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A divisive verdict
Thursday,  1/3/2019, 20:48 

A divisive verdict

By Son Nguyen

It is not just the discord between the plaintiff and the defendant in a lawsuit. The verdict by the HCMC People’s Court last Friday, ordering the ride-hailing firm Grab to pay VND4.8 billion as compensation to the traditional taxi firm Vinasun for extracontractual damages, has opened a rift in society, with proponents hailing the ruling as an effort to restore order and justice in the transport sector, and opponents seeing it as a setback for the country’s hi-tech embrace. The 18-month legal battle between Vinasun and Grab can hardly been settled with the verdict.

The court opened the trial on October 17, having earlier adjourned twice, following Vinasun’s petition that the ride-hailing firm’s violations of regulations had caused huge losses to the traditional taxi firm. Vinasun demanded that Grab pay VND41 billion as compensation for its lost revenue and other material damage.

After the two sides traded barbs in court, after an adjournment by the court this time for the two sides to engage in reconciliation, after assessment by a third-party entity on the damages incurred by Vinasun, the court finally announced the verdict on Friday, which found Grab to have infringed on regulations, causing extracontractual damages to Vinasun. However, the court ruled that damages borne by Vinasun were not all attributed to Grab’s violations, so only partial compensation was handed down, at just VND4.8 billion.

The verdict centered on a key point: Grab operates as a transport service firm rather than a technology one, and therefore must be subject to transport business regulations, while the company insisted otherwise. According to the court, Grab has directly engaged in passenger transport service, manifested by its adjustment of service tariffs, launch of promotions, and imposing penalties on drivers among others, while Decision 24/2016 by the Ministry of Transport on the pilot operation of ride-hailing services does not allow for such practices. Phap Luat Online, citing the court verdict, says that to perform road passenger transport service, an enterprise has to conform to numerous regulations, including rules on the validity of vehicles, and providing insurance coverage for staff.

According to the court, Grab has seriously violated the law on transport business, and the firm’s insistence that it only provides technology that connects drivers and riders is baseless. As such, Vinasun’s claim that Grab’s violations of the law caused damages to the firm is accepted.

Voices of support for the verdict ring out, from not only traditional taxi operators but also lawyers and experts. However, there are also no less full-throated opponents, who say the verdict has set a bad precedent and is an impediment to advancement, according to the local media.

Le Xuan Nghia, a well-known expert, says in kinhtedothi.vn that he whole-heartedly supports the verdict since Grab has violated the law. “Tech-based models like Grab should be quickly treated as a transport service so as to create a transparent, healthy business environment for enterprises,” he is quoted by the media outlet.

Nguyen Cong Hung, chair of the Hanoi Taxi Association, says in Giao Thong newspaper that the legal action by Vinasun is not meant to seek compensation, but protect the rule of law. “Several taxi companies have gone bust. The verdict will restore enterprises’ confidence in justice,” says Hung, adding the verdict helps create a level playing field in the taxi business.

In the same chorus, Lawyer Truong Anh Tu of Hanoi-based TAT Law Firm heaps praise on the verdict, saying in Dan Tri that “it is less important how much Grab will pay Vinasun than the fact that the court has found Grab violating the law.”

Many others, including lawyers and experts, simply disagree, however.

Lawyer Nguyen Van Hau, president of the Vietnam Lawyers’ Commercial Arbitration Center, says in Giao Thong that such a verdict will set a bad precedent that affects Vietnam’s investment environment. Benefits for consumers are so apparent, and if a survey is conducted, most will choose Grab over Vinasun, says Hau. “The most important thing is to be open to technological advancement. If management fails to catch up with the reality, (we should) allow it to continue development instead of an outright ban,” he is quoted as saying.

Lawyer Luu Tien Dung, who represents Grab in the court case, says that the court has outreached its authority. “The court is not vested with the mandate to ascertain the business sphere of the enterprise, but at this hearing, the court sought to do so, categorizing Grab as a transport service,” says the lawyer. From that point, the court charged that Grab violated regulations on transport, which should be under the jurisdiction of the Ministry of Transport, says the lawyer.

In an interview with Phapluatplus.vn, lawyer Tran Viet Hung questions the legal basis for the court to order Grab to pay VND4.8 billion to Vinasun, saying it is unacceptable to force a company to compensate a rival for its poor performance. “Vinasun argued that Grab violated the law… The question is whether Grab’s violation of the law results in civil responsibility to its competitor,” ponders the lawyer. He stresses that if Grab violates the law, it is the State that has the power to impose a penalty, which is not the basis for Vinasun to demand compensation.

“Losing a competition is just normal in the market economy, so any intervention by the State in the form of a court verdict as in this case can hardly be acceptable,” he says.

Similarly, lawyer Le Van Kien argues in Phapluatplus.vn that only the State has the authority to punish Grab if it is found to violate the law. If the legal system fails to impose such punishment, then the enterprise can walk free. “The absence of a level playing field that leads to the disadvantage for traditional taxi firms is not the right excuse for a lawsuit,” the lawyer stresses.

In a commentary, Vietnamnet says the verdict is a counter-progressive move. Grab should be punished for its violations, if any, but under no circumstances should it be ordered to compensate other taxi companies that decry their falling market share, says the news site.

Right after the verdict, Grab said it would challenge the court ruling, and will even counter-sue Vinasun and relevant entities. “We are prepared to launch a defamation lawsuit against Vinasun, and all other parties that have colluded with Vinasun if there is no retraction of the baseless allegations made towards Grab,” the company says in a statement.

While the verdict is meant to restore market order and create a transparent, level playing field, it has in fact opened the rift wider between traditional taxi firms on one hand and ride-hailing companies on the other. The divisive verdict, says head of Grab Vietnam Jerry Lim in Dau Tu, will be a major setback for innovative enterprises and talents wanting to invest in Vietnam. “Time will tell how this verdict will affect the national interest in the long term,” he is quoted as saying in the paper.

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