Court suspends Vinasun vs Grab case as compensation battle wages on

By Hai Duyen   February 8, 2018 | 08:37 pm PT
Court suspends Vinasun vs Grab case as compensation battle wages on
A man is about to get on a Vinasun cab in Ho Chi Minh City. Photo by VnExpress/Phuong Dong
Multiple allegations made by the country's top taxi firm have forced the court to call for more evidence.

The People's Court of Ho Chi Minh City suspended a hearing on a dispute between Vietnam’s top taxi company Vinasun and ride-hailing firm Grab on Wednesday.

The judicial panel said more evidence is needed before a final judgment can be made on the VND42 billion ($1.84 million) lawsuit filed by Vinasun.

The plaintiff said that Grab signed contracts with transport cooperatives, which in turn allow the drivers to use the app, and asked for a list of those cooperatives to be provided. Grab is not allowed to directly sign contracts with individual drivers in Vietnam.

At the hearing, a Grab representative said the firm has not been able to draw up a list yet, but would provide one and sample contracts at a later date.

The judges said the court wants to clarify whether Grab provides an app connecting transport cooperatives or actual transport services to assess the suit in a comprehensive and objective manner.

Fierce debate

Lawyer Nguyen Hai Van for Vinasun said Grab had broken the law by running a taxi transport service, but the Grab representative countered by saying it is a ride-hailing app.

To substantiate the argument, Van said Grab had directly managed routes, directed drivers and decided service costs.

In addition, the firm had offered mass discounts, fined drivers who violated its regulations and cooperated with banks to help drivers access loans, all of which points towards Grab operating a taxi transport service, Van said.

Customers who pay for their fare via credit cards pay directly into Grab’s bank account. “The payment shows that customers are paying for a transport service, not for hiring an app,” the lawyer added.

Grab has violated the competition law, causing huge losses to Vinasun, Van said.

Vinasun has asked the court to force Grab to pay VND42 billion ($1.84 million) in compensation, calculated by the profit loss it claims to have suffered due to Grab in 2016 and 2017.

The compensation should be a one-off payment, said the lawyer.

Another legal representative for Vinasun also claimed that Grab had violated the tax law. According to data from the General Tax Department quoted by the representative, Grab paid VND9.5 billion in tax between 2014 and 2016. The figure is equal to just one-thirtieth of the amount Vinasun paid in the same period, but Grab was operating six times as many cars.

Vinasun also claimed that Grab had violated the country's urban transport plans, causing losses to local taxi firms and the state budget. In HCMC, for example, the transport plan for 2020 was to have 12,500 taxis operating in the city, but with the expansion of ride-hailing firms such as Grab, there are already 27,000 cars offering taxi services in the southern metropolis.   

In response, lawyer Luu Tien Dung for Grab said Vinasun should provide evidence of Grab’s alleged violations, detailed calculations of the actual damage it had caused Vinasun, and the cause-and effect relationship between the two issues.

Together with Grab, nine other companies are currently operating ride hailing businesses in Vietnam, so if Vinasun wants compensation, it should file a suit against the Ministry of Transport, Dung said.

“The matter does not come within the jurisdiction of this court; it lies with state management agencies,” the Grab representative said.

With regards to violations of the competition law, Dung said the issue lies within the jurisdiction of the Ministry of Industry and Trade, which has never been forced to fine Grab for violations in this regard.

In terms of the compensation being asked for by Vinasun, Grab’s representative said the amount had been calculated by the plaintiff  based on market research, which is not recognized by local authorities.

The lawyer subsequently asked the court to dismiss the case.

Earlier in January, the Ministry of Transport said Grab and Uber are to be officially authorized in Vietnam after completing trial runs, and the government has pledged to impose the stricter controls that currently govern local transport firms.

Ride-hailing services will have to register their businesses with investment authorities, the transport ministry and tax authorities.

“Tax agencies will keep track of fares so management can be more transparent,” said Tran Bao Ngoc, director of the ministry's Transport Department.

Hanoi has also recently put up traffic signs banning Uber and Grab cars from operating on roads off-limits to traditional taxis.

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