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Vietnamese taxi firm’s lawsuit against Grab sets bad precedent for tech-based businesses: experts

Vinasun taxi drivers gather in front of a court in Ho Chi Minh City on October 17, 2018.
Vinasun taxi drivers gather in front of a court in Ho Chi Minh City on October 17, 2018.

A courtroom win for Vinasun in its suit against ride-hailing service Grab could open the floodgates for other ‘offline’ firms and traditional industry giants to bring lawsuits against those looking to carve out their own piece of the market by incorporating new strategies and technologies into their business model, experts warn as the country eagerly awaits the final ruling in the high-profile case.

The verdict on the case, in which Vinasun demanded compensation for VND41.2 billion (US$1.77 million) in losses they claim to be caused by the tech-based rival, is scheduled to be announced at 2:00 pm on October 29.

In the meantime, several tech-based businesses are holding their breath, prepared to interpret a win for Vinasun as the institutionalization of industry giants using new entrants as a scapegoat for their bad performance.

Experts and lawyers have not shied away from weighing in on the subject.

“If Vinasun beats Grab in this lawsuit, it’ll be ‘a slap in the face’ for Vietnam’s business environment and culture in general, particularly in the context of defining the country’s direction during the current Industrial Revolution 4.0,” Dr. Luong Hoai Nam, a transport specialist, said in the opening of a Facebook post.

“The doors will open for other taxi companies to sue Grab until it leaves Vietnam,” he continued in the post.

Dr. Nam also took it one step further, reasoning that “any online platform could be sued if it takes an offline firm’s pieces of the cake,” citing Airbnb as one example of a tech-company which would be left exposed to legal action.

According to Nam, Grab is simply a technology company which connects carriers and customers.

“It’s not a taxi business or any other type of transportation companies. It owns no means of transportation and has no drivers,” he said.

His argument continued by comparing Grab to independent airline ticket brokers in Vietnam, claiming that they both essentially offer the same service.

“Calling Grab a transport enterprise is like considering foreign companies that provide air ticket sales in Vietnam as airlines,” he said.

“If a poor business falls, it shouldn’t be allowed to take the country’s business environment down with it,” he said, implying that protectionism and favoring domestic enterprises can disfavor a whole trading environment.

Echoing Nam’s opinion, economic expert Ngo Tri Long underscored that the sharing economy is an indispensable trend throughout the world.

“[The sharing economy] is the basic foundation of the Industrial Revolution 4.0 and is mostly applied in the field of transport and tourism, with Grab being a prominent example,” Long said.

According to him, if the court agrees to the prosecutors’ demands for Grab to pay a one-time compensation fee of VND41.2 billion, it will likely serve as a disclaimer about the importance – and instability – of the sharing economy in Vietnam.

This is not only against the guideline and view of the government on the Industrial Revolution 4.0 but also directly affects consumers, according to Long.

The economic expert was afraid that foreign technology companies will hesitate to invest in Vietnam and domestic companies will lose the motivation to improve their service quality.

Likewise, lawyer Nguyen Van Hau, chairman of the Ho Chi Minh City Commercial Arbitration Association (HCCAA), said that the Vinasun – Grab case is not only the first lawsuit of its kind in Vietnam, but also in the world.

His primary concern is that a victory for Vinasun will set a more conservative tone for the country’s business environment, while creating a bad precedent for both Vietnam’s judiciary and business environments.