Transfer of loan commitments between banks in Vietnam

Vietnamese banking regulations do not have clear mechanics for transfer of loan commitments between banks or credit institutions in Vietnam. In particular:

  • Under Circular 9/2015 of the State Bank of Vietnam (SBV) on loan transfer, loan transfer is defined to mean the transfer of “the right to collect loan” arising from the lending operation by a bank (the Original Bank) to a loan purchaser, which may or may not be a bank. The definition of loan under Circular 9/2015 does not include loan commitment where a bank only commits to lend to a borrower but has not actually disbursed the loan. Accordingly, all the loan transfer mechanics under Circular 9/2015 do not directly apply to transfer of loan commitment.

  • One way for banks to overcome the lack of regulations on transfer of loan commitment is for the Original Bank to actually disburse the loan and then transfer such loan to another bank (New Bank) in accordance with Circular 9/2015. However, under Circular 9/2015, if the loan purchaser is a bank, then the SBV requires the New Bank to have a loan purchase license. Not all banks in Vietnam are granted a loan trading licence by the SBV.

  • Under the lending regulations (Circular 39/2016), a loan commitment could be understood to be an undertaking by a bank to handover to the client an amount of money to use. Therefore, it appears that a loan commitment is regarded as an obligation to lend by a bank (which, of course, is usually conditional on the borrower’s satisfying certain conditions precedent). Therefore, transfer of a loan commitment is regarded as a transfer of obligation and will require the consent of the borrower. Borrower’s consent is usually not a problem since any proper loan agreement will include a transfer clause which allows the bank to transfer any of its rights and obligations under the loan agreement to a third party.


LAWYER’S CRIMINAL LIABLITY FOR FAILURE TO REPORT CRIMES COMMITTED BY A CORPORATION IN VIETNAM

Under Article 19.3 of the Penal Code 2015 of Vietnam, if a defender (người bào chữa), in the course of defending for an accused person, has knowledge of a crime that was committed or has been committed or is under the process of preparation by such person, the defender will not bear criminal liability for failure to report such crimes to the authorities unless such crimes are extremely serious crimes or crimes relating to the national security. This appears to be a watered-down version of the attorney-client privilege in other jurisdictions. The previous Penal Code 1999 does not clearly exempt a defender from criminal liability for failure to report crimes. The exemption for a defender under Article 19.3 is first introduced in the Penal Code 2015. When applying Article 19.3 in the context of corporate criminal liability, one should take note of the followings:

  • A defender is defined as a person appointed by another person (an individual or a commercial legal person) who is alleged to commit a crime to defend him/her in accordance with Article 72 of the Criminal Proceedings Code 2015. A lawyer will become a defender when that lawyer is appointed in accordance with the proceedings (Appointed Time). Therefore, before the Appointed Time, a lawyer is not entitled to the privilege exemption of Article 19.3.
  • Whether before or after Appointed Time, a lawyer for a commercial legal person in a criminal case is not entitled to the privilege exemption of Article 19.3 in respect of the following crimes (1) smuggling, (2) manufacturing or trading counterfeit food or food additives, and (3) manufacturing or trading counterfeit medicines for treatment or prevention of diseases; and
  • Before the Appointed Time, lawyers may be subject to criminal liability for failure to report the following crimes if the lawyers have “clear knowledge” (biết rõ) of such crimes: (1) financing terrorism, (2) money laundering, (3) illegally trafficking goods or money across the border, (4) manufacturing or trading banned goods, (5) hoarding or, transporting banned goods, (6) manufacturing or trading counterfeit goods, (7) manufacturing or trading counterfeit food or food additives, (8) manufacturing or trading counterfeit medicines for treatment or prevention of disease, (9) manufacturing or trading counterfeit animal feeds, fertilizers, veterinary medicine, pesticides, plant varieties, animal breeds, (10) speculating, and (11) destructing forest.

This post is contributed by Tran Thi Ha Phuong, a legal intern at Venture North Law, and Ha Thi Dung, a partner at Venture North Law.

Confidentiality obligations of a lawyer in Vietnam

Lawyers in Vietnam are subject to the following confidentiality obligation with his/her clients including:

  • A lawyer is prohibited from disclosing information on cases, matters, clients that the lawyer has knowledge in the course of practicing except otherwise agreed by the clients or otherwise provided at law (e.g., the Penal Code 2015). Since this rule is carved out by “otherwise provided at law”, a lawyer cannot invoke this rule to avoid the request of providing information or testifying against his/her client in a criminal case;
  • A lawyer must not use information on cases, matters, clients that the lawyer has knowledge in the course of practicing for purpose of violating benefits of the State, public benefits, lawful rights and benefits of organization, individuals, and agencies;
  • A law firm must procure its lawyers and staffs not to disclose information on its cases, matters, clients; and
  • Under Article 73.2 of the Criminal Proceedings Code 2015, a defense lawyer must not disclose information on a case or an offender that the defense lawyer has knowledge in the course of defending for the offender except otherwise agreed in writing by the offender and must not use such information for purpose of violating benefits of the State, public benefits, lawful rights and benefits of organization, individuals, and agencies. A defense lawyer may invoke this privilege to deny providing information or testifying against his/her client but it is not clear whether this privilege can protect him/her from a criminal charge for failure to report extremely serious crimes or crimes which fall within Chapter XIII (crimes relating to the national security) if such case is established.

A lawyer in Vietnam is required to practice either in a law firm or in his/her own personal capacity. Therefore, technically, an in-house lawyer working for a corporation may not be regarded as a lawyer.

This post is contributed by Tran Thi Ha Phuong, a legal intern at Venture North Law, and Ha Thi Dung, a partner at Venture North Law.

New guidance on expedited proceedings for disputes arising from handling of non-performing loans in Vietnam

On 15 May 2018, the Supreme Court issued Resolution 3 on expedited proceedings for disputes arising from handling of non-performing loans (NPL) and security assets of NPL (Resolution 3). Resolution 3 is an implementing legislation of Resolution 42 of the National Assembly on NPLs (Resolution 42). Resolution 3 takes effect from 1 July 2018 and will expire when Resolution 42 expires in August 2022. Resolution 3 will apply to claims (1) accepted for hearing by the courts before 1 July 2018 but have not been brought to trial; and (2) accepted during its term but still in process when it expires. Resolution 3 cannot be based on to protest against effective judgment under retrial and cassation.

Resolution 42 allows disputes relating to security asset of an NPL to be conducted under expedited proceedings. Resolution 3 further clarifies that:

  • Disputes on obligations to hand-over security assets of an NPL is clarified to be dispute relating to the case where the securing party or the party holding the security asset (1) does not hand-over the security asset, or (2) does not hand-over correctly according to the request of the secured party or the party having right to enforce the security asset; and

  • Dispute on right to enforce security asset of NPL is clarified to be dispute on the determination of person having right to enforce the security asset of an NPL.