This is our final post relating the force majeure event in Vietnam. In this post, we will cover the effect of a force majeure event after the existence of a force majeure event is confirmed (see our earlier post here). This post is written by Nguyen Quang Vu and Tran Thuy Tien.

In summary,

• A party affected by a force majeure event will be exempted from contractual liabilities. It is not necessary for a contract to have a separate force majeure clause for the affected party to claim force majeure.

• The Commercial Law 2005 is not clear whether the default of an affected party must be caused by the force majeure event.

• The law does not clearly allow a contract to be terminated on the basis of a prolonged force majeure. However, in case of a prolonged force majeure event, the Commercial Law 2005 allows the parties to refuse to perform the contract.

In the last few months, the Coronavirus (Covid 19) outbreak has adversely affected the health and lives of millions of Vietnamese people and billions of people all over the planet. The outbreak also hurts the commercial life of hundreds of thousands of Vietnamese companies. Inevitably, parties to commercial contracts will now have to consider whether they can be exempt from liabilities on the ground of force majeure if they cannot perform contracts due to Coronavirus outbreak.

In a series of posts, we will now discuss the force majeure regime under Vietnamese law and its connection with Coronavirus outbreak. The first post will address how a force majeure event is defined under Vietnamese law and whether the coronavirus outbreak could qualify as a force majeure event. This post is written by Nguyen Quang Vu and Tran Thuy Tien.

In summary,

• On its face, the definition of force majeure event under Vietnamese law contains three usual elements of a force majeure event which are objectivity, unforeseeability, and irresistibility. However, it is not clear if the coronavirus outbreak could satisfy all the elements of a force majeure event under the Civil Code 2015.

• In Vietnamese, “objectivity” (khách quan) means (1) something which cannot be controlled by people’s mind, or (2) something which is based on factual events. Accordingly, a self-induced event may still qualify as an event, which occurs in an objective manner.