New sources of law in Vietnam - Court precedents and equity

From 1 January 2017, court precedents and “equity principles” (lẽ công bằng) will be the new sources of laws to govern civil relations in Vietnam. Under the new Civil Code 2015, court precedents and equity principles are now expressly allowed to be used to apply to a civil relation if there is no law or customs governing the same. Court precedents are judgements which are selected and announced by the Supreme Court so that lower courts can study and apply when hearing cases. Under the new Civil Procedure Code 2015, equity principles are determined based on rightful principles which are accepted by the society, and consistent with principle of humanity, principle of impartial and equality in terms of rights and obligations of the parties to a dispute.

VALIDITY OF A CONTRACT DENOMINATED IN US$ AND SETTLED IN VND (Updated)

In June 2015, the first instance court decides that a contract in the territory of Vietnam that is denominated in US$ but settled in VND is not invalid. In December 2015, according to newspaper report, the appeal court has revoked a decision of the first instance court and held such a contract invalid in its entirety. This is a surprise development and may cause concern to many business transactions in Vietnam which have relied on a more relax view of the court earlier.

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Validity of a contract denominated in US$ and settled in VND

According to newspaper report, in June 2015, a district court in Hanoi has just held that an apartment sale and purchase contract the price of which is denominated in USD but settled in VND is not invalid. Instead, the price of such contract will be converted into VND at the exchange rate of the signing date of such contract. This is just a first instance judgment which can be changed or cancelled by higher courts. However, this decision has helped to clarify the long-term uncertainty about the validity of a contract denominated in US$ but settled in VND.

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Investment Law 2014 – Selecting foreign arbitration in transactions with foreign invested enterprises in Vietnam

The Investment Law 2014 introduces major changes to the ability to choose foreign arbitration as the dispute resolution forum for transactions involving a foreign-invested enterprise in Vietnam. In particular, from 1 July 2015, only transactions with a foreign-invested enterprise (or more correctly a foreign economic organisation) 51% or more of which is directly or indirectly owned by foreign investors could be referred to foreign arbitration for dispute settlement. Under the Investment Law 2005, transactions with any company with any level of foreign ownership (not necessarily more than 51%) could be referred to foreign arbitration for dispute settlement.

Vietnam Business Law