Determination of a contract term under Vietnamese Civil Code 2015

Commonly, a contract would contain a clause defining the effective term of such contract (thời hạn có hiệu lực của hợp đồng). In such clause, the moments the contract take effect and cease to have effect are determined, whether by a certain period or an occurrence. Nonetheless, the Civil Code 2015 does not have any provisions on the “term” of contracts. Instead, the Civil Code 2015 has separate provisions for (i) the term or time-limit, and (ii) the moment when a contract takes effect and the circumstances where a contract is terminated.

Under the Civil Code 2015, by default, the commencement of a term by reference to an event would start on the day immediately following the date of such event but not the date of the event itself. Therefore, if the term of a contract is defined to commence on the signing date, the contract would actually take effect on the day after, which might not be what the parties intended. Due to this, a contract could be effective on the signing date if (1) so provided by law or (2) the parties agreed on a different method for calculating a term.

Regarding (1), one might argue that the provisions specific to contracts under the Civil Code 2015 should be deemed as a “different regulations” of the law. According to Article 401.1 of the Civil Code 2015, the commencement of the term of the contract would be the moment such contract is executed or otherwise agreed by the parties. However, Article 401.1 of the Civil Code 2015 also provides an exemption of “otherwise provided by relevant law”, which could cause a confusion as to which provision would prevail to govern the term of a contract.

Regarding (2), as mentioned above, the parties can agree on a different method for calculating a time-limit, which could resolve the confusion in case both provisions are applied to govern a term of a contract. For example: “The term of this Agreement shall be 2 years from the signing date of this Agreement inclusive.” In this example, the parties agree that the signing date would also count towards the term of the Agreement, which arguably could be considered as an agreement on a different method for calculating the term of the Agreement.

This post is contributed by Le Thanh Nhat, a trainee at Venture North Law.

UPSTREAM REGULATIONS IN VIETNAM – CONFLICT OF INTERESTS

In Vietnam, foreign and Vietnamese organizations and individuals carry out the petroleum operations based on a petroleum contract signed with Vietnam Oil and Gas Group (PVN) or other agreements signed with PVN or the Government of Vietnam in accordance with the Law on Petroleum 1993.

A petroleum contract can be a production sharing contract (PSC), joint venture agreement or other forms if approved by the Prime Minister. Unless otherwise approved by the Prime Minister, a PSC must comply with the model petroleum product sharing contract promulgated by the Government under Decree 33/2013.

PVN is entitled to participate in petroleum operations as an investor while concurrently has rights and power to manage contractors’ activities and, in some cases, is authorized to act on behalf of the Government in relationship with other investors under PSCs. This results in a material conflict of interests for PVN in acting as an investor under the PSC and as a regulator at the same time. Vietnamese law does not have a clear provision to control the conflict of interests where PVN participates in capital investment with other investors in petroleum operations and concurrently exercise rights and powers which should belongs to a State agency in relationship with such contractors under a PSC.

That said, in theory, the Competition Law 2015 may provide some restrictions on PVN’s authorities under the Law on Petroleum 1993. For example, when exercising the power conferred to it under the Law on Petroleum 1993,

·        if PVN is regarded as a State agency then the Law on Competition prohibits “State agency” to force enterprises, organizations, and individuals to purchase services or goods from enterprises as specified/selected by such State agency/State management agency; and

·        if PVN is regarded as an enterprise then PVN could be deemed to have significant market power (sức mạnh thị trường đáng kể) and is prohibited from abusing such power.

This post is contributed by Ha Thi Dung, a partner at Venture North Law.