Are offshore wind turbines movable or immovable property under Vietnamese law?

1) Introduction

The wind turbines of an offshore wind power project (Offshore WPP) consist of two main types: fixed-bottom and floating. Both types are attached to the seabed either by a foundation or by mooring, respectively (see the image 1 below).. It is not entirely clear if the wind turbines of an Offshore WPP should be considered as an immovable property or movable property under Vietnamese law. This is because it is not clear if the seabed, to which an offshore wind turbine attached, can be considered as “land” under Vietnamese law.

The classification of whether an offshore wind turbine is movable or immovable property could have significant legal impact on an Offshore WPP. For example,

  • immovable property attached to land can only be mortgaged to licensed credit institutions in Vietnam (not to foreign lenders); and

  • certain contracts relating to immovable property attached to land (e.g., title transfer contracts, lease contracts, or mortgage contracts) must be governed by Vietnamese law being the law of the country where the immovable property is located.

In this post, we will discuss in detail as to whether an offshore wind turbine is movable or immovable property. This post is written by Tran Duc Long, Le Thanh Nhat, and Nguyen Quang Vu.

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Written by Nguyen Quang Vu On In

New Amendments To Investment Law, Enterprise Law, Electricity Law, Residential Housing Law and Other Laws

On 11 January 2022, the National Assembly passed a new law amending 09 laws, including Public Investment Law, Public-Private Partnership Law, Investment Law, Residential Housing Law, Tendering Law, Electricity Law, Enterprise Law, Law On Special Consumption Tax, and Law On Civil Judgment Enforcement (Law 03/2022). Law 03/2022 will come into effect on 1 March 2022. In this post, we will discuss some new key points of Law 03/2022.

1) Enterprise Law 2020

Change of the term “members of the Members’ Council” into “members of the company”

As discussed before, the Enterprise Law 2020 (Articles 49 and 50) only provides for the rights of members of the Members’ Council, but not the rights of the members of the LLC. And many rights of the members of the Members’ Council should be the rights of the members of the LLC such as rights to subscribe for new capital increase or to receive dividends paid by the LLC. The change of the term “members of the Members’ Council” into “members of the company” in Articles 49 and 50 has successfully resolved this problem, although in other provisions, the Enterprise Law 2020 still does not distinguish between the positions of members of the LLC and members of the Members’ Council of the LLC.

Removal of requirement on signatures of dissenting members on meeting minutes; personal liability of the chairperson and the person writing the minutes

The requirement that meeting minutes of the Members’ Council must include signatures of members who disagree to pass such meeting minutes is now removed.

In addition, in the event that the chairperson of the meeting of the Members’ Council/Board Of Directors or the person writing the minutes refuses to sign the meeting minutes, for such minutes to be effective, the Enterprise Law 2020 no longer requires all attending members of the meetings to sign, and only the signatures of the attending members who agree to pass the minutes are necessary. Also, in such event, the chairperson or the person writing the minutes who refuses to sign such minutes must bear personal liability for any loss arising to the company due to their refusal.

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Transmission Line for Offshore Wind Power Projects in Vietnam

Please download the pdf version here.

Transmission line is an integral part of any power project in Vietnam. For an offshore wind power project (Offshore WPP), if the Government and Vietnam Electricity (EVN) does not agree to assume the usual responsibility to develop and operate the transmission line of an Offshore WPP as in the case of onshore projects, then the project sponsor will need to assume such responsibilities and the risks associated with them. This post examines in detail the legal issues which may arise when an Offshore WPP develops, owns and operates its own transmission line under the current legal framework.

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Structure for foreign lenders to take mortgage over the Land Use Right held by Vietnamese borrower

Under Land Law 2013, a foreign lender (Foreign Lender) is not permitted to take mortgage over land use right (LUR) from a Vietnamese borrower. However, a foreign lender with the support of a Vietnamese bank may consider the following the structure to allow a Vietnamese company (Borrower) to use its LUR as security for a foreign lender. The structure could be summarized as follows:

  • A Vietnamese bank (Vietnam Bank) will lend a loan (Domestic Loan) to the Borrower. The Borrower will mortgage to the Vietnam Bank its LUR as security for the Domestic Loan (such mortgage, the LUR Mortgage). Under the Land Law 2013, a company in Vietnam can mortgage its LUR to a bank licensed to operate in Vietnam.

  • Under Vietnamese law, upon enforcement of LUR Mortgage by the Vietnam Bank, the Borrower has the right to receive the remaining proceeds after payment of the Domestic Loan (Right to LUR Mortgage). If the value of the Domestic Loan is less than the value of the LUR then the Right to LUR Mortgage could have substantial value. The Right to LUR Mortgage is usually recorded in the mortgage agreement between the Borrower and the Vietnam Bank. Accordingly, Right to LUR Mortgage is a type of contractual property right, which can be used to secure performance of obligation under Article 14 of Decree 21/2021.

  • Accordingly, the Borrower could mortgage the Right to LUR Mortgage to a foreign lender (Foreign Lender) as a mortgage of contractual rights (Rights Mortgage) in order to secure a loan extended by the Foreign Lender (Foreign Loan) to the Borrower.

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Written by Nguyen Quang Vu On In ,