Contract structure in a condo-hotel project in Vietnam

In a condo-hotel project, the hotel developer sells hotel rooms to investors and offers a rental pool program which will be managed by a hotel operator after the hotel is constructed. The contract structure of a condo-hotel could be very complicated since it needs to address and allocate the needs and risks among various parties including the hotel developer, condo owners, operator, and project lenders. In addition to these common issues, there are certain Vietnamese law issues for a condo-hotel project in Vietnam.

The Civil Code 2015 – Risks for the party who prepares the first draft of a contract in Vietnam

Article 404.6 of the Civil Code 2015 provides that where the drafting party in a contract inserts into the contract contents which are disadvantageous to the other party, the contract will be interpreted in a manner favouring the other party. This provision not only applies to consumer contracts but also to commercial contracts between two commercially-sophisticated parties. Accordingly, the party who prepares the first draft of a commercial agreement may be subject to the risk of adverse interpretation in future disputes. In addition, parties, when negotiating a contract, may now need to keep track of who drafting which provision in the contract.

New choice of foreign governing law in a contract with Vietnamese counterparty

From 1 January 2016, the Civil Code 2015 introduces a new set of rules regarding choice of governing law in a civil contract signed with a Vietnamese counterparty. In particular, parties to a contract in which there is at least one party is foreign individual or foreign “legal person” may agree to choose foreign governing law in the contract except in the following cases, among other things:

Civil Code 2015 – Unclear scope of application

The Civil Code 2015 will take effect from 1 January 2015 and will likely to have material changes to the Vietnamese legal framework. The Civil Code 2015 applies to relations between individuals and/or legal persons which are established on the basis of (1) equality, (2) freedom of choice, (3) having one’s own assets and (4) being liable for oneself (civil relations). This is a major change to the scope of application of the Civil Code 2005 which applies to civil relation, family and marriage, business, commercial and employment. There are a few issues arising from the changes: