Ownership of bank deposits in Vietnam

The core business of a bank (a Bank) is to take monies (Deposits) deposited by its customers (Depositors) and to lend such monies to its borrowers. Therefore, legally, it is important to determine who owns the Deposits. Unfortunately, Vietnamese banking law is not clear whether after the Depositors make a Deposit with the Bank, the Bank or the Deposit owns the Deposit.

The case for the Bank

The most logical conclusion is that:

· the Bank is the owner of the Deposit;

· the Depositor is not the owner of the Deposit, but the Depositor has a contractual right to request the Bank to return the Deposit to the Depositor in accordance with the terms of the Deposit; and

· the borrower will own the Deposit after it borrows the same from the Bank.

Issues in selecting arbitration to settle construction disputes in Vietnam

Under the Law on Construction 2014, a dispute relating to a construction contract can be resolved through mediation, by a commercial arbitration or court “in accordance with law”. This standard wording seems to allow parties to a construction dispute in Vietnam to select arbitration to settle the dispute. However, Circular 26/2016 of the Ministry of Construction provides that a dispute relating to quality of a construction work will be resolved in the following steps:

New Decree on registration of mortgages and other security interests in Vietnam

On 15 October 2017, Decree 102 of the Government dated 1 September 2017 on registration of secured transactions (Decree 102/2017) has taken effect. Decree 102 replaces Decree 83 of the Government dated 23 July 2010 (Decree 83/2010) on the same subject matter. Decree 102/2017 introduces the following new points:

A mortgage over assets attached to land has to be registered if such assets have been recorded in a land use right certificate. Before Decree 102/2007, registration of mortgage over assets attached to land is not compulsory.
Procedures for registration of retention of title (a new form of security interest under the Civil Code 2015) are introduced.
The effective date of the registration is amended. Notably, the registration of security interest over land use right or asset attached to land will only be effective after the registrar recorded such registration into the book of registry. On the other hand, Decree 102/2017 expressly recognizes several cases in which, the original effective date of a registration will not change after an amendment to the original registration.
A security interest created over investment project for construction of residential house and works has to be published on the website of the Department of Natural Resources and Environment within five days from the date of registration.
Adding additional secured obligation to a registered security interest will have to be registered, unless (i) the original security agreement has a provision covering future obligations, (ii) there is no addition to security asset, and (iii) the parties only sign supplement agreement rather than new agreement.
Decree 102/2017 also provides a new process for ensuring the continuity of a registration of mortgage of contractual right under a residential house sale and purchase agreement at National Registration Agency of Secured Transactions when it becomes a mortgage of a future residential house at the land registration office. This process will retain the effective date of the original registration.
Decree 102/2017 supplements several cases of rejection of a security registration, including (i) land use right or residential house is not qualified to be mortgaged, (ii) there is accepted dispute regarding land use right or residential house, (iii) the securing party is a judgment debtor or (iv) the security asset had been seized for the enforcement of judgment.
Regarding an application for registration of security interest, the registrar is not allowed to request any document that not required by law or to request the contractual parties to amend the name of the security contract or its contents, except for mistake due to a wrong declaration by the applicant. However, it is not clear what would constitute “a mistake due to a wrong declaration by the applicant”.

This post is contributed by Nguyen Hoang Duy, an associate at Venture North Law Limited.

Info

Comment

Legal Capacity of a Branch of a Company in Vietnam under the Civil Code 2015

Under the Civil Code 2015, the legal capacity of a branch is limited. To be specific, a branch cannot enter into contracts under its own name since it is not a legal person or a natural person. Also, while it is not entirely clear (see below), it is arguable that a branch can no longer be a representative of its parent company. Therefore, it is unsure whether a contract signed by a branch on behalf of the parent company is valid under the new regulations of the Civil Code 2015. This is because under the Civil Code 2015,

only natural persons and legal persons can enter into contracts under their names;
only a natural person or a legal person can become a representative for another person (either natural or legal); and
the Civil Code 2005 used to provide that a branch’s function includes representative function (chức năng đại diện theo ủy quyền). However, such a provision is now removed under the Civil Code 2015.

Vietnam Business Law