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.

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.