Can an investment project be mortgaged under Vietnamese law?

The answer is a qualified “yes”. It is possible to mortgage an investment project under Vietnamese law because:

·         The Investment Law 2020 allows an investor to assign (chuyển nhượng) an investment project in whole and in part. And Decree 31/2021 implementing the Investment Law 2020 expressly provides for the procedures when an investment project is assigned as a result of the enforcement of a security interest including a mortgage.

·         Decree 21/2021 on secured transactions expressly provides the investor of an investment project can mortgage an investment project to the extent such investment project is not prohibited from assignment by the investment regulations. Decree 99/2022 on registration of secured transactions also provide for specific procedures to register a mortgage over investment projects which use land such as residential housing, other construction works, agriculture and forestry development.

·         In practice, it appears that it is common for banks to take mortgage over investment projects.

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Written by Nguyen Quang Vu On In ,

ISSUING L/C BY "CPTPP" BANKS TO RESIDENTS IN VIETNAM

Scenario: An institutional resident in Vietnam intends to open an at sight L/C at a Japanese bank (Offshore L/C Issuer) to import equipment into Vietnam. Can the Offshore L/C Issuer issue the Offshore L/C to the Vietnamese client under Vietnamese laws?

Short answer: Yes, subject to our discussions at 1.2 and 1.3 below.

1.1.         The Offshore L/C Issuer should be able to issue a L/C to a resident in Vietnam if the Offshore L/C Issuer is not regarded as regularly conducting banking business in Vietnam (see 1.2). This is because:

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Mechanism for Calculation of Electricity Generation Price Bracket and Its Implication for Transitory Solar/Wind Energy Investors

On 3 October 2022, the Ministry of Industry and Trade (MOIT) issued Circular 15 on the mechanism for setting up an electricity generation price (EGP) bracket applicable to transitory (chuyển tiếp) solar and wind power plants (Circular 15/2022), which took effect from 25 November 2022.

Determining EGP bracket under Circular 15/2022 will cause significant impact to the selling price of the transitory solar and wind energy projects in Vietnam. To be specific:

  • Circular 15/2022 only applies to solar and wind power plant developers (Developers) who have entered into PPAs with Vietnam Electricity (EVN) before 1 January 2021 (for solar power Developers) or 1 November 2021 (for wind power Developers) but failed to meet the requirements to apply the preferential EGP administered by the Prime Minister under Decision 13/2020 (for solar powers) and Decision 39/2018 (for wind powers) (Transitory Projects);

  • Circular 15/2022 requires the Developers of the Transitory Projects to provide Feasibility Study Reports or Engineering Designs of their power projects to EVN.

  • Based on data submitted by the relevant power plants, EVN will calculate and build up an EGP bracket of a standard solar and wind power plant (Maximum EGP Bracket), and obtain an approval from the MOIT for such Maximum EGP Bracket. The approved Maximum EGP bracket will be published on the website of the MOIT and the Electricity Regulatory Authority. The mechanism for calculation of the Maximum EGP Bracket is illustrated in the diagrams at the end of this post. Details on this mechanism are discussed in this document.

  • The price for selling generated power by the Developers of Transitory Projects to EVN cannot exceed the approved Maximum EGP Bracket. Accordingly, the data provided by the Developers may affect their profit in the future.

On 7 January 2023, the MOIT already issued Decision 21 which approves the Maximum EGP Bracket calculated in accordance with the mechanism specified in Circular 15/2022 (see the bar chart below) which will serve as a basis for EVN to agree on the selling price with the Developers of Transitory Projects:

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Certain Grounds For Cancellation Or Rejection of Arbitration Awards By Vietnamese Courts In Practice

In our experience, Vietnamese court has relied on one or more of the following grounds to cancel domestic arbitration awards or reject application for recognition of foreign arbitral awards:

·       Changes to the venue of hearing to a different location than the place of arbitration. In a VIAC proceeding, the Claimant initiated two claims against two arbitrators for a breach of conduct. As a result, to protect the safety of the two arbitrators, the Tribunal decided to change the venue of hearing from Hanoi to Singapore and then Japan. However, Vietnamese court decided to set aside the awards on the ground that the arbitration does not take place in Hanoi as required by the arbitration agreement;

·       Applying IBA Rules on the Taking of Evidence in International Arbitration in a VIAC proceeding without express agreement by the parties; 

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