Choice of foreign arbitration in contract with Vietnamese counter-parties
Vietnam officially acceded to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards (1958 New York Convention) on 28 July 1995. Accordingly, by virtue of the 1958 New York Convention, if the parties to a dispute reside in countries, which are members of the 1958 New York Convention, then the parties should be able to refer their disputes to a foreign arbitration. In addition, Article 12.3 of the Investment Law provides that any dispute to which one disputing party is a foreign investor or a foreign invested company, or any dispute between foreign investors could be submitted to, among others, a foreign arbitration or an international arbitration. Outside the context of the 1958 New York Convention and Article 12.3 of the Investment Law, there is no express provision under Vietnamese law, which generally allows disputes with a Vietnamese party or relating to assets in Vietnam to be submitted to foreign arbitration.
After the expiration of the preferential Feed-in Tariff (FiT) policy for solar and wind power projects in Vietnam, the energy selling price of solar and wind power plants in Vietnam will now be up to the parties’ negotiation in a power purchase agreement (PPA) but must be within the electricity generation price (EGP) bracket approved by the competent authorities. For that purpose, on 1 November 2023, the Ministry of Industry and Trade (MOIT) issued Circular 19 regulating the mechanism for establishing EGP brackets for solar and wind power plants (Circular 19).
From 1 January 2025, under the new Land Law 2024, Vietnamese who reside overseas and still hold Vietnamese nationality (Vietnamese citizens) will be treated as Vietnamese individuals residing in Vietnam in the matters relating to land use rights in Vietnam, while the land use scheme applicable to persons having Vietnamese origin (người gốc Việt Nam) remains as same as to the one applicable to overseas Vietnamese under the Land Law 2013. This is one of the key changes under the Land Law 2024 relating to Vietnamese residing overseas. This article provides some highlights of the land use scheme applicable to these two groups of land users: (i) Vietnamese citizens and (ii) persons of Vietnamese origin.
On 23 June 2023, the National Assembly adopted the new Law on Tendering effective from 1 January 2024 (Law on Tendering 2023). In an effort to foster a more competitive market, the Law on Tendering 2023 introduces significant amendments regarding the scope of application, methods, and procedures for selecting tenderers and investors. This post will summarize some notable changes in the Law on Tendering 2023.
1) Amendments to the scope of application
Under both the Law on Tendering 2023 and the old Law on Tendering 2013, the selection of investors for (1) projects using land in accordance with the law on land, and (2) other projects in accordance with specific laws must comply with the tendering procedures. The Law on Tendering 2023 provides for certain changes relating to such cases.
Regarding projects using land, the above requirement appears to refer to the circumstances of land allocation and land rental via tender procedure as set forth in the new Land Law effective from 1 January 2025 (Land Law 2024). Under the Land Law 2024, the provincial People’s Council must decide to allow a project using land to be tendered. This condition is not provided in the Land Law 2013 and the Law on Tendering 2013.
With respect to other projects in accordance with specific laws, under Decree 23/2024 implementing the Law on Tendering 2023, the Government specifies projects subject to tendering under specific laws. Such projects include, for example, investment projects for the renovation and reconstruction of apartment buildings, or investment projects for the construction of domestic solid waste treatment works. Previously, the Law on Tendering 2013 did not provide for further clarification on this issue.
From February 2024, companies and foreign investors applying for a contribution of capital or purchase of share/capital contribution by the foreign investor (M&A Approval) must state the actual price of proposed transfer, instead of the estimated transfer price as previously. This is one critical change in the new template for the application for an M&A Approval under Circular 25/2023 of Ministry of Planning and Investment (MPI).
The change may have an adverse effect on relevant parties, especially the foreign investor, particularly:
The parties of an M&A transaction may find it difficult to declare an “actual transfer price” since the M&A Approval will be issued well in advance of the closing of the transaction.