It is understood that under English law, an indemnity is a promise to be responsible for another's loss. If A promises to indemnify B for the consequences of a specified event, and the event occurs, then B can ask A to cover all the loss B suffers. If a party is entitled to a contractual indemnity, such party may not need to prove the remoteness of damages or to mitigate the losses as in the case of a claim for damages for breach of contracts. An indemnity claim is sometimes considered as a claim for a debt, rather than for a breach of contract.

Many contracts in Vietnam including share subscription agreements or share purchase contracts are drafted based on English law contract precedents and include an indemnity clause. However, Vietnamese law does not have the concept of indemnity. In fact, it is even difficult to translate the word “indemnity” into Vietnamese. Therefore, a Vietnamese law contract containing an indemnity clause should have additional wording to clarify the key differences between an indemnity claim and a claim for damages. For example, it may be useful

• to use the word “reimburse” in addition to using the word “indemnify” as reimbursement is a more recognized concept under Vietnamese law;
• to state clearly that an indemnity clause is not a claim for damages but a claim for reimbursement of expenses and losses; and
• to state clearly that an indemnity clause is not subject to the rules on compensation for damages under the Laws of Vietnam including the rules on limitation, exclusion, causation or mitigation of damages.