Confusion regarding time limitation under Vietnamese Civil Code 2015
Under the Civil Code 2015, the time limitation for making a claim is longer than that of the Civil Code 2005. For example,
- Under the Civil Code 2015, a claim for breach of contract or for non-contractual damages now has a time limitation of three years commencing on the date on which the claimant knows or should have known that the claimant’s rights or interests have been violated. This is longer than two years under the Civil Code 2005. In addition, the two year time limitation period under the Civil Code 2005 may commence on a much earlier date (i.e. the date on which the claimant’s rights or interests have been violated).
- Under the Civil Code 2015, a claim for an inheritance of an immovable property is 30 years instead of 20 years under the Civil Code 2005.
The transition clause of the Civil Code 2015 provides that for civil transactions occurring before 1 January 207 (the effective date of the Civil Code 2015), the provision of time limitation under the Civil Code 2015 will apply. This approach is causing confusion about claims which become time bar under the old Civil Code 2005 but can now still be claimed under the Civil Code 2015. Some practitioners and judges take the view that claims, which become time bar under the old Civil Code 2005, can now be restated if it is still within the time limitation under the Civil Code 2015 (see here for example). In our view, this approach is not reasonable and should not be adopted since:
- Retroactively applying a longer time limitation period for claims occurring before the effective date of the Civil Code 2015 will adversely affect the rights of the persons who are protected by the time limitation period under the Civil Code 2005. Under the Law on Laws, a law should not be applied retroactively if such law increases the liabilities of the relevant subjects; and
- Allowing people to restate claims which already become time bar under the old law could cause disruption to the existing civil and commercial transaction which are entered into on the assumption that the relevant counterparty or property or assets cannot be claimed.