Are offshore wind turbines movable or immovable property under Vietnamese law?
1) Introduction
The wind turbines of an offshore wind power project (Offshore WPP) consist of two main types: fixed-bottom and floating. Both types are attached to the seabed either by a foundation or by mooring, respectively (see the image 1 below).. It is not entirely clear if the wind turbines of an Offshore WPP should be considered as an immovable property or movable property under Vietnamese law. This is because it is not clear if the seabed, to which an offshore wind turbine attached, can be considered as “land” under Vietnamese law.
The classification of whether an offshore wind turbine is movable or immovable property could have significant legal impact on an Offshore WPP. For example,
immovable property attached to land can only be mortgaged to licensed credit institutions in Vietnam (not to foreign lenders); and
certain contracts relating to immovable property attached to land (e.g., title transfer contracts, lease contracts, or mortgage contracts) must be governed by Vietnamese law being the law of the country where the immovable property is located.
In this post, we will discuss in detail as to whether an offshore wind turbine is movable or immovable property. This post is written by Tran Duc Long, Le Thanh Nhat, and Nguyen Quang Vu.
2) The case for offshore wind turbines to be immovable property
Under the Civil Code 2015, immovable property includes land; houses and construction works attached to land; other properties attached to land, houses, and construction works; and other properties as prescribed by law. Movable property is a property that is not immovable property.
Therefore, in the case of Offshore WPP, the wind turbine would be classified as immovable property if: (1) the wind turbine is a construction work attached to land; (2) the wind turbine is attached to land; (3) the wind turbine is attached to a construction work (in other words, the foundation or the floating platform is a construction work); or (4) the wind turbine is provided by law to be immovable property. The last scenario is not discussed further since there is no law specifically providing that an offshore wind turbine is immovable property.
There are several provisions at law suggesting that offshore wind turbines are immovable properties.
A construction work (công trình xây dựng) is defined to be a work built in accordance with a design, created from human labor, building materials and equipment installed in the works, and [affixed to soil], which may include sections above and under the ground or water surfaces. Under the guidance of the Ministry of Construction, all wind power works (công trình điện gió) which should include Offshore WPP are all considered construction works. In addition to this, oil & gas offshore production platforms (whose substructure are similar to that of offshore wind turbines) are considered construction works under Circular 6/2021. Accordingly, the law on construction takes the view that being affixed to the seabed is equal to being “affixed to soil”; and
The seabed could be considered as land due to the similarity of their natural characteristics. In addition, the Land Law 2013 has already regulated "land with water surface" as a type of land encompassing coastal land, land of rivers, streams, canals, springs, and special-use water surface.
3) The case for offshore wind turbines to be movable property
Although the seabed has similar natural characteristics as land, as a legal matter, to consider seabed (đáy biển) as land (đất đai) would result in several issues. As such, the seabed to which the offshore wind turbines are attached may not qualify as land under the law. Accordingly, offshore wind turbines may not qualify as immovable property and be treated as movable property. In particular,
The legal regime applicable to land and seabed are separate and different. For example, among others, the grant of land use right is provided under the Land Law 2013, while the allocation of sea area (which include the seabed) is done in accordance with the Sea Law 2012. Accordingly, even if the wind turbine and its substructure are considered “affixed to soil” under the Construction Law 2014, they are not considered “attached to land” under the Civil Code 2015.
In general, the seabed of the Offshore WPP should have the same legal status as the sea zones where they are situated. For example, regarding Offshore WPP developed in the economic exclusive zone (EEZ), Vietnam may not be able to treat the seabed in the EEZ as “land” under the Land Law 2013. This is because under the Constitution 2013, the land belongs to the people of Vietnam, of which the State is the representative. Meanwhile, Vietnam is not the owner of the seabed in the EEZ and is only entitled to the exclusive use of the seabed in the EEZ for economic development purposes. Vietnam only has sovereignty (same as that over the land) over the seabed in the internal waters and the territorial sea of Vietnam. In other countries (e.g., Scotland), only the seabed within the territorial sea is considered as land.