On 24 November 2015, the National Assembly passed the new Civil Code 2015, a leading code governing all civil relations in the society, which will take effective and replace the current one on 1 January 2017.
The official text of the new Civil Code has not yet been announced and published. However, referring to the most updated draft which was submitted for adoption of the National Assembly, it finds that the new code has many significant and progressive amendments learning from shortcomings of the current one and from the practice. These amendments surely will significantly change the way contracting parties negotiate, agree and enter into agreements.
Among those amendments, there are some initial notable changes as follows:
- Company charter may provide the term and scope of the representative authority a legal representative may have. Accordingly, companies may have a chance to limit the representative scope of their legal representative in their charter, which is not possible under the current prevailing laws. However, it will also increase the burden on contracting parties when entering into an agreement, because they must check other parties’ charters, or other evidence, to make sure that they are dealing with the right persons.
- Civil transactions which are not in compliance with form, e.g. not notarized when it is required so, may NOT invalid if one party or both parties have implemented at least two thirds of their obligations under the relevant transaction. Though, identification of such “two thirds” may require further guidance from competent authorities.
- Statute of limitations shall only be applied to a lawsuit upon request of a party(ies) if such request is given before the issuance of the first instance judgment. A party who may benefit from applying statute of limitations is also entitled to refuse such application.
- The new code also entitles contracting parties to “new” security means for performance of obligations in contracts, in addition to the current ones, including (i) reserving ownership of assets until completion of payment, and (ii) putting a lien on assets in case of any violations. Actually, these means have been practically employed for a long time, but they are not legally recognized until the establishment of the new code.
There is still a long way before the new code comes into effect and brings its progressive changes to Vietnam practice. However, it is expected that the new Civil Code shall, together with other significant changes in various sectors of law, support the development of Vietnamese market and help to narrow down the gap between the effectiveness of Vietnamese legal frameworks and of other developing countries.
By Vietnam Law Insight
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