Nghị định Hợp tác Công – Tư (PPP), Các dự án cơ sở hạ tầng đã thực sự mở cửa?

Với nhu cầu cơ sở hạ tầng ngày càng cao, trong khi ngân sách và nguồn vốn ODA có hạn, việc kêu gọi tư nhân vào các dự án cơ sở hạ tầng (PPP) được hy vọng là giải pháp khả thi nhất. Trong khi PPP đã thành công nhiều ở các nước ASEAN khác, nhất là Malaysia, thì các dự án PPP ở Việt Nam vẫn đang gặp trở ngại. Vì vậy, việc Nghị định 51 ngày 14 tháng 02 năm 2015 quy định về đầu tư theo hình thức đối tác công tư hy vọng sẽ đáp ứng được mong đợi của nhà đầu tư. Nghị Định 15 có những quy định mới đáng chú ý như sau:

  1. Nghị Định 15 quy định về hình thức các hợp đồng dự án, bao gồm Hợp đồng Xây dựng – Chuyển giao (Hợp đồng BT); Hợp đồng Xây dựng – Chuyển giao – Thuê dịch vụ (Hợp đồng BTL) và Hợp đồng Xây dựng – Thuê dịch vụ – Chuyển giao (Hợp đồng BLT). Như vậy nhà đầu tư không nhất thiết phải chuyển giao công trình cho nhà nước, mà có thể chọn nhiều giải pháp khác nhau, tùy yêu cầu của nhà đầu tư và bên cấp vốn cho vay dự án.
  1. Nghị Định 15 quy định rõ hình thức đầu tư và phân loại dự án được áp dụng hình thức PPP. Bên cạnh các dự án về cơ sở hạ tầng vật chất như cầu, đường, các công trình xây dựng… các công trình về thương mại, khoa học, công nghệ, khí tượng thủy văn, khu kinh tế, khu công nghiệp, khu công nghệ cao, khu công nghệ thông tin tập trung; ứng dụng công nghệ thông tin cũng được đưa vào danh mục các dự án được áp dụng hình thức PPP. Quy định này khuyến khích nhà đầu tư trong lĩnh vực nghiên cứu và công nghệ cao. Nghị Định 15 cũng quy định rõ, các dự án theo hình thức PPP sẽ được phân loại theo dự án quan trọng quốc gia, các dự án nhóm A, B và C. Nhờ đó mà các dự án nhỏ sẽ được thông qua nhanh chóng hơn.  Theo đó, Dự án nhóm C không phải thực hiện thủ tục cấp giấy chứng nhận đăng ký đầu tư.
  2. Nghị Định 15 quy định việc sử dụng vốn đầu tư của nhà nước tham gia thực hiện dự án sẽ được phân bổ c sẽ được dùng chủ yếuu để hỗ trợ xây dựng công trình phụ trợ, tổ chức bồi thường, giải phóng mặt bằng và tái định cư. Tuy nhiên nghị định không nói rõ giá trị quyền sử dụng đất có được tính trong tổng phí đàu tư hay không.
  3. Một trong những điều kiện để lựa chọn dự án là dự án phải có tổng vốn đầu tư từ 20 tỷ đồng trở lên (trừ dự án O&M và một số dự án đặc thù). Ngoài ra, dự án có khả năng thu hồi vốn từ hoạt động kinh doanh sẽ được ưu tiên lựa chọn.
  4. Về nội dung đề xuất dự án, bên cạnh các nội dung về thông tin dự án, yếu tố kỹ thuật… nội dung đánh giá dự kiến sơ bộ rủi ro trong quá trình thực hiện dự án và phân chia rủi ro giữa cơ quan nhà nước có thẩm quyền và nhà đầu tư cũng cần được đề cập.
  5. Nghị Định 15 cũng quy định về thời điểm ký kết hợp đồng dự án. Theo đó, nhà đầu tư đàm phán và ký tắt hợp đồng dự án trước, sau đó được cấp giấy chứng nhận đăng ký đầu tư. Bước cuối cùng mới là ký kết hợp đồng dự án. Như vậy, các thiệt hại, thay đổi hay phát sinh trước khi ký kết hợp đồng dự án có phát sinh hậu quả pháp lý hay không? Vấn đề này vẫn chưa được trả lời.
  6. Về nội dung hợp đồng dự án, Nghị Định 15 liệt kê các nội dung cần thiết trong một hợp đồng PPP, các tài liệu đính kèm cần thiết. Ngoài ra, Nghị Định 15 có quy định mở để các Bộ, Ngành và UBND cấp tỉnh được phép đề xuất một hình thức hợp đồng khác với các hình thức đã được quy định tại Nghị Định 15 để trình Chính phủ xem xét, quyết định.
  7. Nghị Định 15 cho phép chuyển nhượng quyền và nghĩa vụ theo hợp đồng dự án, hoặc chuyển nhượng một phần hoặc toàn bộ dự án. Điều này mở cửa cơ hội chứng khoán hóa (securitization) cho dự án, giải tỏa một phần lo lắng cho các nhà tài trợ hay ngân hàng đối với vấn đề tài chính dự án, nhất là khi chủ đầu tư không đủ năng lực để tiếp tục thực hiện dự án.
  8. Về pháp luật áp dụng, Nghị Định 15 quy định rõ cho phép các bên ký kết có thể thỏa thuận việc áp dụng pháp luật nước ngoài để điều chỉnh các hợp đồng dự án mà một bên là nhà đầu tư nước ngoài hoặc Các hợp đồng được Chính phủ bảo lãnh nghĩa vụ thực hiện. Đây là thay đổi lớn và cho phép các nhà tư vấn tài chính quốc tế được tham gia sâu rộng vào dự án.
  9. Nghị Định 15 quy định về nghĩa vụ bảo đảm thực hiện hợp đồng dự án, tuy nhiên Nghị định lại đưa vấn đề này cho luật đấu thầu giải quyết. Vấn đề bảo lãnh của Chính phủ không được quy định rõ, mà được giao lại cho Bộ Tài chính và Bộ Tư pháp nghiên cứu.
  10. Đối với doanh nghiệp dự án, sau khi được cấp giấy chứng nhận đăng ký đầu tư, nhà đầu tư thành lập doanh nghiệp để thực hiện dự án phù hợp với mục tiêu, phạm vi hoạt động đã thỏa thuận tại hợp đồng dự án. Việc thành lập doanh nghiệp dự án được thực hiện theo quy định của pháp luật doanh nghiệp.
  11. Nghị Định 15 quy định rõ nghĩa vụ giám sát thực hiện hợp đồng dự án của nhà đầu tư, doanh nghiệp dự án và cơ quan nhà nước có thẩm quyền. Việc phân định trách nhiệm cụ thể này là cần thiết để đảm bảo dự án được giám sát thực hiện một cách cẩn trọng. Về giá, phí hàng hóa, dịch vụ và các khoản thu, Nghị Định 15 tôn trọng thỏa thuận của các bên trong hợp đồng dự án, tạo điều kiện để nhà đầu tư thu hồi vốn và lợi nhuận. Đây là cơ sở quan trọng để nhà đầu tư đàm phán giá với các bên cung cấp hay bên mua hàng của nhà nước nếu có các ràng buộc bất lợi cho nhà đầu tư.
  12. Nghị định 15 quy định rõ thời hạn để quyết toán công trình dự án. Theo đó, trong thời hạn 06 tháng kể từ ngày hoàn thành công trình dự án, nhà đầu tư thực hiện quyết toán vốn đầu tư xây dựng công trình.
  13. Về việc thế chấp tài sản, quyền kinh doanh công trình dự án, Nghị Định 15 quy định rõ Nhà đầu tư, doanh nghiệp dự án được thế chấp tài sản, quyền sử dụng đất và quyền kinh doanh công trình dự án tại bên cho vay theo quy định của pháp luật về đất đai và pháp luật về dân sự, với điều kiện thời hạn thế chấp không quá thời hạn hợp đồng dự án. Tuy nhiên, thời hạn thế chấp có thể vượt quá thời hạn hợp đồng dự án nếu có thỏa thuận tại hợp đồng dự án. Về hình thức thỏa thuận thế chấp, thỏa thuận thế chấp tài sản, quyền kinh doanh công trình dự án phải được lập thành văn bản ký kết giữa bên cho vay và các bên ký kết hợp đồng dự án. Như vậy quyền lợi của bên cho vay đối với dự án sẽ được bảo đảm phần nào.
  14. Về việc sử dụng ngoại tệ trong dự án, Nghị Định 15 quy định nguyên tắc Bảo đảm cân đối ngoại tệ. Theo đó, nhà đầu tư, doanh nghiệp dự án được mua ngoại tệ tại tổ chức tín dụng được phép hoạt động ngoại hối để đáp ứng nhu cầu giao dịch vãng lai, giao dịch vốn và các giao dịch khác hoặc chuyển vốn, lợi nhuận, các khoản thanh lý đầu tư ra nước ngoài theo quy định của pháp luật về quản lý ngoại hối
  15. Về vấn đề giải quyết tranh chấp, Nghị Định 15 phân loại các tranh chấp thành (i) Tranh chấp giữa cơ quan nhà nước có thẩm quyền và nhà đầu tư hoặc doanh nghiệp dự án và tranh chấp giữa doanh nghiệp dự án với các tổ chức kinh tế tham gia thực hiện dự án; (ii) Tranh chấp giữa cơ quan nhà nước có thẩm quyền với nhà đầu tư nước ngoài hoặc doanh nghiệp dự án do nhà đầu tư nước ngoài thành lập và (iii) Tranh chấp giữa doanh nghiệp dự án với tổ chức, cá nhân nước ngoài hoặc với các tổ chức kinh tế Việt Nam và tranh chấp giữa các nhà đầu tư. Theo đó, cơ quan giải quyết tranh chấp tương ứng cho các trường hợp nêu trên là tổ chức trọng tài hoặc tòa án Việt Nam theo quy định của pháp luật Việt Nam; Trọng tài hoặc Tòa án Việt Nam hoặc hội đồng trọng tài do các bên thỏa thuận thành lập và được giải quyết theo quy định của Luật Đầu tư. Tranh chấp được giải quyết bằng trọng tài theo quy định tại hợp đồng dự án và các hợp đồng liên quan là tranh chấp thương mại. Quyết định của trọng tài nước ngoài được công nhận và thi hành theo quy định của pháp luật về công nhận và thi hành quyết định của trọng tài nước ngoài.
  16. Nghị Định 15 quy định trách nhiệm của các Bộ, Ngành liên quan. Trong đó, Bộ Kế hoạch và Đầu tư, bên cạnh các trách nhiệm khác, có trách nhiệm cấp, điều chỉnh, thu hồi giấy chứng nhận đăng ký đầu tư đối với các dự án thuộc thẩm quyền; thẩm định nguồn vốn đầu tư của Nhà nước tham gia thực hiện dự án theo thẩm quyền; tham gia ý kiến về các vấn đề thuộc chức năng, thẩm quyền theo yêu cầu của Bộ, ngành và Ủy ban nhân dân cấp tỉnh; Bộ Tư pháp, bên cạnh các trách nhiệm khác, có trách nhiệm Cấp ý kiến pháp lý đối với hợp đồng dự án, văn bản bảo lãnh của Chính phủ và các văn bản liên quan đến dự án do cơ quan nhà nước ký kết.
  17. Đối với các đồng dự án được ký tắt trước ngày Nghị định này có hiệu lực thi hành không phải đàm phán lại. Như vậy các dự án BT trước đây tạm ngưng không thực hiện nay có thể được tiến hành lại.

Những thay đổi tại Nghị định PPP đem lại nhiều dấu hiệu tích cực cho nhà đầu tư lẫn ngân hàng tài trợ. Có một số vấn đề như bảo lãnh chính phủ, hay cam kết quy định về giá, hay hỗ trợ dòng tiền (take or pay) sẽ còn một số điểm phải làm rõ.  Song việc một loạt các dự án PPP đang tiếp tục khởi động, đặc biệt trong lĩnh vực giao thông vận tải, cũng như việc Vietjetair đặt vấn đề mua lại nhà ga T1 Nội Bài cho thấy đây sẽ là động lực để thúc đẩy phát triển và quản lý tốt các dự án cơ sở hạ tầng.

Thực hiện bởi Vietnam Law Insight (LNT & Partners)

Ghi chú: Bài viết này chỉ nhằm mục dích cung cấp thông tin. Nội dung nó không mang tính tư vấn pháp lý cho bất kì trường hợp cụ thể nào. Để biết thêm thông tin chi tiết, vui lòng truy cập website: Http://LNTpartners.com hoặc liên hệ tác giả: Tiến sĩ Luật Lê Nết, DT : +84909759 699 Email: Net.le@LNTpartners.com

Regulations of Construction Contracts

Decree 37/2015/ND-CP dated 22 April 2015 on detailed regulations of construction contracts (“Decree 37”)

The Government issued Decree 37/2015/ND-CP dated 22 April 2015 on detailed regulations of construction contract (“Decree 37”). Decree 37 replaces Decree 48/2010/ND-CP dated 7 May 2010 on contracts in construction activities (as amended by Decree 207/2013/ND-CP dated 11 December 2013). Decree 37 will take effect on 15 June 2015.

Under Decree 37, there are many substantial changes that have been stipulated, these key changes include:

  • Supplementing some types of contracts in accordance with the nature of these contracts, and the subsequent relationships between parties and the contracts. Accordingly, with respect to their nature, contracts for supplying human resources, work machinery and equipment have been added. Depending on the relationship of the parties to the contracts, Decree 37 stipulates that construction contracts with four main contracts including a main contract, sub-contract, fixed rate contract and foreign construction contract.
  • Stipulating clearly the principles of signing contracts. The most important principle is that at the time of signing, the contractors must meet conditions for practice and performance qualification, as prescribed in the Law on Construction. This principle is aimed at making sure that the contracts are suitable for providing construction services and to limit risks associated with the quality of building construction undertaken by disqualified contractors.
  • Amendments to the rate of advances for construction contracts as follows: With respect to the consultancy contract, rates are divided in two levels, namely 20% of the contract value for a contract valued up to VND 10 billion and 15% of the contract value for a contract valued over VND 10 billion (instead of 25% of the contract value for every contract as stipulated in the previous decree).
  • Decree 37 requires the employers under construction contracts to provide payment guarantee in order to protect the rights and interests of contractors. Accordingly, the employers are responsible for proving their capabilities to perform payment obligations under the signed contract via such forms as approved by the capital arrangement plan, bank or credit organization guarantee and credit supply contract, or loan agreement with financial institutions.

By Vietnam Law Insight.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://LNTpartners.com

New rules ease Public-Private Partnerships (PPP) implementation

The government recently released Decree 15 to provide a comprehensive legal framework for public-private partnership projects, replacing the old regulations. Net Le and Loi Huynh of LNT & Partners took a closer look.

In November 2010, a pilot scheme of public-private partnerships (PPP) was introduced (Decision 71), which was expected to boost PPP projects in Vietnam. As of 2014, there were 38 PPP infrastructure development projects proposed to the government. However, none of them were implemented. From a legal perspective, Decision 71 seems to have failed in providing a realistic framework for the operation of PPP projects. It also confused investors with a dizzying array of government decrees on build-operate-transfer (BOT), build-transfer-operate (BTO), and build-transfer (BT) models, outlined in Decree 108 (November 2009) which provided several amendments. Indeed, most of the infrastructure projects in Vietnam have been carried out in accordance with Decree 108 rather than Decision 71. As such, the government issued Decree 15 on 14 February to finally provide a comprehensive legal framework for PPP projects, replacing Decision 71 and Decree 108. Apart from regulations that remain unchanged, Decree 15 introduces new regulations which may encourage the development of PPPs.

Eligible projects for PPP

The list of the eligible projects for PPP under Decree 15 emphasises the need for the government to develop an integrated infrastructure which has the potential to foster national economic development. Decree 15 describes PPP as an investment arrangement between an authority, investor, and project company to perform, manage, and operate infrastructure and public service projects including:

– Transport infrastructure works and related services;

– Lighting systems; clean water supply systems; drainage systems; waste and waste water collection and treatment systems; social housing; resettlement housing and cemeteries;

– Power plants, transmission lines;

– Health, education, vocational training, culture, sports infrastructure works and related services; offices of state agencies;

– Science and technology, weather forcasting, economic zones, industrial parks, hi-tech zones, information technology parks; the application of information technology;

– Agriculture and rural development infrastructure and services associated with processing and consumption of agricultural products; and

– Other areas as decided by the prime minister.

The government has released Decree 15, intended to clean up sometimes perplexing and contradictory regulations

Financial structure

Excluding operate-manage (OM) projects and projects mentioned above, a PPP project shall have a minimum total investment capital of VND20 billion. Decree 15 allows the investors and the state to allocate financial resources and share the financial risks without a cap, whilst each stakeholder shall be subject to statutory conditions.

Private participation

Private participation shall comprise of the investor’s equity capital and other funding sources which the investor is responsible for raising.

The investor’s equity capital shall be not lower than 15 per cent of the total investment capital. In case the total investment capital is higher than VND1,500 billion ($71 million), the equity capital shall not be lower than 15 per cent for the portion under 1,500 billion Vietnam dong, and for the portion above 1,500 billion Vietnam dong, it shall not be lower than 10 per cent.

Regarding the loan capital, Decree 15 is unclear as to whether the investor may  receive a state guarantee. Previous legislation specifically set out that any loaned capital shall be raised without increasing the burden of public debt. Article 57 of Decree 15 reads that the government may mandate an agency on behalf of the government to guarantee the material supply, product, and service consumption as well as other obligations of the investor, the project company, or other companies participating in the PPP project.

State funding

Before Decree 15, state participation in a PPP projects was capped at 30 per cent under Decision 71, and 49 per cent under Decree 108. These caps had the effect of rendering PPP projects less attractive to investors, as they will have to shoulder a higher risk burden than the state. Decree 15 removes these caps. However, state funding is limited to the following purposes:

– Capital contributions for construction works of projects with business and fee collection from end-users, yet the collection is not sufficient for return on investment and profit;

– Payment for investors providing services in accordance with build-transfer-lease (BTL), build-lease-transfer (BLT), and similar contracts; and

– Support for construction of auxiliary works, site clearance, compensation, and resettlement.

State funding shall include funds from the state budget, central government bonds, local government bonds, official development assistance, and incentive loans from foreign sponsors.

Legal Perspective

Forms of PPP contract

Decree 15 expands on the number of PPP forms available, laying the legal foundation for contracts of build-operate-transfer (BOT); build-transfer-operate (BTO); build-transfer (BT); build-operate-own (BOO); build-transfer-lease (BTL); build-lease-transfer (BLT); and operate-manage (O&M) models. Subject to these forms of contract, the authority that has the power to sign and implement a PPP contract may propose other similar contracts for the review and approval of the prime minister. Previously, Decree 108 only governed BOT, BTO, and BT models, while Decision 71 was silent on the forms of PPP contract.

Governing law

Decree 15 allows parties to choose applicable foreign laws to govern project contracts and contracts guaranteed by the government. Under either scenario, the choice of foreign governing law will not have jurisdiction over Vietnamese regulations on the application of foreign law.

From this perspective, it is possibly the first time that domestic legislation refers to a specific regulation rather than the general term “fundamental principle of Vietnamese laws” which has no definition under the law.

Dispute Resolution

Disputes in a PPP project may be resolved by court or via arbitration subject to agreement by the parties. Decree 15 makes it clear that disputes which are resolved by arbitration in accordance with the project contract and related contracts are commercial disputes. Vietnamese laws only have regulations on commercial arbitration, thus, if the dispute is not commercial, the choice of arbitration would be null and void. Under Decree 15, the resolution schemes are different depending on if the state agency is disputing with a local or a foreign investor.

Protection of lender

Decree 15 provides the lender with the authority to designate a capable organisation to take over all or part of rights and obligations of the investor or the project company in case the investor or the project company fails to perform on its obligations under the PPP project contract or loan agreement. An agreement on such a takeover shall be made between lender and the competent authority or parties of the PPP contract. Decree 15 also allows the investor to assign all or part of its rights and obligations under the PPP project contract to the lender or another investor. In this case, an assignment agreement shall also be made between the assignee and the parties to the PPP project contract.

PPP flow chart

Below is a general flow chart showing the process from initiative to execution of the PPP project contract. It is still a lengthy process for an investor to pursue. Decree 15 allows a conversion from a public project into a PPP project provided that it satisfies the requirements under Decree 15. However, further guidance is expected since it is not yet clear whether such a conversion would require stakeholders to perform all the processes shown below.

This Legal Alert is not a Legal Advice. For more information about this article, please contact the author: Dr. Net Le, Tel: +84909759 699 Email: Net.le@LNTpartners.com

LNT & Partners is a leading full-service independent local law firm based in Vietnam with offices in Ho Chi Minh City, Hanoi, San Francisco and an affiliated presence in Hong Kong. The firm is among Vietnam’s most prominent, representing a wide range of multinational and domestic clients, including Fortune Global 500 companies as well as well-known Vietnamese listed companies on a variety of business and investment matters

By Vietnam Law Insight, LNT & Partners

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://LNTpartners.com

One-size-fits-all contracts may not resolve disputes

LNT’s Thai Binh Tran and Quang Dao Nguyen look at some of the issues raised by the Ministry of Construction’s Circular 03 which insists on a standardised approach to property contracts between individuals and real estate developers.

In apartment sales and purchase transactions, the individual purchaser is often in a weaker position since they often have to accept entering into a standard form contract drafted by a real estate developer. Such contracts generally contain terms favourable to the developer, and may impair the buyer’s interests. This is one of the major causes of disputes arising between developers and individual purchasers.

To address that issue, the Ministry of Construction (MoC) has issued a standard form contract on apartment sales and purchases as a basis for individual purchasers to follow. The guidelines and regulations by the MoC detailing the terms in sale and purchase of apartments are necessary, because they provide clarity and transparency in apartment sale and purchase transactions, as well as protecting the individual’s interests, thereby mitigating disputes between the parties, and facilitating the development of the real estate market in general.

However, recent regulations provided for in Circular 03/2014/TT-BXD (Circular 03) requiring parties to “comply with contents and strictly apply the standard form contract” have caused many difficulties and adverse consequences in practice.

So, what does “non-applying standard form contract” mean?

Prior to Circular 03, the standard form contract for an apartment sale and purchase was prescribed in Circular 01/2009/TT-BXD, later known as Circular 16/2010/TT-BXD. However, these guidelines did not strictly require parties to apply the standard form contract, and also did not provide serious consequences for non-compliance therewith (the invalidity of these contracts). Therefore, in practice, the standard form contract is for reference only.

According to Circular 03, apartment purchase and sale transactions between a developer and an individual purchaser must be in strict accordance with the standard form (issued in conjunction with this Circular). More importantly, a contract signed between the developer and individual purchaser “shall not be recognised and not qualified for issuance of ownership certificate” of ownership to the individual purchaser, if it does not “conform and/or accord with the standard contract”.

The unclear provision of “complying with the standard contract” that real estate developers, when carrying out the registration of sample contract for apartment sale and purchase, are required to amend the sample contract in a way that all words, structure, and order of clauses in the standard contract issued by the MoC must be used and applied.  As such, although the sample contract submitted by the developer is in accordance with principles set forth in the standard contract by the MoC, the registration will still be rejected if the contract has not used the words or the structure of the standard contract.

In our opinion, such interpretation is unreasonable and inflexible, resulting in many problems for both the developers and the individual buyers. The MoC should clarify these issues and if the MoC’s opinion is as interpreted above, then our interpretation results in the legal consequences as discussed below.

Administration of civil transactions

It is clear that an apartment sale and purchase contract between a developer and a individual purchaser must adhere to principles and regulations of the law on the subject matter, however, this does not mean that it is necessary that such a contract need be strictly copied for every sentence, word, or order set forth in the standard contract.

The mandatory use of the wording mentioned above clearly goes against the principle of freedom in entering into an agreement – the key principle of civil transactions. According to this principle, the developer and the individual purchaser have the right to freely agree on the content, and the rights and obligations of each party. Provided that such agreements are not contrary to the laws, it must be recognised by the state. Among various options to address an issue of apartment purchase transactions (such as payment, dispute resolution, etc.), the developer and the individual purchaser may negotiate and agree with the most favourable option. The mandatory use of the standard contract has taken away the freedom in agreements, seriously affecting the interests of both parties. For example, disputes between the developer and the individual purchaser, can be resolved either in a people’s court or in commercial arbitration at the parties’ discretion. However, in a standard form contract, dispute resolution by the court is the only option for parties even though the option of a commercial arbitration may be more appropriate.

Interference in the court’s jurisdiction

According to the Circular 03, the signed contract will be invalid if it is not in compliance with the standard form contract. As such, an agreement (dispute to be resolved by commercial arbitration), despite its full compliance with the law (Law on Commercial Arbitration), may still be invalid if it is not subject to the provision of the standard contract (dispute resolution by the court). However, according to the Civil Code, if the form and content of a contract is in conformity with legal regulations, that contract is valid. This begs the question, is the effectiveness of Circular 03 higher than the Civil Code? Furthermore, this shows that the regulations of the MoC has somewhat interfered in the jurisdiction of the court.

Conclusion

Without a clear explanation from the MoC regarding the requirement of compliance with the standard contract, the parties have been obstructed in their performance, if the aforementioned interpretation is consistent with the opinion of the MoC, those regulations are contrary to the fundamental principles of civil transactions. Therefore, in order to ensure freedom in negotiation, regulations in Circular 03 should only be construed as a requirement for complying with rules and principles of transaction, not necessarily a requirement to comply with every sentence and word of the standard contract.

By Vietnam Law Insight, LNT & Partners

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://LNTpartners.com

“Create” or “import”?

At a recent conference of the Vietnam Chamber of Commerce and Industry (VCCI), a review was made over the practicality of 16 law codes.

When mentioning some of the insufficiencies of the Law on Investment and other laws, Dr. Le Net, LNT & Partners Law Firm, said: “Where will it go if we continue making laws through patchwork and groping around? The wheels have been made – is it necessary to “re-create” something? Do we have enough time to do that?”

Keep being amended

Dr. Le Net’s concern is a common one regarding the quality of law and practices, as well as the current lawmaking methods. It has been said that laws have never been issued as much as in recent years. Each year, dozens of laws and thousands of by-laws are produced, contributing to the adjustment of social relations. Simultaneously, the law has never been continuously modified to the extent as is currently experienced now.

Perhaps the first example to which this can be drawn is the legal system regulating land. The Law on Land has been amended six times (1987, 1993, 1998, 2001, 2003 and 2009), meaning that it takes 3.6 years on average for one modification. After each amendment, millions of people suffer “a cold sweat” due to a change, especially changes related to pink books and red books, which have caused controversy during the years. As expected of the National Assembly, this law is going to be amended and supplemented again!

In relation to foreign investment, in 18 years, 6 issues and amendments of the law were made (1987, 1990, 1992, 1996, 2000 and 2005). The current Law on Investment (2005), which was considered as a “breakthrough innovation” to form the mutual space for domestic and foreign investment enterprises, also faces the pressing proposal for amendments or abolishment. The longevity of the law, according to experts, is only 4-5 years or even lower. For instance, the Law on Complaints and Denunciations was issued in 1998 and amended in 2004, then immediately amended once again in 2005.

Similarly, the Ordinance on Public Employees was produced in 1998, amended in 2000, amended again in 2003 and by 2008, it was replaced by the Law on Cadres and Civil Servants. There are even some cases where the law has just been enacted, but then immediately becomes obsolete and unenforceable because of “encroachments” against other laws. The Law on Intellectual Property (contrary to Vietnam – U.S. Bilateral Agreement on Term of Copyright Protection) and the Law on Housing (contrary to Law on Land regarding housing documents) are just come examples. In order to be implemented, these laws must be amended again.

With by-laws, the situation is more tragic. “A lot of Government decrees or circulars and decisions of ministries have to be modified, replaced only after one or two years, or even several months. We, the lawyers, cannot update them all”, lawyer Nguyen Thanh Tam said.

Acquisition

According to Dr. Le Net, the current manner of making law in our country is like “changing horses in midstream”. We grope around and create laws “in accordance with the Vietnamese circumstances”. However, as mentioned, most of the laws have problems in the implementation. The laws are then amended, “to be carved” through time and “peculiar” final products are finally made.

Experts suppose that the fastest and most cost-effective way to improve the legal system is to absorb the legal achievements of the world. Even in some cases, it is acceptable to “import” a particular law for application. “Previously, Cambodia was laughed at due to their entire application of the U.S. Corporate Law excepting the red seal of the National Assembly of Cambodia. However, not only Cambodia but also Singapore, Malaysia, Japan, Korea did it”, Dr. Le Net demonstrated.

Dr. Nguyen Van Nam stated that the famous Civil Code of Germany (Bürgerliches Gesetzbuch – BGB) has been voluntarily acquired by many Asian countries such as Japan, South Korea and Thailand, because they acknowledge the enormous benefits of this code. “Particularly, Japan has acquired a nearly complete draft of BGB. They just slightly modified it to accommodate its national identity based on saving the nation’s philosophy”, said Mr. Nam. According to Mr. Nam, Vietnam is building its market economy and integration to the world, there is no reason to “create” one that were preceded for hundreds of years on. “Most of the legal issues and problems we are experiencing nowadays have been settled by laws of many countries long time ago”, said Mr. Nam.

In agreement to the comments as above, Dr. Nguyen Quoc Vinh, who used to work at a legislative drafting agency, also warned of a possibility of failure if we only acquire without a thorough understanding about the spirit and roots of the law. “Japan had built its Civil Code on the basis of the French one, and then had to throw it away shortly afterwards. Likewise, during the Asian financial crisis 1997-1998, under pressure from the IMF, Indonesia built a new Law on Bankruptcy with foreign expert consultancy only in a few dozen days. Consequently, this law also fell into “bankruptcy”.

Dr. Vinh said that in legislative activity, Vietnam actually acquires legal documents of the world. However, for various reasons, this acquisition is unsystematic and lacks an obvious philosophy. For instance, the Civil Code is influenced by Soviet law (in connection with the administrative rules in the code), has some details of the French Civil Code and has a bit influence from Japan and Germany. The patchwork causes not only conflict among the laws but also the self-destruction of different provisions in the same law.

According to Mr. Vinh, it cannot be said that Vietnam has no competent and dedicated professionals in making law. However, there are many cases where their drafts could not retain the “soul” of legal thought due to being cut and modified through a number of layers of submission and approval procedures. Vietnam should avoid administrative interference in professional work. Apart from this, taking the experience from Japan, in the formulation of law, Vietnam should change from a passive to active status. That means, Vietnam should take the initiative to invite Vietnamese and foreign experts to be drafters for practice. We should avoid making and amending laws as proposed by foreign donors. Finally, when the law is enacted, it must be enforced, not be regarded as ornaments.

Do not assume that it is “creative”!

Another example of the patchy and halfway acquisition was offered by Dr. Nguyen Van Nam, commenting on the Law on Competition.

For example, the Act Against Unfair Competition of Germany and many European countries makes regulations of unfair competition as follows: “Everyone in business transactions for the purpose of competition that makes unmoral acts may be forced to cease such acts and to indemnify for damages”.

Our Law on Competition also contains similar provisions but with additional conditions that such acts of competition must “cause damage or have the possibility to cause damage”. “We think of this as creativity, but it turned out to encourage acts of unfair competition, since the acts of unfair competition are settled only when the damage is proved. In other words, the acts of unfair competition are allowed if damage has not occurred or has not been determined yet”, said Mr. Nam.

By Vietnam Law Insight, LNT & Partners.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://LNTpartners.com

Levy on houses and lands

Levy on houses and lands should be imposed on speculators

In experts’ opinions, collecting tax on houses and land is not only an economic but also a social issue. When the country’s economy and the citizens’ livelihood have seen little improvement, applying another type of tax may cause negative reactions.

Dr. Tran Du Lich, Deputy Group Leader of HCMC National Assembly Delegation who is also an economic expert, in a talk show regarding “Draft law on house and land tax” held on 19 January at the Southern National Assembly Office, HCMC, asserted that the imposition of tax on houses may not be implemented for the time being, even in 10 more years, since the annual average income of the citizens still remains low at approximately US$1,000. The Government should collect only tax on houses from the business sector to restrict speculation, which has created a “bubble in the real estate market.

Having the same opinion, Dr. Le Net, Founding Partner of LNT & Partners Law Firm, recommended that heavy taxes should be imposed on those who buy and sell houses repeatedly. The closer the period between selling and buying, the higher the tax rate should be. For example, the Government should impose a heavy levy on the first transfer of houses or lands within 1 year (i.e., 50% of the discrepancy between selling and buying prices). The rate will be 30% for the second year’s transaction and will be reduced on a yearly basis.The higher the frequency of house and land trading, the higher the tax rate for this activity

If this succeeds, trading in houses and land in such a “sliding” manner will certainly be decreased. The Government may impose tax on land possession. If a land owner cannot use such land in an effective way, he/she must sell it due to an inability to pay tax imposed on it. If the land owner leases such land, the lessee will pay the relevant tax accordingly.

Ms. Nguyen Thi Tuyet Nhu, Deputy Director of Tan Vu Minh Real Estate Company, said that: levy on houses should not be imposed on those who own only 1 house but on those having 2 or more houses to restrict speculation. Controlling housing areas and valuation for tax calculation is quite complicated. For this reason, it is better to collect taxes on land first, not on houses.

Tax rate should be based on the specific location of each house

According to Dr. Nguyen Thi Thuy, Head of the Department in charge of Law on Finance and Banking of University of Law, Ho Chi Minh City, if a tax on houses is considered a type of tax on property to be collected when the houses are in use, this will be unreasonable. This is because houses for living will depreciate over time and owners will have to spend money on repairing or re-building. To avoid complexities of collecting housing, Ms. Thuy suggested that tax calculation should not be based on housing areas but on particular location of each house.

As for houses in Vietnam in general, especially those in urban areas, the location of a house will decide its value. Therefore, imposing tax on house cannot be “founded on” the house’s size but on the house’s location. For instance, a 100-square meter house on Nguyen Hue Street (District 1, HCMC) may certainly cost a hundred times more compared to one in Binh Chanh District. Moreover, houses in District 1 can make a hundred times more profit than those in Binh Chanh District. For this reason, many experts asserted that the particular location of each house is the main factor to be considered in order for an appropriate tax rate to be applied.

Mr. Trinh Minh Tan, Ho Chi Minh City Bar Association, proposed another solution: tax calculation should be founded on housing size, not on number of houses owned by one person. This is because someone may have only 1 house with an area of up to thousands of square meters while someone may have up to 3 houses with total area of only less than 200 square meters.

In addition, only houses of Levels I and II should be subject to tax, whereas Levels III and IV houses should be entitled to tax exemption (since houses of Levels III and IV have yet been considered standard houses). “Many houses, especially those in urban areas, are used for living and doing business too; therefore, these houses cannot be listed as houses for business because they may be used as a store in the day and a normal house at night,” said Mr. Tan.

By Vietnam Law Insight, LNT & Partners.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://LNTpartners.com