Interpretations by the Supreme People’s Court on Legal Issues in Vietnam
On April 24, 2023, the Judicial Council of the Supreme People’s Court (SPC) held an online conference to address certain issues arising in the adjudication work of the courts. Circular No. 196/TANDTC-PC, issued by the SCJP on October 3, 2023 (the Circular), records the outcomes of the online conference held in April. This Circular primarily consists of clarifications and interpretations by the SPC regarding current legal provisions across various areas of law, including criminal, civil, commercial, and administrative law. Although these clarifications and interpretations are not binding, they constitute an important source of legal interpretation for the court system to rely on.
In this article, we will discuss some of the clarifications from the Circular that we find interesting or noteworthy:
1. The subject of the crime “Intentionally disclosing false information or concealing information in securities activities” (Article 209 of the 2015 Criminal Code) is an individual or a commercial entity responsible for disclosing securities-related information, rather than the parties involved in securities trading transactions.
Our commentary: The Supreme People’s Court’s clarification is unclear because, under securities regulations, parties involved in securities transactions are sometimes required to disclose information regarding such transactions (e.g., the sale or purchase of shares by a major shareholder or an insider). Therefore, it appears that this offense applies only to those who violate the legal obligation to disclose information under securities laws, and does not apply to those who fail to disclose information pursuant to a contractual obligation.
2. In cases where one party to a commercial dispute is a limited liability company or a joint-stock company with multiple legal representatives, but the company’s Articles of Association do not specify the responsibilities and authorities of each legal representative and there is no power of attorney or agreement regarding the company’s representative in that dispute, the court must rely on Article 12.2 of the 2020 Enterprise Law to determine that all legal representatives of the enterprise are authorized to participate in the litigation process during the resolution of the case.
Our commentary: Although the wording in the Circular remains somewhat vague, since the Judicial Council of the Supreme People’s Court relied on Article 12.2 of the 2020 Enterprise Law, this interpretation should be understood to mean that any legal representative of the enterprise has full authority to represent that enterprise during the litigation process.
3. In cases where the disputing parties do not request the court to declare their agreement invalid, (1) if the court finds that the agreement complies with legal provisions, the court must recognize the validity of that agreement, (2) if the court finds that the agreement violates the validity requirements of a contract under the law, the court must declare the agreement invalid, regardless of whether the parties request it or not. (Section III.7).
Our Comment: The Judicial Council of the Supreme People’s Court does not refer to any specific provisions of the law regarding “[violation] of the conditions for the validity of a contract under the law.” Therefore, we believe this should include (i) Article 117 (Conditions for the Validity of Civil Transactions) and Article 122 (Invalid Civil Transactions) of the 2015 Civil Code, as these two provisions appear to fully align with the description, and (ii) other cases with similar legal effect, such as Article 123 (Invalid Civil Transactions Due to Violation of Legal Prohibitions or Violation of Social Morals) of the 2015 Civil Code.
On the other hand, it remains unclear whether an agreement that is void for reasons other than “violation of the statutory conditions for the validity of a contract” (for example, the case under Article 408 (Contracts Void Due to an Impossible Subject Matter) of the 2015 Civil Code) can be declared void by the court even if the parties to the dispute do not request the court to declare it void.
4.In cases where the right to use agricultural land serves as collateral in a mortgage contract and the land use period has expired during the term of the aforementioned mortgage contract, the mortgage contract is terminated pursuant to Article 422.5 of the 2015 Civil Code (termination of an unenforceable contract due to the subject matter no longer existing) if the right to use the land is not extended
Our Comment: Since the mortgagor may decide whether to request the competent authority to extend the land use right, the mortgage contract should be drafted to avoid the risk that the mortgagor intentionally allows the land use right to expire during the term of the mortgage contract in order to escape the mortgage contract.
