Abstract: the guarantee of foreign elements is a measure to ensure the performance of a common obligation in civil transactions in Vietnam and around the world. It is a common practice for a foreign organization to perform its obligations on behalf of an enterprise operating in Vietnam to borrow capital in Vietnam.
Keywords: the guarantee of foreign elements,; receive guarantees ; guarantees risk; Review the terms of the guarantee
Guarantee scope
Guarantee means that the Guarantor will perform an obligation on behalf of the Debtor in case the Debtor fails to perform or improperly perform the obligation within the agreement period. The parties may agree that only when the Debtor is unable to perform the guaranteed obligation do the Guarantor perform an obligation on behalf of the Debtor. The Guarantor will commit to guarantee the performance of a part or all arising obligations of the Debtor. The obligations include the repayment of principal, interest, fines, compensation and Parties may agree on collateral to secure the guarantee obligation.
Applicable law
The international agreements to which the Socialist Republic of Vietnam is a signatory or Vietnamese law shall be applied to civil relations involving foreign elements according to Article 664 Civil Code. In case the international agreements to which the Socialist Republic of Vietnam is a signatory or a Vietnamese law stipulates that the Parties have the right to select applied law, the law applied to civil relations involving foreign elements will be determined by the Parties’ selection.
The choice of Vietnamese law to govern civil relations involving foreign elements arising in Vietnam is a resonable choice.
Dispute resolution
People’s Courts in Vietnam have jurisdiction to settle civil relations involving foreign elements in the following cases:
- The establishment, change or termination of such relationship occurs in Vietnam;
- The object of that relationship is property in the territory of Vietnam or the work performed in the territory of Vietnam.
- A civil relationship case in which the establishment, change, or termination of such relationship occurs outside the Vietnamese territory but related to the rights and obligations of Vietnamese agencies, organizations and individuals;
- A civil relationship case in which the establishment, change, or termination of such relationship occurs outside the Vietnamese territory but related to agencies, organizations and individuals having headquaters and residence in Vietnam.
The choice of jurisdiction as the Vietnamese Court is considered reasonable when resolving civil issues arising in Vietnam.
Civil Judgment Enforcement
If disputes arising between the Parties of the Written Guarantee are impossible to be negotiated and conciliated, they will be settled by the Court or the competent authorities through a valid judgment or a decision.
The Civil Judgment Enforcement Agencies of provinces are competent to execute the judgment or decision related to civil relations involving foreign elements when the Obligee is on abroad (reside, have assets abroad or have headquarters abroad). The civil judgments enforcement will be entrusted to abroad by the Civil Judgment Enforcement Agencies of provinces. Judicial entrustment means to serve civil judgment enforcement decision to the Obligee or determine judgment enforcement condition of the Obilgee according to the request of the Obligor or Judgment Enforcement Agencies.
Judicial entrustment procedure will be governed by legal assistance Law and the international agreements to which the Socialist Republic of Vietnam is a signatory. On the basic of judicial entrustment results, the competent Civil Judgment Enforcement Agencies of provinces shall settle as follows:
- The Civil Judgment Enforcement Agencies shall execute the judgment or a decision according to legal provisions if they receive entrustment results as their request withing 06 months from the date of document delivery.
- The Civil Judgment Enforcement Agencies will perform the judicial entrustment for the second time in case the entrustmen results do not meet their requirements. If the second time of the entrustmen results still fail to satisfy their requirements, the Civil Judgment Enforcement Agencies shall announce entrustmen documents and other related documents in mass media under Article 43 of Law on Enforcement of Civil Judgments.
However, in case the judgment is not voluntarily executed and the assets are not available in Vietnam, the judgment enforcement is difficult to carry out in practice and may cost a fortune. Verification of judgment enforcement or coercion of assets for judgment enforcement may be governed by the laws of the host country causing difficulties for organizations in Vietnam.
Writer’s opinion
The acceptance of guarantee from abroad involves a lot of risks to the Lender since it is hard to determine the fanancial ability, legal capacity, collateral of the Guarantor, therefore, the debt collection is quite difficult to realize. The Lender should consider carefully during the performance of transaction.
Lawyer. Pham TQ. Trang
