22/02/2024 15:54

Vietnam: The Supreme People's Court's responses to issues relating to adjudicating commercial and business cases

Vietnam: The Supreme People's Court's responses to issues relating to adjudicating commercial and business cases

My sister took out a loan with a mortgage on land use rights with the Bank, then a third party built a new house on the land. When my sister did not pay her debt on time, the bank sued her. Thus, how will the house be handled? “Van Anh-Ha Giang, Vietnam”

Hello. Lawnet would like to answer your questions as follows:

On December 27, 2022, the Supreme People's Court issued Official Dispatch No. 206/TANDTC-PC 2022, announcing the results of an online Q&A on certain issues in the trial work.

In this letter, the Supreme People's Court of Vietnam addressed 05 issues in the trial of commercial cases, specifically:

Issue 1: In a commercial case, after the Court has accepted the case, the person who pledged the property (the person with relevant rights and obligations) passes away. The plaintiff and the Court are unable to determine the residence of the inheritor and the litigation rights and obligations of the person with relevant rights and obligations. The Court, based on Article 214(1) of the Civil Procedure Code 2015, temporarily suspends the case. In such a case where the residence of the inheritor and the litigation rights and obligations mentioned above cannot be determined, how does the Court handle it?

Answer:

According to Article 74(1) of the Civil Procedure Code 2015 regarding the inheritance of rights and litigation obligations, if the litigant is an individual involved in the litigation and passes away while their property rights and obligations are inherited, the inheritor of that person shall participate in the litigation.

In cases where the plaintiff and the Court cannot determine the residence of the inheritor and the litigation rights and obligations of the person with relevant rights and obligations, the Court shall apply Article 214(1) of the Civil Procedure Code 2015 to temporarily suspend the case. At the same time, the Court shall instruct the plaintiff to request the Court to search for the absent person at their place of residence (as regulated in Chapter XXV of the Civil Procedure Code 2015) or request the Court to declare a missing person (as regulated in Chapter XXVI of the Civil Procedure Code 2015) regarding the inheritor's litigation rights and obligations. After obtaining the results of the search for the absent person at their place of residence or issuing a decision declaring a missing person regarding the inheritor's litigation rights and obligations, the Court shall continue to handle the case according to general procedures.

Issue 2: In a dispute over a credit contract, with the bank as the plaintiff, the Court must examine the legality of the collateral contract that the bank has appraised prior to granting the loan, as a basis for resolving the case. In cases where the bank has appraised the collateral but a third party is currently using the collateral (using the land or living in a house on the land), should the Court require these individuals to participate in the litigation as persons with relevant rights and obligations?

Answer:

According to Article 68(4) of the Civil Procedure Code 2015:

"4. Persons with relevant rights and obligations in a civil case are those who, although not initiating or being sued, their rights and obligations are related to the resolution of the civil case, and therefore they can propose themselves or be proposed by other litigants and accepted by the Court to participate in the litigation as persons with relevant rights and obligations.

In cases where the resolution of a civil case is related to someone's rights and obligations but no one proposes their participation in the litigation as persons with relevant rights and obligations, the Court must bring them into the litigation as persons with relevant rights and obligations."

In this case, the Court must consider whether the resolution of the case is related to the rights and obligations of this third party. If it is related to their rights and obligations, the Court must include them in the litigation as persons with relevant rights and obligations.

Issue 3: In a dispute over a credit contract, the borrower used their own land and house on the land as collateral to secure the repayment obligation under the credit contract. Afterwards, a third party demolished the old house to build a new one on the land. The third party knew that the land and the old house were used as collateral for the bank but did not inform the bank, and the bank was also unaware of the third party's construction of a new house on the land. The borrower failed to repay the debt on time and was sued by the bank. When resolving the dispute, does the Court need to assess the value of the new house generated on the land, and how should it handle this newly generated asset?

Answer:

The new house built by the third party on the land is an asset that arose after the borrower pledged the land use rights to the bank under the collateral contract signed between the borrower and the bank. Therefore, when resolving the case, the Court must include the third party in the litigation as a person with relevant rights and obligations. The Court must rely on the agreements of the parties in the collateral contract and the requests of the litigants to determine whether to assess the value of this new house. If the assessment of this asset is necessary and the result of the assessment has practical value in the process of resolving the case, the Court must proceed with the assessment of this asset.

If the borrowing party violates the obligation to repay the debt, according to the request of the bank, the court will declare the seizure of assets, which includes the right to use land and assets on the land to fulfill the debt repayment obligation of the borrower. During the enforcement process, a third party has the priority right to receive the transfer of land use rights and purchase assets attached to the land if desired. In the case that the third party does not receive the transfer of land use rights and does not purchase assets attached to the land, they will be compensated for the value of their assets on the land according to the provisions of the law.

Issue 4: According to the provisions of the Civil Procedure Code 2015, the parties have the right to agree to invite an independent valuation organization. After the valuation, the parties will rely on the valuation certificate issued by the valuation organization to resolve the dispute. However, if only one of the parties agrees to invite a valuation organization and the other party does not agree, how is this case handled?

Answer: Clause 2, Article 104 of the Civil Procedure Code 2015 stipulates:

"2. The parties have the right to agree on the selection of an asset valuation organization to conduct the valuation of assets and provide the valuation results to the court.

The valuation of assets shall be conducted in accordance with the provisions of the law on asset valuation."

According to the above regulations, the parties in the case have the right to agree on the selection of an asset valuation organization to conduct the valuation of assets and provide the valuation results to the court to resolve the dispute. The valuation of assets shall be conducted in accordance with the provisions of the law on asset valuation. However, in the case where only one of the parties agrees to invite an asset valuation organization to conduct the valuation of assets and the other parties do not agree, it means that the parties cannot agree on the selection of an asset valuation organization to conduct the valuation of assets. Therefore, the court must make a decision on the valuation of assets and establish a valuation council according to the provisions in point b, clause 3, Article 104 of the Civil Procedure Code 2015 as a basis for resolving the case.

Issue 5: When resolving disputes on credit contracts between the plaintiff, who is a bank, and the defendant, who is an individual business household, with the household head being over 60 years old, the individual business household borrowed money for business activities with profit purposes. Does the person over 60 years old in this case qualify for a fee exemption according to Resolution No. 326/2016/UBTVQH14 dated December 30, 2016, of the National Assembly Standing Committee?

Answer: According to clause 1, Article 79 of Decree No. 01/2021/NĐ-CP dated January 4, 2021: "1. An individual or household members register and establish a business household and take full responsibility for the business activities of the household with their entire assets. In the event that household members register a business household, they authorize one member to represent the business household. The individual who registers a business household, the person authorized by household members to represent the business household, is the household head of the business household." According to clause 2, Article 81 of Decree No. 01/2021/NĐ-CP dated January 4, 2021, the household head represents the business household as the requesting party in civil proceedings, the plaintiff, the defendant, the person with rights and obligations related to the arbitration, and the Court.

In this case, the household head is only representing the business household participating in the litigation at the Court, so the business household is the subject that must pay the fees, not the household head. Therefore, if the household head is over 60 years old, they are not eligible for a fee exemption according to the provisions in point d, clause 1, Article 12 of Resolution No. 326/2016/UBTVQH14 dated December 30, 2016, of the National Assembly Standing Committee.

Best regards!

Nhu Y
93

Key word: issue | commercial cases | Vietnam |

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