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Apolat Legal’s teams have advised on numerous market-shaping transactions across an array of industries in the energy sector, e-commerce, technology, retails, logistic, real estate,…

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  • Foreign Investment
  • Compliance
  • M&A
  • And more

International Commercial & Trade

  • International Trade
  • Sales & After Sales
  • Distribution
  • And more

Dispute Resolution

  • Mediation & Conciliation
  • Litigation & Enforcement
  • Arbitration
  • And more

Employment

  • International Labor
  • Employee Benefits
  • Day to Day HR Management
  • And more

Intellectual Property

  • Franchising
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  • Copy Right and Patent
  • And more

Real Estate

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  • And more

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At Apolat Legal, diversity, inclusion and equality are a part of how we live our values.

We apply our values to all our activities world-wide. They describe our culture and personality both internally and externally, the way we work and what we stand for.

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NEWS

Advising on investment and establishment of a industrial zone infrastructure development company

APOLAT LEGAL played the role as a Vietnamese legal advisor for the Korean Investor as Client in the progress of applying for the Investment Policy of the Government for the project of industrial park infrastructure development in Quang Ngai Province with the scale more than 245ha and the total investment is more than 54 million USD.

APOLAT LEGAL understands that provide the accuracy and effective consultancy shall protect the rights and benefits of the Investor, on the other hand, build the transparency for the investment market of Vietnam and continues to attract foreign investors to make the investment into Vietnam. Therefore, APOLAT LEGAL has built the plans and provided the advisory, guidance and expertized the documents of Client carefully and effectively in the progress of Investment policy from the Government with all the experienced as well as knowledge. Throughout the performance, with the accurate and swiftly consultancy of APOLAT LEGAL, the Investor has handled many legal issues as well as the policy issues of the State agencies.

Moreover, APOLAT LEGAL represents for Investor in the progress to work with the State agencies to make explanations and respondents the questions which are related to the project for the project approval.

The notable legal issues shall be listed as: The case authorization belongs to the Prime Minister which requires a long time of approval, this could affect the estimation of the Investor by the policy amendment, price amendment.

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Advising on settlement of State properties

APOLAT LEGAL is a trusted company which is chosen to perform legal advisory for an enterprise which has 100% capital from the Municipal Party Committee – the leading organization of the Communist Party of Vietnam in municipality and province city in Vietnam – to perform changes to the enterprise structure, to down-sizing the enterprise, to handle the large debts cannot afford to pay and to prepare the plan of transferring operation rights of the restaurant, hotel chains which belong to the Municipal Party Committee.

With the amount of transferred and rented assets from the Municipal Party Committee for decades and the change of according to the management level, the business efficiency of the enterprise does not develop in the good direction, therefore the Municipal Party Committee desires to handle current assets of the enterprise to pay the debts and to transfer the restaurant, hotel chains to experienced individual/organization to develop and bring revenue to the owner company and has the ability to pay the current debts of the enterprise. Moreover, all current employees of the enterprise shall be transferred to the individual/organization received restaurant, hotel chains.

The notable legal issues in this case shall be listed as: Assets assessing, assets value of the Municipal Party Committee, assets value of the enterprise. This issue must be done with the Auditing and Valuation companies. Long-time of operation, the specialty of the enterprise so the legal system changes from time to time, the study and the choice of applicable law and adjustment law is also a complicated problem.

With years of experienced in the fields of enterprise, labor, civil, APOLAT LEGAL has advised and supported the owner company in the plan and offer many greatest solutions to make sure the benefits of the owner company on finance, time and to make sure the hundreds of employees in the enterprise to receive the same benefits after transferring the project to other individuals/organization.

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Advising on copyright dispute between a famous singer and the Vietnam biggest online music streaming site

APOLAT LEGAL is a company which serviced for legal advisory and prosecution representative to conciliate copyrights and related rights between a famous singer and the largest music streaming site of Vietnam about uploading, streaming songs which are protected by copyrights and related rights without permission from copyrights owner. In pursuant to published information, this case shall be considered as the first dispute between a famous singer and the largest music streaming site of Vietnam which was dominating the music market, and also operating as a social network.

In this case, the key is to determine the formula to calculate the number of the views and how to charge them when the parties do not have any formal agreement. Moreover, the case developed complexly under circumstance of Vietnam still does not have transparent Intellectual Property regulations and close to the international standard about responsibilities of the intermediary organizations on the internet.

The question is “Shall the intermediary organization take responsibilities to a song which is uploaded into the organization’s network by another user?”

As the organization which represents for the plaintiff, all lawyers in APOLAT LEGAL have taken steps to review the case, represent to negotiation, conciliate at the court and achieved certain results. The result of this case shall be considered as the first step of the effort to execute effectively the regulations of Intellectual Property law in Vietnam internet environment.

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ARTICLES

Understanding The Debt Purchase And Sale Between Credit Institutions

Under Circular 09/2015/TT-NHNN dated 17 July 2015 of the State Bank of Vietnam describing debt purchase and describing debt purchase and sale by credit institutions and foreign bank branches (“Circular 09”), debt purchase and sale is “a written agreement on the transfer of a creditor’s right to claim a debt arising from the lending operation or a debt to be paid on a third party’s behalf in the guarantee operation whereby the debt seller transfers the creditor’s ownership of the debt to the debt purchaser and receives a payment from the debt purchaser.”[1]

The Law on Credit Institutions allows the banks or financial institutions to do sale and purchase of debt among the credit institutions, but such debt sale and purchase must be compliant with the State Bank’s regulations.[2]

In term of debts purchase and sale, the relevant parties shall follow the statutory conditions as follows:

Conditions for debts to be purchased and sold[3]

  • Dossier and related documents and records of the debt to be sold and security contract (if any) provided by the debt seller must fully and accurately show the state of the debt in accordance with law;
  • There is no written agreement on prohibition of debt purchase and sale; and
  • The debt is not used to secure the fulfillment of a civil obligation at the time of debt purchase and sale, except the case where the secured party accepts in writing the debt sale.

Conditions for the credit institution to be debt purchaser[4]

  • Being a credit institution or foreign bank branch, which was already approved by the State Bank of Vietnam for debt purchase activity as stated in its establishment and operation license;[5] and
  • Its non-performing loan (i.e. bad debts) ratio is under 3%, except cases of debt purchase under an approved restructuring plan.

General conditions and rules for relevant parties to perform debt purchase and sale[6]

  • Debt purchase and sale must not be in contrary to the contents of credit contracts and guarantee contracts signed by debts sellers, clients and guarantors;
  • Debt purchase and sale shall be agreed by the parties and comply with the Circular 09 and relevant regulations;
  • The relevant parties being credit institutions, branch of foreign banks must promulgate internal regulations on debt purchase and sale (clearly stating the decentralized competence based on the principle of division of responsibilities for appraisal of and decision on debt purchase and sale; debt purchase and sale modes; debt purchase and sale process; debt assessment process; debt auction process for debts auctioned by these institutions or branches themselves, and risk management of debt purchase and sale transactions) before conducting the purchase and sale of debts;
  • Debt purchaser being credit institutions, branch of foreign banks must comply with regulations on assurance of safety for their operations;
  • Debt sellers may not redeem the debts they have sold;
  • In case of selling part of a debt or selling a debt to more than one purchaser, the debt seller and debt purchaser shall agree on proportion, modes, rights and obligations of each party, determination of the value of security assets (if any) for the part of purchased and sold debt and other specific contents of the debt purchase and sale contract in accordance with the laws; and
  • Debts to be sold shall be monitored, accounted and statistically reported in accordance with the laws.

General process and procedures for the parties to perform debt purchase and sale

Step 1: Promulgation of internal regulations on debt purchase and sale

Pursuant to the Circular 09, the parties must promulgate internal regulations on debt purchase and sale before conducting the purchase and sale of debts.[7]

Step 2: Selection of debt purchase and sale mode

The debt seller may select either of the following debt purchase and sale modes as below:[8]

  • Agreement: through direct negotiation between the debt seller and debt purchaser or through a broker; or
  • Auction: a debt seller may hire a professional auction organization to auction debts in accordance with the law on asset auction or organize by itself the debt auction.

Step 3: Establishment of debt purchase and sale council[9]

The debt seller shall establish debt purchase and sale councils in accordance with its charter and internal regulations on debt purchase and sale.

The composition, tasks and powers (including determination of debt purchase and sale price for case of debt purchase and sale under agreement, or reserve price in case of debt auction) shall be stipulated by the debt seller.

Step 4: Assessment and determination of debts[10]

The debt purchase and sale price shall be based on the agreements between the parties pursuant to the book value of the debts and interest that the debtor shall pay in future, classification of debt group, recoverability of the debt and value of the security asset (if any).

Step 5: Negotiation and signing of the debt purchase and sale contract[11]

The parties may negotiate and reach agreements in a debt purchase and sale contract that are not contrary to the Circular 09 and relevant regulations. Such debt purchase and sale contract must have the following principal contents:

  • Signing date of the contract;
  • Names and addresses of the parties to the contract;
  • Names and titles of representatives of the parties to the contract;
  • Names and addresses of the debtor and parties (if any) related to the purchased and sold debt;
  • Details of the purchased and sold debt: loan amount and term, borrowing purpose, book value of the debt by the time of purchase and sale;
  • Measures (if any) to secure the fulfilment of the payment obligation of the debtor regarding the purchased and sold debt;
  • Price of debt sale, payment mode and time;
  • Times, modes and procedures for the transfer of documents on debts, including dossier and documents on security assets for the debt (if any); the time when the debt purchaser takes up the debt seller’s rights and obligations to the debt;
  • Rights and obligations of the debt seller and debt purchaser;
  • Liability of the parties for breaching the contract; and
  • Settlement of arising disputes.

Step 6: Transfer of rights and obligations related to debts[12]

Under the law, the debt purchaser takes up the debt seller’s rights and obligations over the debt at the time stated in the purchase and sale contract. Hence, the debt seller shall transfer to the debt purchaser the rights obligations related to the debt including rights and obligations over debt security measures (if any). The transfer of rights and obligations over debt security measures must comply with the law on secured transactions and relevant regulations. The registration of change of the secured party must comply with the law on secured transactions.

Step 7: Reporting to the State Bank of Vietnam [13]

The debt seller and debt purchaser shall report on their debt purchase and sale transactions in accordance with the State Bank’s regulations on statistical reports.

Legal consequence after the transaction is completed

Under the Circular 09, upon the execution of debt purchase and sale contract, the debt seller shall transfer to the debt purchaser the rights and obligations including rights and obligations over debt security measures (if any) and the debt purchaser shall take up the debt seller’s rights and obligations over the debts at the time of such contract taking effect.[14]

[1] Article 3.1 of Circular 09

[2] Article 95.2 of the Law on Credit Institutions

[3] Article 4 of Circular 09

[4] Article 5.3 of Circular 09

[5] In order to obtain an approval for this debt purchase activity, the credit institution must prepare and apply an application dossier to the State Bank in accordance with Article 6 of Circular 09. Within 40 (forty) days after receiving a complete and valid dossier, the State Bank shall consider and approve debt purchase by the credit institution or foreign bank branch by a decision on modification and supplementation of the latter’s license. This document is an integral part of the license.

[6] Article 5 of Circular 09

[7] Article 23 of Circular 09

[8] Article 10 of Circular 09

[9] Article 11 of Circular 09

[10] Article 12 of Circular 09

[11] Article 13 of Circular 09

[12] Article 14 of Circular 09

[13] Article 22 of Circular 09

[14] Article 14.1 and Article 14.2 of Circular 09

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Rules On The Passing Of Risk Under The CISG: An Overview

Rules on the passing of risk are regulated in articles from 66 to 70 of the CISG. Briefly, article 66 governs the legal consequences of the transfer of risk which states that the buyer has the price-risk once the risk concerning such goods has transferred to him, with an exception of loss or damage caused by ‘an act or omission of the seller’.[1] Meanwhile, the impacts of seller’s fundamental breach of contract on the passing of risk assessment are stipulated in article 70 of the Convention. However, the three main pillars of rules of passing of risk under the CISG are presented in articles 67-69 which specific the moment risk is passed in typical situations in international trade.

Generally, the Convention ties the risk passing to the passing of the possession of goods. This approach thus separates the passing of risk under the CISG from the transfer of property which is the primary theory in the SGA. In terms of the passing of property, it is worth noting that the CISG does not address issues concerning how and when the property of goods is passed. Instead, this issue will be left to the applicable domestic law.[2]

Article 69 CISG is considered the general rule to allocate the risk under the Convention’s approach.[3] Accordingly, with transactions falling outside the meaning of articles 67 and 68, the risk is transferred from the seller to the buyer when the buyer takes delivery of goods. In the case the buyer fails to take the goods over in accordance with the contract, risk is passed at the time contract goods are placed at the buyer’s disposal.[4] What is not mentioned in the later is whether the seller has to send notice to the buyer about the readiness of goods. Nonetheless, it is believed that the Convention does not impose this duty on the seller.[5]

The first specific situation is passing of risk in a contract involving carriage of goods governed by article 67 CISG. The article splits risk during transit differently in two situations. Firstly, where the agreement does not require the goods have to be handed over at an appointed place, the risk passes from the time sold goods are taken over by the first carrier.[6]  Secondly, if a particular place appears as a delivery condition, the seller is released from the risk only when the goods are delivered to the carrier at such a place.[7] However, the passing of risk will not occur until the goods are identified to the sale contract.[8] In both the cases, the role of the carrier is significant. Thus, it is worth noting that the mentioned carrier must be an independent one. That means if the carrier is a seller’s person, the risk still remains with this party.[9] Moreover, splitting the risk based on a carrier also gives raise practical concerns. Indeed, it will be very difficult for parties to determine exactly whether the goods suffer losses and damages before or after they are taken over by the carrier.[10] Importantly, the third sentence of Article 67(1) CISG also rejects the possibility to mistakenly overlap between the transfer of documents and physical delivery of goods. Indeed, the fact that documents controlling the disposition of the goods were retained by the seller does not impact the time of passing of the risk. Instead, the transfer of documents will only determine the issue of payment of price.[11]

The other important situation governed by the CISG is the sale contract concluded at the time the goods have been already in transit. In this case, the risk, in principle, transfers to the buyer at the moment of the conclusion of the sale contract with an exception mentioned in Article 68.[12] That means the passing of risk in afloat sale is retroactive. In this case, it is understandable that the risk cannot pass to the buyer at the time of taking delivery of the goods by the first carrier like Article 67 since the buyer is only identified during the carriage of goods. Although the identification of goods is not mentioned in Article 68, it is argued that, for passing risk to the buyer, the goods must be clearly identified.[13] One may argue that rules of risk passing concerning goods sold during transit, especially its retrospective effect, are ambitious. The reason is that its retroactive allocation of risk is not clearly defined in some circumstances. For example, Bridge indicates that Article 68 CISG keeps silent about the cases where the agreed trade term stipulates the different moment of passing of risk, such as at the time goods arrive at their destination.[14]

However, the aforementioned exception is that the risk will be retroactively distributed to the buyer from the moment of handing over goods to the first carrier where ‘the circumstances so indicate’.[15] In other words, the buyer will bear all losses of contract goods even prior to the conclusion of the sale contract. The problem is the ambiguous meaning of ‘circumstances’ the article refers to. It seems that the ‘circumstances’ are not equal to ‘trade term’ because of the choice of language of this article.[16] Instead, this term should be construed  as indicating the implied intentions of contracting parties.[17] The common situation of this case is the transfer of insurance from the seller to the buyer by an endorsement.[18] The transfer makes the buyer the subject who is entitled to claim under the insurance policy. Thus, it obviously expresses an intention to pass the risk of the voyage.[19]

Notably, even in the case of having fundamental breach of contract committed by the seller, the passing of risk is still not affected.[20] It should be noted that the fundamental breaches within the meaning of the Article 70 must not be in themselves the reasons of losses or damages due to the exclusion of an act or omission of the seller as stated in Article 66 CISG. The fundamental breach in this article may be, for example, the delivery of non-conforming goods.

[1] United Nations Convention on Contracts for the International Sale of Goods (adopted 11 April 1980, entered into force 1 January 1988) 1489 U.N.T.S. 3 (CISG) art 66.

[2] Hayward, Zeller and Andersen (n 3) 619.

[3] Alazemi (n 4) 8.

[4] CISG, art 69.1.

[5] Andersen, Schroeter and Kritzer (n 7) 77–105.

[6] CISG, art 67.1.

[7] CISG, art 67.1.

[8] CISG, art 67.2.

[9] Manuel Gustin, ‘Passing of Risk and Impossibility of Performance under the CISG’ (2001) 3 International Business Law Journal 379, 382.

[10] ibid 383.

[11] Harold J Berman and Monica Ladd, ‘Risk of Loss or Damage in Documentary Transactions under the Convention on the International Sale of Goods’ (1988) 21 Cornell International Law Journal 423, 328–329.

[12] CISG, art 68.

[13] Gustin (n 21) 385.

[14] Hayward, Zeller and Andersen (n 3) 637.

[15] CISG, art 68.

[16] Berman and Ladd (n 23) 430.

[17] Peter Schlechtriem and Petra Butler, UN Law on International Sales (Springer Berlin Heidelberg 2009) 169.

[18] ibid.

[19] Valioti (n 10) 16.

[20] CISG, art 70.

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The Difference Of The Promotion Of Buy 1 Get 1 And Discount 50% And The Important Inadequacies For Promotion Activities

Promotion is almost an integral part of the marketing activities of any retail store, this is a form of marketing that helps increase sales without spending a lot of advertising or marketing costs.

However, the promotion is not only implementing a discount program or giving products, but also need to consider the promotion program that is suitable for businesses, bringing the highest economic benefits and especially the implementation of promotion programs must comply with the provisions of law.

Under Article 88 of Commercial Law 2005, promotion means activities of commercial promotion conducted by traders to promote the purchase and sale of goods or the provision of services by offering certain benefits to customers.

Buy 01 get 01 or discount 50% of product price are popular promotions and are selected to increase sales without much effort to advertise products. These two types of promotions are at first glance the same, but upon closer analysis, the two types of promotions are differ in both economic benefits and legal.

Regarding economic benefits

Both of the above promotions bring economic benefits to both consumers and traders who carry out the promotion, however, for the form of buy 1 get 1 free, the trader when applying this form want to sale more products with “the more you buy, the higher the benefits”. On the other hand, traders when applying the 50% discount promotion will attract more consumers, because consumers’ buying needs are limited, they only want to buy what is needed but get a discount. And 50% discount will help them buy less with constant quality and get 50% discount.

Regarding legal aspects

According to the provisions of Decree 81/2018 / ND-CP on trade promotion activities, there are 08 forms of promotion currently applied.

  • Regarding the form of promotion

The form of buy 1 get 1 is defined as a form of promotion which gifting of goods or services, detail, Gifting of goods or services with accompanied goods sale and purchase or service provision;

50% discount is a form of promotion, sale of goods or provision of services at discounted prices during the announced period of sales promotion.

  • Compliance with legal regulations

Under Clause 1 and Clause 2 Article 6 of Decree 81/2018 / ND-CP stipulating the maximum limit on the value of goods and services used for sales promotion as follows:

“1. The promotional value of a unit of promoted product must not exceed 50% of the price of such promoted product unit before the promotion, except for promotion in the forms prescribed in Clause 8 in Article 92 of the Commercial Law and Article 8, Clause 2 in Article 9, Article 12, 13 and 14 of this Decree.

2. Total value of promotional product of a sales promotion program conducted by traders must not exceed 50% of total value of promoted product, except for forms of promotion prescribed in Clause 8 in Article 92 of the Commercial Law, Article 8 and Clause 2 in Article 9 of this Decree.”

Therefore, the total value of goods and services used for sales promotion that a trader implements in a promotion program must not exceed 50% of the total value of goods and services being promoted.

Accordingly, when implementing the promotion form of buy 1 get 1 free, the total value of goods and services used for sales promotion is 100%.

According to the above regulations, it is not possible to apply the promotion of buy 1 get 1 free for products because it exceeds the limit on the value of goods and services used for sales promotion.

In contrast, the form of 50% discount fully meets the regulations on value limits of goods and services used for sales promotion under Article 6 of Decree 81/2018 / ND-CP, when implementing 50% discount, traders who conduct promotions must notify the Department of Industry and Trade in accordance with Article 17 of this Decree.

Some inadequacies in the management of promotional activities

Promotion activities have positively impacted on consumers’ psychology and tastes, stimulated consumption, and boosted trade and service revenue. However, besides the benefits, there are still many difficulties and difficulties for management. According to the provisions of law, promotion activities must meet the requirements as prescribed by law, for example: Traders must notify in writing the promotion program to the Department of Industry and Trade where the promotion is organized within 7 days before the promotion. The form of chance promotion must be registered at the authorized state agency. With the form of discount, the maximum discount rate of the promoted goods or services does not exceed 50% of the previous sale price. The law also stipulates the quality assurance of goods for sales promotion. But in fact some traders have taken advantage of promotions to bring fake goods, poor quality goods, nearly expired goods into consumption; raising the original price to high, then offering discounted promotions, resulting in actual promotions that are not beneficial to consumers but only a way for traders to increase sales.

In order to ensure that promotional activities are strictly complied with the provisions of law, in addition to strengthening the propagation and publicity of promotion units and controlling promotion activities, the management agencies need to strictly handle with the violations of promotional activities. Besides, for customers, it is necessary to find out carefully about the promotion program, ask the salesperson to strictly implement the promotional content as committed, notify the Standards Association and protect the rights of consumers. When seeing signs of violations, promotional fraud; request settlement and compensation for damage upon detecting that their rights have been violated.

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