International Commercial & Trade

Sanctions, international trade, and investment compliance rules can result in the imposition of onerous restrictions on businesses. Violations can lead to substantial risks, including criminal liability, fines, penalties, loss of business, reputational harm, and a variety of associated costs which can be difficult to quantify.

Our lawyers help clients overcome these challenges and successfully compete in the world’s developed and emerging markets. We advise major industrial, technology, consumer products, manufacturing, distributing and selling their products and services in Vietnam. We also help clients select, monitor and manage their relationships with the third-party suppliers, manufacturers, distributors and sales agents in their supply chains.

Well-versed in regulatory and commercial law, we advise companies on compliance issues such as trade sanctions, as well as commercial contracts, product labelling requirements and sales promotion. No matter the issue, we focus on simplifying complex trade requirements so our clients can focus on growing their businesses.

We provide the full range of support to clients including:

  • assessing potential risks associated with particular contracts, relationships or proposed business ventures, including in relation to sanctions and foreign direct investment; 
  • advising on mergers & acquisitions, on dealings with agents, distributors and other third parties. This includes conducting due diligence, drafting and negotiating appropriate contractual protections, and setting in place operational, compliance. 
  • drafting compliance policies and assisting clients with the implementation of these policies
  • providing sanctions compliance training to senior management, boards of directors, employees and agents
  • assisting clients faced with regulatory investigations or prosecutions concerning sanctions and other regulatory breaches, including approaching authorities and negotiating settlements
  • tracking regulatory developments 

KEY CONTACT

Dinh Quang Long

Managing Partner

Pham Hong Manh

Senior Partner

RELATED ARTICLES

Apolat Legal_Legal retainer service

Business activities of enterprises are always dependent on and regulated by relevant laws. For effective operation, enterprises need to well control legal risks arising from their operations. Large enterprises tend to build a legal team with good lawyers to help them apply for permits, provide legal advice and resolve labour disputes during their operation.

However, not all businesses have the financial resources to build their own legal department. For businesses that do not have their own legal team, legal retainer service of separate law firms will be the smart choice.

Understanding this issue, Apolat Legal offers businesses a comprehensive legal consulting service at a reasonable fee. Each business choosing the legal retainer service of Apolat Legal will be supported by a consistent team during the time of using service. By this way, Apolat Legal can clearly understand the clients and help the clients save time and avoid providing duplicated information. In addition, businesses only have to pay a fixed monthly fee to receive helpful advice from Apolat Legal for all day-to-day legal needs of business.

Legal retainer service of Apolat Legal includes but not limited to the followings works:

  • Answering, consulting on provisions, and policies of law and giving legal solutions for each specific matter according to the Client’s requirements in multiple practice areas such as investment, construction, real estate, bidding, enterprise administration, banking, security, insurance, commerce, labor, sales and other areas relating to the Client’s business operation (excluding financial and tax advice).
  • Examining, reviewing and confirming the legality of documentations which the Client have drafted or implemented in respect of business operation, giving legal advice for such documentations as required by the Client.
  • Supporting the Client in preparation of all documentation for contract negotiations or parleys (if requires).
  • Supporting the Client in drafting documentations relating to business transactions between the Client and any third party.
  • Consulting with the Client about business discussions, negotiations, parleys, claims, disputes or lawsuits with any third party or any competent State agency relating to the Client’s business operation. (Scope of consultancy excludes representing for the Client in implementation of specific matters or of claims at competent State agencies or of litigation procedures at Court or Arbitration).
  • Consulting with the Client about general solutions relating to each specific claim, dispute or lawsuit.
  • In case any Client’s partner needs our legal support, then, as the Client’s request or that of such partner, we shall consider whether providing our legal services for such partner or not; and if we choose providing, we shall be committed to not causing any damage to the Client or any conflict of rights and legal interests between the Client and such partner.
  • Supporting and consulting the Client on drafting the Charter, Internal Working Regulation, regulations relating to enterprise organization, management and administration and other essential documents during Client’s business operation.

By professional services, thoroughness and experiences in various legal fields, Apolat Legal is the trusted partner of all businesses.

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Condotel under the view of Vietnamese law

Besides the rapid development of the economy, the tourism and the outstanding features on geography and cultural conditions, Vietnam is the famous, familiar tourism destination for tourists all over the world. The rapid increase in the number of tourists to Viet Nam has significantly impacted on the resorting property demand in Vietnam during the last time. According to the report of the Ministry of Construction on the home and real estate market in Vietnam, until the fourth quarter of 2020, there is one new project with 3,300 granted condotels; 93 projects with 19,128 condotels and 6,759 tourist villas which are being constructed; 18 projects with 62 completed condotels and 370 finished tourist villas. Although the increasing amount of condotels, the law of Vietnam still has not had sufficient legal basis for regulating the business, management of this type of apartment yet, which leads to many difficulties in practices. 

1. Definition: 

Condotel, also called as condotel or hotel apartment, is the name abbreviated by two words condominimum (apartment) and hotel (hotel). If this type is called condotel, it is because it can be used as both hotel and home. Condotel is considered to be a type of hotel but is constructed as an apartment with dining room, kitchen, bedroom, bathroom, living room,…The owner of the condotel is entitled to lease, sell or use it as an apartment. Almost all condotel projects are located at tourist cities, having beaches such as Da Nang, Thanh Hoa, Ba Ria –Vung Tau,… and are controlled and used as hotel type.  

The current market has three primary types of condotel, including: (i) The profit commitment model: in this model, the investor commits a proportional gain account for the first 5 – 10 years and after the commitment term, the profit shall be separated based on real business gains on renting apartments; (ii) Vacation ownership Model: Towards this model, clients do not buy the apartment from the owner, they buy from the international system. After purchasing the vacation from an investor, clients have rights to relax at projects, tourism site of this investor in the world, or make a profit from transferring the holiday; and (iii) Non-profit commitment model: With this model, clients can be free to exploit, use their flat for living, business or consign to the investor and receive gain in accordance with the apartment’s actual business profit.

2. The regulation of Vietnamese law on condotel:

At present, despite the fact that condotels are promoted they are swiftly profitable, the quantity of unsold condotels is up to 18,000 apartments. Investors are afraid of this type of property because condotels have not been prescribed particularly in Vietnam’s legal documents. The absence of the legal framework for adjustment contains much risk for the investors in transactions, transferring this apartment type. 

Realizing this factual situation, on February 12th, 2020, The Ministry of Natural Resources and Environment promulgated the Dispatch No. 703/BTNMT-TCQLDD (hereinafter referred to as “Dispatch 703”) on guiding the land use regime and certification the non-residential construction ownership such as condotels and tourist villas. The Dispatch 703 specifies resort tourism projects using land for business, service activities are classified as commercial, service land. Organizations renting land to use for trade, service purposes shall be considered, determined by the Government based on investment projects or application for renting land with the leasing term is not exceeds 50, and 70 years in exceptional cases; when the term for leasing expires, they shall be considered to renew if needing. At the same time, Dispatch 703 also mentioned the issuance of the Certificate (red book) for qualified condotels, resort villas construction projects for transferring, and the order, procedure, dossier to issue the Certificate are implemented under the law on land. However, many comments show that Dispatch 703’s content is not new and do not resolve problems concerning condotels, particularly, according to Mr. Mai Van Phan, Deputy Director General of the General Department of Land Administration, said that: “Documents of the General Department is guidance for localities based on available regulations in the law” and sent documents: “are only guiding documents, not legislative documents” .

In practices, the Real Estate Association of Ho Chi Minh City (hereinafter referred to as “HoREA”) still has three noticeable difficulties on condotel that are not settled by Dispatch 703, specifically:

  • Firstly, there have not been specific provisions on operation, management regime of condotel when this type project is put into the exploitation.
  • Secondly, there have not been particular regulations guiding to determine the common ownership part, the separate ownership, the general land use right to serve as the basis to issue the pink book to condotel apartments.
  • Lastly, problems on determination maintenance liability, maintaining charges, management, use maintaining fees for the common ownership part in condotel projects are not still prescribed. 

Thus, the most noticeable and urgent issue is the requirement to have legal regulations to solve these above difficulties, contribute to creating conditions of the issuance of pink books to condotel apartments and relieve mind for investors intending to invest in this type of apartment.

If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.

This article is for general information only and is not a substitute for legal advice.

 

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Counterfeit goods: an endless war

1. The reality of counterfeit goods in Viet Nam

As many other developing countries, Viet Nam has been struggling to combat counterfeit goods. It is undeniable that there is a sharp development in the awareness of consumers and handling capability of authorities in relation to fake products. According to the accumulated statistics in the first nine months of 2020 from the National Steering Committee 389, 138,374 cases in relation to counterfeit goods were detected and handled by market surveillance forces across the country (decreasing 7.5% in comparison with that of 2019).

However, since counterfeiting has been ingrained in and in every corner of the market, the war against fake products seems to be endless. The development of e-commerce has also caused counterfeit goods to spread more quickly and uncontrollably. The ICC has estimated that the value of counterfeit goods all over the world will cross over 2 billion USD in the future, equivalent to 3% of global GDP. Viet Nam, as a lucrative market for counterfeiters, will definitely be named in the list.

Among the sectors, cosmetics and pharmaceuticals are two of the sectors that usually have the highest quantity and volume of counterfeit goods on the market. More remarkable, these are the areas that directly affect human health. In fact, many consumers have suffered serious financial harm, financial harm, and even death from the use of counterfeit cosmetics and pharmaceuticals.

2. Detecting counterfeit goods 

Pursuant to prevailing laws, there are three types of counterfeiting goods:

(i) The first type: Goods counterfeit in terms of value or utility or having quality criteria or technical properties that make up the main use of the goods fails to meet the requirements (below 70%). 

(ii) The second type: Goods having labels or packages written false information to deceive consumers about the following contents: manufacturers, importers or distributors of the goods; registration number, publication number or barcode number; the origin of the goods or the place where the goods are manufactured, packed or assembled.

(iii) The third type: Fake labels and packages. This means that the labels and packages itself are counterfeit goods. In this circumstance, information on labels and packages may be true but they are not printed by organizations who are rightful to the goods. Comparing to the second type, recognizing fake labels and packages is more difficult as techniques and tools to forge them become more sophisticated. 

In fact, when conducting inspections of suspected counterfeit goods, the authorities often require businesses to present one, some or all of the following documents. Depending on the case, the suspect will be required to provide other relevant documents.

(i) Certificates of origin (C/O);

(ii) Purchase and sale contracts;

(iii) Valid invoices and vouchers related to the quantity or volume of goods which are suspected of being counterfeited;

(iv) Documents related to the materials for the production of the goods.

However, it is unlikely for the average consumer to access and inspect the above documents. Therefore, the most common manual options for consumers are looking at the selling price and where the product is sold. 

Counterfeit goods usually have the selling price many times cheaper than the real ones because the production cost of counterfeit goods is not too expensive. This hits the desire of most consumers to use good and cheap products. Therefore, when detecting low-priced products or ones accompanied by unusual promotions, consumers should consider not buying and using such products. Regarding the outlets, consumers should choose reputable places in the market. Especially for products directly related to health such as pharmaceuticals and cosmetics, consumers should limit their purchases through social networking sites or e-commerce platforms because it is difficult to access the origin. 

3. Punishments applicable to acts of producing and trading fake goods

Under current regulations, individuals and organizations convicted of producing and trading counterfeit goods often face administrative and criminal sanctions. In some cases, they are also responsible for civil compensation if they are sued in court.

Currently, the administrative sanction applicable to the production and trading of counterfeit goods is up to VND 200,000,000 for individuals and VND 400,000,000 for organizations. Where all the factors constituting a criminal offense are met, individuals may also be sentenced to imprisonment of up to 15 years and a fine of up to VND 50,000,000. Particularly for goods directly affecting human health such as food or medicine, individuals may be subject to a sentence of up to a life sentence. 

For legal entities, the fine level for acts of producing and trading counterfeit goods will generally be fined up to 9 billion VND or permanently suspended. Particularly for goods that directly affect human health such as food or medicine, the fine will be up to 20 billion VND.

4. Conclusion

In general, the administrative sanctions may not be heavy enough compared to the huge profits from the counterfeit market. However, the biggest difficulty in reality comes from the professional capabilities and procedures of the authorities. Facing with the rapid increase of counterfeit goods, state agencies need to be equipped with more facilities and professional skills. In parallel, consumers also need to equip themselves with the ability to identify counterfeit goods and change their consumption habits.

If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.

This article is for general information only and is not a substitute for legal advice.

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Tax liability – a issue when handling the security assets

In recent years, the civil judgement enforcement activities related to credits, banks are the slippery issue although the civil judgment enforcement agencies have made great efforts to resolve, the results of judgment enforcement are not as expected due to the low judgment enforcement rate, the huge number of cases, the huge amount of money that must be collected in judgment enforcement, and the delay of the judgment enforcement process. According to the report of the General Department of Civil Judgment Enforcement, in the first six months of 2019, the results of judgement enforcement of recovering the bad debt in credit and banking judgment enforcement activities as follows: The total handling cases are 25.093, increase to 3.585 cases (up to 16,67%) over the same period of 2018; the amount of 105.201 billion 29 million 644 thousand VND, a growth of 20.981 billion 11 million 646 thousand VND (up to 24,91%) compared with the same period in 2018.  Cases account for 3.84% and money accounts for 60.68% compared to the total amount of cases and sum of money must be enforced of the entire system. The report of the General Department of  Civil Judgment Enforcement shows that although the credit and bank cases only account for 3.84%, the money of them was 60.68%, which is a huge number.

To push up the bad debts recovery, the National Assembly issued Resolution No. 42/2017/QH14 (“Resolution No. 42”) as a legal tool to support The Civil Judgement Enforcement Agencies and Credit Institutions in the process of handling bad debt. However, after implementing the Resolution 42, there are some inadequacies, problems, and difficulties related to the implementation and enforcement of the Resolution 42. In which the crucial problem can be mentioned is the provisions related to the obligation to pay taxes and fees when handling security property for bad debts.

According to Article 15.2 of Resolution No. 42/2017/QH14, tax payment made by securing party or assignee relating to the assignment of security property is prescribed in regulations of law on taxation. Specifically, when transferring property being real estate, the person having the transferred property (including the person who is judgment debtors) is subject of personal income tax[1]. However, according to Article 12 of Resolution No. 42/2017/QH14 and Point 2.4, Section 2 of Official Letter 3022/TCTHADS-NV1 on guiding a number of contents related to the implementation of Resolution No. 42/2017/QH14, proceeds from the security property realization of bad debts are prioritized to pay for the Credit Institutions (“CI”) after deducting enforcement costs and tax obligations are only paid in case of the proceeds from the security property realization are larger than the secured obligation and the expenses for coercive judgment enforcement . However, in fact, most of the money collected after realizing the security property are not enough to pay for credit institutions , let alone tax obligations.

Meanwhile, The Official Letter No. 4606/BTC-TCT dated April 20th, 2018 of the Ministry of Finance thoroughly implementing Resolution No. 42 also does not provide specific guidance on this case, so that the tax authorities affirm that if failing to fulfill the tax obligation, the inability to carry out the name transfer procedure for the winning bidder, which has created many controversies, leading to complaints, denunciations. Some winning bidders even take legal action in order to petition the Civil Judgement Enforcement agency to pay the property transfer tax[2].

A pratical situation related to this inadequacy which can be mentioned is the dispute between the Vietnam Bank for Agriculture and Rural Development – Can Tho Branch and Thanh Ngoc Company Limited. Specifically, according to the Decision No. 06/2017/QDST-KDTM on Martch 17th, 2017 of the People’s Court of Ninh Kieu District, Can Tho City about recognizing the agreement of the concerned parties as the plaintiff: Vietnam Bank for Agriculture and Rural Development – Can Tho Branch (authorized representative is Mr. Le Thai Ngoc), address: 03 Phan Dinh Phung, Tan An Ward, Ninh Kieu District, Can Tho City; The defendant is: Thanh Ngoc Company Limited (The legal representative is Ms. Tran Ngoc Nhanh), address: 11/7 Cach Mang Thang Tam, An Hoa Ward, Ninh Kieu District, Can Tho City “Forcing the defendant to pay the plaintiff for the amount of debt and interest until March 9th,2017, is 313,826,388,272 VND (Three hundred thirteen billion eight hundred twenty six million three hundred eighty eight thousand two hundred and seventy two dong). In which the principal is 163,183,999,384 VND (One hundred sixty three billion one hundred eighty three million nine hundred ninety nine thousand three hundred and eighty four dong) and the interest is 150,642,388,888 VND (One hundred fifty billion six hundred forty two million three hundred eighty eight thousand eight hundred eighty eight dong)”.

In case the defendant improperly or incompletely performs the payment obligation as mentioned above, the plaintiff is entitled to request the judgment enforcement agency to release the security property listed under the digital credit contracts No. 02 /HDTD dated March 9th, 2010; Credit Contract No. 01-/ HD9TD-2011 dated September 6th, 2010 and Credit Contract No. 01 / HDTD.2011-12 dated September 22th, 2011 for debt recovery.

In the process of judgment enforcement, the Civil Judgment Enforcement Agency of Can Tho has carried out the procedures as prescribed by law. Thanh Ngoc Limited Liability Company (legal representative of Ms. Tran Ngoc Nhanh), does not voluntarily execute the judgement although the company has conditions to execute. So, the Department of Judgement Enforcement carried out the attaching and handling of Ms. Tran Ngoc Nhanh’s property, which is the house, the land is located at 21 Ngo Gia Tu, Tan An ward, Ninh Kieu district, Can Tho city (land parcel No. 17, map sheet number 2). Mr. Le Van Quan, address: 7/10 Hamlet Binh, Hoa Hung Commune, Cai Be District, Tien Giang Province, won the auction with the amount of 5,437,100,000 VND (Five billion four hundred thirty-seven million and one hundred thousand copper). According to Article 12 of the National Assembly’s Resolution No. 42/2017 /QH14 dated June 21st, 2017 on the trial of handling bad debts by credit institutions, stipulating “The proceeds from the realization of a security property for a nonperforming loan shall, after subtracting expenses for the security property preservation, storage and realization, be first used to pay the secured loan to the credit institution or foreign bank branch or non-performing loan trading and handling organization before paying taxes and performing other unsecured obligations of the securing party. In case one asset is used to secure more than one obligation, the order of priority for payment to the secured parties must comply with law”.  The Civil Judgment Enforcement Department of Can Tho has a written request for consideration of not collecting personal income tax on the individual transferring real estate in Thanh Ngoc Co., Ltd. because this property is confirmed by the Bank as a bad debt. This asset is not enough to pay the guarantee debt for the Vietnam Bank for Agriculture and Rural Development  – Can Tho Branch. However, the Tax Department has replied in writing that the above case does not fall into the case of exemption from personal income tax payment. Therefore, it is currently difficult to carry out procedures for transferring use right to Mr. Le Van Quan.

Recommendation:

To be able to resolve the above problem, according to the author, it is necessary to:

Firstly, before performing the auction of security property for bad debts, The Civil Judgement Enforcement Agency should be responsible for working with the relevant authorities to clearly define the obligations of the asset owner, the condition of the property (such as: specify in the property auction service contract, notice of the property auction about tax debts, related fees …) in order to publicly notify to the person registering to purchase the property. In addition, the The Civil Judgement Enforcement Agency also needs to clearly inform that whether the judgment debtor is eligible to pay taxes and fees related to the transfer in accordance with the law or not. This notification will help the person who wants to purchase the property, knows about the status of the judgement debtor in order to have a careful consideration before purchasing and can avoid complaints and denunciations and situations that affect the legitimate rights and interests of buyers.

Second, the Ministry of Justice should direct the professional agencies to actively cooperate with relevant ministries and agencies to continue improving the mechanism of bad debt handling. In particular, the Ministry of Finance needs to thoroughly grasp and guide tax authorities on tax-related policies specified in Resolution No. 42/2017/QH14.

[1] Clause 5 Article 3 of Decree 65/2013 / ND-CP of the Government detailing the implementation of several articles of the Law on Personal Income Tax and the Law Amending and Supplementing several Articles of the Law on Personal Income Tax

[2] Thai Trung, “The trial of handling bad debts of credit institutions in the civil enforcement”, Online People’s Newspaper, http://nhandan.com.vn/phapluat/item/38195702-ve-thi-diem-xu-ly-no-xau-cua-cac-to-chuc-tin-dung-trong-thi-hanh-an-dan-su.html, accessed April 14th 2019

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