Tuesday, October 25 2016


Foreign-language contract laws vary in VN

Update: June, 15/2016 - 10:01

In civil and commercial agreements, the parties to the contract may choose Vietnamese or other foreign languages to be the language of contracts. An exception applies in cases where specialised laws may require the contract to be written (or to have a copy) in Vietnamese.

In general, when foreign enterprises engage in a transaction with individuals and organisations in Việt Nam, they often use Vietnamese contracts or bilingual English-Vietnamese contracts following business practices in Việt Nam.

The 2005 Law on Commerce, which is the principle legal reference for commercial transactions in Việt Nam, does not specify the contract language. The 2005 Civil Code, which has a broader scope of regulations on civil actions, only provides a definition for civil transactions made orally or in writing; this content is retained in the new 2015 Civil Code, which will take effect from January 1, 2017. However, the 2004 Civil Procedure Code specifies that the language and scripts to be used in civil procedures shall be Vietnamese, which means that when disputes occur, the contract will be examined on the basis of the Vietnamese language; this content is retained in the new 2015 Civil Procedure Code, which will take effect from July 1, 2016.

Enterprises need to comply with regulations on documents to be used when working with Vietnamese government agencies and commercial arbitration bodies as follows:

For tax regulations, Circular No. 156/2013/TT-BTC specifies that the language used in tax dossiers is Vietnamese; any documents in foreign languages must be translated into Vietnamese. The taxpayers must sign and stamp the translated copy and will be legally liable for the contents of this translation. The contract must accompany the tax dossier as an attachment. Therefore, it should be presented in Vietnamese.

For regulations on the invoices of goods sales and service provision, Circular No. 26/2015/TT-BTC specifies that the invoices should be presented in Vietnamese. In cases where foreign words need to be added, they should be placed on the right-hand side in parentheses. If only one language is allowed to be used on export invoices, then English should be used.

For the law on accounting, the 2013 Accounting Law specifies that the scripts used in accounting must be Vietnamese.

For regulations on notarisation, the 2014 Law on Notarisation specifies that the language and scripts used must be Vietnamese. Contracts that require notarisation should be translated into Vietnamese.

For regulations on arbitral proceedings, the 2010 Commercial Arbitration Act stipulates that in disputes with no foreign elements, the language used in the arbitral proceedings must be Vietnamese, except in cases where at least one of the parties is a foreign-invested enterprise; for any disputes involving foreign elements, the language used in the arbitration will be agreed upon by the parties.

In some commercial areas with specific characteristics, the State shall specify the language to be used in the contracts as follows:

Technology transfer: The 2016 Technology Transfer Act specifies in detail that the contract language should be agreed upon by the parties; where transactions are conducted in Viet Nam, a contract in Vietnamese is required, and the legality of Vietnamese and foreign-language contracts should be equal.

Consumer goods: The 2010 Law on the Protection of Consumer Rights specifies that the language used in contracts signed with consumers must be Vietnamese.

Information technology: The 2010 Postal Act clearly specifies that contracts for the supply and use of postal services in writing must be presented in Vietnamese; if the parties agree to use additional languages, Vietnamese documents and other language documents should have the same legal value.

Urban construction: Decree No. 37/2015/ND-CP specifies that the language used for the construction contract must be Vietnamese. For construction contracts with foreign elements, the contract language will be Vietnamese and a foreign language that will be agreed upon by the parties; in case no agreement is reached, English will be used.

There are two concerns relating to the contracts that should be noted:

The relationship between the parties to the contract: The language is the means to record the will of the parties in the transaction. When the law does not specify a language, the parties can freely agree upon the contract language.

The relationship between the State and the parties to the contract: In this relationship, the State requires the enterprises to present the contract or written documents in Vietnamese to facilitate the management of the State (such as taxes, accounting or notarisation).

Thus, foreign-invested enterprises can select the contract language when conducting transactions in Viet Nam. For typical contracts with no specific requirements, enterprises can use bilingual contracts with English as the preferred language. In fact, in the process of working with State agencies such as the courts, contracts in English are required to be translated and notarised. For specialised contracts, enterprises need to be in compliance with the specialised law. -- PLFLaw Firm

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