Vietnam
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. A freezing order may, amongst other things, prohibit the transfer or change in condition of disputed assets in addition to freezing accounts. The respondent is prohibited from dealing with the assets referred to in the freezing order until a specified time (for example, a further hearing, judgment or payment) or further order of the Court on change or cancellation of the freezing order. A freezing order may be domestic or worldwide.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
The Court might also require the respondent to present its opinion prior to issuance of the freezing order if such presentation guarantees the correct decision making and does not interfere with the implementation of the freezing order (except for cases relevant to intellectual property rights).
3. Briefly what is the relevant legal test?
The freezing order is considered and decided by the judge on the basis that:
(i) the application of this measure is necessary to ensure the enforcement of the lawsuit settlement or judgment; and
(ii) the respondent has assets.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The applicant sends a petition application for a freezing order to the Court setting out the grounds for the order and the specific injunctive relief sought. The applicant may also have to provide the Court with relevant supporting evidence. If urgent, the applicant can seek the issue of a freezing order contemporaneously with the application. Applications are made with notice to the respondent.
Where the property requested to be frozen is indivisible property (where part cannot be frozen) with a value higher than the order sets out, the Court shall explain to the applicant so that they can make a new application. If the applicant persists with the original application, the Court shall refuse the application for injunctive relief.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
Yes. The applicant must submit to the Court a letter of guarantee which must be equivalent to the loss and damage which may arise as the consequence of the application of improper freezing order.
6. Can it be sought against third parties?
Yes, a third party to the underlying proceedings or prospective proceedings may be made a party to a freezing order where there is good reason and evidence provided by the applicant to show that its assets are in fact the assets of the defendant in the underlying litigation. Equally, a third party which is not a party to the freezing order (for example, a credit institution holding the defendant’s assets) can also be bound by the order. The order, its amendment and decision on cancellation of such order shall take immediate implementation effect, shall not be subject to appeal or protestation, and must be sent to or served upon such third parties immediately after the issuance of such order.
7. What assets are covered by a freezing (or equivalent) order?
Any tangible or intangible assets, property rights over the disputed assets and accounts of the respondent provided the value of the frozen assets or accounts are equivalent to or lower than the property obligation to be performed by the respondent, whether within the jurisdiction (a domestic freezing order) or outside (a worldwide freezing order). If the assets are indivisible and of a value higher than the property sought to be frozen, the Court will request the applicant make another application.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
No, the freezing order is only to initiate or resolve a lawsuit in a local Court, or in the course of considering petitions for recognition and enforcement in Vietnam of civil judgments or decisions of foreign Courts.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
At any stage.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Yes. A freezing order is not applied if one of the following non-exhaustive circumstances applies:
(a) its application leads to the shutdown of enterprises or cooperatives;
(b) the property is used as collateral to secure the performance of an obligation and that security has taken effect against a third party, unless the petitioner for preliminary injunctive relief is also the secured party;
(c) it relates to an account at a bank or other credit institution used for the discharge of a liability to the credit institution as agreed in a credit agreement; and
(d) the property is banned from circulation as prescribed by law, or the property serves national defense, security and public interests.
The respondent’s payments for legal expenses and for businesses to expend funds in the ordinary course of business or for individuals to pay for reasonable/ordinary living expenses would be reasonably interpreted to fall within exceptions mentioned in (a).
12. What happens after a freezing (or equivalent) order is granted?
Immediately after the issuance of a freezing order, the Court sends the order to the applicant, the respondent(s), relevant third parties, procurate of the same level, and the authorized civil judgment enforcement agency who then decides whether to enforce the order. If so, they notify third parties who may hold the assets to be frozen. If the respondent wishes to challenge the order, they must do so within three days of receipt of the same.
The application of a freezing order is reflected in a Court decision or recorded in a judgment and is carried out in a separate procedure. Therefore, if the first-instance or appellate judgments are reversed, the freezing order is not automatically annulled.
13. Who pays the costs of the application for a freezing (or equivalent) order?
There is no cost for obtaining a freezing order. However, the applicant who has applied to the Court and incorrectly obtained a freezing order shall pay any expenses arising from its enforcement. Otherwise, the respondent shall be required to pay such expenses.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
No. The law is silent on the protections in a freezing order for third parties. Instead, it is provided that should the request for a freezing order application prove incorrect, causing damage to the respondent or to a third party, compensation shall be paid by the applicant.
15. What are the consequences of breach of a freezing (or equivalent) order?
A respondent intentionally failing to enforce a freezing order shall, depending on the nature and severity of their violations, face financial sanctions and possible penal action.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
Yes, if causing damage, agencies, organizations and individuals that fail to enforce a freezing order shall pay compensation.
17. Can a freezing (or equivalent) order be enforced abroad?
Yes, requests for foreign legal assistance regarding a freezing order enforcement abroad must comply with the laws on mutual legal assistance.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
Yes, where considering petitions for recognition and enforcement in Vietnam of civil judgments or decisions of foreign Courts:
(i) as provided for in international treaty to which both Vietnam and a foreign country are signatories; or
(ii) on the basis of principle of reciprocity for a foreign country which does not sign an international treaty with Vietnam.
Contacts
Dang Trong Hieu Partner Vision & Associates Legal Attorneys at law Hanoi, Vietnam dt.hieu@vision-associates.com www.vision-associates.com Vuong Son Ha Senior Associate Vision & Associates Legal Attorneys at law Hanoi, Vietnam vs.ha@vision-associates.com www.vision-associates.com
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