Legal issues of general application

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?


An in-principle approval for an infrastructure project may be required from the National Assembly, the prime minister or the relevant people’s committee at provincial level subject to the type and size of such project.

Foreign investors will typically obtain an IRC from the local department of planning and investment or the management board of an industrial zone, export processing zone, high-tech zone or economic zone and then obtain an enterprise registration certificate for the establishment of a project company.

Foreign loans

Borrowers of a foreign loan with a term of more than one year must register the foreign loan with the SBV. See question 21.


Foreign investors may be required to open a capital account in either foreign currency or local currency for the purposes of transferring equity into Vietnam to operate investment projects and offshore remittance.

Foreign loans and any remittance thereof must be made through a direct investment capital account if the borrower is a foreign direct investment enterprise; otherwise, the borrower must open a loan account at a bank in Vietnam licensed for borrowing purposes.


Foreign investors, via the project company, must apply for land use right certificates for leased land areas that need to be used for the development, construction and operation of infrastructure projects. Land rentals for leased land areas in respect of PPP projects are exempted or reduced during the term of investment in accordance with applicable laws and regulations on land.


In a typical project finance transaction, the investors must prepare an environmental impact assessment report and submit it to obtain the approval of the Ministry of Natural Resources and Environment or relevant line ministries or provincial people’s committees. A fee is payable to competent authorities, which ranges from 6 million dong to 96 million dong, depending on the project type and size.

Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

Foreign loans made by enterprises must be registered with the state Bank of Vietnam in the following cases:

  • mid-term and long-term foreign loans;
  • renewed short-term loans that have a maturity of more than one year; and
  • short-term loans that are not covered by any loan renewal contract but with the outstanding principal owed on the anniversary of the date of the first fund withdrawal in a full calendar year, except to the extent that borrowers have already fulfilled their debt obligations within a permitted duration of 10 days after the anniversary of the date of first fund withdrawal in a full one year.

Certain types of security agreements are required to be notarised or registered or both. Security agreements in the following cases must be registered:

  • mortgage of land use rights;
  • mortgage of property attached to land whose ownership has been stated in the certificate of rights to use land, ownership of house and property attached to land;
  • mortgage of aircraft;
  • mortgage of seagoing vessels.
Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

Local courts may consider the recognition and enforcement of contractual provisions on foreign arbitration and a foreign arbitral award if such award is made in the laws of the countries that entered into mutual legal assistance treaties with Vietnam or on a reciprocal basis.

Vietnam is not a party to the International Centre for Settlement of Investment Disputes.

Vietnam joined the New York Convention 1958 with a reservation that Vietnam will only recognise and enforce foreign arbitral awards in disputes that have commercial characteristics pursuant to Vietnamese law. Under Vietnamese law, there are three categories of commercial dispute that can be resolved by arbitration:

  • disputes arising from commercial activities;
  • disputes in which at least one party is engaged in commercial activities; and
  • other disputes in which the law stipulates that arbitration is a permissible means of resolution.

Under Vietnamese law, not all disputes can be resolved via foreign arbitration bodies or international arbitration, which applies only to disputes in which at least one party is of the following categories:

  • foreign investors;
  • economic organisations with foreign investors’ equity accounting for more than 51 per cent of the charter capital, or the majority of general partners are foreigners if the organisation is a partnership;
  • economic organisations with 51 per cent of the charter capital or more is held by the organisations mentioned in the second bullet; and
  • economic organisations with foreign investors and the organisations mentioned in the second bullet holding at least 51 per cent of the charter capital.

Domestic arbitration will apply to disputes between domestic investors, foreign-invested enterprises or between a domestic investor, foreign-invested enterprises and a state administrative body of Vietnam relating to investment activities in the territory of Vietnam.

Vietnamese courts will consider the recognition and enforcement of foreign arbitral awards of a country that is a party to a relevant international treaty to which Vietnam is a signatory. In the absence of a relevant international treaty, the recognition and enforcement of foreign arbitral awards may be made on basis of the principle of reciprocity.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

English law is typically selected by the parties for financing documents (including facility agreements and intercreditor agreements) and certain government-guaranteed project documents (including the concession agreement and the supply and off-take agreements). However, the governing law of a land lease agreement and onshore security agreements is Vietnamese law.

The choice of a foreign law may not be recognised if the consequence of its application is contrary to the fundamental principles of Vietnamese law. The concept of ‘fundamental principles of Vietnamese law’ has not been clearly defined, so Vietnamese courts have broad powers to interpret this concept on a case-by-case basis.

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

The Law on Investment 2014 clearly renders disputes between foreign investors or project companies and government authority arbitrable, and such disputes can be referred to international arbitration or arbitration in other jurisdictions. With reference to the recognition and enforceability of foreign arbitral awards, see question 22.

The Civil Code 2015 provides that waiver of immunity is effective when:

  • an international agreement to which Vietnam is a signatory has regulations on waiving immunity;
  • an agreement on waiving immunity is concluded by the parties in such civil relation; and
  • Vietnam or the central or local government agency waives immunity.

Although the Civil Code 2015 for the first time sets out circumstances under which a waiver of sovereign immunity by the state or a Vietnam government agency is effective, the question of enforceability of such waiver as to the concept of sovereign immunity remains largely untested.