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Goal – An efficient institutional framework that balances the rights of the public, owners, lenders and borrowers in the event of a dispute or loan default
Core Question: Do all market participants abide by the rule of law and have confidence in the courts and the ability of police to control crime? No – Weak, there is insufficient separation between the communist party and the judiciary and law enforcement.
4.1.1 What is the confidence level of the strength and impartiality of the police, courts and contract enforcement? Weak – Percentile Ranking – 39.9 Trend ↓
Source: Governance Matters, World Bank, www.govindicators.org
4.1.2 Can members of the judiciary be held accountable for their actions? No – Very Weak Score 21 out of 100 Trend ↓
Source: Global Integrity Report – http://report.globalintegrity.org/Vietnam/2009
Costs of Crime
4.1.3 What are the business costs of crime and violence? Significant costs – Ranking 84th out of 144; Score 5.41 out of 10 – Weak
Source: Global Competitiveness Report 2012-2013– World Economic Forum
Core Question: Are systems in place for timely and efficient enforcement of contracts? Commercial – Yes – Very Strong
Residential – Very Weak – Power-of-sale available but not in use
4.2.1 Judicial Enforcement
Commercial – Very Strong – Ranking 44nd out of 185
18.104.22.168 What is the number of procedures involved in resolving a commercial dispute? 34
22.214.171.124 What is the time between the filing of a lawsuit and resolution in judicial enforcements? 400 days
126.96.36.199 What is the cost of judicial enforcements as a percentage of debt value? 29%
Source: Doing Business – www.doingbusiness.org/ExploreEconomies/?economyid=202
Residential – Very Weak
SQ 12 What is the time between notice of intent to foreclose and loan collection in judicial enforcements? Very Weak – 485 days; Ranking 37th out of 40
SQ 13 What is the cost of judicial enforcements as a percentage of property value? 10.18%; Weak – Ranking 23rd out of 38
4.2.2 Summary Proceedings
SQ 14 Summary proceedings are alternative dispute resolution processes where creditors can apply for a direct court order in property disputes. What is the time between notice of intent to foreclose and loan collection in summary proceedings if available to lenders? Very Weak – Not available
SQ 15 What is the cost of summary proceeding if available to lenders as a percentage of property value? Very Weak – Not available
SQ 16 Power-of-sale agreements give creditors to power to sell properties after notice to the borrower without court intervention. What is the time between notice of intent to sell and loan collection for power-of-sale agreements if available to lenders? Very Weak – Permitted by law, but not used by lenders.
SQ 17 What is the cost of power-of-sale agreements if available to lenders as a percentage of property value? Very Weak – Permitted by law, but not used by lenders.
Source – Financing Homes 2008, World Bank and International Housing Finance Corporation
Core Question: Can commercial disputes be resolved fairly and efficiently without exorbitant expense and delay? Yes – Strong, Foreign investors tend to refer to foreign arbitration due to lack of confidence in Vietnamese courts.
SQ 18 Do specialized commercial courts exist for the handling of property disputes and foreclosures? Yes – Weak – Civil & Economic Courts exist but are not independent
Source: Hauser Global Law School Program, NYU School of Law
Alternative Dispute Resolution
SQ 19 Are alternative dispute resolution mechanisms in place including commercial arbitration, private mediation and community based processes? Yes – Strong
Source: Vietnam International Arbitration Centre www.viac.org.vn/en-US/Home/default.aspx
SQ 20 What bilateral, regional and international commercial treaties exist concerning business between countries? Strong – U.S., a member of ASEAN – South Korea, EU, Japan, China and India; Chile; Israel; a member of the WTO since 2005.
Source: Bilaterals.org http://www.bilaterals.org/spip.php?rubrique171
FQ 8. To what extent do practitioners report contracts as enforceable?
Practitioners often try to resolve any issues based on mutual agreement before creating a contract. Written amendments of a contract can be mutually agreed upon before signing the final contract. The final contract then is enforceable. Any dispute raised after the signing of contract is usually settled between the parties. Reporting to local courts is often avoided because of lengthy process from filing to judgment.
Litigation damages reputation and business relationship – especially when this is between partners of a joint venture with foreign direct investments. Foreign firms hesitate to enter into a joint venture because of the trust issue. When dispute arises, foreign firms always seek international legal counsels or international arbitration organizations. The country is pressed to improve the operation of their court system due to commitments made in joining World Trade Organization in 2005. Judicial reform program is still slowly underway.
Research by Ngoc N. Hoang, March 2013