On October 16th, 2018, Vietnam Government issued Decree No. 144/2018/ND-CP amending, supplementing the decrees on multimodal transport. Under the law of Vietnam, multimodal transport (“MT”) is the transportation of goods performed with at least two different modes of transport under the multimodal transport contract from an original place to a place designated for delivery, the carrier is liable for the entire carriage. MT business includes: International multimodal transport (“IMT”) and Domestic multimodal transport (“DMT”).

The new decree eliminates and simplifies regulations on IMT business conditions and abolishes DMT business as a conditional business line. In fact, DMT including many transportations such as transport by sea, air,… is governed by specialized laws on each transport, hence it is not necessary to stipulate additional business conditions when conducting the combined transport.

Regarding the conditions of IMT business, the new Decree no longer differentiates between domestic and foreign enterprises as in the past, all enterprises therefore must meet the followings:

(1) Maintaining a minimum amount of assets equivalent to SDR 80,000 or provide an equivalent guarantee or an alternative of financial character as regulated by laws;

(2) Having a liability insurance policy for multimodal transport operator or an equivalent guarantee.

In addition, in order to facilitate member state of the ASEAN Framework Agreement on Multimodal Transport or another international treaty on multimodal transport to which Vietnam is a signatory, new regulations are stipulated as follows:

(1) Having a registration certificate of international multimodal transport or another document of equivalent validity issued by the competent national body of its country;

(2) Having a liability insurance policy for multimodal transport operator or an equivalent guarantee.

The licenses to provide international multimodal transport service issued by competent authorities of Vietnam before the date of entry into force of this Decree are still valid until their expiration dates.

With the role of supporting trading activities, modern transports need to meet the increasingly complex requirements of the domestic and international transport market, which not only deliver goods but also connect the transport process into an uninterrupted transport chain to ensure a faster and safer transport process.

Transport lawyers at ANT Lawyers, the law firms in Vietnam have always following up the legal development on transportation to provide our clients with regular update on the matters.

Currently, with the complicated developments of the Covid-19 epidemic in the world in general and in Vietnam in particular, the research, production and import of Covid-19 vaccines are the matter that everyone is concerned about. On February 24th, 2021, the first batch of vaccine approved for import was transported to Vietnam by the Vietnam Vaccine Joint Stock Company.

Facing this situation, a number of foreign enterprises have expressed their opinions on the limitations imposed on foreign-invested enterprises in the field of distribution of pharmaceutical products in Vietnam. Vietnam has reserved no commitment to open the distribution of pharmaceutical products service market and has not committed to opening the distribution of pharmaceutical products service market under any trade agreement or international treaty up to the moment, because the pharmaceutical sector is sensitive, directly related to access to drugs and people’s health.

According to the provisions of the law, “distribution of pharmaceutical products” means the division, movement and storage of pharmaceutical products from the warehouse of the manufacturer/importer of such products or from a distributor to the end user thereof or to a distribution point or between distribution points by means of various transport methods. For distribution services, in the WTO Commitments, it is clear that pharmaceutical distribution services are excluded from the scope of commitments for all modes of supply. In addition, Appendix 03 of Circular 24/2016/TT- publicizing roadmaps for goods trade and goods trading directly related activities of foreign-invested enterprises in Vietnam, it is also recognized that pharmaceutical products are on the list of goods not entitled to distribution.

Regarding this issue, the Drug Administration of Vietnam expressed the following viewpoint: “The suspension of allowing foreign-invested enterprises in Vietnam to provide drug storage and transportation services is to prevent the distribution of disguised drugs in Vietnam, contributing to health security and towards the professionalization of the medicine distribution system in Vietnam.”

Point c, Clause 10, Article 91 of Decree 54/2017/ND-CP, effective from May 8, 2017, provides for cases ineligible to distribute drugs as follows:

“10. The entities that are entitled to import but not entitled to distribute drugs and medicinal ingredients in Vietnam must do activities related to distribution of drugs and medicinal ingredients in Vietnam except for drugs and medicinal ingredients they manufacture in Vietnam, including:

c) Providing drug/medicinal ingredient transport or storage services.”

According to this content, foreign-invested enterprises in Vietnam are not allowed to transport and preserve drugs, except for drugs and medicinal ingredients manufactured by that enterprise in Vietnam. It can be seen that the restriction on the right to distribute drugs to foreign-invested enterprises is aimed at ensuring health security, being proactive in drug supply and distribution, towards to professionalize the domestic drug distribution system as a foundation to support the development of the domestic pharmaceutical industry and contributing to better control of drug prices in the market.

On July 14th, 2020, the Trade Remedies Authority of Vietnam (TRAV), Ministry of Industry and Trade issued an investigation questionnaire on quantity and value to foreign producers and exporters in the AD11 case.

Accordingly, TRAV recommends that the related parties who participate in responding to the questionnaire, carefully study the guidelines in the questionnaire before responding and submitting.

In order to ensure the best rights and interests, TRAV recommends that all related producers/exporters participate in full cooperation during the investigation process. The content of the response is one of the important grounds for TRAV to consider and select samples that limits the scope of the investigation. TRAV is entitled to consult with experts or to inspect, verify the authenticity of information and documents provided by related parties or collect additional information and necessary documents to resolve trade remedies cases, including foreign onsite investigations.

In the event that TRAV does not receive the timely response or the information provided is inadequate or insufficient as required, TRAV will apply the relevant law provisions regarding the non-cooperation of the related party in trade remedies cases.

The response to the questionnaire must be sent in full, including 01 confidential copy and 01 public copy (hardcopy of the response) and 01 USB containing the full soft copy of the response and attached annexes. The response is considered to be submitted on time when the TRAV receives all hard and soft copies before 5p.m on July 31st, 2020 (Hanoi time).

AD11 refers to the the anti-dumping investigation case under Decision No. 1715/QD-BCT regarding the Investigation of imposing Anti-dumping measure to some High Fructose Corn Sweetener Products with the HS Code of 1702.60.10 and 1702.60.20 from People’s Republic of China and Republic of Korea (Case AD11). Related parties may by themselves or authorize experienced law firms in Vietnam on international trade to work with Trade Remedies Authority of Vietnam to cooperate.

Bilateral or multilateral free trade agreements between countries are formed majorly based on the WTO agreement system. In particular, GATS as an Agreement under the WTO system, is the first and only set of multilateral rules governing international trade in services. Ways or modes of trading services are basic provisions of GATS, including: Cross-border supply (mode 1), Consumption abroad (mode 2), Commercial presence (mode 3), Presence of natural person (mode 4). The categorization of modes covering its own regulations depends on the territorial presence of the supplier and the consumer at the time of the transaction.

According to GATS, cross -border supply means supply of a service from the territory of one Member into the territory of any other member, and supplier and consumer of a member do not present within the territory of another member. Consumption abroad means supply of a service in the territory of one Member to the service consumer of any other member. Presence of a natural person means supply of a service by a service supplier of one member, through presence of natural persons of a member in the territory of any other member. It should be noted that cross-border supply of services is defined depending on each Agreement. Under CPTPP, cross-border supply includes modes 1, 2 and 4 above. In this article, cross-border supply is equivalent to mode 1, under GATS.

When participating in GATS, members make commitments for market access with respect to each mode of service supply and sub-sector. The GATS provides a set of general principles that all WTO members must adhere to, which there are no unnecessary barriers applied to trade. However, GATS expressly recognizes the rights of member governments to manage and regulate the supply of services in pursuit of their own policy objectives. GATS also does not interfere in internal affairs and policies of members. Therefore, the governments absolutely have the right to decide and adopt their trade policies. The enterprise of a member must comply with domestic regulations in the territory of another member where they conduct business and trade in services and refer to that Member’s Schedule of Specific Commitments to understand market access obligations and national treatment.

Most sub-sectors do not restrict market access and national treatment for foreign suppliers providing cross-border services in Vietnam (legal, accounting, auditing, tax, architecture, advertising, management consulting, …). Although the market access is not restricted, it does not mean that the foreign suppliers freely provide services in Vietnam without satisfaction of conditions or without the consent of the competent state authorities. To consider this matter and have a correct understanding, the national treatment principle should be reviewed, it requires that each member shall accord to services and service suppliers of any other member the treatment no less favourable than that it accords to its own like services and service suppliers. Having said that, in the event that a member maintains business conditions for the domestic services and service suppliers, these conditions may also apply to the foreign services and service suppliers.

Such as accounting service business, foreign service suppliers are not restricted in market access and national treatment under the Schedule of Specific Commitments in Services. It means that a foreign accounting firm can provide accounting services to a Vietnamese enterprise. However, accounting service is a conditional business applicable to domestic firms. According to the national treatment principle, Vietnam has the right to impose similar conditions on foreign suppliers. Reference to the provisions of Vietnamese laws, the foreign accounting firm must fully meet the conditions of head office and personnel to be licensed its business in Vietnam. Further, there are tax liabilities arisen which obligations of registration and declaration depend on particulars of transactions. It is suggested that international trade lawyers are consulted to avoid potential disputes or non-compliance of cross-border supply of services.

Ship sales and purchase should involve shipping lawyers in Vietnam whom understand the laws and the shipping industry.

For long, maritime activities and carriage of goods by sea are important parts of the international economic life, supporting the import and export of goods, connecting Vietnam to the world commodities market and therefore playing as driving factors behind the development of maritime transportation field.

As the demands for transportation exists, although some times up and down depending on the cycle of the economy, ships purchase and sales are important part of maritime related transaction businesses. With its own special characteristics, the purchase or sale of ships usually involve enormous economic interests, and risks at the same time. Ships are special objects in transactions therefore require the help of local and international ship lawyers with knowledge and experience to handle.

Stages in a Ship Transaction

The sale and purchase of a ship include contract, inspections, and the closing.

At the first step, both buyer and seller appoint ship brokers to carry out the negotiating and defining the clauses needed in the contract. Once details of the contract are agreed, the parties shall initiate the process of drafting the contract under Memorandum of Agreement (MOA) which normally is under a standard form. The governing law applies to such contract is usually the law of the country where the ship is registered its nationality. To enable the international transaction of ship, parties will sign an addendum to the MOA, stating necessary documents to be provided which may include: Approval from Director or Shareholders of resolving the sale of the vessel; Export or Import Permission of the Maritime Administration (requirement depending on national legislation), Power of Attorney, as well as other related documents involving the grade, commitments of the seller, etc. Once lawyers of buyers and sellers agree on the documents and have initial checking of such, the buyer may pay a deposit as a percentage of the value of the contract.

After the forming of contract, shipping lawyers of buyer start to inspect the documents provided by the seller. The inspection of the ship could be conducted in parallel. For the documents inspection, the buyer will check the ship’s class records and certificate records. The inspection of records will reveal the history of the ship’s maintenance in compliance with the requirement of class. Furthermore, the buyer need to check the mortgages and the maritime lien records to make sure that the vessel is free from encumbrances, debts, taxes, mortgages and maritime liens. This will help prevent any damages or loss subject to the legal issue of the ship which may occur before the delivery of the ship. The buyer should also acknowledge of whether the ship owner is in debts for fuels or salaries, etc. However, in some case, it may be difficult to verify such information without the collaboration of the ship owner.

For the physical inspection, instead of just checking the logbook for the status of the ship, it is preferable to hire a professional examiner to control the process of physical inspection relating the safety, certificates, equipment and engine issues. Sending a person on the ship to participate in some of the ship’s voyages may be advisable in circumstances.

At closing, the parties shall transfer the ship and all related documents as required. During the stage of delivery, the buyer physically accepts the delivery of the vessel after re-checking the status of the vessel, the remaining amount of fuel and engines status at the designed port. The place for delivery may be at a different location from where the contract was made. It depends on the agreement between the parties and usually for the convenience of the voyage.

An important document that needs to be transfer at this stage is the Bill of Sale. The Bill of Sale should be in proper form and duly notarized. In some country, it is crucial to get the Bill of Sale registered at the authority agencies in order for it to take effect.

Other procedures that the parties also need to complete at the state’s authority agencies include legalization of the ship transaction process, transference of vessel ownership and modification of the shipping registration. The state where parties are to complete such procedure shall be the country where the vessel is registered (the country which the vessel is permitted for flying flag).

Why Shipping Lawyers are Important in Ship Transaction?

Seagoing vessel is a special type of asset in a commercial transaction. When engaging in a contract to purchase a vessel, it is important to consider not only the nationality of the owner but also the nationality of the vessel itself. As the process of the transaction involves many procedures and requirements which usually need to be complete at the state’s authority agencies, the law of the country where the vessel is registered shall have a strong influence on the interpretation and execution of the contract.

The model contract usually comes with specific requirements on the content and form of the commercial invoice and the Bill of Sale pursuant to the national legislation (the nation where the vessel is registered). The parties may agree to change some of the clause in the model contract to meet their demand in the transaction. However, if a model contract is chosen to be used, the parties should at all time acknowledge of all the clauses existing in the contract and try to comply with the form and requirement of such documents.

Most of the transferred documents in a vessel transaction need to be notarized or legalized in order for the contract to take effect. However, the process of notarized and legalized in some country only certify that the documents have been duly signed and stamped, it doesn’t confirm or verify the certainty of the content and information provided in the documents. Therefore, both parties should require the other to provide the certificate or proof of the competent authority agencies confirming the certainty of the information or content that they have committed in the contract. For example, in a ship transaction, the buyer usually required seller to commit that the ship is free from any encumbrances, debts, taxes, mortgages and maritime liens. To confirm the certainty of such information, the buyer may require the seller to provide documents or certification from National Registration Agency for Secured Transactions to ensure the documents are provided in good faith. To reduce the risks, the buyer may also ask for a specific clause in a contract stating the liability of the seller in the event of future dispute relating the vessel.

In case one parties of the contract is an organization or company, the required documents should include the Minute of the Joint Meeting and Decision/ Approval of Directors or Shareholders resolving the sale of the vessel in accordance with the term and conditions of the MOA. Those documents should be duly established and signed in accordance with the requirement of the national legislation (law of the country where the company is set up). The Approval of Shareholder should also require the signature of all the shareholders of the company in order to avoid future disputes that may arise. Other documents which parties should also consider including Association’s Regulation, authorized papers, passports and personal documents of the representatives of each party. This will help better understand the legal position of parties in the contract, ensure their legal status to engage and perform in the contract.

ANT Lawyers have experience in laws and shipping matters to advice clients whom are interested to buy ships from Vietnam ship owners. We assist our clients in the process of reviewing contract, examining the documents and giving useful consultation for the sale and purchase procedure.

How ANT Lawyers Could Help Your Business?

ANT Lawyers is a law firm in Vietnam located in the business centers of Hanoi, Danang and Ho Chi Minh City. We provide convenient access to our clients. Please contact us to book your time in advanced to let us provide our best service.

Call us at +84 28 730 86 529 or send us email ant@antlawyers.vn