Enterprises need legal counsel on 'force majeure' during COVID-19

Enterprises should carefully study the “force majeure” clauses in contracts and consult experts in assessing their rights and obligations pertaining to the clauses to resolve any disputes on contract performance obligations

  during the COVID-19 pandemic, experts have said.

Speakers at a meeting on economic recovery post-COVID-19, organised by ITPC and VIAC. — VNS Photo Bo Xuan Hiep

Speaking at a meeting on June 18 in HCM City, Luong Van Ly, senior advisor of Global Lawyers, and an arbitrator at the Viet Nam International Arbitration Centre (VIAC), said businesses are trying to “figure out whether they, or those with which they have contracted, are excused from contract obligations or have modified duties to perform”.

Disputes include those related to space lease contracts and contracts for sale of products and services such as hotel reservations, tour arrangements, and labour contracts, he said.

Those disputes arise from relevant parties having difficulties in cash flows and sharp decline in revenue caused by social distancing and other measures imposed by the Government, which result in insolvency, he said.

If a contract does not have a force majeure clause about the pandemic and just considers the pandemic a “circumstance of fundamental change”, enterprises should think of bringing the dispute to court, he said.

However, Ly said negotiations should be considered to ensure benefits for all parties to avoid wasting time and money.

Today, many contracts have “force majeure clauses” but it is important to determine whether the pandemic is a force majeure event, according to Ly.

Commercial disruptions caused by travel restrictions, quarantine and social distancing orders, cancellations of large gatherings, and other measures taken to address the crisis will qualify as a force majeure event under many contracts, according to experts.

Force majeure is a term commonly used for contract clauses that deal with unexpected events beyond the control of the contracting parties. These are sometimes called “Acts of God” provisions, and may address natural disasters such as floods, tornadoes, earthquakes and hurricanes, or man-made disruptions such as acts of terrorism, riots, strikes and wars.

Lawyer Le Thanh Kinh, director of Le Nguyen law firm, and an arbitrator at VIAC, said in case of contract cancellation, enterprises must learn about force majeure provisions in international trade to avoid unnecessary risks.

According to both Vietnamese law and international law, an event is considered a force majeure if it was unforeseen and unavoidable despite taking all necessary measures, he said.

“However, it should be noted that the force majeure provision must be carefully considered and studied,” he added.

Online business

Speaking at the event, Le Thanh Kinh, director of Le Nguyen law firm, and an arbitrator at VIAC, said Viet Nam’s retail market in recent years had maintained a high growth rate averaging at about 10 per cent per year, with the retail market value estimated at US$160 billion in 2020.

 

The country is considered one of the fastest growing e-commerce markets in Southeast Asia, second only to Indonesia, he said.

With high and continuous growth since 2015, Viet Nam’s e-commerce had a growth rate of over 30 per cent in 2018, worth about $7.8 billion, according to the Viet Nam E-Commerce Association.

“The number of people using online shopping on e-commerce platforms has also skyrocketed.”

The country saw 39.9 million people shopping online last year, an increase of 11.8 per cent compared to 2018, and nearly double after only three years. The value of online shopping per capita reached $202, up 8.6 per cent year-on-year.

In addition, a legal framework for online business activities has been issued by the Government.

According to Kinh, online business has helped companies survive the current pandemic as consumers are increasingly using the internet to search for products and shop online.

Non-cash payment methods, especially mobile payments, have also become more popular. With social network platforms such as Facebook, Zalo, Tiktok, Instagram, and YouTube, online sales have become increasingly important for companies, he said.

“Businesses should look for new partners instead of depending on a few foreign customers,” he added. Enterprises should also learn about the legal status of the new partners.

Also speaking at the seminar, Cao Thi Phi Van, deputy director of the HCM City Investment and Trade Promotion Centre (ITPC), said to take advantage of free trade agreements (FTAs), businesses should promote market research and regularly update market requirements, improve their competitiveness and quality of human resources; and promote the use of hi-tech in business and production.

They must also understand FTA commitments to make the most of tariff preferences and risk prevention, she said.

Viet Nam has signed 13 FTAs with 58 countries and territories, of which 12 have entered into force. The EVFTA was approved by the National Assembly on June 8. Three FTAs ​​are still under negotiation.

The seminar was organised by ITPC and VIAC. — VNS

EVFTA paves way for high-quality FDI flows from Europe to Vietnam

EVFTA paves way for high-quality FDI flows from Europe to Vietnam

The European Union (EU)-Vietnam Free Trade Agreement (EVFTA) is expected to trigger high-quality FDI flows from Europe to the Southeast Asian country, said Vietnamese Trade Counsellor in Italy Nguyen Duc Thanh.

Vietnamese goods entering EU not straightforward under EVFTA

Vietnamese goods entering EU not straightforward under EVFTA

Quality standards, rules of origin, and legal aspects are said to be among the barriers Vietnamese businesses will have to overcome to gain a foothold in the European market under the EU-Vietnam Free Trade Agreement (EVFTA).

 
 

Other News

.
Retail revenue likely up 3-4% by year-end, compared to 2020
Retail revenue likely up 3-4% by year-end, compared to 2020
BUSINESSicon  16/11/2021 

Thanks to an expected upturn in retail demand between now and the end of the year, the total revenue for 2021 is expected to have grown by three to four per cent, when compared with the previous year. 

Several listed foreign firms report lower profits and losses in 2020
Several listed foreign firms report lower profits and losses in 2020
BUSINESSicon  16/11/2021 

The majority of foreign-invested enterprises listed on Vietnam's stock market either posted lower after-tax profits or losses in 2020 due to the impact of the COVID-19.

Vietnam Airlines’s additional shares to be officially traded from Nov. 19
Vietnam Airlines’s additional shares to be officially traded from Nov. 19
BUSINESSicon  15/11/2021 

The Ho Chi Minh Stock Exchange (HoSE) has announced the additional listing of nearly 800 million shares of Vietnam Airlines Corporation, coded HVN, from November 15.

E-commerce promotes Vietnam's digital economy
E-commerce promotes Vietnam's digital economy
BUSINESSicon  16/11/2021 

While tourism has been hit hard by Covid-19, e-commerce has become the driving force for the digital economy in Vietnam this year.

HCM City distribution chains ensure food supply
HCM City distribution chains ensure food supply
BUSINESSicon  16/11/2021 

Nearly 1,600 workers at a supermarket chain tested positive for coronavirus when the fourth Covid wave in HCM City reached its peak over the summer. One of them died.

Farm exports to EU must follow food hygiene requirements: experts
Farm exports to EU must follow food hygiene requirements: experts
BUSINESSicon  16/11/2021 

After one year of EVFTA (EU-Vietnam Free Trade Agreement) implementation, Vietnam’s farm exports to the EU have increased sharply.

Four ‘economic commanders’ at NA forum share their vision about stimulus package
Four ‘economic commanders’ at NA forum share their vision about stimulus package
FEATUREicon  15/11/2021 

All four ministers of economy-related fields were asked to answer inquiries at the last National Assembly session, a rare occurrence in Vietnam.

Railway goods transport between Vietnam, China surges
Railway goods transport between Vietnam, China surges
BUSINESSicon  15/11/2021 

The total volume of goods traded between Vietnam and China going through the two border-gate railway stations of Lao Cai and Dong Dang reached more than 838,000 tonnes in the first nine months of 2021, up 43 percent year-on-year.

2021's profit outlook mostly reflected in stock prices: FiinGroup
2021's profit outlook mostly reflected in stock prices: FiinGroup
BUSINESSicon  15/11/2021 

The Vietnamese stock market’s valuation is equivalent to 18.2 times 2021’s profit and 14.3 times 2022’s profit forecast, said Fiin Trade, showing that the profit prospects for 2021 are reflected in share prices.

VN's growth and recovery require strong public investment: economists
VN's growth and recovery require strong public investment: economists
BUSINESSicon  15/11/2021 

Financing public investment to generate future growth and to speed up economic recovery post-COVID-19 remained Vietnam's most important challenge in the near future, said economists and policymakers. 

VIETNAM BUSINESS NEWS NOVEMBER 15
VIETNAM BUSINESS NEWS NOVEMBER 15
BUSINESSicon  15/11/2021 

More effective use of trade remedy tools needed when joining FTA: experts

Nursing home market nascent in Vietnam: Savills
Nursing home market nascent in Vietnam: Savills
BUSINESSicon  15/11/2021 

Demand for “housing with care” – a range of residential formats (which often provide care services) for older people – is increasing, but the market remains almost untouched in Vietnam, according to property consultancy Savills Vietnam.

Online shopping in VN to soar by year-end
Online shopping in VN to soar by year-end
BUSINESSicon  15/11/2021 

 Online shopping in Vietnam is expected to increase sharply near the end of the year. 

Market looks for new sources of goods as divestment from state enterprises proceeds
Market looks for new sources of goods as divestment from state enterprises proceeds
FEATUREicon  16/11/2021 

The situation changed in a positive direction when the stock market and and stock prices went up. This will enable divestment from SOEs and the equitization process to take place more easily.

Huge cash flow continues in Vietnam
Huge cash flow continues in Vietnam
FEATUREicon  15/11/2021 

Foreign capital flows are not only poured into Vietnam through FDI projects but also through buying shares in leading companies in the country.

Leeway for economic recovery, development
Leeway for economic recovery, development
BUSINESSicon  14/11/2021 

Government agencies are discussing how to launch a sufficiently large stimulus package to help the economy recover and develop after Covid-19. In the current context, is there room for this policy?

Norway to partner with Vietnam to "awaken" offshore wind power potential
Norway to partner with Vietnam to "awaken" offshore wind power potential
BUSINESSicon  14/11/2021 

Norwegian Ambassador to Vietnam Grete Løchen and Commercial Counsellor Arne-Kjetil Lian recently have handed over the 'Vietnam Supply Chain Study Report' to Vietnamese Minister of Industry and Trade Nguyen Hong Dien.

VN Rubber Association promoting certification grant toward building brand name
VN Rubber Association promoting certification grant toward building brand name
BUSINESSicon  14/11/2021 

To ensure the quality of rubber, a representative of the Vietnam Rubber Association said that it is promoting the grant of the certification Vietnam Rubber.

VIETNAM BUSINESS NEWS NOVEMBER 14
VIETNAM BUSINESS NEWS NOVEMBER 14
BUSINESSicon  14/11/2021 

Transport Ministry unveils prioritised waterway projects in 10 years

HCMC continues delaying seaport fee collection until April 2022
HCMC continues delaying seaport fee collection until April 2022
BUSINESSicon  13/11/2021 

HCM City will continue to extend the due date of collecting fees for using seaports and sea border gates infrastructure works in the city until April 1, 2022.

 
 
 
Leave your comment on an article

OR QUICK LOGIN