Guidance on Some Difficulties in the Adjudication of Business and Commercial Cases by the Supreme People's Court, Pursuant to Official Letter No. 206/TANDTC-PC dated December 27, 2022

In a business and commercial case, after the Court accepts the case, the person who mortgaged the asset (the person with related rights and obligations) dies. The plaintiff and the Court cannot determine the residence of the person inheriting the procedural rights and obligations of the person with related rights and obligations. The Court decides to temporarily stay the resolution of the case pursuant to Point a, Clause 1, Article 214 of the 2015 Code of Civil Procedure. In such a case, where the residence of the aforementioned procedural rights and obligations heir cannot be identified, how should the Court proceed?

Pursuant to Clause 1, Article 74 of the 2015 Code of Civil Procedure on the inheritance of procedural rights and obligations, if a litigant who is an individual participating in the proceedings dies and their rights and obligations concerning property are inheritable, the heir of that person shall participate in the proceedings.

If the plaintiff and the Court cannot determine the residence of the person inheriting the procedural rights and obligations of the person with related rights and obligations, the Court shall apply Point a, Clause 1, Article 214 of the 2015 Code of Civil Procedure to temporarily stay the resolution of the case. Simultaneously, the Court shall instruct the plaintiff to have the right to request the Court to announce a search for the person absent from their place of residence (as stipulated in Chapter XXV of the 2015 Code of Civil Procedure) or to request the Court to declare a person missing (as stipulated in Chapter XXVI of the 2015 Code of Civil Procedure) with respect to the procedural rights and obligations heir. After the result of the search for the person absent from their place of residence is obtained or a decision declaring the procedural rights and obligations heir missing is issued, the Court shall continue to resolve the case according to the general procedures.

2. In a dispute case regarding a credit agreement where the plaintiff is a bank, the Court must consider the legality of the asset mortgage agreement, which the bank appraised before lending, as a basis for resolving the case. If, after the bank appraised the mortgaged asset, there is a third party using this asset (occupying the land or living in the house on the land), should the Court include these people as persons with related rights and obligations when resolving the case?

Clause 4, Article 68 of the 2015 Code of Civil Procedure stipulates: “4. A person with related rights and obligations in a civil case is a person who, although not initiating the lawsuit or being sued, has their rights and obligations related to the resolution of the civil case. Therefore, they may, on their own initiative or at the proposal of other litigants, be accepted by the Court to participate in the proceedings as a person with related rights and obligations. In case the resolution of the civil case is related to the rights and obligations of a certain person, but no one proposes to include them as a person with related rights and obligations, the Court must include them to participate in the proceedings as a person with related rights and obligations.”

In this case, the Court must consider whether the resolution of the case relates to the rights and obligations of this third party. If it is related to their rights and obligations, they must be included to participate in the proceedings as a person with related rights and obligations.

3. In a dispute case regarding a credit agreement, the borrower used the right to use land and the house on the land, which were under their ownership and use, as mortgaged assets to secure the debt repayment obligation under the credit agreement. Subsequently, a third party demolished the old house and constructed a new house on the land. The third party was fully aware that the land use right and the old house on the land were mortgaged to the bank but did not inform the Bank, and the Bank was also unaware of the third party's construction of the new house on the land. The borrower failed to repay the debt on time, leading to the bank's lawsuit. When resolving the dispute, does the Court need to value the asset, which is the newly arising house on the land, and how should this newly arising asset be resolved?

The new house constructed by the third party on the land is an asset arising after the borrower mortgaged the land use right to the Bank under the asset mortgage agreement signed between the borrower and the Bank. Therefore, when resolving the case, the Court must include the third party to participate in the proceedings as a person with related rights and obligations. The Court must base its decision on the agreement of the parties in the mortgage contract and the requests of the litigants to consider whether to value this new house. If the valuation of this asset is necessary and the valuation result of this new house is useful in the process of resolving the case, the Court needs to proceed with the valuation of this asset.

If the borrower breaches the debt repayment obligation, the Court shall, at the request of the Bank, declare the auction/foreclosure of the assets (the land use right and the assets on the land) to fulfill the borrower's debt repayment obligation. During the enforcement process, the third party has the right to priority in receiving the transfer of the land use right and purchasing the assets attached to the land if they have such a need. In case the third party does not receive the transfer of the land use right and does not purchase the assets attached to the land, they shall be reimbursed the value of their asset on the land according to the provisions of the law. 

4. According to the provisions of the 2015 Code of Civil Procedure, litigants have the right to agree to invite an independent valuation organization, and after the valuation, the Court shall base its resolution on the price recorded in the valuation certificate of the valuation organization. However, in case only one of the litigants agrees to invite the valuation organization, and one or the remaining parties do not agree, how should this case be handled?

Clause 2, Article 104 of the 2015 Code of Civil Procedure stipulates: “2. Litigants have the right to agree to select an asset valuation organization to carry out the asset valuation and provide the valuation result to the Court. The asset valuation shall be carried out in accordance with the provisions of the law on asset valuation.”

Thus, according to the above provision, the litigants in the case have the right to agree on selecting an asset valuation organization to perform the asset valuation and provide the valuation result to the Court to resolve the dispute, and the asset valuation shall be carried out in accordance with the provisions of the law on asset valuation. However, the case where only one of the parties agrees to invite an asset valuation organization to carry out the asset valuation and the remaining parties do not agree is a case where the parties cannot agree on the selection of an asset valuation organization to carry out the asset valuation. Therefore, the Court must issue a decision on asset valuation and establish a Valuation Council pursuant to Point b, Clause 3, Article 104 of the 2015 Code of Civil Procedure to serve as a basis for resolving the case.

5. When resolving disputes over Credit Agreements between the plaintiff, a Bank, and the defendant, an Individual Business Household, where the head of the business household is over 60 years old. The individual business household borrowed money to conduct business activities for profit-making purposes. So, is the person over 60 years old in this case exempted from court fees according to Resolution No. 326/2016/UBTVQH14 dated December 30, 2016, of the Standing Committee of the National Assembly?

Clause 1, Article 79 of Decree No. 01/2021/ND-CP dated January 4, 2021, stipulates: “1. A business household shall be established and registered by an individual or members of a household and shall be responsible for its business operations with all its assets. If members of a household register a business household, they shall authorize one member to act as the representative of the business household. The individual registering the business household, or the person authorized by the members of the household to act as the representative of the business household, is the head of the business household.” Pursuant to Clause 2, Article 81 of Decree No. 01/2021/ND-CP dated January 4, 2021, the head of the business household represents the business household as the person requesting the resolution of civil matters, the plaintiff, the defendant, or the person with related rights and obligations before the Arbitration or the Court.

In this case, the head of the business household is only the representative of the business household participating in the proceedings at the Court. Therefore, the business household is the subject that must pay the court fees, not the head of the business household. Consequently, even if the head of the business household is a person over 60 years old, they shall not be exempted from court fees according to the provisions of Point d, Clause 1, Article 12 of Resolution No. 326/2016/UBTVQH14 dated December 30, 2016, of the Standing Committee of the National Assembly.

Source: https://www.toaan.gov.vn/webcenter/portal/tatc/chi-tiet-chi-dao-dieu-hanh?dDocName=TAND285547