Decree No. 32/2001/ND-CP dated July 05, 2001 of the Government detailing the implementation of the Ordinance on negotiable instruments

DECREE

DETAILING THE IMPLEMENTATION OF THE ORDINANCE ON NEGOTIABLE INSTRUMENTS

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Ordinance on Negotiable Instruments of December 24, 1999;

At the proposal of the Governor of the Vietnam State Bank,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.-Scope of regulation

1. This Decree details and guides the implementation of the Ordinance on Negotiable Instruments.

2. The provisions of the Ordinance on Negotiable Instruments and this Decree govern negotiable instrument relations arising from trade activities, which involve one or a number of credit institutions in its/their capacity as the acceptor(s) of loan provision for the payment of negotiable instruments or the guarantor(s) for the drawees and issuers of negotiable instruments in the Socialist Republic of Vietnam.

Article 2.-Subjects of application

Subjects of application of this Decree include:

1. Participants in negotiable instrument relations in their capacity as drawers, issuers, drawees, transferors, payees, guarantors or pledgees that must be enterprises defined in Article 2 of the Ordinance on Negotiable Instruments, except for cases where foreigners participate in negotiable instrument relations in their capacity as payees.

2. Credit institutions must not take part in negotiable instrument relations in their capacity as issuers or drawers.

Article 3.-Time limits for payment of negotiable instruments

The time limits for payment of negotiable instruments shall be agreed upon by the goods sellers or the trade service providers and the goods buyers or the trade service receivers, and inscribed on negotiable instruments, which, however, must not exceed 180 days, for negotiable instruments used in domestic trade activities and 364 days, for negotiable instruments used in import and export activities of Vietnamese enterprises and foreign traders, except for negotiable instruments drawn for immediate payment upon their presentation. Where the payment of negotiable instruments is made beyond the above-said time limits, Vietnam State Bank’s written approval is required.

Article 4.-Negotiable instruments inscribed with payment in foreign currencies

1. Negotiable instruments shall be inscribed with payment in foreign currencies only when they arise from trade activities, in which one participant is a non-resident.

2. Negotiable instruments inscribed with payment in foreign currencies prescribed in Clause 1 of this Article shall be paid in foreign currencies when the ultimate payees are allowed to collect foreign currencies according to the law provisions on foreign exchange management.

3. For negotiable instruments inscribed with payment in foreign currencies at variance with the provisions of this Decree and the law provisions on foreign exchange management, the sums of money inscribed thereon shall be paid in Vietnam dong at the exchange rates announced by Vietnam State Bank at the time of payment.

Article 5.-Forms of negotiable instrument, language used in negotiable instruments

1. Vietnam State Bank shall design and organize the printing of negotiable instrument forms. The supply of negotiable instrument forms for enterprises shall comply with the regulations of Vietnam State Bank.

2. Negotiable instruments issued by enterprises must be made in Vietnamese language on the pre-printed forms of the Vietnam State Bank. In cases where negotiable instrument relations involve foreign elements, those issued in Vietnam must be made in Vietnamese and English languages.

Article 6.-Term interpretation

In this Decree, the following expressions shall be construed as follows:

1. "Negotiable instrument relations arising from trade activities"mean the negotiable instrument relations arising on the basis of a negotiable instrument issued to pay for a goods sale and purchase transaction or trade service provision;

2. "Signature of person having rights and obligations on a negotiable instrument"means the hand-written signature on the negotiable instrument, affixed with stamp (if any) of the person having rights and obligations towards the negotiable instrument or of the authorized person prescribed by law.

Chapter II

SPECIFIC PROVISIONS

Article 7.-Additional sheets attached to negotiable instruments

Where an additional sheet is attached to a negotiable instrument as prescribed in Clause 3 of Article 11 and Clause 3 of Article 17 of the Ordinance on Negotiable Instruments, such additional sheet must have the same size as the negotiable instrument and shall be used for inscription of the contents of guaranty, transfer, pledge or authorized collection via banks when the negotiable instrument has no more room for the inscription of such contents. The additional sheet shall be valid only when it is attached to the negotiable instrument.

Article 8.-Acceptance of drafts

1. The presentation of a draft for acceptance shall be valid when the following conditions are fully met:

a/ The draft is presented by the payee or its lawful representative;

b/ The payment time limit has not yet expired;

c/ The draft is presented to the right address of the drawee, which is prescribed thereon;

d/ The draft is presented during working hours of a working day.

2. The via-post presentation of a draft in form of a registered letter shall be considered valid. The date of draft presentation for acceptance in this case shall be determined according to the date of its sending inscribed on the postage stamp.

3. The drawee shall have to sign for acceptance as soon as the draft of validly presented according to the provisions in Clauses 1 and 2 of this Article. The draft shall be considered as refusal of acceptance if it is not signed for acceptance by the drawee right at the time of its presentation, but the drawee must issue a document on refusal of acceptance of the draft, clearly stating the reasons therefor.

4. The draft acceptance by the drawee shall be considered valid when the draft is inscribed fully with the contents prescribed in Article 14 of the Ordinance on Negotiable Instruments.

Article 9.-Issuance of negotiable instruments

1. Negotiable instruments falling within the scope of regulation of the Ordinance on Negotiable Instruments and this Decree shall be issued in one of the following cases:

a/ The goods seller or the trade service provider makes and signs for issuance a draft, requesting the drawee being the goods buyer or trade service receiver to pay the sum of money inscribed thereon, and the drawee is guaranteed by a credit institution to pay the draft upon its maturity.

b/ The goods buyer or the trade service receiver makes and signs for issuance a draft and it is signed for acceptance by a credit institution to provide loan for payment to the payee;

c/ The goods buyer or the trade service receiver being the issuer of an order of payment commits itself to pay the payee and the issuer is guaranteed by a credit institution.

2. Credit institutions participating in negotiable instrument relations under the provisions of this Decree must get written consent from the Vietnam State Bank.

Article 10.-Obligations of concerned persons

1. The drawer shall have the following obligations:

a/ To take final responsibility for the payment of the sum of money inscribed on a draft if the drawee refuses to accept the whole or part of the sum of money inscribed on the draft presented for acceptance in accordance with the provisions of this Decree.

b/ To pay the sum of money inscribed on the draft if the acceptor refuses to fully pay it when the draft is presented for acceptance strictly according to regulations;

2. The drawee accepting the draft shall have the following obligations:

a/ To pay the already accepted draft;

b/ To take final responsibility for the payment of the sum of money already signed for acceptance on the draft;

3. The issuer of an order of payment shall take final responsibility for the payment of the sum of money inscribed thereon to the goods seller, trade service provider or transferee when the order of payment is presented for payment on time at the right place inscribed thereon.

4. The guarantor is obliged to pay the full sum of money already committed for guaranty, provided that the guaranteed fails to fulfil the payment obligation when the negotiable instrument turns mature.

5. The negotiable instrument transferor is obliged to pay the negotiable instrument to the succeeding payee if such negotiable instrument is not fully paid upon its maturity.

Article 11.-Guaranty of negotiable instruments

1. Guaranty of a negotiable instrument is the act whereby a third party, hereafter referred to as the guarantor for short, commits to the guarantee (the payee) to pay the whole or part of the sum of money inscribed on the negotiable instrument, if the guaranteed (the drawee, issuer or transferor) fails to pay or fully pay the amount of money inscribed on the negotiable instrument when it becomes due.

2. The guarantor for the issuer and the acceptor are obliged to pay the guaranty money amount when the issuer and the acceptor fail to fully pay the due sum of money inscribed on the negotiable instrument.

3. The guarantor for the drawer is obliged to pay the guaranty money amount when the drawer fails to fulfil its obligation to pay the mature negotiable instrument.

4. The guaranty of a negotiable instrument shall be recorded in a separate document or inscribed on the negotiable instrument. The document on the negotiable instrument guaranty needs not be notarized or authenticated by the Notary Public or People’s Committees of different levels, except otherwise agreed upon by the concerned parties.

5. The guaranty must not be cancelled, except for the following cases:

a/ The negotiable instrument is not made on the pre-printed form issued by the Vietnam State Bank;

b/ The negotiable instrument is not made in Vietnamese or Vietnamese and English languages in cases where foreign elements are involved;

c/ The draft lacks one of the contents prescribed in Clause 1, Article 11 of the Ordinance on Negotiable Instruments.

d/ The order of payment lacks one of the contents prescribed in Clause 1, Article 17 of the Ordinance on Negotiable Instruments.

6. After fulfilling its guaranty obligation, the guarantor shall be entitled to take up the guaranteed s rights towards the concerned parties, including the guaranteed’s security property.

7. The guarantor that has fulfilled the guaranty obligation shall have the right to request the guaranteed, the issuer or the drawee that has signed for the joint-liability acceptance to fulfill the obligation to repay the already paid guaranty money amount.

8. The guaranty by credit institutions shall comply with the provisions of this Decree and other current provisions related to the bank guaranty.

Article 12.-Pledge of negotiable instruments

Negotiable instruments shall be pledged when they fully meet the following conditions:

1. They have been issued in accordance with the provisions of the Ordinance on Negotiable Instruments and this Decree;

2. The phrase "cam chuyen nhuong" (non-transferable) is not inscribed thereon;

3. Their payment time limits have not expired;

4. For drafts, they must be accepted before being pledged.

Article 13.-Time limits and procedures for the pledge of negotiable instruments

1. The time limit for the pledge of a negotiable instrument must not exceed the remaining payment time limit of such negotiable instrument, counting from the date of pledge to the payment deadline inscribed thereon.

2. The procedures for the pledge of negotiable instruments shall comply with the provisions of the Ordinance on Negotiable Instruments and relevant law provisions.

Article 14.-Handling of the pledged negotiable instruments

1. When the pledgor of a negotiable instrument has fulfilled the secured obligation, the pledgee shall have to return the negotiable instrument to the pledgor and inscribe on the back of such negotiable instrument or on the additional sheet the phrase "cham dut cam co" (pledge termination).

2. In cases where the pledgor fails to fulfil the secured obligation within the time limit already agreed upon by the concerned parties, the pledgee shall become the payee of the negotiable instrument. When the negotiable instrument becomes mature, the pledgee shall be entitled to present it for payment. If the money amount collected from the payment of the negotiable instrument is not enough for the fulfillment of the secured obligation, the pledgor shall have to continue performing the obligation already committed with the pledgee. If the money amount collected from the payment of the negotiable instrument is larger than that required for performance of the secured obligation, the pledgee shall have to refund the extra sum to the pledgor.

Article 15.-Transfer of negotiable instruments

1. Negotiable instruments may be transferred among enterprises.

2. A negotiable instrument is transferred when the payee signs on its back and hand it over to the transferee. The transferee shall become the payee as from the time of receiving the negotiable instrument.

3. When issuing a negotiable instrument, the drawer and the issuer may not allow the transfer of such negotiable instrument by inscribing thereon the phrase "Khong chuyen nhuong" (non-transferable).

4. When transferring a negotiable instrument, the transferor may not allow the further transfer of such negotiable instrument by inscribing in the transfer contents the phrase "khong chuyen nhuong" (non-transferable).

5. The drawer, issuer or transferor shall not be held responsible to the payee that is transferred with a non-transferable negotiable instrument prescribed in Clauses 3 and 4 of this Article.

6. The discount and rediscount of negotiable instruments by credit institutions shall comply with the Vietnam State Bank’s regulations. The Vietnam State Bank shall prescribe conditions and types of negotiable instrument for discount or rediscount by credit institutions in each period.

Article 16.-Foreign payees

1. Orders of payment issued or transferred to payees being foreigners not residing in Vietnam or foreign legal persons not permitted to do business in Vietnam must be approved in advance by the Vietnam State Bank.

2. The Vietnam State Bank shall prescribe procedures and conditions for the approval of the issuance and transfer of orders of payment to payees being foreigners not residing in Vietnam or foreign legal persons not permitted to do business in Vietnam.

Article 17.-Presentation of negotiable instruments for payment

1. By the maturity date inscribed on a negotiable instrument, the payee shall have the right to present it at the place of payment, requesting the drawee, for a draft, or the issuer, for an order of payment, to pay the negotiable instrument on the date when it turns mature or within 2 working days after such date. The negotiable instrument may be presented for payment later than the payment deadline inscribed thereon according to the provisions of Clause 2, Article 34 of the Ordinance on Negotiable Instruments.

2. A negotiable instrument, which must be paid "right upon presentation", must be presented for payment within 90 days as from the date of issuance.

3. The payee shall have the right to ask a bank to collect the sum of money inscribed on a negotiable instrument through the signing of the "transfer for authorized collection". For the authorized collection, the payee shall have to fully inscribe the phrase "transfer for authorized collection", the name of the authorized collecting bank, date of transfer for authorized collection and signature of the collection authorizer. The authorized collecting bank is entitled to collect charges according to the Vietnam State Bank’s regulations. The procedures for the authorized collection of negotiable instruments via banks shall comply with the regulations of the Vietnam State Bank.

4. The payee may present the negotiable instrument for payment by mail in form of a registered letter. The time limit for the presentation of the negotiable instrument for payment in this case shall be calculated according to the date of its sending inscribed on the postage stamp.

5. The drawee or the issuer shall have to pay the presented negotiable instrument to the payee within 2 working days as from the date of receiving such negotiable instrument.

Article 18.-Fulfillment of payment obligation in cases where the payee cancels a negotiable instrument

1. The payment of a negotiable instrument shall be considered complete when the payee cancels such negotiable instrument according to the provisions in Clause 2 of this Article.

2. When canceling a negotiable instrument, the payee shall have to clearly inscribe the cancellation on such negotiable instrument with the phrase "cancellation of negotiable instrument", the date of cancellation, then sign and transfer the cancelled negotiable instrument to the drawee, acceptor.

Article 19.-The right to claim payment

The payee shall have the right to claim payment against the following subjects:

1. The drawer or guarantor, in cases where part or the whole of a draft is refused to be accepted as prescribed in Clause 1, Article 13 of the Ordinance on Negotiable Instruments;

2. The drawer or issuer, the transferor or guarantor, when a negotiable instrument becomes mature but is not paid according to its contents;

3. The drawer, transferor or guarantor, in cases where the drawee is declared bankrupt or dissolved, if the draft has already been accepted.

4. The drawer or guarantor, in cases where the drawer is declared bankrupt or dissolved, if the draft has not yet been accepted;

5. The drawer or guarantor, in cases where the drawee is declared bankrupt or dissolved, if the draft has not yet been accepted.

Article 20.-Notice on the refusal of acceptance or refusal of payment

A notice on the refusal of acceptance or refusal of payment shall be considered valid when all the following conditions are met:

1. The notice is made within the time limit prescribed in Article 40 of the Ordinance on Negotiable Instruments;

2. The notice is made by the payee, transferor or representative at law or representative under authorization of the payee, transferor;

3. The notice is made in writing.

Article 21.-Acceptance of payment claims

1. When receiving a notice on the refusal to accept or to pay a negotiable instrument, the transferor, drawer or issuer shall have to reply the payee in writing within 4 working days as from the date of receiving the notice.

2. If accepting the notice, the transferor that has paid the payee shall have the right to claim the refund of the already paid amount according to the provisions of the Ordinance on Negotiable Instruments.

Article 22.-The right to initiate lawsuits

1. The payee that does not receive the sum of money inscribed on a negotiable instrument shall have the right to initiate a lawsuit against the concerned subjects according to the provisions in Section II, Chapter IV of the Ordinance on Negotiable Instruments and other law provisions.

2. After initiating the lawsuit against one or a number of concerned subjects, if the payee still fails to fully receive the money amount inscribed on the negotiable instrument, it shall have the right to initiate lawsuits against other concerned subjects.

3. Concerned subjects against which a lawsuit is initiated as prescribed in Clauses 1 and 2 of this Article shall have the right to initiate a lawsuit against the transferor, drawer, issuer or guarantor (if any) as from the date of fulfilling the payment obligation.

Article 23.-Statute of limitations for lawsuit initiation

1. The payee shall have the right to initiate a lawsuit against the drawer, issuer, guarantor, transferor or acceptor regarding the money amount prescribed in Article 43 of the Ordinance on Negotiable Instruments within 2 years as from the date the negotiable instrument is refused to be accepted or is neither paid nor fully paid.

2. Concerned subjects against which a lawsuit is initiated as prescribed in Clause 1, Article 44 of the Ordinance on Negotiable Instruments shall have the right to initiate a lawsuit against the drawer, issuer, transferor, guarantor or acceptor regarding the already paid money amount prescribed in Article 43 of the Ordinance on Negotiable Instruments within 2 years as from the date of fulfilling the payment obligation.

3. In cases where the payee fails to present a negotiable instrument for payment within the time limit prescribed in Article 34 of the Ordinance on Negotiable Instruments or fails to send notices on the negotiable instrument being refused to be accepted or paid within the time limit prescribed in Article 40 of the Ordinance on Negotiable Instruments, it may only initiate a lawsuit against the acceptor, issuer or drawer within 2 years as from the date the negotiable instrument is signed for issuance.

4. Within the statute of limitations for lawsuit initiation prescribed in Clauses 1, 2 and 3 of this Article, if there appear any objective obstacle beyond the lawsuit initiator’s control, the duration in which such objective obstacle occurs shall not be calculated into the statute of limitations.

Chapter III

HANDLING OF VIOLATIONS AND IMPLEMENTATION PROVISIONS

Article 24.-The following acts are strictly prohibited:

1. Issuing negotiable instruments in contravention of the provisions of Article 9 of this Decree;

2. Counterfeiting or modifying negotiable instruments, thus falsifying the rights and obligations of the concerned parties;

3. Failing to pay negotiable instruments or obstructing the payment of negotiable instruments when they are presented on time at the prescribed place;

4. Transferring negotiable instruments, which have already expired or have been refused to be accepted;

5. Signing negotiable instruments ultra vires.

Article 25.-Handling of violations

Any persons violating the provisions of this Decree shall, depending on the nature and seriousness of their violations, be administratively sanctioned or examined for penal liability; and, if causing damage, pay compensation therefor according to law provisions.

Article 26.-Implementation effect

1. This Decree takes effect 15 days after its signing.

2. The Governor of the Vietnam State Bank shall have to guide the implementation of this Decree.

3. The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People’s Committees of the provinces and centrally-run cities shall, within the scope of their respective functions, tasks and powers, have to guide the implementation of this Decree.