Resolution 01/2019/NQ-HDTP guiding regulations on interests and fines for violations

RESOLUTION

Guiding the application of a number of regulations on interests, interest rates and fines for violations^[1]

THE JUDICIAL COUNCIL OF THE SUPREME PEOPLE’S COURT

Pursuant to the November 24, 2014 Law on Organization of People’s Courts;

In order to correctly and uniformly apply the regulations on interests, interest rates and fines for violations;

After consulting the Procurator General of the Supreme People’ Procuracy and Minister of Justice,

RESOLVES:

Article 1. Scope of regulation

This Resolution guides the application of a number of regulations on interests, interest rates and fines for violations under asset-based loan contracts; average interest rates in the market; and decision on interests and interest rates under court judgments or rulings.

Asset-based loan contracts referred to in this Resolution include contracts on cash lending between credit institutions and clients (below referred to as credit contracts), and contracts on cash lending between individuals or legal persons other than credit institutions themselves (below referred to as asset-based loan contracts other than credit contracts).

Article 2. Application of laws on interests and interest rates under asset-based loan contracts other than credit contracts

1. For asset-based loan contracts other than credit contracts entered into before January 1, 2017 (the effective date of the 2015 Civil Code), the application of laws on interests and interest rates is prescribed as follows:

a/ Completed contract means a contract the parties to which have fulfilled their rights and obligations as agreed upon and other rights and obligations arising from the contract as prescribed by law.

For dispute-involving contracts completed before January 1, 2017, the 2005 Civil Code, the National Assembly’s Resolution No. 45/2005/NQ-QH11 of June 14, 2005, on implementation of the Civil Code, and legal documents detailing and guiding the application of the 2005 Civil Code, shall apply;

Example 1: On December 20, 2015, A signed a contract to lend B an amount of VND 10 billion with a term of one year and an agreed interest rate of 18% per year. The contract had come into force and B has paid both loan principal and interest as agreed upon in the contract. On February 20, 2018, B initiated a lawsuit to request A to pay interest because the applied interest rate exceeded 150% of the prime interest rate specified in Decision No. 2868/QD-NHNN of November 29, 2010, of the State Bank of Vietnam (under which the prime interest rate is 9% per year, so the applied interest rate should be 13.5% per year). In this case, the court shall apply Article 476 of the 2005 Civil Code for determining interest rate and excessive interest rate.

b/ Unperformed contract means a contract to which the parties are yet to fulfill their rights and obligations as agreed upon and other rights and obligations arising from the contract as prescribed by law.

For unperformed contracts under which the applied interests and interest rates comply with the 2015 Civil Code, the 2015 Civil Code and legal documents detailing and guiding the application of this Code shall apply. In case the applied interests and interest rates do not comply with the 2015 Civil Code, the 2005 Civil Code, the National Assembly’s Resolution No. 45/2005/QH11 of June 14, 2005, on implementation of the Civil Code, and legal documents detailing and guiding the application of the 2005 Civil Code shall apply, unless the parties agree on the modification of interests and interest rates to comply with the 2015 Civil Code and to apply the 2015 Civil Code.

c/ Ongoing contract means a contract to which the parties have not yet fulfilled their rights and obligations as agreed upon and other rights and obligations arising from the contract as prescribed by law.

For ongoing contracts under which the applied interests and interest rates do not comply with the 2015 Civil Code, the 2005 Civil Code, the National Assembly’s Resolution No. 45/2005/QH11 of June 14, 2005, on implementation of the Civil Code, and legal documents detailing and guiding the application of the 2005 Civil Code shall apply.

For ongoing contracts under which the applied interests and interest rates comply with the 2015 Civil Code, the application of laws for determining interests and interest rates is prescribed as follows:

For the period prior to January 1, 2006, the 1995 Civil Code, the National Assembly’s Resolution dated October 28, 1995, on implementation of the Civil Code, and legal documents guiding the application of the 1995 Civil Code shall apply.

For the period from January 1, 2006, to before January 1, 2017, the 2005 Civil Code, the National Assembly’s Resolution No. 45/2005/QH11 of June 14, 2005, on implementation of the Civil Code, and legal documents detailing and guiding the application of the 2005 Civil Code, shall apply.

From January 1, 2017, the 2015 Civil Code and legal documents detailing and guiding the application of this Code shall apply.

Example 2: On January 1, 2003, A lent B an amount of VND 100 million (under an indefinite-term loan contract) with an agreed interest rate of 8% per year. On January 1, 2018, A initiated a lawsuit to request B to pay the loan principal and interest under the contract. In this case, for the period from January 1, 2003, to before January 1, 2006, the court shall apply Article 473 of the 1995 Civil Code and legal documents guiding the application of this Code to determine interest and interest rate; for the period from January 1, 2006, to before January 1, 2017, the court shall apply Article 476 of the 2005 Civil Code to determine interest and interest rate; and for the period from January 1, 2017, to the date of first-instance trial, the court shall apply Article 468 of the 2015 Civil Code to determine interest and interest rate.

2. For asset-based loan contracts other than credit contracts which are entered into on or after January 1, 2017, the provisions on interests and interest rates of the 2015 Civil Code and legal documents detailing and guiding the application of this Code shall apply.

3. For asset-based loan contracts other than credit contracts, interests and interest rates must comply with the 2015 Civil Code as guided in Clause 1 of this Article in one of the following cases: