CASE LAW NO. 08/2016/AL on Dispute over Credit Contracts

CASE LAW NO. 08/2016/AL

Cassation Decision No. 12/2013/KDTM-GĐT dated May 16^th, 2013, by the Judicial Council of the Supreme People’s Court in the commercial case “Dispute over Credit Contracts” in Hà Nội City

Approved by the Judicial Council of the Supreme People’s Court on  October 17^th, 2016, and published under Decision No. 698/QĐ-CA on October 17^th, 2016, by the Chief Justice of the Supreme People’s Court.

Source of the Case Law:

Cassation Decision No. 12/2013/KDTM-GĐT dated May 16^th, 2013, by the Judicial Council of the Supreme People’s Court in the commercial case “Dispute over Credit Contracts” in Hà Nội City, between the plaintiff, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), and the defendant, Kaoli Pharmaceutical Joint Stock Company; with the interested parties being Mrs. Nguyễn Thị Phượng, Mr. Nguyễn Đăng Duyên, and Mrs. Đỗ Thị Loan.

Location of the Case Law’s content:

Paragraph 4 of the “Court’s Opinion” section.

Summary of the Case Law:

– Case Background:

In a credit contract, the parties agreed on the loan interest rates, including in-term interest rates, overdue interest rates, and the adjustment of loan interest rates by the lending bank or credit institution. By the time of the first-instance trial, the borrower had not paid or had not fully paid the principal and interest amounts as stipulated in the credit contract.

– Legal Resolution:

In this case, the borrower must continue to pay the bank or credit institution the outstanding principal, interest on the in-term principal (if any), and overdue interest on the unpaid principal at the agreed rates in the contract until the principal is fully paid. If the parties agreed on adjusting the loan interest rate periodically by the bank or credit institution, the interest rate the borrower must continue to pay, as decided by the Court, will also be adjusted accordingly to the rate changes by the bank or credit institution.

Relevant Legal Provisions:

– Articles 471, 474, and 476 of the 2005 Civil Code;

– Clause 2, Article 91 of the 2010 Law on Credit Institutions;

– Clause 1, Article 1 of Circular No. 12/2010/TT-NHNN dated April 14^th, 2010, of the State Bank of Vietnam guiding credit institutions to lend in Vietnamese Dong to customers at agreed interest rates;

– Clause 2, Article 11 of the Lending Regulation of Credit Institutions to Customers issued with Decision No. 1627/2001/QĐ-NHNN dated December 31^st, 2001, by the Governor of the State Bank of Vietnam, amended and supplemented by Decision No. 127/2005/QĐ-NHNN dated February 3^rd, 2005.

Keywords:

“Interest rate”; “Unpaid principal”; “Credit contract”; “Interest rate adjustment”; “Overdue interest rate”.

CASE DETAILS

According to the lawsuit petition dated July 20^th, 2010, and the documents and evidence in the case file, the facts are as follows:

The Joint Stock Commercial Bank for Foreign Trade of Vietnam – Thăng Long Branch (hereinafter referred to as Vietcombank) and Kaoli Pharmaceutical Joint Stock Company (hereinafter referred to as Kaoli Company) signed 04 credit contracts, including: Credit Contract No. 03/07/NHNT-TL dated December 25^th, 2007; No. 04/07/NHNT-TL dated December 28^th, 2007; No. 144/08/NHNT-TL dated March 28^th, 2008; and No. 234/08/NHNT-TL dated May 27^th, 2008. The aforementioned credit contracts were secured by assets, specifically the ownership of houses and land use rights at the following locations:

– 122 Đội Cấn, Đội Cấn Ward, Ba Đình District, Hà Nội City (land plots No. 46B+39C+37C, map sheet No. 19), under the ownership and use rights of Mrs. Nguyễn Thị Phượng (according to Mortgage Contract No. 1678.2008/HĐTC dated June 25^th, 2008, securing a loan and guarantee up to VND 4,605,000,000; detailed conditions of the loan and guarantee would be specified in banking documents to be signed by Vietcombank and the guaranteed party (Kaoli Company) at Vietcombank’s headquarters (Clause 1.3, Article 1).

The value of the mortgaged asset is VND 4,605,000,000 according to the Asset Valuation Record No. 105/08/NHNT.TL; the mortgage period is 5 years from the date the guaranteed party receives the loan; the contract is effective from the time of registration at the Land Use Rights Registration Office (Clause 10.1, Article 10). This contract was notarized by Notary Office No. 3 of Hà Nội City on June 25^th, 2008, and certified by the Ba Đình District Department of Natural Resources and Environment for mortgage registration of land use rights and attached assets on July 10^th, 2008).

Previously, on September 3^rd, 2007, Mrs. Phượng and Vietcombank signed a Handover Record of the Mortgaged Asset, stating: “Both parties hand over the original documents of the secured asset as follows to ensure the obligations of Kaoli Pharmaceutical Joint Stock Company at the Joint Stock Commercial Bank for Foreign Trade of Vietnam – Thăng Long Branch; asset name: Ownership of houses and land use rights at 122 Đội Cấn, Đội Cấn Ward, Ba Đình District, Hà Nội” (Exhibit 52).

– Group 13, Cluster 2, Nhật Tân Ward, Tây Hồ District, Hà Nội City, under the ownership and use rights of Mr. Nguyễn Đăng Duyên and his wife, Mrs. Đỗ Thị Loan (according to Mortgage Contract No. 1677.2008/HĐTC dated June 25^th, 2008, securing a loan and guarantee up to VND 1,250,000,000; detailed conditions of the loan and guarantee would be specified in banking documents to be signed by Vietcombank and the guaranteed party (Kaoli Company) at Vietcombank’s headquarters (Clause 1.3, Article 1).

The value of the mortgaged asset is VND 1,250,000,000 according to the Asset Valuation Record No. 106/08/NHNT.TL dated September 3^rd, 2007 (Clause 3.1, Article 3); the mortgage period is 5 years from the date the guaranteed party receives the loan; the contract is effective from the time of registration at the Land Use Rights Registration Office (Clause 10.1, Article 10); this contract was notarized by Notary Office No. 3 of Hà Nội City on June 25^th, 2008, and certified by the Ba Đình District Department of Natural Resources and Environment for mortgage registration of land use rights and attached assets on July 1^st, 2008).

Previously, on September 3, 2007, Mr. Nguyễn Đăng Duyên and Vietcombank – Thăng Long Branch signed a Handover Record of the Mortgaged Asset, stating: “Both parties hand over the original documents of the secured asset as follows to ensure the obligations of Kaoli Pharmaceutical Joint Stock Company at the Joint Stock Commercial Bank for Foreign Trade of Vietnam – Thăng Long Branch; asset name: Ownership of houses and land use rights at Group 13, Cluster 2, Nhật Tân Ward, Tây Hồ District, Hà Nội” (Exhibit 58a).

In addition, the loans from the aforementioned credit contracts were secured by assets, specifically houses and land owned by Mr. Cao Ngọc Minh and his wife, Mrs. Đoàn Thị Thanh Thủy; houses and land of Mr. Giang Cao Thắng and his wife, Mrs. Dương Thị Sinh (already released from the mortgage); land use rights of Mr. Chu Quốc Khanh; and houses and land of Mrs. Chu Thị Hồng and Mr. Nguyễn Văn Minh.

Upon executing the contract, Vietcombank – Thăng Long Branch disbursed the loan amount to Kaoli Company according to the mentioned credit contracts. Kaoli Company has only partially repaid the principal and interest. Vietcombank filed a lawsuit requesting the court to compel Kaoli Company to pay the outstanding amount under the 04 mentioned credit contracts, totaling 8,197,957,837 VND (of which: principal is 5,457,000,000 VND, due interest is 397,149,467 VND, and overdue interest up to the date of the first-instance hearing is 2,343,808,370 VND) and to initiate foreclosure on the collateral of Mrs. Nguyễn Thị Phượng, Mr. Nguyễn Đăng Duyên, and Mrs. Đỗ Thị Loan in oreder to recover the debt.

The defendant’s representative, Mr. Đỗ Văn Chính, director of Kaoli Company, stated: He acknowledges that Kaoli Company owes Vietcombank the principal and due interest, and overdue interest according to the 04 credit contracts as stated by Vietcombank. He confirms that the responsibility to repay the debt under the 04 mentioned credit contracts belongs to Kaoli Company and requests to repay gradually within 05 years.

In case Kaoli Company fails to repay the debt or repays it insufficiently, Vietcombank requests the auction of the secured assets of Mrs. Nguyễn Thị Phượng, Mr. Nguyễn Đăng Duyên, and Mrs. Đỗ Thị Loan and proposes the court to resolve this according to the law. Mr. Chính confirms that Vietcombank disbursed the loan before signing the Mortgage Contract No. 1678.2008/HĐTC dated June 25^th, 2008, and Mortgage Contract No. 1677.2008/HĐTC dated June 25rg, 2008. Since June 25^th, 2008, Kaoli Company has not taken any additional loans or signed any other credit contracts with Vietcombank.

Interested parties’ statements:

– Mr. Nguyễn Văn Nghi (representing Mrs. Nguyễn Thị Phượng) stated: Vietcombank filed a lawsuit against Kaoli Company and requested the court to auction Mrs. Phượng’s assets in case Kaoli Company fails to fulfill its debt repayment obligation. He disagreed because Mrs. Phượng signed the mortgage contract on June 25^th, 2008, and thus should not be responsible for guaranteeing Kaoli Company’s loan at Vietcombank under the 04 credit contracts that Vietcombank is currently suing for. He requested the court to compel Vietcombank to release the mortgage and return the Certificate of Land Use Rights and House Ownership to Mrs. Phượng.

– Mr. Nguyễn Đăng Duyên and Mrs. Đỗ Thị Loan jointly stated: They signed a mortgage contract on June 25^th, 2008, but this contract only secures the loan of Kaoli Company at Vietcombank and they will bear all arising responsibilities from the period after June 25^th, 2008, to April 25^th, 2009. They will not be responsible for any credit contracts signed before June 25^th, 2008, between Vietcombank and Kaoli Company. According to Vietcombank, since June 25^th, 2008, no other credit contracts have been signed with Kaoli Company. Therefore, their legal responsibility has not arisen. They requested the court to compel Vietcombank to release the collateral according to the Mortgage Contract dated June 25^th, 2008.

In the First-instance Commercial Judgment No. 32/2011/KDTM-ST dated March 24^th, 2011, the People’s Court of Hà Nội decided:

1. Accept a part of Joint Stock Commercial Bank for Foreign Trade of Vietnam’s claim against Kaoli Company. Kaoli Company is obliged to pay the bank a total debt amount of 8,197,957,837 VND.
2. Reject Joint Stock Commercial Bank for Foreign Trade of Vietnam’s claimto auction the assets, which are the house ownership and land use rights at plot numbers 46B + 39C + 37C, map sheet number 19, address 122 Đội Cấn Street, Đội Cấn Ward, Ba Đình District, Hà Nội, according to the Certificate of House Ownership and Land Use Rights No. 10101132587 issued by the People’s Committee of Ba Đình District on April 27^th, 2004, for Mrs. Nguyễn Thị Phượng, and the house ownership and land use rights at the address of Group 13, Cluster 2, Nhật Tân Ward, Tây Hồ District, Hà Nội, according to the Certificate of House Ownership and Land Use Rights at plot number 13+64A (one part), map sheet number 04, at the address of Group 13, Cluster 2, Nhật Tân Ward, Tây Hồ District, Hà Nội, according to the Certificate of House Ownership and Land Use Rights No. 10103090899 issued by the People’s Committee of Hà Nộion March 23^rd, 2004, for Mr. Nguyễn Đăng Duyên and his wife, Mrs. Đỗ Thị Loan.

The Joint Stock Commercial Bank for Foreign Trade of Vietnam is responsible for returning all documents regarding house ownership and land use rights and to complete the procedures to release the collateral for Mrs. Nguyễn Thị Phượng and Mr. Nguyễn Đăng Duyên, Mrs. Đỗ Thị Loan.”

In addition, the first-instance court decided on the court fees and the right to appeal of the parties according to the law.

On April 4^th, 2011, Vietcombank filed an appeal.

In the Appellate Commercial Judgment No. 148/2011/KDTM-PT dated August 17^th, 2011, the Appellate Court of the Supreme People’s Court in Hà Nội, pursuant to Clause 2, Article 275, and Clause 1, Article 276 of the Civil Procedure Code, ruled:

“Amend the First-instance Commercial Judgment No. 32/2011/KDTM-ST dated March 23^rd and 24^th, 2011, of the People’s Court of Hà Nội regarding the guarantee obligations of Mrs. Nguyễn Thị Phượng and the couple Mr. Nguyễn Đăng Duyên, Mrs. Đỗ Thị Loan, as follows:

Rule: The records of the collateral transfer, pledge, and guarantee on September 3^rd, 2007, between the Joint Stock Commercial Bank for Foreign Trade of Vietnam – Thăng Long Branch and Mrs. Nguyễn Thị Phượng and the couple Mr. Nguyễn Đăng Duyên, Mrs. Đỗ Thị Loan are guarantee contracts (Exhibit 52, 58a).

Order Kaoli Pharmaceutical Joint Stock Company to pay the Joint Stock Commercial Bank for Foreign Trade of Vietnam the total debt of 8,197,957,837 VND…

In the case Kaoli Pharmaceutical Joint Stock Company fails to fulfill or insufficiently fulfills its debt repayment obligation to the Joint Stock Commercial Bank for Foreign Trade of Vietnam, the bank has the right to request the Hà Nội City Civil Judgment Enforcement Department to initiate foreclosure on the guaranteed assets according to the Civil Judgment Enforcement Law to recover the debt based on the guarantor’s responsibility.

… Once the judgment takes effect and the party awarded enforcement initiates a formal enforcement request, the party obligated to comply must pay interest on the overdue amount. This interest will accrue from the effective date of the judgment and will be calculated based on the State Bank of Vietnam’s prevailing base interest rate for the entire delay period.”

Additionally, the appellate court decided on court fees and enforcement procedures.

After the appellate trial, Mrs. Nguyễn Thị Phượng, Mr. Nguyễn Đăng Duyên, and Mrs. Đỗ Thị Loan submitted multiple petitions for reconsideration of the appellate judgment under the cassation procedure.

In the Decision of Protest No. 34/2012/KDTM-KN dated October 15^th, 2012, the Chief Justice of the Supreme People’s Court requested the Judicial Council of the Supreme People’s Court to review the case under the cassation procedure, suggesting the vacatur of the Appellate Commercial Judgment No. 148/2011/KDTM-PT dated August 17^th, 2011, by the Appellate Court of the Supreme People’s Court in Hà Nội, and to remand the case files to the Appellate Court of the Supreme People’s Court in Hà Nội for retrial in accordance with the law.

At the cassation trial, the representative of the Supreme People’s Procuracy agreed with the protest of the Chief Justice of the Supreme People’s Court.

COURT’S OPINION:

Considering the Mortgage Contracts of Land Use Rights and Attached Assets to Guarantee Third-Party Loans (Notarization Numbers: 1677.2008/HĐTC and 1678.2008/HĐTC both dated June 25^th, 2008), it was found:

Both mortgage contracts for land use rights and attached assets to guarantee third-party loans did not specify which credit contract they secured and were signed after the 04 Credit Contracts (No. 03/07/NHNT-TL dated December 25^th, 2007; No. 04/07/NHNT-TL dated December 28^th, 2007; No. 144/08/NHNT-TL dated March 28^th, 2008; and No. 234/08/NHNT-TL dated May 27, 2008) had already been disbursed by Vietcombank – Thăng Long Branch.

According to Clause 1.3, Article 1 of the above mortgage contracts: “The detailed conditions regarding the loan mentioned above (the secured obligation is the highest loan and guarantee amount of 4,605,000,000 VND…; – Clause 1.2, Article 1 of the Mortgage Contract) will be specifically recorded in the bank transaction documents to be signed by party B (Vietcombank – Thăng Long Branch) and the guaranteed party at the premises of party B (Vietcombank – Thăng Long Branch)”.

This can be interpreted that Mrs. Phượng, Mr. Duyên, and Mrs. Loan only guaranteed Kaoli Company’s loans according to the credit contracts to be signed at Vietcombank’s premises after the date of the mortgage contract (June 25^th, 2008) and did not guarantee the loans of the 04 Credit Contracts signed before that date.

Vietcombank relied on Clause 6.2, Article 6 of the 04 aforementioned Credit Contracts regarding loan security measures which contained (handwritten) content: “The detailed agreements on assets, rights, and obligations of the parties are specifically determined in…Mortgage Contract No. 1677.2008/HĐTC dated June 25^th, 2008, and Mortgage Contract No. 1678.2008/HĐTC dated June 25^th, 2008” to request the court to hold Mrs. Phượng, Mr. Duyên, and Mrs. Loan responsible for guaranteeing the loans of Kaoli Company under the 04 aforementioned Credit Contracts.

However, this content, as stated by Vietcombank’s representative at the first-instance trial, was “written by the bank’s accountant.” At the first-instance trial, Mr. Đỗ Văn Chính, Director of Kaoli Company, stated: “Kaoli Company did not know about this addition” and “did not agree with the bank’s request for auction. The assets of Mrs. Phượng and the couple Mr. Duyên, Mrs. Loan were added by the bank in the credit contracts.”

Moreover, at the appellate trial, the authorized representative of Mrs. Nguyễn Thị Phượng stated that Mrs. Nguyễn Thị Phượng did not receive any credit contracts from Vietcombank; while Mr. Duyên and Mrs. Loan did receive credit contracts from Vietcombank. Thus, Mr. Chính, Mrs. Phượng, and the couple Mr. Duyên and Mrs. Loan did not know the handwritten content by the bank’s accountant in the credit contracts, and did not sign the credit contracts, so there is no basis to determine that the above-mentioned credit contracts were secured by Mortgage Contracts No. 1677.2008/HĐTC and 1678.2008/HĐTC both dated June 25^th, 2008.

Besides the above-mentioned two mortgage contracts, the case file contains 02 sets of documents related to asset mortgages: 01 set by Mrs. Phượng; 01 set by the couple Mr. Duyên and Mrs. Loan; each set includes: Asset Valuation Record and Asset Transfer Record, both dated September 3^rd, 2007; Mortgage Registration Application (dated January 29^th, 2008, by Mrs. Phượng; dated June 25^th, 2008, by Mr. Duyên and Mrs. Loan). However, in these Records and Mortgage Registration Applications, it is also not clear which credit contract they secured.

The appellate court concluded (summarized): “The asset transfer, pledge, and guarantee records between the Joint Stock Commercial Bank for Foreign Trade of Vietnam – Thăng Long Branch and Mrs. Phượng, the couple Mr. Duyên and Mrs. Loan made on September 3rd, 2007, all contain content of mortgaging, pledging, and guaranteeing the obligations of Kaoli Pharmaceutical Joint Stock Company at the bank…so it is determined to be a contract…”.

The appellate court ruled: “The asset transfer, pledge, and guarantee records made on September 3rd, 2007, between the Joint Stock Commercial Bank for Foreign Trade of Vietnam – Thăng Long Branch and Mrs. Nguyễn Thị Phượng, and the couple Mr. Nguyễn Đăng Duyên, Mrs. Đỗ Thị Loan, are guarantee contracts (Exhibit 52, 58a)”

It also ruled: “In the event Kaoli Pharmaceutical Joint Stock Company fails to fulfill or fulfill insufficiently its debt repayment obligations to the Joint Stock Commercial Bank for Foreign Trade of Vietnam, the bank has the right to request the Hà Nội City Civil Judgment Enforcement Department to initiate foreclosure on the guaranteed assets according to the Civil Judgment Enforcement Law to recover the debt based on the guarantor’s responsibility.”

The above conclusions and decisions of the appellate court are unfounded and unlawful. Because:

– The asset transfer, pledge, and guarantee records dated September 3^rd, 2007, between Mrs. Nguyễn Thị Phượng (and Mr. Duyên, Mrs. Loan) and Vietcombank – Thăng Long Branch are not guarantee contracts as the appellate court determined.

At the appellate trial on August 17^th, 2011, the representative of Vietcombank only determined: “The asset transfer record, asset valuation record are inseparable parts of the asset mortgage contract.”

– According to the Record of Transfer of Mortgage Assets, Collateral, and Guarantees, Asset Valuation Report, and the presentation by Vietcombank’s representative at the appellate court session, the date of transfer and asset valuation was September 3^rd, 2007. However, the mortgage contract between Ms. Phượng (as well as Mr. Duyên and Ms. Loan) and Vietcombank – Thăng Long Branch was signed on June 25^th, 2008 (after the date of the Asset Transfer and Valuation Report), so these Records cannot be considered an integral part of the aforementioned Mortgage Contract. The appellate court also determined: “The mortgage contract dated June 25^th, 2008… is not related to the transfer records…”

– Based on the dates in the records and the presentation by Vietcombank’s representative at the appellate court session, the date of asset transfer (the original Certificate of Ownership of Houses and Land Use Rights) and asset valuation was September 3^rd, 2007. However, these Asset Valuation Reports state: “Based on the Land Price List in districts in Hà Nội issued together with Decision No. 150/2007/QĐUBND dated December 28^th, 2007 of the People’s Committee of Hà Nội,” and this Report is an inseparable part of Mortgage Contracts No. 1678.2008/HĐTC and No. 1677.2008/HĐTC dated June 25^th, 2008.

Regarding Ms. Phượng’s case, the value of the land use rights was determined according to the Actual Land Valuation Report dated September 4^th, 2007, and Ms. Phượng’s Mortgage Registration Request dated January 29^th, 2008 states: “Mortgage Contract No. 1678.2008/HĐTC signed on June 25^th, 2008.”

On the other hand, according to the presentation and documents provided by Ms. Phượng, Mr. Duyên, and Ms. Loan, as of September 3, 2007, Ms. Phượng’s property was mortgaged at the Vietnam Bank for Agriculture and Rural Development – Quảng An Branch, Tây Hồ District, and was not released until January 11^th, 2008; whereas the property of Mr. Duyên, Ms. Loan was mortgaged at the Bank for Foreign Trade of Vietnam – Thăng Long Branch, and was not released until January 16^th, 2008.

With the evidence presented, it is reasonable to conclude that the Asset Transfer, Collateral, and Guarantee Records were not established on September 3^rd, 2007; the Certificate of Ownership of Houses and Land Use Rights was not transferred on September 3^rd, 2007; the valuation was not conducted on September 3^rd, 2007 as stated by Vietcombank’s representative and accepted by the appellate court.

As of September 3^rd, 2007, mortgage and property guarantee contracts with real estate and land property must be notarized and registered for security transactions in accordance with Point a, Clause 1, Article 130 of the 2003 Land Law; Point a, Item 1, Article 12 of Decree No. 163/NĐ-CP dated December 29^th, 2006; and Sub-Section 2.4, Item 2 of Joint Circular No. 03/2006/TTLT-BTP-BTNMT dated June 13^th, 2006; rather than notarized and registered for security transactions as stated by the appellate court.

The appellate court did not clarify whether there were any other documents, evidence to indicate that the mortgage contracts signed by Ms. Phượng, Mr. Duyên, and Ms. Loan guaranteed the 04 credit contracts of Kaoli Company. Instead, it incorrectly asserted that the Document Transfer Records was a guarantee contract, both in form and textual content.

– If there is evidence that the Mortgage Contracts dated June 25^th, 2008 of Ms. Phượng and Mr. Duyên, Ms. Loan guarantee the aforementioned credit contracts, then Ms. Phượng’s guarantee contract only guarantees the highest loan and guarantee of 4,605,000,000 VND; Mr. Duyên’s and Ms. Loan’s guarantee contract guarantees the highest loan and guarantee of 1,250,000,000 VND.

However, the appellate court’s determination that the Document Transfer Records dated September 3rd, 2007 are guarantee contracts is incorrect. The court stated: “In case Kaoli Joint Stock Company fails to fulfill its obligations or fails to fully repay the debts to the Vietnam Joint Stock Commercial Bank for Foreign Trade, the Vietnam Joint Stock Commercial Bank for Foreign Trade has the right to request the Civil Enforcement Agency of Hà Nội to initiate foreclosure on the mortgaged assets in accordance with the Civil Enforcement Law to recover the debt under the guarantee responsibility of the guarantors.”

This implies that Ms. Phượng, Mr. Duyên, and Ms. Loan must be responsible for the entire debt of Kaoli Company without distinguishing the guarantee responsibilities of Ms. Phượng, Mr. Duyên, and Ms. Loan, which is also incorrect.

Furthermore, the decisions of the first-instance court and the appellate court: “Since the effective date of the judgment and the person to be enforced has a petition for enforcement, the person to be enforced must also pay interest on the amount delayed in enforcement according to the basic interest rate announced by the State Bank corresponding to the delayed enforcement period” are also incorrect. 

For loans from banks and credit institutions, in addition to the principal, accrued interest, overdue interest, and fees that borrowers must pay the lender as of the date of the first-instance trial, borrowers must continue to incur overdue interest on any unpaid principal starting from the day after the first-instance trial until the debt is fully paid. If the credit agreement provides for adjustable interest rates, then the interest rate the borrower must continue to pay due to Court’s judgment will be adjusted according to the lender’s periodic interest rate changes.

In light of the foregoing, pursuant to Article 291 Clause 3, Article 297 Clause 3, Article 299 of the Civil Procedure Code (amended and supplemented in 2011),

DECISION:

1. VacateAppellate Commercial Judgment No. 148/2011/KDTM-PT dated August 17^th, 2011 of the Supreme People’s Court’s Appellate Court in Hà Nộiin the case of commercial disputes over credit contracts between the plaintiff, Vietnam Joint Stock Commercial Bank for Foreign Trade, and the defendant, Kaoli Pharmaceutical Joint Stock Company, and related parties Ms. Nguyễn Thị Phượng, Mr. Nguyễn Đăng Duyên, Ms. Đỗ Thị Loan.
2. Remandthe case files to the Supreme People’s Court’s Appellate Court in Hà Nộifor re-trial in accordance with the law.

CONTENT OF THE CASE LAW:

“The decisions of the first-instance court and the appellate court: “Since the effective date of the judgment and the person to be enforced has a petition for enforcement, the person to be enforced must also pay interest on the amount delayed in enforcement according to the basic interest rate announced by the State Bank corresponding to the delayed enforcement period” are also incorrect. 

For loans from banks and credit institutions, in addition to the principal, accrued interest, overdue interest, and fees that borrowers must pay the lender as of the date of the first-instance trial, borrowers must continue to incur overdue interest on any unpaid principal starting from the day after the first-instance trial until the debt is fully paid. If the credit agreement provides for adjustable interest rates, then the interest rate the borrower must continue to pay due to Court’s judgment will be adjusted according to the lender’s periodic interest rate changes.”

If you need more consulting, please Contact Us at TNHH NT International Law Firm (ntpartnerlawfirm.com)

You can also download the .docx version here.