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DEBT RECOVERY PROCEDURES FOR FOREIGN CREDITORS AGAINST VIETNAMESE DEBTORS

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Amid the growing pace of international trade, a considerable number of foreign individuals and enterprises enter into contracts for the sale of goods, business cooperation, or the provision of services with counterparties who are Vietnamese citizens. However, not every transaction proceeds smoothly: in many cases, the Vietnamese party delays payment, pays only in part, or deliberately evades its repayment obligations, while the foreign creditor faces considerable obstacles arising from geographical distance, language barriers, differences between legal systems, and unfamiliarity with litigation procedures in Vietnam.

This raises the question: are foreign individuals and entities entitled to initiate legal proceedings and request that the Vietnamese courts resolve a debt claim against a Vietnamese citizen, and if so, what is the applicable procedure?

This article by BKC LAW analyzes the current legal framework of Vietnam governing the recovery of debts involving a foreign element, and sets out the practical procedure to be followed, so that both corporate and individual foreign clients may have a clear understanding before taking any legal steps.

Legal Analysis

In practice, when handling debt recovery matters involving a foreign element, BKC LAW always assesses two possibilities in parallel: (i) the matter constitutes a purely civil or commercial dispute, arising from the debtor’s insolvency or from a disagreement over contractual obligations; or (ii) the debtor’s conduct satisfies the constituent elements of the criminal offense of Abuse of Trust to Appropriate Property under Article 175 of the 2015 Penal Code (as amended in 2017). Correctly identifying the true nature of the case is decisive in choosing the appropriate course of action (a civil lawsuit and/or a criminal complaint), because where indicia of a criminal offense are present, reporting the matter to the investigative authorities can exert significant legal pressure on the debtor and, in many cases, achieve recovery more quickly than reliance on civil proceedings alone.

Constituent Elements of the Offense under Article 175 of the Penal Code

a) Object of the offense: The creditor’s (the victim’s) lawful ownership right over the property.

b) Objective element – forms of conduct: Article 175 requires that the offender must first have lawfully received another person’s property, whether through a loan, a bailment, a lease, a contract of sale, a business cooperation arrangement, or the receipt of a deposit or advance payment, and must thereafter engage in one of the following acts:

Employing deceitful means to appropriate that property (for example, providing false information as to financial capacity, forging documents, or pledging to repay merely to buy time while dissipating assets);

Absconding in order to appropriate the property (for example, severing contact, changing residence, or leaving the locality/the country to evade the repayment obligation);

Failing, in bad faith, to return the property when due, despite having the means and capacity to do so (this is a significant addition introduced by the 2015 Penal Code as compared with earlier legislation, and applies directly to a great many commercial-contract debt cases);

Having used the property for an unlawful purpose, thereby rendering the offender unable to return it (for example, using advance payments or loan proceeds for gambling, unlawful investment, or unauthorized transfer abroad).

c) Subjective element: Direct intent, with the purpose of appropriating the property being a mandatory element. This is precisely what distinguishes a criminal offense from an ordinary civil dispute, in which the debtor, although in arrears, harbors no intent to appropriate the property, engages in no deceit, does not abscond, and retains both the good faith and the capacity to perform the obligation.

d) Subject of the offense: A natural person aged 16 or above who possesses criminal capacity.

e) Property threshold and penalty framework: The offense is constituted where the value of the property appropriated is VND 4,000,000 or more, or, below that threshold, where the offender has previously been subject to an administrative penalty or a criminal conviction for property appropriation not yet expunged and reoffends, or where the property constitutes the victim’s principal means of livelihood. The applicable penalties range from non-custodial reform for up to three years to imprisonment of up to 20 years, depending on the value appropriated and the presence of aggravating circumstances (organized or professional commission of the offense, use of sophisticated means, abuse of position or power, or appropriation of an especially large amount, among others).

Are Foreign Individuals and Entities Entitled to Sue Before the Vietnamese Courts?

Pursuant to Article 4 of the 2015 Civil Procedure Code, agencies, organizations, and individuals are entitled to initiate a civil action to request that the courts protect their lawful rights and interests. This right is not limited by the nationality of the claimant. Accordingly, a foreign individual is fully entitled to bring a debt claim against a Vietnamese citizen before the Vietnamese courts, provided the matter falls within the jurisdiction of the Vietnamese courts under the rules applicable to cases involving a foreign element.

Jurisdiction of the Vietnamese Courts over Cases Involving a Foreign Element

The case described above is a civil case involving a foreign element, since one of the parties is a foreign individual or entity (point a, clause 2, Article 464 of the 2015 Civil Procedure Code).

Under Article 469 of the 2015 Civil Procedure Code, the Vietnamese courts have jurisdiction to resolve civil matters involving a foreign element in a number of circumstances, the most commonly encountered of which are:

  • The defendant is an individual who resides, works, or has long-term residence in Vietnam;

  • The defendant has property within the territory of Vietnam.

Because the debtor is a Vietnamese citizen residing in Vietnam, the Vietnamese courts have jurisdiction to accept and resolve the debt claim. This is a threshold condition and a considerable advantage for the foreign creditor, who need not first litigate before a foreign court and then seek recognition and enforcement of the foreign judgment in Vietnam, but may instead bring the claim directly before the Vietnamese courts.

As to jurisdiction by court level, under Article 35 of the 2015 Civil Procedure Code, a civil matter involving a party located abroad falls within the jurisdiction of the Regional People’s Court or its specialized divisions.

As to territorial jurisdiction, under the general rule set out in Article 39 of the 2015 Civil Procedure Code, the claimant is entitled to bring the action before the court of the place where the defendant resides or works (in the case of an individual) or where it has its head office (in the case of an entity); where the parties have agreed in writing to the jurisdiction of the court of the place where the claimant resides, the action may be brought there instead. However, where the underlying business contract contains a commercial arbitration clause, the dispute must be resolved by arbitration under the 2010 Law on Commercial Arbitration, and the court will decline jurisdiction under Article 6 of that Law where either the claimant or the defendant invokes a valid arbitration agreement. For this reason, before filing suit or commencing arbitration, the parties should carefully review the dispute-resolution clause of the contract to ensure the claim is brought before the properly competent forum.

Statute of Limitations

Under Article 429 of the 2015 Civil Code, the limitation period for bringing a court action to resolve a contractual dispute is three years, running from the date on which the party entitled to make the claim knew or ought to have known that its lawful rights and interests had been infringed — ordinarily calculated from the date on which the borrower or the buyer breached its payment obligation under the contract. This issue must be reviewed at the very outset, because once the limitation period has expired and the defendant raises the defense of limitation, the court may decline to resolve the claim under the ordinary litigation procedure.

Powers of Attorney in Favor of a Law Firm/Lawyer in Vietnam

Because the client is a foreign individual not habitually present in Vietnam and therefore unable to personally conduct the litigation, granting a valid power of attorney to counsel in Vietnam is the essential, threshold step that determines the validity of the entire case file. The following matters must be observed:

First, the form of the power of attorney

The client must execute a Power of Attorney (or Authorization Agreement) in favor of BKC LAW’s lawyers, clearly specifying the scope of authority granted: representation in gathering evidence, sending demand letters, filing the statement of claim, participating in proceedings before the courts at all levels, requesting the application of provisional emergency measures, and representing the client before the civil judgment enforcement authorities.

Second, the documentation required for the proceedings

Where the power of attorney is executed abroad, in order to be valid for use in Vietnam it must be notarized or certified in accordance with the law of the country where it is executed, or certified at a Vietnamese diplomatic or consular mission abroad, and must thereafter be consularly legalized pursuant to Decree No. 111/2011/ND-CP (as amended by Decree No. 196/2025/ND-CP), unless an exemption applies. It should be noted that, as of 11 September 2026, the Apostille Convention (the 1961 Hague Convention) has officially entered into force for Vietnam. Accordingly, for a power of attorney executed in a country that is a party to the Convention and that maintains recognition relations with Vietnam, a foreign client need only obtain an Apostille certificate from the competent authority of that country, rather than undergo the several stages of traditional consular legalization previously required — substantially shortening both the time and the cost involved in preparing the case file. For countries that are not parties to the Convention, or that have objected to Vietnam’s accession, the traditional consular legalization procedure under Decree No. 111/2011/ND-CP continues to apply.

Once the Apostille certificate or consular legalization has been obtained, the power of attorney (if drawn up in a foreign language) must be translated into Vietnamese, with the translation notarized, before it may be submitted together with the statement of claim, since an Apostille does not dispense with the translation requirement.

BKC LAW assists clients in drafting a compliant power of attorney, guides them through the Apostille process or the consular legalization procedure appropriate to their country of residence, and provides a complete notarized-translation service.

Third, the documentation required for the statement of claim

Pursuant to Article 189 of the 2015 Civil Procedure Code, the case file for a debt claim involving a foreign element typically comprises:

  • The statement of claim (in the prescribed form);
  • The business contract, sale contract, or cooperation agreement giving rise to the repayment obligation;
  • Documents and evidence proving delivery of goods, provision of services, remittance of funds, and reconciliation of the debt (debt-reconciliation minutes, email correspondence, text messages, bank statements, invoices, bills of lading, etc.);
  • Any demand letters or notices of breach of the payment obligation previously sent to the debtor;
  • The claimant’s personal or corporate identification documents (passport, certificate of incorporation of the foreign entity, etc.), duly legalized/apostilled and accompanied by a notarized translation;
  • The Power of Attorney in favor of BKC LAW, duly legalized/apostilled and accompanied by a notarized translation;
  • Information on the defendant’s current address and place of work in Vietnam, for service of process by the court.

Procedure and Steps

Step 1: Consultation, case assessment, and evaluation of recovery prospects

BKC LAW receives the client’s information and the documents evidencing the contractual relationship and the debt; assesses the validity of the contract, the applicable limitation period, jurisdiction, and the realistic prospects of recovery (including a preliminary verification of the debtor’s assets in Vietnam); and advises on the optimal course of action — negotiation, mediation, litigation before the courts, or arbitration (where an arbitration agreement exists).

Step 2: Execution of the legal services agreement and completion of the power-of-attorney formalities

The client executes a Legal Services Agreement with BKC LAW and, concurrently, executes the Power of Attorney and completes the Apostille or consular legalization procedure (as applicable to the relevant country), after which the document is translated into Vietnamese and notarized in accordance with BKC LAW’s guidance.

Step 3: Sending a demand letter and pre-litigation negotiation

Before filing suit, BKC LAW ordinarily sends a formal demand letter to the debtor, requiring payment within a stated period and setting out the legal consequences of non-payment. This step increases the likelihood of swift, cost-effective recovery, and also serves as important evidence — both of the creditor’s good faith and of the debtor’s willful default, should the matter proceed to court.

Step 4: Filing the statement of claim with the competent court

If negotiation fails, BKC LAW prepares and files the statement of claim, together with the supporting file and evidence, with the competent People’s Court (ordinarily the Regional Court of the place where the defendant resides), and pays the provisional court fee as notified by the court (the fee being determined in accordance with Resolution No. 326/2016/UBTVQH14, calculated by reference to the value of the debt claimed).

Where there is evidence that the debtor is dissipating assets, BKC LAW may advise the client to request that the court apply provisional emergency measures (such as the attachment of property in dispute or the freezing of bank accounts) pursuant to Articles 111–139 of the 2015 Civil Procedure Code, so as to preserve the prospects of subsequent enforcement.

Step 5: Participation in the court proceedings

BKC LAW represents the client throughout the proceedings: attending the hearing for the exchange, review, and disclosure of evidence and mediation; preparing legal arguments and supplementary evidence; and appearing at the first-instance hearing (and the appellate hearing, if an appeal is lodged). Because the case involves a foreign element, the proceedings may take longer than an ordinary domestic case owing to the requirements for service of process and, where necessary, the taking of evidence abroad, pursuant to Articles 474 to 481 of the 2015 Civil Procedure Code.

Step 6: Application for enforcement

Once the court’s judgment or decision has taken legal effect and the debtor fails to comply voluntarily, BKC LAW represents the client in filing an application for enforcement with the competent civil judgment enforcement authority under the Law on Enforcement of Civil Judgments, and pursues measures such as asset verification, compulsory attachment, freezing of accounts, and deduction from income, in order to recover the debt on the client’s behalf. The limitation period for applying for enforcement is five years from the date the judgment or decision takes legal effect (Article 30 of the Law on Enforcement of Civil Judgments).

Key Points for Foreign Clients to Note

  • Verify the debtor’s assets before filing suit. A judgment, however legally sound, is of little practical value if the debtor has no remaining assets against which to enforce it. BKC LAW recommends that clients cooperate in a preliminary verification of the debtor’s assets and business activities before deciding to litigate.

  • Assemble complete documentary evidence. Contracts, email correspondence, records of international wire transfers, and debt-reconciliation minutes constitute the key evidence in such cases; these should be preserved and organized as soon as a dispute arises.

  • Contract language and dispute-resolution clauses. Where the contract is drawn up in a foreign language, a notarized Vietnamese translation is required for use before the Vietnamese courts; where the contract selects a governing law other than Vietnamese law, or designates a different dispute-resolution forum, counsel should carefully review the clause to determine the correct mechanism for resolution.

  • Time frame. Cases involving a foreign element generally take longer to resolve than purely domestic matters, owing to the formalities for service of process and document legalization; clients should plan accordingly, both in terms of expectations and finances.

  • Costs. These typically include the provisional court fee (partially refundable if the claim succeeds, the losing party bearing the cost), translation, notarization, and legalization/Apostille costs, and the legal service fee as agreed with BKC LAW.

If you are a foreign individual or entity encountering difficulty recovering a debt from a Vietnamese counterparty, please contact BKC LAW for an initial free consultation and the development of an effective, lawful debt-recovery strategy.

This article is intended for general reference and summarizes the laws of Vietnam in force as of the date of publication. Each case turns on its own particular facts; please contact BKC LAW directly for advice tailored to your specific circumstances.

Tel: 0909 073 692

Email: info@bkclaw.vn

District 1 Office: 9th Floor, Diamond Plaza Building, 34 Le Duan, Sai Gon Ward, Ho Chi Minh City

Binh Tan Office: 41 Ten Lua, An Lac Ward, Ho Chi Minh City

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