Question:
Our company has signed a joint venture contract with a foreign corporation to jointly develop an industrial park. The contract value reaches hundreds of millions of US dollars, and shortly after signing, the foreign partner transferred a portion of its contributed capital to Vietnam. However, just a few months later, the project unexpectedly stalled. The Provincial People's Committee has not yet issued an investment policy decision, the Ministry of Natural Resources and Environment requires the completion of an environmental impact assessment report, and the land clearance process has taken significantly longer than anticipated. This has caused concern for the foreign investor, who has sent a letter requesting the withdrawal of the contributed capital. Meanwhile, we have used part of this capital to cover initial project expenses and are unable to refund the full amount immediately. In this situation, does the foreign investor have the right to withdraw the capital and reclaim the invested amount?
Answer:
The foreign investor may have the ability to reclaim the capital, but this depends on the contract terms and legal procedures. Since the contract lacks precondition clauses and takes effect immediately upon signing as per Article 401 of the 2015 Civil Code:
“Article 401. Effectiveness of a Contract
1.A legally concluded contract takes effect from the time of its conclusion, unless otherwise agreed or unless relevant laws provide otherwise.
2.From the time the contract takes effect, the parties must perform their rights and obligations toward each other as agreed. The contract may only be amended or terminated by mutual agreement of the parties or as stipulated by law.”
Consulting Reference: Foreign Investment Services
