The Vietnamese Government has issued Decree No. 21/2021/ND-CP dated March 19, 2021 to guide the Civil Code’s provisions on security for the performance of obligations (“Decree 21”). Decree 21 took effect on May 15, 2021 and replaced Decree 163/2016/ND-CP as amended by Decree 11/2012/ND-CP (“Decree 163”).
Decree 163 will continue to apply to secured transactions executed and implemented before Decree 21 came into effect. For a secured transaction which has not been implemented yet, or is being implemented but has provisions which differ from the provisions of Decree 21, the parties can negotiate to modify the provisions of such secured transaction in compliance with Decree 21.
Decree 21 provides a new important guidance on the establishment and enforcement of secured transactions. Notably, premised on the freedom of contract principle under the Civil Code, Decree 21 recognizes the principle of parties’ autonomy in concluding their secured transaction. Decree 21 introduces a mechanism which is in general more favorable for the secured party to enforce the security over the secured assets. Please refer to the attachment for further details on Decree 21.