Vietnam

Contracts & Force Majeure

Covid-19 – A Force Majeure Event From Vietnam’s Legal Perspective

The respiratory disease caused by a new strain of virus, Covid-19, is a global pandemic spreading over 200 countries and territories, with hundreds of thousands of infections and deaths without any sign of the situation easing. The Covid-19 outbreak has severely affected the global supply chain of goods and the operations of enterprises in numerous sectors from manufacturing to services. Many enterprises are currently unable to perform their executed contracts due to the shortage of labour and raw materials supply, as well as the administrative measures and/or decisions of the state agencies to isolate persons who are infected with the disease.

It is a legal concern of many enterprises whether the Covid-19 outbreak constitutes a Force Majeure event that would warrant an exemption from liabilities or penalties in the event of a breach of a contract.

This Update provides an overview of the concept of a Force Majeure event, and a legal analysis of the Covid-19 outbreak from Vietnam’s legal perspective.   

Support Measures

Control and Support Measures in Vietnam Amid the COVID-19 Pandemic

In response to the COVID-19 pandemic, the Vietnamese Government has introduced a number of measures to manage the spread of COVID-19, and  provide relief to individuals and businesses affected by the outbreak.                           

Pursuant to the Prime Minister’s Directive No. 16/CT-TTg (as extended), nationwide social distancing measures were imposed from 1 April 2020, and had recently ended on 22 April 2020 for high-risk areas (including Hanoi and Ho Chi Minh City). During such measures, people were advised to stay home and only leave for essential purposes. Regarding relief, the Government has rolled out various initiatives for eligible individuals and businesses. These include tax relief (by way of deferral of tax payment deadlines), suspension of social insurance contributions, and the State Bank of Vietnam asking commercial banks to waive, reduce or defer interest payments on loans to affected businesses.

Useful Resources

Vietnam Ministry of Health