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Vietnam – Languages For Your Documents – Don’t Get Lost In Translation.

27 April, 2012

 

Legal News & Analysis – Asia Pacific – Vietnam – Corporate/M&A

 

When a foreign investor does business in Vietnam, many documents are prepared in more than one languages – Vietnamese and one or more foreign languages. These documents range from transactional documents like contracts, to corporate documents like corporate decisions, minutes, reports, to accounting documents. 

 
Many foreign investors in Vietnam find it difficult to decide whether to prepare also a Vietnamese version for their document, and if so the prevailing language version of their documents. In some cases, language even decides legal validity of a document. This article is to clarify some types of documents where Vietnamese version is required, and to bring some notes on language prevalence issue.
 
Must your documents be in Vietnamese?
 
Yes and No. In general, Vietnamese laws do not require a document to be made in Vietnamese. Accordingly, parties to a contract can generally conclude and get their contract drawn out merely in a foreign language. But there is an exception: Those documents which are submitted to Vietnamese authoritiesmust be at least in Vietnamese.
 
One example: Circular 60/2007/TT-BTC dated 14 June 2007, in its Section V.5, stipulates that the language used in tax documents is Vietnamese. In practice, tax authorities interpret to give this provision a broad sense to effect that all documents submitted to tax authorities have to be in Vietnamese. Consequently, when submitted for tax declaration and other tax procedures the Vietnam tax authorities, contracts evidencing the transactions for which payment is made must be Vietnamese version, or at least in certified Vietnamese translation.
 
Under the Civil Code of Vietnam, the language of a contract is subject to the contract parties’ agreement. This means if a contract between a foreign party and a Vietnamese party is made only in English, such contract is valid. But the rule under the Civil Code has many exceptions.
 
Besides tax authority, there are many other cases requiring Vietnamese version for a document.  Some keep silent on the prevailing language; others claims Vietnamese to take prevalence. Below are some specific cases for the exception. 
 
Foreign investment dossiers: Vietnamese version takes prevalence
 
According to Article 4 of Decree No. 108/2006/ND-CP implementing the Law on Investment, for a foreign invested investment project, the dossier of an investment project and official documents sent to Vietnamese stateagenciesmust be in Vietnamese or in both Vietnamese and commonforeign language(s). And if there is a disparity between the Vietnamese and the foreignlanguage versions, the Vietnamese one shall be applied.
 
In short, the rule under Article 4 of Decree No. 108/2006/ND-CP is that for a foreign invested project, Vietnamese version is a must, and the Vietnamese version prevails over foreign language version(s).
 
Many foreign investors were stunned by the above rule. Carrying their investment in Vietnam with English being their ‘working language’, many foreign investors take it for granted that a commonly used language like English should be recognized at least as equal to Vietnamese. Negotiations for joint venture agreement or other transactional documents are normally conducted in English, and translation is usually deemed as a ‘procedural step’, when the transaction is concluded, and merely for information to Vietnamese stateagencies. As such, budget and time spent for translation are both limited. This may be very risky, and especially to the foreign party, when the Vietnamese version contains inaccurate translations and the inaccuracy is not in favor of the foreign party.
 
Contracts in some other areas – Vietnamese version is a must
 
Another case where contract must be at least in Vietnamese is for technology transfer. Article 14 of the Law on Technology Transfer provides, “The language of a written technology transfer contract shall be as agreed by the parties, but in the case of a transaction in Vietnam there must be a contract in Vietnamese. The Vietnamese and the foreign language versions of a contract shall be of equal validity”. However, anybody working on languages should find that when there is inconsistency or disparity between two versions, taking two language versions as having equal validity is meaningless.
 
In many other pieces of legislation, Vietnamese version is a must for contract. These include Article 9 of the Law on Post, Article 11 of the Decree No. 48/2010/ND-CP on Contracts in Construction Activities, Article 7 of Resolution No. 19/2008/QH12 on Pilot Scheme Permitting Foreign Organizations and Individuals to Purchase and Own Residential Houses in Vietnam. In these cases, different from the rule under Article 108/2006/ND-CP, these provisions keep silent on which language version to be the prevailing one. In these cases, the language to take prevalence in case of inconsistency should be left to the contract parties’ agreement.
 
Some types of internally used documents which must be made in Vietnamese
 
Above, we have discussed the rule under Article 4 of Decree 108/2006/ND-CP, i.e. the Vietnamese version to take prevailing effect in investment documents. Despite the view that the rule applies only during the licensing authorities’ evaluation of application dossiers, at least company’s charter and joint venture agreement (and in some cases share purchase agreement) remain staying under the umbrella of this rule during the company’s operation. So, these documents, though mostly used internally within a company, are subject to the Vietnamese-version-prevailing rule. 
 
Other documents which are required to be made in Vietnamese version include accounting documents, minutes of the general meetings of shareholders of a joint stock company, minutes of meetings of the board of management of a joint stock company.
 
Article 106 and Article 113 of the Law on Enterprises respectively requires that meetingminutes of the general meeting of shareholders and of the board of management must be prepared in Vietnamese and may also be in a foreign language, and that minutes prepared in Vietnamese and foreign languages have equal legal validity.
 
Article 12 of the Law on Accounting provides, “the language used in accounting shall be Vietnamese. In the case where a foreign language must be used in accounting source documents, accounting books and financial reports in Vietnam, both the Vietnamese language and the foreign language must be used simultaneously”.
 
In those provisions of the Law on Enterprises and the Law on Accounting, the statement that Vietnamese and foreign languages have equal legal validity leads to the question that which version, Vietnamese or foreign language version, prevails when there is inconsistency.
 
When reviewing documents of a company, state authorities, e.g. tax authorities or courts, are practically likely to work on the Vietnamese version only. The financial status of a companyand the meaning of a company’s internally used documents are, therefore, more likely determined on the Vietnamese version.
 
Some notes to foreign investors on language in documents used in Vietnam
 
For language version of document, in many cases, it seems Vietnamese laws deviate from the ‘freedom of contract’ rule, to stipulate that Vietnamese version is a must, and in some cases, the prevailing version. From state sovereignty perspective, it is understandable that the Vietnam state agencies need to base on the country’s mother tongue to review documents submitted to Vietnam’s state agencies. 
 
The above requirement is reasonable for non-contract documents, such as accounting documents. For contract, however, the ‘Vietnamese-version-prevailing’ rule may not be entirely reasonable. With respect to provisions not relating to state agencies’ management, e.g. information of private and contractual nature and freely subject to the agreement between the contract parties, the language to be prevailing should be left to the parties’ agreement. 
 
Unreasonable as it is, a rule is a rule. Contract parties should afford to ensure that the Vietnamese version should as accurately as possible reflect the meaning conveyed in the foreign language version. This is because, when in dispute, courtswill bepart of the ‘state agencies’. When the ‘Vietnamese-version-prevailing’ applies, the courts will review the contract to give prevailing effect to the Vietnamese version. Even when the ‘Vietnamese-version-prevailing’ is not stipulated, i.e. when the law keeps silent on the prevailing language or keeps it neutral that both versions are of equal validity, Vietnamese judges would naturally tend to work on their mother tongue.If not reasonably invested, some contents in the English originalmightfail to find their way to present accurately in the Vietnamese translation.
 

 

Bui Ngoc Hong, Partner, Indochine Counsel

hong.bui@ndochinecounsel.com
 
Khuat Hai Long, Indochine Counsel
long.khuat@indochinecounsel.com
 

 

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