Guide on filing debt collection lawsuits against businesses in Vietnam: document preparation, court jurisdiction, fees, and execution measures.
Bad debts are headache issues for many businesses. When negotiations fail, lawsuit is final option. This article provides effective implementation guidance and increases collection rates, especially for foreign businesses unfamiliar with Vietnamese procedures.
1. Before Lawsuit: Steps to Take
1.1. Send Formal Demand Letter
This document is important because:
- Establishes clear payment request time — basis for calculating late payment interest
- Evidence of goodwill before lawsuit
- Sometimes provides enough pressure for debtor to pay
Send via post with delivery confirmation, keep both document and delivery confirmation.
1.2. Negotiate Payment Agreement
Can negotiate:
- Splitting debt into payment schedule
- Partial waiver to motivate debtor to pay
- Asset security (mortgage, pledge)
All agreements must be in writing and signed by authorized person.
1.3. Collect Evidence
Evidence proving debt:
- Contract (original or notarized copy)
- Invoices, goods/service delivery documents
- Debt confirmation minutes — most important
- Related emails, messages
- Bank statements showing money transfers
2. Court Jurisdiction
Under Code of Civil Procedure 2015:
- District-level Commercial Court: disputes under VND 50 billion
- Provincial-level Commercial Court: disputes from VND 50 billion or with foreign elements
Location: court where defendant has headquarters (or court agreed in contract).
3. Statute of Limitations
- Civil contracts: 3 years from date rights infringed
- Commercial contracts: 2 years
- Cargo transportation: 1 year
After limitation period, court may refuse jurisdiction if defendant requests. This is major risk — must file timely.
4. Lawsuit Documentation
- Lawsuit petition (standard form)
- Supporting evidence documents
- Plaintiff's legal copies (ERC, charter)
- Authorization document (if any)
- Court fee advance payment receipt
5. Civil Court Fees
By Resolution 326/2016/UBTVQH14:
| Dispute Value | Court Fee |
|---|---|
| Under VND 6 million | VND 300,000 |
| VND 6 million - 400 million | 5% of dispute value |
| VND 400 million - 800 million | VND 20 million + 4% of excess over 400 million |
| VND 800 million - 2 billion | VND 36 million + 3% of excess over 800 million |
| VND 2 billion - 4 billion | VND 72 million + 2% of excess over 2 billion |
| Over VND 4 billion | VND 112 million + 0.1% of excess over 4 billion |
Court fee advance = 50% estimated fee. Losing party bears court fees.
6. Applying Provisional Emergency Measures
To prevent debtor asset dispersion, can request court to apply:
- Freeze bank accounts: of defendant
- Freeze assets: real estate, vehicles, machinery
- Prohibit rights transfer: for registered assets
- Suspend transactions: specifically
Must place security deposit (10-20% of asset value) and prove dispersion risk.
7. Summary Procedure (for Simple Cases)
Applies when:
- Request has clear evidence
- Defendant does not dispute obligation
- Or defendant absent after proper summoning
Summary trial faster: 1-3 months vs 6-12 months normal procedure.
8. Civil Judgment Enforcement
After judgment becomes effective:
- File enforcement request with Civil Judgment Enforcement Agency
- Enforcement agency verifies debtor's assets
- Apply coercive measures: freezing, seizure, auction
- Collect funds and transfer to enforcement beneficiary
Enforcement fee: 3% of actual collected amount, minimum VND 200,000, maximum VND 200 million.
9. How to Increase Collection Rate
- File early: longer debtor delays, easier asset dispersion
- Apply emergency measures immediately: freeze accounts, assets
- Investigate assets first: hire private detective or lawyer to identify assets before suing
- Find collateral assets: if mortgage/pledge exists, recovery easier
- Threaten criminal prosecution if signs of fraud or breach of trust
10. Special Considerations for Foreign Plaintiffs
- Documentation: all foreign documents must be apostilled or consularized, translated and notarized
- Representation: usually need power of attorney to Vietnamese lawyer
- Currency: judgments typically in VND, foreign exchange risk for foreign plaintiff
- Foreign asset enforcement: hard to chase debtor's overseas assets via Vietnamese courts
- Alternative: consider international arbitration if contract has arbitration clause
This article is for reference only. Please contact a lawyer for accurate advice.
Frequently Asked Questions
What is actual debt collection rate through Vietnam courts?
Average 30-60% depending on debtor remaining assets. 100% collection only when debtor has capability and goodwill. Most suffer partial loss due to costs and time.
Can debt be collected through debt collection company?
Many debt collection companies exist. Fees typically 20-50% of collected amount. Service quality varies widely — choose licensed providers, no illegal methods like threats or pressure.
Partner is dissolved business, still able to collect?
Difficult. If business dissolved properly, no entity remains to sue. Can sue individual members/shareholders if signs of asset transfer to avoid debt.
Can late payment interest be claimed?
Yes. By Civil Code, late payment interest = 10%/year for normal debt. Commercial debt may calculate at bank interest rate at payment time. Must specifically request in lawsuit petition.
Should we sue for small debt (few tens of millions VND)?
Carefully consider cost time. Debt under VND 50 million typically uneconomical to sue (court fees + lawyer fees may equal the amount). Unless serves as example or easy collection (debtor with clear assets).