Joint Circular of the Supreme People's Court - the Supreme People's Procuracy - the Ministry of Justice - the Ministry of Finance No. 01/TTLT dated June 19, 1997 guiding the adjudication and enforcement of judgments concerning property

I. CASES WHERE THE OBJECT OF THE PROPERTY OBLIGATION IS AMOUNTS OF MONEY AND GOLD

1\. For obligations involving amounts of money for compensation, repayment, wages, division of assets, compensation for effort, maintenance payments, interest-free loans, tax arrears, and illegal gains, the following shall be applied: a) If the damage occurs or the civil obligation arises before July 1, 1996, and during the period from the time of damage or the creation of the obligation to the date of the first-instance trial, if the price of rice increases by more than 20%, then the court shall convert these amounts of money into rice based on the average price of rice in the locality at the time of damage or creation of the obligation (hereinafter referred to as "rice price"), and then calculate the amount of rice converted into money based on the rice price at the time of the first-instance trial to compel the party obligated to pay the amount and bear the litigation fee accordingly.

Example: In January 1995, there was embezzlement of an amount of 1 million VND. If the first-instance trial takes place in October 1996 and the price of rice has increased by more than 20% during this period, the court must convert 1 million VND into rice based on the rice price in January 1995. Assuming the rice price in January 1995 was 2,000 VND/kg, the quantity of rice converted would be 500 kg (1,000,000 VND ÷ 2,000 VND/kg = 500 kg). Assuming the rice price at the time of the first-instance trial in October 1996 is 4,000 VND/kg, in the judgment decision, the court shall compel the person convicted of embezzlement to compensate with an amount of 2 million VND (500 kg × 4,000 VND/kg = 2,000,000 VND) and bear the first-instance civil litigation fee of 100,000 VND (5% × 2,000,000 VND = 100,000 VND).

b) If the damage occurs or the obligation arises after July 1, 1996, or although it occurred before July 1, 1996, but during the period from the time of damage or creation of the obligation to the date of the first-instance trial, the price of rice does not increase or although it increases, it is below 20%, then the court shall only determine the specific amounts of money to compel the party obligated to pay in cash. In cases where the obligor is at fault, in addition to the aforementioned amount, they must also pay interest on the overdue amount according to the late payment interest rate specified by the State Bank corresponding to the period of delay at the time of the first-instance trial as stipulated in Clause 2 of Article 313 of the Civil Code, except in cases where there is a different agreement or a different provision in the law.

Example: In February 1996, Mr. A borrowed 2,000,000 VND without interest from Ms. B, with a repayment term of one month. On March 20, 1996, which is the due date for repayment, Mr. A could not repay Ms. B. After multiple unsuccessful demands, Ms. B filed a lawsuit in August 1996 requesting the court to compel Mr. A to repay the loan and pay interest according to the law.

In this case, the court must determine the date of the obligation to repay the debt as March 20, 1996. Assuming that the first-instance trial takes place on November 20, 1996, and during the period from March 20, 1996, to November 20, 1996, the price of rice did not increase or although it increased, it was below 20%, the court will not convert the amount into rice as directed in point a above, but will compel Mr. A to repay Ms. B the principal amount of 2,000,000 VND and interest as stipulated in Clause 2 of Article 313 of the Civil Code. The interest Mr. A must pay to Ms. B is calculated as follows:

- The period for paying interest is from March 20, 1996, to November 20, 1996, which is 8 months.

- The interest rate to be paid is the overdue interest rate for medium-term loans (since the interest period exceeds six months) at the time of the first-instance trial. According to Decision No. 266-QĐ/NH1 dated September 27, 1996 of the Governor of the State Bank of Vietnam, the interest rate is 2.025% per month (1.35% × 150% = 2.025% per month).

- The total interest Mr. A must pay to Ms. B over the 8-month period is 324,000 VND (2.025% per month × 8 months × 2,000,000 VND = 324,000 VND).

Therefore, the court decides to compel Mr. A to repay Ms. B a total of 2,324,000 VND (2,000,000 VND + 324,000 VND = 2,324,000 VND) and bear the litigation fee as prescribed by law.

2\. For amounts of money confiscated, fines, and litigation fees, the court will only decide on specific monetary amounts when rendering judgment without applying the calculation method provided in Clause 1 above.

3\. For loans and deposits at banks and credit institutions, since the value of these amounts of money is guaranteed through interest rates set by the State Bank, the court will not convert these amounts into rice in any circumstances when rendering judgment, but will compel the party obligated to pay the actual amount borrowed or deposited along with interest from the date of the transaction until the completion of enforcement, according to the applicable interest rate set by the State Bank.

3- With respect to loan and deposit amounts at financial institutions such as banks and credit institutions, since the value of these amounts is guaranteed through interest rates prescribed by the State Bank, therefore, when adjudicating, in all cases, courts shall not convert these amounts into rice, but shall decide to compel the obligor to pay the actual loan or deposit amount together with interest from the transaction date until the execution of the judgment, according to the corresponding interest rate prescribed by the State Bank.

Example: In January 1996, A borrowed 1,000,000 dong from the Bank for a term of six months at an interest rate of 1.75% per month according to Decision No. 381-QĐ/NH1 dated December 28, 1995 of the Governor of the State Bank. Upon expiration of the contract, A did not repay the principal and interest to the Bank. At the first-instance trial in October 1996, the court decided that A must pay the Bank 1,000,000 dong of the principal debt along with the interest on the borrowed amount, including the contractual interest of 105,000 dong (1,000,000 dong x 1.75%/month x 6 months = 105,000 dong) and overdue interest from July 1996 to October 1996 of 105,000 dong (1,000,000 dong x 1.75% x 150% x 4 months = 105,000 dong). The court ordered A to bear the civil litigation fee at the first instance based on the total amount payable at the time of the first-instance trial, which includes 1,000,000 dong of the loan, 105,000 dong of contractual interest, and 105,000 dong of overdue interest from July 1996 to October 1996. In this specific case, the civil litigation fee at the first instance is 60,500 dong (5% x 1,000,000 dong + 105,000 dong + 105,000 dong = 60,500 dong).

4- For loans with interest (including both fixed-term and non-fixed-term loans) outside banking and credit organizations, since the value of these amounts has been guaranteed through the borrower's payment of interest, the court shall not convert such amounts into rice in any circumstances, but only compel the borrower to repay the unpaid principal and unpaid interest.

In calculating interest, the following cases need to be distinguished:

- For loan contracts concluded before July 1, 1996, only the unpaid interest as stipulated in the Civil Code shall be calculated; previously paid interest does not need to be resolved again.

- For loan contracts concluded from July 1, 1996 onwards, interest calculation must comply with the provisions of the Civil Code, and previously paid interest must also be resolved again if the agreed interest rate exceeds the maximum interest rate prescribed in Clause 1 of Article 473 of the Civil Code.

According to the Civil Code, the interest rate is calculated as follows:

a) As a general principle, interest is only calculated on the principal debt, except where otherwise agreed or provided by law.

In addition to the general principle that interest is only calculated on the principal debt, the parties may agree to include interest in the principal debt for the calculation of interest for subsequent borrowing periods. However, to prevent the lender from exploiting this agreement to illegally profit, the court will only accept the inclusion of interest in the principal debt once for fixed-term loans between the parties outside banking and credit organizations at the due date when the borrower fails to fulfill their repayment obligation. Other cases must be calculated according to the overdue interest rate as prescribed in Clause 2 of Article 313 of the Civil Code.

b) If the interest rate agreed upon by the parties exceeds 50% of the highest interest rate prescribed by the State Bank for the corresponding type of loan at the time of borrowing, then the court applies Clause 1 of Article 473 of the Civil Code to compel the borrower to pay interest at 150% of the highest interest rate prescribed by the State Bank for the corresponding type of loan.

Example: A borrowed 10,000,000 dong from B on December 30, 1995, with a term of six months and an interest rate of 4% per month. Monthly, A had to pay interest to B. In July 1996, A stopped paying interest to B. After multiple unsuccessful demands, B filed a lawsuit in November 1996 requesting the court to compel A to repay both the principal and interest to B. When resolving this case, the court ordered A to pay B the principal of 10,000,000 dong and interest calculated as follows:

- The time of borrowing was in December 1995. According to Decision No. 381-QĐ/NH1 dated December 28, 1995, the highest interest rate for medium-term and long-term loans was 1.7% per month. Therefore, the court only accepts the interest rate of the loan contract as 2.55% per month (1.7% + 1.7% x 50% = 2.55% per month).

- The interest A had already paid B before July 1996 is no longer considered by the court.

- The court ordered A to pay B interest from July 1996 to the end of the first-instance trial (assuming it is the beginning of February 1997), which is seven months. Thus, the remaining interest A still needs to pay B is 1,785,000 dong (2.55% x 7 months x 10,000,000 dong = 1,785,000 dong).

c) If the interest rate does not exceed 50% of the highest interest rate prescribed by the State Bank for the corresponding type of loan at the time of borrowing, then the court compels the borrower to pay interest at the agreed rate at that time.

d) In cases where the parties have agreed on interest payment in the loan but have not clearly defined the interest rate or there is a dispute over the interest rate, the interest rate for fixed-term savings as prescribed by the State Bank at the time of the first-instance trial shall be applied according to Clause 2 of Article 473 of the Civil Code.

5- In cases where the subject matter of the loan contract is gold, the interest rate is only accepted when the State Bank has made a provision, and the method of calculating the interest rate is not differentiated as in the cases mentioned in Clause 4 above, but is calculated based on the interest rate prescribed by the State Bank.

II. CASES WHERE THE SUBJECT MATTER OF THE PROPERTY OBLIGATION IS A CURRENT ASSET

1- In cases where the subject matter of the property obligation is a current asset, when resolving the case, it is necessary to examine and determine whether the obligor can perform the obligation to deliver the item, and whether the obligee accepts receiving the current asset, so that depending on each specific case, it is resolved as follows:

a) If there are sufficient conditions to compel the obligor to perform the obligation to deliver the item, the court issues a decision compelling them to deliver the current asset as stipulated in Article 294 of the Civil Code, and in the judgment, it must clearly state the condition, quantity, quality, type... of the current asset to be delivered to ensure clarity and ease of enforcement. However, the court must still determine the market value of the current asset at the time of the first-instance trial to calculate the litigation fee.

Example: A lent B a new Japanese mini bicycle, which B lost. Therefore, A initiated a lawsuit requesting the court to compel B to return the bicycle. At the first-instance trial, the court ordered B to return to A a new Japanese mini bicycle. If the market price of a new Japanese mini bicycle at the time of the first-instance trial was 2,500,000 VND (5% of 2,500,000 VND equals 125,000 VND).

b) If the obligor cannot deliver the object to fulfill the obligation, the court shall decide to compel them to pay the value of the object according to the market price at the time of the first-instance trial and compensate for damages.

2- According to Article 310, Clause 2, Article 311, and Clause 1, Article 313 of the Civil Code, a person who delays or fails to perform the obligation to deliver an object must compensate for damages to the right holder. In cases where the object is not delivered or the obligation to deliver the object is delayed, the damage is the actual income lost or reduced. To calculate specific damages, it can be calculated based on the specific actual income lost or reduced proven by the party suffering the loss, if specific damages cannot be determined, then it is calculated based on the average monthly income (after deducting expenses) of the five consecutive months immediately preceding the time when the obligation to deliver the object arose (if less than five months, then it is calculated based on the average monthly income of those months).

Example: According to the contract, A purchased a wood splitter from B with the delivery date set for September 1, 1996. Since A had bought a new machine, at the end of August 1996, A sold the old machine. When the deadline arrived, B did not deliver the machine to A, causing A to lack a machine for production. At the end of December 1996, A filed a lawsuit against B demanding that B return the wood splitter and compensate for damages. Assuming that A's income in April 1996 was 1,200,000 VND, in May 1996 was 1,700,000 VND, in June 1996 was 1,000,000 VND, in July 1996 was 1,800,000 VND, and in August 1996 was 1,300,000 VND, then A's average monthly income is 1,400,000 VND. Thus, if the first-instance trial took place in January 1997 and accepted A's request, the court would order B to return the machine to A (if B cannot return the machine, B must pay the value of the wood splitter at the time of the first-instance trial) and compensate A for the actual income lost over four months (from September 1996 to January 1997, totaling 5,600,000 VND (1,400,000 VND x 4 months = 5,600,000 VND)).

For this type of damage, the court compels the person causing the damage to compensate until the time the right holder files a lawsuit with the court.

III. PROTECTION OF RIGHTS FOR THE PARTY ENTITLED TO ENFORCE THE JUDGMENT

1- To ensure the rights of the party entitled to enforce the judgment, to limit the situation where the party obligated to perform the judgment deliberately delays or refuses to voluntarily perform it, along with determining the amount of money that the obligor regarding property must pay to the party entitled to enforce the judgment, and the amount of money to be paid into the state budget (seized funds, taxes to be recovered, profits from illegal gains, fines), the court must clearly decide in the judgment or decision that from the date the judgment or decision becomes legally effective (for cases where enforcement agencies have the authority to issue enforcement decisions on their own initiative) or from the date the party entitled to enforce the judgment submits a request for enforcement (for amounts payable to the party entitled to enforce the judgment) until the enforcement is completed, the obligor must bear interest on the outstanding amount to be enforced each month according to the overdue interest rate stipulated by the State Bank corresponding to the period during which the enforcement has not been carried out, as provided for in Clause 2, Article 313 of the Civil Code, except in cases guided by Clause 3, Part 1 of this Circular regarding loans from banking organizations. When calculating interest, only the interest on the outstanding amount is calculated, not the interest on unpaid interest during the enforcement process.

From now on, the court will not unilaterally determine the time or deadline for performance in the judgment or decision, except in cases where the parties have agreed otherwise or the law provides differently.

Example: According to the case example mentioned in point b, Clause 1 of this section, the court ordered Mr. A to pay Ms. B a total of 2,324,000 VND (2,000,000 VND principal + 324,000 VND interest = 2,324,000 VND). The judgment or decision of the court must clearly state: from the date Ms. B submitted the enforcement request, if Mr. A does not pay the aforementioned amount, he must pay interest to Ms. B each month according to the overdue interest rate stipulated by the State Bank corresponding to the period during which the enforcement has not been carried out.

2- If the judgment or decision of the court has ordered the obligor to deliver an object to the right holder, then during enforcement, the obligor must deliver the object according to the court's decision, except in cases where the parties agree among themselves for the obligor to pay the value of the object in cash to the right holder.

In cases where the obligor intentionally fails to deliver the object, the enforcement agency shall apply coercive measures to compel the obligor to deliver the object.

If upon verification there is evidence to determine that the object to be delivered is actually no longer available or the person subject to enforcement has lost the ability to deliver the object (the object is missing; objects of the same type are no longer available for sale on the market; movable property has been severely damaged compared to its condition at the time of the court's first-instance judgment, making the party entitled to enforcement unwilling to accept it...), then the head of the enforcement agency has the authority to mediate so that the party entitled to enforcement accepts the value of the object in monetary form according to current market prices. In cases where the party entitled to enforcement does not agree to accept the value of the object in monetary form and the enforcement agency cannot compel the person subject to enforcement to deliver the object due to the reasons mentioned above, the head of the enforcement agency has the authority to issue a decision compelling the person subject to enforcement to pay an amount equal to the value of the object to be delivered as determined in the judgment or decision of the court and invite the party entitled to enforcement to come and collect it. If the party entitled to enforcement does not come to collect it, then the enforcement agency will proceed with the procedures to deposit the amount into a bank under a non-term savings account in the name of the party entitled to enforcement and inform the party entitled to enforcement that the enforcement process has ended, and the party entitled to enforcement only has the right to withdraw the amount in the savings account (including both principal and interest) bearing their name.

IV. GUIDANCE ON THE EFFECTIVENESS OF THE CIRCULAR

1- This Circular takes effect from July 15, 1997.

2- For cases that have been tried at first instance, second instance, cassation, and retrial, but the judgments and decisions have been appealed or protested before this Circular takes effect and have not yet been resolved, this Circular shall be applied to resolve them.

3- For judgments and decisions of the courts that have taken legal effect before this Circular takes effect and the cases have been resolved in accordance with previous guidance, this Circular shall not be applied to protest them through cassation proceedings.

4- The enforcement of judgments and decisions of the courts that took effect before this Circular takes effect is regulated as follows:

a) In cases where the assets subject to enforcement are objects, the enforcement agency may apply the guidance provided in Part III of this Circular to resolve the enforcement matter.

b) For cases where the assets subject to enforcement are not objects, the enforcement agency shall enforce strictly in accordance with the court's decision, including any interest that the party subject to enforcement must bear due to delayed enforcement. During the implementation of this Circular, if any issues arise, they should be reported immediately to the Supreme People's Court, the Supreme People's Procuracy, the Ministry of Justice, and the Ministry of Finance for timely guidance.