TEMPORARY SUSPENSION OF ASSET DISPOSAL: PROVISIONAL EMERGENCY MEASURE IN COMMERCIAL LITIGATION

1. Legal basis

Civil Procedure Code No. 92/2015/QH13 dated November 25, 2015;

Resolution No. 02/2020/NQ-HĐTP dated September 24, 2020, guiding the application of certain provisions on provisional emergency measures under the Civil Procedure Code.

2. What is “temporary suspension of asset disposal”

Currently, the law does not provide a specific definition of “temporary suspension of asset disposal.”

In practice, this term is commonly used to refer to the application of provisional emergency measures aimed at "freezing" the status of assets, preventing the obligated party from engaging in acts of disposal such as selling, gifting, pledging, or transferring money out of accounts to evade debt repayment or enforcement.

Since the law does not have a specific term called “temporary suspension of asset disposal,” it is necessary, when implementing, to request one of the provisional emergency measures explicitly to ensure the assets are preserved.

3. Measures for Temporary Suspension of Asset Disposal

Pursuant to Article 114 of the 2015 Civil Procedure Code, several provisional emergency measures may be applied to temporarily suspend asset disposal, including:

(i) Seizure of the disputed assets.

The seizure of disputed assets is applied if, during the litigation process, there is evidence indicating that the party holding the disputed assets engages in disposal or destruction of the assets. Seized assets may be confiscated and preserved by the civil judgment enforcement agency or recorded and handed over to one of the parties or a third party for management until a court decision is issued.

(ii) Prohibition on transferring rights to the disputed assets.

This measure is applied if, during the litigation process, there is evidence showing that the person in possession of or holding the disputed assets is transferring ownership or other rights to the assets to another party.

(iii) Prohibition on altering the condition of the disputed assets.

This measure is applied if, during the litigation process, there is evidence indicating that the person in possession of or holding the disputed assets is dismantling, assembling, constructing, or performing any other act that changes the current state of the assets.

(iv) Freezing bank accounts at banks, other credit institutions, or the State Treasury.

Freezing accounts at banks, other credit institutions, or the State Treasury is applied if, during the litigation process, there is evidence showing that the obligated party has accounts at these institutions and such action is necessary to ensure the resolution of the case or the enforcement of a judgment.

(v) Freezing assets held in custody.

This measure is applied if, during the litigation process, there is evidence indicating that the obligated party has assets held in custody, and the application of this measure is necessary to ensure the resolution of the case or the enforcement of a judgment.

(vi) Freezing assets of the obligated party.

This measure is applied if, during the litigation process, there is evidence indicating that the obligated party possesses assets, and the application of this measure is necessary to ensure the resolution of the case or the enforcement of a judgment.

(vii) Prohibition or mandatory performance of specific acts.

This measure is applied if, during the litigation process, there is evidence indicating that a party, agency, organization, or individual performs or fails to perform certain acts that affect the resolution of the case or the legal rights and interests of other parties involved in the case being adjudicated by the Court.

4. Right to Request Provisional Emergency Measures

Pursuant to Article 111 of the 2015 Civil Procedure Code:

During the litigation process, a party, the legal representative of a party, or an agency, organization, or individual filing the lawsuit has the right to request the court handling the case to apply one or more provisional emergency measures to temporarily address the urgent needs of the party, protect life, health, or property, collect or preserve evidence, maintain the existing status to prevent irreparable damage, and ensure the resolution of the case or the enforcement of a judgment.

In cases of urgent circumstances where it is necessary to immediately preserve evidence or prevent potentially serious consequences, an agency, organization, or individual has the right to request the competent court to issue a decision on the application of provisional emergency measures simultaneously with the submission of the lawsuit to that court.

5. Cases Where Provisional Emergency Measures Cannot Be Applied

Pursuant to Article 4 of Resolution No. 02/2020/NQ-HĐTP, certain cases are excluded from the application of provisional emergency measures, specifically:

(i) The application of the provisional emergency measure would result in the suspension of operations of an enterprise or cooperative.

(ii) The application of the measure prohibiting the transfer of rights over disputed assets, or the freezing of an obligated party’s assets, is not allowed in the following situations:

- The assets are used to secure the performance of an obligation where the security measure has taken effect against third parties, except in cases where the requester of the provisional emergency measure is also the secured party;

- The assets have been sold at auction and the buyer has fully paid for the auctioned assets, except where the auction result is canceled under the law or the parties have agreed otherwise.

(iii) The application of the measure freezing accounts at banks or other credit institutions is not allowed for accounts used by an enterprise to fulfill obligations to a credit institution under a credit agreement.

(iv) The application of provisional emergency measures is not allowed for the following types of assets:

- Assets prohibited from circulation under the law; assets serving national defense, security, or public interest;

- Assets of individuals including: essential food supplies; medicines necessary for prevention or treatment of illness; essential items for persons with disabilities; items for caring for the sick; customary worship items according to local practices; necessary labor tools of modest value used as essential means of living; essential household items;

- Assets of enterprises, cooperatives, or production, business, and service establishments, including: medicines for preventing or treating illness of employees; food, tools, and other assets for employee meals; kindergartens, schools, healthcare facilities, and related equipment, tools, or assets, if they are not business assets; equipment, tools, and means to ensure occupational safety, fire prevention, or environmental protection.

6. Procedure for Applying Provisional Emergency Measures

Pursuant to Article 133 of the 2015 Civil Procedure Code:

A party requesting the court to apply provisional emergency measures must submit a petition to the competent court. Depending on the requested measure, the petitioner must provide the court with evidence demonstrating the necessity of applying the provisional emergency measure.

(i) In cases where the request is made during the litigation process:

- If the court receives the petition before the trial, the assigned judge must review and decide on the request. Within three (03) working days from the date of receipt, if the petitioner is not required to provide a security measure, or has already provided such security, the judge must issue a decision to apply the provisional emergency measure immediately. If the request is denied, the judge must notify the petitioner in writing and state the reasons.

- If the panel of judges receives the petition during the trial, the panel shall review, discuss, and decide in the courtroom. If approved, the panel issues a decision to apply the provisional emergency measure immediately or after the petitioner has completed the required security measures. The implementation of the security measure begins from the time the panel issues the decision requiring it, but the petitioner must present evidence that the security measure has been fulfilled before the panel enters deliberation. If the request is denied, the panel must notify the petitioner immediately in the courtroom and record it in the trial minutes.

(ii) In cases where the request for provisional emergency measures is submitted simultaneously with the filing of a lawsuit:

After receiving the petition along with the lawsuit and accompanying evidence, the Chief Judge of the court shall immediately assign a judge to handle the petition. Within 48 hours from the receipt of the petition, the judge must review and issue a decision to apply the provisional emergency measure. If the request is denied, the judge must notify the petitioner in writing and state the reasons.

Temporary suspension of asset disposal is an essential legal tool that helps balance the interests of the parties involved and ensures the efficiency of the commercial litigation process. Although it is only a temporary measure, it demonstrates the flexibility and timely responsiveness of the law in protecting legal rights, preventing the risk of asset loss, and reinforcing confidence in the judicial system. Understanding the legal basis, conditions for application, and procedural steps for implementing this measure is essential for organizations, enterprises, and individuals participating in commercial relations.