Guide on Calculating Late Payment Interest under Article 306 of the Commercial Law (Through Trial Practice)

1. Right to claim interest due to late payment

According to Article 306 of the 2005 Commercial Law, the right to claim interest due to late payment is determined as follows:

"Where the contract-breaching party delays payment for goods or remuneration for services and other reasonable expenses, the aggrieved party has the right to claim interest on such delayed payment at the average overdue debt interest rate in the market at the time of payment corresponding to the period of delay, unless otherwise agreed or provided by law."

Thus, to protect their legitimate rights and interests, the aggrieved party is fully entitled to require the breaching party to pay interest for the period of delayed performance of the payment obligation.

2. Practical application and methods for determining interest rates

a. Providing USD lending interest rates announced by the State Bank on its official website (sbv.gov.vn):

Based on Judgment No. 287 dated September 26, 2024, the Plaintiff provided a Bailiff's Report (Vi bằng) recording the USD lending interest rates announced by the State Bank of Vietnam on its official website, which was accepted by the Trial Panel.

The Plaintiff submitted Bailiff's Report No. 740/2024/VB-TPL (established by Gia Dinh Bailiff Office on August 30, 2024). This report recorded the USD lending interest rates announced on the official website of the State Bank of Vietnam (sbv.gov.vn) in August 2024. Specifically, the average USD lending interest rate of domestic commercial banks for outstanding loans was:

• Short-term: 4.1% - 5.0%/year.

• Medium and long-term: 6.3% - 7.4%/year.

• Interest rate accepted by the Court: Based on the above data, the average interest rate accepted by the Court was 6.83%/year.

• Period of delay: Calculated from the date the breach commenced (March 31, 2021) to the date of the first-instance trial (September 26, 2024), equivalent to 1,275 days.

b. Providing notices of lending interest rates from commercial banks at the time of the trial:

Based on Judgment No. 209/2024/KDTM-ST dated August 22, 2024, of the People's Court of Ho Chi Minh City, the Plaintiff provided 03 Notices of lending interest rates from commercial banks at the time of the trial, which were approved by the Trial Panel.

According to the evidence related to interest rates provided by the Plaintiff, the Court cross-referenced data from 03 different banks:

• Document No. 3017/CNTPHCM-TH of Commercial Joint Stock Bank C (June 14, 2025).

• Document No. 1261/NHNo.TTSG-PC of Bank N2 (June 19, 2024).

• Document No. 7572/HCM-TH of Bank N1 (July 10, 2024).

The collected results showed that the average overdue debt interest rate of these 03 banks was 15%/year. In the aforementioned case, the Plaintiff only requested an interest rate calculation of 10%/year. Considering that the 10%/year rate was entirely within legal limits and did not exceed the market's average interest rate (15%/year) strictly in accordance with Article 306 of the 2005 Commercial Law, the Trial Panel officially accepted the Plaintiff's entire interest claim. This demonstrates the flexibility and respect for the litigants' right to self-determination in commercial cases, provided it does not exceed the statutory ceiling.