Legal Risks Amidst Legislative Changes: What Businesses Need to Do to Protect Their Contracts

March 21, 2026 | Guidelines, Litigation in Vietnam

In a volatile business environment, it is not uncommon for legal regulations to change while a contract is still being performed. A critical question arises for businesses: Can an agreement legally signed in the past be invalidated by a new, stricter regulation? Correctly identifying the applicable legal instruments not only determines the outcome of a dispute but also ensures the stability of civil transactions. The following article provides a detailed analysis of the transitional provisions under the Civil Code 2015 and their practical application through an Arbitral Tribunal's award.

I. Provisions of the Civil Code 2015

Pursuant to Clause 1, Article 688 regarding the Transitional Provisions of the Civil Code 2015 ("CC 2015"), the application of law for civil transactions established prior to the effective date of the CC 2015 is regulated as follows:

a) For civil transactions that have not yet been performed and contain contents or forms differing from this Code, the parties shall continue to perform in accordance with Civil Code No. 33/2005/QH11 and its guiding documents, unless the parties agree to amend or supplement the transaction to comply with and apply the CC 2015.

For civil transactions currently being performed with contents or forms differing from this Code, the provisions of the Civil Code No. 33/2005/QH11 and its guiding documents shall apply.

b) For civil transactions completed before the effective date of this Code that subsequently face a dispute, the provisions of the Civil Code No. 33/2005/QH11 and its guiding documents shall apply for resolution.

In summary, based on the above provisions, if a civil transaction was established before the CC 2015 took effect but has not yet been performed and differs from the new Code, the Civil Code 2005—the law at the time of execution—continues to apply. Furthermore, any disputes arising from transactions completed before the effective date of the CC 2015 will also be resolved under the 2005 Code.

II. Arbitral Award on Contract Validity Amidst Changing Regulations

Factual Background:

A foreign company (Claimant) and a Vietnamese company (Respondent) entered into a share subscription and purchase agreement in 2009. The contract included a put-option clause where the Respondent agreed to repurchase shares upon certain conditions. When a dispute arose, the Respondent requested the application of a 2012 Decree to challenge the contract, but this was rejected by the Arbitral Tribunal.

Case Conclusion:

Through this case, businesses should recognize that the legality and validity of contractual agreements must be considered based on the legal instruments in effect at the time of execution, unless otherwise provided by law. This means that, barring specific exceptions, a contract's legality is not bound by regulations enacted after the contract was established. This approach prevents the disruption of the parties' reasonable expectations and ensures that transactions legally established under old rules are not invalidated.

In this specific case, the new regulation was stricter than the old one (the repurchase agreement was acceptable under the old law but questionable under the new one), thus the old law was applied. However, instances may occur where new laws are more favorable (e.g., removing a notarization requirement). In such cases, court practice may lean toward applying the new law to "save" a contract that was technically invalid under the old law but conforms to the new standards.

Source: VIAC - Effectiveness of Contracts in Case of Changes in Legal Documents

III. Conclusion

In short, the principle of "non-retroactivity" and the prioritization of transaction stability remain the guiding stars for resolving conflicts of laws over time. However, the boundary between applying old laws to protect parties' expectations and applying new laws to "rescue" formally defective contracts still requires careful attention. To mitigate legal risks, businesses must proactively review transitional provisions as soon as policy changes are announced. If you are facing challenges regarding the applicable law for long-term contracts, please contact our legal experts for the most optimal strategic advice.

The information contained in this article is general and intended only to provide information on legal regulations. DB Legal will not be responsible for any use or application of this information for any business purpose. For in-depth advice on specific cases, please contact us.

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