In a court dispute, the party, its legal representative, or the entity or individual initiating the case (referred to as “The Party” or “The Claimant”) has the right to request the court to apply one or more emergency temporary measures, including freezing accounts at banks, credit institutions, or state treasuries; freezing assets held elsewhere (“Account Freezing”) in accordance with the Civil Procedure Code 2015, No. 92/2015/QH13 (“Civil Procedure Code 2015”). The temporary account freezing measure is a legal measure that the party can request the court to implement to temporarily halt the transfer or use of funds in the bank, credit institution, or state treasury; freezing assets held by the party being asked to freeze their account.
A request for a temporary account freezing order can be proposed by the claimant if there is a risk that the counterpart may dispose of or transfer assets to evade obligations. This ensures that the claimant has the opportunity to recover funds or assets that the defendant is deliberately avoiding paying.
With an account freezing order, the court can require banks or relevant agencies to stop all transactions or transfers from the account of the party whose account is being frozen to ensure that the assets of the defendant are not transferred during the dispute resolution process.
However, in practice, applying an account freezing order can face many difficulties and is not commonly used. In subsequent articles, ASL LAW will analyze the legal basis for requesting account freezing and the potential difficulties that may arise during the request and implementation process.
Legal Basis for Requesting Account Freezing in Dispute Cases in Vietnam
Clause 1, Article 111 of the Civil Procedure Code 2015 stipulates that during the resolution of a case, the party has the right to request the court to apply one or more emergency temporary measures as specified in Article 114 of the Civil Procedure Code 2015 to temporarily address urgent requests of the party, protect life, health, property, collect evidence, protect evidence, preserve the current state to prevent irreparable damage, ensure the resolution of the case or enforcement of the judgment.
Additionally, emergency temporary measures can only be applied by the court upon the request of the party or its legal representative or an individual or organization with the right to initiate a case. In some cases, the court may also decide to apply certain emergency measures on its own if it deems necessary, even if not requested by the party.
In particularly urgent cases, the application of emergency temporary measures can be requested simultaneously with the submission of the claim to prevent serious consequences that could arise if the process of applying such measures is delayed, as stipulated in Clause 2, Article 111 of the Civil Procedure Code 2015.
Article 114 of the Civil Procedure Code 2015 lists 17 emergency temporary measures that the court can apply to ensure the claimant’s rights and prevent prolonged serious consequences. Among these, the emergency temporary measure of freezing the bank account of the defendant is specified in Clause 10, Article 114 of the Civil Procedure Code 2015.
Specifically: “10. Freezing accounts at banks, credit institutions, state treasuries; freezing assets held elsewhere.”
Accordingly, in urgent cases, to prevent potential serious consequences, the party may rely on this basis to request the court to apply the emergency temporary measure of freezing accounts at banks or other credit institutions, state treasuries, or asset storage locations to prevent actions such as asset concealment or transfer that may affect the claimant’s rights and ensure the case resolution and enforcement proceed smoothly according to the law.
Important Considerations When Implementing Bank Account Freezing in Disputes
The emergency temporary measure of freezing accounts at banks, credit institutions, or state treasuries is regulated under Article 124 of the Civil Procedure Code 2015.
Accordingly, the measure of freezing accounts at banks, credit institutions, or state treasuries is applicable if, during the case resolution, there is evidence showing that the obligated party has an account at a bank, credit institution, or state treasury and that applying this measure is necessary to ensure the case resolution or enforcement.
However, there are many difficulties in applying this emergency temporary measure that the claimant needs to be aware of, including:
Challenges in Accessing Bank Account Information in Dispute Cases
When requesting an account freeze, the court needs accurate information about the amount of money in the account to be frozen, regardless of whether it is more or less than the requested amount. However, information about account deposits, balances, and other account details such as investment assets, security codes, and account holder information are among the most confidential types of information at banks and credit institutions according to legal and internal regulations.
Thus, accessing this information is not straightforward for the claimant in a dispute to request the court to freeze the account.
Clauses 2 and 3, Article 14 of the Credit Institutions Law 2010, No. 47/2010/QH12 stipulate that credit institutions and foreign bank branches must ensure the confidentiality of information related to accounts, deposits, stored assets, and transactions of customers and are not allowed to provide such information to others except under requests from competent state agencies or with customer consent.
Clause 4, Article 4 of Decree 117/2018/NĐ-CP further states the principle of maintaining customer confidentiality, stipulating: “4. State agencies, other organizations, and individuals must keep customer information confidential, use customer information for the intended purpose when requesting information, and not provide it to third parties without customer consent, except as required by law.”
Therefore, banks and credit institutions can only provide information about the deposit amount if they have customer consent, except as required by law. In practice, it is rare for the party whose account is to be frozen to voluntarily provide account information. Moreover, accessing and contacting the party for settlement is also challenging.
Clause 2, Article 12 of Resolution 02/2020/NQ-HĐTP (“Resolution 02”) states: “…The party requesting the application of temporary emergency measures must prove the value of the account or assets to be frozen. The requester is responsible for the accuracy and authenticity of documents related to determining the value of the assets and account to be frozen. The court will base its decision on documents, evidence, and relevant legal provisions to determine the value of the assets subject to the temporary emergency measure.”
Thus, the requesting party must identify and prove the amount in the assets of the party to be frozen so the court can apply the account freezing measure.
However, the current Vietnamese legal framework presents issues with account freezing in disputes, where the requesting party has the burden of proof but lacks access to necessary information.
This contradiction leads to difficulties in applying the temporary emergency measure of account freezing if the defendant does not cooperate, which is often challenging in practice.
In most cases where this measure is applied, besides requiring the requesting party to provide proof and data to determine the amount to be frozen, the court may actively contact banks to request information about the deposit amount, account balance, and other necessary details for the temporary emergency measure.
However, when the court directly requests information from banks or credit institutions, the requesting party must prove that they made every effort to gather the necessary information for the freezing order, usually including a bank’s refusal to provide information or evidence such as emails showing multiple requests with no response or cooperation from the bank.
Additionally, according to Clause 1, Article 4 of Resolution 02, there are cases where temporary emergency measures cannot be applied, including situations where such measures would lead to the suspension of operations of a business or cooperative. Thus, if applying the measure results in the business or cooperative being forced to suspend operations, the account freezing measure cannot be applied.
Obligation to Provide Security by the Party
Aside from difficulties with cooperation from banks and credit institutions to provide detailed information about the account balance, the party requesting the account freeze also has the obligation to provide security at the bank, credit institution, or court as stipulated in Clause 1, Article 136 of the Civil Procedure Code 2015.
This is to ensure that the implementation of temporary emergency measures such as account freezing, which carries inherent risks, has compensation for any damages to the party being subjected to the freezing measure and to prevent misuse of the emergency measures that could harm competing parties in the dispute.
Clause 2, Article 12 of Resolution 02 states: “The party requesting the temporary emergency measure is responsible for the accuracy of documents related to determining the value of the assets and accounts to be frozen…”
Thus, the security deposit will be used to compensate the party being frozen if the court later determines that the temporary emergency measure was applied incorrectly, affecting the rights of the frozen party.
According to Clause 1, Article 13 of Resolution 02, a judge or trial panel will issue a decision to apply the temporary emergency measure only when the requesting party has completed the security provision at the bank, credit institution, or court. The decision requiring the provision of security by the judge or trial panel takes immediate effect.
Due to the immediate enforcement of security measures and the urgency of some disputes, the deadline for providing security should not exceed 48 hours from the time the request is submitted and accepted by the court, as per Point b, Clause 2, Article 14 of Resolution 02. Therefore, providing security might need to occur on weekends, requiring coordination among the requesting party, the court, and the court’s treasurer with the bank as per the process outlined in Clause 3, Article 14 of Resolution 02.
Regarding the value of the security deposit, the party requesting the account freeze must deposit an amount equivalent to potential damages that could arise from the incorrect application of the temporary emergency measure into the frozen account at the bank where the court is located within the time frame set by the court, as per Clause 2, Article 136 of the Civil Procedure Code 2015.
Determining the potential damages is challenging. Therefore, Clause 2, Article 13 of Resolution 02 stipulates that the security must be at least 20% of the estimated value of the asset subject to the emergency measure. If there is clear evidence showing that the damages will be less than 20% of the estimated value, the security deposit will be adjusted accordingly.
For example, if the court applies the emergency measure to freeze an account with 100 billion VND, the requesting party must deposit at least 20 billion VND into the frozen account at the bank where the court is located, unless clear evidence indicates otherwise.
This amount will be returned to the requesting party if the court’s subsequent judgment confirms that the temporary emergency measure was correct and/or no damages or losses occurred due to the account freezing.
ASL LAW hopes this article helps clients understand the legal regulations in Vietnam. The content provided is for reference only. For more detailed understanding, clients can contact ASL LAW directly for assistance with individual cases.
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