Based on the practical run and operation of investment projects in Vietnam through recent years, the Law on Investment 2020 (amended) has accordingly added an additional case for terminating the operation of investment projects, specifically: “Investors implementing investment activities on the basis of false civil transactions according to the provisions of civil law.” (Article 48.2.e Law on Investment 2020).

This provision is a new prominent point in the Law on Investment 2020, however, to implement and apply in practice, it is necessary to clarify the following issues:

1. Definition of an investment activity based on false transaction

The Investment Law 2020 does not clearly define the definition of an investment project based on a false civil transaction, which can make it difficult for both law enforcement and investors to distinguishing between a false transaction and other forms of investment arrangements.

2. Enforcing authority

According to Article 3.2 of Law on Investment 2020, the authority to decide to terminate the operation of an investment project as such is the Investment Registry. However, this agency must firstly prove the existence of such false transaction to later deal with it as law  prescribed. Yet the authority to deal with civil matters rests with the competent Court (Article 132 Civil Code 2015). Therefore, it is unclear whether the right to by virtue of ruling of competent Court.

3. Scope of termination

The Investment Registry may decide to terminate whole or a part of an investment project. However, there is no regulation determining precisely cases in which an investment project is to be terminated wholly or partly. This might lead to a likelihood of abuse of power, and at the same time a lack of detailed instructions for law enforcement.

4. Time to determine the behavior constituted false transaction

The Law on Investment 2020 does not specify whether the subject is an investment project which is "already" implemented or "being" implemented. For example, where their investment has been legalized at the time Investment Registry discovers their transaction was false, then could this Law may be applied retrospectively to deal with such case? From a legislative perspective, this is a large loophole that could make the law ineffective in practice.

In general, false transactions are often difficult to detect and usually discovered when there is a dispute. Therefore, in order to have a mechanism for detection and judgment in practice, it is vital to have more detailed guiding documents for this Law.