VIETNAM Law and Practice Contributed by: Chuyen Hong Huu Le, Tan Nhat Truong Phan and Tu Anh Tran, Tilleke & Gibbins
3.2 Security 3.2.1 Typical Forms of Security and Recourse Security over aircraft may be created by way of a mortgage or pledge in Vietnam. Insurance proceeds, payments, rents, profits, revenue or other receivables as the result of the sale, lease or other disposition of the aircraft may also be secured under Vietnamese law. 3.2.2 Types of Security Not Available Apart from a mortgage and pledge, other forms of security are generally impractical to take in relation to an aircraft. 3.2.3 Trust/Trustee Concepts The concepts of trust and security trustee are gener - ally not recognised and the laws also do not allow a bank to act as a security trustee or agent for a foreign lender(s). A bank may instead provide the services of an agent or hold security as an agent in favour of foreign lenders as their authorised representative in a syndicated loan. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee Vietnamese law does not specifically address the assignment of rights to an aircraft by a borrower to a security trustee, which is also not a recognised con - cept. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations To the extent permitted by laws, it is possible to assign the rights and benefits only without assigning the attendant obligations of the lessor under an aircraft lease as well. The prior consent of the counterparty is not required. Notification must be served instead. 3.2.6 Choice of Foreign Law A security assignment or a guarantee could be gov - erned by English or New York law. However, the cho - sen foreign law, irrespective of it being chosen, will not apply in the following circumstances. • The application of the law or the consequence thereof are inconsistent with the fundamental prin - ciples of Vietnamese law.
• The contents of the foreign law are not identifiable regardless of the application of necessary meas - ures prescribed by procedural law. If the chosen foreign law is considered inapplicable, Vietnamese law will apply instead. With respect to an aircraft pledge/mortgage, as a mat - ter of practice, in addition to entering into a security over the aircraft under, and in compliance with, the foreign law, the parties could also enter into a Viet - namese law-governed pledge or mortgage. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments Vietnamese law does not require the security assign - ment to be in a particular form. However, it should be made in writing for registration purposes. In addition, the security assignment in a foreign lan - guage must be translated into Vietnamese and the translation must be certified as a true translation by a Vietnamese notary public. 3.2.8 Domestic Law Security Instruments If an English or New York law-governed security assignment is taken in respect of an aircraft registered domestically there will be no additional domestic law security instrument that a financier needs to take. When the security assignment creates a registrable international interest in respect of an aircraft under the Cape Town Convention, this international interest may be filed in the International Registry. In addition, any change of securing or secured party must also be registered with the Civil Aviation Authority of Viet - nam. The government fee for the filing is VND550,000 (approximately USD22).
3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws
In principle, English or New York law-governed secu - rity assignment or a domestic law security instrument can be registered domestically.
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