Precedent No. 08/2016/AL

Precedent No. 08/2016/AL on determining interest rates and adjusting interest rates in credit contracts from the day following the first instance trial date was approved by the Council of Judges of the Supreme People's Court on October 17, 2016 and promulgated under Decision No. 698/QD-CA dated October 17, 2016 of the Chief Justice of the Supreme People's Court.

Source of case law:

Final judgment No. 12/2013/KDTM-GDT dated May 16, 2013 of the Council of Judges of the Supreme People's Court on the business and commercial case "Dispute over credit contract" in Hanoi city between the plaintiff, Vietnam Joint Stock Commercial Bank for Foreign Trade, and the defendant, Kaoli Pharmaceutical Joint Stock Company; the persons with related rights and obligations include Mr. and Mrs. Nguyen Thi Phuong, Nguyen Dang Duyen, and Do Thi Loan.

Location of case law:

Paragraph 16 of the “Considering” section of the above cassation decision.

Overview of the case law:

– Case law:

In the credit contract, the parties have an agreement on the loan interest rate, including: the loan interest rate within the term, the overdue debt interest rate, the adjustment of the loan interest rate from time to time by the Bank, the lending credit institution, but by the time of the first instance trial, the borrower has not paid, or has not paid in full the principal and interest amount according to the credit contract.

– Legal solutions:

In this case, the borrower must continue to pay the Bank or credit institution the unpaid principal, interest on the principal within the term (if any), and overdue interest on the unpaid principal at the interest rate agreed by the parties in the contract until the principal is fully paid. In case the parties have agreed to adjust the lending interest rate from time to time by the lending bank or credit institution, the interest rate that the borrower must continue to pay according to the Court's decision will also be adjusted in accordance with the interest rate adjustment by the lending Bank or credit institution.

Legal provisions relating to precedents:

• Articles 471, 474 and Article 476 of the 2005 Civil Code;
• Clause 2, Article 91 of the Law on Credit Institutions 2010;
• Clause 1, Article 1 of Circular No. 12/2010/TT-NHNN dated April 14, 2010 of the State Bank guiding credit institutions to lend in Vietnamese Dong to customers at agreed interest rates;
• Clause 2, Article 11 of the Regulations on lending by credit institutions to customers issued under Decision No. 1627/2001/QD-NHNN dated December 31, 2001 of the Governor of the State Bank was amended and supplemented by Decision No. 127/2005/QD-NHNN dated February 3, 2005.

CASE CONTENT

According to the petition dated July 20, 2010 and documents and evidence in the case file, it can be seen that:

Joint Stock Commercial Bank for Foreign Trade of Vietnam - Thang Long Branch (hereinafter referred to as Vietcombank) and Kaoli Pharmaceutical Joint Stock Company (hereinafter referred to as Kaoli Company) have signed 04 credit contracts, including: Credit contract No. 03/07/NHNT-TL dated December 25, 2007; No. 04/07/NHNT-TL dated December 28, 2007; No. 144/08/NHNT-TL dated March 28, 2008 and No. 234/08/NHNT-TL dated May 27, 2008. The above credit contracts are secured by assets being house ownership rights and land use rights at:

- No. 122 Doi Can, Doi Can Ward, Ba Dinh District, Hanoi City (land plot No. 46B+39C+37C, map sheet No. 19) is owned and used by Ms. Nguyen Thi Phuong (according to Mortgage Contract No. 1678.2008/HDTC dated June 25, 2008; guarantee for the loan and maximum guarantee is 4,605,000,000 VND; detailed conditions for borrowing and lending the above amount will be specifically stated in the banking documents that Vietcombank and the Guaranteed Party (Kaoli Company) will sign at Vietcombank's headquarters (Clause 1.3, Article 1); the value of the mortgaged property is 4,605,000,000 VND according to the Property Valuation Record No. 105/08/NHNT.TL; the mortgage term is 05 years from the date the Guaranteed Party receives the money loan; the contract is effective from the time of registration at the Land Use Rights Registration Office (Clause 10.1, Article 10). This contract was notarized by the Notary Office No. 3 of Hanoi City on June 25, 2008 and the Department of Natural Resources and Environment of Ba Dinh District certified the registration of mortgage by land use rights and assets attached to land on July 10, 2008). Previously, on September 3, 2007, Ms. Phuong and Vietcombank made a Minutes of handover of mortgaged, pledged and guaranteed assets with the following content: "The two parties proceed to hand over the following original documents of secured assets to secure the obligations of Kaoli Pharmaceutical Joint Stock Company at the Bank for Foreign Trade of Vietnam - Thang Long Branch; property name: House ownership rights and land use rights at 122 Doi Can, Doi Can Ward, Ba Dinh District, Hanoi" (BL 52).

- Group 13, cluster 2, Nhat Tan ward, Tay Ho district, Hanoi city is owned and used by Mr. Nguyen Dang Duyen and his wife, Ms. Do Thi Loan (according to Mortgage Contract No. 1677.2008/HDTC dated June 25, 2008, guaranteeing the maximum loan and guarantee of VND 1,250,000,000; detailed conditions for borrowing and lending the above amount will be specifically stated in the banking documents that Vietcombank and the Guaranteed Party (Kaoli Company) will sign at Vietcombank's headquarters (Clause 1.3, Article 1); the value of the mortgaged property is VND 1,250,000,000 according to the Property Valuation Record No. 106/08/NHNT.TL dated September 3, 2007 (Clause 3.1, Article 3); the mortgage term is 05 years from the date the Guaranteed Party receives the loan; contract The contract is effective from the time of registration at the Land Use Rights Registration Office (Clause 10.1, Article 10); this contract was notarized by the Notary Office No. 3 of Hanoi City on June 25, 2008 and the Department of Natural Resources and Environment of Ba Dinh District certified the registration of mortgage using land use rights and assets attached to land on July 1, 2008). Previously, on September 3, 2007, Mr. Nguyen Dang Duyen and Vietcombank - Thang Long Branch made a Minutes of handover of mortgaged, pledged and guaranteed assets with the following content: "The two parties proceed to hand over the following original documents of secured assets to ensure the obligations of Kaoli Pharmaceutical Joint Stock Company at the Bank for Foreign Trade of Vietnam - Thang Long Branch; property name: House ownership rights and land use rights at Group 13, Cluster 2, Nhat Tan Ward, Tay Ho District, Hanoi" (BL 58a).

In addition, the loans of the above credit contracts are also secured by assets such as houses and land under the ownership and use rights of Mr. Cao Ngoc Minh and his wife, Ms. Doan Thi Thanh Thuy; houses and land of Mr. Giang Cao Thang and his wife, Ms. Duong Thi Sinh (which have been released from mortgage); land use rights of Mr. Chu Quoc Khanh; houses and land of Ms. Chu Thi Hong and Mr. Nguyen Van Minh.

In order to perform the contract, Vietcombank - Thang Long Branch has disbursed to Kaoli Company the loan amount according to the above credit contracts. Kaoli Company has only paid a part of the principal and interest. Vietcombank filed a lawsuit requesting the Court to force Kaoli Company to pay the remaining debt of the above 04 credit contracts of VND 8,197,957,837 (of which: principal is VND 5,457,000,000, interest on time is VND 397,149,467, overdue interest as of the date of the first instance trial is VND 2,343,808,370) and handle the mortgaged assets of Ms. Nguyen Thi Phuong; of Mr. Nguyen Dang Duyen and Ms. Do Thi Loan to recover the debt.

Defendant representative - Mr. Do Van Chinh, director of Kaoli Company presented:

He admitted that Kaoli Company still owed Vietcombank the principal and interest due, overdue interest under the 04 credit contracts as Vietcombank presented was correct. He determined that the responsibility to repay the debt under the 04 credit contracts mentioned above belonged to Kaoli Company and requested to pay gradually within 05 years.

In case Kaoli Company cannot repay the debt or does not repay the debt in full, Vietcombank requests the auction of the secured assets of Ms. Nguyen Thi Phuong, Mr. Nguyen Dang Duyen and Ms. Do Thi Loan, then the Court shall resolve the matter in accordance with the provisions of law. Mr. Chinh confirmed that Vietcombank disbursed the loan before signing the Mortgage Contract No. 1678.2008/HDTC dated June 25, 2008 and the Mortgage Contract No. 1677.2008/HDTC dated June 25, 2008. From June 25, 2008 to present, Kaoli Company has not borrowed any other loan or signed any other credit contract with Vietcombank.

The person with related rights and obligations presents:

- Mr. Nguyen Van Nghi (authorized representative of Ms. Nguyen Thi Phuong) presented: Vietcombank sued Kaoli Company and requested the Court to auction Ms. Phuong's assets in case Kaoli Company fails to fulfill its debt repayment obligations. He did not agree because Ms. Phuong signed a mortgage contract on June 25, 2008, so she is not responsible for guaranteeing Kaoli Company's loan at Vietcombank according to the 04 credit contracts that Vietcombank is suing. Requested the Court to force Vietcombank to carry out mortgage release procedures and return the Certificate of land use rights and house ownership rights to Ms. Phuong.

- Mr. Nguyen Dang Duyen and Ms. Do Thi Loan both stated: They signed a mortgage contract on June 25, 2008, but this contract only guaranteed the loan of Kaoli Company at Vietcombank and will bear all responsibilities arising from the time after June 25, 2008 to April 25, 2009. They will not be responsible for all credit contracts signed before June 25, 2008 between Vietcombank and Kaoli Company. According to Vietcombank, from June 25, 2008 to present, Vietcombank has not signed any credit contracts with Kaoli Company. Therefore, their legal responsibilities have not arisen. The Court requests that Vietcombank release the mortgaged assets under the mortgage contract dated June 25, 2008 for them.

In the First Instance Commercial Judgment No. 32/2011/KDTM-ST dated March 24, 2011, the Hanoi People's Court decided:

“1. Partially accept the lawsuit request of Joint Stock Commercial Bank for Foreign Trade of Vietnam against Kaoli Company. Force Kaoli Company to be responsible for paying the Bank the total principal and interest of VND 8,197,957,837.

2. Not accepting the request of the Joint Stock Commercial Bank for Foreign Trade of Vietnam to auction the assets which are the value of house ownership rights and land use rights at land plot No. 46B + 39C + 37C, map sheet No. 19, address No. 122 Doi Can, Doi Can ward, Ba Dinh district, Hanoi city according to the Certificate of house ownership rights and land use rights No. 10101132587 issued by the People's Committee of Ba Dinh district on April 27, 2004 to Ms. Nguyen Thi Phuong and the value of house ownership rights and land use rights at address No. 13, cluster 2, Nhat Tan ward, Tay Ho district, Hanoi city according to the Certificate of house ownership rights and land use rights at land plot No. 13+64A (1 part), map sheet No. 04 at address No. 13 cluster 2, Nhat Tan ward, Tay Ho district, Hanoi ... House ownership and land use rights number 10103090899 issued by Hanoi People's Committee on March 23, 2004 to Mr. Nguyen Dang Duyen and his wife, Ms. Do Thi Loan.

Joint Stock Commercial Bank for Foreign Trade of Vietnam is responsible for returning all documents on house ownership and land use rights and carrying out procedures to release mortgaged assets to Ms. Nguyen Thi Phuong and her husband, Mr. Nguyen Dang Duyen and Ms. Do Thi Loan.

In addition, the Court of First Instance also decides on court fees and the parties' right to appeal according to the provisions of law.

On April 4, 2011, Vietcombank filed an appeal.

In the Commercial and Business Appeal Judgment No. 148/2011/KDTM-PT dated August 17, 2011, the Supreme People's Court of Appeal in Hanoi, based on Clause 2, Article 275 and Clause 1, Article 276 of the Civil Procedure Code, decided:

“Amend the First Instance Commercial and Business Judgment No. 32/2011/KDTM-ST dated March 23 and 24, 2011 of the Hanoi People's Court regarding the guarantee obligation for Ms. Nguyen Thi Phuong and the husband and wife of Mr. Nguyen Dang Duyen and Ms. Do Thi Loan, specifically as follows:

Judgment: The Minutes of handover of mortgaged, pledged and guaranteed assets dated September 3, 2007 between Vietnam Joint Stock Commercial Bank for Foreign Trade - Thang Long Branch with Ms. Nguyen Thi Phuong and the couple Mr. Nguyen Dang Duyen and Ms. Do Thi Loan are guarantee contracts (records No. 52, 58a).

Requiring Kaoli Pharmaceutical Joint Stock Company to be responsible for paying the Joint Stock Commercial Bank for Foreign Trade of Vietnam the total principal and interest debt of VND 8,197,957,837...

In case Kaoli Pharmaceutical Joint Stock Company fails to fulfill its obligations or does not fully fulfill its debt repayment obligations to Vietnam Joint Stock Commercial Bank for Foreign Trade, Vietnam Joint Stock Commercial Bank for Foreign Trade has the right to request the Hanoi City Civil Judgment Enforcement Department to handle the guaranteed assets in accordance with the provisions of the Law on Civil Judgment Enforcement to recover the debt according to the guarantor's guarantee responsibility.

…From the date the judgment comes into legal effect and the person entitled to enforcement has a request for enforcement, the person subject to enforcement must also pay interest on the amount of late enforcement at the basic interest rate announced by the State Bank corresponding to the period of late enforcement.”

In addition, the Court of Appeal also decides on court fees and enforcement of judgment.

After the appeal trial, Ms. Nguyen Thi Phuong, Mr. Nguyen Dang Duyen and Ms. Do Thi Loan submitted many petitions requesting a review of the above appeal judgment according to the supervisory review procedure.

In the Appeal Decision No. 34/2012/KDTM-KN dated October 15, 2012, the Chief Justice of the Supreme People's Court requested the Council of Judges of the Supreme People's Court to conduct a review trial in accordance with the cassation procedure in the direction of annulling the Business and Commercial Appeal Judgment No. 148/2011/KDTM-PT dated August 17, 2011 of the Supreme People's Court of Appeal in Hanoi; and transfer the case file to the Supreme People's Court of Appeal in Hanoi for re-trial in accordance with the provisions of law.

At the appeal hearing, the representative of the Supreme People's Procuracy agreed with the appeal of the Chief Justice of the Supreme People's Court.

The Council of Judges of the Supreme People's Court determined:

Considering the contracts for mortgage of land use rights and assets attached to land to guarantee a third party to borrow capital from the bank (Notarization number: 1677.2008/HĐTC and 1678.2008/HĐTC both dated June 25, 2008), it is found that:

Both mortgage contracts of land use rights and assets attached to land to guarantee a third party to borrow capital from the bank did not specify which credit contract was used to secure the loan and were both signed after the 04 credit contracts (No. 03/07/NHNT-TL dated December 25, 2007; No. 04/07/NHNT-TL dated December 28, 2007; No. 144/08/NHNT-TL dated March 28, 2008 and No. 234/08/NHNT-TL dated May 27, 2008) had been disbursed by Vietcombank - Thang Long Branch. According to the provisions of Clause 1.3, Article 1 of the two mortgage contracts mentioned above: "The detailed conditions for borrowing and lending the above amount of money (The secured obligation is the loan and the maximum guarantee is 4,605,000,000 VND...; - Clause 1.2, Article 1 of the mortgage contract) will be specifically stated in the banking documents that Party B (Vietcombank - Thang Long Branch) and the guaranteed party will sign at the headquarters of Party B (Vietcombank - Thang Long Branch)" then it can be understood that Ms. Phuong, Mr. Duyen and his wife and Ms. Loan only guarantee the loan for Kaoli Company according to the credit contracts that will be signed at the headquarters of Vietcombank after the date of signing the mortgage contract (June 25, 2008) but not guarantee the loans of the 04 previously signed credit contracts.

Vietcombank based on Clause 6.2, Article 6 of the 04 Credit Contracts mentioned above on loan security measures with the content (handwritten): "Detailed agreements on assets, rights and obligations of the parties are specifically determined in... Mortgage Contract No. 1677.2008/HDTC dated June 25, 2008 and Mortgage Contract No. 1678.2008/HDTC dated June 25, 2008" to request the Court to force Ms. Phuong, Mr. Duyen and his wife and Ms. Loan to be responsible for guaranteeing the loans of Kaoli Company under the 04 Credit Contracts mentioned above. However, according to Vietcombank's representative at the first instance trial, this content was "written by the Bank's accountant". At the first instance trial, Mr. Do Van Chinh - Director of Kaoli Company stated: "Kaoli Company did not know about this additional writing" and "Does not agree with the Bank's request for auction. The assets of Ms. Phuong and Mr. Duyen and Ms. Loan were recorded by the Bank in the credit contracts.

On the other hand, at the appeal hearing, the authorized representative of Ms. Nguyen Thi Phuong stated that Ms. Nguyen Thi Phuong did not receive any credit contracts from Vietcombank; while Mr. Duyen and Ms. Loan did receive credit contracts from Vietcombank. Thus, Mr. Chinh, Ms. Phuong and Mr. Duyen and Ms. Loan did not know the handwritten content recorded by the bank accountant in the credit contracts, and did not sign the credit contracts, so there is no basis to determine that the above credit contracts were secured by Mortgage Contracts No. 1677.2008/HDTC and 1678.2008/HDTC on the same date of June 25, 2008.

In addition to the two mortgage contracts mentioned above, the case file has 02 sets of documents related to the mortgage of assets: 01 set of Ms. Phuong; 01 set of Mr. Duyen and Ms. Loan; each set includes: Minutes of asset valuation and Minutes of asset handover both dated September 3, 2007; Application for mortgage registration (dated January 29, 2008 of Ms. Phuong; dated June 25, 2008 of Mr. Duyen and Ms. Loan). However, these Minutes and Application for mortgage registration do not clearly state which credit contract guarantees the loan.

The Court of Appeal stated (summary): “The Minutes of handover of mortgaged, pledged, and guaranteed assets between the Joint Stock Commercial Bank for Foreign Trade of Vietnam – Thang Long Branch and Ms. Phuong, Mr. Duyen and his wife, Ms. Loan, established on September 3, 2007, all contain the content of mortgage, pledge, and guarantee for the obligations of Kaoli Pharmaceutical Joint Stock Company at the Bank...so this is determined to be a contract...”. And the Court of Appeal ruled: “The Minutes of handover of mortgaged, pledged and guaranteed assets dated September 3, 2007 between the Joint Stock Commercial Bank for Foreign Trade of Vietnam – Thang Long Branch with Ms. Nguyen Thi Phuong and the couple Mr. Nguyen Dang Duyen and Ms. Do Thi Loan are guarantee contracts (records No. 52, 58a)” and “In case Kaoli Pharmaceutical Joint Stock Company fails to fulfill its obligations or does not fully fulfill its debt repayment obligations to the Joint Stock Commercial Bank for Foreign Trade of Vietnam, the Joint Stock Commercial Bank for Foreign Trade of Vietnam has the right to request the Civil Judgment Enforcement Department of Hanoi City to handle the guaranteed assets according to the provisions of the Law on Civil Judgment Enforcement to recover the debt according to the guarantor's guarantee responsibility”.

The above judgment and decision of the Court of Appeal is baseless and illegal. Because:

- The minutes of handover of mortgage, pledge and guarantee documents dated September 3, 2007 between Ms. Nguyen Thi Phuong (as well as between Mr. Duyen and Ms. Loan) and Vietcombank - Thang Long Branch is not a guarantee contract as determined by the Court of Appeal.

- At the appeal hearing on August 17, 2011, Vietcombank representative also only confirmed: "The asset handover record and asset valuation record are inseparable parts of the asset mortgage contract".

- According to the Minutes of handover of mortgaged, pledged, and guaranteed property documents, the Minutes of property valuation and the presentation of Vietcombank's representative at the appeal hearing, the date of handover of documents and property valuation was September 3, 2007. The mortgage contract between Ms. Phuong (as well as between Mr. Duyen and Ms. Loan) and Vietcombank - Thang Long Branch was signed on June 25, 2008 (after the date of the Minutes of handover of property documents and the Minutes of property valuation), so these Minutes cannot be considered an inseparable part of the above-mentioned mortgage contract. The appeal court also determined: "The mortgage contract dated June 25, 2008... is not related to the minutes of handover of documents...".

- According to the date recorded in the minutes and the presentation of Vietcombank's representative at the appeal hearing, the date of delivery of the file (original copy of the Certificate of house ownership and land use rights) and the date of asset valuation were September 3, 2007, but in these asset valuation minutes, it was stated: "Based on the Land Price List in districts in Hanoi issued together with Decision No. 150/2007/QD-UBND dated December 28, 2007 of the Hanoi People's Committee" and this Minute is an inseparable part of the Mortgage Contract No. 1678.2008/HDTC and No. 1677.2008/HDTC dated June 25, 2008. In Ms. Phuong's case, the value of the land use right is determined according to the Minutes of determining the actual land price dated September 4, 2007 and Ms. Phuong's application for mortgage registration dated January 29, 2008 stating: "Mortgage contract No. 1678.2008/HDTC signed on June 25, 2008". On the other hand, according to the presentation and documents presented by Ms. Phuong, Mr. Duyen and Ms. Loan, at the time of September 3, 2007, Ms. Phuong's house and land were mortgaged at the Quang An Branch of the Bank for Agriculture and Rural Development, Tay Ho District, and were not released until January 11, 2008; while Mr. Duyen and Ms. Loan's house and land were mortgaged at the Vietnam Joint Stock Commercial Bank for Foreign Trade - Thang Long Branch, and were not released until January 16, 2008.

With the above evidence, there is a basis to conclude: The minutes of handover of mortgaged, pledged, and guaranteed assets and the minutes of asset valuation were not made on September 3, 2007, the Certificate of house ownership and land use rights was not delivered on September 3, 2007, the valuation was not performed on September 3, 2007 as presented by Vietcombank's representative and accepted by the Court of Appeal.

At the time of September 3, 2007, the Mortgage Contract, property guarantee using land use rights and properties attached to land must be notarized and registered as a secured transaction according to the provisions of Point a, Clause 1, Article 130 of the 2003 Land Law; at Point a, Section 1, Article 12 of Decree 163/ND-CP dated December 29, 2006 and at Sub-Section 2.4, Section 2 of Joint Circular No. 03/2006/TTLT-BTP-BTNMT dated June 13, 2006; and not notarized and not registered as a secured transaction as the Court of Appeal determined.

The Court of Appeal has not clarified whether, in addition to the above documents, there are any other documents or evidence to indicate that the mortgage contracts signed by Ms. Phuong and Mr. Duyen and Ms. Loan are guarantees for the 04 credit contracts of Kaoli Company or not, but it is incorrect and inaccurate to say that the minutes of handover of documents are guarantee contracts. Because this Minutes cannot be a guarantee contract, considering both the form and content of the document.

- If there is reason to believe that the Mortgage Contracts dated June 25, 2008 of Ms. Phuong and of Mr. Duyen and Ms. Loan guarantee the above credit contracts, then Ms. Phuong's guarantee contract only guarantees the loan and the maximum guarantee is VND 4,605,000,000; the guarantee contract of Mr. Duyen and Ms. Loan guarantee the loan and the maximum guarantee is VND 1,250,000,000. Meanwhile, the Court of Appeal determined that the Minutes of handover of mortgaged, pledged and guaranteed assets dated September 3, 2007 were guarantee contracts and declared: "In case Kaoli Pharmaceutical Joint Stock Company fails to perform its obligations or does not fully perform its debt repayment obligations to the Joint Stock Commercial Bank for Foreign Trade of Vietnam, the Joint Stock Commercial Bank for Foreign Trade of Vietnam has the right to request the Hanoi City Civil Judgment Enforcement Department to handle the guaranteed assets in accordance with the provisions of the Law on Civil Judgment Enforcement to recover the debt according to the guarantee responsibility of the guarantor" meaning that Ms. Phuong, Mr. Duyen and Ms. Loan must be responsible for guaranteeing the entire debt of Kaoli Company and not clearly defining the guarantee responsibility of Ms. Phuong, Mr. Duyen and Ms. Loan is also incorrect.

In addition, the Court of First Instance and the Court of Appeal decided: "From the date the judgment comes into legal effect and the person entitled to enforcement has a request for enforcement, the person subject to enforcement must also pay interest on the amount of late enforcement at the basic interest rate announced by the State Bank corresponding to the period of late enforcement" is also incorrect. For loans from banks and credit institutions, in addition to the principal, interest within the term, overdue interest, and fees that the borrower must pay to the lender under the credit contract as of the date of the first instance trial, from the day following the date of the first instance trial, the borrower must continue to pay overdue interest on the unpaid principal, at the interest rate agreed upon by the parties in the contract until the principal is fully paid. In case in the credit contract, the parties have an agreement on adjusting the lending interest rate from time to time by the lending bank, the interest rate that the borrower must continue to pay to the lending bank according to the Court's decision will also be adjusted in accordance with the interest rate adjustment by the lending bank.

For the above reasons, based on Clause 3, Article 291, Clause 3, Article 297, Article 299 of the Civil Procedure Code (amended and supplemented in 2011),

DECISION

1. Annul the Business and Commercial Appeal Judgment No. 148/2011/KDTM-PT dated August 17, 2011 of the Appellate Court of the Supreme People's Court in Hanoi, which tried the business and commercial case of credit contract dispute between the plaintiff, the Joint Stock Commercial Bank for Foreign Trade of Vietnam, and the defendant, Kaoli Pharmaceutical Joint Stock Company, and the persons with related rights and obligations, namely Ms. Nguyen Thi Phuong, Mr. Nguyen Dang Duyen, and Ms. Do Thi Loan.
2. Transfer the case file to the Supreme People's Court of Appeal in Hanoi for re-trial in accordance with the provisions of law.

CONTENT OF PRECEDENT

“The Court of First Instance and the Court of Appeal decided: “From the date the judgment comes into legal effect and the person entitled to enforcement has a request for enforcement, the person subject to enforcement must also pay interest on the amount of late enforcement at the basic interest rate announced by the State Bank corresponding to the period of late enforcement” is also incorrect. For loans from banks and credit institutions, in addition to the principal, interest within the term, overdue interest, and fees that the borrower must pay to the lender under the credit contract as of the date of the first instance trial, from the day following the date of the first instance trial, the borrower must continue to pay overdue interest on the unpaid principal, at the interest rate agreed upon by the parties in the contract until the principal is fully paid. In case in the credit contract, the parties have an agreement on adjusting the lending interest rate from time to time by the lending bank, the interest rate that the borrower must continue to pay to the lending bank according to the court's decision will also be adjusted in accordance with the interest rate adjustment by the lending bank.

Major