When disputes over credit contracts arise, banks normally bring the disputes to court for settlement. However, insiders have said that legal action does not help much as contracts have not been completed fully in the first place.
A representative from a commercial bank revealed that one major reason for unresolved disputes in court is that the address of the sued party cannot be found in the contracts.
Without such material provision, the contracts are regarded as unqualified for hearing, leaving the court no choice but to dismiss the case.
Sometimes the court asks the suing party to add the sued party’s verified address to the contracts to make those contracts qualified for hearing, but it is not easy to get verification from local police.
"Local police normally refuse to verify the address, saying that they only give the verification at the request of state agencies,” the representative said.
Nguyen Ngoc Thanh, a representative from the Provincial People’s Court of Ha Noi, said that in many cases borrowers are unsuitable for bank loans from the outset of contracts, but regardless banks still grant the loans to the borrowers.
This failure to adequately evaluate borrowers' financial situation beforehand leads to subprime loans, which eventually result in disputes in court. Thanh urges banks to set the bar high for bank loans to nip disputes in the bud.
The representative also said it is the job of the court to have the address verified by local police, but some judges pass the responsibility on to banks, to move the legal process along faster. The practice seems time-saving but is procedurally wrong.
"Some judges are concerned that the legal process would move slowly should the court itself has to have the address verified," Thanh said. "Accordingly, they require banks to do so instead. That requirement is not right procedure-wise."
Another bank representative asserted that borrowers are normally required to put up collateral to be eligible for bank loans. If the collateral is land lots, banks register the names provided in land-use-right certificates as owners of the realty properties.
Unfortunately, when disputes arise between the registered owners and previous owners over land use rights, the court rules that banks failed to determine collateral owners beforehand and request the return of land-use-right certificates.
The ruled failure constitutes a legal ground for the court to declare banks' collateral-related contracts null and void.
Nguyen Thanh Long, chairman of the Legal Club under the Vietnam Banks' Association, underscored three groups of issues that have been holding back dispute settlement in court.
The three groups of issues are; issues arising from the difference between legal perception and actual laws, issues related to legal procedures, and issues related to the determination of civil liability in criminal cases.
The chairman recommends the court rely on the regulations on bonafide third parties under the Civil Code 2015 to deal with cases where disputes between registered owners and previous owners arise. — VNS