Let’s explore the adjustment of investment commitments with nplaw

In a dynamic investment market, initial commitments between parties do not always retain their original value over time. Changes in the economy, laws, or actual circumstances may compel investors to reconsider and adjust signed agreements to ensure the feasibility and effectiveness of a project. However, adjusting investment commitments is not merely a matter of agreement between the parties, it also requires compliance with relevant legal regulations. So how does current law regulate such an issue, and what should parties be mindful of when adjusting investment commitments? This article clarifies these key aspects.

NPLaw invites you to explore these issues concerning the adjustment of investment commitments.

I. The need to adjust investment commitments 

Amid ever-changing economic and legal landscapes, the need to adjust investment commitments has become increasingly common. Investors may need to modify their initial commitments due to various factors, such as changes in legal policies, market fluctuations, shifts in business strategy, or force majeure impacting project implementation.

Adjusting investment commitments not only helps ensure the flexibility and efficiency of the project but also contributes to minimizing legal and financial risks for the parties involved. However, to facilitate a smooth adjustment process, the parties must carefully review the contract terms as well as applicable legal regulations.

II. Legal regulations on the adjustment of investment commitments

1. Are adjustments of investment commitments provided for in investment contracts or agreements?

Adjustments to investment commitments may be stipulated in investment contracts or agreements between the parties, depending on the nature of commitments and the arrangement between the investor and the related party. Some important points to note include:

- If the investment commitment is recorded in the Investment Registration Certificate, the adjustment must comply with the procedure for adjusting investment projects as prescribed by law.

- If the investment commitment is included in an investment contract or agreement between the parties (for example, a BCC contract—Business Cooperation Contract), the adjustment must follow the contract’s provisions and relevant laws.

2. Can the parties agree in advance on the conditions and procedures for adjusting investment commitments?

The parties may agree in advance on the conditions and procedures for adjusting investment commitments, but such agreements must still comply with statutory limits. Specifically, under Clause 1, Article 76 of the Law on Bidding 2023, amendments to investment business contracts concerning the conditions and procedures for adjusting investment commitments are only valid in the following cases:

- Adjustments to business investment projects under investment law that change the contents of the contracts for projects subject to investment policy approval.
In this case, amending the contract or agreeing in advance on the conditions and procedures for adjustment may only be implemented after the competent authority approves the adjustment of the investment policy. The investor must ensure meeting the technical and financial capacity requirements for implementing the project after adjustment.

- When transferring the business investment project in accordance with investment law and other relevant laws.

- Other cases agreed upon by the parties in the contract in compliance with the law.

Thus, while the parties have the right to agree on the conditions and procedures for adjusting investment commitments, these changes must comply with the above legal conditions to ensure legality and practical enforceability.

In practice, the parties may agree in advance on these conditions and procedures through investment contracts or agreements. However, the implementation of such adjustments must still comply with current law and, in some cases, be approved by competent authorities.

3. Are there legal documents that regulate the adjustment of investment commitments in the relevant sectors?

Adjustments to investment commitments are governed by the following legal documents:

(i) The Law on Investment 2022;
(ii) The Law on Bidding 2023;
(iii) The Law on Enterprise 2020;
(iv) Decree 31/2021/ND-CP guiding the Law on Investment;
(v) Decree 15/2021/ND-CP guiding certain aspects of investment project management in construction.

III. Questions on the adjustment of investment commitments

1. What factors could give disputes when adjusting investment commitments?

Factors that may raise disputes include:

- Changes in economic interests: A party may feel the adjustment reduces their benefits or increases investment costs.

- Lack of clear agreement in the contract: If the contract does not specifically provide for the conditions and procedures for adjusting commitments, the parties may interpret matters differently, leading to disputes.

- Failure to reach consensus: A party may disagree with the adjustment or claim the other party has not fulfilled the original commitments.

- Impact of legal regulations: Adjustments may be limited by law or require approval by competent authorities.

- Impact on third parties: Adjustments that affect partners, suppliers, customers, or regulatory agencies may prompt objections or complaints from these third parties.

2. Can a party unilaterally adjust the investment commitment without the other party’s consent?

Under Article 116 of the Civil Code 2015, a civil transaction may be a contract or a unilateral legal act intended to give, change, or terminate civil rights and obligations. However, unilaterally adjusting an investment commitment without the consent of the other party is not permitted by law.

Any adjustment to the contents of an investment contract must be based on mutual agreement or comply with conditions set forth in the contract. If one party unilaterally changes the commitment without the other party’s agreement, such action may be deemed a breach of contract, subjecting them to corresponding legal liability.

3. Are there contractual provisions on liability if a party does not accept the adjustment of the investment commitment?

Provisions on liability if a party refuses to adjust an investment commitment are usually set out in the investment contract under clauses on dispute resolution, fines, compensation for damages, or conditions for amending the contract.

While the law does not mandate such clauses, in practice, investment contracts often stipulate:

- Conditions for adjusting investment commitments: Clearly define situations in which parties may request adjustments.

- Dispute resolution mechanisms: If one party refuses an adjustment that the other believes causes damage, disputes will be resolved according to the agreed method (negotiation, mediation, arbitration, or court).

- Liability for damages: If refusal to adjust causes harm, the contract may set out specific compensation levels or principles for determining losses.

These clauses must comply with current laws, including the Civil Code 2015, the Law on Investment 2020, and the Commercial Law 2005.

4. Does adjusting investment commitments affect the interests of third parties? If so, how are their rights protected?

Adjustments may affect third parties, especially when changes involve project content, implementation schedules, or investors’ rights and obligations. Third parties may include business partners, suppliers, customers, employees, or even related state agencies.

The law protects third parties’ interests through mechanisms such as:

- Respecting legitimate rights: Under Clause 2, Article 3 of the Civil Code 2015, parties adjusting investment commitments must not harm the legitimate rights of third parties.

- Right to claim compensation: If an adjustment causes losses, third parties have the right to claim compensation for damages incurred.

- Dispute resolution: Third parties may bring disputes to court, arbitration, or request intervention by competent state authorities.

5. Which authority has jurisdiction to resolve disputes related to adjustments of investment commitments?

Jurisdiction depends on the parties’ agreement and applicable laws. Competent authorities include:

- Commercial arbitration: If the investment contract contains an arbitration clause, disputes will be resolved by an arbitration center or tribunal under the Law on Commercial Arbitration 2010.

- People’s Courts: If there is no valid arbitration agreement or the agreement is invalid, disputes will be resolved under the Civil Procedure Code 2015 at a provincial People’s Court or economic Court, depending on the nature of the dispute.

IV. Legal consultancy services on adjusting investment commitments

In today’s complex legal environment, using legal consultancy services is an optimal solution for complying fully with the law. Lawyers can provide guidance on matters related to the adjustment of investment commitments and offer the most effective solutions for clients.

Ngoc Phu Law Company Limited, with a team of experienced lawyers, is willing to support clients in all matters concerning adjustments to investment commitments. We are committed to delivering effective legal solutions and maximizing the protection of our clients’ rights and interests throughout the transaction process.