In the context of Vietnam’s rapidly developing economy and its strong attraction of investment capital from various sources, the management and supervision of investment projects have become increasingly important. One of the most complex and sensitive legal issues is the regulation on the revocation of investment projects. The following article by NPLaw provides an overview of the legal provisions governing the revocation of investment projects, thereby helping investors and enterprises better understand their rights and obligations during project implementation. 

I. Overview of the revocation of investment projects 

In Vietnam, the revocation of investment projects is regulated by investment-related legal instruments. Circumstances leading to revocation may include, but are not limited to, the investor’s failure to execute committed obligations, failure to pay the required security deposit or provide a performance guarantee, suspension of the project due to serious violations, or voluntary termination of the project by the investor.

The revocation process generally involves the competent authority issuing a decision to revoke the Investment Registration Certificate, notifying the investor, and implementing procedures for liquidation and settlement of related consequences.

The revocation of an investment project not only affects the investor but also has impacts on the local economy, labor, and other related stakeholders. Therefore, such a process must be conducted transparently, fairly, and in strict compliance with applicable laws.

II. Legal regulations on the revocation of investment projects

2.1. What is the revocation of an investment project?

The revocation of an investment project refers to a decision by a competent state authority to terminate the operation of an investment project prior to its expiry for certain statutory reasons. It means that the investor no longer has the right to continue implementing the project and must implement liquidation procedures in accordance with the law.

In general, the revocation of investment projects is an important management measure to ensure that projects are implemented in compliance with regulations, thereby contributing to the efficient use of resources and sustainable economic development.

2.2. Conditions for revocation of an investment project

Pursuant to Article 57 of Decree No. 31/2021/ND-CP, an investment project shall be revoked if it falls under one of the cases specified in Clauses 1 and 2, Article 48 of the Law on Investment 2020, including:

The investor may terminate investment activities or an investment project in the following cases:

  • The investor proactively decides to suspend the project;
  • The project terminates in accordance with conditions agreed upon in the contract or the enterprise’s charter;
  • The project reaches the end of its operational term as prescribed.

The investment registration authority has the right to terminate all or part of the operation of an investment project in the following cases:

  • The project is suspended according to Clauses 2 and 3, Article 47 of the Law on Investment 2020, and the investor is unable to remedy the conditions for continued operation;
  • The investor loses the right to use the investment location but fails to complete procedures for adjustment of the location within six (06) months from the date such right ceases, except for certain special cases;
  • The project has ceased operation for more than twelve (12) months, and the investment registration authority cannot contact the investor or its lawful representative;
  • The land used for the project is recovered due to non-use or delayed implementation in accordance with land law;
  • The investor fails to fulfill the obligation to make a security deposit or fails to provide a deposit guarantee as required for projects subject to performance security requirements;
  • The investor implements the project based on a sham civil transaction in accordance with the law;
  • The project is terminated according to a court judgment, decision, or an arbitral award.

2.3. Cases of revocation of investment projects

An investment project may be revoked, or in other words, its operation may be terminated, in the cases stipulated in Clauses 1, 2, and 3, Article 48 of the Law on Investment 2020, specifically as follows:

2.3.1. Investor-initiated termination of the project

The investor may decide to terminate the project in the following situations:

  • Voluntary termination of the project;
  • Expiry of the project’s operational term;
  • Fulfillment of termination conditions specified in the contract or the enterprise’s charter.

2.3.2. Revocation or partial termination decided by the investment registration authority

The investment registration authority has the right to revoke or partially terminate a project in the following cases:

  • The project falls under cases of suspension pursuant to Clauses 2 and 3, Article 47 of the Law on Investment 2020, and the investor is unable to remedy such situation;
  • The investor no longer has the right to use the investment location and fails to complete adjustment procedures within six (06) months from the date of land recovery (except in cases of land recovery due to delayed project implementation);
  • The project has ceased operation for more than twelve (12) months and the investment registration authority cannot contact the investor or its lawful representative;
  • The land used for the project is recovered due to non-use or delayed use in accordance with land law;
  • The investor fails to make the required security deposit or fails to provide a guarantee for the deposit obligation as required by law for projects subject to performance security;
  • Investment activities are conducted based on sham civil transactions in accordance with the law;
  • The investor fails to implement or is incapable of implementing the project according to the committed schedule and does not fall under cases eligible for schedule extension according to Article 46 of the Law on Investment 2020;
  • Based on a court judgment, decision, or an arbitral award.

Note: For projects subject to investment policy approval, the investment registration authority may only terminate the project after obtaining opinions from the authority competent to approve the investment policy.

In summary, compliance with regulations not only helps protect the legitimate rights and interests of investors but also contributes to the sustainable development of Vietnam’s investment environment.

III. Questions regarding the revocation of investment projects

3.1. In which cases is the revocation of an investment project usually applied?

The revocation of an investment project is usually applied in cases where the investor fails to comply with or violates legal regulations related to investment activities as prescribed in Article 48 of the Law on Investment 2020 (see details in Section 2.3).

3.2. Obligations of investors upon revocation of an investment project

After an investment project is revoked or its operation is terminated, the investor is responsible for liquidating the project in accordance with Clause 8, Article 57 of Decree No. 31/2021/ND-CP, specifically as follows:

  • Self-liquidation of project assets: The investor is responsible for liquidating project assets in accordance with applicable regulations on asset liquidation, ensuring compliance with procedures and fulfillment of related financial obligations.
  • Handling of land use rights and assets attached to land: If the project uses land allocated or leased by the State or land permitted for change of use purpose, the investor must handle land use rights and land-attached assets in accordance with land law.
  • Dissolution or bankruptcy of the enterprise: During the liquidation process, if the investor being an economic organization falls into dissolution or bankruptcy, the liquidation of the project must comply with legal regulations on enterprise dissolution and bankruptcy.

Proper fulfillment of the above obligations helps ensure that the revocation and liquidation process is conducted transparently, avoids legal disputes, and protects the legitimate interests of relevant parties.

3.3. What is the procedure for revocation of an investment project?

The revocation of an investment project occurs when the project’s operation is terminated in accordance with the law. Pursuant to Clause 2, Article 57 of Decree No. 31/2021/ND-CP, the procedure for termination of an investment project is implemented as follows:

In case the investor decides to terminate the project on its own initiative (Point a, Clause 1, Article 48 of the Law on Investment 2020):

  • The investor shall submit the decision on termination of the project to the investment registration authority within fifteen (15) days from the date of issuance.
  • If an Investment Registration Certificate has been issued, it must be returned together with the termination decision.

In case the project terminates according to the contract, the enterprise’s charter, or upon expiry of its operational term (Points b and c, Clause 1, Article 48 of the Law on Investment 2020):

  • The investor shall notify and return the Investment Registration Certificate (if any) within fifteen (15) days from the date of termination.
  • The investor must enclose a copy of documents evidencing the termination of the project.
  • Upon receipt, the investment registration authority shall notify relevant authorities of the project termination.

In case the competent authority decides to terminate the project (Clause 2, Article 48 of the Law on Investment 2020):

  • The investment registration authority shall issue a decision on termination of the project and revoke the Investment Registration Certificate (if any).
  • The Investment Registration Certificate shall cease to be valid from the effective date of the termination decision.

3.4. How is unlawful revocation of an investment project handled?

Pursuant to the Law on Investment 2020 and Decree No. 31/2021/ND-CP, an investment project revoked due to legal violations shall be handled as follows:

  • In cases of serious violations, the investor may be subject to administrative sanctions or criminal liability depending on the nature and severity of the violation.
  • If the investor fails to fully execute obligations after the project is revoked, the competent authority shall apply enforcement measures in accordance with the law.

In summary, the handling of unlawful revocation of investment projects aims not only to ensure transparency and fairness in the investment environment but also to protect the interests of the State and related parties.

3.5. How are procedures for revocation of an investment project implemented? 

Procedures for revocation of an investment project are implemented in accordance with the procedures for termination of an investment project as stipulated in Clause 2, Article 57 of Decree No. 31/2021/ND-CP. Accordingly, investors must fully comply with relevant legal regulations and fulfill financial obligations prior to terminating the project’s operation (see details in Section 3.3).

IV. Legal consulting services related to loss-making projects

The above are the legal issues concerning the revocation of investment projects presented by NPLaw to our readers. Should you have any questions or require further clarification, please feel free to contact NPLaw via the following details: