On 15 May 2021, Decree 21/2021/ND-CP (guiding the Civil Code on security for fulfilment of obligations) "Decree 21") came into force. Decree 21 provides more detailed provisions on the manner in which security interests may be created.
The new decree specifies the requirements parties should meet in describing the collateral of the security transactions, including the specific contents of such descriptions. However, despite such details, Decree 21 allows for general freedom of contract among parties regarding the creation of security interests. Non-compliance with the requirements on descriptions will not be fatal to the validity of the agreement, and the contractual relationship of the parties can still be recognised, provided that they do not contravene the basic principles of civil law or breach the conditions for a valid civil transaction.
Decree 21 also sets out the procedures that parties should follow in enforcing security interests. These include mandatory contents of enforcement notices and the manner of service of the notice.
