Transplantation of Derivative Actions to Vietnam - Tip-offs from Absence of Academic Debate

Abstract

AbstractDerivative actions have just been newly introduced into Vietnamese company law in 2010. The adoption of the derivative action is a striking signal of Vietnam's affiliation with the litigation bandwagon of East Asian countries. Unlike those Asian countries where the issue of the transplanting and functioning of derivative actions are well-discussed topics in the corporate governance literature, such discussions have not yet begun in Vietnam. In fact, the derivative action was adopted without a domestic academic debate to pave the way for its introduction. The lack of discussion on the one hand is troublesome to those who want to review the transplantation of the derivative action to Vietnam. On the other hand, this absence also detaches the Vietnamese academic debate from the on-going international debate on the subject.Seeking possible explanations for the absence of such debate is the first aim of this article. Towards this end, the article proposes three explanation which help to explain why the derivative action had never been widely discussed in Vietnam before its introduction. Such explanations enable us to better understand the context in which the action was introduced. Moreover, the explanations provide us with hints to predict the feasibility of the derivative action in the jurisdiction. The second aim of this article is to give some suggestions to improve the newly-adopted regulations on derivative actions. For this purpose, some of the ambiguities and deficiencies of the regulations are discussed. Based on the understanding of its surrounding context and its own deficiencies, the article comes up with conclusions on the future of the derivative action in Vietnam.