The Unresolved Standard for Disadvantageous Contracts under Vietnam's Bankruptcy Recovery Law 2025

Abstract

Vietnam's Bankruptcy Recovery Law 2025 (RBL 2025) permits a bankruptcy court to suspend or terminate a debtor's ongoing contract found "liable to cause disadvantage" to the insolvent enterprise, yet neither RBL 2025 nor its two predecessors has ever given that standard operative content. This article reconstructs the standard's legislative lineage across the 2004, 2014, and 2025 statutes to show the gap is inherited, not newly created, and argues it persists for two sequential reasons: the 2025 reform's drafting effort was absorbed by structural innovations elsewhere in the statute, and Vietnamese law lacks a mechanism for generating operative content at the pace an open-textured standard requires, because a judgment becomes binding precedent only once centrally selected by the Judicial Council of the Supreme People's Court. A comparative examination of the business-judgment standard developed through United States bankruptcy case law under section 365 of the Bankruptcy Code illustrates what such a mechanism supplies and why Vietnam's institutions cannot replicate it. The article proposes a two-threshold model within Article 51's existing structure, together with an institutional allocation between a Government decree for the preliminary threshold and a Supreme People's Court resolution for the final one.