Simplifying investment procedures in Vietnam - the case for Apostille Convention

Vietnam should join the Apostille Convention given the enormous gains that come from reducing administrative burdens and costs of preparing foreign documents for use in the country, write Freshfields Bruckhaus Deringer Vietnam lawyers Chris Milliken and Duong Bao Trung.

As highlighted by the Prime Minister's Decision 667/QD-TTg dated June 2, 2022 approving the foreign investment cooperation strategy for Vietnam, the government is striving to improve both the quantity and quality of foreign investment.

While Vietnam has many dynamics that make it attractive to foreign investors, the processes by which foreign companies can make investments in Vietnam often require the legalisation of documents that have been issued by overseas governments such as passports of relevant individuals, constitutional documents of companies, and so forth.

Currently, the process of legalising public documents to be used in Vietnam is often time-consuming and expensive, involving multiple steps and fees. When foreign investors have a large pool of potential investment prospects both in Southeast Asia and worldwide, they will be looking to source opportunities that are quick and straightforward. Lengthy administrative procedures could therefore put Vietnam at a disadvantage compared to other countries.

However, there is a potential solution to this issue, namely the Apostille Convention.

What is Apostille Convention?

The Convention of October 5, 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (the Apostille Convention) is an international treaty which was designed with the ultimate purpose of simplifying the legalisation procedures for public documents for use in foreign countries. The Apostille Convention came into effect on January 24, 1965.

Generally, when a public document issued by a government authority in a country is used in the same country there is no need for its origin to be certified. However, when such document is used abroad, a foreign recipient may wish to have the origin of such document verified because it may not be familiar with the official capacity of the signatory and/or the identity of the authority.

One way of undertaking this verification process is to have the document legalized. In essence this means that diplomatic or consular agents of the country in which the document has to be produced certify the authenticity of the signature, the capacity in which the person signing the document has acted, and, where appropriate, the identity of the seal or stamp which it bears. The exact processes for this depend on which countries are involved.

The Apostille Convention serves to abolish the need for complicated and expensive back-to-back processes of legalisation of public documents by introducing a standardized authentication form named an ‘Apostille’.

The Apostille is a certificate that is attached to the public document by the competent authority in the country where the document was produced, which contains specific information such as the name of the date of issuance, the issuer, and the signature of the authorized person. The Apostille is recognized by all member countries of the Apostille Convention, which means that a public document that has been apostilled in one country can be used in any other member country without the need for any other verification procedures such as legalization.

The Apostille Convention has been widely adopted around the world, reflecting the growing need for simplified procedures to authenticate public documents. The Apostille Convention has 125 members, including the U.S., Japan, South Korea, Germany, France, Luxembourg, the Netherlands, the UK, Australia, New Zealand and Singapore, to name but a few.

China, a country sharing certain similarities in the procedural steps of its foreign investment regime with Vietnam, has recently deposited its instrument of accession, and will become a new member of the Apostille Convention on November 7, 2023.

The position in Vietnam today

Vietnam has previously expressed interest in joining the Apostille Convention. In 2013, a government proposal, supported by the Ministry of Foreign Affairs and other ministries, said that Vietnam should accede to the Apostille Convention to reduce the administrative burden and cost of legalizing public documents for use abroad.

However, to date Vietnam has yet to accede to the Apostille Convention, and as such legalization has remained the central requirement for the use of foreign documents in Vietnam, particularly for foreign documents produced in Vietnam.

To be used in Vietnam, a foreign document would usually need to be legalized through the following general processes:

· Obtain the original document that needs to be legalized.

· Have the document notarized or other authorized agency in the home country.

· Have the notarized document certified by the government agency responsible in the home country.

· Have the certified document legalized by the Vietnamese embassy or consulate in the home country.

· Have the document legalized by the Vietnamese Ministry of Foreign Affairs.

· Have the document translated into Vietnamese by a certified translator, and then notarized by a Vietnamese public notary.

The entire process can take weeks, if not months, to complete. Not only that, but discretionary practices within Vietnam can result in previously legalised documents having to be re-legalised if the original legalisation occurred three or more months previously.

Benefits to Vietnam

Whenever a new idea is considered, it is important to undertake a risk-benefit analysis. While there are potentially some risks and uncertainties as to the operation of the Apostille Convention, it seems clear that the benefits of Vietnam joining outweigh them.

The key benefit is the enormous gain that comes in reducing the administrative burden and cost of preparing foreign documents for use in Vietnam by having a simple process that follows that of many other countries worldwide.

There are certainly issues that need to be addressed before Vietnam can accede to the Apostille Convention. One of the key wrinkles is the lack of a centralized authority responsible for issuing apostilles in Vietnam itself. The Ministry of Foreign Affairs is responsible for legalizing public documents, but there is no clear mechanism for issuing apostilles. Moreover, training officials to become familiar with the apostilles structure, and eliminating the current system and mindset associated with legalization process, would require time and effort.

These issues are, however, by no means insurmountable. Indeed, the Apostille Convention allows countries that wish to accede to the convention to confirm when the Apostille Convention will come into force when their accession instrument is deposited, thus giving the relevant country time to prepare before it becomes binding.