One of the Dean Rusk International Law Center’s Visiting Researchers for 2023, Daesun Kim, Esq., recently concluded his research year at the University of Georgia School of Law under the supervision of Associate Dean for Academic Affairs & J. Alton Hosch Professor of Law Kent Barnett. Below are some of Kim’s reflections on his research findings regarding the impact of the Covid-19 pandemic on foreign investment projects in Vietnam and his overall experience at Georgia Law.

As a Korean legal professional with a U.S. law license, providing legal services for cross-border transactions in Vietnam has exposed me to myriad challenges stemming from legal, cultural, and linguistic disparities. My research at the University of Georgia School of Law’s Dean Rusk International Law Center focused on a comparative legal analysis of the material adverse impact of the Covid-19 pandemic on foreign investment projects in Vietnam. Throughout various project milestones, such as providing legal due diligence reports, offering second-party legal opinions or lender’s legal opinions to enhance project credibility, negotiating contracts, addressing implementation stage issues, and handling disputes, clients, especially those from the U.S. and Korea, increasingly seek insights from a common law perspective. However, providing clear answers to their queries has proven challenging, leading to a collective impasse when practitioners convene and even causing a temporary standstill when representing clients in local courts or arbitration panels.

As expected, Vietnam, alongside other Southeast Asian nations, is witnessing a surge in investors seeking a new production base, mirroring the rise of a second China. Notably, the country has rapidly ascended as a crucial player in the global value chain, boasting well-established production infrastructure in sectors like electronics, automotive, batteries, and textiles.

Over the past 15 years, global enterprises from the United States, South Korea, Germany, Japan, Australia, Russia, and the United Kingdom have established a significant presence in Vietnam. The competition is particularly intense among nations like Korea, Japan, and Singapore, vying for the top spots in foreign direct investment. Cities like Ho Chi Minh and Hanoi host numerous Korean law firms and accounting firms handling the legal and tax aspects of business operations, reflecting the growing interest and investment in the region.

Recent analyses underscore the evolving opportunities and risks faced by Vietnam due to the rapid escalation of global tensions, the rollback of globalization, and shifts in the global value chain, all intricately connected. Investors are increasingly scrutinizing the status and evaluation of supply chains, encompassing not only their subsidiaries but also their suppliers, considering comprehensive assessments, including human rights and environmental considerations. Moreover, challenges in obtaining approval for international arbitration decisions from Vietnamese courts and the lack of clear legal grounds in judgment documents contribute to the complexities faced by international investors, emphasizing the need for thorough preparation within the local legal system.

Reflecting on my experience entering the Vietnamese legal landscape seven years ago to contribute to cross-border M&A deals, I vividly recall the unfamiliarity of concepts commonplace in legally advanced countries like the U.S., Korea, Singapore, or Hong Kong. Tasks involved explaining and bridging the gap in understanding with local counterparts and regulatory authorities, presenting both a formidable and rewarding aspect of the work. Issues such as (i) offshore loans using stand-by LCs issued by local banks as a security for foreign-owned companies with a 51% or more stake in Vietnam, (ii) the issuance of perpetual bonds by foreign-invested enterprises, (iii) the feasibility of establishing a security on the residual assets of the mortgagor, (iv) issuance of a business license for the E-wallet of a payment gateway company, (v) whether a local Vietnamese company can provide its listed shares as collateral for the repayment of mezzanine debts, such as convertible bonds, when issuing to foreign-based private equity funds, and so on presented novel challenges requiring creative problem-solving beyond conventional legal education.

In addition, navigating through intricacies like land-use rights instead of ownership, foreign ownership restrictions in certain business sectors, and unique political and legal constraints became part of the routine. For instance, (i) when a foreign-invested company in Vietnam receives an offshore loan from a foreign lender to cover operational expenses, addressing issues related to the establishment of land use rights as collateral on the commercial & residential building complex owned by the company for loan repayment, and (ii) in cases where Vietnamese securities laws impose foreign investment ownership percentage limits on public and private companies, determining whether the same constraints apply unconditionally when issuing preference shares or dividend preference shares during repayment.

As foreign lawyers practicing in Vietnam and other developing nations provide legal services for foreign investors, a dynamic daily routine must be anticipated. Challenges range from the use of Vietnamese as the primary legal language, reliance on local lawyers proficient in the language, to the heavy reliance on the skills of local attorneys in drafting contracts and legal documents in the local language.

Despite the inherent difficulties and challenges, Vietnam remains a nation full of promise. With an ever-changing legal landscape, an influx of substantial investments amounting to approximately 36.61 billion USD in 2023, and a population characterized by a significant youth demographic and high domestic purchasing power, Vietnam stands as a beacon of development. As I encounter and contribute to these advancements daily, I am determined not to lose sight of the pride associated with making small but meaningful contributions to Vietnam’s progress.

Having spent the past year as a visiting researcher at the Dean Rusk International Law Center, I have observed the legal dynamics of the world’s leading nation, the United States, and the pivotal role it plays in international law. The experience has further amplified the stark differences in language, nationality, culture, and legal knowledge encountered during my legal practice in Vietnam. Notably, the U.S. legal system’s meticulous handling of the Covid-19 pandemic through clear precedents and statutes provides a stark contrast to the legal landscape in Vietnam, instilling hope for a future where such advanced legal systems and accumulated experiences emerge in developing countries like Vietnam.

I express my deepest gratitude to all those who have facilitated my research period at the Dean Rusk International Law Center. I am sincerely thankful to every individual involved for their consideration in providing me the opportunity to conduct research at this prestigious hub of international law. During my brief stay, I have sensed the scholarly dedication, efforts, support, and contributions of the faculty, scholars, and staff here. Thanks to their collective endeavors, practitioners like myself can find solid academic foundations in international law, enabling us to deliver comprehensive legal services to our clients.

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Daesun Kim, Esq., was one of the four 2023-2024 Visiting Researchers at the Dean Rusk International Law Center. Kim is a foreign attorney practicing law in Vietnam who specializes in cross-border M&A, foreign investment, and public-private partnerships (PPP), with a focus on construction & real estate development projects and mezzanine project financing in Southeast Asian countries. He primarily represents Korean corporate clients and common-law jurisdiction clients (Singapore, Hong Kong, USA) investing inbound in Vietnam. He is a member of the International Construction & Energy Law Society, South Korea, and the Chartered Institute of Arbitrators. Previously, Kim worked at top-tier Korean firms such as Shin & Kim LLC and Yulchon LLC, representing Korean PEFs, conglomerates, banks, construction/engineering contractors, and developers in outbound investment. He also worked as in-house counsel at POSCO E&C, where he was in charge of contentious and non-contentious legal services encompassing overseas engineering, procurement, and construction works in power plants, oil & gas refinery plants, steel-making projects, project financing, and related international arbitration disputes.

Read more about the University of Georgia School of Law’s Visiting Researcher initiative here.