Is deposit the receiver be fined when violating the liabilities due to objective reasons?

In June 2020, I and Mr. M signed a deposit contract on real estate purchase with the contract price of 2 billion VND. In the contract, Mr. M commits to complete the procedures conveyance within 60 days from the date of signing the contract. Also, if he can't perform his liability correctly, he will be fined a deposit of VND 1,000,000,000 and paid a deposit of VND 500,000,000 as agreed in the Contract. After 6 months, Mr. M has not completed the procedures to transfer the land-use rights, despite being urged many times. Mr. M said that due to the problem with the paperwork in the process of receiving the resettlement land, it takes him more time to carry out the procedure at the state agencies. In this case, can I file a lawsuit to ask Mr. M to complete his obligation and impose a fine?

FDVN’s Opinion:

According to Clause 2 of Article 382 of Civil Code 2015, the fine on deposit is stipulated as follows: “2. Upon a contract being entered into or performed, any deposited property shall be returned to the depositor, or deducted from the amount of an obligation to pay money. If the depositor refuses to enter into or perform the contract, the deposited property shall belong to the depositary. If the depositary refuses to enter into or perform the contract, it must return the deposited property and pay an amount equivalent to the value of the deposited property to the depositor, unless otherwise agreed.” Accordingly, if Mr. M refuses to carry out the procedures to transfer the land use rights, he must return the deposit of VND 500 million as well as a fine of VND 1 billion.

However, if the failure to carry out the procedures is due to the fault of the state agencies as Mr. M presented caused by problems with the papers in the process of receiving the resettlement land leading to that the state agencies need more time for verification, Mr. M will not be fined. Under the Case law 25/2018/AL in respect of relief from deposit penalty due to objective causes, promulgated by the Judicial Council of the Supreme People's Court on October 17, 2018, the content of the deposit penalty is as follows: “If there is basis to determine that the Civil Judgment Enforcement Agency delayed in transferring the ownership right to Ms. H, Ms. H's failure to comply with the agreement with Mr. L shall be due to the objective causes, and Ms. H shall not be subject to the deposit penalty...” This viewpoint is also consistent with the provisions of Section 1, Part I of Resolution 01/2003/NQ-HDTP, dated April 16, 2003, guiding the application of laws in the settlement of a number of civil and marriage, and family disputes.

Therefore, if Mr. M proves that the failure to comply with the commitments in the deposit contract is due to the state agency's own fault, not the fault of Mr. M, this is considered an objective cause, so Mr. M may be relieved from the fine.

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