A steel production joint venture in Quang Ninh between a Korean group holding 60 percent and a Vietnamese partner holding 40 percent stalled after the construction market fell for two consecutive years, and the partners disagreed on injecting more capital or stopping operations. The Korean side wanted to terminate the venture during 2026 while the Vietnamese side wanted to keep the plant alive for its 120 local workers and an outstanding VND 22 billion bank loan. The 2016 joint venture contract contained a termination clause of barely half a page, saying nothing about valuing capital shares or handling the plant.
Two layers of joint venture termination: private bargain and state file under Articles 207 and 208
Terminating a joint venture company in Vietnam always runs through two independent layers: the private bargain layer of the joint venture contract, the company charter and investor commitments, and the state procedure layer of project adjustment or termination plus enterprise dissolution under Articles 207 and 208 of Enterprise Law 2020 No. 59/2020/QH14. The bargain layer decides who buys whose stake, at what price and how common assets are divided, while the state layer decides whether the project may end, whether the enterprise may dissolve and whether tax plus labour duties are settled. A perfectly negotiated termination agreement cannot by itself replace the dissolution file, and conversely the state file cannot force two partners to accept a transfer price they never agreed.
Under Article 207 a joint venture may dissolve by decision of its owners or members council, and Article 208 places debt payment ahead of asset division, so every money term inside a termination agreement must respect that barrier.
Negotiating termination terms for the Quang Ninh steel venture across four locked points
Step 1 – Lock the valuation method before debating a concrete price: the partners agree to use net asset value per audited statements at 31 December 2025 plus an independent appraisal of the leased land use right with 18 years remaining, and they exclude the discounted cash flow method because two consecutive loss years make every forecast a fresh argument.
Step 2 – Fix the transfer date and its conditions precedent: the termination agreement sets a target closing date of 30 September 2026 conditional on the buying partner paying a first instalment of 70 percent of the stake value, the lending bank for the VND 22 billion loan approving a guarantor change and the Quang Ninh investment registration authority confirming the project termination plan.
Step 3 – Allocate common assets and the outstanding loan: the plant and steel rolling lines pass to the Vietnamese partner to operate under a new entity after the venture dissolves, the VND 22 billion loan is restructured onto that entity, and specialised equipment imported from Korea may be bought back by the Korean side at remaining book value.
Step 4 – Design post closing commitments: the partners covenant not to litigate over the venture operating period, release each other from known claims, keep customer information confidential and agree that the Korean side provides remote technical support for 6 months so the plant runs without interruption after transfer.
Step 5 – Synchronise the termination agreement with the state dissolution file: immediately after signing, the venture files its project termination notice, builds the Article 208 dissolution plan, finalises tax and arranges employment or severance for 120 workers, ensuring the commercial closing date matches the administrative file progress.
Four months of Quang Ninh negotiation and the breaking point that nearly killed the deal
Negotiation opened in March 2026 with a valuation gap of VND 19 billion, because the Vietnamese side valued the leased land at rising industrial park market prices while the Korean side accepted book value only. The biggest breaking point arrived in the second month when the lending bank demanded the Korean side keep guaranteeing the VND 22 billion loan for a further 12 months after termination, something the Seoul parent initially refused outright. The final compromise was a guarantee stepping down along a 4 quarter repayment schedule, in exchange for the Vietnamese side accepting a land valuation midway between the two methods and paying its second instalment 30 days earlier than first proposed.
The termination agreement was signed on 18 July 2026 after 11 negotiation sessions, with the 60 percent stake value settled at VND 46.5 billion and the closing date held at 30 September 2026 as planned.
When a partner refuses to cooperate and the value of drafting termination terms at the outset
The gravest joint venture termination risk is a partner refusing to sign dissolution documents or absenting themselves from members council meetings, leaving the enterprise unable to pass a valid resolution even though the other side wants a lawful exit. In that situation the trapped side can bring the joint venture contract dispute to a court or arbitral tribunal and at the same time ask the investment registration authority for guidance on a project that has in reality ceased operating. Another exposure is the tax authority revaluing common assets on transfer, creating tax duties outside the termination agreement budget where the parties built no price adjustment mechanism for post inspection tax outcomes.
The preventive lesson sits inside the question whether termination clauses belong in the joint venture contract from day one, and the practical answer is that detailed drafting is essential while the partners still cooperate well.
The action recommendation for the Quang Ninh venture and similar ventures is to negotiate termination as four independent packages covering valuation, transfer timing, common assets and post closing commitments, sign a minute for each package as it settles and run the Article 208 dissolution file in parallel rather than waiting for the commercial agreement to finish before starting state procedures.
This article has been quality-reviewed by the FLAW AI Legal Council