The blurred line between civil disputes and criminal enforcement in business

(KTSG) – In a modern market economy, disputes are an inevitable consequence of business activities. Enterprises may fail, contracts may collapse, and obligations may not be fully performed for a variety of objective reasons. However, in current legal practice, not only is the number of disputes increasing, but the boundary between civil–commercial disputes and criminal enforcement is also becoming increasingly blurred.

The fundamental principle of civil law is to respect the freedom of contract and the parties’ autonomy to assume responsibility in transactions. The failure to perform or the improper performance of contractual obligations, in essence, should be addressed through civil remedies such as specific performance, contractual penalties, damages, or termination of the contract.

In practice, there are cases where the nature of the matter is merely a breach of civil obligations, yet it is treated from a criminal perspective simply because one party loses the ability to pay, a project incurs losses, or a business cooperation fails to meet expectations.

As a result, businesses, before having the opportunity to resolve civil disputes, are already confronted with strict procedural measures. In many cases, the consequences of prosecution are far more severe than the damages arising from the disputed contract itself.

The key factor in distinguishing between a civil dispute and a criminal offense does not lie in whether the debt can be repaid, but in the subjective intent of the party at the time of entering into and performing the transaction.

If, from the outset, a party engages in deceit, conceals the truth, fabricates documents, lacks the capacity to perform obligations but still intentionally enters into a contract to appropriate assets, then such conduct clearly bears a criminal nature. In this case, the contract serves merely as a “legal cover” for the criminal act.

Conversely, if a transaction is lawfully established, the parties act in good faith, and genuine business activities take place, but subsequently encounter objective risks such as market fluctuations, financial crises, pandemics, or policy changes, then the failure to perform obligations should be recognized as a business risk, falling within the scope of civil and commercial law.

The criminalization of civil disputes not only harms individual businesses but also creates adverse consequences for the overall investment environment. It undermines legal predictability. Businesses cannot foresee whether a contractual dispute will be resolved through civil or criminal proceedings, leading to hesitation and caution in investment and cooperation. The risk of criminalization also deters foreign investors, who place high value on legal transparency and stability. An environment where contractual disputes may lead to criminal risks is one that lacks safety for long-term capital flows.

To address this issue, the key is not to “loosen” criminal enforcement, but to apply the correct and sufficient legal criteria when distinguishing between civil and criminal matters.

Competent authorities should comprehensively assess the context of the transaction, the parties’ subjective intent, post-contract conduct, the extent of damage, and the scope of social impact, rather than relying solely on the outcome of non-payment. At the same time, it is necessary to promote alternative dispute resolution mechanisms such as negotiation, mediation, and commercial arbitration—methods that are consistent with the nature of business relationships.

A healthy legal environment is not one without disputes, but one that clearly distinguishes boundaries, addresses matters according to their true nature, and safeguards legal certainty for legitimate investment and business activities.

Interested readers may learn more at: https://thesaigontimes.vn/ranh-gioi-mong-manh-giua-tranh-chap-dan-su-va-xu-ly-hinh-su-trong-kinh-doanh/