The dispute resolution landscape and choice of forum: negotiation, mediation, arbitration and the courts, the Article 13 foreign-element rules, governing law and seat, enforceability, and how to choose and draft the clause

Four routes, one decision made at signing

A business dispute in Vietnam is resolved in one of four ways: by negotiation between the parties, by mediation with a neutral third party, by arbitration, or by litigation in the people's courts. Article 13 of Law No. 143/2025/QH15 on Investment states the sequence for disputes relating to business investment: negotiation and mediation first, then arbitration or the courts (FAQ 71). The sequence is a policy statement more than a procedural bar for ordinary commercial contracts, but it becomes a real precondition where the contract or an investment treaty makes negotiation or mediation a condition of starting proceedings, and a tribunal may decline to proceed, or stay the case, if that step was skipped.

Arbitration and litigation are mutually exclusive. A valid arbitration agreement removes the dispute from the courts: Article 6 of Law No. 54/2010/QH12 on Commercial Arbitration requires a court seised of a dispute covered by a valid arbitration agreement to decline jurisdiction unless the agreement is void or incapable of being performed. Conversely, a contract with no arbitration clause, or with a defective one, leaves the dispute to the court that has jurisdiction under the Civil Procedure Code. The forum is therefore fixed when the contract is signed, not when the dispute arises. After a dispute has arisen the parties can still agree to arbitrate, but a party that expects to be the defendant rarely agrees.

This chapter treats each route in turn: arbitration in Vietnam in Commercial arbitration and VIAC, foreign arbitration and the enforcement of foreign awards in Foreign arbitration and enforcement of awards, the courts in Vietnamese courts and litigation, mediation in Mediation and negotiation, and the enforcement stage in Enforcing judgments and civil judgment enforcement. This section explains how to choose between them.

Article 13: who may go offshore

Article 13 of the Law on Investment draws the line that governs every choice of forum. For disputes between investors, where at least one party is a foreign investor or an economic organisation more than 50% foreign-owned within Article 20, the parties may choose a Vietnamese court, Vietnamese arbitration, foreign arbitration, international arbitration or ad hoc arbitration (Article 13(3)). Disputes among domestic investors, and among companies at or below the 50% threshold, must go to Vietnamese arbitration or the Vietnamese courts (FAQ 72). A Vietnamese joint venture company that is 49% foreign-owned is therefore a domestic investor for this purpose, and its contracts with Vietnamese suppliers cannot validly refer disputes to SIAC or the ICC, while a 51% foreign-owned company can.

For disputes between an investor and a State authority, a foreign investor's dispute goes to Vietnamese arbitration or the Vietnamese courts unless the contract with the State body, or a treaty to which Vietnam is party, provides otherwise; a domestic investor's dispute with the State goes to Vietnamese arbitration or courts (FAQ 77). The guarantees, treaty network and Article 13 itself are explained in Investment guarantees and treaties; claims against the State are covered in Investor-State disputes and treaty claims.

Article 13 sits alongside the Law on Commercial Arbitration, which allows arbitration of disputes arising from commercial activities, disputes in which at least one party carries on commercial activities, and other disputes the law permits to be arbitrated (Article 2). Neither law prohibits a foreign-element dispute from being arbitrated in Vietnam: a foreign investor may choose VIAC as readily as SIAC. The question is what the parties gain or lose by each choice.

Governing law: foreign law and its limits

Governing law and forum are separate choices. Where a contract has a foreign element, which under Article 663 of the Civil Code means a foreign party, the creation, performance or termination of the relationship abroad, or an object of the relationship located abroad, the parties may choose the applicable law under Article 683. The choice is subject to three limits. First, a foreign law is not applied where its consequences would be contrary to the fundamental principles of Vietnamese law (Article 670). Second, mandatory rules apply regardless of the choice: contracts concerning real estate in Vietnam are governed by Vietnamese law, and labour and consumer contracts cannot deprive the weaker party of Vietnamese protections. Third, a contract between two Vietnamese companies with no foreign element is governed by Vietnamese law, and a tribunal seated in Vietnam must decide a dispute with no foreign element under Vietnamese law (Article 14 of the Law on Commercial Arbitration).

A foreign-invested company is a Vietnamese legal entity. Its contract with another Vietnamese company is not, on that ground alone, a foreign-element contract under the Civil Code, although Article 13 of the Law on Investment allows it to choose foreign arbitration. Many practitioners therefore advise that a domestic contract involving a majority foreign-owned company should be governed by Vietnamese law even where foreign arbitration is chosen, to avoid an argument that a foreign governing law was invalid. Where foreign law does govern, its content must be proved, and a Vietnamese court or tribunal unfamiliar with it will rely on expert evidence. The contract rules that apply under Vietnamese law, including the 8% penalty cap and the two-year limitation period, are explained in Commercial contracts in Vietnam.

Seat, institution and language

The seat of an arbitration is its legal home. It determines which courts may support the arbitration and annul the award, and whether the award is Vietnamese or foreign for enforcement purposes. An award made in Singapore under the SIAC Rules is a foreign award that must be recognised by a Vietnamese court before it can be enforced in Vietnam; an award made by VIAC with its seat in Hanoi is a Vietnamese award that can be enforced directly, without recognition, but can be challenged in the Vietnamese courts within 30 days. An award made by a foreign institution with its seat in Vietnam sits in an uncertain category, because Article 3(11) of the Law on Commercial Arbitration and the Civil Procedure Code do not define foreign awards in the same way; most advisers avoid that combination.

The institution administers the case under its rules. VIAC, the Vietnam International Arbitration Centre, is the leading Vietnamese institution, and its 2026 Rules apply to arbitrations commenced from 1 July 2026 (FAQ 73). For offshore arbitration, SIAC in Singapore, HKIAC in Hong Kong and the ICC are the usual choices. Ad hoc arbitration under the UNCITRAL Rules is lawful but places the burden of appointments and administration on the parties.

The language of an arbitration in Vietnam is Vietnamese unless the dispute has a foreign element or a party is a foreign-invested enterprise, in which case the parties may agree on another language and, failing agreement, the tribunal decides (Article 10 of the Law on Commercial Arbitration). Court proceedings are always in Vietnamese, and every foreign-language document must be translated.

Enforceability decides most cases

The best forum is the one whose decision can be enforced against the assets of the party most likely to lose. Where the Vietnamese counterparty's assets are all in Vietnam, every route ends in a Vietnamese enforcement agency, and the question becomes which decision reaches that agency most reliably. A Vietnamese arbitral award is enforced directly once the 30-day window for annulment has passed. A foreign arbitral award is enforceable under the New York Convention, which has been in force for Vietnam since 11 December 1995, after recognition by a Vietnamese court; recognition can be refused on Convention-style grounds, including conflict with the fundamental principles of Vietnamese law, which courts have sometimes read broadly (FAQ 74). A foreign court judgment is recognised only where Vietnam has a judicial assistance treaty with the judgment state or on reciprocity, and there is no such treaty with the United Kingdom, the United States or Singapore (FAQ 75). A Vietnamese judgment is enforced directly but may take years to obtain once appeals and cassation are exhausted.

These differences explain the prevailing practice. Foreign investors contracting with Vietnamese counterparties usually choose arbitration, either VIAC or an offshore institution, and avoid foreign court jurisdiction clauses, which produce judgments Vietnam will generally not enforce. Where the counterparty has assets abroad, an offshore seat gives access to enforcement in more than 170 New York Convention states as well as in Vietnam.

Model clauses and the stepped clause

VIAC's model clause refers any dispute arising out of or in relation to the contract to arbitration at VIAC under its Rules of Arbitration, and VIAC recommends adding the number of arbitrators, the seat, the governing law and the language, particularly where a foreign party or foreign-invested company is involved (FAQ 73). SIAC, HKIAC and the ICC publish comparable clauses. Using the institution's text, without paraphrase, is the single most effective protection against a clause being held defective; most clauses that fail in Vietnam fail because they name an institution that does not exist, name two institutions, or leave a choice between arbitration and court.

A stepped clause provides for negotiation for a fixed period, then mediation, then arbitration. It suits long-term relationships and reflects the sequence in Article 13, but each step must have a clear trigger and an end date, so that a party can start arbitration when the period expires without arguing about whether the earlier step was completed. Interim relief from a court or tribunal should be expressly excluded from the waiting period, and the clause should state that time spent negotiating does not extend the two-year limitation period for commercial claims under Article 319 of the Commercial Law, which continues to run unless interrupted.