When a domestic enterprise signs a distribution contract with a multinational company, disputes can arise from many reasons: disagreements in contract terms, differences in applicable laws, delivery deadlines, quality, payment, exclusive rights, or risks in transportation and storage. Especially with consumer goods - products with high requirements on standards, safety, packaging, environment, and labels - these issues can easily lead to conflicts.
In Vietnam, relevant laws have new points worth noting:
Commercial Arbitration Law 2010Allows parties to agree to resolve disputes by arbitration if there are appropriate provisions; But with disputes between consumers and businesses, consumers have the right to choose Court or Arbitration.
Usage trendselectronic contractis being strongly promoted, especially in the context of digital transformation and according to the National Strategy for digital economic and social development to 2025, with a vision to 2030. Electronic contracts are recognized if they meet the criteria of safety, authentication, have digital signatures, and store the signing process.
In international distribution contracts or other international commercial contracts, some parties choose to apply international standards or choice of law agreements, which require clarity from the contract. For example, if the contract chooses to apply CISG (Vienna Convention on Contracts for the International Sale of Goods), or English law, Singapore law if the parties so agree. If there is no agreement, the law most closely related to the transaction must be determined.
In addition, according to recent analysis, regulatory instability in local markets (distribution locations) is also a source of risk: when laws, technical standards, and labeling standards change, distribution partner businesses may have difficulty complying, leading to contract violations.
Violation of quality/label/expiry date: Consumer goods are especially sensitive to quality. If the international supplier does not meet the required standards in the importing country (for example, regulations of the Ministry of Health, Ministry of Industry and Trade), the goods may be returned or fined.
Payment & exchange rates, delivery conditions (INCOTERMS): Late payment, dispute over payment method (LC, TT, L/C opening, bank transfer...), or disagreement about shipping risks.
Delivery time and responsibility for preserving goods: Late delivery, damage in transportation, loss due to poor storage... who is clearly responsible in the contract?
Violation of exclusive rights and regional distribution: The distributor may want to sell into unlicensed areas, or have sub-distributors in exclusive areas that cause disputes.
Changes in national or international laws or standards: Regulations on labeling, packaging, product safety or anti-counterfeiting/counterfeiting are subject to change; If the contract does not foresee this, the distributor may suffer losses.
Dispute Resolution: Court vs International Arbitration: If the contract elects arbitration but there are issues about jurisdiction or enforcement of the arbitral award, or if the injured party does not want to enforce in the other country.
The use of electronic contracts is recognized by Vietnamese law when it meets safety criteria, digital signatures, and proper storage procedures.
Choice of law in international commercial contracts: if the parties have a clear agreement, it must be respected; If there is no agreement, it is necessary to identify the law with the closest connection.
Consumer protection provisions under the Consumer Protection Law, especially for consumer goods, state that if the contract affects consumers, they have the right to choose the method of dispute resolution.
Draft a detailed and clear contract
Clearly state the name of the goods (with HS code if related to import and export), quality, applicable standards, quantity, difference margin (tolerance), packaging, label.
Clear payment terms: payment method, term, interest rate for late payment, who bears shipping costs, customs duties, import taxes if any.
Clearly define risks in transportation and storage: if there is damage, who is responsible, how to handle it, and insurance.
The choice of applicable law and the place of dispute resolution (Court or Arbitration; if the arbitrator chooses a reputable international arbitration body) must be clearly stated.
Evaluate local regulations & import standards
If distributing multinational consumer goods, you need to check the standards of the Ministry of Health, the Ministry of Industry and Trade, and relevant ministries to see if product certification/announcement is required, labeling, expiration date, sample testing, etc.
Continue to update laws, especially newly issued circulars and decrees.
Establish a mechanism for monitoring, quality control and close cooperation between parties
Quality control at source, inspection upon receipt of goods, samples for testing, storage and transportation.
There are appendixes or conditions for re-inspection if the goods are found to be unsatisfactory.
Communicate clearly when there are discrepancies with the contract – minimize disputes through good faith behavior.
Collect complete evidence and contract documents
Main contract, appendix, delivery record, invoice, invoice, shipping documents, quality inspection, payment documents.
Emails, exchange messages, goods reports, inspection records, photos, videos if any.
Review the dispute resolution clause
If there is an international arbitration agreement, check the jurisdiction of the arbitrator, the place of enforcement, and the applicable law.
If the choice of law agreement is clear, use the chosen law. If not, identify the closely related law.
See if a force majeure clause applies if the dispute is due to an event beyond your control.
Prioritize mediation and negotiation before suing or arbitration
Mediation can help keep relationships cooperative.
Re-negotiate with partners to reach a settlement agreement, share risks, and adjust contracts if the market changes.
Turn to arbitration or court if out-of-court settlement is not possible
Arbitration advantages: security, faster, choosing a neutral agency.
A court may be necessary if the counterparty fails to perform, or if there are provisions required by law (for consumers, for example).
Prepare to sue internationally if the foreign partner or assets are located abroad.
Enforcement of judgments and verdicts, post-dispute resolution
If there is an arbitration award, the possibility of enforcement in Vietnam or in the partner country must be considered.
If it is a court judgment, consider the execution of the judgment, recover assets, and ensure implementation of the decision.
Consider arising damages: interest on late payment, preservation costs, loss of reputation if the contract has a major impact.
Disputes on multinational consumer goods distribution contracts always have many potential risks — from quality to payment, from applicable law to the right to enforce decisions. Careful prevention with detailed contracts, updating new regulations, and choosing appropriate dispute resolution methods will help businesses minimize losses.
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