Civil Litigation with Foreign Enterprises – What Barriers Must Be Overcome?

Jun 20

1. Identifying “Foreign Elements” and Court Jurisdiction

According to Article 663 of the 2015 Civil Code and Chapter XXXVIII of the 2015 Civil Procedure Code, a case involves foreign elements when:

At least one party is a foreign individual or legal entity; or
The contract, assets, or related activities take place abroad.

If any of these conditions apply, the provincial People’s Court has jurisdiction under Articles 469 and 470 of the Civil Procedure Code. However, determining what constitutes “long-term residence or business” in Vietnam or where the legal event occurred remains vague and controversial in both legal practice and theory.

2. Challenges in Determining Jurisdiction

Lack of clear guidelines on what qualifies as “long-term” presence in Vietnam often results in district courts accepting cases that should be handled at the provincial level.
Unclear distinctions between general and exclusive jurisdiction may lead to disputes between Vietnamese and foreign courts over who has authority to adjudicate.

3. Inconsistencies in Civil and International Judicial Systems

Current provisions under the Civil Procedure Code and Law on Legal Assistance are inconsistent:

District-level courts may accept cases but lack the authority for international legal assistance, causing delays when cases are transferred to the provincial level.
Jurisdictional conflicts can arise when both Vietnamese and foreign courts claim authority over the same case, complicating enforcement.

4. Legal Assistance and Application of Foreign Law

Legal assistance (Judicial Delegation): Sending or receiving documents, evidence, or summoning foreign witnesses remains challenging due to geographical and procedural barriers.
Applying foreign law: Article 481 of the Civil Procedure Code requires courts to verify foreign law, but courts often struggle due to a lack of practical guidance and expertise.

5. Limited Human Resources and Legal Expertise

Vietnamese lawyers and judges are not yet allowed to practice under foreign law (per the 2020 Law on Lawyers), and there’s a shortage of professionals in international judicial matters.
Lack of specialized legal knowledge and language skills means courts may ignore or misapply foreign law.

6. Ongoing Judicial Reforms

Vietnam is accelerating reforms in civil procedure, including digitalizing court processes to shorten trial time and improve transparency.

Resolution 49-NQ/TW and proposed amendments to the Civil Procedure Code promote ADR (Alternative Dispute Resolution), international arbitration, and streamlined procedures for foreign-related disputes.

Expert Recommendations

Review dispute resolution clauses and ADR options in contracts with foreign businesses.
Prepare comprehensive legal documentation: clearly define jurisdiction, applicable law, and foreign elements.
Develop internal expertise: equip your legal team with international legal knowledge and language skills.
Engage expert legal support: hire specialized lawyers to avoid procedural errors and ensure effective use of foreign law provisions.

Conclusion

Civil litigation involving foreign enterprises in Vietnam presents multiple challenges—jurisdiction, legal delegation, foreign law application, and enforcement capacity. However, with ongoing reforms, specialized guidance, and professional legal support from firms like DEDICA Law Firm, businesses can overcome these barriers and pursue their legal rights effectively.