Common Dispute Resolution Methods in Vietnam
When businesses or individuals in Vietnam face disputes — whether in contracts, investment, labor, or commerce — the first thing to understand is that there is no “one-size-fits-all” solution. Each dispute resolution method has its own advantages, limitations, and applicable conditions. Below is an overview of the most common methods used in Vietnam, along with an analysis to help you choose the most suitable approach.
1. Main Dispute Resolution Methods in Vietnam
1.1. Negotiation
This is the most natural first step — both parties meet to review the issue, make proposals, and seek a common agreement without involving any legal authority or third party.
Advantages: Fast, low-cost, flexible, and helps preserve business relationships.
Limitations: If one party lacks goodwill or the conflict is too severe, negotiation may fail; the agreement is not legally binding if breached.
Note in Vietnam: Many legal documents consider negotiation as a necessary preliminary step before moving to more formal legal proceedings, especially in business, contract, or investment disputes.
In practice, many cases are successfully resolved through negotiation, allowing the parties to maintain cooperation even after the dispute.
1.2. Mediation / Conciliation
If negotiation fails, mediation is the next step — involving a neutral third party (mediator) to help the parties reach a mutual understanding.
Legal Basis: In commercial disputes, mediation is governed by Decree No. 22/2017/NĐ-CP on commercial mediation.
Mandatory Principles: Mediation must be voluntary, equal, and confidential; any settlement reached must not violate laws or social ethics.
Advantages: Like negotiation, mediation is flexible but benefits from the mediator’s neutrality, which helps reduce tension and facilitates settlement.
Limitations: The mediation result is not enforceable by law if one party refuses to comply; if unsuccessful, the case moves to arbitration or court.
Recent Development: In consumer-business disputes, mediation is increasingly encouraged to reduce pressure on the court system.
1.3. Arbitration
Arbitration is a private dispute resolution method where the parties agree to appoint one or more independent arbitrators to adjudicate their case.
Condition for Use: There must be a valid arbitration agreement between the parties, usually in writing or included in the contract.
Legal Force: An arbitral award is legally binding and enforceable like a court judgment, provided it meets the legal requirements.
Advantages: More flexible than court proceedings, usually faster, private, and suitable for disputes involving technical or commercial matters.
Limitations: Arbitration cannot proceed without a valid arbitration agreement. Courts will refuse to hear the case if such an agreement exists.
Note: In investment cases involving foreign elements, parties may choose international arbitration if provided in the contract. The Law on Investment 2020 allows investment disputes to be resolved by foreign arbitral tribunals, as long as it does not contravene Vietnam’s international treaties.
1.4. Litigation / Court Proceedings
When the above methods fail or are unsuitable, disputes can be brought to state courts for settlement under civil or commercial procedures, depending on the nature of the case.
Legal Basis: Civil Procedure Code 2015 (amended), and other sectoral laws such as the Law on Commerce, Law on Investment, Land Law, and Labor Code.
Jurisdiction and Procedure: Parties must comply with formal processes for filing, evidence, defense, and trial.
Advantages: Court judgments have strong legal enforceability; the losing party must comply or face compulsory enforcement.
Limitations: Procedures are often lengthy, costly, and rigid; relationships between the parties may deteriorate further.
Note: If a valid arbitration agreement exists and one party files a lawsuit in court, the court must refuse jurisdiction, unless the arbitration clause is invalid or unenforceable.
Additionally, under the Land Law 2024, the jurisdiction for land-related disputes has been significantly revised, so litigants should carefully review the latest provisions before filing.
1.5. Alternative Dispute Resolution (ADR) Mechanisms
Beyond traditional methods, Vietnam is also introducing newer forms of Alternative Dispute Resolution (ADR) similar to international practice:
Neutral Evaluation: A neutral expert assesses the strengths and weaknesses of each party’s position to help them reach an informed settlement.
Mini-Trial (Three-Party Mediation): Each side presents its case through representatives, with a neutral facilitator helping them reach agreement.
Expert Determination / Expert Adjudication: For technical disputes, parties may appoint an expert to issue a binding or non-binding decision based on professional expertise.
Although ADR methods are not yet as common as arbitration or mediation in Vietnam, they can be effective for technical, intellectual property, or technology-related disputes — helping parties save time, reduce costs, and preserve business relationships.
2. Choosing the Right Method for Your Situation
Selecting the appropriate dispute resolution method depends on several factors: the nature of the dispute (contractual, investment, labor, intellectual property, etc.), desired speed, acceptable cost, the relationship between the parties, international elements, and any pre-existing agreements.
Some practical recommendations:
If both parties remain cooperative and wish to preserve their business relationship, start with negotiation, and proceed to mediation if it fails.
If the dispute involves technical or cross-border issues, arbitration is often a sound choice for its flexibility, expertise, and confidentiality.
For major disputes requiring clear legal enforcement, litigation in court remains the ultimate route, especially when other methods are infeasible.
In technical or intellectual property disputes, consider modern ADR mechanisms like neutral evaluation or expert determination before pursuing formal proceedings.
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