Consultancy on Resolving Labor Disputes Involving Foreign Elements in Vietnam

In the context of international integration and increasing foreign investment, labor disputes involving foreign elements are becoming an increasingly common legal challenge for both employers and employees. When one party is a foreign individual or when the employment contract contains international elements, dispute resolution becomes more complex than in ordinary labor disputes — it requires determining the applicable law, jurisdiction, and choosing the most suitable dispute resolution mechanism. This article analyzes the latest legal perspectives and provides practical consultancy approaches in Vietnam.

1. Nature and Characteristics of Labor Disputes Involving Foreign Elements

1.1. Definition and Scope of International Labor Disputes

A labor dispute involving foreign elements arises from an employment relationship in which at least one party (an individual or organization) has a foreign factor, or when the contract, the performance process, or the subject matter of the dispute is related to a foreign country.

Typical examples include:

• A Vietnamese employee assigned by a foreign company to work in Vietnam;

• A foreign employee working for a Vietnamese company;

• A labor contract signed abroad but performed in Vietnam.

According to Article 179 of the 2019 Labor Code, a labor dispute refers to any disagreement over rights, obligations, or interests between an employee and an employer (individual or collective).

Therefore, when a foreign factor is involved, a labor dispute is no longer purely domestic — it may involve international law, conflict of laws, and even foreign judicial intervention.

1.2. Distinctions from Domestic Disputes & Legal Risks

Compared to purely domestic labor disputes, those involving foreign elements have several key characteristics:

• Determining the Applicable Law:
  According to Article 664 of the 2015 Civil Code, in civil relations involving foreign elements, if the parties agree or if an international treaty to which Vietnam is a party provides otherwise, foreign law may apply. In the absence of an agreement, Vietnamese law or the law of the country most closely connected to the dispute shall apply.

• Public Order Principle:
  If a foreign law contradicts the fundamental principles of Vietnamese law, it shall not be applied — Vietnamese law will take precedence.

• Complex Jurisdiction:
  Conflicts of jurisdiction may arise between Vietnamese courts, foreign courts, or international arbitration. Vietnamese law provides both general and specific jurisdiction for its courts over civil cases, including those involving foreign elements.

• Difficulties in Gathering International Evidence & Enforcement:
  When evidence, witness statements, or judgments are located abroad, parties must rely on international judicial delegation or mutual legal assistance mechanisms.

• Diplomatic Risks & High Costs:
  Bringing a case before a foreign court often entails translation expenses, local law verification, international legal fees, and potential diplomatic barriers.

2. Resolution Process and Strategic Consultancy

2.1. Basic Stages and Limitation Periods

When a labor dispute arises, following an appropriate procedural sequence is critical to protect the parties’ rights:

Negotiation – Internal Settlement

The first step is for both parties to actively negotiate and seek amicable solutions. This approach is cost-effective, helps maintain goodwill, and may preserve the working relationship.

Labor Mediation

Ordinarily, individual labor disputes must undergo mediation before proceeding to arbitration or court, except in certain cases exempted by law (such as disputes over unilateral termination, dismissal, compensation, or social insurance).

• Limitation period for mediation: 6 months from the date of discovering the violation.

Choosing Labor Arbitration or the People’s Court

If mediation fails, either party may submit the case to the Labor Arbitration Council or file a lawsuit with a competent court.

• Labor Arbitration: A relatively new mechanism under the 2019 Labor Code, offering flexibility in handling labor disputes, including those with foreign elements.

• Court: The competent authority may be a district or provincial People’s Court, depending on the international relevance, the respondent’s domicile, and the disputed property’s location.

Limitation periods for filing:

• Arbitration: 9 months from the date the violation is discovered.

• Court: 1 year from the date the violation becomes known.

Hearing / Arbitration Procedures and Enforcement

The claimant must submit all necessary documentation and evidence (labor contracts, work permits, violation records, emails, notices, etc.).

If certain documents or witness statements are abroad, judicial delegation must be initiated to collect evidence from the foreign jurisdiction.

After a judgment or arbitral award is issued, if the losing party fails to comply, enforcement may be sought through international cooperation mechanisms where the counterparty holds assets.

2.2. The Role of Lawyers and Strategic Consultancy

When a labor dispute involving foreign elements arises, engaging experienced legal counsel is essential. An effective consultancy strategy should include:

• Contract Review and Applicable Law Analysis
  The lawyer examines the employment contract to identify any clauses concerning governing law, jurisdiction, or arbitration, and evaluates their validity under Vietnamese law.

• Jurisdiction Assessment & Litigation Strategy
  Advising whether to choose arbitration or court proceedings; identifying the competent court (district or provincial), or even an international court if contractually valid.

• Drafting Claims and Collecting International Evidence
  Supporting the preparation of claims, mediation records, and foreign evidence, including requests for judicial delegation where necessary.

• Representation and Advocacy
  Acting on behalf of clients in court or arbitration, presenting arguments regarding choice of law, jurisdiction, and reasonableness of claims.

• Post-Judgment Advice and Enforcement
  Assisting with enforcement procedures and proposing domestic or international enforcement measures when the losing party has assets overseas.

3. Practical Notes and Recommendations

• Negotiate Applicable Law and Dispute Resolution Clauses Early:
  When signing employment contracts with international elements, include clear clauses on governing law and dispute resolution forum, ensuring compliance with Vietnam’s public order principles.

• Comply with Vietnamese Labor Law:
  Even if foreign law is chosen, any clause violating the fundamental principles of Vietnamese labor law may be deemed invalid.

• Timeliness Matters:
  Claims must be filed within statutory deadlines — 6 months for mediation, 9 months for arbitration, and 1 year for court actions. Missing these periods may result in loss of the right to sue.

• Work Permits and Professional Certifications:
  If a foreign employee works in Vietnam without a valid work permit, this may adversely affect their rights in a dispute or cause partial denial of their claims.

• Prepare for International Enforcement:
  If the opposing party has assets or business operations abroad, be ready to pursue judicial delegation or recognition and enforcement of foreign judgments or arbitral awards.

• Maintain Composure and Long-Term Strategy:
  Labor disputes with international elements often last longer and incur higher costs. Strategic negotiation or mediation may yield better outcomes than prolonged litigation.

4. Conclusion

Labor disputes involving foreign elements require a delicate balance between domestic labor law, international legal frameworks, and practical dispute resolution strategies. By combining proactive negotiation, sound legal preparation, and professional legal representation, both employers and employees can effectively protect their legitimate interests while minimizing financial and reputational risks.

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