Disputes over Office Lease Agreements in Vietnam Involving Foreign Companies
When a foreign company leases an office as its headquarters or branch in Vietnam, an office lease may look straightforward but can hide significant legal risks if not carefully drafted—and once a dispute arises, it is not easy to resolve. This article analyzes common dispute scenarios, challenges specific to foreign tenants, and practical solutions in Vietnam.
1. Common dispute scenarios in office leasing in Vietnam
1.1. Typical types of disputes
Rent, payment, and late payment
This is the most common category: the tenant fails to pay on time, underpays, or the parties have unclear arrangements about payment method or timing. In many court decisions, courts uphold the landlord’s claim for unpaid rent and default interest.
Right to lease, ownership, and authorization
In some cases the landlord is not the owner or lacks the right to lease, or uses a false power of attorney, rendering the contract void in whole or in part.
Costs of maintenance, repairs, and servicing
Tenants often allege that the landlord failed to perform promised maintenance, or landlords seek to deduct repair costs from the deposit without clear agreement between the parties.
Deposits, contractual penalties, and termination
When a tenant wishes to exit early, disputes commonly arise over deposit refunds, penalties, or termination. If the contract lacks clear termination clauses or reasonable penalty provisions, litigation becomes likely.
Subleasing and assignment of the lease
Driven by business needs, either party may wish to sublease or assign the lease, but if the head lease prohibits or is unclear on such rights, disputes follow.
Diminished office value, damage, or loss of use
Tenants may claim the premises are damaged, unusable, subject to planning restrictions or prohibition, affecting operations—leading to claims for damages or rent adjustment.
1.2. Particularities when the tenant is a foreign company
International elements and governing law
Office leases between a Vietnamese party and a foreign company often involve a foreign element: choice of governing law, jurisdiction (court or arbitration), contract language, and whether international law or Vietnamese law applies, as well as appropriate dispute-resolution clauses.
Language, documentation, and local-law hurdles
Foreign companies may be unfamiliar with domestic requirements such as the 2023 Housing Law, rules on leasing, standards for company headquarters, lawful leasing documentation, and legal undertakings. If the contract is drafted in a foreign language without a bilingual version or without compliance with Vietnamese law, interpretive disputes are likely.
Risks regarding title, permits, and planning
Office space may be converted from residential use to office use; if the building fails to meet fire safety requirements, lacks construction permits, or is subject to complaints/land recovery, foreign tenants can be “stuck” in a dispute. For example, under the 2023 Housing Law, premises for office leasing must not be under dispute, complaint, attachment for enforcement, or subject to land recovery.
Difficulties in enforcing judgments and awards
Even if a foreign tenant prevails in Vietnam, enforcement (civil judgment enforcement/coercive measures) can be difficult where assets are outside Vietnam, or the losing party has transferred assets, gone bankrupt, or is otherwise hard to collect against.
2. Solutions—how to prevent and handle office lease disputes in Vietnam
2.1. Preventive steps before signing
Legal due diligence on the asset and the landlord
Request title documents from the landlord (certificate of land use/ownership, investment approvals where applicable).
Check whether the premises are subject to disputes, complaints, attachment, or land recovery—because under the 2023 Housing Law, such properties may not be leased for office use.
Review construction permits, fire prevention and fighting certificates, and ensure the building meets technical standards, maintenance, and infrastructure requirements.
Written, detailed, and bilingual contracts if needed
Under Article 163 of the 2023 Housing Law, an office lease must be in writing and clearly state the parties’ names and addresses, description of the premises, term, payment method, and the parties’ rights and obligations.
Consider a bilingual contract (Vietnamese plus English or the chosen language), but prioritize the Vietnamese version if disputes will be resolved in Vietnamese courts.
Draft robust clauses on deposits (amount, term, refund), liquidated damages/penalties, termination, subleasing rights, repairs and maintenance, and rent adjustment.
If choosing international arbitration, carefully determine the arbitral institution, seat, governing law, language, and recognition/enforcement in Vietnam.
Security and guarantees
Require performance guarantees if either party presents financial risk.
Use security measures such as deposits, retention/escrow, or bank guarantees for high-value leases.
Dispute-resolution mechanism and forum selection
Specify clearly whether disputes go to Vietnamese courts or arbitration (domestic or international).
If choosing international arbitration, define the seat, governing law, language, and enforcement mechanism in Vietnam.
If choosing courts, determine jurisdiction—for example, courts where the property is located or where the contract is performed under civil procedure rules.
2.2. When a dispute arises—methods and practical notes
Negotiation and mediation
This is the first, low-cost step that helps preserve the business relationship. Use any contractual mediation mechanism if agreed.
Arbitration (if agreed)
Where the lease contains a valid arbitration clause, the parties may refer disputes to the agreed center. Advantages include speed, specialized decision-makers, and less publicity. However, if the losing party does not voluntarily comply, coercive enforcement in Vietnam must follow the relevant enforcement laws.
Litigation in Vietnamese courts
If mediation fails or arbitration is unsuitable, the aggrieved party can sue in a competent Vietnamese court. The process typically includes filing, acceptance, court-facilitated mediation, first-instance trial, and appeal if any.
Jurisdiction: under the 2015 Civil Procedure Code, typically the court where the property is located or where the contract is performed.
Evidence: provide the lease agreement, handover minutes, invoices, receipts, notices of breach, inspection reports of defects, etc.
Claims: termination, recovery of possession, payment of outstanding rent plus interest, and damages.
Judgment enforcement and coercive measures
Once a judgment or award takes effect, the prevailing party may request the civil judgment enforcement authority to execute coercive measures in accordance with law. Enforcement becomes difficult if the debtor has moved assets out of Vietnam or has no recoverable assets.
Cassation and reopening
In cases of serious procedural errors or legal violations, a party may petition for cassation or reopening (retrial) in accordance with procedural law.
2.3. Practical lessons from case law
In Appellate Judgment No. 05/2018/KDTM-PT, the court ordered the tenant to pay rent, electricity charges, contractual penalties, and default interest under the executed office lease.
In a 2022 judgment, the court upheld the landlord’s claim where the tenant was months in arrears, including metered electricity charges.
A 2022 case (No. 02/2022/KDTM-PT, Bac Giang) shows courts continue to treat office and factory lease disputes as commercial matters.
Various appellate and cassation decisions on office and business premises leases confirm courts’ willingness to terminate the lease, order return of the premises, and award damages where a party breaches the contract.
3. Conclusion
Disputes over office lease agreements in Vietnam involving foreign companies are complex and require careful preparation—from drafting and legal due diligence to selecting an appropriate dispute-resolution mechanism and planning for enforcement.
If you are entering into or already party to an office lease in Vietnam, do not overlook “small” clauses: deposits, penalties, maintenance, termination, and dispute resolution. When a dispute arises, prioritize negotiation and mediation; if that fails, proceed with arbitration or litigation—while preparing robust evidence and an enforcement strategy.
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