Foreign-Related Commercial Contracts – How to Resolve Disputes?

Jun 18

1. Legal Basis & Nature of Disputes

According to the 2025 Law on Commercial Dispute Resolution, Vietnam prioritizes resolving disputes through negotiation and arbitration before proceeding to court litigation to shorten time and improve efficiency.

The Law on Commercial Arbitration and the 2015 Civil Procedure Code allow parties to agree on a dispute resolution authority (arbitration or court), especially in international commercial contracts.

Disputes involving foreign elements are often complex and tied to international legal frameworks. It’s essential to clearly determine the foreign element before applying the law.

2. Identifying Foreign Elements and Jurisdiction

A contract is considered to have a foreign element if at least one party is a foreign entity/individual, or if the contract is signed, performed abroad, or the disputed property is located overseas.

Jurisdiction:

If the contract includes a valid arbitration clause, arbitration takes precedence.
If there is no clear arbitration clause or the parties opt for litigation, the case may be filed in a Vietnamese court, per Article 30 of the 2015 Civil Procedure Code and Article 14 of the 2020 Investment Law (for investment contracts).

3. Dispute Resolution Methods

Negotiation & Mediation:
This is the first step and is cost-effective. Professional mediators may be engaged if needed.

Commercial Arbitration (Domestic or International):
If the contract contains an arbitration clause, the arbitral award is legally binding, confidential, and efficiently rendered.

Litigation in Vietnamese Court:
Applied when there’s no arbitration clause, legal violations are involved, or enforcement through coercion is needed. The court proceeds based on civil procedure law.

5. Key Considerations in Practice

Arbitration clauses must be clearly drafted—specifying the arbitration institution, venue, applicable law—to avoid being declared invalid.
Applicable law & jurisdiction: Parties may choose applicable laws (as per Hague principles), but such laws must not contravene Vietnam’s public order.
Transparency & professionalism: Parties should provide full documentation, certified copies, and original evidence when dealing with foreign-related disputes.
Practical experience: Many businesses have successfully used professional mediation or international arbitration to save time and protect confidentiality.

Conclusion

Prioritize mediation–arbitration for international contracts to ensure efficiency and confidentiality.
If no arbitration agreement exists, Vietnamese courts still have jurisdiction—but proper identification of the foreign element and standardized procedures is essential.
Applicable law: Parties may choose international or foreign law, provided it does not violate Vietnamese law or public order.
Engage international legal experts early to draft proper clauses, assess risks, and represent in dispute resolution—especially when foreign elements are involved.

Contact DEDICA Law Firm today for expert legal advice!

Phone: (+84) 39 969 0012 (We are available on WhatsApp, WeChat and Zalo)
Head Office: 144 Vo Van Tan Street, Vo Thi Sau Ward, District 3, Ho Chi Minh City, Vietnam
Hours: Monday–Friday (8:30 am – 6:00 pm)

Call us now or leave us a message to get advice. Initial consultation is free of charge.