Handling Disputes of Financial Derivative Contracts in Vietnam

Sep 22

1. What Are Financial Derivative Contracts & the Applicable Legal Framework?

Before diving into dispute resolution methods, let’s briefly revisit what financial derivative contracts are, and the current legal framework in Vietnam — so we have a solid legal basis to handle potential disputes.

Financial derivative contracts are agreements whose value depends on the price of an underlying asset (e.g., securities, bonds, indices, interest rates, foreign currencies, etc.). Common types include futures, options, forwards, and swaps — meaning any fluctuation in the underlying asset will affect the gains or losses of the derivative contract.

The Law on Securities 2019 is the core legal document governing securities activities and the derivatives market in Vietnam. It clearly outlines the rights and obligations of participating parties, and measures to address violations.

Decree 158/2020/ND-CP provides detailed regulations on derivatives and the derivatives market, including clearing, settlement, and trading of futures contracts based on indices and government bonds. Circular 58/2021/TT-BTC implements certain aspects of this Decree, especially relating to clearing, settlement, management of margin assets, and responsibilities in cases of insolvency or losses.

A recent development is that in June 2025, the contract templates for derivatives transactions were revised (under Circular 14/2025/TT-BTC), replacing previous versions to better reflect dispute resolution terms, insolvency provisions, and updated handling of incorrect or missing information.

2. Common Disputes & How to Handle Financial Derivative Contracts

When derivative contracts generate disputes, they usually fall into the following categories. Let’s break down each scenario with practical and legal solutions.

2.1. Common Dispute Scenarios

Insolvency

When a clearing member or customer fails to pay for a losing position or fulfill obligations under the derivative contract, Circular 58/2021 clearly defines various insolvency conditions.

Errors in margin, mismanagement of margin assets, incorrect information, or contract volume discrepancies

For example, if a non-clearing member fails to provide the required margin or mishandles margin assets, or if there are discrepancies in contract records — these lead to disputes between trading members, clearing members, or between a clearing member and its client.

Payment issues: delays or non-payment

These arise during settlement of margin differences, final payments upon contract maturity, or reimbursement of incidental fees. Circular 58/2021 sets out the payment obligations and legal remedies for violations.

Contract content disputes

For instance, unclear terms regarding profit/loss calculations, final settlement price, contract termination, or amendment clauses. The introduction of new contract templates under Circular 14/2025 aims to resolve such ambiguities.

Violations of clearing or settlement rules by the Stock Exchange, VSD, or the Vietnam Securities Depository (VSD)

Disputes may also arise if these entities fail to fulfill their obligations under current regulations.

2.2. Steps and Methods to Resolve Disputes

Here are practical steps and resolution methods investors or businesses can take:

Negotiation & Mediation

Start by sending a formal request for the other party to explain, fulfill their obligations, or correct their errors.

If the contract includes a dispute resolution clause (e.g., Court or Arbitration), use this clause to invite the other party to mediate or resolve the matter via a neutral intermediary.

Review contract evidence & updated contract templates

Examine the original contract, appendices, and the latest template (e.g., as per Circular 58/2021 or 14/2025) to determine terms relating to dispute resolution, insolvency, or margin requirements — especially if the current contract differs from updated versions.

Supporting documents may include: position statements, margin notices, settlement records, emails, and notifications from the Stock Exchange or VSD.

Apply relevant Circulars & Decrees

Decree 158/2020 and Circular 58/2021 are key legal frameworks. They regulate insolvency, the use of clearing funds, contract liquidation procedures when margin obligations are violated, and VSD's authority in such cases.

If the contract follows the updated template (per Circular 14/2025), make sure to understand and determine whether it overrides previous contract terms.

Request resolution from VSD / Stock Exchange

If an investor is affected by a trading or clearing member, they may file a petition with the VSD or Stock Exchange to assess whether rules on clearing, settlement, or margin were violated.

The VSD has the authority to liquidate positions, use margin assets, or utilize the Clearing Fund in case of insolvency.

File a lawsuit with the Court or Arbitration

If negotiation or mediation fails, one can file a lawsuit in a civil court at the location of the incident or where the defendant resides, in accordance with the Civil Procedure Code.

If the contract has an arbitration clause, ensure it is legally valid and enforceable.

When initiating a lawsuit, the claimant must gather sufficient evidence: contracts, applicable templates, notices, payment statements, and documentation proving fault or damage.

Jurisdiction & litigation procedure

Disputes are generally resolved in the People’s Courts unless both parties agree to arbitration.

The Civil Procedure Code governs litigation when filing in court.

In the case of securities disputes, the Law on Securities 2019 allows for either court or arbitration — depending on the parties’ agreement.

2.3. Challenges & Risks in Dispute Resolution

High market volatility, unpredictable damage calculation: Underlying asset prices may fluctuate wildly, making it difficult to determine exact losses.
Inconsistencies in contract templates / dispute clauses: Disputes may arise if outdated templates are used and lack updated resolution clauses.
Legal deadlines & evidence: Important documents may be lost if not well-stored, and legal deadlines for initiating claims must be observed.
Counterparty bankruptcy or insolvency: Recovering damages is more difficult when the breaching party is insolvent. Liquidation of margin or use of the Clearing Fund may help but is often limited.

2.4. Strategic Tips & Real-World Experiences

Here are some tested tips to help you better handle derivative contract disputes:

Check the latest contract template from the outset: As an investor or business, insist on using the updated contract version (per Circular 14/2025) or at least ensure clear terms on dispute resolution, insolvency, and termination.
Include clear dispute resolution clauses in the contract: Specify the dispute venue, applicable law, costs, and enforcement mechanisms.
Store all related documentation: This includes transaction records, margin notices, account statements, payment receipts, and notices from the VSD or Stock Exchange.
Closely monitor margin risks & act proactively: If the contract includes margin clauses, stay alert to price fluctuations and proactively request margin top-ups or collateral safeguards.
Consult a securities derivative lawyer early: Even minor issues should be evaluated early on to avoid major consequences.
Consider arbitration if suitable: Arbitration may offer speed, flexibility, and confidentiality — especially valuable in international disputes or where sensitive financial data is involved.

3. Conclusion

Resolving disputes related to financial derivative contracts in Vietnam can be complex, involving multiple parties (investors, clearing members, the VSD, Stock Exchange), specialized laws, and detailed contract terms. However, with the current legal framework — including the Law on Securities 2019, Decree 158/2020, Circular 58/2021, and the 2025 updated templates — parties have access to many tools to protect their rights effectively.