Handling Warehouse Lease Disputes with Foreign Partners in Vietnam
1) Current Legal Landscape: What Businesses Need to Know
A warehouse lease (warehouse/industrial lease) is essentially a lease contract under the Civil Code 2015. If the parties are commercial entities and the purpose is profit-making, the transaction is also governed by the Commercial Law 2005 and relevant sectoral regulations (fire protection, environment, logistics, industrial zones). When disputes arise with foreign partners, two legal axes are critical:
Choice of governing law and dispute resolution forum
Enforceability of awards/judgments in Vietnam
International and Vietnamese law firms note a growing trend to favor commercial arbitration (VIAC, SIAC, etc.) in lease contracts or commercial asset transactions to optimize cross-border enforcement.
From January 1, 2025, the Land Law 2024 comes into effect, introducing commercial arbitration mechanisms to resolve disputes related to land use rights transactions—providing a clearer “runway” for commercial real estate lease disputes involving land. Businesses entering new contracts or renewing existing ones should update their dispute resolution clauses accordingly.
2) Typical Disputes in Warehouse Leases with Foreign Elements
Handover and warehouse quality: failure to meet standards (area, floor load, fire protection, power capacity), delayed handover, or lack of operating/foreign warehouse permits. Analyses of industrial real estate highlight hidden costs and insufficient infrastructure risks if technical conditions are not thoroughly checked before signing.
Rent, surcharges & adjustments: unclear internal service fees for industrial zones, maintenance, handling, utilities; disputes over CPI or periodic rent increases.
Payment & performance guarantees: late payments, deductions or offsets from deposits, late payment penalties or interest calculations.
Misuse or sublease: unauthorized subleasing or leasing contrary to industrial zone regulations.
Early termination & compensation: contract termination due to breaches, handling land-attached assets, restoring premises. Real estate dispute practice shows high risk in restoring original condition and allocating fault.
3) Choice of Law, Jurisdiction & Enforcement Path
3.1 Governing Law & Jurisdiction
Businesses may choose foreign law (e.g., Singapore law) for warehouse lease contracts but must consider mandatory Vietnamese provisions (land, fire safety, etc.). Recent case law emphasizes that the validity of arbitration clauses must respect the law chosen by the parties and the standards of the New York Convention.
Exclusive foreign court clauses may face challenges in recognition and enforcement in Vietnam. Therefore, for contracts involving assets or execution in Vietnam, commercial arbitration is usually the more practical route for enforceability.
3.2 Commercial Arbitration (VIAC/SIAC) – Why It Fits
The Commercial Arbitration Law 2010 (LCA) allows dispute resolution arising from commercial activities, where at least one party is commercial. Vietnamese courts adopt a strict approach to “commercial disputes,” requiring clear clauses to avoid challenges to jurisdiction.
VIAC provides recommended clause templates, international practice guidance, and procedural design tips (selection of arbitrators, case management).
3.3 Enforcement of Awards/Judgments in Vietnam
Foreign arbitral awards are recognized and enforced under the New York Convention 1958 and the Civil Procedure Code 2015 (CPC) – Chapter XXXVII. Applications must be filed within 3 years from the award’s effective date; documents require the original/certified award and arbitration agreement, with a certified Vietnamese translation. Vietnamese courts do not review the merits but only check refusal grounds under Article 459 CPC (capacity, invalid arbitration agreement, procedural violations, public order conflicts).
4) Step-by-Step Dispute Handling Process
Step 1 – Activate negotiation/contractual mechanisms:
Send a Notice of Dispute to the proper address and in the contract language; set a cure/remedy period.
Rapidly collect technical documentation: drawings, handover minutes, fire protection checklist, infrastructure acceptance, incident logs, usable area measurement—these often form the basis of industrial real estate warehouse disputes.
Step 2 – Evaluate forum strategy & enforcement:
If assets/funds are to be enforced in Vietnam, consider initiating arbitration (VIAC/SIAC) instead of foreign courts to reduce enforcement risks.
Review the “legal landing” of Land Law 2024 (effective 01/01/2025) for disputes involving land-use rights or land-attached warehouses; new arbitration mechanisms help “validate” arbitration routes previously questioned.
Step 3 – Interim measures & evidence preservation:
When filing for arbitration, consider requesting provisional relief or court support (sealing goods, ensuring access, restricting asset removal).
Step 4 – Prepare enforceable evidence:
Prioritize originals or authenticated scans; beware that scanned contracts or e-signatures may be scrutinized.
Standardize notarized translations for submission in Vietnam per CPC requirements.
Step 5 – Recognition & enforcement in Vietnam:
For foreign awards: file within 3 years via the Ministry of Justice or directly at the competent court; prepare arguments to overcome refusal grounds under Article 459 CPC.
5) “Dispute-proof” Clauses to Include from Negotiation Stage
Law firms recommend incorporating the following to reduce risks:
Technical warehouse description: usable area (net vs. gross), floor load, clear height, power capacity, fire safety standards, cold storage (if any), operational readiness date.
Handover & acceptance: checklist + acceptance report with photos, GPS, digital signature; “fail → cure → penalty/reduced rent” mechanism.
Surcharges & price adjustment: lifetime fee annex (zone services, maintenance, security, waste), annual cap, CPI formula; advance notice required.
Sublease/Assignment: prior written approval; minimum conditions for subtenants; joint liability.
Performance guarantees: deposit/LC, trigger for claiming deposit, offset rights.
Force majeure & service disruption: utility outages due to shared infrastructure; right to rent reduction/exemption within reason.
Governing law, language & arbitration:
Example clause: “Any dispute arising from or related to this Agreement shall be resolved by VIAC under its Rules; venue in Vietnam; language: English/Vietnamese.”
Multi-contract dispute consolidation: deposits – construction – lease to avoid parallel proceedings.
Enforcement: voluntary compliance commitment, specify assets in Vietnam/secured accounts.
6) Quick FAQ on Warehouse Lease Disputes with Foreign Partners in Vietnam
(i) What if the counterparty wants to sue in a foreign court?
Consider the feasibility of recognizing the foreign judgment in Vietnam. Recognition is more difficult than for arbitral awards since Vietnam is a New York Convention member (arbitration), while foreign court judgment recognition depends on treaties or judicial cooperation.
(ii) Are scanned/email contracts valid?
There is risk—especially for arbitration clauses if the signing/authorization chain is unclear. Use e-signatures/originals or strict authentication procedures to avoid invalidity claims.
(iii) Does Land Law 2024 help with warehouse disputes?
Yes, it expands arbitration for transactions involving land-use rights, legitimizing arbitration for some previously disputed cases. Effective from 01/01/2025.
(iv) How long does it take to recognize a foreign arbitral award?
CPC sets a 3-year filing window; procedure includes filing, court review, hearing, and decision—the court does not re-examine dispute merits, only refusal grounds. Actual duration depends on the case.
7) Quick Execution Checklist
Review dispute clauses (governing law, arbitration/court, venue, language).
Issue notice of breach; set remedy schedule.
“Package” technical evidence (fire protection, electricity, area, handover); involve independent inspection if necessary.
Prepare loss calculation: rent, lost revenue, remediation costs, late interest.
Decide forum (VIAC/SIAC or court) and plan enforcement in Vietnam under CPC.
Conclusion
For warehouse leases with foreign elements in Vietnam, the key is careful contract design upfront (technical description, surcharges, sublease, guarantees, arbitration) and choosing the right forum for enforceable outcomes in Vietnam. Updating Land Law 2024 (effective 2025) opens a “green lane” for arbitration in land/warehouse-related transactions. When disputes arise, activate a notice–negotiate process, collect proper evidence, and plan the “return path” for enforcement under the Civil Procedure Code and New York Convention.
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