How to Mediate Disputes in International Distribution Agency Contracts in Vietnam

In international business, distribution agency contracts play a crucial role — they link manufacturers, distributors, markets, and end‑customers. When a dispute arises, if it is not handled skillfully, it may lead to financial loss, reputational damage, and complex legal procedures. Mediation is one of the dispute resolution methods that is favored because of its flexibility, cost‑saving nature, and its ability to preserve the business relationship between parties.

This article clarifies how to mediate disputes in international distribution agency contracts from the latest Vietnamese legal perspective, including practical steps and things enterprises should note.

1. Legal Basis & Principles for International Dispute Mediation

1.1. Legal framework in Vietnam and internationally

• Decree 22/2017/ND‑CP on Commercial Mediation
  This is an important regulation governing commercial mediation in Vietnam — covering mediators, commercial mediation organizations, principles, procedures, and outcomes of mediation.
  The decree applies to “commercial disputes,” which include disputes arising from distribution agency contracts if there is a commercial element.

• International Instruments such as the UNCITRAL Model Law on Mediation and Treaties like the Singapore Convention on Mediation Agreements
  These international rules are referenced to improve mediation procedures in Vietnam, especially in cases where international contracts choose foreign law or an international mediation body.
  For example, UNCITRAL sets rules on confidentiality of information, selection of mediators, termination of mediation, and enforcement of mediated settlement agreements.

• Contract terms in international distribution contracts should clearly state applicable law and dispute resolution methods
  In international distribution agency contracts, the parties should clearly stipulate which law applies when the contract is signed — if not specified, international rules and Vietnamese law will apply under the Civil Code and Civil Procedure Code.
  Additionally, the contract should specify a dispute resolution sequence: negotiation → mediation → arbitration/courts, so that the parties are not caught off guard when a dispute arises.

1.2. Principles when mediating disputes

Some important principles under Vietnam’s law (Decree 22/2017/ND‑CP) that businesses should note:

• Voluntariness: both parties must agree to mediate. No one is coerced.

• Equality: rights and obligations of both sides must be ensured; no side is imposed upon.

• Confidentiality: information collected or exchanged during the mediation process must be kept confidential, unless otherwise agreed or required by law.

• Legality of the mediated outcome: the result of successful mediation must be lawful, not violate prohibited acts by law, social morality, and not aim to evade obligations.

2. Practical Steps for Mediation of Disputes in International Distribution Agency Contracts

Below is a recommended process based on practice in Vietnam + guidance from international law.

2.1. Preparation before mediation

• Review the contract & collect evidence

    • Check if the contract includes a mediation agreement (if any): see whether the contract specifies commercial mediation, the mediation organization, applicable law, language, place of mediation.
    • Gather the original contract, appendices, delivery‐acceptance reports, invoices, payment documents, correspondence/emails exchanged, evidence of breach (quality, quantity, late delivery…), and losses incurred.

• Assess legal position & risk

    • Determine applicable law — if the contract specifies foreign law; if not, then Vietnamese law + relevant international treaties (if applicable).
    • Compare cost and time if proceeding to arbitration or court versus mediation.
    • Consider the impact on long‐term business relations with the other party — mediation may help maintain reputation and partnership better.

• Choose mediation organization or mediator

    • Domestic option: use a commercial mediation organization in Vietnam or a mediator from the judiciary’s published list.
    • If the international contract provides for a foreign organization or international mediator, parties can select a suitable person/body.
    • Agree in advance on mediation fees, language to be used, location, time frame.

2.2. Conducting the mediation

• Initiating mediation

    • One party sends a written request for mediation to the other, setting out the dispute, the legal/contractual basis, and the desired remedy.
    • If there is no prior mediation agreement, establish a mediation agreement: in writing, confirming mediation terms if they had not been stipulated.

• Mediation session

    • The mediator facilitates by listening to both parties’ arguments, identifying the real points of dispute.
    • Parties exchange views, propose possible solutions. The mediator acts as a neutral facilitator, not a decision‐maker.
    • If foreign elements are involved: take into account language differences, foreign laws, jurisdiction, transfer of information across borders.

• Reaching or terminating mediation

    • If mediation succeeds: the parties prepare a mediated settlement agreement in writing, specifying the commitments, obligations, deadlines, compensation (if any). This document becomes binding on the parties.
    • If mediation does not resolve the dispute: record a termination minute, and choose the next method (arbitration, court, or other methods if agreed).

2.3. Enforcement of the mediated agreement & supportive measures

• The mediated settlement agreement has legal value in civil relations between the parties.

• Under the Vietnamese Civil Procedure Code 2015, Chapter XXXIII provides for recognition of out‐of‐court mediation outcomes — the beneficiary party may apply to a court for a decision recognizing the mediated agreement to ease enforcement.

• If the other party fails to comply with the mediated agreement, one can use the written mediated settlement as evidence to request court enforcement.

3. Key Considerations & Practical Experience

• Clearly stipulate mediation clauses in the contract

  Law choice, language, location, mediation body, fees, timeline. This helps avoid further disputes about how to resolve conflicts.

• Cost & time

  Mediation is generally faster than arbitration or court proceedings. However, if the other side is not cooperative, mediation can also drag on.

  Mediation costs include mediator fees + organization costs; parties should agree beforehand.

• Confidentiality & protection of information

  Very important in international contracts to ensure cooperation with foreign law, protect trade secrets, and sensitive information.

• Effectiveness and enforceability of the mediated agreement

  The mediated settlement should have clear obligations to be enforceable by court if needed.

  Understand the jurisdiction and capacity of the courts to enforce.

• Skills of mediator / mediation organization

  Must understand international commercial law, Vietnamese law, the specifics of the industry, cultural differences.

  Also need strong soft skills: listening, negotiation, conflict management.

• Choose mediation first — preserve relationships & reduce risk

  In practice, many international businesses prefer mediation because they want to maintain brand reputation, and retain good relations with their agents and markets.

Conclusion

Mediation of disputes in international distribution agency contracts in Vietnam is a very practical solution: flexible, cost‑efficient, preserves business partnerships, and faster than arbitration or litigation in court. However, to succeed in mediation, one needs careful preparation: clear contracts, sufficient evidence, choosing an effective mediator, ensuring procedures are legally proper, and having a mediated settlement that can be enforced.

Contact DEDICA Law Firm for expert legal consultation!

📞 Hotline: (+84) 39 969 0012 (Available on WhatsApp, WeChat, and Zalo)

🏢 Head Office: 144 Vo Van Tan Street, Xuan Hoa Ward, Ho Chi Minh City (144 Vo Van Tan Street, Vo Thi Sau Ward, District 3, Ho Chi Minh City)

🕒 Business Hours: Monday – Friday (8:30 AM – 6:00 PM)

Reach out today for a free initial consultation with our team of professional lawyers!