Legal Advice on Resolving Civil Contract Disputes with Foreign Individuals in Vietnam
When entering into contracts with foreign individuals, Vietnamese businesses or citizens may face greater risks than in domestic agreements. These include differences in applicable law, legal jurisdiction, enforcement of judgments, cost, time, language barriers, and evidence issues. Below is the most up-to-date (2025) guideline on resolving civil contract disputes involving foreign elements in Vietnam — from the preparation stage to legal enforcement.
1. Legal Issues That Must Be Identified from the Outset
1.1. Identifying “Foreign Elements” and Applicable Law
According to Article 663 of the 2015 Civil Code, a civil contract is considered to involve foreign elements if at least one party is a foreign individual or entity; or the contract is formed, executed, amended, or terminated abroad; or the subject matter (goods, services, etc.) is located overseas.
The applicable law is determined by the parties’ agreement; if no such agreement exists, the law of the country most closely connected to the contract will apply. If international treaties to which Vietnam is a member stipulate otherwise, such provisions shall prevail.
However, foreign laws may be excluded if they contradict Vietnam's fundamental legal principles or cannot be clearly identified despite efforts through international legal assistance. In such cases, Vietnamese law will apply.
1.2. Jurisdiction for Dispute Resolution
Civil disputes involving foreign elements may be resolved by Vietnamese courts if the parties have agreed to this forum or if the dispute concerns assets or rights located in Vietnam.
Under Article 470 of the 2015 Civil Procedure Code, there are cases that fall under the exclusive jurisdiction of Vietnamese courts — such as disputes involving real estate in Vietnam, contracts that select Vietnamese courts, or obligations arising within Vietnamese territory.
If the defendant is a foreign individual who does not reside or do business in Vietnam, or resides abroad, determining jurisdiction must also consider international regulations, legal practices, and the contract’s content.
2. Steps to Resolve Civil Contract Disputes with Foreign Individuals
2.1. Preparation & Negotiation – Mediation
Review Contract Terms
Check for agreements on applicable law, dispute resolution forum (court or arbitration), penalty clauses, and compensation for damages.
Ensure all terms are clear and avoid ambiguity, particularly regarding language, performance deadlines, delivery locations, and notice of breach procedures.
Notice of Default
Send a notice to the foreign party via agreed methods (letter, email, courier, etc.), clearly stating the breach, remedial deadline, and potential consequences for non-compliance.
Retain evidence of sending, receiving, and response (emails, minutes, delivery logs) to use in mediation, court, or arbitration.
Negotiation / Mediation
Prioritize amicable settlement methods — they are faster, more cost-effective, and help preserve business relationships.
If commercial mediation fails, parties may choose court mediation centers or shift to arbitration if the contract allows.
2.2. Arbitration and Court Proceedings – Filing a Lawsuit
International Commercial Arbitration
If the contract includes an arbitration clause: select an arbitral institution (e.g., VIAC with international cooperation or a foreign arbitral body).
Arbitral awards are final and binding and can be enforced in many countries under conventions (e.g., the 1958 New York Convention) or bilateral agreements.
Filing a Lawsuit in Vietnamese Court
Prepare the lawsuit dossier: petition, contract evidence, performance documents, notice of default, response documents (if any).
File with the competent court: identify the level (district, provincial, city) based on the defendant’s residence, the dispute location, or contractual agreement if valid.
The statute of limitations for civil contract disputes is usually 3 years from the date the aggrieved party knew or should have known their rights were violated.
2.3. Enforcement of Judgments & Damages
Enforcement of Judgments or Arbitral Awards
If resolved by arbitration: the enforceability of the award must be confirmed; if the violator fails to comply, enforcement must be sought in Vietnam or the country where the violator's assets are located.
If resolved by a Vietnamese court: once judgment is rendered, enforcement measures are taken under the Law on Civil Judgment Enforcement.
Compensation and Penalties for Breach
Under Article 418 of the 2015 Civil Code, parties may agree on penalties; if actual damage occurs, the injured party can claim compensation with evidence.
Must prove actual losses (financial, lost benefits, etc.) and the causal link between the breach and the damage.
3. Common Difficulties and How to Overcome Them
3.1. Challenges in Determining Applicable Law and Jurisdiction
When contracts lack clarity on applicable law or chosen forum, it may lead to prolonged disputes. Solution: include detailed annexes or written confirmations as soon as disputes emerge.
The foreign party may lack assets in Vietnam or be unwilling to comply. Enforcing judgments abroad is difficult without a mutual enforcement treaty. Consider the cost-benefit of suing in a foreign jurisdiction.
3.2. Evidence – Language – Translation – Cost
Foreign-language documents must be officially translated and notarized if required by the contract. Keep originals, translations, invoices, default notices, and emails.
Translation, notarization, travel, and international verification are often costly. Budget for these and include related clauses in the contract.
3.3. Risks from Force Majeure, Legal Changes, International Treaties
Contracts should clearly define what constitutes force majeure, how to handle such events, notice requirements, and performance delays to avoid future disputes.
International treaties or legal interpretations can change unpredictably. Always stay informed of current legal updates.
4. Conclusion
Resolving civil contract disputes with foreign elements in Vietnam is not simple. However, with proper preparation, clarity on applicable law and jurisdiction, selection of appropriate dispute resolution mechanisms (negotiation, mediation, arbitration, or court), and comprehensive evidence collection, protecting your rights becomes much more feasible.
If you are facing such a dispute, practical advice includes:
Before signing: clearly define governing law and dispute resolution forum (arbitration or court).
Upon breach: send a notice of default as early as possible and retain all evidence.
From the outset: choose the most suitable resolution method — arbitration for speed and confidentiality, court if you seek formal recognition and asset enforcement in Vietnam.
Always consult international or foreign law experts to avoid procedural errors regarding international laws, evidence, and enforcement.
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!
