Resolving Conflict of Laws in International Commercial Disputes in Vietnam

Have you ever wondered: when a Vietnamese business gets entangled in an international commercial dispute, and the applicable legal provisions are unclear or conflicting legal systems are involved, how should the issue be resolved?

1. Starting Point: Why are international commercial disputes prone to conflicts of law?

In international commercial disputes in Vietnam, conflicts of law can easily arise in the following situations:

• The parties do not clearly agree on the applicable legal system—one party may prefer foreign law while the other favors Vietnamese law, creating a legal vacuum.

• Conflict between substantive law and procedural law: for example, the contract stipulates the application of Vietnamese law, but procedural rules follow those of an international organization—leading to practical contradictions.

• Jurisdiction and dispute resolution mechanisms are inconsistent: when a dispute involves a foreign element, determining whether a Vietnamese court or arbitral body has jurisdiction can become unclear and confusing.

Without proper handling, businesses may waste time and resources, and risk suffering significant losses.

2. Principles for Resolving Conflicts of Law in Vietnam

2.1 Priority Application of International Treaties

When Vietnam is a member of international treaties such as the CISG, these treaties take precedence over domestic Vietnamese laws, unless they conflict with the Constitution.

2.2 Principle of “Higher Legal Effect” & “Later Enactment”

If a conflict arises between legal documents, the document with higher legal effect or the more recently enacted document will be prioritized.

2.3 Specialized Laws Prevail Over General Laws

In commercial contract disputes, the Law on Commerce (specialized law) will take precedence over the Civil Code (general law), when both address the same legal issue.

3. Practical Methods for Resolving Conflicts of Law in Vietnam

3.1 Commercial Arbitration – A Preferred Path

Arbitration offers flexibility, confidentiality, and high enforceability. Vietnam’s 2010 Law on Commercial Arbitration provides the legal framework for arbitration proceedings.

Arbitration Process in Vietnam:

• Written arbitration agreement.

• Filing a claim with an arbitration center or appointing ad-hoc arbitrators.

• Formation of the arbitral tribunal as agreed or appointed by the center.

• Final award issued within 30 days of the hearing—legally binding.

• Enforcement can be requested through court if the losing party fails to comply.

Note: Legal conflicts still exist between arbitration rules and Vietnamese law, highlighting the need to improve the legal framework.

3.2 Mediation and Negotiation – Flexible and Cost-Effective Options in Vietnam

Before entering litigation, Vietnamese businesses can consider negotiation or mediation—flexible, low-cost methods that help maintain business relationships.

3.3 VIAC – A Reputable Arbitral Forum in Vietnam

The Vietnam International Arbitration Centre (VIAC) is the leading arbitration institution in Vietnam, having resolved thousands of disputes involving parties from 53 provinces and 63 foreign countries.

4. Real-World Experience

4.1 Draft Clear Contractual Clauses in International Agreements

Not only should the applicable law be specified (e.g., Vietnam/CISG/neutral law), but the method of dispute resolution (arbitration/court), implementing body, venue, language, and procedural rules should also be clearly defined.

4.2 Align Substantive and Procedural Laws

If Vietnamese law is chosen as the governing law, avoid applying loosely defined procedural rules from foreign institutions. This may risk the arbitration agreement being deemed invalid under Vietnamese law.

4.3 Choose an Experienced Arbitration Institution and International Lawyer

Lawyers and arbitrators with expertise in international law can help navigate conflicts more flexibly, prevent legal clashes, and protect the interests of the business.

4.4 Stay Updated on Legal Developments

International FTAs and updates to domestic laws such as the 2015 Civil Procedure Code (regarding jurisdiction) are continuously evolving. Staying current helps businesses avoid outdated practices that could expose them to legal conflicts during disputes.

Conclusion

Conflicts of law in international commercial disputes in Vietnam are no longer a nightmare if you know how to prevent them properly. A clear contract clause, the right choice of arbitration, and an experienced international lawyer can serve as a strong shield to protect your business.

Dedica Law Firm is always ready to support you in building smart dispute prevention strategies and effectively resolving any legal situation—so your business can grow confidently in Vietnam and beyond.

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