Resolving Disputes in Export Agricultural Product Guarantee Contracts in Vietnam

In the context where exporting agricultural products in particular, and participating in international supply chains in general, are increasingly emphasized, export guarantee (or “offtake”) contracts for agricultural products are vital for producers — from small farmers, cooperatives to businesses. But when disputes arise — for example over quality, quantity, delivery time, payment terms — being clear about the methods of resolution and the latest legal regulations helps protect rights more effectively and minimize losses.

Below are practical insights — compiled from Vietnam’s legal sources and recent legal-practice developments — on how to resolve disputes in export guarantee agricultural contracts effectively.

1. Legal basis & common types of disputes

1.1 Relevant legal regulations

• Decree 98/2018/ND‑CP: A policy to encourage development of cooperation and linkage in production and consumption of agricultural products. Under Article 15 of this Decree, when there is a dispute or breach in linkage contracts (of which guarantee/off‑take contracts are one kind), parties may face various remedies: being compelled to perform the contract, contractual penalty, suspension, termination, cancellation of the contract, being required to compensate for damages, etc.

• Commercial Law 2005 (amended, supplemented if applicable): provisions governing commercial disputes (Article 317) — with forms such as negotiation, mediation, arbitration, or resolution in Court.

• Civil Code 2015: regulations on the doctrine of changed fundamental circumstances (hardship) under Article 420, allowing the party whose interest is affected to request modification or termination of the contract if there are unforeseeable, serious, force‑majeure style events. This may apply to guarantee contracts when natural disasters, epidemics, or sudden export‐policy changes affecting the international environment occur.

• Law on Commercial Arbitration 2010 & Civil Procedure Code 2015: conditions and procedures for resolving via arbitration; civil litigation via Courts for contract disputes.

1.2 Common types of disputes in export guarantee contracts

• Product quality: agricultural goods failing to meet quality standards, presence of chemical residues, food safety or hygiene requirements as demanded by importing markets.

• Quantity / Weight / Allowable loss (shrinkage): the buyer not taking up the agreed amount, or disagreements over tolerances.

• Payment / Financial issues: delayed payments, change of payment method (e.g. letter of credit, international bank transfer…), conflicts about exchange rates, transport or insurance charges.

• Delivery time / logistics: late delivery, transportation issues, storage, post‑harvest preservation.

• Unexpected policy / international trade risks: changes in tariffs, export or import controls, fluctuations in international markets, new regulations from importing countries (for example EU, USA).

• Commitments on technical support / inputs: the enterprise promises supply of seeds, fertilizer, cultivation techniques but fails to deliver or delivers poorly, causing production losses.

2. Methods of dispute resolution and considerations in application

2.1 Negotiation & Mediation

• Negotiation is the first, simplest step — both parties sit together, exchange views, try to find a satisfactory solution without involving a third party. Advantages include speed, low cost, maintaining the business/production relationship.

• Commercial Mediation: via a pre‑agreed intermediary (individual, organization, mediator). The Law on Commercial Mediation (via Decree 22/2017/ND‑CP) stipulates principles of voluntariness, confidentiality, equality.

Things to note when using negotiation or mediation in guarantee/off‑take contracts:

• Include a clause in the contract that expressly provides for negotiation/mediation should a dispute arise.

• If negotiation/mediation succeeds, prepare a clear written record (minutes) with signatures of both parties, and supporting documents to serve as evidence later if arbitration or court becomes necessary.

• The timing of initiating negotiation/mediation should be prompt, as soon as signs of contract breach appear (e.g. non‑receipt of product, quality failing). Delaying too long may result in losing evidentiary advantage and may affect statute of limitations.

2.2 Arbitration

• If an export guarantee contract involves international elements or large party negotiations, it often includes an international arbitration agreement or a domestic arbitration center. The Law on Commercial Arbitration 2010 permits such agreements to be written into contracts.

• Advantages: faster procedures (relative to courts), confidentiality, easier access to expertise in international disputes.

• Disadvantages: higher cost, need to define clearly the arbitration center, applicable law, language, choice of arbitrators, translation costs if necessary.

2.3 Courts

• When there is no arbitration agreement, or the counterparty refuses to arbitrate, or arbitration cannot be enforced, the Court is the final option.

• Disputes under export guarantee agricultural contracts can be filed at the People’s Court having jurisdiction.

• Under Article 319 of the Commercial Law 2005, the statute of limitations for commercial dispute litigation is 2 years from the date the right or interest is violated.

• If a dispute involves civil matters (e.g. compensation beyond commercial contract scope), the Civil Code may apply and the civil statute of limitation is 3 years under general rules.

3. Proposed response strategies & practical experience

Here are experiences and specific steps producers, cooperatives or businesses should take so that if a dispute under an export guarantee contract arises, they can handle it effectively:

• Draft tight contracts from the start

  • Clearly specify quality standards, inspection methods, handling of non‑conforming products — both technical content and responsibility for inspection costs.

  • Payment clauses: deadlines, payment methods (like letter of credit, international transfer), who bears bank or customs charges.

  • Include clause on dispute resolution method (negotiation/mediation/arbitration/court), the center, applicable law, location of enforcement.

  • Include clauses on changed circumstances / force majeure / hardship to mitigate risk when force majeure or sudden regulatory changes internationally affect export.

• Collect full evidence

  • Keep contracts, annexes, email correspondence, delivery records, quality, transport, payment documents.

  • Document abnormal events: natural disasters, epidemics, environmental changes, legal/regulatory changes, border closures, export tax changes, etc. Use sources from government agencies or public bulletins.

• Prioritize mediation & negotiation first

  • Because in guarantee contracts for agricultural products, producers often benefit from maintaining long‑term cooperation, avoiding high costs and risk of losing market.

  • Use a neutral third party (for example technical consultancy unit, cooperative, local authorities) to mediate if the buyer is uncooperative.

• Check arbitration agreements (if present) & applicable law

  • If the contract chooses international arbitration, pay attention to enforcing the award in the importing country, translation or foreign legal counsel costs.

  • If choosing Vietnamese law, ensure compatibility with export contract obligations (such as food safety, quarantine law, environmental regulations in the importing countries).

• Litigate in Court when necessary & track limitation periods

  • Be aware the limitation period for commercial disputes is 2 years under the Commercial Law. If case extends into civil compensation beyond commercial scope, the Civil Code’s 3‑year limitation may apply.

  • Prepare the case carefully before filing: contract, evidence of breach, quotations, invoices, negotiations correspondence.

• State support policies

  • For linkage/guarantee contracts that are supported by the state budget (such as under Decree 98/2018/ND‑CP), if a party violates the linkage project, the violator may be more harshly sanctioned – for example, losing entitlement to incentives, being prohibited from participating in incentive policies for 5 years from the moment of violation determination.

  • Businesses, cooperatives should understand incentives/support policies — ensure the linkage contract satisfies requirements for quality, food safety, environmental protection, necessary registrations and certifications to avoid losing rights in case of dispute.

Conclusion

Disputes in export guarantee agricultural contracts are foreseeable — but losses can be minimized and resolution can be effective if there is proper legal preparation, careful gathering of evidence, and choosing the right dispute resolution method.

If you are a producer, cooperative or business that enters into a guarantee/off‑take contract, make sure your contract:

• Has clear terms on quality, payment, delivery, and international conditions,

• Is ready to use mediation or arbitration when disputes arise,

• Is informed of the newest legal policies such as Decree 98/2018/ND‑CP, the Commercial Law, the Law on Commercial Arbitration, the Civil Code 2015, etc.

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