Steps to Resolve Foreign Investment Disputes in Vietnam

1. Why is it important to understand the dispute resolution process in Vietnam?

Are you an investor or a business in Vietnam currently facing a dispute with a foreign investor? Don't worry—Vietnam has developed a clear and advanced legal framework to effectively handle these situations.

Understanding the steps to resolve foreign investment disputes in Vietnam not only helps protect your legal rights and interests but also ensures a transparent, safe, and investor-friendly environment. Especially in the context of Vietnam’s deepening global integration, mechanisms such as conciliation, courts, and arbitration—particularly the new mechanism introduced by EVIPA—offer significant advantages when applied correctly.

2. Legal framework in Vietnam – Investment Law 2020 and EVIPA

2.1 Investment Law 2020

The Investment Law 2020 serves as the foundational legal framework for resolving all foreign investment disputes arising in Vietnam. According to Article 14 of this law, dispute resolution steps are prioritized as follows:

• Negotiation and mediation – This is the first recommended approach.

• If unsuccessful, the parties may choose one of the following methods: Vietnamese arbitration, Vietnamese courts, or, if appropriate, foreign arbitration or international arbitration.

• Parties involved—including domestic or foreign investors or state agencies—can select from these methods unless otherwise stipulated in a contract or international treaty.

• In disputes between a foreign investor and a Vietnamese state agency, if no specific provisions are stated in a contract or treaty, the parties may choose either Vietnamese arbitration or courts.

2.2 EVIPA – A “new weapon” for investment dispute resolution in Vietnam

The EVIPA (EU-Vietnam Investment Protection Agreement) introduces several new and enhanced mechanisms:

• Three methods to resolve disputes between investors and the Vietnamese government: Permanent Investment Tribunal, Mediation, and Investment Arbitration Tribunal.

• Once an investor chooses the tribunal route, they may not pursue other mechanisms simultaneously—ensuring transparency and avoiding strategic abuse.

• EVIPA strictly prohibits frivolous claims and mandates the losing party to bear all litigation costs—discouraging abuse of traditional ISDS mechanisms.

• It outlines a clear process for appointing tribunal members via random selection and rotation, ensuring fairness and balance between the parties.

3. Specific steps to resolve foreign investment disputes in Vietnam

Step 1: Negotiation – internal mediation (friendly and fast)

• This method is preferred for being amicable, cost-effective, and preserving business relationships.

• Parties can mediate independently or seek assistance from commercial mediation centers.

• If a resolution is reached, a written settlement agreement should be prepared, which is legally binding.

Step 2: Choosing the dispute resolution forum – court or arbitration?

If mediation fails, the dispute may be brought to:

• Vietnamese courts, if both parties agree or as mandated by law.

• Domestic arbitration (e.g., VIAC – Vietnam International Arbitration Center) or international arbitration (e.g., ICC, SIAC, UNCITRAL, etc.).

Step 3: Litigation procedures at arbitration or court

• Vietnamese courts:

  • Follows standard civil litigation procedures: filing, acceptance, conciliation/hearing, first-instance trial, and appellate trial (if appealed).

• Vietnamese arbitration (VIAC):

  • According to procedures effective since 2017, arbitration begins upon receiving the Statement of Claim.

  • Within 30 days of receiving the notice, the parties must agree on arbitrators or request VIAC to appoint them.

  • Multiple disputes under different contracts may be consolidated into a single arbitration.

• International arbitration:

  • Follows the rules of international arbitration bodies (e.g., UNCITRAL, ICC, ICSID, etc.).

  • Arbitral awards carry significant legal weight and can be enforced in numerous countries under the 1958 New York Convention.

Step 4: Enforcement of the award or court judgment

• In Vietnam, international arbitral awards may be recognized and enforced if they meet the criteria under the New York Convention.

• Court judgments may be enforced similarly to domestic judgments.

• Under EVIPA, awards from the Investment Tribunal may be recognized and enforced through investment enforcement resolutions (e.g., Resolution No. 113/2020/QH14).

4. Conclusion

Overall, Vietnam has developed a highly flexible and efficient mechanism for resolving foreign investment disputes—safeguarding both investors' rights and national interests within Vietnam. Notably, with the introduction of the Permanent Investment Tribunal under EVIPA, Vietnam gains a modern and proactive position in managing international investment disputes.

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