In the process of investment and business activities, disputes are inevitable. Numerous conflicts between shareholders and enterprises have occurred, directly affecting the legitimate rights and interests of the parties involved and negatively impacting the stability and growth of enterprises. Disputes not only cause financial losses but also reduce operational efficiency, undermine credibility, and erode the trust of partners and customers. Accordingly, it is necessary to thoroughly examine the causes, identify preventive measures, and establish effective remedies to help enterprises sustain long-term growth in a highly competitive business environment.
I. Current situation of investment disputes under Vietnamese law
The current situation of investment disputes under Vietnamese law is a significant matter when discussing the investment and business environment in Vietnam. In recent years, the number of investment disputes has increased, particularly in the context of deeper international economic integration.
Both domestic and foreign investors are not only confronted with contractual disputes but also disputes related to policies, legal frameworks, and legitimate rights during project implementation.
II. Legal provisions on investment disputes under Vietnamese law
1. Definition
Investment disputes under Vietnamese law refer to conflicts arising in the process of investment activities, relating to the rights and obligations of investors, economic organizations, State agencies, or other relevant parties. Such disputes may occur between domestic and foreign investors, between investors and State authorities, or among foreign-invested economic organizations.
2. Causes of investment disputes
Common causes of investment disputes include:
- Contractual disagreements: Unclear contractual terms or inconsistencies in contract execution between investors.
- Changes in policies and laws: Sudden or non-transparent legal changes creating difficulties for investors.
- Land and site clearance issues: Disputes over land use rights, licensing procedures, or unclear site clearance processes.
- Intellectual property infringements: Disputes concerning patents, copyrights, or trademarks among parties.
- Difficulties in dispute resolution: Delays or lack of transparency in dispute resolution by State agencies or Courts.
These factors significantly affect the legitimate rights and interests of the parties involved in investment and business activities.
3. Jurisdiction over investment dispute resolution under Vietnamese law
According to Clauses 2, 3, and 4, Article 14 of the Law on Investment 2020, the jurisdiction for resolving investment and business disputes in Vietnam is stipulated as follows:
- Disputes between domestic investors, foreign-invested economic organizations, and State authorities concerning investment and business activities in Vietnam shall be resolved by Vietnamese Arbitration or Courts, unless otherwise provided.
- Disputes between investors, where at least one party is a foreign investor or an economic organization, may be resolved by:
+ Vietnamese courts;
+ Vietnamese, foreign, or international arbitration;
+ Ad hoc arbitration established by agreement between the parties. - Disputes between foreign investors and State authorities in connection with investment in Vietnam shall be settled by Vietnamese Arbitration or Courts, unless otherwise agreed upon or provided by an international treaty.
III. Clarification of certain issues concerning investment disputes under Vietnamese law
1. Who are the parties to investment disputes under Vietnamese law?
The primary parties to such disputes are traders (business entities engaging in investment and commercial activities).
2. Under what circumstances may international arbitration resolve investment disputes under Vietnamese law?
Pursuant to Clause 3, Article 14 of the Law on Investment 2020, where a dispute arises between investors, at least one of whom is a foreign investor or an economic organization as defined in Points a, b, and c, Clause 1, Article 23 of the Law, the dispute may be resolved by international Arbitration.
When a dispute occurs between domestic investors and companies with foreign ownership (where the foreign investor holds more than 50% of the charter capital), the parties may also agree to have the dispute resolved by international Arbitration.
3. When may investors choose between commercial Arbitration and Courts for investment disputes under Vietnamese law?
Under Article 14 of the Law on Investment 2020, parties may select commercial Arbitration or Courts as dispute resolution forums in the following circumstances:
- When a dispute related to investment and business activities in Vietnam arises and cannot be settled through negotiation or mediation;
- Disputes between domestic investors, economic organizations with foreign investment capital or between domestic investors, economic organizations with foreign investment capital and State agencies with rights related to investment and business activities in the territory of Vietnam;
- Disputes involving at least one foreign investor or an economic organization specified in Points a, b, and c, Clause 1, Article 23 of the Law.
4. Can investment disputes under Vietnamese law be resolved by foreign courts or arbitral tribunals, and under what circumstances?
According to Clause 3, Article 14 of the Law on Investment 2020 on dispute resolution in investment activities, if a dispute arises between investors where at least one party is a foreign investor or an economic organization specified in Points a, b, and c, Clause 1, Article 23 of the Law, the parties may choose to resolve it through foreign courts or foreign arbitration.
IV. Legal consultancy services on investment disputes under Vietnamese Law
For further information on legal issues related to disputes between domestic investors and foreign-invested companies, clients may contact Ngoc Phu Law Company Limited (NPLaw) for dedicated and prompt consultation by NPLaw’s experienced lawyers. With extensive experience in corporate legal affairs and dispute resolution, NPLaw is committed to achieving the best possible outcomes and protecting the legitimate rights and interests of clients.
