Understanding and complying with legal regulations on disputes in investment cooperation plays an essential role in safeguarding the rights and interests of the parties, thereby ensuring the stability and sustainability of the project.

I. Current situation of disputes in investment cooperation

At present, disputes in investment cooperation in Vietnam are becoming increasingly common, particularly in sectors such as real estate, construction, and energy.

The primary causes arise from poorly drafted contracts, ambiguous provisions, and a lack of clear terms on responsibilities, entitlements, and dispute resolution mechanisms. Many enterprises lack adequate legal capacity and rush into project implementation without consulting experts, which results in contractual deficiencies. In addition, the lack of transparency during cooperation, breaches of financial or technical commitments, and disagreements over profit distribution or management rights are also prevalent causes. Moreover, changes in government policy, market volatility, and different interpretations of legal provisions between parties further increase the potential disputes.

II. Legal regulations on disputes in investment cooperation

1. What are disputes in investment cooperation?

Disputes in investment cooperation are disagreements or conflicts arising between parties during the implementation of investment activities. Such disputes may involve capital contribution, profit distribution, management rights, performance of financial obligations, or breaches of terms under business cooperation contracts. 

2. Common causes of disputes in investment cooperation

There are the most frequent causes of disputes in investment cooperation in Vietnam, as follows: 

  • Legal and contractual causes:
    + Vague or insufficiently detailed contract provisions: Many contracts contain only general terms without clearly defining responsibilities, duration, or technical standards.
    + Lack of legal consultation: Many enterprises neglect legal review, leading to serious deficiencies.
    + Absence of clear dispute resolution mechanisms: Contracts often fail to specify dispute-handling procedures, prolonging the resolution process.
  • Internal causes within enterprises:
    + Disagreements over profit distribution and management rights: Particularly in joint venture projects, lack of consensus on strategy and decision-making often triggers conflicts.
    + Lack of financial and informational transparency: Failure to disclose costs or profits, or breaches of financial commitments, losing trust between partners.
    + Different business objectives: One party may prioritize short-term profits while the other pursues long-term development, resulting in strategic conflict.
  • External causes:
    + Policy changes or market conditions: Exchange rate fluctuations, tax adjustments, or regulatory changes may change the initial benefits of the investment.
    +Different culture and legal interpretations: Especially in cooperation with foreign investors, such differences can easily lead to misunderstandings and disputes.

3. Methods of resolving disputes in investment cooperation

Pursuant to Clause 1 Article 14 of the Law on Investment 2020, disputes arising from investment and business activities in Vietnam shall be resolved through negotiation and conciliation. If negotiation or conciliation fails, disputes may be resolved by arbitration or court in accordance with Clauses 2, 3, and 4 of the same Article.

Accordingly, dispute resolution methods in investment cooperation include:

  • Negotiation: Parties directly discuss and agree on solutions without third-party involvement.
  • Conciliation: A neutral third party (conciliator) assists the parties in reaching a mutual agreement.
  • Arbitration: Disputes are submitted to an arbitral agency (domestic, international, or ad hoc arbitration).
  • Court proceedings: State courts adjudicate disputes through litigation procedures.

4. Jurisdiction over dispute resolution in investment cooperation

Pursuant to Clauses 2, 3, and 4 Article 14 of the Law on Investment 2020, jurisdiction over disputes in investment cooperation is as follows:

  • Disputes between domestic investors, between foreign-invested economic organizations, or between domestic investors/foreign-invested organizations and competent State authorities relating to investment and business activities in Vietnam shall be resolved by Vietnamese arbitration or courts.
  • Disputes involving at least one foreign investor or a foreign-invested economic organization may be resolved by:
    + Vietnamese courts;
    + Vietnamese arbitration;
    + Foreign arbitration;
    + International arbitration;
    + An arbitral tribunal established by agreement of the disputing parties.
  • Disputes between foreign investors and competent State authorities relating to investment and business activities in Vietnam shall be resolved by Vietnamese arbitration or courts, unless otherwise agreed in contracts or international treaties to which the Socialist Republic of Vietnam is a member. 

III. Questions regarding disputes in investment cooperation 

1. What is the statute of limitations for initiating disputes in investment cooperation?

According to Article 429 of the Civil Code 2015: The statute of limitations for initiating lawsuits to request the Court to resolve contractual disputes is three years from the date the claimant knew or should have known that their lawful rights and interests were infringed. 

Thus, the statute of limitations for disputes in investment cooperation is three years from the date the entitled party knew or should have known that their lawful rights and interests were injured. 

2. What contractual provisions should be included to prevent disputes in investment cooperation?

To prevent disputes, contracts must be drafted comprehensively with clear, specific, and legally binding provisions. The following are essential clauses:

  • Project description and scope of cooperation;
  • Capital contribution and profit-sharing arrangements;
  • Implementation schedules and acceptance procedures;
  • Management and decision-making mechanisms;
  • Confidentiality obligations;
  • Breach handling and compensation for damages;
  • Contract termination provisions;
  • Dispute resolution clauses (method, venue, and applicable law).

3. Is conciliation mandatory before initiating litigation in disputes over investment cooperation?

Conciliation is not mandatory unless the parties have expressly agreed in the contract that conciliation is a prerequisite before arbitration or court proceedings.

4. Which authorities have jurisdiction over disputes in investment cooperation?

Pursuant to Clauses 2, 3, and 4 Article 14 of the Law on Investment 2020, competent authorities include:

  • Vietnamese courts;
  • Vietnamese arbitration;
  • Foreign arbitration;
  • International arbitration.

5. Can disputes in investment cooperation result in project termination?

Disputes in investment cooperation may lead to project termination, especially where conflicts remain unresolved or become a serious matter that the project is impossible to progress, or where legal conditions for implementation are violated.

According to Clauses 1 and 2 Article 48 of the Law on Investment 2020, investment projects may be terminated in the following dispute-related circumstances:

  • Termination pursuant to contractual agreement or conditions;
  • Decision by a competent State authority where investors seriously breach project progress, objectives, or conditions;
  • Arbitral awards or court judgments mandating termination;
  • Prolonged force majeure linked to disputes (e.g., land use rights or licensing issues) that cannot be remedied. 

IV. Legal consultancy services relating to disputes in investment cooperation

The above provides general guidance on disputes in investment cooperation prepared by NPLAW. Should you require further clarification on this matter, please contact NPLAW for legal support.