Protecting your rights in contract disputes with vietnamese partners from NPLaw’s legal support

Contract disputes with Vietnamese partners create a significant challenge for many foreign enterprises investing and operating business in Vietnam. A lack of understanding of laws, business culture, and trade practices can lead to disagreements and complex disputes, resulting in financial losses and reputational damage. NPLaw will analyze the current situation, relevant legal regulations, common types of disputes, resolution methods, and main considerations for preventing contract disputes with Vietnamese partners in the following article: 

I. Current situation of contract disputes with Vietnamese partners

In economic integration and increased international cooperation, commercial contracts between foreign enterprises and Vietnamese partners are becoming significantly common in various sectors such as import-export, construction, manufacturing, and services. However, contract disputes have also risen, particularly in the current period of economic volatility, specifically:

• Growth in commercial transactions: According to data published by the General Statistics Office on January 6, 2025, Vietnam’s import-export turnover in 2024 reached 786.29 billion USD, resulting in a large number of contracts with Vietnamese partners and simultaneously a higher risk of disputes.
• Common disputes: These include breaches of delivery and payment obligations, product quality issues, or non-compliance with contract terms.
• Legal challenges: Differences in legal systems, language, and business culture between Vietnamese and international traders complicate dispute resolution.
• Lack of distinct contracts: Many contracts lack resolution clauses in detail, leading to prolonged conflicts.
• Impact of disputes: Contract disputes can cause financial losses and reputational damage, and negatively affect long-term business relationships.

II. Contract disputes with Vietnamese partners?

1. Definition of a contract dispute with a Vietnamese partner

There is currently no specific regulation defining a contract dispute between a foreign trader and a Vietnamese partner; however, according to Article 385 of the Civil Code 2015 stating a contract, a contract dispute with a Vietnamese partner can be understood as disagreements or conflicts arising between parties during contract performance, in which at least one party is a Vietnamese organization or individual and the other is foreign ones, concerning issues such as:

• Contract interpretation: The parties disagree on the meaning of contractual provisions.
• Execution of obligations: One party fails to execute a part or entire of contractual obligations.
• Compensation for damages: Either claims compensation for damages arising from breach of contract by the other.
• Termination of contract: The parties have disputes regarding the right to terminate the contract and legal consequences of such termination.

2. Cases leading to contract disputes with Vietnamese partners

Several factors may lead to contract disputes, including:

• Cultural and language differences:Differences in business culture and language can create challenges in communication, mutual understanding, and issue resolution.
• Lack of understanding of Vietnamese law: Foreign enterprises may not understand Vietnamese legal provisions in detail and accuracy, so they often sign contracts with unfavorable or unlawful terms.
• Distinct contract terms and conditions: Ambiguous or inadequate drafting of contract provisions may complicate execution and interpretation.
• Changes in law and policy: Amendments to Vietnamese law and policies can affect parties’ rights under the contract.
• Financial and business risks: Objective factors such as market fluctuations, economic crises, natural disasters, or epidemics may affect a party’s ability to fulfill the contract.

3. Methods for resolving contract disputes with Vietnamese partners

When a contract dispute arises, parties may choose the following resolution methods:

• Negotiation: Parties voluntarily negotiate to reach a mutual solution, safeguarding both parties’ interests and maintaining the business relationship.
• Mediation: It includes the assistance of a neutral third party (mediator) to reconcile conflicts and find an acceptable solution for both parties.
• Commercial arbitration: The parties shall submit the dispute to commercial arbitration under the arbitration agreement specified in the contract (according to the Commercial Arbitration Law 2010).
• Court litigation: The parties may file a civil lawsuit at the competent People’s Court to resolve the dispute (according to the Civil Procedure Code 2015).

III. Legal regulations on contract disputes with Vietnamese partners

1. Relevant regulations for resolving contract disputes with Vietnamese partners

Contract dispute resolution must comply with Vietnamese law, particularly:

• Civil Code 2015: Provides general principles of contracts, rights and obligations of parties, and liability for damages arising from contract breaches.
• Commercial Law 2005: Governs commercial activities, purchase and sale of goods, provision of services, and dispute resolution in commercial transactions.
• Commercial Arbitration Law 2010: Regulates procedures for resolving disputes through commercial arbitration.
• Civil Procedure Code 2015: Provides procedures for civil dispute resolution in Courts.
• International treaties to which Vietnam is a member: Free Trade Agreements (FTAs), or bilateral or multilateral investment agreements may contain specific provisions on dispute resolution between foreign investors and the Vietnamese State.

2. Authorities have the competence for resolving contract disputes with Vietnamese partners

Depending on the resolution method chosen by the parties, the following authorities shall be entitled to resolve contract disputes:

• Mediation: Parties may voluntarily negotiate or engage a mediator.
• Commercial arbitration: If the contract contains an arbitration clause, arbitration centers such as the Vietnam International Arbitration Center (VIAC) are competent, according to the Commercial Arbitration Law 2010.
• Court (People’s Court):
  + District-level People’s Courts: Have competent to handle first-instance contract disputes. Jurisdiction is based on the location of the head office or residence of the defendant (Vietnamese partner). (Articles 35 and 39, Civil Procedure Code 2015, amended 2025).
  + Provincial-level People’s Courts: Handle appeal procedures for judgments from district-level courts. (Article 37, Civil Procedure Code 2015, amended 2025).
•  State management agencies: The National Competition Commission (Ministry of Industry and Trade) may assist in mediation if the dispute involves consumer interests, according to Decree 03/2023/ND-CP regulating its functions, duties, and powers in receiving, verifying, and evaluating information or evidence on acts potentially violating competition law.

3. Consequences if contract disputes cannot be resolved

If contract disputes cannot be resolved through any method (negotiation, mediation, arbitration, or court), the parties must accept the loss and take the legal consequences arising from contract breaches. Enforcement may be difficult, especially if the losing party has no assets or intentionally evades obligations. 

IV. Questions on contract disputes with Vietnamese partners

1. What does a foreign trader need to do if a Vietnamese partner refuses to cooperate in dispute resolution?

If the partner refuses to cooperate, the foreign trader should:

• Send a written notice: Officially notify the partner to request cooperation and state legal grounds for your requirement.
• Seek lawyer assistance: A lawyer can evaluate the situation, provide legal advice, and represent you in negotiating with the partner.
• Choose an alternative dispute resolution method: If the partner continues to refuse, pursue arbitration or court proceedings.

2. How to prove rights in a contract dispute with a Vietnamese partner?

The foreign trader need to provide the following documents, including:

• The original contract with the Vietnamese partner.
• Amendments or supplementary agreements (if any).
• Payment documents, delivery receipts, project acceptance records, etc.
• Emails, messages, or meeting minutes.
• Other documents related to the contract performance.

3. Can a foreign trader claim compensation for damages in contract disputes with a Vietnamese partner?

If the Vietnamese partner breaches the contract and causes damages, the foreign trader is entitled to claim compensation, including:

• Direct damages: Actual costs incurred to remedy the consequences of the breach (e.g., lawyer fees, repair costs, replacement purchases).
• Indirect damages: Profits that the foreign trader would have earned if the contract had been properly performed (e.g., sales profits, profits from project exploitation).

Compensation may be agreed upon by the parties or determined by the court.

4. Should contracts include dispute resolution clauses with Vietnamese partners?

Including dispute resolution clauses is crucial, as it:

• Specifies the method of dispute resolution (negotiation, mediation, arbitration, court), helping the parties save time and costs.
• Allows the parties to chóoe competent arbitration or court.
• Determines applicable law to govern the contract and resolve disputes.
• Establishes the language to be used in dispute resolution, avoiding translation issues.

V. Why foreign traders should consult a lawyer regarding contract disputes with Vietnamese partners

Seeking professional legal advice is crucial in contract disputes with Vietnamese partners, as a lawyer can:

• Objectively and professionally evaluate the case, and provide accurate advice on chances of success and elimination of legal risks.
• Draft complete and compliant legal documents (complaints, defense statements, evidence submissions).
• Represent clients in mediation and negotiations with Vietnamese partners.
• Participate in court or arbitration proceedings to effectively protect clients’ legal rights.
• Help clients save time, costs, and effort in dispute resolution.

NPLaw provides professional legal services regarding contract disputes with Vietnamese partners, assisting clients to:

• Conduct comprehensive legal assessments of contracts and disputes.
• Develop effective dispute resolution strategies tailored to each situation.
• Draft legal documents accurately and professionally.
• Represent clients in mediation, negotiation.
• Assign experienced lawyers to participate in court or arbitration proceedings to safeguard clients’ legal rights optimally.

Contact NPLaw today for professional legal advice and support regarding contract disputes with Vietnamese partners. We are committed to assisting you in resolving legal issues efficiently and protecting your rights to the fullest.