CONTRACTS & DISPUTE RESOLUTION IN VIETNAM - LEGAL PROTECTION BEYOND THE DEAL CONTRACTS

loanlelawlinkvn
2 hours ago
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Contracts are central to risk management — but in Vietnam, their effectiveness depends heavily on how they are structured and enforced.

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Contracts Must Align with Vietnamese Law

Foreign investors often use templates governed by foreign law.

While Vietnam recognizes freedom of contract, certain matters are:

Subject to mandatory local law
Invalid if they conflict with statutory provisions

A contract that looks strong on paper may be partially unenforceable in practice.

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Governing Law and Jurisdiction: Strategic Choices

Vietnam allows:

Vietnamese courts
Local or foreign arbitration (in qualifying cases)

However, enforceability, cost, timing, and evidentiary standards differ significantly.

Choosing dispute resolution clauses without considering enforcement realities is a common — and costly — mistake.

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Arbitration Is Popular, But Not Automatic

Arbitration is often preferred by foreign investors, but:

Not all disputes are arbitrable
Poorly drafted arbitration clauses can be invalid
Enforcement still involves Vietnamese courts

Arbitration works best when supported by clean documentation and compliance history.

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Evidence Wins Cases, Not Arguments

Vietnamese dispute resolution places strong emphasis on:

Written evidence
Proper execution
Consistent documentation

Informal agreements, side letters, or undocumented practices weaken legal positions significantly.

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Disputes Are Often Commercial, Not Legal

Many disputes arise from:

Misaligned expectations
Cultural misunderstandings
Governance gaps

Early legal structuring and clear internal controls often prevent disputes altogether.

The best dispute strategy is prevention.

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Key Takeaway

Contracts in Vietnam are powerful tools — but only when they reflect local legal and enforcement realities.

Legal protection begins long before a dispute arises.

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What’s Next

In the next articles of this series, we will look at:

M&A and restructuring considerations,

· Working with State Authorities in Vietnam – Licenses, Inspections & Regulatory Reality, and

Common mistakes foreign investors make — and how to avoid them

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Article: Prepared by LLVN.

Image: LLVN

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Lawlink Vietnam (LLVN) is a business law firm providing world-class legal solutions to businesses, entrepreneurs on investment, corporate & business, Mergers & Acquisitions; Litigations and Dispute Resolution. We offer a complete range of consulting services from type of company/investment, operating models, licensing, contracts, capital structure and arrangement, and representation sevices.

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