An arbitration clause for a contract with a Vietnamese company should name one specific institution and its rules (or set out an ad hoc process), state the seat, the language, the number of arbitrators and the governing law, and cover all disputes "arising out of or in connection with" the contract. It must be in writing and signed by people with authority to bind each company. Missing any of these elements is the usual reason clauses fail.
Clauses are often treated as boilerplate and added at midnight before signing. In Vietnam that habit is expensive, because the arbitration agreement is the foundation of the tribunal’s power, and Vietnamese law lists specific situations in which an agreement is invalid or cannot be performed. Below is a clause-by-clause checklist, the traps that have caused trouble in practice, and points to raise with your counterpart’s lawyers.
The building blocks of a workable clause
A complete clause answers each of the following questions without leaving room for argument:
- Scope: which disputes go to arbitration. Broad wording such as "any dispute arising out of or in connection with this contract, including its formation, validity, performance and termination" avoids side arguments about tort claims or validity.
- Institution and rules: the exact name of the centre and the rules that apply. If you want ad hoc arbitration, say so and state how arbitrators are appointed.
- Seat: the legal place of arbitration, such as Hanoi, Ho Chi Minh City or a foreign city. The seat decides which courts supervise the process and whether the award is domestic or foreign in Vietnam.
- Language: the language of the proceedings, if your dispute has a foreign element.
- Number of arbitrators: one or three, and, if three, how the presiding arbitrator is chosen.
- Governing law: the law that governs the contract itself. Where there is a foreign element, parties can generally choose foreign law, provided the result does not breach fundamental principles of Vietnamese law.
- Finality: a sentence that the award is final and binding, which matches Vietnamese law and reassures enforcing courts.
The traps that make clauses fail in Vietnam
The most frequent problem is the hybrid clause that says disputes will be resolved "by arbitration or by the court" without more. Vietnamese law has rules for this situation, broadly allowing arbitration if the claimant chooses it and the other side does not object in time, but such clauses generate preliminary skirmishes. If you genuinely want an option, state clearly which party can choose, by when and how.
The second problem is naming an institution wrongly, either by inventing a name, using an outdated name, or referring to a body that does not administer arbitrations. Vietnamese courts have shown willingness to give effect to clauses where the institution can be identified, but a wrong name gives the reluctant party a jurisdictional argument. Copy the exact name from the institution’s own model clause.
A third trap is authority. A Vietnamese company is bound by the signature of its legal representative or someone holding a valid authorisation. If a branch manager or a sales director without written authority signs, the other party may later claim the arbitration agreement is invalid. Ask for the authorisation document and keep a copy in the contract file.
Another quiet trap is the clause that fixes too much. Clauses that require arbitrators of a particular nationality, with a specific number of years of experience in a narrow field, and fluency in three languages can make the tribunal impossible to constitute. Keep requirements realistic.
Finally, watch the counterparty’s status. Clauses with individuals who are not engaged in business, or consumer contracts on standard terms, are treated differently. A consumer generally keeps the right to sue in court even if the standard terms contain an arbitration clause.
Seat and foreign arbitration: the key strategic choice
If your dispute has a foreign element, for example because one party is a foreign company or the contract is performed abroad, you can usually choose a foreign seat such as Singapore or Hong Kong, or a Vietnamese seat with an international institution or VIAC. A Vietnamese seat produces a domestic award, enforced in Vietnam without a recognition step. A foreign seat produces a foreign award that a Vietnamese court must recognise under the New York Convention before enforcement.
Do not confuse the seat with the hearing venue. A case seated in Hanoi can hold hearings in Singapore or online, and a case seated in Singapore can meet in Ho Chi Minh City. What the seat controls is the supervising court, the set-aside route and the nationality of the award. That is why the clause should name a city as the seat in so many words, rather than only saying where meetings will happen.
The harder question is the foreign-invested enterprise. A company incorporated in Vietnam with foreign shareholders is a Vietnamese legal entity, so a contract between it and a local company may not have a foreign element in the legal sense. Investment law contains specific provisions on when such disputes can go to foreign arbitration, and the analysis depends on the facts. Do not assume that a foreign parent means foreign arbitration is available for your Vietnamese subsidiary’s contracts.
If you choose a foreign seat, also consider whether the governing law, the language and the institution fit that seat. A Singapore seat with Vietnamese law and Vietnamese language may be workable but needs arbitrators who can handle that combination.
Multi-tier clauses: negotiation and mediation first
Make the steps measurable. If you require negotiation before arbitration, set a clear trigger and a fixed period, for example a period of days after a written notice of dispute. Vague wording like "the parties shall try to settle amicably" invites arguments about whether the step was completed.
Name the mediation body. If you want mediation, name a specific provider and its rules. Several Vietnamese centres, including VIAC’s mediation arm, offer commercial mediation.
Allow urgent relief. Write that the pre-arbitration steps do not prevent a party from seeking interim measures from a court or tribunal. Without this, a party trying to stop assets disappearing could be accused of skipping the agreed sequence.
Do not let the steps become a trap for limitation periods. Time spent negotiating does not necessarily stop the limitation period for bringing a claim. Keep an eye on deadlines and, where needed, file to protect your position.
Record each step in writing. Send the notice of dispute in writing, keep minutes of negotiation meetings, and confirm the end of the negotiation period by letter. If the other side later says the pre-arbitration steps were never completed, that paper trail is your answer, and it costs almost nothing to create at the time.
A clause structure you can adapt, sentence by sentence
Rather than offering a ready-made clause to paste, it is more useful to see how a sound clause is built, so you can check whatever draft lands on your desk. The first sentence fixes scope and forum: all disputes arising out of or in connection with the contract, including questions about its existence, validity or termination, shall be finally resolved by arbitration administered by a named centre under its rules in force at the time of filing. The second sentence fixes the seat, naming a city rather than a country. The third fixes the language. The fourth sets the number of arbitrators and how they are appointed. The fifth states the governing law of the contract, which can also sit in a separate clause.
Optional sentences follow. One can require negotiation or mediation for a defined period first, with an exception for urgent relief. Another can allow consolidation with arbitrations under related contracts between the same group of companies. A third can confirm that the parties may agree on electronic service of documents to specified addresses, which speeds things up considerably when one party is overseas.
Each institution publishes its own recommended wording, and using that wording as the backbone, then adding your seat, language and tribunal size, is usually the safest approach. If you are told that an elaborate custom clause is needed, ask what problem each extra sentence solves. Every additional condition is a potential argument when the relationship has broken down and the other side is looking for reasons to delay.
Questions to settle with the other side’s lawyers
Negotiating a clause is easier when you know where Vietnamese counterparties usually push back and what compromises are common.
| Issue | Common Vietnamese preference | Possible compromise |
|---|---|---|
| Institution | A Vietnamese centre familiar to management | VIAC or a recognised international institution with a Vietnamese seat |
| Language | Vietnamese | English, with Vietnamese translations of key documents, or bilingual proceedings |
| Governing law | Vietnamese law | Vietnamese law with clear contract definitions, or a neutral law where a foreign element exists |
| Arbitrators | Sole Vietnamese arbitrator | Three arbitrators, or a sole arbitrator with experience in cross-border contracts |
| Seat | Hanoi or Ho Chi Minh City | A Vietnamese seat with an international institution |
There is no single correct answer. A Vietnamese seat often makes enforcement simpler when assets are in Vietnam, and many foreign companies accept it in exchange for English as the language and a three-member tribunal.
Whatever you agree, put the final wording in both language versions of the contract and make sure they match. Bilingual contracts frequently state which version prevails, but a mismatch in the dispute clause itself, such as a centre named differently in the Vietnamese text, gives the other side an opening. Have someone fluent in both languages compare the two clauses line by line before signing.
When you need a Vietnamese lawyer
Have a licensed Vietnamese lawyer review the clause whenever your counterparty is a Vietnamese company, a state-owned enterprise, or your own Vietnamese subsidiary, and whenever the contract involves land, licensed business activities or consumers. Counsel can check that the institution’s name is current, that the dispute types are arbitrable, that signatories have authority, and that your chosen seat and governing law work together.
For state-owned counterparties, counsel should also check whether internal approvals are needed before the enterprise can agree to arbitration or to a foreign seat, and whether the signatory’s authority covers the dispute clause. These questions rarely surface at signing, but they are among the first a state-linked respondent may raise once a claim is filed.
If you already have signed contracts with weak clauses, a lawyer can advise whether to sign a fresh arbitration agreement now, while relations are good, rather than discovering the weakness when a dispute arrives. For a quick first read of an existing clause, you can ask a lawyer on AI Co Van (aicovan.com), then decide whether a fuller review is worth commissioning. Always check the current model clause published by the institution you name.
Frequently asked questions
Can an arbitration agreement be made by email?
Vietnamese law treats agreements recorded through written communications, such as exchanges of emails or other messages that capture the agreement, as valid written form. A signed clause inside the contract is still the most reliable evidence, so use it whenever possible.
Does the arbitration clause survive if the contract is invalid?
Generally yes. The arbitration agreement is treated as independent of the main contract, so a claim that the contract is invalid or terminated does not automatically void the clause. The tribunal can decide its own jurisdiction, subject to court review.
Can we choose English law with a Vietnamese seat?
Where the contract has a foreign element, parties can generally choose foreign governing law, including English law, with a Vietnamese seat. The award must not violate fundamental principles of Vietnamese law. Choose arbitrators able to apply the chosen law.
Should a guarantor sign the arbitration clause too?
Yes. A guarantor who has not agreed to arbitration may not be bound by it. Put a matching arbitration clause in the guarantee or have the guarantor sign the main contract’s clause, so all claims go to one forum.
What happens if our clause names two different arbitration centres?
A clause naming two centres without saying how to choose can be read as allowing the claimant to choose, but it is an invitation to dispute. Fix it by agreement before any dispute arises, ideally by naming one centre.