Dispute Settlement in International Trade Made Simple: 4 Key Mechanisms

Introduction: Why Dispute Settlement Matters in International Trade

When goods cross borders, risks follow. A late shipment, an unpaid invoice, or a disagreement over product quality can quickly turn into a costly conflict. This is why dispute settlement in international trade is a central part of doing business globally.

International trade involves multiple countries, different legal systems, and diverse business cultures. When disputes arise, they can disrupt supply chains, damage reputations, and result in financial losses. Knowing how disputes are resolved is essential not only for lawyers, but also for CEOs, business owners, and future lawyers preparing for careers in global trade.

There are four main mechanisms for dispute settlement in international trade: Negotiation, Mediation, Arbitration, and Litigation. Each has its advantages and challenges. Understanding them helps businesses choose wisely and students grasp the foundations of international commerce.

Dispute Settlement in International Trade Made Simple: 4 Key Mechanisms

Why Do Disputes Happen in International Trade?

Disputes arise when expectations clash or agreements break down. The most common causes include:

• Non-payment: A buyer refuses to pay after delivery.
• Defective goods: Products don’t meet quality standards.
• Late delivery: Delays cause financial harm to the buyer.
• Regulatory issues: Customs or import restrictions block goods.
• Intellectual property disputes: Unauthorized use of brand or design.

Negotiation To Talk It Out

Negotiation is the simplest and most common form of dispute settlement in international trade. It involves direct discussion between the parties without third-party involvement.

Advantages: It is fast, inexpensive, and preserves long-term business relationships. Parties have complete control over the outcome and can agree on flexible solutions.

Disadvantages: The process has no legal guarantee of settlement. Success depends on the willingness of both sides to compromise.

Negotiation is always available, no matter what the contract says. It should be the first attempt before escalating further.

Mediation When A Neutral Person Helps

Mediation involves a neutral third party who helps both sides reach a voluntary agreement. The mediator doesn’t impose a decision but facilitates dialogue.

Advantages: Mediation is confidential, less confrontational, and usually cheaper than arbitration or litigation. It often preserves commercial relationships because the process encourages cooperation rather than conflict.

Disadvantages: A mediated settlement is not legally binding unless it is formalized in writing. More importantly, mediation only happens if both parties agree to try it, it cannot be forced by one side.

Arbitration Is The Global Favorite

International arbitration is a binding process where disputes are resolved by arbitrators chosen by the parties. International arbitration the most widely used method in dispute settlement in international trade, but only if the contract provides for it.

Advantages: Arbitration awards are binding and enforceable in over 170 countries under the New York Convention. Parties can choose a neutral forum, select arbitrators with expertise, and keep proceedings confidential.

Disadvantages: Arbitration can be more expensive and formal than mediation. Arbitration is only available if there is an arbitration clause in the contract, or if both parties later agree to arbitrate.  There also also complexity concepts in seat choice, and choice of laws including law of seat, law governing the arbitration agreement, law governing of the contract that practitioners need to master.

Litigation: Going to Court

Litigation means taking the dispute to national courts. In international trade, litigation is often used if the contract specifies courts, or if no arbitration agreement exists.

Advantages: Court judgments are backed by state authority and may allow for appeals. Courts can also handle issues beyond contracts, such as fraud or criminal claims.

Disadvantages: Litigation is usually slow and expensive. Foreign court judgments are often not enforceable internationally, which limits their usefulness in cross-border disputes. A company wins a case in its home country, but the losing party has assets abroad lead to the enforcement of such that judgment can be very challenging.

Additional Insight: Mediation and Arbitration Together

In reality, these methods are not always separate. Some contracts use tiered clauses, requiring mediation first, then arbitration if talks fail. This approach combines flexibility with enforceability.

This hybrid is sometimes called Med-Arb. It saves time and cost but raises concerns for instance statue of limitation, or if the same person acts as both mediator and arbitrator. One should understand this as an evolving practice in dispute settlement in international trade.

Comparing the Four Mechanisms in Practice

Although all four mechanisms are used worldwide, they differ in cost, speed, enforceability, and impact on business relationships.

• Negotiation is almost always the first step. It is informal, fast, and inexpensive, but carries no legal guarantee.
• Mediation adds a neutral third party to assist communication. It is less adversarial and protects relationships, but it only works if both sides agree to try it.
• Arbitration is the leading method in international trade, but only available if the contract includes an arbitration clause. It provides neutrality and enforceability, though it is more costly than mediation.
• Litigation is usually a last resort. It can be pursued when there is no arbitration clause, but international enforcement is uncertain, and proceedings can take years.

Taken together, the four mechanisms show that businesses must plan dispute resolution clauses carefully at the contract stage, because the options available later will depend on what has been agreed in writing.

Conclusion: What to Take Away

The four main mechanisms: Negotiation, Mediation, Arbitration, and Litigation form the backbone of dispute settlement in international trade. Each has strengths and weaknesses, and the right choice depends on cost, enforceability, and above all, what the contract allows.

This is the foundation of understanding how dispute settlement mechanism functions. For business owners, and international counsels, practitioners mastering these tools is essential to protect contracts and maintain trust in international markets.

Dispute settlement is not a simple ladder. Negotiation is always available, mediation requires consent, arbitration requires an agreement, and litigation applies if no arbitration clause exists. The key is in the contract.

Step-by-Step Guide to Dispute Settlement in International Trade

Step-by-Step Guide to Dispute Settlement in International Trade

Step 1: Review your contract: See what dispute resolution clause is written (arbitration, court jurisdiction, or none).

Step 2: Attempt negotiation: This is always possible and often the most efficient first step.

Step 3: Check if mediation is possible: Only proceed if both parties agree, or if the contract includes a mediation clause.

Step 4: Use arbitration if agreed: If the contract specifies arbitration, or both parties consent later, initiate proceedings at the chosen arbitration center.

Step 5: Litigate if no arbitration clause: If the contract specifies litigation, or if no arbitration agreement exists, the dispute must go to court.

Step 6: Enforce the outcome: Whether arbitration award or court judgment, check if it is enforceable in the country where the other party has assets.

Frequently Asked Questions (Q&A)

Q1: Why is arbitration more common than litigation in international trade?

Because arbitration awards are enforceable under the New York Convention in over 170 countries, while court judgments are often not recognized abroad.

Q2: Can mediation really solve international trade disputes?

Yes, if both parties agree. Many disputes are settled through mediation, which saves time and money. But without consent, mediation cannot proceed.

Q3: What happens if the contract has no dispute settlement clause?

The parties must rely on national courts, unless they later agree to arbitration or mediation. This often makes disputes more costly.

Q4: What is Med-Arb?

It’s a hybrid process where disputes start with mediation and, if unresolved, continue to arbitration. It combines flexibility and enforceability but requires careful structuring.

Q5: How can businesses avoid disputes in international trade?

By drafting clear contracts with dispute resolution clauses, ensuring compliance with international standards, and maintaining good communication with partners.

Source ANT Lawyers: Dispute Settlement in International Trade Made Simple: 4 Key Mechanisms

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8 Essential Lessons Arbitration Counsel Helps Companies to Build Effective Dispute Strategies

 Why Arbitration Matters More Than Ever

When business relationships collapse, companies often discover too late that their contract’s dispute resolution clause is important. Arbitration, trusted for neutrality, speed, and cross border enforceability has become a core part of global commerce.

As a practising arbitration counsel advising clients before domestic and international tribunals, we have seen how a clause can protect and one can lead to procedural delay.

In here, we draw on eight lessons every company and every team of arbitration counsel should know before a dispute begins.

8 Essential Lessons Arbitration Counsel Helps Companies to Build Effective Dispute Strategies

It draws from Vietnam’s Law on Commercial Arbitration, the Civil Procedure Code (CPC), the UNCITRAL Model Law, and the New York Convention, aligning Vietnamese practice with international standards.

The Clause Defines the Framework

Every arbitration begins with a clause and that clause defines the framework. The clause is limited to only a few sentences in length but play significant important roles.

Arbitration counsel in Vietnam frequently encounter clauses that look professional but contain flaws, for example:

• The institution is misnamed, creating jurisdictional confusion.
• The seat of arbitration is omitted, leaving no supervisory court.
• The law governing the arbitration agreement is missing, causing conflict between substantive and procedural rules.

These errors violate core doctrines:

• Separability, which said the arbitration clause remains valid even if the main contract is invalid.
• Competence-competence, which said the tribunal has the first right to determine its own jurisdiction.

This clause is not boilerplate; it defines enforceability.

Procedure Is Also Strategy

Once a tribunal is constituted, procedure becomes strategy.

The lex arbitri, the law of the seat controls how the arbitration proceeds.

Under the competence-competence doctrine, the tribunal decides jurisdiction first, though courts can later review.

In domestic arbitration, Vietnam’s VIAC Rules and the Law on Commercial Arbitration govern timelines.

In international cases, institutional rules and the chosen seat dictate procedure.

The lawyers practicing arbitration understand that timing, evidence, and professional tone shape the tribunal’s perception more than rhetoric.

Enforcement Is Where Reality Begins

Winning an arbitral award is only half the victory. Enforcement gives it value.

In domestic arbitration, awards have the same force as court judgments unless annulled as regulated in the Law on Commercial Arbitration.

In international arbitration, enforcement follows the New York Convention, which Vietnam joined in 1995.

Vietnam’s Civil Procedure Code governs recognition and enforcement of foreign arbitral awards.

Key points include:

1. Authority to Sign: The person signing the arbitration agreement must have legal authority; otherwise, enforcement fails.

2. Proper Notice: Mis-delivery between a company’s branch and head office can invalidate proceedings.

3. Tribunal Formation & Due Process: The tribunal must act impartially and within its mandate.

4. Fundamental Principles of Vietnamese Law: Awards violating Vietnam’s core legal principles may be refused recognition as regulated under the Law on Commercial Arbitration.

Arbitration counsel preparing enforcement applications translate international obligations into local procedures, ensuring filings meet CPC’s deadline and citing the New York Convention appropriately.

Setting Aside Is Not a Second Trial

Sometimes, losing parties seek to try their case through setting aside proceedings.

In Vietnam, grounds for annulment are limited to:

• Invalid arbitration agreement.
• Improper notice or lack of opportunity to present the case.
• Tribunal exceeding its authority.
• Procedural irregularities.
• Violation of fundamental principles of Vietnamese law.

Under Resolution 81/2025/UBTVQH15, effective July 1st, 2025, only the People’s Courts of Hanoi, Da Nang, and Ho Chi Minh City instead of local provincial courts may hear annulment or enforcement cases. This changes would help improve uniformity.

For foreign awards, Vietnamese courts cannot annul them but may refuse recognition under CPC.

Arbitration counsel ensure clients understand that “setting aside” and “refusal of enforcement” are different processes governed by different laws.

The Three Roles of Arbitration Counsel

Modern arbitration counsel in Vietnam perform three essential roles:

1. Advocates before Tribunals: presenting legal arguments, cross-examining witnesses, and coordinating expert testimony in both domestic and international arbitrations.

2. Legal Representatives: managing petitions to enforce or set aside awards, ensuring harmony between Vietnamese law, the UNCITRAL Model Law, and the New York Convention.

3. Advisers to Businesses: designing enforceable clauses, choosing the correct seat, and preparing companies for dispute readiness.

By balancing these roles, arbitration counsel bridge arbitral autonomy and judicial oversight, helping Vietnam maintain investor confidence.

Technology Changes The Arbitration

Arbitration now operates in a digital environment. 

Virtual hearings are getting popular. In Vietnam, there is no law or guidance on artificial intelligence assisting in document review but Ciarb’s guidelines on the use of AI could be a good reference.

The UNCITRAL Arbitration Rules and ICC Rules already allow online procedures.

However, technology imposes new duties, ensuring data security, confidentiality, and authenticity of evidence.

Competent arbitration counsel combine legal skill with digital literacy, guaranteeing that virtual hearings remain fair under the lex arbitri and institutional standards.

Mediation Still Matters

Even with sophisticated arbitration systems, early settlement remains best.

The Med-Arb model, recognized in Vietnam and promoted by UNCITRAL, blends mediation and arbitration for efficiency.

Arbitration counsel trained in both methods guide clients to resolve disputes early while safeguarding enforceability.

This pragmatic approach saves cost, preserves relationships, and supports business continuity.

Vietnam’s Progress and Direction

Vietnam’s arbitration framework is young but advancing rapidly.

Since 2010, the Vietnam International Arbitration Centre (VIAC) has adopted modern rules, and courts increasingly apply doctrines such as separability and competence-competence.

Recent judgments published by the Supreme People’s Court show greater consistency in enforcement decisions.

Each recognition of a foreign award, and each principled refusal under CPC, brings Vietnam closer to global standards under the UNCITRAL Model Law.

Arbitration lawyers in Vietnam play a decisive role in this transformation, case by case, award by award, leveling up Vietnam to get closer to a trusted arbitration jurisdiction in Asia.

Step-by-Step Guide: How to Build an Effective Arbitration Strategy

Designing an arbitration strategy is proactive, not reactive.

The following framework could be used by arbitration counsel to help companies prepare for disputes long before they happen.

Step 1: Draft the Right Arbitration Clause

• Choose a recognized institution and define the seat.
• State governing and procedural laws clearly.
• Maintain separability.
• Seek early review by arbitration counsel.

Step 2: Preserve Evidence and Communication

• Keep all correspondence and contracts organized.
• Send clear written notices when issues arise.
• Document negotiation efforts.

Step 3: Assess the Forum and the Law

• Determine whether the case is domestic or international.
• Identify the seat, applicable law, and enforceability options.
• Consult arbitration counsel for comparative analysis.

Step 4: Select the Tribunal Wisely

• Research arbitrators’ independence and expertise.
• Evaluate diversity and balance.
• Consider the level of the potential conflict for appropriate institutions.

Step 5: Manage the Procedure Professionally

• Respect deadlines and tribunal orders.
• Maintain professional tone and compliance.
• Use the party’s autonomy principle responsibly.

Step 6: Control Costs and Expectations

• Budget early for arbitrators’ fees, translations, experts, and travel.
• Use transparent, phase based billing with arbitration counsel.

Step 7: Anticipate Enforcement Early

• Ensure signatories have authority.
• Confirm assets in New York Convention jurisdictions.
• Keep all procedures clean to resist annulment challenges.

Step 8: Plan for Settlement and Med-Arb Options

• Include mediation clauses where appropriate.
• Allow arbitration counsel to coordinate between mediation and arbitration phases.

Step 9: Prepare for Post Award Action

• Gather certified copies and translations.
• File recognition or defense petitions with one of the three competent courts.
• Rely on arbitration counsel familiar with Vietnamese court practice.

Step 10: Learn and Improve

• After each case, review performance and refine internal policies.
• Treat every dispute as a lesson in risk prevention.

Frequently Asked Questions (FAQ)

Q1: What makes arbitration counsel different from litigation lawyers?

They blend cross border advocacy with procedural strategy, mastering the New York Convention and multiple institutional rules. Language skills are also important to ensure smooth communication.

Q2: What is the difference between domestic and international arbitration in Vietnam?

Domestic involves Vietnamese parties only; international includes a foreign element, affecting procedure and enforcement.

Q3: What if the arbitration clause is unclear?

An unclear clause may cause delay or court intervention. Arbitration counsel can redraft it before signing.

Q4: What are “fundamental principles of Vietnamese law”?

They refer to fairness, equality, good faith, and lawful protection, the Vietnam’s version of “public policy”.

Q5: How long does an arbitration usually take?

Typically 6–12 months at VIAC; complex cross border cases may last longer.

Q6: Can a court decide the merits of an arbitral award?

No in principle. Courts review only procedure, not substance. But this might be interpreted differently in Vietnam sometimes, which is considered procedure and which is not.

Q7: Is online arbitration recognised in Vietnam?

Yes. Virtual hearings are permitted if confidentiality and fairness are ensured and parties agree.

Q8: How can businesses reduce arbitration costs?

By focusing issues, limiting witnesses, and collaborating closely with arbitration counsel.

Q9: Which arbitration institutions are most common in Vietnam?

Domestically, VIAC; regionally, SIAC for international contracts.

Q10: What is the biggest mistake companies make?

Waiting until a dispute begins before seeking advice from arbitration counsel. Early consultation prevents future risks.

Building Trust Through Fairness

Every arbitration starts long before a notice of dispute.

The procedure parties design decides the justice they receive.

Doctrines such as separability, competence-competence, and lex arbitri, together with the UNCITRAL Model Law and New York Convention, make arbitration predictable and respected worldwide.

In Vietnam, these principles are now daily practice, applied by institutions, and arbitration counsel who translate international standards into local law.

Arbitration is not just an alternative to litigation, it is a symbol of business trust and legal maturity.

Source ANT Lawyers: 8 Essential Lessons Arbitration Counsel Helps Companies to Build Effective Dispute Strategies

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Contract Disputes in Vietnam: 8 Contract Matters Foreign General Counsels Must Get Right

 Introduction: Contract Disputes in the Recognition and Enforcement of Foreign Arbitral Awards in Vietnam

When you discuss about contract disputes in Vietnam, most of the time, you might think about what happens when a deal goes wrong. You could go on and discuss breaches, delays, non payment, termination, or damages.

We now take a different starting point.

We talk about what happens after a dispute has already been decided, often by arbitration, and one party believes it has won and now proceed to recognition and enforcement stages in Vietnam.

Contract Disputes in Vietnam: 8 Contract Matters Foreign General Counsels Must Get Right

In practice, many foreign companies in Vietnam follow a familiar path:
1. A contract is signed and performed.
2. A dispute arises.
3. The parties go to arbitration.
4. An arbitral tribunal issues an award.
5. The winning party moves to enforce or recognize and enforce that outcome in Vietnam under New York Convention.

At this final stage, something unexpected would happens.

Vietnamese courts do not simply look at the arbitral award.
They may look back at the contract itself, sometimes in detail, to assess whether the agreement was valid, properly authorized, and compliant with Vietnamese law.

This means that even when:
• the contract has been used for years,
• the parties have fully performed,
• and an arbitral tribunal has ruled on the merits,

the contract can still become the central issue again at the recognition and enforcement stage in Vietnam.

Why Need To Think Early About Enforcement in Contract Disputes in Vietnam

When it comes to the time to enforce an arbitral awards issued by Vietnam arbitration or to recognize and enforce a foreign arbitral awards in Vietnam, the issue would arise. Although many contract disputes in Vietnam do not fail on commercial merits, they fail because the contract itself cannot survive judicial review.

Vietnamese courts and arbitral tribunals emphasize:

• authority,
• written consent,
• legal form,
• and documentary integrity.

As a result, contract disputes in Vietnam often shift away from who breached question to more basic questions:

• Did a valid contract exist?
• Who had authority to bind the company?
• Can the agreement be proven cleanly?

For foreign general counsels, it is important to think about enforceability long before a dispute arises.

How Contract Design Shapes Contract Disputes in Vietnam

International arbitration theory emphasizes autonomy, separability, and minimal court intervention. But in contract disputes in Vietnam, decision makers often apply a stricter, document driven approach.

Vietnamese courts typically ask:

1. Was the contract validly formed?
2. Was it signed by the right person?
3. Is the arbitration clause clearly binding?
4. Does the contract comply with mandatory law?
5. Can the contract be proven without ambiguity?

If any answer is uncertain, the dispute escalates regardless of commercial fairness.

8 Contract Matters That Define Contract Disputes in Vietnam

1. Authority to Sign the Contract

One of the most frequent triggers of contract disputes in Vietnam is lack of signing authority.

We see in many cases, contracts are often signed by sales managers, project leaders, or foreign executives without valid authorization.

Vietnamese law applies a strict test that authority must exist at the time of signing.

For instance, in a Hanoi court case, an arbitral award was annulled because the contract was signed by a project director without proper authorization. The company had performed the contract for years, but the court focused solely on authority at signing, not later conduct.

Therefore, the general counsels need to make sure they verify the legal representative or require a valid Power of Attorney before execution. Authority risk is dispute risk.

2. Power of Attorney: Form, Scope, and Legalization

In cross border contract disputes in Vietnam, defective Powers of Attorney are a recurring problem.

Common issues include:

• expired POAs,
• POAs lacking arbitration authority,
• foreign POAs not consularly legalized.

Vietnamese courts treat representation capacity as a foundational legal requirement.

For instance, a Ho Chi Minh City court set aside an arbitral award after finding that a foreign Power of Attorney used in the arbitration had not been properly legalized. The court viewed this as a violation of basic legal order.

Therefore, the company’s general counsels should treat POAs as jurisdictional documents, and not forget to legalize, authenticate properly.

3. Contract Formation: Clear Written Consent Matters More Than Performance

Foreign companies often assume that performance proves agreement.

In contract disputes in Vietnam, this assumption is risky.

Problems arise when:

• contracts are unsigned,
• arbitration clauses appear only on invoices or many times in small letters in terms and conditions,
• email exchanges are treated as final agreements.

Vietnamese courts prioritize clear written consent.

For instance, in a dispute involving long term supply, a court rejected arbitration jurisdiction because the arbitration clause appeared only on delivery notes. Continuous performance did not cure the lack of formal agreement.

Therefore, if it is not clearly agreed in writing, the general counsels expect it to be challenged in a contract dispute in Vietnam.

4. Arbitration Clause Quality and Party Binding

Defective arbitration clauses are a major source of escalation in contract disputes in Vietnam.

Typical issues include:

• incorrect party names,
• references to affiliates instead of contracting entities,
• conflicting dispute resolution clauses.

Vietnamese courts could interpret arbitration clauses narrowly and literally.

For instance, a Vietnamese court refused to recognize arbitration jurisdiction where the clause named a parent company instead of the actual contracting party, even though the commercial relationship was clear.

Therefore, general counsels would note that arbitration clauses are not boilerplate

5. Contract Scope and Dispute Scope Alignment

Many contract disputes in Vietnam arise when tribunals are asked to decide matters outside the contract’s scope.

Examples include:

• reliance on side letters,
• NDAs not covered by the arbitration clause,
• claims based on improperly executed amendments.

Tribunal authority derives strictly from party consent.

For instance, in one annulment case in Vietnam, a court held that the tribunal exceeded its mandate by deciding issues not expressly submitted by the parties, even though the issues were commercially connected.

It is important for the general counsels to remember to align contract scope and dispute scope carefully.

6. Mandatory Vietnamese Law and Contract Legality

Some contract disputes in Vietnam arise because the contract violates mandatory law.

High risk areas include real estate, financial, banking and other conditional sectors.

Even a favorable arbitral award cannot legitimize illegality.

For instance, a court in Vietnam declined to support an arbitral outcome where the underlying contract involved an unlicensed business activity, holding that enforcement would violate fundamental legal principles.

Therefore, for general counsels, compliance review is part of contract governance, not a post dispute exercise.

7. Contract Amendments and Post-Signing Governance

Disputes often arise from what happens after signing.

Common issues include:

• amendments signed by unauthorized persons,
• side letters contradicting the main contract,
• informal email modifications.

Courts may question whether such changes were validly made.

Therefore, for general counsels, it is necessary to apply the same authority and execution standards to amendments as to the original contract.

8. Contract Execution and Documentary Integrity

In Vietnam, a contract must not only exist, it must be provable.

This is not about litigation evidence created later.

It concerns execution discipline from day one.

Weaknesses include:

• inconsistent language versions,
• missing annexes,
• poor document retention.

For instance, in Vietnam, a court questioned enforcement where the parties submitted inconsistent versions of the contract, with unsigned annexes and unclear signing sequences. The dispute shifted from breach to existence.

Therefore, for the general counsels, documentary integrity is a contract issue, not a litigation issue.

Step-by-step: Manage Contract Disputes in Vietnam

Step-by-step: Manage Contract Disputes in Vietnam

Step 1: Confirm the parties and the signing authority

• Verify the Vietnamese counterparty’s legal name, registration number, and legal representative.
• Decide who will sign on your side and whether a Power of Attorney is needed.

Step 2: Lock the commercial deal terms

• Scope of work.
• Acceptance criteria.
• Payment milestones.
• Delivery terms.

Step 3: Choose governing law and dispute resolution strategy early

• Governing law of the contract.
• Arbitration vs court; if arbitration, specify institution, seat, language, number of arbitrators.

Step 4: Draft the arbitration clause like it’s the most valuable paragraph

• Ensure the clause binds the correct entities
• Ensure it covers contract, non contract claims, side letters, and amendments.

Step 5: Check Vietnam mandatory law

• Conditional sectors, foreign exchange, payment flows, interest, penalties, data protection and privacy regulations if relevant.
• If something is sensitive, add compliance representations and a lawful performance clause.

Step 6: Control amendments and side communications

• Make sure no amendment unless in writing and signed by authorized representatives.

Step 7: Execute cleanly and preserve documentary integrity

• Signed signature pages, stamped where used, annexes initialed, signed.
• Consistent bilingual versions and specify which language prevails.
• Centralized storage, originals and signing evidence.

Step 8: Build a dispute ready record while the relationship is still friendly

• Delivery, acceptance records, change orders, meeting minutes, payment confirmations.

FAQ: Questions Relevant to Contract Disputes in Vietnam

Q1: What causes contract disputes in Vietnam most often?

Authority issues, unclear formation, weak arbitration clauses, amendment chaos, mandatory law conflicts, and poor documentary integrity.

Q2: Can we sign a contract by email or scanned PDF in Vietnam?

Often yes in practice, but enforceability depends on clear evidence of mutual consent and authority. For higher risk deals, use clean execution formalities and preserve a reliable signing trail.

Q3: If we performed the contract, can the other side still argue the contract is invalid?

Yes. In contract disputes in Vietnam, performance does not always cure defects in authority, formation, or mandatory legal requirements.

Q4: What is the number one signing mistake foreign companies make in Vietnam?

Letting a counterparty’s commercial head sign without verifying legal authority or a valid Power of Attorney.

Q5: Do we need a Power of Attorney for a foreign director or manager to sign?

If the signer is not the legal representative shown on the business registry, a Power of Attorney is typically needed.

Q6: Should we choose Vietnam law or foreign law as governing law?

It depends on value of contract, deal type, regulatory exposure, assets location, and enforcement strategy. If performance and assets are in Vietnam, Vietnam law may reduce friction; but many cross border deals choose foreign governing law with a Vietnam seat or offshore seat depending on risk tolerance and of course the cost of disputes in relation to the value of the contract.

Q7: Where should we seat the arbitration (Vietnam vs others)?

Vietnam seat can be efficient for Vietnam centric disputes but is more formalistic. In the region, Singapore and Hong Kong are benchmark pro-arbitration seats with strong non intervention traditions. Choose based on where enforcement will happen and how much court supervision you can accept. 

Q8: Do Vietnamese courts enforce arbitration awards?

Vietnam is a New York Convention state, and enforcement is available, but outcomes depend heavily on clean procedure and strong contract documents.

Q9: What makes an arbitration clause invalid or risky in Vietnam practice?

Wrong party names, conflicting clauses, unclear seat, institution, clauses hidden in unsigned documents, or lack of proof both parties agreed.

Q10: Can a side letter or email change the contract?

It can unless your contract does not allow it.

Conclusion: Contract Governance Is Dispute Strategy

In Vietnam, contract disputes are rarely won by arguments alone.

They are decided by preparation, formality, and discipline.

Strong contracts:

• reduce jurisdictional challenges,
• simplify arbitration,
• improve enforceability.

For foreign general counsels, mastering these eight contract matters is the most effective way to manage contract disputes in Vietnam.

Source ANT Lawyers: Contract Disputes in Vietnam: 8 Contract Matters Foreign General Counsels Must Get Right

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