Regulations on settlement of contract disputes involving foreign elements in Vietnam
Resolving a contract dispute involving a foreign element will cover more issues than resolving a contract dispute without a foreign element. So how is the settlement of contract disputes with foreign elements regulated? Please follow the article of Lawyer X for more detailed information!
Legal grounds
– Civil Code 2015
– Decree 22/2017/ND-CP
What is a contract with foreign elements?
According to the provisions of civil law in Vietnam, a contract is an agreement to perform, change or terminate by the parties thereby expressing the rights and obligations that the parties agree to meet the interests of the parties each side. A contract with foreign elements is a contract when it falls into one of the cases specified in Article 663 of the Civil Code 2015 as follows:
“a) One of the parties to the contract is a foreign entity (individual, legal entity);
b) The parties to the contract are all Vietnamese individuals and legal entities, but the establishment, change, performance, or termination of the contractual relationship occurs in a foreign country;
c) The parties to the contract are all Vietnamese individuals and legal entities, but the subject of the contract is overseas.”
When does a contract dispute involving foreign elements arise?
A contract with a foreign element must have at least one person participating in the relationship who is a foreigner, or the parties are all Vietnamese citizens or Vietnamese legal entities, but the establishment, change, performance, or termination of such relationship occurs in a foreign country or the parties involved are Vietnamese citizens or Vietnamese legal entities but the subject matter of such civil relations is abroad.
Contractual disputes with foreign elements arise when one of the parties fails to perform or performs improperly or inadequately the obligations of a contract with foreign elements and must compensate for any damage caused.
Regulations on settlement of contract disputes involving foreign elements
In Vietnam, the ways to resolve contract disputes with foreign elements include negotiation, conciliation, arbitration, and court.
Negotiated settlement:
Negotiation is when the parties sit down and engage in discussions with each other to resolve the conflicts or problems they encounter so that the interests of the parties fully met. Bargaining is a method of agreement, prioritizing the agreement of the parties’ issues. Currently, there is no domestic law regulating the way this contract dispute with foreign elements resolved.
However, negotiation can agree upon in writing, this is to determine the basis if there is a dispute that needs to resolve by a third agency (Court, Arbitration).
Mediation settlement:
Mediation in civil legal relations should carry out with the consent of the parties and with the participation of a commercial mediator in our country. The mediation is carried out and adjusted according to the order and procedures of Decree 22/2017/ND-CP on commercial mediation.
Settlement by Arbitration:
Along with the method of conciliation and negotiation, the method of settling contract disputes with foreign elements by commercial arbitration is also a popular settlement method today. The application applies to cases where the parties agree to settle disputes by arbitration for disputes between the parties arising from commercial business activities in general and contracts with foreign elements in particular.
Other disputes between the parties as provided for by law may be resolved by arbitration by the provisions of “Jurisdiction to settle disputes by arbitration” in Article 2 of the Law on Commercial Arbitration 2010.
Settlement by Court:
With a contract dispute involving foreign elements by way of the Court, this is one of the contents of the dispute under the jurisdiction of the People’s Court under the provisions of the Civil Procedure Code 2015.
Determine the applicable law when settling the dispute
Pursuant Article 683 of the 2015 Civil Code stipulates how to determine the law applicable to a contract as follows:
“first. The parties to a contractual relationship may agree to choose the law applicable to the contract, except for the cases specified in Clauses 4, 5, and 6 of this Article. If the parties do not agree on the applicable law, the law of the country with the closest relationship to the contract shall apply.
2. The laws of the following countries considered to be the laws of the countries that have the closest relationship with the contract:
a) The law of the country where the seller resides if he is an individual or the place of an establishment if he is a legal entity, for the sale of goods contract;
b) The law of the country where the service provider resides if he is an individual or the place of the establishment if he is a legal entity for service contracts;
c) The law of the country where the right recipient resides if it is an individual or the place of an establishment if it is a legal entity, for contracts on licensing of use rights or assignment of intellectual property rights;
d) The law of the country where the employee regularly performs work for the labor contract. If the employee regularly performs work in different countries or it is not possible to determine where the employee regularly performs work, the law of the country that has the closest relationship with the labor contract is the law of the country where the employer resides in the case of an individual or established in the case of a legal entity;
d) The law of the country where the consumer resides concerning the contract of consumption.
3. In case it show that the law of a country different from the law mentioned in Clause 2 of this Article has a closer relationship with the contract, the applicable law is the law of that country.
4. Where the contract is immovable, the law applicable to the transfer of ownership rights or other rights to the property is immovable, the lease of immovable property or the use of the immovable property for a guarantee of performance is the law of the country where the immovable property is located.
5. Where the law selected by the parties in the labor contract or consumer contract affects the minimum interests of employees and consumers according to the provisions of Vietnamese law, the law of Vietnam is applied.
6. The parties may agree to change the law applicable to the contract, but such change must not affect the lawful rights and interests of a third party before the change of applicable law, except where the third party consents.
7. The form of a contract shall be determined according to the law applicable to such contract. In case the form of a contract is not consistent with the form of a contract under the applicable law, but is consistent with the form of a contract under the law of the country where the contract is concluded or the law of Vietnam, that form of contract is recognized in Vietnam”.
Please see more:
- Instructions for registering the latest exclusive copyright logo in Vietnam
- Register the ownership of the logo by the laws of Vietnam
- How to register a foreign logo in Vietnam?
Frequently asked questions
A contract is an agreement to perform, change or terminate by the parties thereby expressing the rights and obligations that the parties agree on to meet the interests of each party.
Freedom to enter into contracts, but not against the law and social ethics. The content of the principle shows that the two sides are of primary importance in entering into a contract, free but not contrary to the requirements prescribed by law, not contrary to the law, or against social morality.
– The principle of the parties is “voluntarily, equality, goodwill, cooperation, honesty and integrity in entering into the contract”. First of all, the parties must have an equal position, because equality is a condition for genuine voluntariness.
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