As Vietnam continues to position itself as one of Asia’s most attractive investment destinations, foreign-invested enterprises (FIEs) are increasingly involved in commercial disputes that are resolved through international arbitration. For many investors, arbitration offers neutrality, flexibility, and global enforceability. However, the enforcement of foreign arbitral awards in Vietnam—especially against FIEs—still presents legal and procedural complexities that foreign parties must understand.
1. Legal Framework for Enforcement
Vietnam is a member of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the key international instrument governing cross-border enforcement. Domestically, the enforcement process is regulated under:
- Civil Procedure Code (CPC) 2015 – Articles 424 to 451;
- Law on Commercial Arbitration 2010; and
- Resolution No. 01/2014/NQ-HDTP of the Supreme People’s Court, guiding recognition and enforcement procedures.
In principle, a foreign arbitral award can be enforced in Vietnam if it satisfies the procedural requirements under the CPC and is not refused on any of the grounds listed in Article V of the New York Convention—such as lack of due process, excess of authority, or violation of Vietnamese public policy.
2. Competent Authorities and Procedure
The People’s Court of Hanoi or Ho Chi Minh City has jurisdiction to handle petitions for the recognition and enforcement of foreign arbitral awards, depending on where the FIE’s head office or assets are located.
Applicants must submit the following within three years from the date the award takes effect:
- The original or certified copy of the arbitral award;
- The arbitration agreement;
- An authenticated Vietnamese translation; and
- Proof of authorization or legal representation (if applicable).
Once accepted, the court will review both formal validity and substantive compatibility of the award with Vietnamese law before issuing a decision on recognition.
3. Key Challenges in Practice
Despite alignment with international standards, the enforcement of foreign arbitral awards in Vietnam can still be unpredictable due to several recurring issues:
- Public policy exception: Vietnamese courts may refuse enforcement if they find the award contrary to the “fundamental principles of Vietnamese law.” The broad interpretation of this standard remains a major source of uncertainty.
- Procedural scrutiny: Courts may rigorously review arbitration proceedings for procedural irregularities, such as notice, arbitrator selection, or jurisdictional validity.
- Execution difficulties: Even after an award is recognized, execution can be delayed if FIE assets are encumbered, transferred, or held by related entities.
- Limited institutional capacity: Some enforcement agencies lack experience in handling complex cross-border cases, leading to procedural delays.
4. Practical Recommendations for Foreign Investors
Foreign investors seeking to protect their interests in Vietnam should:
- Draft clear arbitration clauses designating a recognized arbitral institution and seat within a New York Convention member state;
- Maintain detailed documentation of notices, procedural steps, and evidence of fair process;
- Conduct asset due diligence on FIEs to ensure enforceability before initiating arbitration;
- Engage experienced local counsel to manage procedural submissions and liaise with Vietnamese authorities; and
- Anticipate the possibility of parallel proceedings before local courts during the recognition phase.
By proactively addressing these considerations, investors can minimize enforcement risk and increase the likelihood of successful recovery.
5. Recent Trends and Outlook
Recent case law and judicial guidance indicate a gradual shift toward pro-enforcement attitudes among Vietnamese courts. Training programs by the Supreme People’s Court and the Ministry of Justice have also improved consistency in applying the New York Convention.
Nonetheless, public policy interpretation and execution procedures remain critical areas for reform. Vietnam’s ongoing judicial modernization—particularly the establishment of specialized commercial courts and potential revisions to the Law on Enforcement of Civil Judgments—may further enhance investor confidence and enforcement efficiency.
6. Conclusion
Vietnam’s commitment to the New York Convention provides a solid legal foundation for the recognition and enforcement of foreign arbitral awards. However, enforcement against FIEs still demands meticulous preparation and local expertise due to procedural strictness and interpretive uncertainty.
For foreign investors and multinational corporations, early contract drafting, asset risk assessment, and strategic legal support are essential to ensure arbitration remains an effective and enforceable dispute resolution mechanism in Vietnam’s evolving legal landscape.
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