An unpaid invoice, delayed shipment, or disagreement over product quality can quickly disrupt business operations. For foreign companies working with Vietnamese partners, differences in language, contract terms, and business practices may make these disputes harder to resolve.
Managing a commercial contract dispute in Vietnam starts with understanding the agreement, gathering reliable evidence, and choosing a practical way to pursue your objectives.
1. Identify the Breach and Review the Contract
Before demanding compensation or ending a business relationship, identify precisely what the other party was required to do and how its performance fell short.
Common disputes involve:
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Failure to pay for delivered goods or completed services;
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Late delivery or failure to deliver;
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Goods that do not meet agreed specifications;
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Disagreements over acceptance, warranties, or refunds;
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Early termination of distribution or service agreements.
Review the signed contract together with its appendices, purchase orders, amendments, and subsequent correspondence. Pay particular attention to payment conditions, inspection procedures, notice requirements, governing law, and dispute resolution clauses.
For example, an invoice may appear overdue, but the contract may make payment conditional on acceptance or submission of specific documents. These details can affect the strength of a claim.
2. Preserve Evidence of the Transaction
A clear record helps explain what the parties agreed, what actually happened, and which amounts remain disputed.
Businesses should collect the relevant contracts, invoices, bank records, delivery documents, inspection reports, and correspondence. For international sales, shipping documents and communications with freight forwarders may also help establish the transaction history.
Arrange these materials chronologically and prepare a short summary identifying:
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Each party’s obligations;
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Key performance and payment dates;
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The alleged breach;
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Payments already made;
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The outstanding amount and supporting calculation.
Preserve original documents and electronic records in their original format where possible. If negotiations took place by telephone, follow up with a written summary to create a clearer record.
3. Assess the Amount and Legal Basis of the Claim
Depending on the contract and applicable law, a claim may involve outstanding payments, contractual penalties, damages, or late-payment interest.
Under Articles 300 and 301 of Vietnam’s Commercial Law, contractual penalties generally require an agreement and are generally capped at 8% of the value of the breached contractual obligation, subject to applicable exceptions. Damages require evidence of loss and a direct causal connection to the breach. Article 306 provides for interest on certain overdue commercial payments, subject to the parties’ agreement and applicable law.
Prepare separate calculations for each claim. Avoid combining the unpaid principal, penalties, interest, and alleged losses into one unexplained figure.
For example, a claim for additional storage costs should be supported by invoices and an explanation connecting those costs to the other party’s breach.
4. Send a Clear Written Demand
A written demand can help clarify the dispute and provide a basis for settlement discussions.
The demand should identify the transaction, explain the alleged breach, state the requested remedy, and set a reasonable response deadline. It should also follow any contractual requirements concerning the recipient, delivery method, and notice period.
Where the parties wish to continue doing business, a payment schedule, replacement delivery, or agreed price adjustment may offer a practical solution. Record any settlement clearly, including payment dates and the consequences of non-performance.
Keep the wording factual and professional. Unsupported accusations can distract from the commercial issue and make negotiations more difficult.
5. Check Whether Arbitration or Court Proceedings Apply
Before commencing proceedings, examine the dispute resolution clause carefully.
Arbitration requires an arbitration agreement, which may be concluded before or after a dispute arises. Vietnamese law requires the agreement to be in writing, including certain recognised electronic forms. Where a valid and enforceable arbitration agreement applies, courts generally must decline jurisdiction, subject to statutory exceptions.
The appropriate forum should be assessed alongside the governing law, language, costs, and location of the other party’s assets.
For cross-border transactions, enforcement deserves attention from the beginning. A favourable decision has limited practical value if recovery cannot realistically be pursued against the debtor’s assets.
6. Review Deadlines and Recovery Prospects Early
Do not postpone reviewing deadlines while settlement discussions continue.
Article 319 of the Commercial Law generally provides a two-year limitation period for commercial claims from the infringement of lawful rights and interests, subject to exceptions. Separate complaint periods may also apply.
A practical case assessment should consider both legal merits and recovery prospects. Relevant questions include whether the counterparty remains operational, whether the debt is disputed, and whether identifiable assets are available.
This assessment helps businesses decide whether to pursue a negotiated settlement, commence proceedings, or adjust their recovery strategy.
How Jurion & Partners Can Assist
Resolving a commercial contract dispute requires a strategy that reflects the evidence, contractual terms, and business objectives.
Jurion & Partners can assist with reviewing contracts and supporting documents, assessing potential claims, preparing demand letters, conducting negotiations, and representing clients in dispute resolution proceedings.
If your business is facing a commercial contract dispute in Vietnam, contact Jurion & Partners to discuss the circumstances and available legal options.
