UPDATE ON DISPUTE RESOLUTION IN INVESTMENT ACTIVITIES UNDER THE LAW ON INVESTMENT 2025
The Law on Investment No. 143/2025/QH15 (“Law on Investment 2025”) was passed by the National Assembly on 11 December 2025 and will come into force on 1 March 2026, except for:
(i) the provisions under Clause 3 Article 50 amending and supplementing certain articles of the Law on Railways No. 50/2025/QH15; and
(ii) the list of conditional business lines set out in Appendix IV, which shall take effect from 1 July 2026.
In this article, Mr. Phan Quang Chung – Founder and Managing Partner of BFSC Law LLC, together with Ms. Tran Hong Hanh – Legal Assistant, provide an update and analysis of the regulations on dispute resolution in investment activities in Vietnam under the Law on Investment 2025, from a practical perspective applicable to both domestic and foreign investors.
1. Settlement of Investment Disputes through Negotiation and Mediation
Clause 1 Article 13 of the Law on Investment 2025 establishes the principle that disputes arising from investment activities in Vietnam shall be prioritized for resolution through negotiation and mediation. Where negotiation and mediation fail, disputes may be resolved by arbitration or court litigation.
However, it should be noted that unless the parties have expressly agreed that negotiation and/or mediation constitutes a mandatory pre-condition, one party may not rely on the absence of negotiation or mediation to prevent or delay the other party from initiating proceedings before an arbitral tribunal or a court.
In practice, dispute resolution authorities (arbitral tribunals and courts) do not refuse to accept jurisdiction, return statements of claim, or suspend or terminate proceedings solely on the grounds that the parties have not conducted negotiation or mediation prior to filing the claim, unless such procedures have been clearly and mandatorily agreed upon by the parties.
Where the parties agree that negotiation or mediation (whether directly or through a mediation intermediary) is a compulsory procedure prior to commencing arbitration or court proceedings, such agreement must clearly specify:
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the procedures to be followed; and
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the applicable time limits.
Failure to clearly define these elements may lead to misunderstandings in implementation, restrict a party’s lawful right to initiate proceedings, or cause undue delay in dispute resolution, thereby creating the risk of expiration of the statute of limitations.
2. Resolution of Investment Disputes by Arbitration and Courts
Where investment disputes in Vietnam cannot be resolved through negotiation or mediation pursuant to Clause 1 Article 13, the Law on Investment 2025 provides that jurisdiction shall lie with Vietnamese courts or arbitration.
Arbitration may include:
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Vietnamese arbitration;
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foreign arbitration;
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international arbitration; and
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ad hoc arbitration established by agreement of the disputing parties.
The Law on Investment 2025 does not recognize the jurisdiction of foreign courts or international courts, except where such jurisdiction arises from:
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contractual agreements between the parties; or
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international treaties to which the Socialist Republic of Vietnam is a contracting party,
in respect of disputes between foreign investors and competent state authorities relating to investment and business activities within the territory of Vietnam (Clause 4 Article 13).
The Law on Investment 2025 distinguishes between mandatory jurisdiction under statutory provisions and jurisdiction subject to the parties’ choice, as follows:
2.1. Statutory (Mandatory) Jurisdiction
Pursuant to Clauses 2 and 4 Article 13 of the Law on Investment 2025, disputes relating to investment activities fall within the jurisdiction of Vietnamese courts or Vietnamese arbitration in the following cases:
(i) Disputes between domestic investors; between economic organizations with foreign-invested capital; or between domestic investors and/or economic organizations with foreign-invested capital and competent state authorities in relation to investment and business activities within Vietnam, except where the parties are entitled to make a choice under Clause 3 Article 13.
It should be noted that Clause 3 Article 13 only grants the right to select a dispute resolution forum where at least one party is a foreign investor or an economic organization as specified under Points (a), (b), or (c) Clause 1 Article 20 (i.e. an entity with foreign investor participation in its ownership structure).
In the authors’ view, this means that:
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disputes solely between domestic investors; and
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disputes between domestic investors and/or economic organizations with foreign-invested capital and competent state authorities
are exclusively subject to the jurisdiction of Vietnamese courts or Vietnamese arbitration, and no alternative forum may be selected.
(ii) Disputes between foreign investors and competent state authorities relating to investment and business activities within the territory of Vietnam, unless otherwise agreed in contracts or provided under international treaties to which Vietnam is a party.
2.2. Jurisdiction Subject to the Parties’ Choice
Clause 3 Article 13 of the Law on Investment 2025 provides that disputes between investors, where at least one party is a foreign investor or an economic organization specified under Points (a), (b), or (c) Clause 1 Article 20, may be resolved by one of the following bodies or organizations as agreed by the parties:
a) Vietnamese courts;
b) Vietnamese arbitration;
c) foreign arbitration;
d) international arbitration;
e) ad hoc arbitration established by agreement of the disputing parties.
It should be emphasized that arbitral jurisdiction only arises where a valid, enforceable and operable arbitration agreement exists.
Meanwhile, ownership structures and investment forms may change during the lifecycle of an investment project, from commencement through to the emergence of a dispute. Accordingly, the parties should ensure that their arbitration agreement remains effective and enforceable notwithstanding any changes in ownership structure or investment form during the implementation of the investment project.
3. Key Considerations for Resolving Investment-Related Disputes in Vietnam
(i) Investors should correctly understand and accurately identify what constitutes investment activities, domestic investors, foreign investors, and economic organizations with foreign-invested capital, in order to properly apply the provisions on dispute resolution jurisdiction under Article 13 of the Law on Investment 2025.
(ii) Parties involved in investment activities in Vietnam should enter into clear and well-defined agreements on negotiation, mediation or pre-dispute resolution procedures, ensuring that such mechanisms are sufficiently detailed to avoid unnecessary delays, while not adversely affecting the statute of limitations.
(iii) Parties should accurately determine whether an economic organization meets the conditions set out in Points (a), (b), and (c) Clause 1 Article 20, in order to avoid confusion regarding the right to select the dispute resolution forum, and to anticipate potential adjustments to jurisdiction where such conditions are no longer satisfied at the time a dispute arises.
(iv) Arbitration agreements should be drafted in a reasonable manner to ensure their validity and enforceability under changing investment conditions.
(v) Any agreement to resolve investment disputes in Vietnam by arbitration must ensure compliance with exclusive jurisdiction provisions of Vietnamese courts under the Civil Procedure Code.
(vi) Investors conducting investment and business activities in Vietnam should regularly review and adjust dispute resolution clauses to ensure alignment with actual investment practices.
Disclaimer
This article is provided for general informational purposes only and does not constitute legal advice or a legal opinion on any specific transaction or matter. The application of the regulations discussed herein may vary depending on the specific circumstances.
Readers should not rely on the contents of this article without obtaining independent legal advice. The authors and BFSC Law LLC shall not be liable for any loss or damage arising from reliance on or use of this article.
Authors:
Mr. Phan Quang Chung – Founder & Managing Partner – BFSC Law LLC
Email: [email protected]
Ms. Tran Hong Hanh – Legal Assistant – BFSC Law LLC
Email: [email protected]