Perspective On The Arbitration Of Vietnam’s Intra-Corporate Disputes

February 24th, 2023
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The complexity of intra-corporate disputes (“ICDs”)–disputes among company owners or between company owners and the company they own–have grown. When setting up a company, investors naturally tend to focus on business issues (eg, capital, business conditions, business orientation, etc.) and often disregard corporate governance issues. Since enactment of the Law on Commercial Arbitration[1] (“LCA”) 15 years ago, arbitration to resolve ICDs has gained much popularity. However, there are some obstacles to the arbitration of ICDs.


  1. The disputed matters

The term ICDs is broad. Almost any matter involving the operation of a company can be the subject of dispute. In the Organization for Economic Cooperation and Development (“OECD”)’s Exploratory Meeting on Resolution of Corporate Governance Related Disputes, disputed matters were classified into 15 categories[2]. The six considered most important were: self-interested transactions, minority shareholder rights, take-over procedures, mismanagement, share valuation, and nomination of board members.

Vietnamese law has no definition of an ICD. However, the Civil Procedures Code[3] classifies ICDs as: disputes between a company and its members; disputes between a limited liability company and its manager, or between a joint-stock company and members of its Board of Directors, its Director or its General Director; or among members of a company regarding the establishment, operation, dissolution, merger, consolidation, total division, partial division, property transfer and/or organizational transformation of the company[4].

These types of disputes are illustrative, not exhaustive. As the CPC puts it, an ICD can be any dispute that relates to the establishment, operation, dissolution, merger, consolidation, division, separation or change in the organizational structure of a company. This is sufficiently broad to cover almost any matter involving the operation or existence of a company.

Not all ICDs are disputes which involve commercial/business activities. Article 6.5 (c) of Resolution 03[5] distinguishes what should and should not be considered a dispute involving business/commercial activities. Resolution 03 is still acceptable as there is no contrary guidance under Civil Procedure Code 2015. For example, disputes involving labor or civil matters (eg, borrowing and lending assets) do not qualify as disputes which involve business or commercial activities. Again, while Resolution 03 does not directly govern arbitration and provides guidelines for the previous Civil Procedure Code, it remains a good reference.

  1. The companies and ICDs

The ability to choose arbitration to resolve ICDs can be invaluable for business owners whether foreign or local, whether partners to a partnership, whether members of a multi-member limited liability company (“LLC”), or whether shareholders of a joint-stock company (“JSC”). It is preferred by institutional investors who make long-term equity investments in emerging markets such as Vietnam. A private equity investor in a privatized State-owned company will also prefer arbitration to litigation, especially where the State retains substantial capital ownership in a privatized State-owned company.

Arbitration of ICDs is especially helpful when a Vietnamese company lists its shares overseas. There can be differences between foreign investors who hold overseas shares and the listed Vietnamese company, or among shareholders, especially local and offshore shareholders. Arbitration, in such cases, is an attractive method to resolve disputes.


We analyze the elements of arbitration in the LCA to see how they affect the resolution of ICDs. Under the LCA, to be arbitrable, a particular dispute must satisfy the following criteria:

  1. Conditions on the competence of the arbitration

 Arbitration of ICDs is not expressly mentioned in the LCA. Article 2 of the LCA indicates that only the following sorts of disputes among parties can be resolved by arbitration:

  • Disputes which arise from commercial activities;
  • Disputes in which at least one disputant engages in commercial activities; and
  • Other disputes which the law stipulates can be settled by arbitration.

ICDs are arbitrable when:

  • They can be proven to arise out of commercial activity;
  • At least one of the disputing parties can be shown to engage in commercial activities; or
  • They are stipulated by law to be settled by arbitration.

ICDs generally arise out of investment activities. Investment activities are specifically identified in the Commercial Law[6] (“CL”) to be commercial activities[7]. As such, ICDs should pass a ‘commercial’ test.

In addition, Article 14 of the IL[8] provides that disputes arising out of investment activities which take place in Vietnam, and can be resolved through negotiation, reconciliation, arbitration, or court litigation. Dispute resolution among local investors can be resolved either through arbitration or through litigation in a Vietnamese court[9]. Disputes (i) between foreign investors, or (ii) where one party is a foreign investor or a foreign-invested company, may also be arbitrated through (among others): local arbitration; foreign arbitration; international arbitration[10]; or ad-hoc arbitration[11].

However, not all ICDs are disputes regarding commercial/business activities. Article 6.5(c) of Resolution 03 makes a distinction. Matters involving labor matters or civil matters (eg, disputes involving the borrowing and lending of assets) do not qualify. Such ICDs are arbitrable only if at least one of the disputants engages in commercial activities, or the dispute may be settled by arbitration.

  1. Conditions on subjects

The general rule is that agreement to arbitration between the parties[12] must be in place. In particular:

  • A party must be at least 18 years old and have no limit on her civil capacity. The representative of an entity must have full civil capacity.
  • The signatory of an arbitration agreement must be legally authorized.

Arbitration agreements must be voluntary. If a party is deceived, intimidated, or coerced in respect of the agreement, the agreement is null and void.

Under the LCA, an arbitrable dispute only needs to meet one of the following conditions[13]: (i) the dispute must arise out of commercial activities; (ii) the disputing parties must be individuals/entities conducting business; or (iii) the law permits the dispute be settled by arbitration. The concept of commercial activities as specified in the LCA and Decree 63[14] refers to parties in an arbitrable dispute including; (i) an individual who chooses arbitration, (i) any organization choosing arbitration to resolve the dispute, and (iii) the dispute falls within the legal jurisdiction of arbitration.

  1. Conditions on the form of arbitration agreements and their enforcement

 Arbitration agreement generally

Arbitration of ICDs in an international context is more common. The usual approach is for an arbitration clause to be included in the charter. An embedded arbitration clause has the same binding effect as the charter, and it binds the company, its owners and its constituent corporate bodies[15]. Moreover, the parties don’t have to account for a separate arbitration agreement.

To repeat, having an arbitration agreement is a general requirement for arbitration to take place. The arbitration agreement, under the LCA is valid only when the following formal conditions have been satisfied[16]:

  • The agreement is made in the form of an arbitral clause in a contract or separate agreement;
  • An arbitration agreement is specially written or an agreement to arbitrate is already in an acceptable form, including:
    • Agreement made through communication among the parties by fax, email, telegram, or similar form;
    • Written exchanges between the parties;
    • Recorded in writing by a lawyer, notary public, or competent institution at the request of the parties;
    • In transactions, the parties refer to a document which contains an agreement to arbitrate, such as a contract, document, company charter, or similar document; or
    • Agreement made through the exchange of petitions and self-defense statements or assertions which reflect the existence of an agreement proposed by a party and not denied by the other party.

According to Article 24.2 of the EL[17], rules for internal dispute settlement are the primary content of the company’s charter. Article 24.3 of the EL requires that the charter contain names and signatures of company members and the legal representative of the company. Therefore, an arbitration clause embedded in the company charter qualifies as an arbitration agreement and binds company owners together with the company itself (except in case of a JSC, which is discussed below).

The special case of the JSC

Of note, using arbitration to resolve ICDs in JSCs (especially public ones) may not be as appealing as it is in private companies thanks to the liquidity of the stock market that shareholders in a public JSC enjoy. Non-sophisticated and small individual shareholders may prefer court litigation over arbitration while institutional shareholders or offshore shareholders may prefer arbitration. It is also practically impossible for all shareholders of a public JSC to reach 100% consensus on using arbitration as the exclusive method of dispute resolution for ICDs within a JSC which is necessary for an arbitration clause in the charter to take effect.

There is a solution to this problem under the LCA. However, interestingly, Decision 116[18] has provided a standard charter for listed JSCs to adapt. The standard charter includes a dispute resolution clause, and it allows disputes to be resolved by internal arbitration.  A non-listed JSC can adapt the standard charter as well. In practice, most listed JSCs adopt the standard dispute resolution clause with little or no amendment. The dispute resolution clause was prescribed in Decision 116 as follows:

“Article 62. Resolution of Internal disputes

  1. In case of disputes or complaints relevant to the Company’s operation or to rights and obligations of shareholders prescribed by the Law on Enterprises, the Company’s Charter, other laws, or agreements between:
    • The shareholders and the Company; or
    • The shareholders and the Board of Directors, the Inspection Committee, the Director/General Director, or other executives.
  1. The parties shall try to settle these disputes through negotiation and mediation. Except for disputes that involve the Board of Directors or the President of the Board of Directors, the President of the Board of Directors shall preside over the settlement of disputes and request each party to provide information about their dispute within [… working days] from the occurrence of the dispute. In case the dispute involves the Board of Directors or the President of the Board of Directors, either party is entitled to request […] to appoint an independent expert as a mediator.

In case the dispute cannot be settled through mediation within [6 weeks] or the mediator’s decision is not accepted by the parties, either party may bring the case to court or arbitration. […]

These provisions have certain shortcomings with respect to arbitration that practically and legally make arbitration inoperable. The charter fails to refer to a method of arbitration (eg, ad-hoc arbitration or a specific institutional arbitration center), nor does it make a choice between court litigation and arbitration. It seems that, in the case of a public JSC, the right to arbitration of ICDs is recognized only to a limited extent. Maybe, in order for arbitration to be an exclusive method of resolution of ICDs in a JSC (especially listed ones), the consensual principle may need to be sacrificed to a certain extent. This problem, in order to be resolved fully, will require a legislative solution.

Enforcing the award

One of the main concerns regarding arbitration in general is juridical repudiation. There is a risk that an arbitral award can later be revoked by a court decision. Even though an arbitral award is effective from the date it is issued, the LCA gives the parties 30 calendar days from the date they receive the award to ask a competent court to revoke the award[19]. The losing party is usually tempted to exercise this right. However, in considering a revocation request, the court can only consider a number of limited statutory grounds[20]. A violation that meets one of the statutory grounds could harm the overall validity of the arbitral award. However, in many cases, local courts seem to be reluctant to retry the merits of a case but, rather, consider only the limited question whether grounds for revocation of the award have been met. Many superfluous attempts to get a valid arbitral award annulled have been dismissed by the court. A decision to revoke or not to revoke an arbitral award can be subject to appeals by the parties as well. The lengthy process of judicial review, therefore, can significantly increase the overall time of arbitration.

Vietnam has seen a wave of local JSCs seeking to list their shares on offshore bourses. A series of Vietnamese companies have successfully listed on overseas stock exchanges[21] to raise capital and to enhance their corporate profile. More are expected to list aboard. This will probably bring more interesting issues and challenges, and dispute resolution will certainly be one of them.


In general, current legislation appears to be fairly ‘arbitration-friendly’ towards ICDs. The practice supports this view; however, limitations on the enforcement of arbitral awards and the arbitration agreement which affect the arbitrability of ICDs remain. Arbitration, with its own strengths and weaknesses, should not be regarded as a threat to the jurisdiction or power of local courts. Rather it is a reliable method of dispute resolution that company owners can trust. It is a solid way to deal with disputes and is a workable alternative to the courts.

[1] No. 54/2010/QH12 dated 17 June 2010

[2] See, March 2006

[3] Civil Procedures Code No. 92/2015/QH13 dated 25 November 2015 (“CPC”).

[4] Article 30.4 of the CPC.

[5] Resolution No. 03/2012/NQ-HDTP of the Judges’ Council of the Supreme People’s Court dated 03 December 2012 (“Resolution 03”).

[6] Commercial Law No. 36/2005/QH11 dated 14 June 2005 (“CL”).

[7] Article 3.1 of the CL defines commercial activities as “activities for the purpose of generating profits, including sale and purchase of goods, provision of services, investment, commercial promotion, and other activities for the profit purpose”.

[8] Investment Law 61/2020/QH14 dated 17 June 2020 (“IL”).

[9] Article 14.2 of the IL.

[10]  The difference between the terms ‘foreign arbitration’ and ‘international arbitration’ isn’t explained.

[11] Article 14.3 of the IL.

[12] Article 5.1 of the LCA.

[13] Article 2 of the LCA.

[14] Decree 63/2011/ND-CP of the Government dated 28 July 2011 guiding the implementation of the Law on Commercial Arbitration.

[15] This may not always be true, especially in the context of a public JSC.

[16] Article 16 of the LCA as amended by Article 7 of Resolution 01.

[17] Enterprises Law No. 59/2020/QH14 dated 17 June 2020 (“EL”).

[18] Decision 116/2020/QD-BTC of the Ministry of Finance dated 31 December 2020 (“Decision 116”).

[19] Article 69.1 of the LCA.

[20] Under article 68 of the LCA, an arbitral award can be revoked on the grounds that (i) there is no arbitration agreement or the arbitration agreement is invalid, (ii), the composition of the arbitral tribunal or the arbitration proceedings was not consistent with the agreement between the parties or the LCA, (iii) the dispute is not within the jurisdiction of arbitration, (iv) the evidence provided by the parties on which the arbitration council bases its decision to issue the award is false, or (v) the award contravenes the fundamental principles of Vietnamese law.

[21] Such as VNG corporation, Ti Ki Trading One Member Company Limited, Vietnam Manufacturing & Export Processing Company Limited, Vietnam Holdings Company Limited, VinaCapital Fund Management Joint Stock Company, and XP Power (Vietnam) Co., Ltd; etc.


This article was updated in June 2022 by Do Hong Minh, and it also appeared on Mondaq in July 2022.


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