Vietnam has been attracting many foreign organizations and individuals who come to invest, study, work, and live. During their stay in Vietnam, foreign organizations and individuals can engage in a number of civil transactions with each other in Vietnam, including transactions such as buying and selling, leasing, lending, and labor… giving rise to debt between the parties due to one party’s failure to perform the payment obligation. One of the concerns is that when there is a dispute over debt payment between the foreign parties, foreign organizations and individuals often wonder whether they can ask a Court in Vietnam to resolve the dispute.

In this article, BLawyers Vietnam presents the provisions of Vietnamese law that address the jurisdiction of Vietnamese courts to settle disputes arising from debts among foreign organizations and individuals in Vietnam by answering the following three questions:

1. Are civil relations between foreign organizations and individuals in Vietnam considered civil relations with foreign elements?

According to Vietnamese law, civil relations involving foreign elements are civil relations in one of the following cases:

1. 1. 1. At least one of the participating parties is a foreign individual or foreign legal entity;
      2. The participating parties are all Vietnamese citizens and Vietnamese legal entities, but the establishment, amendment, performance, or termination of such relationship occurs in a foreign country; and
      3. The involved parties are all Vietnamese citizens and Vietnamese legal entities, but the subject matter of such civil relations is abroad.

From the above, it can be seen that civil relations in which the parties involved are all foreign organizations and individuals are also determined as civil relations with foreign elements.

2. What does Vietnamese law stipulate about the jurisdiction of Vietnamese courts over civil disputes involving foreign elements?

In regard to the settlement of civil disputes involving foreign elements, the scope of jurisdiction of the Vietnamese Courts is divided into 02 types: exclusive jurisdiction and common jurisdiction.

Accordingly, Vietnamese courts have common jurisdiction over a number of disputes specified in the Civil Procedure Code, including the following cases:

1. 1. 1. Defendant is an individual who resides, does business, or lives permanently in Vietnam;
      2. Defendant is an agency or organization with its head office based in Vietnam;
      3. The defendant is an agency or organization having a branch or representative office in Vietnam, if disputes are related to the operations of branch or representative office of such agency or organization in Vietnam;
      4. Defendant has property in the Vietnamese territory;
      5. Disputes over civil relations in which the establishment, amendment or termination of such relation occurs in Vietnam, or of which the subject matter is the property located in the Vietnamese territory or the work performed in the territory of Vietnam.

The following civil disputes involving foreign elements are under the exclusive jurisdiction of Vietnamese courts:

1. 1. 1. Disputes related to the rights to immovable property located in the territory of Vietnam;
      2. Disputes in which the parties have the right to choose a Vietnamese court to settle the dispute under Vietnamese law or under international treaties in which Vietnam is a member and the parties agree to choose a Vietnamese Court.

According to prevailing Vietnamese law, the Vietnamese Court will not settle a civil dispute with foreign elements if such dispute is under the common jurisdiction of the Vietnamese Court but at the same time (1) is not under the exclusive jurisdiction of the Vietnamese Courts and (2) falls into the exclusive jurisdiction of the relevant foreign courts. In this case, the Vietnamese Court will return the petition dossier.

3. Do Vietnamese Courts have jurisdiction over the settling of disputes arising from debts among foreign parties?

From the regulations described in question 2 above, it can be seen that the Vietnamese Courts can only settle disputes arising from debts among foreign parties in one of the following cases:

1. 1. 1. Under the rules of International Justice, disputing parties are given the right to choose Vietnamese Courts to resolve their disputes and they have chosen to do so.➔ Vietnamese Courts have exclusive jurisdiction.
      2. Such disputes are under the common jurisdiction of the Vietnamese Courts and are not under the exclusive jurisdiction of the relevant foreign Courts.

The above is not official advice from BLawyers Vietnam’s lawyers. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 27 July 2023

Writers: Trinh Nguyen and Uyen Tran