The Investment Law 2014 introduces major changes to the ability to choose foreign arbitration as the dispute resolution forum for transactions involving a foreign-invested enterprise in Vietnam. In particular, from 1 July 2015, only transactions with a foreign-invested enterprise (or more correctly a foreign economic organisation) 51% or more of which is directly or indirectly owned by foreign investors could be referred to foreign arbitration for dispute settlement. Under the Investment Law 2005, transactions with any company with any level of foreign ownership (not necessarily more than 51%) could be referred to foreign arbitration for dispute settlement.

There are two potential consequences, among other things, arising from this change:

A foreign arbitration clause in a contract which is entered into before 1 July 2015 and involves a foreign invested enterprise with less than 51% foreign ownership is no longer valid after 1 July 2015; and
A foreign arbitration clause in a contract which is entered into after 1 July 2015 and involves a foreign invested enterprise with 51% or more foreign ownership should have a fall back dispute resolution forum if the level of foreign ownership in such enterprise is reduced to less than 51%.

Vietnam Business Law