When a Vietnamese company enters into a contract with a foreign party, the foreign party usually requires the contract to have an arbitration clause so that disputes arising from the contract will be settled by commercial arbitration instead of Vietnamese courts. When negotiating and drafting the arbitration clause of such contract, a Vietnamese company may need to consider the following points:

Governing law of the contract

If the governing law of the contract is Vietnamese law, then selecting arbitration centers in Vietnam may be appropriate since the arbitrators in Vietnam will likely be more familiar with Vietnamese law than arbitrators in other countries. If the governing law is a foreign law, then the Vietnamese party may consider selecting the jurisdictions whose law is more accessible from Vietnam. Based on this criteria, English law would be more favourable for Vietnamese companies since many English law textbooks are available in Vietnam or can be bought from online stores. There are more free internet sources about English law than other laws. In addition, it may easier to find UK qualified lawyers in Vietnam than lawyers from other jurisdictions.

Under Vietnamese law, the rules of interpretation of contract are mostly provided under Article 404 of the Civil Code 2015. According to this provision, the order of priority in interpreting a contract seems to be (1) “mutual intention” (ý chí chung) of the parties; (2) contract wording; and (3) each party’s intention and customary practice. In particular:

• Mutual intention has priority over contract wording, and therefore the top priority in contract interpretation. This is because according to Article 404.5, in case of conflict between the “mutual intention” of the parties and the wording used in a contract, the mutual intention of the parties will be used in order to interpret the contract.

• Unlike common law principles, under the Civil Code 2015, determining “mutual intention” of the parties is a subjective exercise (as opposed to an objective exercise using reasonable person’s standard), which requires examination of the parties’ intention before and at the time of execution and performance of the contract. Therefore, it would be difficult to determine “mutual intention” of the parties without concrete evidence of the same.