Choice of foreign arbitration in contract with Vietnamese counter-parties

Vietnam officially acceded to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards (1958 New York Convention) on 28 July 1995. Accordingly, by virtue of the 1958 New York Convention, if the parties to a dispute reside in countries, which are members of the 1958 New York Convention, then the parties should be able to refer their disputes to a foreign arbitration. In addition, Article 12.3 of the Investment Law provides that any dispute to which one disputing party is a foreign investor or a foreign invested company, or any dispute between foreign investors could be submitted to, among others, a foreign arbitration or an international arbitration. Outside the context of the 1958 New York Convention and Article 12.3 of the Investment Law, there is no express provision under Vietnamese law, which generally allows disputes with a Vietnamese party or relating to assets in Vietnam to be submitted to foreign arbitration.

Vietnam Business Law Blog

On 28 December 2018, the State Bank of Vietnam (SBV) issued Circular 42 amending current foreign currency borrowing regulations (in Circular 24 of the SBV dated 8 December 2015, as amended from time to time (Circular 24/2015)) (Circular 42/2018). Circular 42/2018 will take effect from 1 January 2019.

Changes to permitted lending purpose

Vietnamese banks only lend in foreign currency for a few limited purposes. Circular 42/2018 has following changes to these purposes: