Under the law of Vietnam, in case a contract between a Vietnamese and a foreigner (i) selects Vietnamese law as its governing law for the whole contract, (ii) selects a foreign seated arbitration as the dispute resolution mechanism, but (iii) fails to specify the governing law of the arbitration agreement, it is likely that the law of the country where the arbitration is seated (not Vietnamese law) will be the governing law to such arbitration agreement. This is because:

Similar to the separability doctrine, which is widely accepted in the practice of international commercial arbitration, the Law on Commercial Arbitration 2010 also provides that the arbitration agreement is "completely independent" from the main contract. Accordingly, the governing law of the main contract should not automatically be the governing law of the arbitration agreement. However, the Law on Commercial Arbitration 2010 does not clarify what is the governing law of the arbitration agreement in the case illustrated above. This is different from common law position where the governing law of the contract will be considered as governing law of the arbitration agreement unless there is evidence to the contrary; and
On the other hand, the Civil Code 2015 provides that regarding a contract where there is a foreign party and where the parties have not agreed on the applicable law, the law of the country having the closest connection with such contract will apply. Arguably, the country where the arbitration is seated (Seat Country) is the country that has the closest connection to the arbitration agreement. Therefore, the law of the Seat Country should be the governing law of said arbitration agreement.

With that being said, if the arbitration agreement is considered as a service contract where the tribunal provides service to the parties to the dispute, then under Civil Code 2015, the country where the service provider is established (Tribunal Country), is considered as the country which has the closest connection to the arbitration agreement unless otherwise proved. Therefore, in case the Seat Country is different from the Tribunal Country, either of them can be the governing law to the arbitration agreement. The outcome would depend on how the parties prove which country has the "closest connection" with the arbitration agreement.

This post is written by Le Thanh Nhat and Nguyen Quang Vu

Vietnam Business Law