Short answer: Yes. Vietnamese law does not bar state-owned enterprises (SOEs) from arbitration: disputes arising from an SOE commercial activity fall within arbitral jurisdiction under Article 2 of the Law on Commercial Arbitration 2010, with the sole condition of a valid arbitration agreement (Article 5). But contracting with an SOE is not like contracting with a private company: six points must be locked into the arbitration clause — signatory authority, institution, seat, governing law, language, enforcement/security mechanism — under the new state-capital management framework of Law 68/2025/QH15 (passed 14/6/2025, effective 01/8/2025, replacing Law 69/2014/QH13 — Law 69/2014 is no longer cited as current law).
The illustrative scenario in this article is hypothetical: a contractor signs an EPC contract with a state-owned group; when delay and penalty disputes erupt, a thin arbitration clause costs the contractor months just arguing over signatory authority and the arbitral seat.
1. The new framework: SOEs operate like ordinary merchants — but internal approvals remain a risk
Law 68/2025/QH15 on management and investment of state capital in enterprises sets a new principle: the State exercises rights and obligations proportional to its ownership like any other investor; SOEs operate under market mechanisms, with autonomy and self-responsibility. In commercial dealings, an SOE is thus treated as an ordinary merchant — the basis for arbitral jurisdiction.
“Ordinary” does not mean “simple”, however: every major SOE decision still passes through internal approval — the Members Council/Chairperson, the ownership representative agency — under Law 68/2025 and the company charter. The detailed approval hierarchy must be checked against the original text of Law 68/2025; this article states only the general framework.
2. No default “immunity” for SOEs
Jurisdictional immunity is a privilege of the State in public acts, not automatically extended to SOEs in commercial transactions (distinguishing acta jure imperii from acta jure gestionis). When an SOE signs an arbitration agreement, that act is understood as waiving immunity for disputes arising from that agreement. This article presents only the general principle, without asserting Vietnam membership status regarding the 2004 UN Convention on Jurisdictional Immunities.
3. Six-point checklist for arbitration clauses with SOEs
(1) Signatory authority — the biggest risk point. Under Article 18 of the Law on Commercial Arbitration, an arbitration agreement is void if the person concluding it lacked authority. With SOEs, check three layers: (i) whether the signatory is the legal representative; (ii) whether the transaction falls within the approval authority of the Members Council/Chairperson/ownership representative agency under Law 68/2025 and the charter; (iii) whether the authorization scope covers choosing a dispute-resolution method. Request written confirmation of authority/internal approval during negotiations. Note: an internal restriction like “all disputes must go to court” does not automatically void an agreement signed by the legal representative — but counterparties should still verify to avoid prolonged fights.
(2) Arbitral institution: VIAC (lower cost, awards enforced directly through civil judgment enforcement) versus SIAC/HKIAC/ICC (neutral, deep experience with complex disputes). For information-sensitive SOEs, the non-public nature of arbitral proceedings is a major advantage.
(3) Seat: a Vietnam seat means a domestic award, with Vietnamese courts holding set-aside power under Article 68; a foreign seat means a foreign award that must go through recognition in Vietnam (New York Convention 1958 + Civil Procedure Code Articles 451–461) — time-consuming and carrying refusal risk.
(4) Governing law: agree it expressly in the clause; if left blank, the tribunal decides the most appropriate law (Article 14.2) — with SOEs, most likely Vietnamese law.
(5) Language: agree Vietnamese, English or bilingual expressly from the start.
(6) Enforcement/security mechanism: consider a payment guarantee or performance security clause in the underlying contract — because enforcement against SOEs has practical peculiarities (see section 4).
The arbitration agreement form must comply with Article 16 of the Law on Commercial Arbitration (written form). Also, dispute types outside arbitration: land disputes involving SOEs (land allocation, lease, recovery) are not disputes arising from commercial activity and fall outside arbitral jurisdiction (Article 2) — draw the line clearly from the start.
4. Enforcing awards against SOEs: practical realities
Domestic arbitral awards are final and enforced through civil judgment enforcement bodies (Law on Civil Judgment Enforcement 106/2025/QH15 — check the detailed effective date before citing). Three practical points to anticipate:
- State-capital-linked assets: the SOE payment capacity and internal disbursement approval mechanics; the scope of seizable assets under Law 106/2025 needs a full-text check before any conclusion.
- Slow voluntary compliance: decisions awaiting the ownership representative agency opinion can delay voluntary enforcement — which is why checklist point (6) recommends security provisions in the original contract.
- Companion risks requiring due diligence: (i) corruption — contracts tainted by corruption may be declared void under Article 123 of the Civil Code and handled under the Anti-Corruption Law 2018 (check amendment status before citing); (ii) bidding — many SOE contracts follow bidding, and bidding-process violations (Bidding Law 22/2023/QH15 and amending laws) affect contract validity, indirectly affecting the arbitration agreement; (iii) investment policy approval for state-capital projects (Investment Law 143/2025).
On court support jurisdiction for arbitration: Law 81/2025/QH15 amended Article 7.3 of the Law on Commercial Arbitration — this update applies generally, including disputes with an SOE party.
Frequently asked questions
Can SOE disputes go to arbitration? Yes — the law does not prohibit it; disputes from SOE commercial activity fall within arbitral jurisdiction (Article 2), requiring only a valid arbitration agreement (Article 5).
Do SOEs enjoy jurisdictional immunity? No default immunity in commercial transactions; signing an arbitration agreement is understood as waiving immunity for that dispute.
What is the first thing to check when signing with an SOE? Signatory authority and internal approvals — an arbitration agreement is void if concluded by an unauthorized person (Article 18).
About to sign a major contract with a state-owned enterprise and need a shock-proof arbitration clause, or already in a dispute with an SOE? Reach us via the Contact page of FLAT Law Firm.
The information in this article is for reference only and does not constitute legal advice.
The legal content of this article is reviewed by the AI Legal Council of FLAT and submitted to the owner for approval before publication; it is not an opinion of a licensed lawyer and does not replace legal advice for specific cases.