Disputes between foreign investors and Vietnamese partners in joint ventures — how to handle

Joint ventures are a popular investment vehicle for foreign investors in Vietnam: one side contributes capital, technology and markets; the other contributes local knowledge, relationships and execution capacity. Yet this “dual DNA” also makes joint-venture disputes among the most complex investment disputes — commercial in nature, with foreign elements, and intertwined with corporate governance. This article analyzes the typical categories of disputes and the proper resolution roadmap under current Vietnamese law.

1. The most common types of joint-venture disputes

In practice, disputes between foreign investors and Vietnamese partners usually fall into the following groups:

Capital contribution disputes: one party is late in contributing or fails to contribute the committed capital in full; disagreement over valuation of in-kind contributions (machinery, land use rights, brands); disputes over timing and method of contribution. This is the most common “root cause,” as it directly affects ownership ratios and voting rights.

Management and operation disputes: disagreement over appointing the General Director or chief accountant; one party alleges abuse of power or lack of financial transparency by the other; deadlock in the Members’ Council/Board of Directors when the charter requires supermajority voting for key decisions.

Profit distribution disputes: disagreement over dividend policy, fund appropriations, or one party wanting to reinvest while the other wants distributions.

Capital transfer disputes: the Vietnamese partner wants to sell its stake to a third party while the foreign investor invokes pre-emptive rights, or vice versa. Arguments over the “market” transfer price also arise frequently.

Joint-venture termination disputes: one party wants to exit while the other refuses to cooperate on valuation; or disagreement over asset liquidation, debt settlement and distribution of remaining assets.

2. The legal framework: where are joint-venture disputes resolved?

The Law on Investment 2025 (No. 143/2025/QH15, effective March 1, 2026, replacing the 2020 Law on Investment) provides in Article 13 for the settlement of disputes in business investment activities. The guiding principle: negotiation and mediation first; failing that, disputes between investors where at least one party is a foreign investor (exactly the joint-venture case) may be resolved by one of the following:

• A Vietnamese court;
• Vietnamese arbitration;
• Foreign arbitration;
• International arbitration;
• Arbitration established as agreed by the disputing parties.

The law thus gives joint-venture parties a very wide choice of dispute resolution forum — but that choice only works if it is “locked in” through a properly drafted dispute resolution clause from the outset (see our article on dispute resolution clauses in joint-venture contracts).

The Law on Commercial Arbitration 2010 (No. 54/2010/QH12, effective July 1, 2011) is the key statute when parties choose arbitration. Three points are essential:

• An arbitration agreement is mandatory (Article 5): without one, the arbitral tribunal has no jurisdiction and the dispute belongs to the courts;
• The arbitration agreement must be in writing (Article 16): oral agreements or inferred consent are invalid;
• The limitation period for arbitration claims is 2 years (Article 33) from the date lawful rights and interests were infringed, unless a specialized law provides otherwise. Once expired, the right to seek arbitration is lost — while the limitation period for bringing a contract dispute to court under the 2015 Civil Code is 3 years (Article 429).

3. The joint-venture dispute roadmap: 4 practical steps

Step 1 — Direct negotiation. This is not only in the spirit of Article 13 of the Law on Investment 2025 but also the cheapest route. Negotiate at the highest leadership level of both sides, with minutes recording agreed points and outstanding disagreements. Many contribution and profit disputes settle here if parties act in good faith with transparent figures.

Step 2 — Mediation. Commercial mediation under Decree No. 22/2017/ND-CP with a commercial mediator, or mediation at an arbitration center (VIAC has its own mediation rules). Advantages: confidentiality, preservation of the business relationship, and a successful settlement can be recognized by the court.

Step 3 — Arbitration or court. Depending on the signed clause:

• With a valid arbitration agreement: file a request for arbitration (mind the 2-year limitation). Joint-venture parties commonly choose VIAC (Vietnam International Arbitration Centre) or international arbitration such as SIAC or HKIAC where the contract allows.
• Without an arbitration agreement: sue in the competent People’s Court. Note the 3-year limitation period for contract disputes.

Step 4 — Enforcement. An arbitral award is final; parties may not appeal. If one party does not comply voluntarily, the other may request civil judgment enforcement. Foreign arbitral awards are recognized and enforced in Vietnam under the Civil Procedure Code, provided Vietnam and the award’s seat country are both parties to the relevant treaty (such as the 1958 New York Convention).

4. Prevention from day one: 5 “must-have” clauses in the joint-venture contract

Experience shows that the cost of carefully drafting a dispute clause is a tiny fraction of the cost of one lawsuit. The joint-venture contract/agreement should clearly address:

1. Deadlock mechanisms: what happens when the Members’ Council cannot reach the required voting threshold — mandatory mediation, buy-sell/shotgun rights, or dissolution;
2. Pre-emptive rights on capital transfers, with an independent valuation method;
3. Multi-tier dispute resolution (negotiation → mediation → arbitration), specifying the arbitral institution, number of arbitrators, language and seat;
4. Governing law: for contracts with foreign elements, parties may agree on the applicable law if not contrary to the fundamental principles of Vietnamese law;
5. Information transparency duties: each party’s right to access books and periodic financial reports — the best “vaccine” against governance disputes.

5. Special notes for foreign investors

Do not confuse joint-venture disputes with international investment disputes (ISDS). A dispute between a foreign investor and a Vietnamese partner is a dispute between investors (Article 13(3) of the Law on Investment 2025), not an investor-versus-state dispute. ISDS mechanisms under the CPTPP or investment protection treaties only apply when the respondent is the Vietnamese state — not to sue a joint-venture partner.

Beware the limitation “trap.” Many foreign investors, used to longer limitation periods at home, miss Vietnam’s 2-year arbitration limitation. At the first sign of breach, consult counsel promptly to calculate the limitation start date correctly.

Collect evidence early. Meeting minutes, emails, financial reports, contribution vouchers — all are critical evidence. In arbitration, the party that proves its case with documents prevails.

In short, a joint-venture dispute is not a “death sentence” for the investment if handled along the right roadmap: good-faith negotiation first, mediation when needed, and arbitration or court only when soft measures are exhausted. Even more important is prevention from day one through a carefully drafted joint-venture contract.

Prepared by the FLAW AI Legal Council. Content has passed internal QA panel review (Oct 15, 2026) and is pending approval before publication. General information only; not a substitute for legal advice on a specific matter.