Short answer: Article 68.2(dd) of the Law on Commercial Arbitration 2010 — an award “contrary to the fundamental principles of Vietnamese law” — is the vaguest yet most frequently invoked annulment ground. Courts may annul only when two cumulative conditions are met under the sole existing guidance (Article 14.2(dd) of Resolution 01/2014/NQ-HDTP): (i) the award is shown to contradict one or more specific fundamental principles relevant to resolving the dispute, which the tribunal failed to observe; and (ii) the award seriously infringes State interests or the lawful rights and interests of the parties or third parties. Missing either condition means no annulment. The key boundary: “violating the law” is not the same as “contrary to fundamental principles”.
1. The place of this ground in the annulment system
This is the only “public policy safety net” among the award-annulment grounds — letting courts intervene for the common good, beyond purely procedural or jurisdictional defects. That very safety-net character makes it both important and prone to abuse as a generic pretext to attack any unfavorable award.
On “fundamental principles”: Article 4 of the Civil Code 2015 (No. 91/2015/QH13) sets out the fundamental principles of civil law. Precedent 42/2021/AL of the Supreme People Court Judges Council identifies fundamental principles as those recorded in the Constitution and key codes — this article approaches that precedent only through secondary sources and does not quote details without reading the full text. Note: the law has no closed list of “fundamental principles” — any enumeration is illustrative only, with courts interpreting case by case.
2. The “double filter”: two conditions must both be satisfied
Under Article 14.2(dd) of Resolution 01/2014/NQ-HDTP (effective 02/7/2014, still in force):
- Condition 1: the applicant must show the award contradicts one or more specific fundamental principles that the tribunal failed to observe when rendering the award — the principle must be relevant to resolving the dispute, not an abstract generality.
- Condition 2: the award seriously infringes State interests or the lawful rights and interests of a party or parties, or third parties.
Resolution 01/2014 gives two illustrations: (1) the parties had lawfully and voluntarily agreed, but the tribunal failed to record it in the award — breaching the principle of free, voluntary commitment and agreement (Article 11 of the Commercial Law 2005, Article 4 of the Civil Code); (2) the award was made under coercion, fraud, threat or bribery — breaching the principle that arbitrators be independent, objective and impartial (Article 4.2 of the Law on Commercial Arbitration).
3. The key boundary: illegality is not breach of fundamental principles
Misapplying an ordinary legal rule — e.g. miscalculating interest — does not equal breaching fundamental principles. Illustration: Decision 1160/2021/QD-PQTT dated 24/11/2021 of the Ho Chi Minh City People Court rejected a set-aside application in a VAT-in-transfer-price dispute — the court held it was merely a contractual-content dispute, not a fundamental-principles issue. This article cites only the decision number, date and issuing body, without inferring further facts.
A worrying practice: the ground is invoked frequently, yet many annulment decisions fail to specify which principle was breached — criticized as unpersuasive; “contrary to fundamental principles” is often loosely equated with “contrary to any legal provision” (even sub-statutory instruments) — against the spirit of Resolution 01/2014. More concerning: decisions granting or refusing annulment are final (Article 71.10 of the Law on Commercial Arbitration) — misapplication of this ground is hard to correct. That is the biggest risk of the vaguest ground.
4. Proof checklist for both sides
The applicant must: identify a specific fundamental principle (no generic invocation); prove its relevance to resolving the dispute; prove serious infringement — with documents and evidence under Articles 69 and 70 of the Law on Commercial Arbitration. The respondent argues strictly along the Resolution 01/2014 “double filter”: either the invoked principle is unspecific/irrelevant, or there is no serious infringement — stressing the “illegality is not breach of fundamental principles” boundary.
Time limit for set-aside applications is 30 days from receipt of the arbitral award (Article 69). On jurisdiction: Law 81/2025/QH15 amended Article 7.3 of the Law on Commercial Arbitration on the jurisdiction of certain provincial People Courts over set-aside applications (effective 01/7/2025) — the specific court list is set by the National Assembly Standing Committee and is not enumerated here absent verification.
This article examines exactly one ground; the general set-aside framework is covered elsewhere. Practical advice: stick to the language of Resolution 01/2014 when drafting set-aside or opposition filings — and because annulment decisions are final, prepare thoroughly from the start.
Frequently asked questions
Does a tribunal misapplying the law trigger annulment for breach of fundamental principles? Not automatically. Misapplying an ordinary rule differs from breaching fundamental principles — the Resolution 01/2014 “double filter” must be passed.
Where are “fundamental principles” defined? Article 4 of the Civil Code 2015 sets out the fundamental principles of civil law; Precedent 42/2021/AL identifies them as principles in the Constitution and key codes. There is no closed list.
Can an award-annulment decision be appealed? No — decisions granting or refusing annulment are final (Article 71.10 of the Law on Commercial Arbitration).
Facing an application to set aside an arbitral award, or need to oppose one invoking the “fundamental principles” ground? 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.