Governing Law for Foreign-Related JV Contracts: Vietnamese or Foreign Law? is the question that determines how an entire joint venture contract dispute will be resolved: which law governs the mandatory parts, which parts the parties may choose for themselves, and where the limits of that choice lie. This article analyses governing law foreign-related joint venture contract under current Vietnamese law at the time of writing, grounded in primary sources and real joint venture practice.
Current Legal Framework
Civil Code 91/2015/QH13 lets a foreign-related contract choose foreign governing law, except where Vietnamese law applies mandatorily, such as rules on form, immovable property in Vietnam and mandatory public-order provisions; absent a choice, the law of the most closely connected country applies.
The internal affairs of a venture incorporated in Vietnam, including legal personality, governance structure, membership rights and enterprise registration, always sit under Law on Enterprises 59/2020/QH14 and Investment Law 143/2025/QH15, whatever law the venture contract chooses.
A Vietnamese court hearing a foreign-related dispute applies the chosen law if the choice is valid and the foreign law’s content is proven; if that content cannot be proven, the court may apply Vietnamese law under procedural rules.
Practical Analysis and Risks
Choosing foreign law for the venture contract offers the investor neutrality and a familiar case-law system, but creates the cost of proving that law, foreign-law experts before a Vietnamese forum, and the risk of clauses failing where they touch Vietnamese mandatory rules.
The two-layer structure is the most practical: Vietnamese law for all company and investment matters, the chosen law only for purely contractual duties between the partners such as confidentiality, non-compete and indemnities; the boundary must be written clearly so the forum never has to guess.
Foreign law performs better with an international arbitral forum, because the tribunal is used to applying it and is not bound like a Vietnamese court by procedures for proving foreign law content.
A Binh Thuan energy venture chose Singapore law for its shareholders’ agreement while keeping Vietnamese law for the charter; when an indemnity dispute reached arbitration, the tribunal applied Singapore law to the indemnity exactly as agreed, while company resolutions were still tested under Vietnamese enterprise law, with no clash because the layers were separated from the start.
Avoid choosing the law of a third country with which neither party has a real connection if the forum is a Vietnamese court; a weak connection raises the risk of refusal and of heavy cost proving an unfamiliar law.
A bilingual contract needs a prevailing-language clause; many governing-law fights actually begin with the two language versions reading the same clause differently, before any question of law is even reached.
Action Checklist for Investors
- Separate company and investment matters (mandatory Vietnamese law) from contract duties
- Align governing law with the chosen dispute forum
- Budget for proving foreign law content in a dispute
- Screen contract clauses against Vietnamese mandatory rules
- Fix the contract language and which translation prevails
Frequently Asked Questions
For a foreign-related JV contract, should Vietnamese or foreign law be chosen?
Foreign law can govern the contractual duties if the choice does not collide with Vietnamese mandatory rules, but internal governance, membership status and investment procedures of a Vietnam-incorporated company always follow Vietnamese law. The practical answer is a two-layer model rather than one law for the whole relationship.
Will a Vietnamese court recognise a choice of foreign law?
A Vietnamese court recognises a valid choice of law, but the party invoking foreign law must prove its content through documents and expert opinion; failing that, the court may apply Vietnamese law. The outcome also must not offend Vietnamese public order.
What are the risks of choosing foreign law?
Risks include the cost of proving foreign law, clauses failing where they conflict with Vietnamese mandatory rules, and uncertainty when a Vietnamese forum interprets foreign legal concepts. The risks drop sharply where foreign law covers only purely contractual duties and the forum is international arbitration.
Additional practical note 1 on governing law foreign-related joint venture contract: before signing, investors should reconcile the agreed position against the company’s current charter, its investment registration file and commitments to third parties, and keep that reconciliation in the deal file so that when the investment registration authority, a bank or auditors ask for an explanation, the company has a consistent record instead of having to reconstruct a past decision.
This article has been quality-reviewed by the FLAW AI Legal Council
