Most FDI contracts in Vietnam live in two languages, and most parties discover the two texts differ only when a dispute has erupted. This article answers the central question — which text wins — across three situations: with a priority clause, without one, and where the divergence is a mistranslated legal term.
With and without a priority clause: two different worlds
Where the contract states an English or Vietnamese text is the prevailing language, the dispute forum applies the prevailing text to interpret the contested clause, and the other text is only a reference. Without such a clause, both texts rank equally and the adjudicator must interpret the contract by the principles in Article 404 of Civil Code 91/2015/QH13: read the clause within the contract as a whole, by the purpose the parties pursued and by custom; an ambiguous clause is commonly construed against the party that drafted it. Separately, documents filed with Vietnamese state authorities (enterprise and investment registration) must be in Vietnamese, so the Vietnamese version of those documents has its own legal life regardless of any priority clause.
Mistranslated legal terms: who bears it and how to prevent it
A mistranslated term — for example rendering ‘best efforts’ as a guaranteed-result duty, or confusing ‘indemnify’ with ‘compensate’ — is in principle the risk of the party that supplied the translation or drafted the clause, and adjudicators will compare the parties’ intent across the whole negotiation record. Prevention lies in process: draft from a single source text, translate with legally trained translators, back-translate the money and sanctions clauses, and write the priority clause from the start. The cost of that process is far below a dispute where both sides win on their own language version.
Frequently asked questions
If a bilingual contract has two different translations, which version is used?
Use the text the contract designates as prevailing: the priority-language clause is an effective agreement and the forum will interpret on that text. If the two texts were signed as independent originals and they seriously conflict on a core clause, the parties may need a negotiated correction document or ask the forum to interpret by common intent. The only certain prevention is designating one prevailing text from the start.
Which language should be stated as prevailing in the contract?
For English–Vietnamese FDI contracts, safe practice is to name one prevailing text (many deals choose English as the negotiation original), adding that ‘the other text is for reference and for Vietnamese procedures only’. For documents that must be registered with state authorities, a Vietnamese text mandatorily exists with independent administrative effect — a priority clause cannot erase that fact, so the two document layers should be clearly separated in the contract.
If no prevailing language is stated, how does the court handle it?
The court or tribunal interprets under Article 404 of Civil Code 91/2015/QH13: weighing the whole contract, the transaction’s purpose, the negotiation history and custom; an unclear clause is construed against its drafter. Both translations are treated as equal evidence, and the side that proves the common intent sits closer to its text wins the contested clause. The outcome is therefore hard to predict — which is exactly the cost of omitting a priority clause.
Who bears liability if a mistranslated legal term causes a dispute?
The general principle: the risk falls on the party that supplied the faulty translation or issued the template containing the clause, because ambiguous clauses tend to be construed against the drafter. If the error came from a third-party translation vendor, the hiring party may claim compensation from that vendor under the translation services contract, but toward the contract counterparty the hiring party still bears the direct consequence and must arrange recovery itself.
A two-line priority-language clause can save a two-year dispute. Every operating bilingual FDI contract lacking one should add it by amendment at the next revision — before the two translations get a chance to disagree inside a clause that carries money.
This article has been quality-reviewed by the FLAW AI Legal Council
