Joint ventures between Chinese investors and Vietnamese partners — when the two sides disagree on strategy, profit distribution, or management rights, shareholder disputes are hard to avoid. How can parties protect their interests without “destroying” the business? This article systematizes the available legal tools.
1. Prevention First: Shareholders’ Agreement (SHA) and Charter
The most effective measure is prevention. The SHA should clearly provide for:
- Deadlock resolution: buy-sell mechanisms, partition.
- Drag-along / tag-along rights when one party wishes to sell.
- Veto rights over material decisions.
Note: an SHA is a civil agreement between parties, not a statutory instrument — its effectiveness depends on careful drafting consistent with Vietnamese law.
2. Internal Mechanisms: GMS / Members’ Council
Disputes should first go through internal governance: convening meetings and voting by ownership ratio. Minority shareholders/members are protected by law with rights to request meetings, access information, and sue to annul unlawful resolutions.
3. Capital Transfer in Deadlock
When conflicts prove irreconcilable, a party may exit:
- Pre-emptive rights: existing members/shareholders have priority to purchase transferred capital (Article 52, Enterprise Law — multi-member LLCs; Article 127 — joint-stock companies).
- Company buyback: in certain cases, the company repurchases capital contributions/shares (Article 60).
4. Commercial Arbitration vs Courts
| Criterion | Arbitration | Courts |
|---|---|---|
| Speed | Usually faster | May go through multiple levels |
| Confidentiality | High | Public hearings (with exceptions) |
| International enforcement | Under the New York Convention | Under judicial assistance treaties |
| Cost | Usually higher | Lower |
For disputes with Chinese elements, arbitration is often preferred for confidentiality and enforceability of awards in China under the New York Convention. Prerequisite: an arbitration clause must be included in contracts from the outset (Law on Commercial Arbitration 54/2010).
5. Ownership Transparency: Beneficial Owners
The amended Enterprise Law (Law 76/2025, Article 4(35)) introduces the concept of beneficial owner — in JVs with multi-tiered ownership through China, identifying the true owner becomes increasingly important in disputes.
Note: This article summarizes current regulations for reference. Specific disputes require dossier review and lawyer consultation.
Transparency: This article was researched and drafted by the AI Legal Council from original legal texts, through independent cross-checking. Content is for reference only and does not replace legal advice from a licensed lawyer.
