In short: there is no always-right answer to AAA/ICDR versus VIAC in contracts with US partners — it turns on four factors: (1) cost (US arbitration costs multiples more); (2) neutrality of the seat and arbitrators; (3) enforceability of the award — both the US and Vietnam are New York Convention 1958 members, so awards from either forum enforce in the other; (4) the governing law of the contract and the law of the arbitral seat. This article unpacks each factor so businesses negotiate the most favourable arbitration clause — because that clause is negotiated only ONCE, at signing.
What the ICDR is and how it differs from the AAA
The ICDR (International Centre for Dispute Resolution) is the international arm of the AAA (American Arbitration Association) — the largest US arbitral institution. Where a dispute has an international element (one side a Vietnamese business), the ICDR International Arbitration Rules apply, closer to international practice than the AAA’s domestic rules. The ICDR’s strengths: arbitrators steeped in US commerce and US-style discovery — both an advantage (thorough evidence) and a drawback (cost, duration) for Vietnamese businesses unaccustomed to it.
VIAC: the cost advantage and a conditional “home court”
VIAC (Vietnam International Arbitration Centre) charges a fraction of ICDR fees — on a multi-million-dollar dispute, the gap in tribunal and counsel fees can reach hundreds of thousands of dollars. VIAC procedure is lean, with little US-style discovery, suiting Vietnamese businesses. But “home court” only helps with a well-drafted clause: the seat in Vietnam, English (or bilingual) language, and a three-member tribunal with each side appointing one arbitrator. Do not assume VIAC always wins — if enforcement assets sit mainly in the US, a VIAC award still enforces under the New York Convention, but US-court recognition adds time and cost.
Governing law: separate the three layers
A proper arbitration clause separates three layers: (1) the governing law of the contract — US-counterparty contracts often pick New York or California law; Vietnamese businesses should consider a neutral law (e.g. English law) if negotiable; (2) the law of the arbitration agreement and procedure — usually the law of the seat; (3) the enforcement law — the New York Convention 1958. The common mistake: writing only “disputes resolved at VIAC” without a seat and governing law — when disputes erupt, just establishing the applicable law costs a round of argument.
The four-factor decision matrix
Choose the ICDR when: the amount at stake is large, thorough discovery is needed, enforcement assets sit mainly in the US, and the US partner flatly refuses a non-US forum. Choose VIAC when: cost control matters, the dispute has Vietnamese technical elements (construction, energy…), and a neutral seat is negotiable. A middle path many Vietnam–US contracts use: SIAC/HKIAC arbitration seated in Singapore/Hong Kong — neutral, mid-range cost, awards enforcing well in both countries. Whichever is chosen, lock the arbitration clause BEFORE signing the main contract — once a dispute exists, the party holding the advantage never agrees to switch forums.
Frequently Asked Questions
- How do the ICDR and AAA differ?
- The ICDR is the AAA’s international arm, applying International Arbitration Rules to cross-border disputes — closer to international practice than the AAA’s domestic rules.
- Is a VIAC award enforceable in the US?
- Yes. Both Vietnam and the US are members of the 1958 New York Convention on the recognition and enforcement of foreign arbitral awards. Recognition in US courts takes additional time and cost.
- How much more expensive is US arbitration?
- Arbitrator and counsel fees — especially US-style discovery — make total costs multiples of VIAC’s. On a multi-million-dollar dispute the gap can reach hundreds of thousands of dollars.
- Should the arbitration clause state the governing law?
- It must state all three layers: the contract’s governing law, the arbitral procedure law (per the seat), and the enforcement mechanism (New York Convention). Omitting the seat and governing law is the most common mistake.
This article has been quality-reviewed by the FLAW AI Legal Council