A client recently asked us to advise on a dispute arising from a joint venture gone wrong. The arbitration clause in the contract named no institution. When the relationship collapsed, both parties spent three months and significant legal fees just agreeing on where and how to arbitrate — before a single substantive issue was heard.

That is an avoidable cost. A well-drafted arbitration clause resolves these procedural questions upfront, when the parties are still aligned. This article explains how to draft one that works under Vietnam's Law on Commercial Arbitration 2010 and the Vietnam International Arbitration Centre (VIAC) Rules on Arbitration.

What an arbitration clause does

An arbitration clause is a contractual provision that replaces court litigation with arbitration as the method for resolving disputes. Under Article 5.1 of the LCA 2010, arbitration is available only if both parties have expressly agreed to it — typically through a clause in their contract.

Without that agreement, or with an ambiguous one, either party can challenge jurisdiction, delay proceedings, or route the dispute to a Vietnamese court instead. The clause is the foundation of the entire arbitration process.

Essential terms: what must be in the clause

1. The arbitral institution

Name VIAC by its full official name. Ambiguous references — "a Vietnam arbitration body" or "the relevant arbitration centre" — give one party grounds to challenge jurisdiction or delay proceedings by disputing which institution was intended.

Under Article 43.5 of the LCA 2010, if the clause does not name an institution and the parties cannot agree when a dispute arises, the institution is chosen at the claimant's request. That effectively hands the claimant the procedural advantage of selecting the forum.

VIAC model clause — "Any dispute arising out of or in relation to this contract shall be resolved by arbitration at the Vietnam International Arbitration Centre (VIAC) in accordance with its Rules of Arbitration. The place of arbitration shall be [city and/or country]; The governing law of the contract [is/shall be] the substantive law of [·]. The language to be used in the arbitral proceedings shall be [·]."

2. The seat of arbitration

The seat is where the award is legally issued. It determines which court can supervise the proceedings, hear set-aside applications, and enforce interim measures. Parties may choose any seat — inside or outside Vietnam — but the choice has consequences that extend well beyond geography.

Foreign-seated arbitrations may make enforcement in Vietnam more complex. Vietnam-seated proceedings retain supervisory jurisdiction of the Vietnamese courts, which is relevant if either party's assets are here.

3. Governing law

Governing law determines which substantive legal framework applies when assessing the merits of a dispute. If both parties are Vietnamese entities and the contract was formed and performed in Vietnam, Vietnamese law applies — the parties have no choice under Articles 14.1, 663.2, and 664 of the Civil Code 2015. In all other cases, the parties may agree on the governing law.

If the clause is silent, the arbitral tribunal determines the applicable law under Article 14.2 of the LCA 2010. That introduces uncertainty — and the risk that the tribunal applies a law neither party expected or prepared for.

4. Language of arbitration

At VIAC, most arbitrators are proficient only in Vietnamese and English. Choosing a third language significantly narrows the available arbitrator pool and may result in a less qualified tribunal for your specific dispute.

Where a dispute has a foreign element — for example, one party is a foreign-invested enterprise (FIE) — Vietnamese law permits proceedings in a foreign language under Article 10.2 of the LCA 2010 and Article 23.2 of the VIAC Rules. If the parties cannot agree, the tribunal decides.

5. Number of arbitrators

VIAC allows one or three arbitrators. The default, under Article 11.2 of the VIAC Rules, is three. A three-member tribunal costs more and takes longer. For straightforward commercial disputes with modest values at stake, a sole arbitrator is efficient and proportionate. For complex or high-value disputes, three arbitrators reduce the risk of a poorly reasoned outcome.

Specify the number in the clause. If you leave it to the default, you may find yourself in a three-arbitrator proceeding for a dispute that did not warrant it.

Optional terms: what to consider adding

Arbitration gives parties freedom to shape the proceedings. The terms below are not required to initiate a VIAC arbitration, but each addresses a risk left open by the default rules.

Implications for businesses contracting in Vietnam

An arbitration clause is not boilerplate. It is the procedural infrastructure for the entire dispute process. The time to negotiate it is when both parties want the contract to succeed — not after it has broken down.

Three questions every contracting party should answer before signing:

If the answer to any of these is "we left it to the default," review the clause before execution. Defaults serve the party who drafted the rules — not necessarily you.

About the author

Michael Lee is a Partner at Dilinh Legal, bringing over a decade of experience from two international law firms in Vietnam. He advises on Corporate & M&A, FDI, dispute resolution, and regulatory matters. Michael was ranked by Chambers Asia and Legal500 as a leading lawyer in Corporate & M&A from 2014 to 2019. Dilinh Legal is ranked by Chambers Asia in Corporate & M&A, Dispute Resolution, and Labour & Employment, and by Legal500 in Corporate & M&A and Dispute Resolution.

This article is for general information only and does not constitute legal advice. For further information, please contact Dilinh Legal at contact@dilinh.com | +84 (28) 73000864 | dilinh.com.