In the context of international integration and globalization, Vietnam has emerged as an attractive destination for foreign enterprises engaged in trade, investment, and goods distribution. However, alongside the rapid expansion of business cooperation comes the increased risk of disputes arising from delayed or non-payment by Vietnamese counterparties.
When confronted with such situations, initiating legal proceedings may become a necessary course of action. Nonetheless, debt recovery in Vietnam is not merely a legal remedy—it constitutes a comprehensive process that requires thorough preparation in terms of legal compliance, procedural understanding, and strategic planning.
Outlined below are the key issues that foreign enterprises should be fully aware of before initiating litigation in Vietnam.
1. Determining jurisdiction: Arbitration or Vietnamese courts?
If the statute of limitations for initiating a lawsuit remains valid, the first step in evaluating the potential for legal action is to review the dispute resolution clause in the contract. This will help determine the necessary procedures, estimated costs, anticipated timelines, and other relevant considerations. Similar to other jurisdictions, Vietnam currently recognizes two primary methods of dispute resolution:
Arbitration – If the contract contains an arbitration clause, the parties may refer the dispute to an international arbitration center (such as the ICC, SIAC, HKIAC, etc.) or a domestic arbitration center in Vietnam (e.g., the Vietnam International Arbitration Centre – VIAC). An arbitral award may subsequently be enforced in Vietnam through the recognition process before a Vietnamese court, in accordance with the 1958 New York Convention.
Vietnamese Courts – In the absence of a valid arbitration agreement, or if the arbitration clause is deemed unenforceable, the Vietnamese courts shall have jurisdiction to resolve the dispute if any of the following conditions are met: The Vietnamese enterprise (respondent) has its headquarters or assets located in Vietnam; The dispute arose in, was performed in, or has a substantial connection to the territory of Vietnam; The parties have not agreed on the application of foreign law or foreign jurisdiction.
2. Legal standing of foreign enterprises to initiate legal proceedings
A foreign enterprise has the full right to initiate legal proceedings in Vietnam, provided that it meets the legal capacity requirements, including: being lawfully established in its country of incorporation; possessing legal person status with a duly authorized representative signing the statement of claim; and submitting sufficient documentation evidencing its legal status, which must be duly legalized by consular authorities and translated into Vietnamese in accordance with Vietnamese law. The Vietnamese courts will not accept or process the claim if the submitted documents are incomplete or fail to meet the formal requirements concerning format, language, and evidence.
3. Initiating legal action in Vietnamese courts – key considerations for foreign enterprises
Before formally initiating proceedings before a Vietnamese court, foreign enterprises must place particular emphasis on the preparation of a complete and properly structured litigation dossier, as this is the determining factor for whether the court will accept jurisdiction over the case.
Preparation of the Lawsuit Dossier, the litigation dossier must, at a minimum, comprise the following documents: a Statement of Claim clearly specifying the plaintiff’s demands, the legal grounds on which the claim is based, and the identifying information of all parties involved; the relevant commercial contract and accompanying documents, such as contract appendices, invoices, delivery and acceptance records, and payment instruments, to establish the existence and terms of the underlying transaction; evidence of breach of payment obligations, including but not limited to demand notices, reminder emails, or debt confirmation letters (if available); documents evidencing the plaintiff’s legal status, such as the enterprise registration certificate or equivalent incorporation documents, which must be duly legalized by consular authorities and translated into Vietnamese in accordance with Vietnamese legal requirements; and evidence establishing the defendant’s residence, registered office, or assets located in Vietnam, for the purpose of determining the jurisdiction of the Vietnamese court. Failure to prepare a complete dossier or to comply with the procedural standards prescribed by Vietnamese civil procedure law may result in the court’s refusal to accept the case or cause significant delays in the adjudication process.
Language and Translation: All documents submitted to the Vietnamese court must be translated into Vietnamese and duly notarized or certified in accordance with applicable legal requirements. Minor inaccuracies in the translation—particularly concerning legal terminology, numerical data, or proper names—may result in the rejection of documents or cause delays in the litigation process. Therefore, foreign enterprises are strongly advised to engage professional legal translation service providers and to have the translated documents reviewed for legal accuracy by a qualified Vietnamese lawyer prior to submission.
Statute of Limitations – A Critical Factor: Under Vietnamese law, the statute of limitations for initiating commercial dispute litigation is three (3) years from the date the claimant knew or should have known that their rights or interests were infringed. Upon expiration of this period, the court may dismiss the claim if the defendant requests the application of the statute of limitations. Therefore, foreign enterprises should avoid undue delay in pursuing debt recovery. In practice, numerous cases have been dismissed due to failure to timely assess and initiate legal action within the prescribed limitation period.
Enforcement of Judgments in Vietnam: Even after obtaining a favorable judgment or arbitral award, foreign enterprises must initiate civil enforcement procedures to compel the debtor in Vietnam to fulfill their payment obligations. However, locating and verifying the debtor’s assets in Vietnam can be challenging without prior information. The enforcement process may incur significant costs and delays, especially if the debtor resists compliance or attempts to dissipate assets. In certain cases, it is necessary to request interim relief measures, such as asset freezing, at the outset of the litigation.
Close cooperation with local Lawyers and enforcement authorities is essential to ensure the effective execution of the judgment or award.
4. Litigation procedure in Vietnam
Once the statement of claim filed by the foreign enterprise is accepted by a competent Vietnamese court, the case enters the pre-trial preparation phase. This is a particularly critical stage, as in practice, many disputes are effectively resolved through mediation at this point without proceeding to a public trial.
Timeframe for Trial Preparation: Pursuant to Article 203 of the 2015 Civil Procedure Code of Vietnam, the standard timeframe for trial preparation is two or four months, depending on the nature of the dispute. For cases involving foreign elements—such as when a foreign company files a claim against a Vietnamese entity—the court may grant an extension of one to two additional months if the case is complex or hindered by objective obstacles. During this phase, the presiding judge is responsible for verifying the facts, collecting evidence, summoning the parties, and organizing the mediation session.
Mediation: Mediation is a mandatory procedural step unless specific exceptions apply (e.g., the claim involves prohibited acts under the law, the defendant deliberately fails to appear, or the parties request not to mediate). The Vietnamese court will organize a mediation session prior to trial. Mediation is conducted under the chairmanship of the presiding judge and court clerk, with full participation of the disputing parties and their legal representatives, if any.
Pre-Trial Conference and Evidence Disclosure: This session is held to verify the submission, access, and disclosure of evidence and also provides an opportunity for the parties to negotiate under the court’s supervision. This mechanism is flexible, cost-effective, and time-efficient, and helps preserve commercial relationships if an amicable settlement is reached.
At the trial hearing, if mediation fails or cannot be conducted, the judge shall issue a decision to proceed with a trial. Participants in the trial include the judge, the People’s Assessor, the court clerk, parties or their legal representatives, the Protector of legitimate rights and interests (if any), the procurator, and the interpreter (for foreign parties who do not speak Vietnamese).
5. Practical perspective
Debt recovery through litigation is inherently challenging for Vietnamese enterprises, and even more so for foreign companies seeking to enforce claims through judicial authorities in Vietnam. The primary difficulties stem from a lack of familiarity with Vietnamese legal provisions, and the extended duration of proceedings. Notably, the timelines stipulated by law represent ideal scenarios and do not account for delays caused by the non-cooperation of the defendant (debtor or breaching party), interruptions in service of process, translation requirements, judicial assistance procedures in the absence of a local legal representative in Vietnam, or other objective impediments.
Although initiating legal proceedings is a strong measure, foreign enterprises are advised to consider adopting softer approaches beforehand, such as: sending a formal debt reminder letter issued by a lawyer; engaging in negotiation or amicable settlement — which may prove more effective in many instances; and requesting the debtor to sign a written acknowledgment of debt or a repayment commitment — serving as solid legal grounds for future litigation. A well-calculated legal strategy that is flexible yet resolute is a key factor for successful debt recovery in the Vietnamese market, where legal and negotiation cultures operate hand-in-hand.
Debt recovery in Vietnam is a multilayered process: from contract review, determination of competent jurisdiction, and preparation of evidentiary documents to participation in conciliation and adjudication in accordance with Vietnamese procedural law. Throughout this process, foreign enterprises must not only understand the applicable laws but also proactively develop an action plan that aligns with local litigation practices. Conciliation — a mandatory step that also presents valuable opportunities — may enable the parties to reach a cost-effective, flexible resolution while preserving commercial relations. Should the dispute proceed to trial, thorough preparation in terms of evidence, procedural compliance, and coordination with local lawyers will be the decisive factors for a favorable outcome.
Time of writing: 16/05/2025
The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer at info@cdlaf.vn
You can refer for more information:
- International debt collection: Legal strategies and best practices for Vietnamese businesses
- Legal strategy for foreign investors in Equity and Asset M&A transactions in Vietnam
- Legal requirements for organizing various types of events in Vietnam: A comprehensive guide for investors
