Author:

• Nguyen Huyen Anh – Lawyer
• Ho Thanh Quang – Paralegal

1. Overview of arbitration agreements

Commercial arbitration is currently one of the most commonly used dispute resolution methods thanks to its flexible and efficient procedures (usually only one level of adjudication), high level of confidentiality, and the ability to select arbitrators with appropriate expertise. When a dispute arises, the arbitration agreement serves as the basis to initiate arbitration proceedings. Unlike court litigation, where the adjudicating authority still has jurisdiction to resolve disputes even when the parties have not previously agreed, arbitration only has jurisdiction where the parties freely and voluntarily agree to choose this method.

In essence, an arbitration agreement is the mutual consent of the parties to choose arbitration as a method of dispute resolution within the framework permitted by law.

In terms of form, according to Article 16 of the Law on Commercial Arbitration 2010, an arbitration agreement may be established in the form of an arbitration clause in a contract or a separate agreement, and must be expressed in writing. Such written form may exist in various formats, such as exchanges via email, fax, correspondence, references in a contract or related documents, or be reflected through the exchange of a statement of claim and statement of defense where one party asserts the existence of the agreement and the other party does not deny it. This provision demonstrates that the law recognizes flexibility in the form of arbitration agreements in order to facilitate parties when choosing this dispute resolution method.

2. Cases where arbitration agreements are invalid

According to Article 18 of the Law on Commercial Arbitration 2010, an arbitration agreement shall be invalid in the following cases:

(i) Disputes arising in fields not falling within the jurisdiction of arbitration as provided in Article 2 of the Law on Commercial Arbitration 2010.

Under Article 2 of the Law on Commercial Arbitration 2010, the jurisdiction of commercial arbitration arises in the following fields: a) Disputes between parties arising from commercial activities; b) Disputes arising between parties in which at least one party engages in commercial activities; and c) Other disputes between parties that are permitted by law to be resolved by arbitration.

Thus, not all disputes can be resolved by arbitration. Only disputes falling into the above categories are within the jurisdiction of arbitration. In cases where the parties agree to resolve disputes by arbitration that do not fall within these categories, the arbitration agreement may be considered invalid.

(ii) The person establishing the arbitration agreement does not have authority under the law.

According to Clause 2 Article 3 of Resolution No. 01/2014/NQ-HĐTP, a person is considered unauthorized when that person is not the legal representative, not a lawful authorized representative, or is a lawful authorized representative but acts beyond the scope of authorization.

However, it is not automatically the case that an arbitration agreement is invalid merely because it is established by an unauthorized person. If the arbitration agreement is established by an unauthorized person but during the performance of the arbitration agreement or during arbitration proceedings, the person with authority accepts it or knows about it without raising objections, the arbitration agreement shall not be deemed invalid.

(iii) The person establishing the arbitration agreement does not have civil act capacity

Civil act capacity of an individual is the ability of that individual, through his or her own actions, to establish and perform civil rights and obligations.

According to the Civil Code 2015, an adult (a person aged 18 years or older) has full civil act capacity, except in cases where the person has lost civil act capacity, has difficulties in perception and control of acts, or has limited civil act capacity.

Accordingly, arbitration agreements established by minors, persons who have lost civil act capacity, persons having difficulties in cognition and control of their acts, or persons with limited civil act capacity will not be valid.

(iv) The form of the arbitration agreement does not comply with Article 16 of the Law on Commercial Arbitration 2010

Under Article 16 of the Law on Commercial Arbitration 2010, an arbitration agreement must be established in written form. This form may be expressed in various forms such as an arbitration clause in a contract, a separate written agreement, exchanges via letters, fax, or email, or other forms where the content of the agreement is clearly recorded.

In cases where the arbitration agreement is not established in the above forms or the existence of a written agreement cannot be proven, the arbitration agreement may be considered as not satisfying the formal requirements and may be declared invalid and may be declared invalid under the law.

(v) One of the parties is deceived, threatened, or coerced during the establishment of the arbitration agreement and requests that such agreement be declared invalid

In principle, an arbitration agreement is a consensus of will based on freedom and voluntariness. Therefore, in the event of any deception, threat, or coercion during the establishment of the arbitration agreement, a party has the right to request that the arbitration agreement be declared invalid.

Article 127 of the Civil Code also specifically explains these situations as follows:

Deception in civil transactions is the intentional act of one party or a third party to mislead the other party about the subject, nature of the object, or content of the civil transaction, thereby causing that party to establish the transaction.

Threat or coercion in civil transactions is the intentional act of one party or a third party forcing the other party to enter into a civil transaction in order to avoid harm to life, health, honor, reputation, dignity, property, or those of their relatives.

(vi) The arbitration agreement violates prohibitions of the law

This refers to cases where the arbitration agreement violates prohibitions of the law, which refers to Article 128 of the Civil Code 2005 (the time when Resolution No. 01/2014/NQ-HĐTP was issued). However, when referencing to the current law, namely Article 123 of the Civil Code 2015, this provision may have significant differences because the arbitration agreement will only be invalid if it violates prohibitions of a “law” instead of “the law” as previously used.

Compared with the Law on Promulgation of Legal Normative Documents 2025, “the law” encompasses all legal normative documents listed in Article 4 of that law, while “law” only includes “Codes, Laws, and Resolutions of the National Assembly”.

This adjustment narrows the circumstances that may invalidate an arbitration agreement. However, the difference in legal terminology between “law” and “the law” may also lead to inconsistent interpretation and application, particularly when relevant provisions are still referenced from legal documents issued before the Civil Code 2015 took effect.

3. Arbitration agreements that cannot be performed

Although not falling into the cases of invalid arbitration agreements under Article 18 of the Law on Commercial Arbitration 2010, in certain circumstances an arbitration agreement may still be incapable of performance. In such cases, although the arbitration agreement still exists in form, the dispute cannot practically be resolved by arbitration.

These situations include: (i) The agreed arbitration center has terminated its operation, has no successor organization, and the parties cannot agree on another center; (ii) An ad hoc arbitrator has been appointed but cannot participate due to force majeure or objective obstacles, no replacement can be appointed, and the parties cannot agree on another arbitrator; (iii) The selected arbitrator refuses appointment or is rejected, and the parties cannot agree on a replacement; (iv) The parties agree to resolve disputes at one arbitration center but choose the procedural rules of another center, while the charter does not allow it and the parties cannot agree on replacement rules; (v) The arbitration clause is included in standard terms prepared in advance by a supplier, but when a dispute arises, the consumer does not agree to resolve the dispute by arbitration.

4. Common causes and ways for enterprises to prevent risks

In practice, there are several issues commonly encountered by enterprises when recording arbitration agreements in contracts with partners and customers, which may easily lead to the invalidity of such clauses as follows:

First, arbitration agreements applied to disputes outside the jurisdiction of arbitration

According to the Law on Commercial Arbitration 2010, arbitration has jurisdiction to resolve disputes arising from commercial activities or other disputes that the law permits to be resolved by arbitration. However, in practice, some enterprises still include arbitration clauses in legal relationships that do not fall within this scope, particularly in purely civil relationships. Misunderstanding the jurisdiction of arbitration may lead to the risk that the arbitration agreement will be declared invalid when a dispute arises.

• Solution:

To minimize the risk of arbitration agreements being declared invalid due to disputes outside the jurisdiction of arbitration, enterprises need to clearly determine the legal nature of the dispute relationship before including an arbitration clause in the contract. Accordingly, arbitration clauses should mainly be applied to disputes arising from commercial activities or disputes with commercial elements, where at least one party engages in commercial activities as prescribed by the Law on Commercial Arbitration 2010. In addition, enterprises should seek legal advice when drafting dispute resolution clauses in order to ensure that the arbitration clause is designed in accordance with the jurisdiction of arbitration and to avoid the risk of invalidity when disputes arise.

Second, the person establishing the arbitration agreement does not have authority

This is one of the direct causes leading to invalid arbitration agreements. In practice, some enterprises enter into contracts with partners and customers without thoroughly verifying the legal representative or authorized representative of the partner.

• Solution:

When entering into contracts, enterprises should specifically verify the information of the legal representative of partners or customers. In cases of authorized representation, enterprises should request a power of attorney to verify the scope and duration of the authorization.

Third, arbitration agreements that are unclear or incapable of being performed

Currently, when agreeing on dispute resolution clauses, there are cases where contracts record provisions such as: “Disputes arising from this contract shall be resolved by arbitration. The place of resolution is Ho Chi Minh City. The applicable law is Vietnamese law.” It can be seen that this clause does not clearly specify the arbitration center as well as the procedural rules to be applied. This may fall into the situation where the arbitration agreement cannot be performed as mentioned above.

• Solution:

Enterprises should use model clauses provided by reputable arbitration institutions. For example, the model clause of the Southern Trade Arbitration Centre (STAC):

“Any dispute arising from or in connection with this contract shall be resolved by arbitration at the Southern Trade Arbitration Centre (STAC) in accordance with the Arbitration Rules of this Centre”. This clause basically satisfies the essential elements of an arbitration agreement. In specific cases, the parties may further supplement provisions regarding the place of arbitration, number of arbitrators, applicable law, language of arbitration, etc..

In summary, arbitration agreements play an important role in establishing the jurisdiction for dispute resolution by arbitration. However, if such clauses are drafted inconsistently with legal regulations or lack necessary clarity, enterprises may face the risk that arbitration agreements are declared invalid or incapable of performance when disputes arise. Therefore, drafting arbitration clauses accurately, clearly, and in compliance with legal regulations from the contract formation stage is an important factor that helps enterprises minimize legal risks and ensure the effectiveness of the arbitration dispute resolution mechanism.

Time of writing: 12/03/2026

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:

• Legal Regulations Regarding Electronic Evidence In Civil Proceedings
• Applying the force majeure clause to exempt liability under the contract
• Conditions for Granting a License for Establishment of a Representative Office of Foreign Traders in Vietnam
• Closure of a Representative Office of a Foreign Trader in Vietnam