La Défense Advocates & Solicitors

Vietnam’s Transformative Growth Story Over the last two decades, Vietnam has undergone a remarkable economic transformation, rising as one of Southeast Asia’s most dynamic markets.From a modest agrarian economy, the nation has turned into an emerging industrial powerhouse, attracting multinational corporations and foreign direct investment (FDI) on an unprecedented scale. As Vietnam heads into 2025, it is poised to further solidify its position as a regional hub for investment. With significant reforms in its legal framework, advancements in infrastructure, and strategic global partnerships, the country offers a plethora of opportunities for international businesses. This article provides a detailed market overview tailored to international partners and investors looking to navigate Vietnam’s evolving landscape. Vietnam’s Economic Landscape in 2025 Sustained Economic Growth Vietnam has consistently posted high GDP growth rates, often outpacing its regional peers. Despite global economic uncertainties, the government remains committed to maintaining an annual growth target of 6.5% to 7%. The key drivers of this growth include robust exports, burgeoning domestic consumption, and substantial FDI inflows. Strategic Geographical Position Situated at the heart of Southeast Asia, Vietnam is strategically located along key global trade routes, connecting China, India, and the rest of ASEAN. This geographic advantage, coupled with a growing network of free trade agreements (FTAs), makes the country a gateway for international businesses seeking access to both regional and global markets. Key Legal and Policy Reforms for Investors 1. Revised Investment Laws The 2024 amendments to the Law on Investment and the Law on Enterprises are significant milestones. These updates are designed to: Simplify Licensing Procedures: A one-stop-shop mechanism has been introduced, reducing bureaucratic delays for foreign investors. Enhance Legal Transparency: Clearer guidelines on conditional business sectors aim to eliminate ambiguities, offering greater predictability for investors. Expand Incentive Zones: Special Economic Zones (SEZs) now offer more attractive tax breaks, especially in renewable energy, high-tech manufacturing, and digital transformation. 2. Green Energy Policies Vietnam has embraced sustainability as a core principle of its economic growth. The country’s commitment to achieving net-zero carbon emissions by 2050 has spurred policies encouraging investments in: Renewable Energy: With vast potential for solar and wind power, Vietnam offers attractive incentives for green energy projects, including land-use exemptions and preferential tax rates. Energy Efficiency Projects: Investors in green buildings, smart grids, and sustainable urban planning are also eligible for government support. 3. Intellectual Property (IP) Protections In compliance with its obligations under agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), Vietnam has enhanced its IP regulations. These reforms: Strengthen enforcement mechanisms to combat counterfeiting and IP infringement. Offer expedited procedures for registering patents and trademarks. Provide foreign entities with a more level playing field in protecting proprietary technologies and brands. Vietnam’s Judicial System and Dispute Resolution Vietnam’s legal and judicial systems have evolved to better accommodate the needs of foreign investors. While challenges remain, recent developments demonstrate a concerted effort to modernize and align with global standards. 1. Growth of Arbitration and Mediation Vietnam has witnessed a surge in the use of arbitration as an alternative dispute resolution (ADR) mechanism. The Vietnam International Arbitration Center (VIAC) is increasingly favored for its efficiency and impartiality. Mediation, especially under the UNCITRAL framework, is gaining traction as a cost-effective option for resolving commercial disputes. 2. Specialized Courts for Commercial Disputes Recognizing the complexities of international trade and investment, Vietnam has established specialized economic courts in key jurisdictions. These courts aim to expedite the resolution of business disputes and improve consistency in judicial rulings. Investment Opportunities Across Key Sectors 1. Manufacturing and Export-Oriented Industries Vietnam remains a manufacturing hub, benefiting from its cost-competitive labor market and integration into global supply chains. Electronics and Technology: Giants like Samsung, Intel, and Apple continue to expand their production capabilities in Vietnam. Textiles and Apparel: Leveraging FTAs, the sector enjoys tariff-free access to major markets like the EU and Japan. 2. Renewable Energy Vietnam is rapidly emerging as a leader in renewable energy in Asia. The government’s Power Development Plan VIII prioritizes: Scaling up solar and wind energy capacity. Modernizing the national grid to integrate renewable energy sources. Offering preferential land leases and feed-in tariffs for clean energy developers. 3. Digital Economy The digital economy, driven by a tech-savvy population, offers immense potential. Key areas include: E-commerce: Platforms like Shopee and Lazada dominate, while local startups gain traction. Fintech: With increasing internet penetration, payment solutions and blockchain applications are burgeoning. Smart Cities: Government initiatives in Hanoi, Ho Chi Minh City, and Da Nang are fostering investments in IoT, AI, and big data technologies. Challenges Facing International Investors Despite its many advantages, Vietnam presents challenges that investors must navigate carefully: 1. Regulatory Uncertainty Frequent amendments to laws and decrees can create confusion. Businesses are advised to work closely with local legal experts to stay ahead of regulatory changes. 2. Infrastructure Gaps While major cities boast modern infrastructure, rural areas often lack the connectivity needed to support large-scale operations. 3. Skilled Labor Shortages Although Vietnam offers a young and dynamic workforce, a mismatch in skills, particularly in high-tech industries, remains a concern for employers. How Legal Expertise Enhances Success in Vietnam In a rapidly changing legal and economic environment, having reliable legal support is crucial for navigating complexities. La Défense, with its core expertise in litigation and dispute resolution, has been at the forefront of assisting international businesses in Vietnam. 1. Mitigating Legal Risks By conducting thorough due diligence, La Défense identifies potential regulatory risks and provides tailored solutions to mitigate them. 2. Efficient Dispute Resolution With deep experience in both domestic courts and arbitration, the firm ensures efficient and favorable outcomes for clients. 3. Strategic Advisory Services La Défense supports businesses in optimizing their investment strategies by offering insights into Vietnam’s regulatory landscape and identifying sectors with high growth potential. So, Why Vietnam Should Be Your Next Investment Destination in 2025 As Vietnam steps into 2025, its combination of economic resilience, strategic reforms, and openness to international cooperation makes it an unmissable destination for global investors. While challenges exist, the opportunities far outweigh the risks, particularly with the right legal guidance. For businesses looking to capitalize on Vietnam’s growth, now is the time to act. With its deep understanding of the local market and unmatched expertise in dispute resolution, La Défense stands ready to be your trusted partner in navigating Vietnam’s dynamic landscape. Author: Linh Nguyen

In recent years, Vietnam has rapidly become one of the most attractive investment destinations in Southeast Asia, particularly in sectors such as real estate, infrastructure, and manufacturing. As businesses grow and expand, the likelihood of legal disputes also increases, making it crucial for international investors and businesses to understand the litigation process in Vietnam. This article aims to provide a comprehensive overview of litigation procedures in Vietnam, focusing on key steps, potential challenges, and best practices to navigate the legal landscape effectively. Overview of the Vietnamese Legal System Vietnam operates under a civil law system, a framework based on codified laws rather than judicial precedents. The Vietnamese legal system is structured around a number of legal documents, including the Constitution, the Civil Code, the Commercial Code, and other specialized laws governing areas such as labor, real estate, and environmental protection. The judiciary is independent, with the highest court being the Supreme People's Court of Vietnam. Local courts handle civil and commercial disputes, while specialized courts such as the Economic Court deal with complex commercial cases. Courts at various levels are responsible for hearing and deciding cases, with the most common ones being: People’s Courts at the district and provincial levels (basic jurisdiction). The Supreme People’s Court for appeals and oversight. The system encourages both litigation and alternative dispute resolution (ADR) mechanisms, with mediation and arbitration being strongly promoted in commercial disputes. The Litigation Process in Vietnam: Step-by-Step Litigation in Vietnam follows a structured process with several key stages. Understanding each stage helps ensure that international clients are prepared for what to expect. 2.1 Pre-Litigation Phase Before initiating formal litigation, the first step is often to attempt to resolve the dispute through informal means: Negotiation: Many disputes can be settled through direct negotiation between the parties involved. This is often the most cost-effective and efficient method, especially in commercial contracts where both parties have an interest in maintaining their relationship. b. Mediation: Mediation is actively encouraged by the Vietnamese court system. Courts often order mediation before proceeding to trial, as it can save time and reduce litigation costs. The mediation process typically involves the parties discussing the issues with a neutral third-party mediator. While mediation results are not legally binding unless an agreement is reached, it often leads to a settlement. If these methods fail, the next step is to file a lawsuit in the appropriate court. 2.2 Filing the Lawsuit a. Jurisdiction and Venue: It is important to determine which court has jurisdiction over the dispute. In most civil cases, the court of the defendant’s residence or place of business has jurisdiction. In commercial cases, the Economic Court may be the appropriate venue if the dispute involves business transactions. b. Filing the Claim: The plaintiff (the party initiating the lawsuit) must file a claim that includes detailed information about the dispute, including the facts, legal grounds, and any supporting evidence. The court may reject a claim if the facts are insufficient or if the dispute does not fall under its jurisdiction. The plaintiff also needs to pay a court fee, which is typically based on the value of the claim. 2.3 Pre-Trial Procedures Once the court accepts the claim, several steps take place before the trial begins: a. Acceptance of the Case: The court will review the lawsuit and determine whether it complies with the procedural requirements. If it is accepted, the court will notify the defendant and schedule a date for the trial. b. Exchange of Documents: The parties may be required to exchange evidence, such as contracts, invoices, witness statements, and other relevant documents. This process ensures both sides have the necessary information to present their case. c. Preparation for Trial: The court may request further clarification from the parties on certain issues or ask for additional documents. Pre-trial hearings may also be held to narrow down the issues and assess the possibility of a settlement. 2.4 Trial Process The trial is the core of the litigation process. It typically follows this structure: a. Presentation of Evidence: Both parties present their evidence, which may include oral arguments, written documents, expert opinions, and witness testimony. The plaintiff typically presents first, followed by the defendant’s response. b. Examination of Witnesses: The court may examine witnesses presented by both parties. Witness testimony plays a crucial role in shaping the outcome of the case. c. Judicial Findings: After hearing from both parties, the judge evaluates the facts and applies the law to make a ruling. The judge may request additional evidence or adjourn the hearing for further clarification. 2.5 Post-Trial and Appeals After the trial, the court issues a judgment. However, this is not always the final decision. a. Judgment Issuance: Once all evidence is presented and the arguments are made, the court will issue a judgment, which may include an order for damages, an injunction, or any other remedy deemed appropriate. b. Appeals Process: If a party disagrees with the judgment, they can file an appeal with a higher court. The appellate process can take several months. The Supreme People’s Court may hear appeals on specific cases, especially those with broader implications. c. Enforcement of Judgment: Once a final judgment is rendered, the winning party can request the court’s assistance in enforcing the judgment. This involves taking action to ensure the losing party complies with the court’s decision, whether that be through financial compensation, property transfer, or other measures. Key Considerations for International Clients There are several important considerations for international clients navigating the litigation process in Vietnam: a. Language and Translation: All court proceedings are conducted in Vietnamese. Therefore, it is crucial for foreign clients to ensure that all legal documents are translated into Vietnamese, and they may need the assistance of an interpreter during hearings. b. Court Costs and Fees: Court fees in Vietnam are relatively affordable compared to other jurisdictions. However, they are based on the value of the dispute. Therefore, clients should be aware of these costs in advance to better manage their budgets. c. Duration of Proceedings: The timeline for litigation can vary depending on the complexity of the case, the court’s schedule, and the cooperation of the parties. Civil cases typically take several months, while more complicated commercial disputes can take a year or more. Alternative Dispute Resolution (ADR) in Vietnam While litigation is a formal and structured way to resolve disputes, Alternative Dispute Resolution (ADR), including arbitration and mediation, is gaining popularity in Vietnam. ADR mechanisms offer several advantages, including: a. Arbitration: Arbitration is widely recognized in Vietnam, and the country is a signatory to several international arbitration conventions, such as the New York Convention. Many international businesses prefer arbitration for its confidentiality, efficiency, and expertise in handling commercial disputes. Arbitration decisions are enforceable in Vietnam and internationally. b. Mediation: Mediation has become increasingly popular in Vietnam’s legal culture, especially in commercial disputes. Courts encourage mediation at various stages of litigation, and the Vietnamese government has been active in developing frameworks to promote mediation as an effective dispute resolution method. Recent Changes in Vietnam's Legal Environment and Impact on Litigation Vietnam’s legal system has undergone significant changes in recent years, which could impact the litigation process: 5.1. Land Law Reform and Its Impact on Litigation Land-related disputes remain one of the most prevalent types of legal issues in Vietnam, particularly in real estate and infrastructure projects. Recent changes to the Land Law have created new opportunities and challenges for investors, property developers, and businesses, with significant implications for litigation. a. Changes in Land Use Rights The revised Land Law introduces clearer provisions regarding land use rights, including better regulations for land transfers, leasing, and use. This has helped make land transactions more transparent and efficient, reducing the ambiguity often associated with land-related disputes. b. Impact on Land Disputes Despite these reforms, land disputes remain common, especially in cases involving land expropriation by the government or land-use rights conflicts between investors and local communities. Legal battles over land acquisitions, zoning decisions, and land compensation remain significant contributors to the overall litigation volume in Vietnam. Impact on Litigation: The improved clarity in land use laws reduces some sources of litigation, yet disputes involving land ownership, compensation, and government land use decisions continue to create complex legal challenges. The legal framework now requires more nuanced legal counsel to navigate these disputes effectively. 5.2. Court System Reforms and the Evolution of Dispute Resolution Vietnam's court system has been undergoing a comprehensive reform to streamline judicial processes, improve the efficiency of dispute resolution, and align with global legal standards. These changes have made the litigation process faster and more transparent, but also introduced new dynamics that require skilled legal strategies. a. Commercial Court System The establishment and strengthening of Commercial Courts aim to expedite the resolution of commercial and business-related disputes. These specialized courts are designed to handle complex cases involving corporations, contracts, and business transactions, facilitating more efficient dispute resolution in the business sector. b. Rise of Arbitration The Vietnamese government has increasingly promoted arbitration as an alternative dispute resolution mechanism. With a growing number of Arbitration Centers and international arbitration bodies gaining recognition, businesses are increasingly opting for arbitration to resolve complex commercial disputes outside of the public court system. This shift not only alleviates the burden on the national court system but also provides a faster, more flexible approach to litigation. Impact on Litigation: The creation of specialized courts and the increasing use of arbitration have transformed litigation in Vietnam. These changes enable businesses to resolve disputes more efficiently, with better protection for commercial interests. However, navigating the intersection of national and international arbitration practices requires expertise in both domestic law and global standards—expertise that firms like La Défense can provide. 5.3. Enforcement of Court Decisions and Challenges in Enforcement One of the persistent challenges in Vietnam's litigation system has been the enforcement of court decisions. Although court judgments are increasingly seen as legitimate and binding, the enforcement process has often been slow and cumbersome, especially in complex commercial disputes. a. Reforms in Enforcement Procedures The government has introduced various reforms aimed at improving the enforcement of judgments, including more streamlined procedures and the integration of technology to monitor enforcement activities. This ensures that court decisions are executed more swiftly and transparently, benefiting both local and foreign businesses involved in disputes. b. Technology and Enforcement The adoption of technology in court systems has helped enhance enforcement processes. Online platforms for tracking cases and managing legal procedures are being implemented to ensure greater transparency and efficiency. Impact on Litigation: While these changes have improved the speed and transparency of enforcing judgments, challenges remain—particularly when enforcement involves significant assets or cross-border issues. A well-established local partner, like La Défense, is invaluable for navigating enforcement challenges, ensuring that judgments are executed efficiently. 5.4. Labor Law Reforms and Their Impact on Employment Disputes The recent revisions to the Labor Code and other employment laws in Vietnam have led to a rise in disputes between employers and employees. These reforms, aimed at strengthening worker rights and ensuring more equitable workplace practices, have changed the landscape of employment-related litigation. a. Key Changes in Labor Law The new Labor Code includes updated provisions on employment contracts, severance pay, social insurance, and labor conditions. These changes reflect a stronger emphasis on protecting workers' rights while ensuring compliance with international labor standards. b. Employment Disputes As workers gain more legal protections, disputes regarding wrongful termination, compensation claims, and other employment matters have become more frequent. In addition, companies are facing greater scrutiny and potential litigation for non-compliance with these new standards. Impact on Litigation: With the increased protection for workers, employment-related disputes are expected to grow, necessitating robust legal strategies to mitigate the risk of litigation. Businesses need to adapt to the new legal framework to prevent costly legal battles and maintain good employer-employee relations. 5.5. Recent Changes in the Corporate and Investment Laws Vietnam's Investment Law and Enterprise Law have undergone revisions to simplify procedures and attract foreign direct investment. These changes aim to foster a more conducive environment for international businesses while ensuring compliance with local legal requirements. a. Changes to Investment and Business Regulations The revised Investment Law and Enterprise Law streamline the process for establishing and operating businesses in Vietnam, reducing bureaucratic hurdles and creating a more transparent business environment. These reforms are designed to make the Vietnamese market more attractive to foreign investors, thereby increasing investment activity. b. Corporate Disputes As a result, the volume of corporate disputes is also rising, particularly in joint ventures and business partnerships, where conflicts may arise over governance, profit-sharing, or business strategies. Impact on Litigation: With the increase in business activities, corporate disputes, especially those related to governance and shareholder rights, are expected to increase. Businesses must ensure they have clear contracts and dispute resolution mechanisms in place to protect their interests.   The litigation process in Vietnam is structured and offers clear procedures for dispute resolution. However, international clients must be prepared for potential complexities, especially regarding language barriers, court procedures, and the enforcement of judgments.