Background

In a high-value cross-border financing transaction, a foreign lender (the “Lender”), a foreign arranger (the “Arranger”), and a Vietnamese real estate developer (the “Borrower”) entered into a facility agreement (the “Facility Agreement”) under which the Lender agreed to extend a loan of up to USD 400 million. As consideration, the Borrower undertook to pay a total of USD 20 million in front-end and arrangement fees (the “Fees”).

Each party signed a counterpart and exchanged scanned copies via email, but the Borrower never provided a wet-ink original. The Facility Agreement is governed by English law and includes a dispute resolution clause referring disputes to the Singapore International Arbitration Centre (SIAC).

Separately, the Lender entered into guarantee agreements (the “Guarantee Agreements”) with the Borrower’s subsidiaries and major shareholder (the “Guarantors”), under which the Guarantors irrevocably and unconditionally guaranteed the Borrower’s obligations. These agreements are governed by Vietnamese law and similarly contain SIAC arbitration clauses.

Following default by the Borrower and Guarantors, the Lender and Arranger initiated arbitration proceedings at SIAC and secured a favorable award (the “Award”), ordering the Borrower and Guarantors to pay the Fees jointly and severally.

The Lender and Arranger applied for recognition and enforcement of the Award before the Hanoi People’s Court (the “Hanoi Court”). The Hanoi Court partially recognized the Award - enforcing it against the Borrower - but declined to recognize it against the Guarantors, citing (i) alleged deficiencies in the service of arbitration documents and (ii) references to real estate within the Guarantee Agreements.

The decision was subsequently appealed by the Lender and the Borrower to the High People’s Court in Hanoi (the “High Court”). The appeal judge panel includes Mr. Dieu Van Hang, Mr. Bui Anh Thang, and Mr. Nguyen Phan Nam, of which Mr. Dieu Van Hang is the presiding judge of the panel.

Legal Issues Raised

The proceedings before the Vietnamese courts gave rise to two core legal questions:

The High Court’s Reasoning and Decision

On appeal, both the High Court and the High People’s Procuracy invoked Article 3.8 of Decree No. 30/2020/ND-CP, which defines an “original document” (bản gốc) as either a hard copy bearing a wet-ink signature or a digitally signed electronic document. The court and procuracy reasoned that, since the Facility Agreement was executed only through scanned copies exchanged via email and there was no evidence that the Borrower had signed a wet-ink original, the Facility Agreement lacked legal effect under Article 400.4 of the 2015 Civil Code. Consequently, the arbitration clause in Article 18 of the Facility Agreement was also deemed legally ineffective.

With respect to the Guarantee Agreements, the High Court noted that there are provisions which referenced real estate assets. As the agreements were neither notarized nor registered as secured transactions, the Court found them to be in violation of Vietnamese legal requirements. Although the Court did not elaborate in detail on the consequences of this non-compliance, it appeared to imply - by citing Article 5.2 of the 1958 New York Convention and Articles 459.2(a) and 459.2(b) of the 2015 Civil Procedure Code - that disputes involving real estate fall under the exclusive jurisdiction of Vietnamese courts and are therefore non-arbitrable under domestic law. Furthermore, the lack of notarization and registration was deemed to contravene the fundamental principles of Vietnamese law.

For these reasons, the High Court upheld the Borrower’s appeal and dismissed those of the Lender and Arranger, thereby declining to recognize and enforce the Award in its entirety.

Commentary and Concerns

The High Court’s ruling presents a series of jurisprudential and procedural concerns that merit close examination:

Key Takeaways

Under Vietnamese law, electronically executed contracts - especially those exchanged via email without a corresponding wet-ink original - may face enforceability challenges, depending on judicial interpretations of formal validity requirements.

Additionally, where guarantees reference real estate and are subject to Vietnamese law, questions may arise concerning notarization, registration, and competent jurisdiction. These factors may affect not only the legal validity of the guarantee itself but also the arbitrability of any associated disputes.

Conclusion

The High Court’s reasoning reflects a notably restrictive interpretation of contractual enforceability and international arbitration frameworks. Beyond unsettling legal certainty, this ruling risks undermining Vietnam’s attractiveness as an investment destination, sowing doubt among foreign investors and dispute resolution practitioners alike. It highlights the urgent need for a more consistent, predictable judicial approach to applying international legal instruments.

Although the High Court ceased operations on 1 July 2025, the adverse precedential impact of its decision may persist well beyond its institutional lifespan.