Arbitration Clause for Vietnam Loans: SIAC vs ICC vs HKIAC

A well-drafted arbitration clause is the most valuable page in a cross-border loan or bond to a Vietnamese borrower. If the arbitration clause names a defective institution, an unsuitable seat or an unworkable route to enforcement, the remedy after a default may be worth far less than the pricing.

This article explains how governing law and dispute resolution interact in finance documents with Vietnamese obligors: the choice of English, New York or Singapore law, the choice among SIAC, ICC, HKIAC and VIAC, and what actually happens when an award reaches a Vietnamese court.

Why Governing Law and the Arbitration Clause Decide Outcomes

Most offshore financings of Vietnamese corporates follow a familiar template. The loan or bond is governed by English or New York law, the lenders are foreign banks, funds or bondholders, and the dispute mechanism is an institutional arbitration clause with a seat outside Vietnam. The borrower, however, is a Vietnamese legal person whose assets and security sit in Vietnam, so a lender can win an award in Singapore and then spend far longer converting it into cash in Vietnam.

Every decision in the arbitration clause, from the governing law to the number of arbitrators, should be tested against one question: will this produce an award that a Vietnamese court will recognise and an enforcement agency will execute?

For lenders structuring new facilities, our banking and finance team typically reviews the dispute clause together with the security package, because the two are enforced in different forums under different laws.

Choosing English, New York or Singapore Law

English law for loan agreements

An English law loan agreement remains the default for syndicated and bilateral facilities with Vietnamese borrowers, largely because the Loan Market Association (LMA) templates are English law documents. Lenders value predictable contract doctrine and deep case law on events of default, set-off and guarantees.

New York law for bonds and some bank loans

New York law is common in high-yield bonds, Rule 144A and Regulation S issues, and in facilities arranged by US banks. Under New York General Obligations Law sections 5-1401 and 5-1402, parties to a sufficiently large contract (US$250,000 for choice of law and US$1 million for forum) can choose New York law without a further connection to the state.

For Vietnamese issuers, bonds are usually issued through an offshore special purpose vehicle, with a guarantee or keepwell from the Vietnamese parent, which affects where enforcement must occur.

Singapore law as a regional option

Singapore law is increasingly chosen for regional club deals, intra-Asian project finance and fund financings. Paired with SIAC arbitration, it offers a coherent, neutral package that Vietnamese counterparties often accept readily. Whichever law is chosen, the security documents over Vietnamese assets will still be governed by Vietnamese law, a point we return to below.

Does Vietnam Respect a Foreign Governing Law?

Civil Code 2015 and Commercial Law 2005

Vietnam recognises party autonomy in foreign-related contracts. Under the Civil Code 2015 (Law No. 91/2015/QH13), parties to a foreign-related civil relationship may choose the applicable law unless Vietnamese law provides otherwise (see Article 664; verify paragraph references against the current text). The Commercial Law 2005 (Law No.

36/2005/QH11) similarly permits parties to commercial activities with a foreign element to agree on foreign law or international commercial practices, provided the result does not contradict the basic principles of Vietnamese law (see Article 5; verify). A loan between an offshore lender and a Vietnamese borrower is a foreign-related relationship, so a foreign governing law is in principle respected.

Public-policy limits

The qualification is public policy. The Civil Code provides that a foreign law will not be applied where its application would produce consequences contrary to the basic principles of Vietnamese law (see Article 670; verify). The concept is not precisely defined, which creates residual uncertainty. The risk is that a specific outcome, such as a penalty, a currency term or a security right, is held to offend mandatory Vietnamese rules.

Mandatory Vietnamese rules that travel with the deal

Foreign governing law does not displace regulatory requirements. Offshore borrowing by Vietnamese enterprises is subject to State Bank of Vietnam rules on foreign loans, including registration of medium- and long-term loans and controls on remittance of principal and interest (Circular 03/2016/TT-NHNN as amended; verify the current instrument). Security over land use rights, shares, receivables and accounts in Vietnam must satisfy Vietnamese formalities and registration, with Decree 21/2021/ND-CP as the principal framework on security (verify current amendments).

Drafting the Arbitration Clause

An arbitration clause should be short, complete and conventional. The essential elements of an arbitration clause are the institution and rules, the seat, the number and appointment of arbitrators, the language and the governing law of the clause itself. Vietnamese courts look first at whether the arbitration clause is valid and capable of performance under the Law on Commercial Arbitration 2010 (Law No. 54/2010/QH12), and an ambiguous arbitration clause invites a jurisdictional fight at the worst possible moment.

Seat selection

The seat determines the supervisory court, the procedural law and, importantly, whether an award is a foreign award for Vietnamese purposes. Singapore and Hong Kong are the dominant Asian seats: both are New York Convention jurisdictions with arbitration-friendly courts and limited grounds for set-aside. A Vietnam seat, typically with VIAC and a domestic arbitration clause, makes sense where most assets are local and speed of enforcement matters more than perceived neutrality.

Institutional versus ad hoc arbitration

An institutional arbitration clause is strongly preferred in finance documents. An institution appoints arbitrators if a party defaults, rules on challenges and supports the process administratively. Ad hoc arbitration clauses depend on a court at the seat to fill gaps.

Core terms of a robust arbitration clause

A reliable arbitration clause in a Vietnam-facing facility should address five items: (1) the institution and the version of rules in force at commencement; (2) the seat, expressed as a city; (3) three arbitrators for large facilities, with a mechanism to appoint if a party fails; (4) English as the language, with agreed treatment of Vietnamese-language evidence; and (5) express consent to joinder and consolidation where multiple agreements, such as the facility, guarantee and intercreditor deed, are involved.

SIAC vs ICC vs HKIAC vs VIAC: Comparison

All four institutions produce awards that are enforceable under the New York Convention in Vietnam if the seat is outside Vietnam, and all four have emergency arbitrator and expedited procedures. The differences lie in cost structure, supervision of awards, user base and, for VIAC, the domestic seat. Confirm current editions and fee schedules before signing.

Feature	SIAC	ICC	HKIAC	VIAC
Home seat	Singapore	Paris (any seat chosen by parties)	Hong Kong	Vietnam (Hanoi, Ho Chi Minh City)
Current rules	SIAC Rules 2025	ICC Rules 2021	HKIAC Administered Arbitration Rules 2024	VIAC Rules 2021 (in force from 2022)
Award scrutiny	Registrar review of draft award	Formal scrutiny by ICC Court	Limited review of form	Limited internal review
Fee model	Ad valorem, institution plus tribunal	Ad valorem, ICC scale	Ad valorem or hourly option	Ad valorem under VIAC tariff
Typical use	Asian financings, project finance	Global, multi-jurisdiction deals	China-linked and Asian deals	Vietnam-centred disputes
Enforcement in Vietnam	Foreign award, New York Convention	Foreign award, New York Convention	Foreign award, New York Convention	Domestic award, Law on Commercial Arbitration 2010
Arbitration clause strength	Speed, neutral Asian seat, strong courts	Brand, scrutiny improves enforceability	Cost flexibility, strong courts	Local familiarity, domestic enforcement path

In practice, SIAC arbitration is the most common choice for Vietnam-related loan documents because of its Asian focus and procedural tools, including early dismissal and streamlined procedures. ICC suits large multi-jurisdictional deals, HKIAC suits transactions with a Greater China element, and VIAC suits creditors who value local recovery speed over neutrality.

Enforcing Foreign Awards in Vietnam

The New York Convention framework

Vietnam acceded to the New York Convention in 1995, with the usual reciprocity and commercial-nature reservations. The practical effect is that an award made in another Convention state in a commercial dispute should be recognised and enforced in Vietnam, subject to the grounds for refusal. The status of contracting states can be checked on the UNCITRAL status page.

Procedure under the Civil Procedure Code 2015

The recognition and enforcement of foreign arbitral awards is governed by the Civil Procedure Code 2015 (Law No. 92/2015/QH13), in the chapter on recognition and enforcement of foreign court judgments and arbitral awards, together with the Law on Civil Judgment Enforcement.

The creditor files an application for recognition, which is routed through the Ministry of Justice to the competent provincial People’s Court, where a panel of judges reviews it (see Articles 451 onwards; verify the current time limits and routing). Once recognised, the award is enforced by the civil judgment enforcement agency.

Foreign court judgments, by contrast, are recognised only under a treaty or reciprocity, which is the main reason finance documents favour arbitration over New York or English court jurisdiction clauses for Vietnamese borrowers.

Public-policy refusal grounds

The Code lists grounds, which matter for every arbitration clause, on which recognition is refused, tracking Article V of the Convention.

These include an invalid arbitration agreement, lack of notice or inability to present a case, an award exceeding the scope of submission, an irregular tribunal or procedure, an award not yet binding or set aside at the seat, a non-arbitrable subject matter, and recognition being contrary to the basic principles of Vietnamese law (see Article 459; verify). The last ground is the one practitioners watch.

Historically, Vietnamese courts were cautious and some applications were refused or delayed, though familiarity with the Convention has grown. We do not cite recovery statistics because reliable public data is limited; check recent Supreme People’s Court decisions before advising on timing.

To reduce refusal risk, the arbitration clause should be unambiguous, the borrower should be properly served under the rules, and the award should be reasoned, address the borrower’s main defences and avoid relief that touches mandatory Vietnamese rules, such as interest above statutory limits or currency terms contrary to foreign exchange law. Our dispute resolution practice advises creditors on the enforcement of foreign arbitral awards, starting with a pre-dispute asset and enforceability review.

Interim Relief and Asset Protection

Speed matters in distressed lending. Under any arbitration clause naming SIAC, ICC, HKIAC or VIAC, the rules offer emergency arbitrator relief before a tribunal is constituted, and the seat court may grant injunctions or freezing orders in aid of arbitration. The weak point is cross-border effect.

Vietnamese law on commercial arbitration provides for interim measures by the tribunal and by the court in arbitrations governed by that law (see Articles 49 to 53 of the Law on Commercial Arbitration 2010; verify), but it is uncertain whether a Vietnamese court will give effect to interim orders or emergency arbitrator decisions rendered abroad. Lenders should assume that urgent protection of Vietnamese assets needs a direct application to a Vietnamese court or contractual protections.

Contractual tools therefore matter alongside the arbitration clause: security over accounts and receivables with cash-sweep rights, share pledges with enforceable exit rights, negative pledge and information covenants, and cross-default provisions. A well-drawn arbitration clause can add an express carve-out allowing any party to seek interim relief from competent courts in any jurisdiction without waiving arbitration.

SOE Borrowers and Sovereign Immunity

State-owned enterprises complicate the analysis. An SOE is generally a separate legal person under the Law on Enterprises 2020, and its commercial borrowing is not automatically a sovereign obligation. Still, lenders ask whether an SOE or an entity linked to a ministry could plead immunity from jurisdiction or from enforcement.

Vietnam has no comprehensive state immunity statute that we are aware of, and it is not a party to the UN Convention on Jurisdictional Immunities of States and Their Property (verify current status), so documents should address the point expressly.

A sovereign immunity waiver should cover immunity from suit, from the jurisdiction of arbitral tribunals, from pre-judgment attachment, and from execution against commercial assets, and should include an acknowledgment that the borrowing is a commercial act. Waivers are not a panacea: assets used for public functions remain protected, and State guarantees for foreign loans are governed by the Law on Public Debt Management 2017 and Decree 91/2018/ND-CP (verify), which limit who may give them.

For strictly commercial SOE borrowers, a clear sovereign immunity waiver, combined with a robust arbitration clause, is customary and generally accepted.

Step Clauses and Pathological Drafting

Multi-tier or step clauses

Many finance documents require negotiation, escalation to senior management or mediation before arbitration. Such step clauses can delay a lender that needs urgent relief. Where the arbitration clause is preceded by steps, the key issue is whether compliance is a condition precedent to jurisdiction.

Singapore courts have treated carefully drafted preconditions as binding, with the Court of Appeal addressing the question in International Research Corp v Lufthansa Systems Asia Pacific [2013] SGCA 55 (verify citation and holding before relying). A lender should therefore keep the arbitration clause clean: use short, objective time limits, exclude interim relief and enforcement steps from the process, and say plainly that failure to complete the steps does not bar arbitration.

Pathological clauses

A pathological arbitration clause is one that is defective, inconsistent or incapable of being performed. Examples include naming a non-existent institution, combining incompatible institutions and rules, offering unilateral options without clear exercise mechanics, providing for both court jurisdiction and arbitration without hierarchy, or choosing a seat that conflicts with the institution’s rules.

Some seats rescue inconsistent drafting purposively, as the Singapore Court of Appeal did in Insigma Technology v Alstom Technology [2009] SGCA 24 an often cited example (verify). A Vietnamese court, however, may be less willing to repair a pathological arbitration clause and may treat it as invalid or incapable of performance, which would leave the creditor litigating at home.

Asymmetric clauses, where a lender may choose arbitration or courts but the borrower may only arbitrate, are common in English law loan agreement forms. They are generally enforced in English-law and Singapore-law contexts, but should be tested for validity under the law of the seat and the law of the place of enforcement. The safest approach is a conventional arbitration clause with one institution and one seat.

Frequently Asked Questions

Can a Vietnamese borrower sign an English law loan agreement?

Yes. Pair it with a clear arbitration clause. A foreign-related loan may be governed by foreign law under the Civil Code 2015, subject to public policy and mandatory Vietnamese rules on registration, foreign exchange and security.

Is SIAC arbitration better than ICC for Vietnam deals?

Neither is universally better as an arbitration clause choice. SIAC is often faster and cheaper in Asia; ICC offers award scrutiny and global reach. Both yield awards enforceable in Vietnam under the Convention.

Will a Vietnamese court enforce an English court judgment?

Only under a treaty or reciprocity, which is uncertain in practice. That is why arbitration is preferred for borrowers whose assets are in Vietnam.

Can an SOE rely on immunity to avoid an award?

A commercial SOE borrower rarely has a strong argument, particularly after an express waiver. State-function assets may still be protected, so check which assets can be reached.

What is the biggest risk in an arbitration clause?

Ambiguity in the arbitration clause. Conflicting institutions, seats or court options invite jurisdictional fights and delay enforcement. Use one institution, one seat and clear, standard wording.

Next action: before your next term sheet is signed, send us the draft arbitration clause and the list of Vietnamese assets and security, and we will review whether the arbitration clause produces an award that a Vietnamese court can recognise and enforce.

Disclaimer: This article provides general information only and is not legal, tax or financial advice. Laws and institutional rules change; items marked “verify” should be confirmed against current texts before reliance. Please seek advice on your specific circumstances.