FOREIGN TRADE UNIVERSITY HCMC CAMPUS

DEPARTMENT OF ECONOMICS AND LAW

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INTRODUCTION TO LAW – PLUE111

FINAL ASSIGNMENT
Academic year: 2023-2024

Grade (in number) Grade (in words)

Examiner 1’s signature Examiner 2’s signature

Invigilator 1’s signature Invigilator 2’s signature

Student’s Name: Trần Ngọc Phương Nguyên

Student ID: 2312255037
Class code: ML211
Lecturer: LLM. Tran Thanh Tam
No Title Content/discussion Marking

1.0 Introduction Provide an overview of the concept of

party autonomy in contractual choice of law.
(1 mark) Discuss its significance in international
contracts and its implications for cross-border
transactions.
2.0 Main body Legal Framework Governing the Party
Autonomy Principle in Contractual Choice of
(7 marks) Law in Vietnam: Outline the legal framework
in Vietnam that governs party autonomy in
contractual choice of law. Refer to relevant
rules that establish and regulate this principle.
(1.5 marks)

Statutory Restrictions on Party Autonomy in

Vietnam: Discuss the statutory restrictions on
party autonomy in Vietnam. Identify specific
limitations imposed by Vietnamese law on the
parties' ability to choose the governing law of
their contract. Provide examples of
circumstances under which Vietnamese law
might override the parties' chosen law. (1.5
marks)

Judicial Practice on the Party

Autonomy Principle in Contractual Choice of
Law: Examine how Vietnamese courts have
interpreted and applied the principle of party
autonomy in contractual choice of law. Analyze
key judicial decisions that have shaped the
understanding and application of this principle
in Vietnam. Highlight any trends or notable case
law. (2 marks)

Evaluation on the Party Autonomy in

Contractual Choice of Law in Vietnam:
Discuss whether the current legal framework
adequately protects the interests of the parties
while ensuring fairness and justice. (2 marks)
3.0 Conclusion Provide a conclusion which is fitting for
the discussion and summarise relevant
(1 mark) recommendation based on the report.

4.0 References List all the relevant references used in

your report in accordance with the APA
(1 mark) Referencing system. In-text References and
Bibliography required
Total Mark

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 TABLE OF CONTENTS
INTRODUCTION...........................................................................................................4

CHAPTER I: LEGAL FRAMEWORK GOVERNING THE PARTY AUTONOMY

PRINCIPLE IN CONTRACTUAL CHOICE OF LAW IN VIETNAM:............................5

1. Civil code 2015 Article 683:...........................................................................................5

2. Law on Commerce 2005 Article 5:.................................................................................5

CHAPTER II: STATUTORY RESTRICTIONS ON PARTY AUTONOMY IN

VIETNAM:................................................................................................................................7

1. Condition about agreement between two parties................................................7

2. Restrictions to protect the weaker parties’ rights and interest...........................7

3. Limitations of contracts relating to immovable property:..................................7

4. Law must safeguard with the Vietnamese law:...................................................8

5. Examples of circumstances under which Vietnamese law might override the

parties' chosen law..................................................................................................................8

CHAPTER III: JUDICIAL PRACTICE ON THE PARTY AUTONOMY

PRINCIPLE IN CONTRACTUAL CHOICE OF LAW:......................................................9

1. How Vietnamese courts have interpreted and applied the principle of party autonomy
in contractual choice of law:................................................................................................................9

2. Key judicial decisions that have shaped the understanding and application of this
principle in Vietnam:............................................................................................................................9
2.1 Case Number: 68/2019/KDTM-PT:...............................................................................................9
2.2. Case Number: 174/DSPT........................................................................................................9

CHAPTER IV: EVALUATION ON THE PARTY AUTONOMY IN

CONTRACTUAL CHOICE OF LAW IN VIETNAM:.......................................................10

CONCLUSION..............................................................................................................12

REFFERENCES:..........................................................................................................13

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 INTRODUCTION

1. Context of the report:

In this century, multinational cooperation and cross-border transactions are increasingly

developing due to the significant rise of technology and economics in the world. Therefore,
the appearance of international contracts will be more important when people make
agreements or transactions. In that situation, parties will come to a problem: they do not know
which law will apply to their contracts. Therefore, the concept of party autonomy in
contractual choice of law will solve this problem, this will be a guideline for parties in making
contractual choice law, which is regulated by a legal framework in a detailed way. In Vietnam,
it also has a legal framework and rules to regulate party autonomy, which will be mentioned
in this report later. Party autonomy in contractual choice of law is essential in overseas
contracts and agreements, it can minimize the litigious and legal risks in these cases.

2. Purpose of the report:

This report will discuss the concept of party autonomy in contractual choice of law, its
importance in international contracts, and its implications for foreign transactions. Party
autonomy in contractual choice of law allows parties who enter into a binding agreement or
contract to choose applicable law for their contracts. They have the freedom to choose which
law will be applied to their contracts and based on agreements between both parties. Party
autonomy in contractual choice of law plays a vital role in international contracts, where two
parties may come from two different countries and use different applicable laws or legal
systems. They need party autonomy to make an agreement on which law will be applied to the
contract, about its implications for cross-border transactions, parties may choose the law in
the country of party A or party B or both two countries ‘legal systems or in some special
situation they also have a chance to choose a third different country’s law to be applicable law
too. In short, party autonomy in contractual choice of law helps minimize legal risks and
disputes and create transparent and certain contracts for the contractual relationship. This also
provides a flexible and predictable legal system for both parties from different countries and
contribute to promotion in international trade in Vietnam.

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 CHAPTER I: LEGAL FRAMEWORK GOVERNING THE PARTY AUTONOMY
PRINCIPLE IN CONTRACTUAL CHOICE OF LAW IN VIETNAM:

1. Civil code 2015 Article 683:

This article allows parties in international contracts to freely choose the applicable law
for the contracts; in case this law must not violate the principal law of Vietnam and must be
agreed between both parties in advance. In detail, unless Vietnam law has some other
regulations, both parties could choose the law of a country that they want to apply in their
contracts. Clause 1 of this article highlights the principle of party autonomy will mention in
detail the rights and obligations of two parties. Clause 2 mentioned the applicable law shall be
determined as follows:

a) For contracts, the law of the country with which the contract is most closely
connected shall apply;

b) For obligations arising from unilateral legal acts, the law of the country where such
acts are performed shall apply;

c) For obligations arising from non-contractual relationships, the law of the country
where such relationships arise shall apply;

d) For ownership rights and other rights in rem, the law of the country where the
property is located shall apply;

e) For inheritance, the law of the country where the estate is located shall apply;

f) For the legal capacity of individuals, the law of the country of which such
individuals are citizens shall apply; if such individuals have more than one nationality, the law
of the country of the nationality with which such individuals are most closely connected shall
apply;

g) For the legal capacity of juridical persons, the law of the country where such
juridical persons are established shall apply.

2. Law on Commerce 2005 Article 5:

This law will promote flexibility for the party autonomy principle in choosing
applicable law for commercial contracts while safeguarding the core principle law of
Vietnam. In article 5 of this law, it mentioned the order of laws applicable to commercial
contracts in Vietnam, and particularly in some that has foreign elements.

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 Overall, Vietnam’s legal framework recognizes party autonomy in choosing law for
contracts, especially in some international contracts, which involve foreign elements. This
will give freedom to the parties in choosing the law, but it still has some limitations. First, the
chosen law must not be violated or contradict to the Vietnam core principal law, and it have to
have close and relevant connection in some ways with the parties in the contract. The legal
framework gives respect to the parties in the contracts, they will have freedom, which can
lead to a flexible commercial transaction, and encourage cross-border cooperation. These two
article marked an incredible improvement of Vietnam’s principle law in choosing law for
contracts. (see Thi Hong Trinh Nguyen, 2018).

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 CHAPTER II: STATUTORY RESTRICTIONS ON PARTY AUTONOMY IN
VIETNAM:

1. Condition about agreement between two parties

The statutory restrictions on Party autonomy in Vietnam were highlighted in article 683,
clause 1. Clause 1 article 683 mentioned contracts that involve foreign elements, the law is
applicable when both parties agree with that chosen law, and there would be restrictions on
party autonomy when one of them did not agree on the chosen law. In that case, the law of the
country in which the closest connection will be applied.

According to article 683 clause 1 Civil Code, if both parties have not agreed on the
chosen law before, the law of the country which is most closely connected with the contract
shall apply. In detail, “most closely connected” with the contract include the condition in
clause 2 of article 683 Civil Code:

By that, the provision of this clause is to make sure that the applied law is the one that
has a logical and reasonable relationship with the contract. Therefore, governing law in
international contracts would be more predictable and enhance fairness in a positive way.

2. Restrictions to protect the wea

ker parties’ rights and interest.
Clause 5 in article 683 also mentioned restrictions on party autonomy in choosing law
in Vietnam. The parties have the freedom to choose the law to apply for their contract, but this
clause highlights the most specific limitations, the final fallback provision for the party
autonomy in the contractual choice of law.
This clause makes sure that there will always be a legal framework that governs
applicable law for the contracts, in case other applicable law is unfair and affects the
minimum rights of the employee and consumer, this shows the respect of the Vietnam law for
both parties and especially for consumers and employees.

3. Limitations of contracts relating to immovable property:

When it comes to contracts with immovable property, the parties’ choice of law is
eliminated. Therefore, the law of the country in which this immovable is located would be the
applicable law for this contract. In detail, contracts about immovable property in Vietnam
must use Vietnam law. This was highlighted clearly in the article 683 clause 4 Civil code 2015

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 Parties of the contract should be aware of these specific limitations because when the
contract is about immovable property such as land, or building, the parties can in no way can
choose the applicable law, they must use the Vietnamese law
This restriction helps protect public policy because real estate transactions in some ways
can affect the local community there, so using Vietnamese law is the best way to control and
regulate these contracts.

4. Law must safeguard with the Vietnamese law:

Another specific limitation in Vietnam Law is stated in “Article 5 clause 2 of the Law
on Commerce”. It highlighted that the chosen law must be complied with Vietnamese law and
must not violate or contradict to the core principle law of Vietnam.
This clause clearly said that the applicable law must not be contrary to the fundamental
principle of Vietnam law. Therefore, this will protect the social order, and improve the power
of the legal system in Vietnam.

5. Examples of circumstances under which Vietnamese law might override the

parties' chosen law
a. If contracts involve terms that allow the illegal actions or consider as illegal or
unethical based on Vietnamese law, for example, bribery or corruption, Vietnamese
law will override the parties’ chosen law.
b. If the chosen law for the contract affects negatively to the minimum rights of the
employees and consumers, then the Vietnamese law will be applied. This will help
to protect the rights and benefits of the employees and consumers in full aspects.
c. If the contracts involve immovable property in Vietnam, for example, real estate
contracts, the Vietnamese law must override the parties’ chosen law because this
property is located in Vietnam.
d. In the situation that both parties cannot make decision on which law will be applied,
or one of them did not agree on the chosen law, then the Vietnamese law will be
applied for this contract.

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 CHAPTER III: JUDICIAL PRACTICE ON THE PARTY AUTONOMY
PRINCIPLE IN CONTRACTUAL CHOICE OF LAW:

1. How Vietnamese courts have interpreted and applied the principle of party autonomy
in contractual choice of law:

In general, Courts in Vietnam interpret and apply the principle of party autonomy in
contractual choice of law based on the standard of the Civil Code and Law on Commerce,
parties in contracts can choose law but the law need to satisfy the requirements.

2. Key judicial decisions that have shaped the understanding and application of this
principle in Vietnam:
2.1 Case Number: 68/2019/KDTM-PT:

- Court: People's Court of Hanoi

- Date: June 28, 2019
- Parties Involved:
Plaintiff: Phuong Dong Shipping and Trading JSC (previously BB Shipping
JSC)
Defendant: P Insurance Corporation
- Related Parties: Agribank, Vietnam Development Bank (VDB)
- Facts:
On June 29, 2016, the plaintiff and the defendant signed a hull insurance
contract for the vessel Ngoc Son (NS) with a coverage amount of USD 2,800,000.
On August 13, 2016, the vessel ran aground near the Maldives.
The plaintiff submitted a claim, but the defendant only agreed to pay USD
1,750,000, excluding fuel costs.
- Plaintiff’s Claim: Full insurance amount of USD 2,800,000 including additional costs
and interest due to late payment.
- Court Decision: The court partially upheld the plaintiff's claim, ordering the defendant
to pay the insured amount but not the full additional costs or interest requested.
This key judicial decision shaped the understanding and application of this principle in
Vietnam. The court used the British Marine Insurance Act law for this jurisdiction because the
parties chose this law for the contract.

2.2 Case Number: 174/DSPT

- Case Number: 174/DSPT
- Court: Supreme People's Court of Hanoi
- Date: December 4, 2003
- Parties Involved: Vietnamese Company and Singaporean Company
- Facts:
The contract stipulated that disputes would be resolved by Singapore arbitration
under Singapore law.

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 A dispute arose, and the Vietnamese party argued that Vietnamese courts had no
jurisdiction.
The trial court claimed jurisdiction and applied Vietnamese law.
- Court Decision:
The appellate court overturned the trial court’s decision, emphasizing that the
dispute resolution should adhere to the contractual agreement regarding arbitration and
applicable law.
This case clearly shows the principle of party autonomy in contractual choice of
law in Vietnam and its restriction in applicable law.

CHAPTER IV: EVALUATION ON THE PARTY AUTONOMY IN

CONTRACTUAL CHOICE OF LAW IN VIETNAM:

The party autonomy in Contractual choice of law in Vietnam is very detailed and has
specific applications and restrictions.

- Art 683 (1) Vietnam Civil Code and Art 5 (1) Law on Commerce clearly expressed the
rights of parties to choose applicable law on their contracts. They have freedom and
flexibility in choosing the law for the contract.
- The Article 683 (2) also highlight which conditions that a law need to satisfy to
become an applicable law in the contract.
- The Vietnamese law of party autonomy in contractual choice of law in Vietnam is also
protecting the weaker parties in the contract like workers or consumers.
- The law also highlighted that if both of the parties could not make an agreement on
which law would be applied, the Vietnamese law would be applicable to that contract.
- The law regulation make sure that all of the chosen laws will not contradict or violate
the core principles of Vietnam. Those applicable laws must be safeguarded by the
Vietnam legal system.

The current legal framework is doing its best in protecting the interests of the parties
while ensuring fairness and justice. As this report had mentioned, the party autonomy is really
considered about the rights of weaker parties in the contracts, for the consumers and
employment contracts in particular. This makes sure that the minimum benefits and rights of
workers or consumers will not be affected in the contracts, if there were, they had to choose
another law to apply in the contract. Vietnam's legal framework is showing the respectful
towards the weaker parties of the contracts and ensuring fairness and justice in a clear and
specific way. This current legal system adequately protects the interests of the parties, but this
legal system needs to be more detailed and consistent in order to help the court in making
decisions. Party autonomy can also give more predictable and flexible terms in the contract

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based on the applicable law. As a results, the international contracts in particularly and the
economics in generally will develop in a positive way.

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 CONCLUSION

Conclusion: In conclusion, the party autonomy in contractual choice of law in Vietnam

is clearly mentioned and regulated by Vietnamese law. This was highlighted in the Civil Code
and Law on Commerce. The party autonomy plays a vital role in cross- border transactions
and international contracts, in generally, the economics of a country. This minimizes the legal
risks and disputes in making contracts while ensuring fairness and justice. The party
autonomy allow parties to freely choose which law they will apply in the contracts, but there
still has some limitations and restrictions. The most important restriction is that the applicable
law must be sticking with the core Vietnamese law. The party autonomy in contractual choice
of law also protect the interest and rights of parties involve in the contracts, especially the
weaker ones, like consumers or employees in employments contracts. Overall, the party
autonomy in contractual choice of law helps develop the contractual relationships between
parties involved and provide the flexibility and consistency for the contracts.
Recommendation: when it comes to international contracts and contracts that have
foreign elements, parties involved must look up carefully about law regulations about
contractual choice of law, so they can take full advantage and benefit in choosing law for
contracts. In case having dispute, it is very important to understand clearly about the party
autonomy in contractual choice of law, because it is directly affect the jurisdiction and law use
for solving problems.

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 REFFERENCES:
The National Assembly of Socialist Republic of Vietnam. (2015). Civil Code.
The National Assembly of Socialist Republic of Vietnam. (2005). Law on Commerce.
The National Assembly of Socialist Republic of Vietnam.(2010). Law on Arbitration
The National Assembly of Socialist Republic of Vietnam. (2015). Civil Procedure
Code
Thuyet Tran. (2024). The Freedom to Choose Applicable Law and Dispute Settlement, The
Freedom to Choose Applicable Law and Dispute Settlement.
https://www.blawyersvn.com/vietnamese-contract-law-the-freedom-to-choose-
applicable-law-and-dispute-settlement/

Ngọc Trang. (2019). Một số vấn đề pháp lý và thực tiễn về quyền tự do hợp đồng ở Việt Nam
hiện nay. http://moj.gov.vn/qt/tintuc/Pages/nghien-cuu-trao-doi.aspx?ItemID=2503

Thư viện pháp luật.( 2003). Bản án 174/DSPT. https://thuvienphapluat.vn/banan/ban-an/ban-

an-174dspt-ngay-04122003-ve-vu-an-doi-no-97724

Trung tâm Trọng tài Quốc tế Việt Nam (VIAC). (2023).Thỏa thuận áp dụng nhiều hệ thống
pháp luật. https://www.viac.vn/thu-tuc-trong-tai/077-%7C-thoa-thuan-ap-dung-nhieu-
he-thong-phap-luat-a220.html

Ts. Bùi Thị Thu (Đại học Luật Hà Nội). (2022). Chọn luật áp dụng tại Tòa án và trọng tài
trong giải quyết tranh chấp thương mại có yếu tố nước ngoài - Một số khác biệt cơ bản.
https://thuvienphapluat.vn//banan/tin-tuc/chon-luat-ap-dung-tai-toa-an-va-trong-tai-
trong-giai-quyet-tranh-chap-thuong-mai-co-yeu-to-nuoc-ngoai-mot-so-khac-biet-co-
ban-6873

Dr. Giang Bui Duc and Thu Hang Le Thi. (2023).Contract formation under Vietnam’s law at
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glance-69739.html

Lê Mạnh Hùng (Phó Vụ trưởng, Vụ Hợp tác quốc tế, TANDTC).( 2021). Vấn đề áp dụng
pháp luật nước ngoài trong giải quyết các vụ việc dân sự tại Tòa án Việt Nam.
https://tapchitoaan.vn/van-de-ap-dung-phap-luat-nuoc-ngoai-trong-giai-quyet-cac-vu-
viec-dan-su-tai-toa-an-viet-nam

Pgs. Ts Bùi Thị Huyền. (2022). Về áp dụng các nguồn của luật dân sự tại Tòa án.
https://tapchitoaan.vn/ve-ap-dung-cac-nguon-cua-luat-dan-su-tai-toa-an5820.html

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