No Title Content/discussion Marking

1.0 Introduction FOREIGN

Provide an overview
TRADE of the concept ofHCMC
UNIVERSITY party autonomy
CAMPUS in
(1 mark) contractual choice of OF
DEPARTMENT law.ECONOMICS
Discuss its significance
AND LAW in
international contracts and its implications for cross-border
---------o0o---------
transactions.
2.0 Main body Legal Framework Governing the Party Autonomy Principle
(7 marks) in Contractual Choice of 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
PARTY AUTONOMY
law on the IN CONTRACTUAL
parties' ability to choose the governing law of their
CHOICE
contract. OF LAW
Provide examples IN VIETNAM
of circumstances under which
Vietnamese law might override the parties' chosen law. (1.5
marks)
INTRODUCTION TO LAW – PLUE111
FINAL
Judicial Practice ASSIGNMENT
on the Party Autonomy Principle in
Academic year: 2023-2024
Contractual Choice of Law: Examine how Vietnamese courts
have interpreted and applied the principle of party autonomy in
Grade (in number) Grade (in words)
contractual choice of law. Analyze key judicial decisions that
have shaped the understanding and application of this principle
in Vietnam.
Examiner Highlight any trends or notable
1’s signature Examinercase2’s
law. (2 marks)
signature
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
Invigilator 1’s signature Invigilator 2’s signature
ensuring fairness and justice. (2 marks)
3.0 Conclusion Provide a conclusion which is fitting for the discussion and
(1 mark) summarize relevant recommendations based on the report.
4.0 References List all the relevant references used in your report in
(1 mark) accordance with the APA Referencing system. In-text
Student’s Name: Tran Minh Chau
References and Bibliography required
Total Mark Student ID: 2313255002
Class code: ML211
Lecturer: LLM. Tran Thanh Tam

HO CHI MINH CITY, JUNE 18, 2024

 Table of Contents

I. INTRODUCTION.......................................................................................................................2

1. Overview of the concept of party autonomy in contractual choice of law...........................2

2. The significance and implications of party autonomy.........................................................2

1. Legal Framework Governing the Party Autonomy Principle in Contractual Choice of

Law in Vietnam.............................................................................................................................3
1.1 Legal Framework................................................................................................................3
1.2. Relevant rules that establish and regulate this principle...................................................3

2. Statutory Restrictions on Party Autonomy in Vietnam.........................................................4

2.1 Statutory restrictions and limitations imposed by Vietnamese law on party Autonomy....4
2.2 Circumstances under which Vietnamese law might override the parties' chosen law.......5

3. Judicial Practice on the Party Autonomy Principle in Contractual Choice of Law............5

3.1 Interpretation and application of the principle of party autonomy.....................................5
3.2 Key judicial decisions.........................................................................................................6

4. Evaluation of the Party Autonomy in Contractual Choice of Law in Vietnam........................7

III CONCLUSION.........................................................................................................................9

IV REFERENCES........................................................................................................................10

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I. INTRODUCTION
1. Overview of the concept of party autonomy in contractual choice of law.

During the “Age of Discovery” when European traders paved a new path for cross-border
transactions, global trade earnestly began. (Co, 2022)
However, the complexity in identifying jurisdictions and resolving contractual disputes of
international contracts was revealed. This originated from the need to ensure the balance between
international legal standards and one party's interests protection. As a result, an urge to enquire
about party autonomy in contractual choice of law has arisen. “Party autonomy” is “the freedom
of the parties to construct their contractual relationship in the way they see fit”. This means the
parties’ freedom to make decisions on their own legal course.
2. The significance and implications of party autonomy.

Thanks to the doctrine of Party autonomy, a more efficient environment for international
business transactions has been created with better predictability. This improvement has
encouraged cross-border trade and promoted economic growth. In the context of Vietnam, since
its participation in The Association of Southeast Asian Nations on July 28, 1995, a new period of
integration has been opened, marking the Vietnamese Government's emphasis on economic
globalization and international trade agreements (Vietnam in ASEAN, n.d.) (Vietnam’s 22 Years
of Membership in ASEAN, n.d.). Thus, the development of private international law has been
accompanied by increasing civil relations involving foreign elements. Despite being adopted into
Vietnam’s legal system, it has been revised and reconstructed with improvements and restrictions
appropriate for Vietnam’s application.
This report aims to dig into party autonomy and Vietnamese law while outlining the legal
framework that governs this principle by researching the Vietnamese Civil Code 2015,
Vietnamese Law on Commerce 2005, and the support of other legislative documents. It will
scrutinize the legal provisions that both establish and restrict the autonomy of parties to choose
contractual law, on which subject judicial pronouncements are examined. An overview of how
Vietnamese courts have interpreted and applied the parties' autonomy will also be provided in
this report along with the evaluation of its effectiveness in achieving a balance of promoting party
autonomy in cross-border transactions while ensuring fairness and preserving the public interest
in the context of international trade within Vietnam's evolving legal landscape.

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II CONTENT

1. Legal Framework Governing the Party Autonomy Principle in Contractual Choice

of Law in Vietnam

1.1 Legal Framework

The birth of the Vietnam Civil Code 1995 with the introduction of the Article 834, which
declared that “the rights and obligations of parties to a contract are governed by the law of the
place of performance, unless otherwise agreed upon”, has marked the very first step of Vietnam
in adopting Party autonomy in Contractual Choice of Law. The Party autonomy has been
established by the amendment of Vietnamese Civil Code 2015 which provides clearer and more
structured guidance for parties to choose the appropriate law to govern their contracts. It supports
the parties involved with better predictability in determining the legal framework of the
agreement.

The scope of applicable legal choices in civil relations that involve foreign elements has been
identified by the Vietnam Civil Code 2015 which guarantees the basic rights and interest of
weaker parties (Labors and Consumers) and the third party. Simultaneously, it governs and
restricts the provisions of law relating to real estate transactions.

1.2. Relevant rules that establish and regulate this principle

1.2.1 Vietnam Law on Commerce 2005
As illustrated by the Article 5(2), the Commercial Law of Vietnam does recognize the
right to choose applicable law for parties in commercial and foreign affairs without being bound
to any specific issues of the contract. In other words, the parties have the right to make decisions
on the law applicable to all issues arising from this type of commercial relationship.
1.2.2. Vietnam Civil Code 2015

The Civil Code 2015 extends the scope of the parties’ choice of applicable law in their
contractual relationships, overcoming disputes between parties.
First, about the scope of the application,
Art 663 Civil Code 2015 of Vietnam governs legal provisions applicable to international
commercial contracts, in which these legal provisions are not contrary to the provision of the

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Code. This regulation shows respect for the principles of freedom, voluntary commitment, and
agreement in civil relations in the context of international integration.
Second, about identifying the legal provisions applicable for civil contracts involving
foreign elements.
Article 664 of the Civil Code 2015 of Viet Nam regulates the principles of identifying the
law applicable to international commercial contracts. Accordingly, the principles for determining
the law applicable to international civil contracts, according to the Civil Code 2015, are
mentioned
Therefore, the set of principles for determining the law applicable to international
commercial contracts, according to the Civil Code 2015 of Vietnam, is the order of applicable
priorities of the Law. Especially, the Civil Code 2015 states that the parties are allowed to choose
the applicable law for an international treaty to which Vietnam is a member or in accordance with
the law of Vietnam. Additional provisions on the principles of applying the Law which has the
closest connection to the parties to serve as a basis for determining the applicable law ensure the
flexibility of the jurisdiction authority to manage cases that arise in reality, avoiding the situation
of directly applying Vietnamese law without any basis or agreement. Concurrently, the principles
acknowledge the effort of Vietnam’s Law in governing international commercial contracts in the
context of integration and globalization.
2. Statutory Restrictions on Party Autonomy in Vietnam

2.1 Statutory restrictions and limitations imposed by Vietnamese law on party Autonomy

According to Art 683 (1) of the Civil Code 2015 of Vietnam, it can be analyzed as
follows, (Tranh chấp quyền sở hữu với bất động sản tại Việt Nam có yếu tố nước ngoài thì có
được lựa chọn áp dụng pháp luật nước ngoài không?, 2024)
Protecting Public Policy (Ordre Public):

Vietnamese courts have the authority to disregard the chosen governing law if it is
contrary to the basic principles of Vietnamese laws which maintain public order; and protect,
uphold, and develop the good values of the Vietnamese nation.

Protecting weaker Parties:

Clause 5 and Clause 5.1, Article 683 of the Vietnam Civil Code 2015 protect rights in
labor contracts and consumer contracts, respectively.
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 Minimum standards for employee benefits such as wages, overtime pay, and safety
measures have been established in Article 5, while Article 5.1 protects consumers by governing
standards for product quality, return policies, and protection against dishonest business practices.
When these standards are infringed, Vietnam's legal framework may prevail over any foreign
Laws.

Respecting Third-Party Rights:

Article 683(6) protects the basic rights of third parties in international contracts in
Vietnam. This encourages business entities to enter into cross-border transactions with
confidence, knowing that their rights are protected from changes. As a result, a more stable
commercial ecosystem with trust and predictability will be promoted.

Immovable Property Matters:

Article 683 (4) prioritizes the application of Vietnam's Law to domestic real estate
transactions, regardless of the governing law chosen in the contract. This ensures consistency and
clarity in transactions related to assets in Vietnamese territory, protects land use regulations, and
minimizes potential disputes.

2.2 Circumstances under which Vietnamese law might override the parties' chosen law

Examining the case in which a foreign company launches a new store in Vietnam, the
company issues labor contracts with Vietnamese employees. If the contracts do not satisfy the
minimum benefits of the labor, mentioned in Vietnam’s Labor Code 2019, Vietnam’s law will be
applied.

3. Judicial Practice on the Party Autonomy Principle in Contractual Choice of Law

3.1 Interpretation and application of the principle of party autonomy

Party autonomy is advocated by Vietnamese courts but within the restriction of a specific legal
framework, in which the validity of the chosen law and compromise between parties must be
guaranteed. When the chosen law is contrary to Vietnamese’s basic public policy principles, the
Court may disregard it. Simultaneously, the intervention of Courts will appear to protect the basic
needs of weaker parties to a binding contract from exploitation.

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 If both parties are unable to make decisions on the legal regulations in their contract,
Vietnamese courts will examine various factors, for example, the contract language, place of
performance, and location of the parties to determine the legal basis appropriate to both parties'
preferences. However, analyzing these factors can lead to uncertainty. Therefore, the parties need
to choose the law powering in the contract, in order to avoid any further complicated disputes

In some situations, the Parties are allowed to choose different laws for their contract
(dépeçage) This means the court must ensure that the law chosen ensures clarity and avoids
potential conflicts that may complicate dispute resolution.
3.2 Key judicial decisions

3.2.1 The development of Vietnam Civil Code

Before the year of 2015, “lex fori”, the law of the Court hearing the case, and the Closest-
connect law had been the primary basis for most approaches of Vietnamese Courts
(thuvienphapluat.vn, 2017). However, here arose the problem that the uncertainties for businesses
involved in cross-border transactions, resulting in the lack of party autonomy appeared to prevent
these businesses from entering the foreign market.

The amendment of the Civil Code 2015, especially the improvement of Article 683, has
marked a significant change in the Party autonomy within Vietnam’s context, in which the parties
are allowed to choose the governing law for their contract. Concurrently, some restrictions have
been determined, in order to guarantee the balance between Party autonomy and public interest
within Vietnam’s legal framework.
3.2.2 Notable case law

In the practice of resolving contract disputes at Vietnamese Courts, the Court respects the
freedom of will of the parties and considers contracts as the basis for resolving disputes,
specifically in some cases the following work:
In the case relating to a contracting dispute between a Vietnamese company and
Singaporean company in 2003, according to the contract, the parties agree that if a dispute arises,
they will choose Singapore arbitration to resolve the dispute and Singapore law to govern the
contract. However, when a dispute arose, the Vietnamese Party believed that the Vietnamese
Court did not have the authority to resolve it. However, the Trial Court still had the right to

6
evaluate and apply Vietnamese law. The Court of Appeal of the Supreme People's Court annulled
the first instance judgment for the reason that: “Regardless of any prior discussions, in the
situation of a dispute leading to litigation between the parties regarding the performance of the
contract, the court shall base its judgment on the terms and conditions agreed upon in the
contract, as well as the basis for determining jurisdiction.”
/Judgment No. 174/DSPT dated April 12, 2003, of the Supreme People's Court/
( Judgment No. 174/DSPT, December 4, 2003)

4. Evaluation of the Party Autonomy in Contractual Choice of Law in Vietnam

The Party autonomy in the Contractual Choice of Law within Vietnam’s current legal
framework has offered fundamental advantages. Parties are allowed to have freedom of choice in
the governing Law for the contracts, which promotes predictability and adjusts based on the
industry standards. Simultaneously, the basic principles of the Law of Vietnam are protected by
the “ordre public” concept. Fairness for weaker parties is also ensured as the courts have the
authority to intervene if the Law chosen in the contract is disadvantageous to one party (Labor,
consumer, and the third party). When the absence of a Choice of Law clause occurs, the Courts
will analyze thoroughly the factors mentioned in the contract to ensure a fair outcome in such
unforeseen circumstances.

However, such principles also face challenges while dominating under the current legal
framework of Vietnam. The procedure of examining the contract in the absence of a choice of
law clause can delay the dispute resolution for quite a long time and can also lead to
uncertainties, especially for businesses unfamiliar with Vietnamese law. Furthermore,
international treaties and jurisdictional complexities can make it difficult for parties to seek a
legal basis that presses judgment against foreign parties. Furthermore, international treaties and
jurisdictional complexities can make it difficult for parties to seek a legal basis that presses
judgment against foreign parties.

Thus, while a significant improvement took place in Vietnam’s legal framework in 2015
with the adjustment of the Civil Code 2015 of the Socialist Republic of Vietnam, many potential
strengthening and developments in the balance between parties’ interests protection and fairness
guaranteed. Businesses can minimize risks by examining Vietnam's legal framework and
consulting Vietnamese legal advisors to overcome complexities during the application of the

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Contractual chosen Law. Additionally, a clearer legal framework should be adopted to address
the uncertainty in examining the contract in which there is no choice of law clause mentioned.
Vietnam’s authorities are putting effort into improving the Vietnamese legal framework, which is
promising for all the stakeholders to enter the market with better predictability and guaranteed
fairness.

III CONCLUSION

Party autonomy in Contractual Choice of Law has showcased improvement. While being
encouraged to participate in such cross-border transactions with greater predictability and
flexibility, the parties are restricted and governed by the powering authorities, so that the basic
principles of Vietnam’s Law will be protected. Vietnam’s approach to the doctrine of Party
autonomy should be acknowledged in the context of integration and globalization. The Courts
play a fundamental role in maintaining the protection of public interests and fairness among
contract-involve parties. However, in practice, inconsistencies may arise among the jurisdictions,
leading to the discouragement of business entities in entering cross-border transactions.

Improvements are promised to take place in the not-too-far-distance future and strengthen
the legal framework of the Socialist Republic of Vietnam in the application of the doctrine.
Furthermore, it is necessary to help the parties significantly understand the concept of Party
autonomy and procedure that should be considered when using the choice of law clause.
Potentially, Vietnam’s Government will continue to adopt, adjust, and improve such great
principles, to support the economy as a whole. Therefore, the complexities arising in dispute
resolution will be minimized and all the parties will be better safeguarded by Vietnam’s legal
framework.

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IV REFERENCES

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https://americandeposits.com/brief-history-globalization/

thuvienphapluat.vn. (2017). Lex fori là gì? THƯ VIỆN PHÁP LUẬT.

https://thuvienphapluat.vn/hoi-dap-phap-luat/1DFCB-hd-lex-fori-la-gi.html

Tranh chấp quyền sở hữu với bất động sản tại Việt Nam có yếu tố nước ngoài thì có được lựa
chọn áp dụng pháp luật nước ngoài không? (2024, January 31). ThuVienPhapLuat.vn.
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Vietnam in ASEAN: Toward Cooperation for Mutual Benefits. (n.d.). ASEAN Main Portal.
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National Assembly of the Socialist Republic of Vietnam. (2015). 91/2015/QH13 in Vietnam, Law
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Cổng thông tin điện tử Bộ Tư pháp. (2015). Các quy tắc về lựa chọn pháp luật áp dụng trong
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den-dao-duc-xa-hoi-o-viet-nam-hien-nay

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Ngọc Trang. (2019). Một số vấn đề pháp lý và thực tiễn về quyền tự do hợp đồng ở Việt Nam hiện
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Nam, V. (2024, June 10). Vietnamese Contract Law: The Freedom to Choose Applicable Law and
Dispute Settlement. BLawyers Vietnam | International Law Firm.
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law-and-dispute-settlement/

TS Đỗ Quí Hoàng. (2022, September 22). Xác định pháp luật điều chỉnh hình thức của hợp đồng
mua bán hàng hóa có yếu tố nước ngoài. Tạp chí Công Thương.
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ban-hang-hoa-co-yeu-to-nuoc-ngoai-98566.htm

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