Multi-language contracts and 02 notes about mitigating the risk of disputes arising from use of multiple languages

Multi-language contracts

Currently, there are many contracts that are concluded and implemented in Vietnam but are drafted in both Vietnamese and other foreign languages. This may be because one of the contracting parties is a foreign organization/individual, so the parties use a foreign language to negotiate and conclude contracts, and at the same time use Vietnamese for accounting, tax, inspection and examination purposes in Vietnam.

In this article, BLawyers Vietnam presents an overview of the regulations on language in contracts as mentioned above and includes notes on the provisions of Vietnamese law.

1. General principles on choosing and applying language to contracts

According to Vietnamese law, Civil Code 2015 and the Law on Commerce 2005 are the main legal basis to regulate content related to civil and commercial transactions in Vietnam. However, the two laws do not have provisions specifically regulating the language that the parties use in establishing and performing the contract. Therefore, based on the principle of freedom of agreement, the parties can choose the language of the contract to be either Vietnamese or a foreign language, or there can be many different languages.

However, the parties should note that in some specific areas, some specialized laws have mandatory regulations on the use of Vietnamese in contracts. Accordingly, when drafting a contract in a foreign language, the parties must prepare an additional version in Vietnamese language for that contract. These can be mentioned as:

  1. According to the Law on Post 2010, written contracts for providing and using postal services must be made in Vietnamese; if the parties agree to use another language, the document in Vietnamese and the document in another language have the same legal value.
  2. According to the Law on Notarization 2014, if the contract is subject to mandatory notarization (for example, transfer, mortgage, capital contribution of houses and land of individuals or households), the language and script used in the notarization will be Vietnamese. Accordingly, when the parties draft a contract in another language, the law requires that they also prepare a Vietnamese version of the accompanying contract.
  3. According to the Decree No. 37/2015/ND-CP, the language used for construction contracts is Vietnamese. For construction contracts with foreign elements, the language used is Vietnamese and a foreign language selected by agreement between the parties; if no agreement can be reached, the party can use English.
2. Mitigating the risk of conflicts between the languages of multi-language contracts

Drafting contracts in both Vietnamese and other languages can also lead to conflicts in content between the contract languages, and then the parties may have disputes about which language is given priority to interpret that contract.

In principle, when such a dispute arises, the competent dispute-resolution authorities (such as Courts or Commercial Arbitration Centers) will rely on the agreement on the preferred language applicable to the contract. However, when the parties do not agree on the language to be prioritized to interpret the contract, there have been cases where the dispute-resolution authority reviews the entire content of the contract as well as agreements outside the contract to determine which language should be prioritized.

Therefore, to mitigate the risk of disputes arising due to conflicts between the languages of a contract with many different languages, the parties should pay attention to agreeing on which language should be prioritized for interpretation.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. We would love to hear from you.

Date: 02 April 2024

Writer: Minh Truong

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