How a British Company Can Collect a Debt from a Vietnamese Company

Trade between the United Kingdom and Vietnam has grown rapidly over the past decade, especially in manufacturing, consumer goods, technology, and agriculture. However, with increased trade comes increased risk of non-payment. When a Vietnamese buyer delays or refuses payment, British exporters often face legal, cultural, and practical challenges. Understanding how debt collection in Vietnam works is essential for protecting cash flow and minimizing losses.

Legal Framework for Debt Collection in Vietnam

Vietnam operates under a civil law system. Debt recovery is primarily governed by the Civil Code, Commercial Law, and Civil Procedure Code. Foreign companies, including British firms, have the same legal standing as local companies when pursuing contractual claims, provided the contract is valid and enforceable.

A British company can recover debt through:

1. Amicable (pre-litigation) collection
2. Court litigation in Vietnam
3. Arbitration, if agreed in the contract
4. Enforcement of foreign judgments or arbitral awards

Each method has different costs, timelines, and success rates.

Amicable Debt Collection: The First Step

In practice, most debt collection in Vietnam cases start with negotiation. Vietnamese companies often respond better to formal legal demand letters issued by local lawyers rather than informal emails from abroad. A professionally drafted demand letter in Vietnamese, citing legal consequences, can be highly effective.

British exporters are strongly advised to:

• Act quickly once payment is overdue
• Use local legal representatives familiar with Vietnamese business culture
• Keep communication polite but firm, as preserving “face” is important in Vietnam

Many disputes are resolved at this stage without court involvement.

Litigation and Arbitration Options

If amicable efforts fail, British companies may initiate legal proceedings. Vietnamese courts have jurisdiction if the debtor is based in Vietnam and no alternative dispute resolution clause exists.

However, litigation can be time-consuming, often lasting 12–24 months. Evidence requirements are strict, and all documents must be translated into Vietnamese.

Arbitration is often a more efficient option. If the contract includes an arbitration clause (e.g., VIAC, SIAC, or ICC), arbitral awards are generally enforceable in Vietnam under the New York Convention. This makes arbitration a preferred tool for international debt recovery.

Enforcement Challenges

Winning a case does not guarantee payment. Enforcement is handled by local civil enforcement authorities, and success depends on whether the Vietnamese debtor has identifiable assets or bank accounts. Early asset tracing significantly improves recovery prospects.

Practical Recommendations for British Exporters

To improve the chances of successful debt collection in Vietnam, British companies should:

• Conduct thorough due diligence before signing contracts
• Use clear payment terms, penalties, and dispute resolution clauses
• Prefer arbitration clauses enforceable in Vietnam
• Act immediately when payment delays occur
• Engage Vietnamese legal counsel early
• Avoid writing off debts prematurely—many cases are recoverable with proper strategy

Conclusion

Debt recovery in Vietnam is possible but requires a structured and informed approach. British companies that understand the legal environment, act promptly, and rely on local expertise significantly increase their chances of success. With the right strategy, debt collection in Vietnam can be an effective process rather than a costly obstacle to international trade.

Original source: Grandliga website