Decree 328 Explained: The VIFC's International Arbitration Centre and the Annulment Waiver That Changes Everything

Decree No. 328/2025/NĐ-CP, signed on 18 December 2025 and effective immediately, establishes the legal framework for an International Arbitration Centre within Vietnam's International Financial Centre. It is one of the foundational VIFC decrees to receive detailed coverage, and it contains a provision — the written annulment waiver — that materially changes the enforceability calculus for international investors considering the VIFC. The decree does not create the IAC itself. It sets the conditions under which one may be licensed, and as of April 2026, no licence has been granted.

An Enabling Framework, Not an Operational Institution#

The distinction matters. When Law 150's specialised court launched on 1 January 2026, it existed by statute — the court was stood up by legislative mandate. The IAC follows a different model. Decree 328 sets the rules; private actors must assemble qualifying founder groups, submit an application to the Ministry of Justice, and obtain an operating licence. Until that happens, the IAC is a legal possibility, not a functioning institution.

This licence-on-application model mirrors the framework used for private arbitration centres under Vietnam's Commercial Arbitration Law 54/2010/QH12. The IAC layers VIFC-specific provisions — particularly the annulment waiver and the IFC-nexus jurisdiction requirement — on top of that baseline statute.

Once licensed, the IAC will be a private institution with independent legal status, its own seal, and its own bank accounts. It will not be a government body. This independence is by design: international parties expect arbitral institutions to operate at arm's length from the state, and the decree's architecture delivers that separation.

Who Can Found the IAC#

Article 7 sets demanding qualification requirements for founders. A minimum of five individuals must each hold:

• Vietnamese citizenship
• A university degree
• English proficiency at Level 5 or above (on Vietnam's national framework)
• At least 10 years of arbitration experience
• Participation in at least 10 arbitral awards
• Membership in an established Vietnamese arbitration centre

The Vietnamese citizenship requirement for founders is notable but should not be conflated with arbitrator eligibility. The decree's language on who may serve as an arbitrator in IAC proceedings is distinct from who may found the institution. International counsel should expect — though this has not been explicitly confirmed by Ministry of Justice guidance — that foreign nationals will be eligible to sit as arbitrators, consistent with the VIFC's broader framework of attracting international expertise.

The founder requirements point toward a narrow pool of candidates. The Vietnam International Arbitration Centre (VIAC), which handles several hundred cases annually, is the most established Vietnamese arbitration institution and the most likely source of qualifying founders. Whether VIAC itself will sponsor or affiliate with the IAC remains an open question, but the institutional overlap is hard to ignore.

What the IAC Can and Cannot Hear#

Article 5 defines the IAC's jurisdiction through both inclusion and exclusion. The IAC may resolve disputes arising from investment and business activities within the IFC, provided the parties have agreed to arbitration. The IFC-nexus requirement is a scoping limitation that counsel must account for when drafting arbitration clauses — a dispute between two VIFC members over activities outside the IFC would not fall within the IAC's jurisdiction.

The decree explicitly excludes four categories:

1. Administrative decisions or state management acts
2. Labour disputes
3. Personal rights matters
4. State management issues already adjudicated by competent authorities

These exclusions are consistent with international arbitration practice and should not surprise experienced counsel. The IFC-nexus requirement is the more commercially significant constraint, because it means parties cannot route non-VIFC disputes to the IAC simply because one party holds VIFC membership.

The Annulment Waiver: Decree 328's Central Innovation#

Article 4 is the provision that will generate the most interest from international investors and their counsel. It introduces a mechanism with no precedent in Vietnamese arbitration law: parties may execute a written agreement waiving their right to request that a Vietnamese court set aside an IAC arbitral award or a decision recognising their settlement.

Where a valid written waiver exists, Vietnamese courts must refuse to accept or consider set-aside applications. The award proceeds directly to enforcement.

The practical significance is substantial. In Vietnamese commercial arbitration, losing parties have historically used set-aside applications as a delaying tactic, stretching enforcement timelines by months or years. The annulment waiver is designed to eliminate that delay for IAC proceedings — a deliberate structural innovation that aligns the VIFC with the award-finality standards of leading international financial centre arbitration bodies such as the DIFC-LCIA and the AIFC International Arbitration Centre.

Two Exceptions That Preserve Court Review#

The waiver is not absolute. Decree 328 preserves court oversight in two circumstances:

1. Invalid waiver agreement. Where the waiver itself violates grounds for invalidity under Vietnamese arbitration legislation — for example, if it was procured by fraud or by a party without legal capacity — the court retains jurisdiction to hear a set-aside application.
2. Prior proceedings. Where the court application was filed after annulment proceedings have already commenced, the waiver does not retroactively bar the existing proceedings.

These carve-outs are sensible safeguards, but they introduce drafting risk. The first exception turns on the validity of the waiver agreement itself, which means counsel must ensure the waiver meets all formal requirements under Vietnamese law. The second exception creates a timing vulnerability — a party who moves quickly to file annulment proceedings before the waiver is formally invoked may preserve access to the courts.

What This Means for Contract Drafting#

International counsel advising on VIFC transactions should consider including an explicit annulment waiver clause in their arbitration agreements now, even before the IAC is licensed. The key drafting considerations:

• Standalone written agreement. The decree treats the waiver as an integral component of the arbitration agreement, but best practice would be to execute it as a clearly identified, standalone provision to minimise challenges to its validity.
• Mutual waiver. A one-sided waiver — where only one party waives annulment rights — could face enforceability challenges. Mutual waivers are commercially standard and legally safer.
• Governing law of the waiver. The waiver's validity is assessed under Vietnamese arbitration legislation. Choosing a foreign governing law for the underlying contract does not change this — the waiver itself is subject to Vietnamese law.
• Timing language. To reduce exposure to the second exception, consider language that makes the waiver effective from the commencement of arbitral proceedings, not merely from the issuance of the award.

Choice of Law: Flexibility With a Caveat#

For transactions involving at least one foreign party, Decree 328 permits the parties to agree on foreign substantive law. This is a significant concession to international commercial practice and aligns the VIFC with other IFCs that permit common law or civil law choice depending on the parties' preferences.

The caveat: foreign law may not be applied where doing so would contravene the fundamental principles of Vietnamese law. This limitation is standard in Vietnamese private international law, but its breadth is undefined in the decree. Vietnamese courts have applied a similar concept under the Civil Code and in CISG-related disputes, but the standard has not been tested in the IFC arbitration context.

For practical purposes, this means that choice of English law or Singapore law for commercial contracts is unlikely to be problematic. But provisions that conflict with mandatory Vietnamese rules — for example, on interest rate caps, land use rights, or certain regulatory requirements — could trigger the limitation. Until the IAC develops a body of practice and the specialised court issues guidance, this remains a drafting risk that counsel should flag to clients.

The IAC and the Specialised Court: A Tiered System#

The IAC and the Law 150 specialised court form a complementary dispute resolution ecosystem — not competing institutions. Understanding the division of labour is essential:

A party who waives annulment rights still interacts with the specialised court — for enforcement support, for interim measures during proceedings, and for any recognition proceedings involving the award in other jurisdictions. The waiver eliminates one specific pathway (set-aside litigation), not all court involvement.

As the parliamentary debate record shows, the specialised court was designed with this tiered model in mind. The court provides the judicial infrastructure that makes the IAC's award-finality mechanism credible — because an award that cannot be set aside still needs a court to enforce it.

Unresolved Questions#

Several commercially significant issues remain open:

Procedural rules. The decree does not specify whether the IAC must develop bespoke procedural rules or may adopt established frameworks such as the UNCITRAL Arbitration Rules, SIAC Rules, or ICC Rules. For international parties, this is a threshold question — familiarity with procedural rules drives institutional choice, and bespoke rules from an untested institution would face market resistance. The answer likely depends on the IAC's founding charter, which will be submitted as part of the licence application.

Foreign arbitrators. While founders must be Vietnamese citizens, the decree's provisions on arbitrators appear to permit foreign nationals. This distinction is commercially critical — international parties expect to appoint arbitrators with expertise in the governing law of the contract, which may be English law, New York law, or another foreign system. Explicit Ministry of Justice confirmation would resolve this uncertainty.

The "fundamental principles" standard. The limitation on foreign law choice tracks language used elsewhere in Vietnamese legislation, but it has not been applied in the IFC context. Whether Vietnamese courts and IAC tribunals interpret this narrowly (limited to constitutional principles and mandatory rules) or broadly (extending to general policy preferences) will materially affect the utility of foreign law choice clauses.

Institutional timeline. No public announcement confirms that an IAC licence application has been submitted. The VIFC Authority has not published a target date for the IAC's establishment. This is the most significant practical gap — the legal framework exists, but the institution does not.

How the VIFC Compares#

The annulment waiver positions the VIFC alongside — not ahead of, but alongside — the DIFC, AIFC, and GIFT City in award-finality terms. The DIFC-LCIA permits opt-out of annulment proceedings. The AIFC International Arbitration Centre operates under its own statute with limited court review. The VIFC's mechanism is structurally similar, adapted for the Vietnamese legal system's requirements.

The gap is institutional maturity. The DIFC-LCIA has operated since 2008. The AIFC centre opened in 2018. The VIFC's IAC does not yet exist. The legal architecture is credible; the institutional track record is zero. International investors will watch the IAC's first cases — the quality of its arbitrator panel, the efficiency of its proceedings, and the enforceability of its awards — before committing to it as a primary dispute resolution forum.

What Counsel Should Do Now#

The IAC is not yet operational, but the legal framework is in force. International counsel advising on VIFC transactions should:

• Draft arbitration clauses that contemplate the IAC. Include the annulment waiver as a standalone provision. If the IAC is not yet licensed at the time of contracting, consider a fallback to another institution (SIAC, HKIAC, or VIAC) with a mechanism to migrate to the IAC once operational.
• Monitor Ministry of Justice announcements for licence applications and approvals. The IAC's founding charter — which will establish its procedural rules and arbitrator eligibility criteria — is the next critical document.
• Understand the specialised court's role. Even with a waiver in place, enforcement runs through the Law 150 court. Counsel should be familiar with both institutions.
• Flag the "fundamental principles" limitation to clients choosing foreign governing law. Until the standard is tested, it is a known unknown that belongs in risk disclosures.

The VIFC's dispute resolution architecture — Decree 328's IAC plus Law 150's specialised court — is the most ambitious institutional design in Vietnamese legal history. The annulment waiver, in particular, represents a genuine innovation that addresses one of the most persistent complaints about arbitration enforcement in Vietnam. Whether the institution that sits inside this framework matches the ambition of the law will depend on who builds it, what rules they adopt, and how their first awards are received by the market.

This article reflects the legal framework as of 25 April 2026. We will update it when the IAC licence is granted or Ministry of Justice guidance is issued.