VIFC Forex and Dispute Resolution: A Practical Framework for Cross-Border Transactions

The VIFC's regulatory architecture spans tax, visas, sandboxes, and infrastructure. But for the legal and treasury teams at international financial institutions structuring cross-border transactions, two pillars matter most: the foreign exchange liberalisation that determines how money moves, and the dispute resolution framework that determines what happens when things go wrong. These two systems interact in ways that neither the forex rules nor the court legislation fully explain on their own.

How Money Moves: The Forex Framework in Practice#

Vietnam's standard foreign exchange regime requires conversion to Vietnamese dong for most domestic transactions and imposes licensing requirements on capital flows. The VIFC framework, built through Resolution 222, Decree 329, and Circular 72, dismantles these constraints for IFC members — but not uniformly.

The Ex Ante to Ex Post Shift#

The most consequential change is structural, not transactional. Under the general Vietnamese regime, firms apply for foreign exchange permissions before acting. Under the VIFC framework, they operate under declaration and reporting obligations, with the State Bank of Vietnam (SBV) conducting supervision after the fact.

For treasury operations, this means the difference between a workflow that starts with a licensing application and one that starts with execution. Wholly foreign-owned IFC members — defined under Article 16.7(a) of Resolution 222 — receive the fullest benefit: exemption from foreign exchange administrative procedures entirely, subject only to declaration and reporting.

This is not deregulation. The SBV retains supervisory authority, and non-compliance with reporting obligations carries consequences. But it is a fundamental change in the sequencing of regulatory interaction, and it brings the VIFC closer to the operational model that treasury teams at global institutions already use in Hong Kong, Singapore, and the DIFC.

The Dual-Account Structure#

Circular 72 implements the forex liberalisation through a two-account architecture that separates capital flows from operational flows:

1. Foreign Currency Capital Account — held at an IFC member bank, required for offshore borrowing, offshore and domestic lending, outbound investment from the IFC, and investment elsewhere in Vietnam originating from the IFC. This is the account through which structured capital movements flow.

2. Foreign Currency Payment Accounts — held at any IFC member bank, used for operational receipts, vendor payments, currency conversion, and receiving direct investment capital. A member may hold multiple payment accounts.

The separation matters for compliance architecture. Capital account transactions carry specific reporting requirements and — for non-fully-foreign-owned enterprises conducting outbound direct investment — require registration with city-level authorities before transfer. Payment account transactions operate under lighter reporting. Firms structuring their VIFC operations need to map their expected transaction flows against this dual structure early, not after account opening.

The Foreign Debt Exclusion#

One provision has attracted less commentary than it deserves. IFC members' debts to offshore organisations and individuals are excluded from Vietnam's national foreign debt safety indicators. For firms with substantial offshore borrowing — or those planning to use the VIFC as a platform for regional debt issuance — this removes a constraint that has historically limited how much foreign-currency debt Vietnam-based entities could carry before triggering macro-prudential attention.

This does not mean the debt is unregulated. It means the debt does not count against national thresholds that could trigger policy responses affecting all borrowers. For an individual firm, this is the difference between operating in an environment where its borrowing capacity is constrained by the aggregate behaviour of every other Vietnamese entity, and one where it is assessed on its own merits.

What the Forex Framework Does Not Do#

The liberalisation has boundaries that practitioners must map precisely:

• Non-IFC bank accounts remain restricted. IFC members using accounts at commercial banks outside the IFC are subject to general Vietnamese foreign exchange rules. The liberalisation attaches to the IFC banking relationship, not to the entity's status alone.
• Domestic banks face capital limits on overseas bond purchases. Under Decree 329, domestic banks buying foreign-currency bonds issued overseas must not exceed 7% of equity capital and must demonstrate three consecutive years of audited profitable financials.
• Dong requirements apply outside the IFC perimeter. Transactions with non-IFC domestic counterparties remain subject to standard currency rules. The VIFC is not a dollarisation zone — it is a liberalised corridor for IFC-to-IFC and IFC-to-offshore flows.

How Disputes Resolve: Four Pathways, One Framework#

The VIFC's dispute resolution architecture is not a single institution but a menu of four options, each with distinct characteristics. Article 30 of Resolution 222 permits parties to resolve disputes through: the IFC Specialized Court, the International Arbitration Centre (IAC), existing Vietnamese arbitration institutions, or foreign arbitration and courts. The optionality itself is the innovation — no other Vietnamese legal framework offers this range of choice.

The Specialized Court#

Law No. 150/2025/QH15, effective 1 January 2026, creates a court that operates more like a common law commercial court than a standard Vietnamese judicial body. Its key features for cross-border transaction structuring:

Foreign law choice. Where at least one party is a foreign individual or organisation, parties may choose foreign law and international commercial customs as the governing law — including from treaties Vietnam has not signed. This is Article 5.2(a) of Law 150, and it is the provision that makes the VIFC viable for transactions governed by English, New York, or Singapore law.

English proceedings. The court may conduct proceedings and issue judgments in English, or in English with Vietnamese translation. For international firms, this eliminates the translation layer that adds cost and ambiguity to standard Vietnamese litigation.

Foreign judges. Article 10.2 permits foreign-qualified judges to sit on the bench, provided they have 10 or more years of experience in investment or business disputes and English proficiency. This is designed to address the concern that Vietnamese judges may lack familiarity with common law concepts or international financial instruments.

Streamlined appeals. First instance matters are heard by a single judge; complex matters by a three-judge panel. Appeals go to a three-judge panel with finality — no cassation or reopening. This two-tier structure is faster than Vietnam's standard multi-level court system.

The 'Public Order' Problem#

The most significant practical risk in the Specialized Court framework is the exception to foreign law choice. Law 150 blocks application of foreign law where it contravenes Vietnam's "public order" — but does not define the term.

This is not unusual in civil law systems. France, Germany, and many ASEAN jurisdictions use similar public order exceptions. But in mature legal systems, decades of case law have given the concept boundaries. Vietnam's Specialized Court has been operational for under four months. There is no case law, no judicial guidance, and no regulatory definition establishing where the line falls.

For firms drafting governing law clauses, this creates a calculable but unresolved risk. A contract governed by English law and adjudicated in the Specialized Court could, in theory, encounter a public order challenge on provisions that are routine in common law jurisdictions — aggressive creditor remedies, certain derivative netting arrangements, or trust structures that do not map neatly to Vietnamese legal concepts. The probability may be low, but the consequence of a successful challenge — the court substituting Vietnamese law for the parties' chosen law — could fundamentally alter the economics of a transaction.

Until the court builds a body of precedent, or the Supreme People's Court issues interpretive guidance, practitioners should treat the public order exception as an identified risk requiring specific mitigation in transaction documentation.

The International Arbitration Centre#

The IAC, established under the government decree implementing the IAC provisions of Resolution 222 (referred to in official sources as Decree 328/2025/ND-CP, though the full text has not been publicly released as of this writing), is the most innovative element of the dispute resolution framework — and the least tested.

Its structural feature is the waiver-of-annulment mechanism. Under Article 30 of Resolution 222 and the decree establishing the IAC, parties may waive in writing their right to petition a Vietnamese court to set aside an IAC arbitral award. When a valid waiver exists, courts cannot review annulment requests.

This is potentially the strongest enforceability guarantee available within Vietnam's legal system. In standard Vietnamese arbitration, losing parties can — and regularly do — petition courts to set aside awards on procedural or public policy grounds. The IAC waiver eliminates this avenue entirely, provided the waiver is validly executed.

For cross-border transactions, this matters in two ways. First, it reduces post-award litigation risk within Vietnam. Second, it creates a cleaner enforcement pathway: an award that cannot be set aside in the seat jurisdiction is generally easier to enforce in other jurisdictions under the New York Convention.

However, several questions remain open:

• Is the IAC operational? The establishing decree requires a minimum of five qualified members for establishment, with Ministerial approval from the Ministry of Justice. Whether the IAC has been formally constituted and is accepting cases as of April 2026 is not confirmed in publicly available sources.
• New York Convention coverage. Vietnam is a signatory to the New York Convention, which should in principle cover IAC awards. But the IAC is a new institution, and no award has been tested for cross-border enforcement. Firms with assets outside Vietnam should not assume enforceability without independent legal advice in the relevant enforcement jurisdiction.
• Waiver scope and validity. The conditions for a valid waiver — timing, form, and whether it can be challenged on grounds other than annulment — have not been tested in practice.

Foreign Arbitration Remains Available#

Resolution 222 explicitly confirms that parties may resolve disputes through foreign arbitration. This means international arbitration clauses designating SIAC, LCIA, ICC, HKIAC, or other established institutions remain fully available to VIFC participants. For firms that prefer the certainty of an established arbitral institution with decades of enforcement history, this pathway avoids the uncertainties of both the Specialized Court and the IAC — at the cost of losing the VIFC-specific benefits those institutions offer.

Where the Two Frameworks Intersect#

The forex and dispute resolution frameworks are not independent systems. They interact at several points that matter for transaction structuring:

Governing law for forex obligations. A loan agreement between two IFC members, denominated in US dollars under the Circular 72 framework, might be governed by English law and subject to IAC arbitration with a waiver of annulment. This combination is now legally possible — but it means the substantive law governing repayment obligations (English law) differs from the regulatory law governing the currency mechanics (Vietnamese law under Circular 72). Practitioners need to ensure their documentation addresses which law governs which layer.

Enforcement currency. If the Specialized Court or IAC issues an award denominated in foreign currency, enforcement against assets held in VIFC accounts should proceed in that currency under the liberalised regime. But enforcement against assets outside the IFC perimeter reverts to standard Vietnamese rules, potentially requiring conversion. Documentation should specify both the award currency and the enforcement pathway.

Regulatory reporting and confidentiality. The ex post reporting obligations under Circular 72 require disclosure of transaction details to the SBV. Arbitration proceedings are typically confidential. Firms need to reconcile these obligations — particularly where the subject matter of a dispute involves transactions that are also the subject of regulatory reporting.

What to Watch#

Three developments will determine whether this framework delivers on its structural promise:

The first Specialized Court judgment applying foreign law. This will establish — or at least indicate — where the public order boundary falls. Until it happens, the foreign law choice provision is a statutory right with an undefined exception.

IAC operational launch and first award. The institution's credibility depends on attracting qualified arbitrators, publishing procedural rules, and issuing awards that withstand enforcement proceedings in other jurisdictions.

SBV guidance on reporting scope. The ex post supervision model requires clarity on what must be reported, when, and in what format. The difference between a reporting obligation that functions as a compliance formality and one that functions as a de facto approval requirement lies in the implementing detail — and that detail is still emerging.

For legal and treasury teams evaluating the VIFC today, the framework is structurally sound and genuinely innovative. The forex liberalisation solves real operational problems. The dispute resolution menu offers optionality that no other Vietnamese framework matches. But the gap between statutory architecture and operational certainty remains material, and prudent structuring requires planning for the scenarios where untested provisions produce unexpected results.

This analysis reflects the regulatory framework as of 18 April 2026. We will update it as the Specialized Court issues its first judgments and the IAC begins operations.