SPECIALIZED COURT AT THE INTERNATIONAL FINANCIAL CENTER – THE OPTIMAL FORUM FOR FINANCIAL AND COMMERCIAL DISPUTES

In the age of deep economic integration, financial and commercial disputes have become increasingly diverse and complex, marked by the emergence of new financial structures such as derivatives, financial technology (fintech), and international bonds. Although the People’s Courts and commercial arbitration remain the most commonly used dispute resolution mechanisms, practical experience indicates that these institutions are facing significant challenges in meeting the growing demand for specialization and speed required by modern financial markets.

Against this backdrop, the promulgation of the Law on Specialized Courts at the International Financial Center (Law No. 150/2025/QH15), adopted by the National Assembly on 11 December 2025 and effective from 1 January 2026, represents a major breakthrough in Vietnam’s judicial system. This legislation establishes a legal framework for dispute resolution bodies operating within the International Financial Center under a specialized model that closely aligns with the standards and best practices of leading global financial centers such as Dubai (DIFC) and Singapore (SICC).

The position of the Specialized Court is further reinforced when compared with ordinary People’s Courts and commercial arbitration based on three fundamental pillars: judicial personnel, procedural framework, and enforceability of judgments.

Secretary of the Party Central Committee, Chief Justice of the Supreme People’s Court Le Minh Tri. (Photo: National Assembly Information Portal)

First, the distinction in judicial personnel.

The most significant difference – and the most notable highlight – of the Specialized Court compared to ordinary courts and arbitration lies in the human factor. Law No. 150/2025/QH15 establishes an unprecedented mechanism in the history of Vietnam’s judiciary regarding the sources and standards for the appointment of judges. In ordinary People’s Courts, judges are civil servants with jurisdiction over a wide range of legal fields, which limits their ability to deeply engage with complex financial structures that require highly specialized knowledge and a strong understanding of international commercial practices.

By contrast, the new law introduces an open and innovative appointment mechanism. Pursuant to Article 10 of Law No. 150/2025/QH15, judges may be selected not only from domestic sources but also from among foreign nationals, lawyers, or internationally recognized experts with at least ten years of professional experience. This mechanism facilitates the formation of a judiciary with deep expertise and proficiency in the “global legal-financial language,” thereby ensuring that judgments accurately reflect the economic substance of disputed transactions and are consistent with international practice. 

Accordingly, the appointment regime not only opens the judiciary to foreign participation but also imposes strict requirements regarding professional experience and language proficiency. Judges are appointed by the President of the Socialist Republic of Vietnam upon the proposal of the Chief Justice of the Supreme People’s Court, thereby ensuring the highest legal status and institutional authority. This mechanism ensures that the adjudicating panel and the disputing parties share a common financial and legal mindset. As a result, judgments are rendered in harmony with international commercial customs rather than through the rigid application of domestic legal provisions.

In summary, the distinction in judicial personnel constitutes a key factor in building confidence among international investors. By transitioning from a “civil servant judge” model to a “global expert judge” model, the Specialized Court combines the coercive authority of a state court with the expertise, flexibility, and market awareness typically associated with international commercial arbitration. This is precisely why the Specialized Court is regarded as the optimal forum for resolving large-scale financial and commercial disputes.

Second, procedural distinctions.
In ordinary courts, proceedings strictly comply with the Civil Procedure Code and involve multiple levels of adjudication (first instance, appellate, cassation, and retrial), often extending over many years, resulting in capital stagnation and increased business risks for enterprises.

In commercial arbitration, proceedings are conducted in accordance with the Law on Commercial Arbitration and the procedural rules of the chosen arbitration center, as agreed by the parties. While this framework ensures procedural flexibility, arbitral tribunals lack enforcement mechanisms and must rely on court assistance for enforcement, leading to delays and uncertainty in effectiveness.

In contrast, the Specialized Court applies a distinct procedural regime. The establishment and application of specialized procedural rules mark a shift from traditional adjudication to a modern case management model. These rules enable the adjudicating panel to flexibly apply expedited procedures, notably including default judgments or summary judgments. By eliminating unnecessary and cumbersome procedural steps, dispute resolution timelines are significantly shortened, ensuring timeliness – an essential factor in commercial and investment transactions.

Pursuant to Article 14 of Law No. 150/2025/QH15, for the first time within Vietnam’s domestic legal system, English is recognized as an official language of judicial proceedings. This provision goes beyond mere linguistic preference and serves as a legal solution to eliminate risks of terminological inaccuracies arising from translation. By allowing parties to submit pleadings, conduct arguments, and receive judgments in the most widely used language of international commerce, the judicial system effectively removes language barriers and ensures consistency in the interpretation and application of international legal standards among all stakeholders.

To prevent prolonged disputes and ensure legal certainty, Article 35.4 of Law No. 150/2025/QH15 establishes the principle of absolute finality for judgments of the Specialized Court. Specifically, appellate judgments are final and immediately enforceable and are not subject to extraordinary review procedures such as cassation or retrial. This rule creates a definitive judicial mechanism, enabling parties to promptly ascertain their rights and obligations while preventing abuse of procedural loopholes to delay enforcement.

From a procedural perspective, the Specialized Court is designed as an optimal hybrid model that combines the coercive and enforcement authority of the People’s Courts with the flexibility, international expertise, and confidentiality of commercial arbitration. It serves as a new “destination” that effectively resolves the bottlenecks relating to language, time, and enforcement faced by traditional dispute resolution mechanisms.

Third, the interaction between judicial authority and confidentiality.
In ordinary courts, the principle of public hearings is mandatory, which often raises concerns among financial institutions due to the risk of information disclosure that may trigger stock price volatility or reputational crises.

In commercial arbitration, hearings are conducted in private, ensuring strict protection of business secrets and the parties’ reputations. However, due to the absence of coercive enforcement mechanisms, arbitral awards may face difficulties in compulsory enforcement in practice.

In the Specialized Court, the law establishes a “procedural confidentiality order” mechanism, allowing the court to decide on the confidentiality of the parties’ identities and transaction details from the case acceptance stage.

This mechanism offers a significant advantage by combining confidentiality – an inherent strength of arbitration – with the coercive authority of the state. Judgments of the Specialized Court are enforced immediately by civil enforcement agencies without the need for complex recognition and enforcement procedures applicable to foreign arbitral awards.

Accordingly, the Specialized Court is designed to provide enterprises with an additional optimal option rather than to create a “jurisdictional monopoly” or deprive businesses of their freedom to choose dispute resolution mechanisms. The Specialized Court is also expected to serve as the safest “harbor” for investors by integrating state authority (judicial coercion) with arbitration-like flexibility (expedited procedures and international personnel).

For non-member entities, participating in transactions with IFC members or agreeing to select the IFC Court enables access to a “clean,” professional judicial system that closely aligns with global standards.

Within this newly established legal framework, Paxlaw, positioned as a pioneer in global investment advisory and outsourced legal services, stands ready to assist enterprises in contract drafting and advisory matters, including the review and supplementation of clauses selecting the Specialized Court for disputes falling within its jurisdiction (pursuant to Article 13 of Law No. 150/2025/QH15). In addition, Paxlaw provides strategic advice on selecting the most appropriate dispute resolution mechanism – Specialized Court, arbitration, or mediation – based on the nature of each case, with a view to maximizing the protection of clients’ rights and corporate reputation.

Dao Mai Linh – Nguyen Thi Viet Anh

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