Khi Nào Nên Kiện, Khi Nào Nên Thương Lượng? (Luật sư Lê Bình Phương phân tích)When to Sue and When to Negotiate? (Analysis by Lawyer Lê Bình Phương)

Reference translation for convenience. The Vietnamese version is the authoritative text.

Overview

Whenever a dispute arises — whether a breached contract, misappropriated property, or infringed rights — the first question almost everyone asks is: sue or negotiate?

Many people choose to sue immediately out of frustration. Many others, wary of the cost and the delay, negotiate endlessly without resolution — and by the time they decide to sue, the limitation period has expired. Both extremes can leave you worse off.

Vietnamese law does not require you to pick one or the other. Article 317 of the Commercial Law 2005 recognises four forms of dispute resolution, in order: negotiation, mediation, arbitration, and the court. Even after a matter has reached the court, the mediation mechanism continues to operate in parallel. The point is to know how to use the right tool at the right time.

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Relevant Legal Provisions

Forms of dispute resolution

Article 317 of the Commercial Law 2005 provides four forms of dispute resolution in commerce, applied on the principle of preference from the least costly to the most formal: negotiation, mediation, commercial arbitration, and the court.

Article 3 of the Civil Code 2015 affirms a foundational principle: every civil dispute is resolved on the basis of freedom of agreement, mutual respect, and good faith. An out-of-court agreement is a right, not an obligation — except in certain cases the law requires.

Mediation at court before acceptance of the case

The Law on Mediation and Dialogue at Court 2020 (Law No. 58/2020/QH14) provides a mechanism for mediation right before the court officially accepts a civil case. This is an important intermediate stage:

• Article 1: Scope of application — all civil, marriage-and-family, business-and-commercial, and labour matters within the court’s jurisdiction.
• Article 3: Principles — voluntariness, confidentiality, flexibility. No party is forced to take part.
• Article 4: Absolute confidentiality — all information and documents exchanged in a mediation session may not be recorded and may not be used as evidence in any subsequent legal proceedings. This is why the parties can speak truthfully at the mediation table without fear of it being used against them.

Mediation during proceedings

Article 10 of the Civil Procedure Code 2015 (consolidated 2025) establishes that mediation is a responsibility of the court throughout the resolution of a case.

Article 205 sets out the principle: mediation in proceedings must be voluntary; the court may not compel it.

Article 206 lists the cases that may not be mediated: disputes involving claims for compensation for damage to State property; cases arising from transactions contrary to the law or to social morality.

Article 207 provides the cases where mediation cannot be conducted: the defendant deliberately absent for the second time without good reason; one of the parties requests that mediation not be conducted.

Article 212: After the parties have reached agreement, the court issues a decision recognising the agreement. This decision takes effect only after 7 days, to give the parties time to reconsider.

Article 213: A decision recognising an agreement takes effect immediately and is not subject to appellate appeal. The losing party can only seek cassation review if they can prove deception or coercion — which in practice is very difficult. This means a successful-mediation decision is stronger than an ordinary judgment because it does not go through appeal.

The limitation period — a limit that cannot be ignored

Article 429 of the Civil Code 2015: The limitation period to sue on a civil contract is 3 years from the day the person entitled to make the claim knew or should have known that their lawful rights and interests were infringed.

Article 319 of the Commercial Law 2005: The limitation period to sue on a commercial dispute is 2 years from the time the rights were infringed.

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Analysis and Application

Negotiation — the fastest, but not always right

Direct negotiation between the parties costs nothing, requires no formalities, and can be done at any time. It is a sensible choice when the dispute is still small, the relationship between the parties can still be maintained, or the cost of litigation exceeds the value of the dispute.

However, negotiation has no compulsory enforceability. If one party signs an agreement and then does not perform, the other must start again from scratch — or sue. Moreover, a drawn-out negotiation can “swallow” the limitation period without anyone noticing.

Mediation at court — the often-forgotten tool

The Law on Mediation and Dialogue at Court 2020 creates a special space: the parties sit down together before the case is officially opened, with the support of a mediator who is a retired judge or a person with the relevant expertise. Everything said in the mediation room is completely confidential — it cannot be used as evidence later.

If mediation succeeds, the court’s decision recognising the agreement is immediately enforceable, without going through appeal. This is a major advantage over an ordinary judgment, which can be appealed and dragged out for years.

When you must sue — no other choice

Suing is the appropriate, and sometimes mandatory, choice in the following situations:

First, when the opposing side is, or shows signs of, dissipating assets. Only the court can apply provisional emergency measures such as freezing accounts and distraining property to preserve your interests while awaiting trial.

Second, when the dispute involves State property or an unlawful transaction — falling within the matters that may not be mediated under Article 206 of the Civil Procedure Code. In this case, suing is the only route.

Third, when the limitation period is about to expire. If a commercial dispute is approaching the 2-year mark (Article 319 of the Commercial Law), or a civil contract dispute is approaching the 3-year mark (Article 429 of the Civil Code), you must file the lawsuit immediately to preserve your right, even though you can keep negotiating in parallel.

Fourth, when negotiation has failed repeatedly and the opposing side has no good faith. Continuing to negotiate only wastes more time and can be exploited by the other side to stall.

Lê Bình Phương, MBA., Esq. adds: even once you have decided to sue, the in-proceedings mediation process (Articles 205–213 of the Civil Procedure Code) remains open. A case can end early with a decision recognising an agreement — better than a judgment because it is not subject to a drawn-out appeal.

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Real-World Situation

The situation: Company A signs a contract to supply goods to Company B, worth VND 800 million. B receives the goods but pays only VND 300 million, then cuts off contact. The dispute arose in March 2024. A continually sends emails and messages demanding payment; B promises repeatedly but does not perform. By November 2025, A still has not sued.

Analysis: This is a commercial dispute — the limitation period under Article 319 of the Commercial Law runs only until March 2026 (2 years from B’s breach). If A keeps “negotiating” for a few more months without filing, the right to sue may be refused. The correct solution: file the lawsuit immediately to preserve the limitation period, and at the same time request a provisional emergency measure to freeze B’s account — these two steps do not conflict and can be done in parallel.

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Frequently Asked Questions

Is an out-of-court agreement enforceable?

A directly negotiated agreement between the parties is just an ordinary civil contract — if the other side does not perform, you have to sue again to enforce it. By contrast, a court’s decision recognising an agreement (Articles 212–213 of the Civil Procedure Code) is immediately enforceable and can be compulsorily enforced by the enforcement authority without going through appeal. So, if you have reached an agreement, consider taking it to the court for official recognition.

Does a drawn-out negotiation affect the right to sue?

Yes — this is a real risk that is often overlooked. The limitation period does not “stop” during a negotiation (save in certain special cases). A commercial dispute has a 2-year limitation period (Article 319 of the Commercial Law 2005); a civil contract dispute has 3 years (Article 429 of the Civil Code). If you negotiate while keeping an eye on the time, you must file the lawsuit before the deadline — after which you can still continue with in-proceedings mediation.

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Important Notes

A few points to grasp carefully before deciding:

Not every dispute can be mediated in proceedings. Article 206 of the Civil Procedure Code clearly lists the cases that may not be mediated: disputes involving compensation for damage to State property, or arising from an unlawful transaction. If your case falls within this category, there is no need to waste time waiting for mediation.

Provisional emergency measures are available only when you sue. If the opposing side shows signs of transferring property, withdrawing money from accounts, or preparing to dissipate assets — continuing to negotiate while you wait can leave you with an enforceable judgment but no property left to recover. Suing early and requesting a freeze on the property is the priority choice in this situation.

Information exchanged at a mediation session is completely confidential. Under Article 4 of the Law on Mediation and Dialogue at Court 2020, all information, documents, and statements at a mediation session may not be used as evidence in any other legal proceedings. This creates space for the parties to speak truthfully and propose solutions without worrying that it will be used against them later.

A decision recognising an agreement has stronger effect than a judgment. Under Article 213 of the Civil Procedure Code, this decision is not subject to appellate appeal — the losing party can only seek review by cassation if they can prove deception or coercion. In practice this is very difficult. Accordingly, a successful court mediation is usually more durable and more time-saving than a judgment that goes through multiple rounds of appeal.

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Conclusion

There is no one-size-fits-all answer to “sue or negotiate” — each case has its own particularities. What matters is to correctly assess three factors: how much of the limitation period is left, whether the opposing side has good faith, and whether the property is under threat.

If the limitation period is still long, the relationship can still be salvaged, and the property is not at risk — negotiation and mediation are the preferred direction. If any one of the three factors shows a bad sign, suing is not an extreme choice but a measure to protect lawful rights. And even after suing, the door to mediation is always open — with the added advantage that a successful mediation result is recognised by the court with immediate enforceability.

See also: Who is Lawyer Lê Bình Phương?