Force Majeure in Cross-Border Contracts: CISG vs. Vietnamese Law

1. Key Considerations for Import-Export Businesses

In international trade, unexpected disruptions happen — wars, pandemics, natural disasters, sudden government bans or new policies. Understanding Force Majeure (FM) clauses is essential for minimizing legal and financial risks in cross-border transactions. Here’s how CISG and Vietnamese law handle this concept:

2. Under the CISG (Article 79)

The United Nations Convention on Contracts for the International Sale of Goods (CISG), which Vietnam is a party to, provides a default rule on exemption from liability due to FM:

1. Key Conditions:

   1. Impediment beyond control of the party.

   2. Unforeseeable at the time of contract conclusion.

   3. Unavoidable and insurmountable even with due care.

   4. Notice requirement: The affected party must notify the other party without undue delay.

2. No need for a written FM clause – Article 79 automatically applies unless the parties exclude it or agree otherwise.

3. Limitations:

   1. Does not excuse payment obligations unless the impediment affects the ability to make payment (e.g., banking sanctions).

   2. Temporary impediments suspend performance, not terminate obligations permanently.

3. Under Vietnamese Law (Civil Code 2015 & Commercial Law 2005)

   1. Key Definitions:

      1. Article 156 of the Civil Code: An FM event is one that is objective, unforeseeable, and cannot be remedied even with all necessary measures.

      2. Article 294.1(d) of the Commercial Law: FM may exempt liability for breach of contract if proven.

2. Required elements:

   1. Objective cause not caused by the breaching party.

   2. The event was unpredictable and insurmountable.

   3. Timely notification and proof of efforts to mitigate.

3. Practical Note: Vietnamese courts often require evidence of both the FM event and efforts to overcome it. Documentation is crucial.

4. Key Takeaways for Businesses

   1. Always include a detailed FM clause in your contracts—even if CISG applies.

   2. Specify what counts as FM, how notice is given, and what happens to obligations.

   3. Keep evidence of communications, official notices, and mitigation efforts.

   4. In Vietnam, be ready to prove your case in court/arbitration with documentation.

💼 If you're unsure whether your situation qualifies as Force Majeure or want to tailor your contract protections, please reach out to us for a quick review.