As continued legalization of cannabis across jurisdictions in the U.S. and foreign countries causes the industry to become increasingly lucrative, determining proper avenues for dispute resolution controlling underlying agreements and investments has become a critical consideration for business-owners and foreign investors alike. Foreign investment in businesses involving cannabis is subject to a complex web of oversight that could include any combination of local and foreign laws, agreements, regulations, and practices. Many foreign investors in the cannabis industry have turned to international arbitration as a method for navigating these complexities and resolving disputes that may arise from such investments and business relationships. This post explores high-level considerations for foreign investors in the cannabis industry when assessing the viability of arbitration as a means for dispute resolution.
Most contracts in North America and Europe specify in detail all of the parties’ obligations and will be closely watched for the effectiveness of its clauses. The contract’s legal enforceability, however, is widely regarded as a given.
On the other hand, contracts between foreign investors and Vietnamese entities or with a reference to Vietnam that establishes Vietnamese jurisdiction should always specify the question “what institution will decide any disputes and in which language and what national law is to be applied?”
In this circumstance, without a dispute resolution clause, Vietnamese courts will have jurisdiction over a possible dispute. However, interested parties must consider the particularities of Vietnamese courts in comparison to Western rule-of-law courts.