There are many issues when migrating from App Service with Docker Compose to Azure Container Apps. The NGINX configuration files should be modified accordingly. Just FYR: the following of default.conf file works well for me 
variables_hash_bucket_size 128;
variables_hash_max_size 2048;
server {
listen 80;
server_name nginx.xxx-xxxxxxxx.southeastasia.azurecontainerapps.io;
large_client_header_buffers 4 128k;
proxy_read_timeout 300;
proxy_connect_timeout 300;
proxy_send_timeout 300;
location / {
proxy_pass http://app1.internal.xxx-xxxxxxxx.southeastasia.azurecontainerapps.io;
proxy_http_version 1.1;
proxy_set_header Upgrade $http_upgrade;
proxy_set_header Connection keep-alive;
proxy_set_header X-Real-IP $remote_addr;
proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;
proxy_set_header X-Forwarded-Ssl on;
proxy_set_header X-Forwarded-Proto https;
proxy_set_header X-Forwarded-Host $host;
proxy_set_header X-Forwarded-Server $host;
add_header Front-End-Https on;
fastcgi_buffers 32 32k;
fastcgi_buffer_size 64k;
proxy_buffer_size 128k;
proxy_buffers 4 256k;
proxy_busy_buffers_size 256k;
proxy_read_timeout 300;
proxy_connect_timeout 300;
fastcgi_read_timeout 300;
}
location /api {
rewrite /api/(.*) /$1 break;
proxy_pass http://app2.internal.xxx-xxxxxxxx.southeastasia.azurecontainerapps.io;
proxy_http_version 1.1;
proxy_read_timeout 300;
proxy_connect_timeout 300;
fastcgi_read_timeout 300;
}
}