Feature of commercial arbitration in Vietnam

Commercial arbitration is one of the most popular dispute resolution methods in the world, especially in countries with developed economies. In Vietnam, the dispute resolution mechanism through arbitration has been established for a long time, although according to the law in each period, the organization and operation of the arbitration are different. In 2010, the National Assembly of Vietnam issued Law on Commercial Arbitration No. 54/2010/QH12 specifically regulating issues related to commercial arbitration. In the following article, Viet An Law will present an overview of the feature of commercial arbitration in Vietnam.

What is commercial arbitration?

Commercial arbitration is a notion that has been around for a long time and is increasingly popular in economic life around the world. Arbitration as a method of dispute resolution is the main approach of the system of legal regulations on arbitration. According to Article 2.a of the UNCITRAL Model Law: “Arbitration means any form of arbitration with or without institutional supervision.” According to the American Arbitration Association (AAA): “Arbitration is a way to resolve disputes by submitting the dispute to several objective people to consider and resolve, and they will make the final decision, has a mandatory value for the disputing parties to implement”.

According to Clause 1, Article 3 of the Law on Commercial Arbitration 2010 stipulates: “Commercial Arbitration is a method of resolving disputes agreed upon by the parties and conducted following the provisions of this Law.” Thus, commercial arbitration can be considered from two main angles:

• Arbitration is a method of resolving disputes in commercial business: as a method of resolving disputes, commercial arbitration is understood as a method in which the disputing parties voluntarily agree with each other or entrust the settlement of disputes that have arisen or that may arise between them to arbitrators. Based on the objective details of the dispute, arbitrators are entitled to make a final decision to resolve the dispute and this decision is binding on the parties.
• Arbitration is a dispute resolution body: commercial arbitration is a body voluntarily established by arbitrators to resolve commercial business disputes at the request of the disputing parties. Arbitration is an independent judicial body, coexisting with the Court, with authority to resolve disputes arising in commercial activities.

Feature of commercial arbitration in Vietnam

Arbitration is a non-governmental dispute resolution method chosen by parties to resolve commercial disputes. Arbitration is a third intermediary chosen by the disputing parties to help the parties resolve conflicts and disagreements based on ensuring the parties’ right to self-determination.

In essence, commercial arbitration is a method of resolving commercial disputes that do not carry the will of state power but is resolved through the decision of a commercial arbitrator according to flexible procedures, a dispute resolution is carried out by special institutions. Therefore, arbitration has some of the following basic characteristics:

Commercial arbitration is a type of non-governmental organization. The arbitrator has the same power as a court and the arbitrator’s decisions are enforced

This is a judicial body that has the authority to resolve disputes arising in commercial activities and is regulated by law. Arbitration is a jurisdictional body because conducting arbitration procedures is a regular and main activity of arbitration centers. These are centers with legal status, their own seals and accounts with a clear and strict organizational structure. As well as the court, after resolving the dispute, the arbitration tribunal will issue an arbitration award. This judgment is legally binding on the parties and is guaranteed to be enforced with the support of the enforcement agency (when requested).

The dispute resolution mechanism by arbitration is a combination of two elements: agreement and arbitration

The agreement is the premise for the award and there cannot be an arbitration award that goes away the agreed elements. Therefore, in principle, the arbitrator’s authority is not limited by law, parties can choose at any time any ad hoc or regulatory arbitrator in the world to resolve the dispute. However, once agreed upon, the arbitration award is binding and obligates the parties to implement it.

The method of resolving disputes by arbitration ensures a high degree of self-determination of parties

The parties have the right to choose the arbitrator, arbitration procedural rules, and applicable law to resolve disputes… The method of resolving disputes by commercial arbitration ensures the litigants’ right to self-determination is higher than the method of resolving disputes in court.

Commercial arbitration exists in the following basic forms: ad hoc arbitration and regulatory arbitration

Ad hoc arbitration is a form of arbitration established to resolve specific disputes and is dissolved when the dispute is resolved. Permanent arbitrators are arbitration organizations that have a stable headquarters, and a list of arbitrators, and operate according to their charter.

The arbitrator’s award is final, cannot be appealed or protested, and is enforceable by the parties

Due to the nature of the proceedings, the court can execute at many levels of trial, so a judgment declared by the court can be appealed, protested, and resolved according to the appellate, cassation, and retrieval procedures. Therefore, if the dispute is resolved in court, it will take a lot of time, effort, and money. Meanwhile, with the principle of a one-time trial, the criteria set by the disputing parties to resolve quickly, at a low cost, and avoid prolonged have been completely met in arbitration proceedings. If one party fails to comply, the other party has the right to request the court to recognize and enforce the arbitration award. This feature represents a quick mechanism for quickly and decisively resolving trade disputes.

Resolving disputes by arbitration with the support of the Court

• The laws of several countries around the world, including Vietnam, stipulate support from the court for the organization and operation of arbitration. The reason why the Court’s support is needed is that because the arbitration decision does not carry state power, so there needs to be a state agency to support it.
• Through the process of recognizing and enforcing arbitral awards, the Court ensures the actual enforcement of arbitral decisions, when one or both parties do not voluntarily comply.
• In addition, the court can also assist the arbitrator in other tasks such as: determining the legal value of the arbitration center, resolving complaints about the jurisdiction of the arbitration tribunal; order the application of temporary emergency measures, distrain assets, preserve evidence, consider applications to cancel arbitration decisions, recognize and enforce arbitration decisions…

Frequently asked questions related to commercial arbitration

What is commercial arbitration?

Pursuant to Clause 1, Article 3 of the Law on Commercial Arbitration 2010 stipulates: “Commercial Arbitration is a method of resolving disputes agreed upon by the parties and conducted in accordance with the provisions of this Law.”

Can an arbitration award be appealed?

Article 4 of the Law on Commercial Arbitration 2010 stipulates principles on the finality of arbitration awards. Accordingly, the arbitration award is final and cannot be appealed like a judgment of the Court.

Is the commercial arbitration process conducted publicly?

According to the provisions of Clause 4, Article 4 of the Law on Commercial Arbitration 2010, disputes resolved by Arbitration are conducted privately, unless the parties agree otherwise. This is to ensure confidentiality and avoid affecting their reputation and prestige in the market.

What conditions must be met to resolve a dispute by arbitration?

According to Clause 1, Article 5 of the Law on Commercial Arbitration 2010, disputes will be resolved by arbitration if the parties have an arbitration agreement. Arbitration agreements can be made before or after a dispute arises.

Which disputes fall under the jurisdiction of commercial arbitration?

According to Article 2 of the Law on Commercial Arbitration 2010, the Arbitrator has the authority to resolve the following disputes:

• Disputes between parties arising from commercial activities.
• Disputes arise between parties in which at least one party has commercial activities.
• Other disputes between the parties in accordance with the law to be resolved by arbitration.

Enterprises that need corporate legal advice and dispute resolution through commercial arbitration please contact Viet An Law Firm to receive the fastest and most effective support from an experienced and highly qualified lawyer.