Model Commercial Arbitration Clause in Vietnam

When participating in a commercial contract, the parties are no longer unfamiliar with the model commercial arbitration clauses, because model commercial arbitration clauses are becoming increasingly popular. To advise on the model Commercial Arbitration Clause in Vietnam, Viet An Law Firm will present the article below.

Legal basis

• Vietnam Law on Commercial Arbitration 2010.
• Procedure Rules of Vietnam International Arbitration Center.

What are model clauses?

Currently, in Vietnamese law, there is no regulation defining what a model clause is. However, it can be understood that model clauses are available ones stipulated in a model contract, accordingly, when drafting a contract, the parties can use these available clauses.

Therefore, it can be inferred that sample clauses will include the following characteristics:

• Subject of drafting model clauses: Model clauses can be drafted by one of the parties in the contract or drafted by a third party.
• When drafting a contract, the parties will use the sample clauses without having to negotiate from the beginning.
• The parties using model clauses only can accept or reject it.

What is a model commercial arbitration clause?

The notion of the model commercial arbitration clause

From the content of the model clause mentioned above, the answer to the question of what a model commercial arbitration clause is can be drawn as follows: A model commercial arbitration clause is an available one that is stipulated in a model contract. Whereby, when drafting the contract, the parties to the contract choose to use the available commercial arbitration clause.

Characteristics of Model Commercial Arbitration Clauses

Similar to the characteristics of the model clause, the model commercial arbitration clause will include the characteristics listed below:

Advantages of model commercial arbitration clauses

When using model commercial arbitration clauses for their contracts, the parties will inherit certain benefits. Specifically:

• The parties in the contract will save quite a bit of time because instead of spending a lot of time negotiating and then agreeing on the content of the commercial arbitration clause, the parties can immediately use the available model clause.
• If the model commercial arbitration clause is drafted by someone with extensive experience and knowledge of commercial arbitration, the parties t will not have to worry about the issue that the invalidity of the arbitration clause.

Disadvantages of model commercial arbitration clauses

Besides the advantages, the model commercial arbitration clause also has disadvantages, and because of that, many subjects when drafting commercial arbitration clauses do not choose to use the model clause. Specifically, the disadvantages of the model commercial arbitration clause include the following:

• In case the commercial arbitration model clause is drafted by one of the parties to the contract, the other party has almost no opportunity to negotiate on this issue. This leads to the commercial arbitration clause in the contract completely depending on the will of one party.
• A party’s drafting of a model commercial arbitration clause may lead to a situation in which it may be prohibited by law or be contrary to social morality and then become invalid.
• In situations in which the parties choose a model commercial arbitration clause drafted by a third party but the parties do not understand the content of this clause, it can lead to the parties misapplying the content of the provision.

The model commercial arbitration clause of the Vietnam International Arbitration Center

The Vietnam International Arbitration Center (VIAC) has provided a model arbitration clause as follows:

“Any dispute arising out of or in relation with this contract shall be resolved by arbitration at the Vietnam International Arbitration Centre (VIAC) in accordance with its Rules of Arbitration “.

In addition, the Vietnam International Arbitration Center also allows the parties to the contract to add several other contents to the above clause such as:

• Number of arbitrators of the Arbitral tribunal (one or three arbitrators);
• Place of arbitration (is in a certain city and/or country);
• Applicable law (In case the dispute has a foreign element);
• Language (Only applies in cases where the dispute has a foreign element or a dispute in which at least one of the parties is a foreign invested enterprise).

Notes for enterprises

In reality, it is no longer rare for enterprises to use model commercial arbitration clauses when signing contracts today. These model clauses are useful when they bring several benefits to enterprises when choosing arbitration as a method of resolving disputes for their contracts.

However, model clauses in commercial arbitration also bring certain disadvantages to enterprises when they do not really understand or firmly grasp the content and meaning of this type of model clause.

Therefore, enterprises when using sample commercial arbitration clauses need to pay close attention to how to take full advantage of the benefits that this clause brings, while also trying to diminish all their disadvantages.

Therefore, once the parties have chosen to include an arbitration clause in their contract, they should seek advice from experts who have both professional qualifications and extensive practical experience. This includes the team of lawyers and consultants of Viet An Law Firm to receive the most comprehensive assistance when drafting model commercial arbitration clauses.

If you have any questions about the Model Commercial Arbitration Clause in Vietnam, please contact Viet An Law firm for our best support!