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Principles of arbitration dispute resolution in Vietnam

Commercial arbitration is a popular dispute resolution method internationally, especially in countries with developed economies. According to Clause 1, Article 3 of the Vietnamese Law on Commercial Arbitration 2010 stipulates: “Commercial arbitration means a mode of dispute resolution agreed by the parties and to be conducted under this Law“. In the role of dispute resolution methods, commercial arbitration needs to follow certain principles to ensure the valid and legitimate rights of parties. In the article below, Viet An Law will present principles of arbitration dispute resolution in Vietnam under current law.

Principles of arbitration dispute resolution in Vietnam

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    The notion of principles

    The principle of dispute resolution by commercial arbitration is understood as the guiding ideology that arbitrators and participating entities must adhere to in the process of resolving disputes by arbitration. If the principles are violated, the resolution of commercial disputes by arbitration will be invalid for the participating entities and will not be protected by the State.

    Principles of arbitration dispute resolution in Vietnam

    Specifically, according to Article 4 of the Vietnamese Law on Commercial Arbitration 2010, the principles of dispute resolution by commercial arbitration include:

    Party autonomy

    The arbitrator shall respect the parties’ agreement if that agreement does not violate prohibitions or is immoral.

    It can be said that the arbitration agreement is a prerequisite and mandatory condition in resolving disputes by commercial arbitration. Arbitration agreements represent the will of the parties to submit the dispute to arbitration for resolution. This is the basis for the parties to resolve disputes by arbitration. A valid arbitration agreement is not only a legal form recording the parties’ agreement but also a legal basis on which the violated party has the right to request the breaching party to perform its important obligations.

    Regarding dispute resolution by judicial procedures in the Court, when a dispute arises, the violated party has the right to bring a suit to the Court to resolve it without prior agreement. Because the arbitration agreement has an important position and role in determining the application of arbitration, Vietnam’s arbitration law has quite specific regulations. The Law on Commercial Arbitration 2010 inherited the Commercial Arbitration Ordinance 2003 and more strictly stipulated the terms of the agreement between the disputing parties as “the dispute shall be resolved by arbitration if before or after a dispute occur that the parties have an arbitration agreement, and this arbitration agreement does not violate the law’s prohibitions”.

    It appears that in practice, many arbitration agreements have been declared invalid due not to ensuring this principle. As a result, this principle has the outstanding advantage of arbitration as a method of dispute resolution compared to court. The arbitration agreement is a premise, setting the starting point for the arbitration procedure process. If a dispute may arise or has arisen to be resolved by arbitration, the prerequisite is that before or after the dispute occurs, an arbitration agreement established voluntarily must exist between the parties in written form, and is not included in the types of invalid arbitration agreements specified in Article 18 of the Law on Commercial Arbitration 2010.

    Arbitrators must be independent, objective, impartial, and comply with the provisions of law

    • The arbitrator, as a third person trusted by the parties with the authority to resolve the dispute, has to be properly aware of their role to make the most objective and impartial decision, to ensure maximum rights and benefits for litigants.
    • The independence and impartiality of the arbitrator is shown during the dispute resolution process that the arbitrators themselves decide based on the evidence in the case file, not depending on others. It will be difficult for an arbitrator to resolve a dispute independently if he or she has a direct relationship or certain interests related to a party in the case.
    • This principle comes from the objective need to resolve the dispute according to the wishes of the parties. The content of the principle is clearly expressed in the arbitration proceedings that there must be no interference by anyone with the arbitrator. Arbitrators must be people who meet certain standards such as having active legal capacity, having a university degree, having worked in practice, or people with high professional qualifications and practical experience.

    Due process principles

    • The disputing parties hold equal rights and obligations. The arbitral tribunal has the responsibility to facilitate the exercise of their respective rights and fulfillment of their obligations under a regulated process.
    • This principle is an expression of the principle that everyone is equal before the law recognized in international conventions in the Constitution guided in civil law and other legal documents in particular.
    • The principle that the disputing parties are equal in rights and obligations has been mentioned in the New York Convention and the UNCITRAL Model Law and is recognized by the arbitration laws of some countries around the world. Article 18 of the Model Law states: “The parties shall be treated fairly and each party shall be given full opportunity to present its case.” According to this principle, the parties have the same right to choose to refuse the arbitrator, choose the location, present requests and justifications as well as evidence for the arbitrator to consider and receive information from the parties.
    • Some cases requirethe intervention of the arbitral tribunal such as the parties cannot agree on a place to resolve the dispute by arbitration. In this case, the arbitral tribunal shall
    • For the establishment of an arbitral tribunal, if the respondent does not choose an arbitrator or does not request to appoint an arbitrator, the president of the Arbitration Center shall appoint an arbitrator for the respondent (Clause 4, Article 40 of the Law on Commercial Arbitration 2010). The arbitral tribunal always facilitates the parties to promote their rights and obligations, based on party autonomy principles. During the dispute resolution process, the parties express their supreme will and when they legitimately express that right, the arbitral tribunal needs to create favorable conditions for them to promote these rights.

    Confidential

    • Dispute resolution by arbitration is conducted privately unless otherwise agreed by parties.
    • One of the advantages of resolving disputes by arbitration is that the trial is not public, meeting the requirements of the parties to keep business secrets. Different from court proceedings as the provisions in Clause 1, Article 15 of the Vietnamese Civil Procedure Code: “The trial of civil cases by the court is conducted publicly, everyone has the right to attend…”.
    • The principle of confidentiality in arbitration proceedings is an advantage highly appreciated by entrepreneurs. This principle comes from the characteristics of business activities.
    • In the business process, when a dispute arises, entrepreneurs often want to resolve the dispute privately, without affecting the reputation of the business, and the reputation of the entrepreneurs and ensuring business secrets are kept. Accordingly, “closed trial” means that participants in the resolution session only include the parties and the arbitrator. All information and documents related to the case are kept confidential and will not be disclosed.
    • However, still respecting the principles of the parties’ agreement, in case of consent of the parties according to Clause 3, Article 55 of the Vietnam Commercial Arbitration Law2010, the arbitral tribunal can allow other people to attend the session.

    The arbitration award is final

    • Arbitration decisions are final and effective for all parties, this is an important principle among principles of arbitration dispute resolution in Vietnam.
    • Due to the specific nature of the proceedings, the court can execute at many levels of trial. As a result, a judgment declared by the court can be appealed, protested against, and resolved according to the appellate, cassation, and retrial. Therefore, court proceedings will take a lot of time, effort, and money. Meanwhile, with the principle of a one-time trial, the criteria set by the parties to resolve quickly, at a low cost, and avoid prolonged proceedings have been completely satisfied in arbitration.
    • In the spirit of trusting the impartiality, objectivity, and impartiality of the arbitrator when making a decision, the parties will voluntarily implement the arbitrator’s decision. However, if one of the parties does not voluntarily execute the award at the end of the time limit for enforcement and does not request to set aside the award, the party against whom the award is enforced has the right to request the competent civil enforcement agency according to the provisions of Clause 1, Article 66 of the Law on Commercial Arbitration 2010 similar to the court judgment enforcement.

    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!

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