This chapter is from the International Commercial Arbitration in Asia © JurisNet, LLC 2013 www.arbitrationlaw.com Chapter 15 ARBITRATION IN VIETNAM Bui Thi Bich Lien1 I INTRODUCTION Arbitration is a relatively new concept in Vietnam, and its path of development is facing considerable challenges It was not until the late 1980’s and early 1990’s of the 20th century when the country was opened to foreign trade that the concept was legislated, and non-governmental arbitration institutions were set up in Vietnam Vietnam also became a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) in 1995 Legislative development has shown that the Government has been attempting to promote non-governmental arbitration in the transitional period from centrally planned economy to market-oriented economy The first piece of legislation that governed arbitration in Vietnam is Decree No 116-CP, which was promulgated by the Government in 1994 Following the issuance of this Decree, a number of arbitration centers were established including the Vietnam International Arbitration Center (VIAC) which remains the largest arbitration tribunal in Vietnam to date Decree No 116-CP was later replaced by the Ordinance on Commercial Arbitration (the Ordinance) in 2003.2 The Ordinance adopted a number of internationally recognized principles and norms such as ad hoc arbitration, finality of arbitration awards, and independence of arbitration agreement In addition, the Ordinance affirmed the court’s support for arbitration and provided a mechanism to enforce arbitral awards Other laws that support the enforcement of arbitration awards were also enacted recently, such as the Code of Civil Procedures3 and the Law on Bui Thi Bich Lien is a PhD Candidate in the Department of Business Law and Taxation, Monash University, Australia The author would like to thank Nguyen Manh Dzung, managing partner of Dzungsrt and Associates, and arbitrator at PIAC, for his valuable comments and inputs into the daft Ordinance No 08/2003/PL-UBTVQH, dated February 25, 2003 Code No 24/2004/QH11, dated June 15, 2004 569 570 International Commercial Arbitration in Asia Execution of Civil Judgments However, the implementation of the Ordinance revealed a number of crucial obstacles not only for disputed parties but also for the courts and arbitrators To name a few examples: jurisdiction of arbitration was limited and hence excluded many disputes from arbitration, opaque and debatable arbitrability, conflict of jurisdiction between the courts and arbitration, limitation in the application of interim measures, and loose grounds for setting aside arbitration awards Adding to the weaknesses of the legislative framework, the concept of arbitration has not been well-rooted in Vietnamese business culture where disputes are often resolved through negotiation or informal conciliation If these measures not produce acceptable results, the court is often the parties’ choice of last resort Arbitration is still unknown to the majority of businesses.5 According to a small-scale survey which was conducted with 103 companies in large cities (Hanoi, Ho Chi Minh City and Can Tho), 84% of the surveyed businesses have never used arbitration.6 Enforcement of arbitral awards in Vietnam is another cause for concern The capacity of formal institutions such as the courts and judgment execution agencies have not been sufficiently developed to keep up with the rapid change of the economic environment Although it is undeniable that arbitration in Vietnam is more viable comparing to twenty years ago, businesses’ reliability and trust in this mode of dispute resolution remains relatively low As a consequence, the workload of arbitration centers is modest The bulk of commercial cases still belong to the courts While the Ho Chi Minh City Economic Court handles approximately 1,000 cases annually, the VIAC’s highest record was a mere 63 cases in 2010 On average, a judge at Hanoi and Ho Chi Minh City Economic Courts handles between 30 and 50 cases a year, while an arbitrator at the VIAC sits on only 0.25 cases per year.7 After almost ten Law No 26/2008/QH12, dated November 14, 2008 N Phuong, Commercial Arbitration Law: Approaching International Standards, http://www.vccinews.com/news_detail.asp?news_id=21601 Nguyen Thi Minh, Prerequisites for Arbitrators and Practice of Arbitration Centers, paper presented at workshop in Hanoi in July 2010 Vietnam Lawyers Association, Report on Draft Commercial Arbitration Law, presented to Vietnam’s National Assembly on September 1, 2009 See further http://www.viac.org.vn/en-US/Home/statistics/2011/01/352.aspx Arbitration in Vietnam 571 years of implementing the Ordinance, the total number of arbitrated disputes in Vietnam sits at 280.8 In another effort to boost the use of arbitration, Vietnamese policymakers enacted a new Law on Commercial Arbitration on June 17, 2010 (the LCA) to replace the Ordinance The drafting of this legislation received significant support and input from the international donor community, practicing lawyers and arbitrators It is believed that the LCA has addressed the Ordinance’s shortcoming and better reflects international standards Its introduction has generally been welcomed by the legal community However, the LCA still needs detailed guidance in order to be implemented effectively There are still a number of major issues, such as jurisdiction of arbitration and arbitrability that are not addressed At the time this chapter is written, the Supreme People’s Court, the country judiciary, is drafting such guidance It is not clear when this piece of regulation will be issued In addition, there are controversial opinions about the content of the guidance A Government Decree10 has been released Nonetheless, it focuses on the administration of arbitration centers rather than the substantive matters of arbitration Therefore, the analysis in this chapter will focus on the LCA The coming time will be a test of the LCA’s impact on arbitration practice II THE LEGAL FRAMEWORK FOR INTERNATIONAL ARBITRATION IN VIETNAM A Applicable Law The LCA is the key legislation that governs arbitration in Vietnam It came into effect on January 1, 2011 The LCA covers the following issues: Le Kien, Commercial Arbitration is Not Attractive Because of Poor Reputation, Tuoi Tre Newspaper, January 19, 2010 http://tuoitre.vn/Chinh-tri-xa-hoi/Phapluat/359382/Trong-tai-thuong-mai-it-viec-vi-chua-du-uy-tin.html According to legislative tradition and practice in Vietnam, a law is promulgated by the National Assembly and is regarded as having highest legal validity The law, however, only set out general principles and framework for the regulated area Detailed regulations will then be issued by other authorities 10 Decree No.63/2011/ND-CP dated 28 July 2011 of the Government Providing Guidance for Implementing a Number of Provisions of the LCA 572 International Commercial Arbitration in Asia (i) jurisdiction of arbitration; (ii) arbitration institutions and proceedings; (iii) court involvement in arbitration; (iv) establishment and operation of foreign arbitration in Vietnam; and (v) enforcement of arbitral awards Although the effective date of the LCA is clearly stated, its application in practice has been challenging for arbitration centers and the courts The legal community has yet to reach an agreement on which legislation (i.e the Ordinance or the LCA) should apply to disputes that are filed after January 1, 2011 but have arbitration agreements in question that were formed before then For the first time, the LCA permits the services of foreign arbitration institutions in Vietnam This shows Vietnam’s determination to open its market Foreign arbitration institutions can open a branch or a representative office in Vietnam It is worthy to note that no foreign arbitration institution has done so at this writing International arbitration is not subject to the LCA However, the enforcement of foreign arbitration awards in Vietnam has to comply with Vietnamese laws It will follow not only the New York Convention, but also the Vietnamese Civil Procedures Code and the Law on Enforcement of Civil Judgments This issue will be discussed in more detail in Section IV It is unclear whether the LCA is applicable to the situation where parties agree to international arbitration but select Vietnam as place of arbitration B The Role of Courts The relationship between the courts and arbitration has been subject to considerable discussion and debate in Vietnam As mentioned, one of the key weaknesses of the Ordinance was the conflict of jurisdiction between the courts and arbitration The Supreme People’s Court is also authorized with a legislative function to provide guidance for the implementation of the Ordinance.11 Such a power allows the courts to claim jurisdiction in certain situations even when an arbitration agreement is in place Specifically, if a defendant is given notice by a 11 Resolution No 05/2003/NQ-HDTP of the Justice Council of the Supreme People’s Court on Guidance for the implementation of the Ordinance on Commercial Arbitration, dated 31 July 2003 Arbitration in Vietnam 573 plaintiff or the court about the plaintiff’s decision to bring the dispute to court but did not express disagreement within seven days from the date of receiving such notice, then the court would automatically have the right to open a hearing on the case In this setting, the courts and arbitration come into conflict about whom between them has jurisdiction over the dispute In one of the cases, a dispute was handled by the VIAC and a provincial court at the same time and the conflict of jurisdictions is a dispute on its own.12 To overcome this shortcoming, the LCA adopts the UNCITRAL approach and incorporates an important principle that minimizes the courts’ interference into arbitration Article obliges the courts to deny jurisdiction if an arbitration agreement already exists unless such agreement is void or cannot be performed At the same time, lawmakers provide a “supervisory and supportive” role for the court13 by specifying a number of situations in which the court may handle arbitration-related matters, and identifying competent courts that have jurisdiction over these matters Parties can select a court to be involved in the arbitration of their case If the parties fail to reach an agreement, Article identifies certain provincial courts that have authority to intervene into arbitration in the following situations: • • • • • • 12 appointment or replacement of an arbitrator in an ad hoc arbitration appeal against the decision of an arbitration tribunal in relation to the validity of arbitration agreement, and jurisdiction of arbitrational tribunal collection of evidence application of interim measures summon of witnesses setting aside arbitral award or registering ad hoc arbitral award Nguyen Tan, Businesses Are Not Keen on Arbitration, Saigon Economics Times, June 8, 2008 http://www.thesaigontimes.vn/Home/diendan/ykien/6294 13 Vietnam Lawyers Association, footnote above 574 International Commercial Arbitration in Asia Commentators generally welcome these new provisions They believe that a clearer definition of the courts’ role and more support from the courts will better facilitate arbitration However, some are skeptical about the new arrangements as they increase the burden of the courts which were already overloaded with trial work Referral to courts may lead to delay in arbitration proceedings and thus does not help to speed up the parties’ dispute settlement 14 In addition, commentators urge clarification of the parties’ right to select courts in a dispute that involves foreign elements For example, it would be good to know whether parties can choose to designate one or more foreign courts to support dispute resolution, such as an English court to appoint arbitrators, Singaporean court to hear appeal against the decision of the arbitration tribunal, and Vietnamese court to apply interim measures 15 They also request a definition of “arbitration agreement that cannot be performed” C Forms and Scope of Arbitration Agreement The LCA adopts the UNCITRAL Model Law approach and provides that arbitration agreements must be made in writing It can either be an arbitration clause in a contract, or be made into a separate agreement The LCA also lists five additional forms of communication between parties that can be regarded as constituting a written arbitration agreement Examples are emails, fax, telegrams, or references to a contract that include an arbitration agreement (Article 16) This list is more exhaustive than that of the Ordinance There is no explicit regulation on the scope of arbitration agreements, although the issue of the validity of arbitration agreements has always been a key concern in Vietnam This issue will be discussed in detail below 14 Bui Ngoc Hong, Vietnam’s New Commercial Arbitration Law – the World’s Local Law, Asian Legal Business, Issue 10.8, August 2010 15 Vu Anh Duong, Arbitration Practice at VIAC, presentation in Hanoi on August 30, 2011 Arbitration in Vietnam 575 D Validity of Arbitration Agreements Setting a more reasonable ground for defining the invalidity of arbitration is another improvement that the LCA brings in comparison to the Ordinance Under Article 18, an arbitration agreement is invalid in the following situations: • • • • • Non-arbitrability, i.e the dispute cannot be subject to arbitration in accordance with Article of the LCA Lack of capacity by the person who entered into the arbitration agreement This can either be due to the lack of legal authority or the lack of civil capacity The former is a common legal issue in Vietnam that has been subject to considerable debate Specifically, only the legal representative of an organization (e.g the registered director of a company) has the authority to enter into a transaction or an agreement on behalf of that organization If it is not the legal representative, then written authorization must be provided Lacking of such authorization would render the agreement void This leads to a number of practical questions For example, it is unclear whether the head of a branch of a foreign bank in Vietnam has legal authority to enter into an arbitration agreement Incorrect form of arbitration agreement Forced agreement, i.e one of the parties was deceived, threatened or coerced during the process of formulation of the arbitration agreement Such a party has to request for a declaration that the arbitration agreement is void Breaches of law, i.e the arbitration agreement violates a prohibition prescribed by law Although the list of situations provided in Article 18 is still broad, it has eliminated one problem that was produced by the Ordinance Previously, the Ordinance stated that unclear arrangements in relation to arbitration, e.g failure to specify an arbitration institution, were sufficient for the arbitration agreement to be void This allowed the courts to have a wide discretion to set aside arbitration and/or to revoke arbitral decisions The LCA now allows the parties to discuss with each 576 International Commercial Arbitration in Asia other to clarify the unidentified issues If they cannot agree, then the plaintiff will have the right to decide such issues The LCA also incorporates a new principle that protects consumers’ rights Specifically, the arbitration clause in the standard terms and conditions for supply of goods and services will not have automatic effect Consumers still have the right to choose between the courts and arbitration to resolve the dispute, and suppliers can only initiate arbitration proceedings with consumers’ consent (Article 17) It is noteworthy that the LCA provides that when the ‘arbitration agreement cannot be performed’, the legal consequence is similar to that of an invalid arbitration agreement However, the LCA does not provide further clarification on this issue E Arbitrability of Claims The widening scope for arbitration under the LCA can be seen as a move away from the traditional approach of Vietnamese lawmaking according to which parties can only what the law allows them to It also represents an effort of the lawmakers to increase harmony and consistency between different pieces of legislation that regulate business Previously, the Ordinance regulated that only dispute arising from commercial activities was subject to arbitration The Ordinance also provided a detailed list of commercial activities Because of this limitation, arbitration was not possible for a number of contractual and non-contractual disputes For example, the court once denied the jurisdiction of arbitration to handle a dispute that was related to the maintenance service of a golf course because such service was not classified as a commercial activity.16 To address this shortcoming, Article of the LCA now extends the option to arbitrate to: • • Disputes between the parties arising from commercial activities; Disputes arising between the parties with at least one of whom is engaged in commercial activities; and 16 Nguyen Tan, Will Arbitration Become Stronger?, The Saigon Times, December 7, 2008, http://www.thesaigontimes.vn/Home/diendan/ykien/12963/ Arbitration in Vietnam • 577 Other disputes between the parties where the law stipulates they may/shall be resolved by arbitration What constitutes a commercial activity is defined according to the provisions of Commercial Law.17 Despite the improvement, this Article still requires further clarification from lawmakers to ensure smooth application A number of practical questions remain unclear For example, what is the basis to decide that one party is engaged in commercial activity? Does it depend on the legal status of such party or the purpose of the transaction? Can a government authority become a party in an arbitration agreement? Opinions on whether a branch of a foreign company in Vietnam can be a party in arbitration are also controversial In addition, lawyers and legal scholars are still arguing on whether arbitration has jurisdiction over a number of disputes such as legal services, life insurance, intellectual property, health and education services by private hospitals and universities, and labor relations As mentioned in Section B above, before the introduction of the LCA, the arbitrability of claims was also subject to certain confusion and debate because of unclear and inconsistent regulations on the jurisdictions of arbitration and the courts When disputes involved a foreign partner, the matter could become even more complicated There was a reported case in which the arbitrability of the claim had to be referred to the Ministry of Justice for final decision.18 Although the LCA has addressed these issues, further clarification of its provisions is still needed for implementation As representative of the business community, the Vietnam Chamber of Commerce and Industry has been urging the Government and other authorities to work on this.19 17 Interview with an advisor to the drafting team of the LCA The Commercial Law was passed by the National Assembly on 14 June 2005, and came into force on January 2006 18 Nguyen Xuan An, Resolving Contractual Disputes with Foreign Partners Through Arbitration, http://www.vamas.com.vn/home/detail.php?iCat=64&iNew=355& module=news 19 Nguyen Tan, Laws Wait for Decrees Again, The Saigon Times, March 14, 2011, http://www.thesaigontimes.vn/Home/doanhnghiep/phapluat/49423/Luat-lai-doinghi-dinh!.html 578 International Commercial Arbitration in Asia Under Article of the LCA, arbitrability of a claim is subject to the existence of an arbitration agreement Such an agreement can be formed before or after the dispute arises Cease of existence of one party will not affect arbitrability as an arbitration agreement can be transferred to another party F Selection and Challenges to Arbitrators Selection of Arbitrators The LCA follows the Chinese model and sets out conditions for one to become an arbitrator According to Article 20, people with all of the following qualifications may act as arbitrators: (i) having full civil legal capacity as prescribed in the Civil Code; (ii) having a university degree and at least five years’ work experience in the field of his or her studies; (iii) in special cases, an expert with high qualifications and considerable practical experience who fails to satisfy the requirements stipulated in (ii) above may still be selected to act as an arbitrator There has been debate among lawmakers and scholars about the above conditions Some believe that the modest qualification bars set for arbitrators will attract more professionals and practitioners to be involved in arbitration Others are concerned with the possibility that easy entrance for arbitrators will lead to low quality decisions that would eventually be set aside by the courts.20 Vietnamese nationality is not included as a prerequisite for an arbitrator This is an improvement in comparison to the Ordinance, and it is generally welcomed by the business community Foreign arbitrators now can practise in Vietnam if they are members of an arbitration center In addition, they can sit in ad-hoc arbitration The VIAC is the first arbitration center to admit foreign arbitrators.21 Parties have the right to agree on the number of arbitrators as well as the selection of arbitrators Three arbitrators will be appointed if parties cannot agree on the number (Article 39) 20 21 Nguyen Thi Minh, footnote above See further VIAC website: http://viac.org.vn/en-US/Home/dieukhoanmau.aspx 580 International Commercial Arbitration in Asia • the claimant will have the right to request a competent court to appoint an arbitrator for the respondents Where the parties agree to dispute resolution by a sole arbitrator but fail to select an arbitrator within thirty days from the date of receiving the claim, and if the parties not reach an agreement on requesting an arbitration center to appoint an arbitrator, then a competent court may appoint an arbitrator for the parties at the request of one or both of the parties Challenges to Arbitrators Article 42 of the LCA sets out several grounds to challenge an arbitrator: • • • • The arbitrator is a relative or the representative of a party; The arbitrator has certain benefits related to the dispute; There is clear evidence that the arbitrator is not impartial or objective; The arbitrator previously acted as conciliator or representative or lawyer of any party before the dispute is brought to arbitration, unless the parties provide written consent In the above situations, the arbitrator must refuse to handle the case, or the parties can request for replacement of the arbitrator Similar to other provisions of the LCA, this Article leaves considerable room for interpretation since there is neither explicit criteria for ‘impartiality’ and ‘objectivity’ nor definition of an arbitrator’s ‘benefits’ that relate to the dispute Some arbitration centers, such as the VIAC, have issued codes of conduct for their arbitrators while other centers state that they adhere to International Bar Association’s rules on ethics of international arbitrators.22 However, a professional body to enforcement of these rules does not exist yet Authority to replace an arbitrator lies in members of the arbitration tribunal or the chairman of the arbitration center (in case of institutional arbitration), or the courts (in case of ad-hoc arbitration) 22 Interview with Nguyen Manh Dung, PIAC arbitrator Arbitration in Vietnam 581 G Place and Language of Arbitration The LCA adopts the UNCITRAL terms regulating place of arbitration It allows the parties to choose the seat of arbitration Failing to reach such an agreement, the place of arbitration will be decided by the arbitration tribunal The place of arbitration can be within or outside of Vietnam The parties can also agree on the place of hearing If such an agreement cannot be reached, the arbitration tribunal will decide a place that is convenient for the settlement of the dispute, taking into consideration the taking of statements from witnesses, or inspection of goods, other property, or documents (Article 11) If the seat of arbitration is in Vietnam, arbitral award shall be deemed as having been given in Vietnam without depending on the place of hearing (Article 1.8) The language for arbitration proceedings depends on whether the dispute involves a foreign element, such as one party is a foreigninvested company in Vietnam, or the disputed goods is outside of Vietnam For all disputes without foreign involvement, the language of arbitration is Vietnamese In a dispute that has foreign element(s), the parties can agree on the language for arbitration Without such an agreement, the language used in arbitration proceedings will be decided by the arbitration tribunal (Article 10) These new arrangements have been regarded as improvements in comparison to the Ordinance.23 H Conduct of Proceedings The LCA contains detailed instructions on the initiation of arbitration proceedings If it is institutional arbitration, the claimant should file a statement of claim at the chosen arbitration center In case of ad-hoc arbitration, the statement of claim is served to the respondent by the claimant The statement of claim must include all issues listed in Article 30 The proceedings are deemed to start at the time the arbitration tribunal or the respondent receives the statement of claim (Article 31) Noticeably, the LCA sets a statutory limitation of years for arbitral 23 Nguyen Ngoc Bich, Innovation of The Law on Commercial Arbitration of 2010, The Saigon Times, August 25, 2010, http://english.thesaigontimes.vn/Home/ business/ investment/12233/ 582 International Commercial Arbitration in Asia claims which runs from the date that legal rights and interests are infringed (Article 33) The ambiguity in these time limits has caused considerable debate in the legal community Formal clarification for such vagueness is not yet available If the parties not have specific agreement, the respondent has to prepare a statement of defense which includes a number of issues as prescribed in Article 35, and submit it to the arbitration center or the respondent’s arbitrator within 30 days from the date that proceedings were initiated Arbitral proceedings are not affected if the respondent fails to this Respondent can also file a counterclaim Before the arbitration tribunal makes the final decision, parties can still amend or withdraw statements of claim and defense, and counterclaim unless the tribunal decides that such actions are to delay the proceedings (Article 37) Inspection and collection of evidence are prescribed in Articles 45 and 46 according to which the arbitration tribunal plays a considerable role Specifically, the arbitration tribunal can conduct fact-finding activities with or without the parties’ request if it is deemed necessary If the arbitration tribunal or one or both of the parties fail to collect evidence, they may request support from a competent court However, judicial assistance has been limited in practice As mentioned, courts have been overloaded lately, and the cooperation between the courts and arbitrator centers has not always been smooth The arbitration tribunal can also summon witnesses upon the parties’ request or at its own decision If the witnesses are absent without reasons, the arbitration tribunal will request for the court’s assistance in summoning such witnesses The court order must be sent to the witnesses within 12 days of receiving request A copy of this order is sent to the arbitration tribunal and the People’s Procuracy Office (Article 47) The participation of the Procuracy is perhaps one of the distinguishing features of arbitration regulations in Vietnam 24 Article 47 only states generally that the Procuracy must be informed of the court order so that it can perform its role and functions in accordance with the laws This has created debate in the legal community about the extent to which the Procuracy can be involved in arbitration 24 Vu Anh Duong, Development of Arbitration in Vietnam – Comparison of Vietnamese and International Arbitration, presentation in Seoul, Korea, March 2011 Arbitration in Vietnam 583 Subject to any contrary agreement by the parties or rules of the arbitration center, the arbitration tribunal will decide the time and location for a hearing (Article 54) The parties can be present at the hearing or authorize their representatives to attend the hearing (Article 55) This Article is unclear on whether a lawyer can play the dual role of being a lawyer of and a representative to his/her client in an arbitration hearing, a position not possible in a court hearing In practice, some arbitration centers may take a flexible approach and allow a lawyer to act as his/her client’s representative at the same time Unlike the UNCITRAL Rules, Article 56 of the LCA states that the claimant’s failure to appear at the hearing or leaving the hearing without permission is deemed to be a withdrawal of claim Proceedings can only be resumed upon the respondent’s request or submission of a counterclaim In addition, termination of proceedings is possible in the following situations: • • • • • I The claimant or respondent being an individual dies, without anyone inheriting his/her obligation The claimant or respondent being an organization which is dissolved or declared bankrupt, merged, demerged, or transformed without any individual or entity succeeding to its rights and obligations The claimant withdraws the claim or the claim is deemed to be withdrawn pursuant to Article 56 The parties reach an agreement on termination of the dispute resolution The court issues a decision stating that the dispute is not within the jurisdiction of the arbitration tribunal or that there is no arbitration agreement or that the arbitration agreement is invalid (Article 59) Interim Measures New provisions on interim measures have been applauded as a significant improvement of the LCA Previously, the Ordinance also allowed the parties to apply for court order on interim measures However, such measures could only be granted after the arbitration 584 International Commercial Arbitration in Asia tribunal was formed (Articles 33 and 34) This led to delay in the application of the measures and therefore did not respond to the urgent needs of the parties In addition, only the provincial court where the arbitration tribunal accepted the case had authority to apply interim measures This limitation prevented the effectiveness of interim measures in certain situations, for example in the case of disputed assets being located outside the province where court order was granted The LCA has one chapter on interim measures Parties can petition either the arbitration tribunal or the court to apply interim measures If one of the parties has already petitioned a court to order interim measures, and then requests the same from the arbitration tribunal, the arbitration tribunal must refuse such request (Article 49) The arbitration tribunal can require the applicant to lodge a sum of money, precious stones or valuable papers as specified by the arbitration tribunal of a value corresponding to the amount of the loss which could be sustained as a result of inappropriate application of interim measures, in order to protect the interests of the party against whom interim relief is sought Such security items will be deposited in an escrow account nominated by the arbitration tribunal (Article 50) It is noteworthy, however, that arbitrators are not subject to immunity If an arbitration tribunal orders a different form of interim measure or a measure which exceeds the scope of the application by the applicant, thereby causing loss to the applicant, to the party against whom the interim measure was applied, or to a third party, then the party incurring loss shall have the right to initiate a civil claim against the tribunal at court (Article 49) Despite the improvement that the LCA brings on interim measures, the legal community is of great concern about the implementation of these new provisions.25 They are urging the Supreme People’s Court to provide further clarification and guidance to prevent the situation where a party petitions both court and arbitration tribunal for interim measures The new Decree No 63/2011/ND-CP states that enforcement of interim measures by the arbitration tribunal will follow the same procedures as 25 Binh An, Providing Implementation for the LCA: Which Dispute Can be Subject to Arbitration?, Ministry of Justice website, http://moj.gov.vn/ct/tintuc/lists/ hdlanhdaobo/view_detail.aspx?ItemID=4272 Arbitration in Vietnam 585 applied to court orders (Article 26) Yet, how this provision is implemented in practice remains to be seen J Issuance and Correction of Arbitral Awards An arbitration award is issued on the basis of majority vote by the arbitration tribunal If voting does not result in a majority decision, then the arbitral award is made in accordance with the opinion of the Chairperson of the arbitration tribunal (Article 60) The arbitration award must be in writing and be signed by the arbitrators However, the lack of an arbitrator’s signature will not affect the validity of the award if the Chairperson records this matter and the reason for the lack of such signature in the award Content of the award must include a number of issues, as prescribed in Article 61, such as the final decision, reasons for the decision, time frame for honoring the award, and allocation of fees An award can be issued at the hearing or within 30 days after the date of the last hearing An arbitral award is final, of full force and takes effect from the date of its issuance Within 30 days from the date of receiving the award (unless otherwise agreed by the parties), a party may request the arbitration tribunal to correct minor errors of the award (such as typos) and immediately notify the other party of such request If the arbitration tribunal considers the request legitimate, it has to make the correction within thirty days from the date of receiving the request The same time frame applies to the request for interpreting specific part(s) of the award The interpretation will form an integral part of the award In case a party lodges a legitimate request for a supplementary of the award within 30 days from date of issuance, the tribunal will provide the supplemented parts within 45 days of the date of receiving the request (Article 63) III ARBITRATION IN PRACTICE According to the report that summarized the implementation of the Ordinance, Vietnam now has seven arbitration centers with 210 arbitrators Specifically, the VIAC has 121 arbitrators, among them are foreigners Hanoi Commercial Arbitration Center (HCAC) has arbitrators Asean International Commercial Arbitration Center (AICAC) 586 International Commercial Arbitration in Asia has 20 arbitrators Ho Chi Minh City Commercial Arbitration Center (TRACENT) has 26 arbitrators Pacific International Arbitration Center (PIAC) has 26 Vietnamese arbitrators Can Tho Commercial Arbitration Center has arbitrators, and Far East Commercial Arbitration Center has arbitrators.26 Work distributed among the arbitration centers is uneven with the VIAC having the most cases by far and other centers that have virtually no business The table below shows the number of cases that the arbitration centers handled between 2004 and 2010 Name of the Center AICAC VIAC TRACENT HCAC Can Tho Commercial Arbitration Center PIAC Far East Commercial Arbitration Center27 2004 2005 2006 2007 2008 2009 2010 26 5 17 31 30 n/a 58 11 n/a 48 10 n/a n/a 63 n/a n/a 0 0 0 n/a 0 0 0 n/a 0 0 0 n/a The VIAC has considerable advantages in comparison to other arbitration centers It was set up as an associated body of Vietnam Chamber for Commerce and Industry (VCCI) – the largest business association in Vietnam VCCI was established by the Government with the mandate to represent the business community nationwide As such, it enjoys special assistance from the Government VIAC also receives support from international donors in relation to capacity building and 26 Vietnam Lawyers Association, footnote above According to an informal source, the number of arbitration centers has increased to 10 by October 2012 However, the author has not been able to confirm this information with the Ministry of Justice 27 This center was licensed in March 2007, but after that it did not register with Hanoi Department of Justice, i.e the establishment process is not entirely completed Arbitration in Vietnam 587 raising profile These factors certainly help increase the VIAC’s popularity The development of the LCA also witnessed active participation by the VIAC Despite its comparative advantages and reasonable fee scale, the VIAC’s success in branding itself as a dispute resolution center is still modest While 75% of the cases handled by the VIAC involve foreign elements, 28 the majority of disputes with foreign partners are still resolved overseas 29 Although the LCA offers a more supportive legal framework, other factors of the external environment (i.e business culture) may continue to challenge the VIAC.30 It is still common for practicing lawyers to refer their clients to other arbitration centers in the region such as the Singapore International Arbitration Center or the Hong Kong International Arbitration Center While the LCA adopts international norms and recognizes ad-hoc arbitration, ad-hoc arbitration does not come into existence yet Business preference still lies with institutional arbitration Analyzing the unpopularity and underdevelopment of arbitration in Vietnam, commentators attribute it to a number of reasons, including low awareness of arbitration by the business community, weakness of state structures that support arbitration, poor capacity of arbitration centers and arbitrators, and unclear and inconsistent legal framework.31 IV ENFORCEMENT OF ARBITRAL AWARD A General Structure of Enforcement Vietnam has two separate legal frameworks for the enforcement of arbitral awards Specifically, enforcement of domestic arbitral award is subject to the LCA and the Law on Enforcement of Civil Judgments 28 See further VIAC website, http://www.viac.org.vn/vi-VN/Home/thongke/ 2011/01/358.aspx 29 Nguyen Thi Minh, footnote above 30 Hong Thanh, VNCI Needs to Review Its Discretion to Handle the Dispute Between Huawei and Hoang Gia Companies, Cong An Da Nang Newspaper, http://cadn.com.vn/News/Phap-Luat/Toa-Soan-Ban-Doc/2011/1/22/54709.ca 31 Nguyen Thi Minh, footnote above 588 International Commercial Arbitration in Asia (LECJ) while foreign arbitral award is subject to the New York Convention, the Civil Procedural Code (CPC), and the LECJ Domestic Arbitral Awards In principle, the parties are encouraged to voluntarily honor the arbitral award (Article 65) If the award debtor has not voluntarily carried out the award on expiry of the time limit for enforcement, and has not yet requested that the award be set aside, then the award creditor has the right to petition the provincial civil judgment enforcement agency to enforce the arbitral award Procedures for enforcement of domestic arbitral awards again differ between ad hoc and institutional arbitration With regards to ad hoc arbitration, the award has to be registered by one or both of the parties at the provincial court where the arbitration tribunal issued such an award Time limit for the registration is one year from the date of award issuance Within 15 days, the court has to either accept or deny the registration In the latter case, the applicant is entitled to appeal the court’s decision (Article 62) Only after the award is registered, can the award creditor request for enforcement at the enforcement agency Registration is not required for awards issued by an arbitration institution although parties may opt to so Foreign Arbitral Awards A foreign arbitral award must be formally recognized by the Vietnamese courts to be enforced in Vietnam Under the CPC, Vietnam only recognizes and enforces foreign arbitral awards when such awards are issued either in a member country of the New York Convention or a country that applies reciprocal treatment to Vietnam (Article 343) Procedures for enforcement of foreign arbitral awards in Vietnam are set out as follows First, the award creditor sends a request to the Vietnamese Ministry of Justice Such request must be accompanied by relevant documents, such as a copy of the award and a copy of the arbitration agreement Seven days after receiving the dossier, the Ministry of Justice will pass it on to the relevant court (Articles 364366) Two months from the date of receiving the dossier, the court will Arbitration in Vietnam 589 either cease the case or open a hearing Dossier of the case has to be sent to the Procuracy in order to prepare for the hearing (Article 368) Participation of the Procuracy is perhaps the most noticeable feature of Vietnamese civil procedures Non-attendance by prosecutor sets a ground for the court to postpone the hearing (Article 355) The prosecutor who participates in the hearing also gives his/her opinion on the enforceability of the foreign arbitral award If the court decides to recognize foreign arbitration award at the hearing, the award will then be enforced by a relevant civil judgment execution agency in accordance with the LECJ B Setting Aside Arbitral Awards Domestic Awards According to Article 68, the court can consider setting aside an arbitral award on receipt of a petition from either of the parties based on the following grounds: • • • • • There is no arbitration agreement or the arbitration agreement is invalid The composition of the arbitration tribunal was, or the arbitration proceedings were, inconsistent with the agreement of the parties or with provisions of this Law The dispute is outside the jurisdiction of the arbitration tribunal; if any part of an arbitral award is outside the jurisdiction of the arbitration tribunal, then that part shall be set aside Evidence provided by the parties, which the arbitration tribunal based their findings on, are falsified, the arbitrator(s) accepts money, property or other benefits in kind from either of the parties, and such acceptance affects the impartiality and objectiveness of the arbitral award The arbitral award is contrary to the fundamental principles of the Vietnamese laws 590 International Commercial Arbitration in Asia It is the obligation of the petitioner to provide sufficient evidence to justify that award rendered by the arbitration tribunal falls within one of the above grounds (Article 69) The above articles have been highlighted as significant improvement of the LCA Previously, the Ordinance provided a very loose ground for the setting aside of arbitration awards Specifically, Article 50 of the Ordinance stated that within 30 days from the date of receiving the award, the party(ies) was/were entitled to request the court to set it aside if they disagreed with such award In practice, disputants took advantage of this article to delay the enforcement process since a mere disagreement could legitimize their request for award revocation In the period of 2003 and 2006, the VIAC issued 167 arbitral awards, among which 15 requests for setting aside were submitted to courts The courts eventually set aside only awards (i.e 26.6%).32 Despite the improvement, the legal community is still concerned that Article 68 of the LCA is too broad Specifically, the last provision that refers to the inconsistency with fundamental principles of the Vietnamese laws is too general and vague As one commentator puts it, ‘fundamental principles of Vietnamese laws’ can be interpreted to mean any provision in any legal document There are also possibilities that courts could blend these principles with the state’s interests in their practice According to Article 71, the court’s decision is final and enforceable It is unclear whether this decision can be challenged under cassation procedures of the Civil Procedure Code Foreign Awards Articles 369 and 370 of the CPC provide considerable grounds for the court to set aside a foreign arbitral award Specifically, the court may decide not to recognize an award in the following situations: • The dispute cannot be settled through arbitration according to Vietnamese law 32 Vu Anh Duong, presentation at workshop on Setting Aside, Recognition and Enforcement of Arbitral Awards in Vietnam, Hanoi, October 21, 2009 Arbitration in Vietnam • • • • • • 591 The recognition and enforcement of the award is against the fundamental principles of Vietnamese laws This ground is identical to Article 68 of the LCA mentioned above Compared to the UNCITRAL Model Law according to which an arbitral award could be set aside if it is conflict with public policy of the state, this provision appears to be vague because there is no legislation where the fundamental principles of Vietnamese laws are defined Therefore, it leaves significant room for court interpretation.33 The parties that enter the arbitration agreement not have legal capacity according to the laws of the country that is applicable to them As mentioned, ‘legal capacity’ of an organization to enter into a transaction under Vietnamese law is another common ground on which many transactions are declared void The arbitration agreement is invalid under the laws of the country that the parties chose to govern, or the country where the award was made The award debtor was not timely and properly notified about the arbitration procedures in the foreign country and therefore could not perform their legitimate rights Decision made by foreign arbitration was not requested by the parties or exceeds what was being requested Composition of the arbitration tribunal, and arbitration procedures were inconsistent with the arbitration agreement or the law of the country where the award was made The number of foreign arbitral awards that are submitted to Vietnamese courts is limited, and the eventual number of awards that are recognized for enforcement is even fewer Although the CPC provides that the court will only look into the procedural aspect of arbitration, some courts have reviewed the substantive matters of the case based on 33 Institute of Judicial Science, Supreme People’s Court, Legal Framework for the Recognition and Enforcement of Civil Judgments and Decisions by Foreign Courts, and Foreign Arbitral Awards, Special Volume on The Science of Trial, No 4, 2009, p29 http://toaan.gov.vn/portal/page/portal/tandtc/ttsktand/3415171?pers_id=1751932& folder_id=& item_id=2531627&p_details=1 592 International Commercial Arbitration in Asia Vietnamese laws to decide whether the awards can be enforced in Vietnam or not.34 The court also adopts a flexible approach in interpreting CPC provisions For example, Article 364 merely sets out a checklist of the information required for a request by the award creditor, such as name, address, legal representative of the award creditor in Vietnam However, in practice, the court has relied on this article to return requests and to deny hearing cases For example, failure to provide a name of the legal representative of the award creditor in Vietnam can make the request illegitimate and eventually eliminate the right to petition for recognition and enforcement of a foreign arbitral award in Vietnam 35 The burden of proof, legal validity of evidence, and application of interim measures are some other common issues that arise in the recognition of foreign arbitral awards Under Article IV of the New York Convention, the only documentation that the award creditor is required to provide is a copy of the award and the arbitration agreement Meanwhile, Article 367 of the CPC states that the Vietnamese courts can request the award creditor to provide explanation of unclear issues in the dossier In addition, the petitioner has an obligation to provide evidence to the court to prove that his or her request is legitimate Based on these provisions, the court often requests the award creditor to provide additional documentation and assesses such evidence at its own discretion In the process of considering a request for recognition of foreign arbitration award, the court may also give orders on interim measures However, it has occurred that implementation of such measures is subject to conflict between the courts and other authorities because they have different understanding and interpretation of the CPC provisions 36 Failure to 34 Dang Trung Ha, Recognition and Enforcement of Civil Judgments and Orders by Foreign Courts, and Foreign Arbitral Awards in Vietnam – Issues Faced in Economic Integration, http://www.vibonline.com.vn/vi-VN/Judgments/ReviewDetails.aspx?ReviewID= 11 35 Institute of Judicial Science, footnote 28 above See the example case of Van Ekris & Co vs Vinacofexim at pp 64-65 36 Ibid, pp 68-69 Arbitration in Vietnam 593 prove legal validity of the evidence can also lead to the denial of foreign arbitral award.37 The prospect of foreign arbitral award enforcement in Vietnam will substantially depend on Vietnam’s efforts to improve the capacity and credibility of its justice institutions to foreign investors and trading partners 37 See further the case of Eastland Produce (1995) Pte Ltd Singapore vs Hoang Dung in Dao Minh Khoa, Discovery a Case of Recognition of Foreign Arbitral Award that Lacks Legal Grounds, Cong An Nhan Dan newspaper, http://www.cand.com.vn/viN/khcn/2009/ 2/136944.cand ... for defining the invalidity of arbitration is another improvement that the LCA brings in comparison to the Ordinance Under Article 18, an arbitration agreement is invalid in the following situations:... can be involved in arbitration 24 Vu Anh Duong, Development of Arbitration in Vietnam – Comparison of Vietnamese and International Arbitration, presentation in Seoul, Korea, March 2011 Arbitration. .. seat of arbitration is in Vietnam, arbitral award shall be deemed as having been given in Vietnam without depending on the place of hearing (Article 1.8) The language for arbitration proceedings