Rationale
The 21st century is often referred to as an era of connection and cooperation, exemplified by the global nature of technology production For instance, the assembly of smartphones and high-tech computers involves sourcing components from various countries, which are then brought together to create the final product This process highlights the essence of international trade at its peak.
Technological advancements have significantly transformed international trade by minimizing barriers to global advertising, enabling near-instant communication, and facilitating prompt delivery of products and services Consequently, technology has redefined the concept of "globalism."
While technology plays a significant role in globalism, certain aspects remain beyond its current capabilities International business contracts are often complex and involve extensive negotiations to address each party's commercial needs Furthermore, there is a growing recognition of the importance of well-drafted dispute settlement clauses in these agreements.
As technology advances, dispute resolution mechanisms have evolved to accommodate globalization, with arbitration emerging as a preferred alternative to traditional court procedures Arbitration is often viewed as more efficient and flexible, providing parties with confidentiality throughout the process Additionally, one of the significant advantages of arbitration is the ease of enforcing arbitration awards, which are generally more readily enforceable than judgments from foreign courts.
The ongoing question in the realm of dispute resolution is whether we have reached the pinnacle of development for dispute settlement clauses, particularly in the context of arbitration and alternative dispute resolution methods Recognizing this need for evolution, the Singapore International Arbitration Centre (SIAC) and the Singapore International Mediation Centre (SIMC) are actively exploring ways to refine these clauses They have introduced an innovative dispute settlement model known as the Singapore Arb-Med-Arb Protocol (AMA Protocol), which combines the benefits of both arbitration and mediation to enhance the resolution process.
The AMA Clause allows parties to choose to settle disputes by method of arbitration to deal with their differences or by mediation before reaching arbitration
A multi-tiered clause is an arbitration clause that integrates mediation and arbitration processes to enhance the likelihood of dispute resolution through goodwill and positive dialogue This approach encourages constructive negotiations before proceeding to a comprehensive arbitration procedure.
This thesis explores the advantages of the Arb-Med-Arb model for dispute resolution and examines its potential applicability in Vietnam The author, a Master's student specializing in International Trade Policy and Law, aims to contribute to improving Vietnam's dispute settlement mechanisms in alignment with global standards The selected topic, "Arb-Med-Arb Model: International Practice and Applicability in Vietnam," seeks to address whether this innovative approach can effectively resolve disputes in the future.
Literature review
Despite the global development of commercial mediation and arbitration, Vietnam's experience in these areas remains limited, with the concepts still relatively new The Arbitration-Mediation-Arbitration model, in particular, has not been extensively researched or implemented in Vietnam Consequently, this study addresses a novel topic, as there are no existing works that closely resemble it The author aims to review relevant experiential research from both Vietnamese and international sources.
Nguyen Trung Nam and Trinh Nguyen (2017) explore mediation and arbitration in commercial and construction disputes within the framework of Vietnamese law Their research highlights the challenges of resolving construction disputes and offers recommendations for enhancing mediation practices by integrating various Alternative Dispute Resolution (ADR) methods They advocate for a multi-tiered dispute settlement mechanism, inspired by Singapore's Arb-Med-Arb model, to improve the efficiency and enforceability of resolving construction conflicts The key takeaway from this study is the comprehensive insight into the current issues surrounding construction disputes in Vietnam.
In their 2018 article for Financier Worldwide Magazine, the authors discuss the concept of multi-tiered dispute resolution, emphasizing its goal of offering multiple pathways for resolving disputes within a single procedure This approach integrates various methods, such as mediation and arbitration, to create a flexible resolution mechanism Additionally, the study highlights the advantages and limitations of the AMA Protocol, providing valuable insights into its application in cross-border disputes.
The 2015 article by the Bryan Cave Leighton Paisner team examines Singapore's innovative "Arb-Med-Arb" protocol, analyzing the operational framework of the SIMC-SIAC protocol It highlights the advantages and disadvantages of incorporating this modern dispute resolution method into commercial contracts, providing valuable insights into its implications for businesses.
Anindya Basarkod and Dr Markus Altenkirch (2018) explore the concept of Arb-Med-Arb in their paper, "Arb-Med-Arb: What is it and how can it help the parties to solve their disputes efficiently?" This innovative approach combines arbitration and mediation to offer an effective resolution process for disputes The authors highlight the benefits of Arb-Med-Arb for conflicting parties, emphasizing its potential to enhance efficiency in dispute resolution.
In their 2018 study, "Arb-Med-Arb: Connecting the Dots between Arbitration and Mediation," Daniel Chong and Sharon Lin highlight essential elements of the Arb-Med-Arb process, emphasizing the distinctions between arbitration and mediation They advocate for the use of this hybrid approach, illustrating its benefits in resolving disputes effectively.
Arb-Med-Arb to solve the dispute and a sample of Arb-Med-Arb clause are also mentioned in this research
This review will concentrate on key aspects of dispute resolution, particularly the Arb-Med-Arb (AMA) model highlighted in previous studies While many of these studies outline the advantages of the AMA approach, they often overlook the specific methods for implementing it in Asian countries, such as Vietnam.
The study "Mediation – Arbitration in Commercial and Construction Disputes" by Nguyen Trung Nam and Trinh Nguyen (2017) highlights issues related to construction dispute resolution under Vietnam's laws and offers recommendations However, it fails to address the definition, characteristics, and significant advantages of the Arb-Med-Arb process.
Currently, there is a lack of comprehensive research on the Arb-Med-Arb model and its application as a multi-tiered dispute settlement mechanism in Vietnam This article aims to emphasize the general advantages of this dispute resolution method and explore practical ways to implement Arb-Med-Arb in the Vietnamese context.
Research questions
This study explores the Arb-Med-Arb protocol, examines the countries that have implemented this framework globally, and discusses the necessary actions for Vietnam to adopt this model in the future To address these research questions, we will delve into several sub-questions that provide a comprehensive understanding of the protocol and its applications.
- What are the basic principles of arbitration and mediation?
- What are the differences between arbitration and mediation?
- How can Arb-Med-Arb help the parties to solve their disputes in Singapore?
- What are the benefits of Arb-Med-Arb model?
- How can Viet Nam apply Arb-Med-Arb model?
- What are implications for Viet Nam? h
Research’s objective
Arbitration and mediation are becoming increasingly popular methods for resolving disputes globally, serving as effective alternatives to traditional court proceedings The combination of these two approaches offers unique advantages, enhancing the dispute resolution process significantly.
Vietnam's commitment to international economic integration is a key priority for its future development This integration serves as a foundation for advancements in other areas, enhancing economic growth, national defense, and cultural preservation A coordinated global integration strategy, as outlined in Resolution No 22-NQ/TW, emphasizes the importance of aligning with the country's capabilities and conditions By 2018, Vietnam had successfully negotiated over ten regional free trade agreements (FTAs), including the EVFTA and RCEP, which address technical trade barriers These agreements feature a structured ten-year tariff reduction roadmap, contributing to a significant increase in international trade and import-export turnover.
Vietnam must take immediate action to address unforeseen business disputes and safeguard its enterprises in the international market Currently, there is a lack of a legal framework and specific clauses related to the Arbitration-Mediation-Arbitration model This thesis aims to emphasize these critical objectives.
- Systematize the basic principles of two alternation dispute resolution method: arbitration and mediation and the key differences between these approaches
- Understanding how Arbitration - Mediation – Arbitration model works ; h
- Get deeper understanding on the way Singapore apply this protocol to resolve conflict in business and the advantages of this model
Vietnam faces significant challenges in implementing an effective dispute settlement model To address these difficulties, it is crucial for the Vietnamese government, along with arbitration and mediation service providers, to enhance the development of a comprehensive dispute resolution mechanism By fostering collaboration and adopting best practices, Vietnam can improve its legal framework and promote a more efficient resolution process for disputes.
Scope of study
Alternative dispute settlement methods, including negotiation, arbitration, mediation, and med-arb, are effective for various dispute categories such as civil, family, and commercial disputes Research indicates that these methods are particularly beneficial in resolving commercial disputes, which are crucial for a nation's economic development This study emphasizes the effectiveness of the arbitration and mediation processes, as well as the arbitration-mediation-arbitration model, in addressing commercial disputes efficiently.
The study focuses on the Arb-Med-Arb model in Singapore, highlighting its unique advantages as a novel approach to dispute resolution, with Singapore being the sole country to implement this model Additionally, the thesis examines Vietnam's recent advancements in commercial mediation and arbitration, including legislation and public awareness Ultimately, the research aims to assess the current state of arbitration and commercial mediation in Vietnam and propose strategies for effectively integrating the Arb-Med-Arb model in accordance with international standards and best practices.
The research will focus on the period from the early 20th century to the present, highlighting the later development of mediation in Singapore and Vietnam compared to other developed nations Additionally, it will incorporate various legal documents related to commercial mediation and arbitration from international bodies spanning the late 19th to early 20th centuries.
Methodologies
This thesis employs both theoretical and practical research methods The theoretical approach encompasses analytical and synthesis methods, along with a review of relevant laws and regulations to meet the project's requirements In contrast, the practical research method primarily utilizes expert interviews in the fields of international arbitration and mediation, as detailed in Appendix 1.
The analysis in this thesis primarily relies on secondary data sourced from reports and research conducted by experienced researchers and organizations specializing in arbitration and mediation Conducting primary research is challenging due to the novelty of the arbitration-mediation-arbitration model in Vietnam, coupled with the author's constraints in terms of time and funding.
Chapter 2 explores the analytical and synthesis methods in research, focusing on the theoretical framework that distinguishes between theory and fact It examines the legal framework surrounding mediation and arbitration, both generally and in the context of internal coordination related to the arbitration-mediation-arbitration model This analysis aims to uncover international and domestic practices, highlighting the potential for implementing arbitration effectively.
In Vietnam, the integration of mediation and arbitration clauses is essential for effective dispute resolution This article explores various cases of arbitration and mediation practices in Singapore, providing valuable insights and experiences that Vietnam can adopt for future dispute settlement By analyzing these successful applications, Vietnam can enhance its legal framework and improve its approach to resolving similar disputes.
Chapter 1 explores the international application of the arbitration-mediation-arbitration model, with a focus on Singapore's practices The author employs a synthesis method, referencing relevant laws and regulations to highlight key experiences and derive implications for Vietnam's legal framework.
Chapter 2 explores the applicability of the arbitration-mediation-arbitration model in Vietnam, highlighting discrepancies in current laws and regulations It employs a reference method to identify these inadequacies and utilizes a synthesis approach to draw conclusions and propose new areas for exploration.
Interviews are carried out with some experts and associations to show the applying method and give recommendations for Chapter 3.
Research disposition
Beside the table, chart lists, reference and appendix, the main content of the thesis includes the followings:
- Chapter 2: International experience on applying arb-med-arb model: study of Singapore
THEORETICAL FRAMEWORK
Alternative dispute resolutions
The World Bank Group reports that Alternative Dispute Resolution (ADR) stems from traditional practices across various cultures, emphasizing consensus over confrontation This approach is particularly rooted in Asian history, where the pursuit of harmony is a fundamental principle.
The modern origins of Alternative Dispute Resolution (ADR) are widely recognized to be in the United States, where it was initially implemented to address civil rights issues through mediation and to alleviate the burden of overworked courts Over time, ADR has evolved significantly, gaining institutional support from the government, legal organizations, and academia In 1990, a mandate was established requiring all federal district courts to develop plans aimed at reducing litigation costs and delays, leading to the implementation of various ADR processes across these courts This growth and innovation in ADR, along with its mandatory incorporation into state and federal systems, have positioned the United States as a leading source of knowledge in court-connected ADR.
In the late 1980s, the demand for commercial Alternative Dispute Resolution (ADR) in the United States surged as parties sought more effective alternatives to litigation This led to significant developments in ADR models, including negotiation and mediation The institutionalization of ADR has transformed legal practices and rules, incorporating US regulations, public consultation, and administrative dispute resolution into its framework.
The United States consistently leads in various fields, including Alternative Dispute Resolution (ADR), which has inspired many countries to adopt its processes or integrate them with their own dispute resolution traditions ADR is increasingly utilized to address a wide range of issues across commerce, social matters, civil disputes, and politics Notably, developing countries, such as Vietnam, are actively engaging in the implementation of ADR practices.
The trend of Alternative Dispute Resolution (ADR) has extended from the United States to China, particularly Hong Kong, as parties express dissatisfaction with traditional litigation and arbitration methods (Zheng Rungao, 2003) This shift towards ADR is influenced by China's unique cultural emphasis on consensus and non-adversarial approaches to conflict resolution, reflecting philosophies such as "better bend than break" and "willows are weak yet they bind others wood." The importance of preserving face and maintaining business relationships in China has further fueled the growth of ADR, especially in trade While the U.S ADR model has global implications, China's approach holds significant sway in Asia, particularly Southeast Asia.
Singapore, a pioneer in Southeast Asia's Alternative Dispute Resolution (ADR), has been significantly influenced by ADR trends from the US The necessity for ADR arises from the limitations of the traditional litigation process, which faced overwhelming caseloads in the early 1990s, with over 2,000 cases pending resolution in the Supreme Court and more than 10,000 inactive cases, some unresolved for over a decade Approximately 44% of cases took 5-10 years to initiate, while appeals required an additional 2-3 years for hearings This extensive latency not only affects the life expectancy of claimants but also highlights the inefficiencies in judgment processing To alleviate the court's burden and assist desperate claimants, the Singapore judiciary implemented ADR strategies (Judith Prakash, 2009).
The thesis explores the origins of Alternative Dispute Resolution (ADR) in the United States and its influence on neighboring countries like China and Singapore, which have adopted similar approaches due to the limitations of traditional litigation and court procedures It will further define ADR and its significance in addressing these challenges.
According to Yona Shamir, ADR is defined as:
“Alternative Dispute Resolution (ADR, sometimes also called
Appropriate Dispute Resolution (ADR) encompasses a variety of non-confrontational methods for resolving disputes This includes direct negotiations between parties, which is the most straightforward approach, as well as arbitration and adjudication, where an external party imposes a resolution Mediation falls between these two extremes, involving a third party who facilitates the disputants in reaching a mutually acceptable agreement.
Alternative dispute resolution, often referred to as dispute settlement, is essential for improving social interactions (Park and Burger, 2009) This process aims to address and resolve conflicts, enabling individuals and entrepreneurs to maintain healthy relationships The Latin origins of the term highlight its significance in social dynamics, emphasizing the importance of resolving disputes for societal harmony Without effective dispute resolution, collaboration and coexistence among individuals become challenging.
Or even the Great Gandhi once said:
Throughout my two decades of legal practice, I discovered that a lawyer's primary role is to facilitate the resolution of disputes between parties This insight profoundly influenced my approach, leading me to prioritize private compromises in countless cases In doing so, I found that I gained invaluable experience and maintained my integrity, without sacrificing financial stability or my sense of self.
What the thesis tries to say, all are in the words of the former US Chief Justice, Warren Burger:
The core responsibility of our profession is to act as healers of human conflict To honor this commitment, we must create solutions that yield satisfactory outcomes quickly, economically, and with minimal stress for all involved This essence defines what justice truly represents.
Source: (Chief Justice Warren Burder, 1997)
Alternative Dispute Resolution (ADR) refers to various methods for resolving legal disputes, primarily emerging as a response to delays in court proceedings These methods offer disputing parties a timely and cost-effective means of conflict resolution, while still complementing the traditional court system Both nationally and internationally, ADR is gaining traction in legal and commercial sectors, applicable to a wide range of disputes, including civil, family, and commercial matters Research indicates that ADR methods are particularly effective for trade disputes, which are crucial for a country's economic development (Shodhganga, 2018).
Obviously, ADR is not a new concept, but novelty lies in the proliferation of its model:
Alternative dispute resolution (ADR) has a rich history, with various societies utilizing non-judicial methods to address conflicts Recently, there has been a significant rise in the promotion and adoption of ADR models, including their integration with court systems Additionally, ADR is increasingly recognized as a valuable tool for achieving broader objectives beyond merely resolving individual disputes.
1.1.3 Methods and forms of ADR
ADR systems can often be categorized into negotiation, mediation or mediation systems and arbitration According to the USAID study in 1998, the thesis summarized the following categories:
The negotiation process allows disputing parties to engage directly without a third party, while mediation and reconciliation involve a neutral party to help resolve conflicts or improve relationships Mediators facilitate communication and guide the settlement process but do not have the authority to make decisions In contrast, arbitrators are empowered to make binding decisions to resolve disputes.
It is essential to distinguish between binding and non-binding Alternative Dispute Resolution (ADR) forms Non-binding methods, such as negotiation, mediation, and reconciliation, emphasize the parties' willingness to reach a consensus In contrast, arbitration can be either binding or non-binding; binding arbitration results in a decision by a third party that both parties must adhere to, similar to a court ruling, while non-binding arbitration offers a decision that the disputing parties are not obligated to follow.
Mediation
Mediation is defined by the International Mediation Institution as negotiation facilitated by a trusted neutral person, known as the mediator The mediator's role is to assist parties in resolving their issues and reaching a consensus, which may include finalizing agreements, resolving disputes, enhancing communication, and improving relationships Two key features of mediation are highlighted below.
Mediation is a confidential process, ensuring that discussions and agreements remain private unless all parties consent to disclosure Additionally, information shared in private sessions with individual parties is not revealed to others without prior approval During these private meetings, mediators can use neutral questions to help parties evaluate their situations, enabling them to develop more realistic proposals that facilitate a mutually agreeable settlement.
Before mediation begins, parties must sign a written mediation agreement that serves as the legal foundation for the process The mediator facilitates discussions but cannot enforce a resolution on the parties If mediation fails to yield an agreement, either party retains the right to take the dispute to court or arbitration, as appropriate Importantly, any details from the mediation will remain confidential and cannot be introduced in subsequent court or arbitration proceedings.
Arbitration has traditionally been the preferred method for resolving international commercial disputes, as noted by Gary B Born (2009) However, the international community is increasingly moving away from arbitration due to concerns about its time, cost, and procedural complexities (William W Park, 2012) As a result, parties in disputes are seeking alternative resolution mechanisms, with mediation emerging as a more favorable option (Jacqueline Nolan-Haley, 2012).
International commercial mediation may seem like a recent concept, but it has long been utilized for resolving cross-border commercial disputes Historically, commercial mediation was more prevalent than arbitration; however, following World War II, arbitration emerged as a significant alternative for settling transnational trade disputes.
China has a rich history of mediation, dating back to the Qing dynasty when judges often mandated mediation before litigation (Wang Wenying, 2005) Influenced by Confucian philosophy, which emphasizes harmony and conflict avoidance, this approach has permeated Southeast Asia, including countries like Vietnam, Singapore, and Thailand The preference for consensus-based dispute resolution remains prevalent today, as studies indicate that the lower reliance on arbitration in the region stems from concerns about preserving business relationships, given that arbitration and litigation typically identify a winner and a loser (Danny McFadden, 2011).
Commercial mediation is gaining traction not only in the Eastern region but also in the Western world, reflecting a significant shift among business professionals towards consensus-based dispute resolution (John Lande, 2000) This trend spans various sectors, including private, public, and international domains Notably, international organizations like the World Bank and International Finance Corporation are actively promoting commercial mediation Additionally, many jurisdictions now mandate mediation before parties can proceed to court Prominent corporations such as General Electric and Siemens advocate for advanced mediation as an effective dispute resolution method (S.I Strong, 2014) Consequently, empirical studies indicate that commercial mediation is becoming increasingly institutionalized.
This article will explore the concept of commercial mediation, following an overview of its background, rationale, and general definition According to the Vietnamese government’s Decree 22/2018/ND-CP, commercial mediation is defined broadly, highlighting its significance in resolving disputes within the commercial sector.
Commercial mediation is a method for resolving commercial disputes, where parties agree to engage a neutral third party, known as a commercial mediator, to facilitate the process in accordance with established regulations.
The lack of specificity in the definition of commercial disputes can lead to confusion among viewers and disputants To clarify what constitutes a commercial dispute, one can refer to the regulations outlined in the Commercial Act of 2005 and the Commercial Arbitration Act of 2010.
While looking at the definition of a country in the region – Singapore, the dispute parties can know right away what type of dispute is considered having commercial characteristic:
“…commercial disputes … include banking, construction, healthcare, employment, information technology, insurance, partnership, shipping and tenancy disagreements…”
Commercial mediation is an effective dispute resolution process that allows parties to resolve conflicts related to various commercial matters, such as banking, construction, and healthcare, without resorting to court action This process enhances communication between disputants, enabling them to collaboratively develop resolutions with the guidance of a neutral mediator Key characteristics of commercial mediation include confidentiality and a supportive environment, which encourages open dialogue about the disputes and their implications Participants can freely express their viewpoints and ask questions, fostering a deeper understanding of the issues at hand The face-to-face nature of commercial mediation significantly increases the likelihood of reaching a successful agreement, with studies indicating that over two-thirds of mediating parties achieve a resolution While it cannot guarantee a 100% agreement, commercial mediation paves the way for improved negotiations and greater chances of success in future discussions.
Mediation is a flexible process influenced by cultural differences across nations (Lewicki, Barry, and Saunders, 2009) In the USA, mediators often prioritize achieving a win-lose outcome and focus on closing deals quickly, with less emphasis on relationship building In contrast, Asian mediators tend to prioritize establishing connections between parties over other procedural aspects (Feehilly, 2008) Despite these cultural variations, mediation sessions generally consist of three main stages (Street, 2005).
Agreement to mediate Contact with mediator
Mediation scheduled Mediation conducted Parties reach agreement
Parties do not reach agreement
In disputes, communication between parties is often hindered, as lawyers typically act as representatives to prevent any misstatements that could lead to disadvantages, particularly in commercial disputes However, successful mediation relies on the crucial element of fostering open communication channels (Street, 2005).
Effective communication between negotiating parties is essential for understanding each other's objectives and needs, which forms the foundation for developing suitable solutions Research indicates that a lack of information exchange can lead to unsuccessful negotiations To achieve successful outcomes, mediators must facilitate open communication, encourage parties to express their needs, and foster a positive and productive discussion environment (J Butler, 1999).
Effective communication relies on trust and honesty, as individuals must openly share their needs and desires with the mediator's support However, not all situations allow for smooth information flow; negative emotions can obstruct communication In these instances, the mediator acts as a messenger, facilitating dialogue between parties Additionally, when one party dominates the conversation, often referred to as the "big fish and small fish" scenario, the mediator must equalize the dynamics, ensuring that every participant has the opportunity to express themselves (Street, 2005).
Arbitration
Arbitration serves as a formal alternative to litigation, allowing disputing parties to present their cases to a neutral third party who makes a binding decision This method is commonly utilized for resolving conflicts in both private and public sectors.
Arbitration is often viewed as a more efficient alternative to litigation due to its speed, cost-effectiveness, and procedural flexibility Parties involved can choose their arbitrator and have control over various aspects of the arbitration process Additionally, arbitrators usually possess specialized expertise related to the dispute, allowing for more informed decision-making compared to judges.
Arbitration is a method for resolving business disputes by presenting them to an impartial third party known as an arbitrator This arbitrator reviews the evidence from both parties and issues a decision, which may be binding Essentially, to arbitrate means to submit a dispute for resolution by an arbitrator, who acts as an observer and decision-maker in the process.
Arbitration is an alternative dispute resolution (ADR) method that aims to resolve disputes efficiently and cost-effectively, avoiding the lengthy litigation process Unlike litigation, which takes place in court and results in binding decisions with the option to appeal, arbitration offers a more streamlined approach The key differences between arbitration and litigation lie in their processes and the outcomes they produce for the parties involved.
Arbitration is frequently mistaken for mediation, which is an informal process involving a third party who facilitates discussions between disputing parties without making binding decisions or hearing evidence Unlike arbitration, mediation focuses on dialogue and separate discussions, known as caucusing, to help parties reach a resolution While litigation, arbitration, and mediation are all methods used to resolve business disputes, they differ significantly in their processes and outcomes (Jean Murray, 2019).
In legal science, the arbitration was studied under many different levels and there are many definitions of arbitration:
According to the American Arbitration Association/ICDR (AAA):
"Arbitration is a dispute resolution method by submitting the dispute to a number of objective consideration and settlement and they will make the final decision, valuable required the claimants to enforce " h
In Vietnam, commercial arbitration is defined by Article 3 (1) of the Law on Commercial Arbitration 2010 as a method of dispute resolution that is mutually agreed upon by the parties involved and conducted in accordance with the law's provisions.
Besides, according to Martin Domke, commercial arbitration is defined as:
Arbitration is a method for resolving disputes by appointing a neutral arbitrator chosen by the parties involved This arbitrator makes a decision based on the evidence and arguments provided to the arbitration tribunal The parties consent beforehand to accept the arbitrator's decision as final and binding.
Commercial arbitration is a type of alternative dispute resolution (ADR) that allows for the resolution of commercial disputes outside of traditional court systems In this process, disputes are adjudicated by one or more arbitrators, who make binding decisions.
"arbiters" or "arbitral tribunal"), which renders the "arbitration award" An arbitration award is legally binding on both sides and enforceable in the courts (O'Sullivan, Arthur; Sheffrin, Steven M., 2003)
According to the American Arbitration Association (AAA), here is the general process for arbitration h
Arbitrations typically follow a structured process, as outlined by the American Arbitration Association, although each case may present unique circumstances that could alter standard procedures.
The arbitration center notifies the involved parties via letter or email that the case has been officially filed, outlining the arbitration process This communication includes deadlines for the respondent to submit an answer to the claimant's Demand for Arbitration, as well as timelines for all parties to provide any necessary information Additionally, if there are any fees due from the parties, the American Arbitration Association (AAA) will request these payments at this stage.
Depending on what process is set forth in the Rules that govern your arbitration, the arbitration center/asscociation invites an arbitrator or arbitrators to
Position Statements submitted to arbitrator Hearing
In the decision award and enforcement process, the arbitrator thoroughly examines case details, identifies any conflicts of interest, and submits a signed oath document along with pertinent disclosures, if necessary.
Parties are informed of the appointed arbitrator and given a chance to raise objections, with a specified deadline for submissions If objections are filed, the arbitration center will evaluate whether to retain or dismiss the arbitrator Should the arbitrator be removed, the process reverts to the invitation stage for a new arbitrator Conversely, if the arbitrator remains, the case progresses to the next phase.
1.3.3.4 Preliminary Hearing and Information Exchange
Once the Arbitrator is appointed and confirmed, a preliminary hearing conference call will be scheduled with the parties involved This call focuses on addressing preliminary issues, scheduling information exchanges, and setting a hearing date Following the call, the Arbitrator will issue a written "scheduling order" that outlines all key dates and details discussed during the call.
In this phase, both parties present their case to the arbitrator, which can occur in person, via telephone, or through the submission of written documents The arbitration agreement and relevant governing rules determine the procedure Additionally, parties may be required to submit written arguments post-hearing as directed by the arbitrator.
Once the hearing concludes and the arbitrator establishes that no additional evidence will be presented, the hearing is officially closed, and a date for issuing the award is determined The arbitrator then provides a written award that outlines the case's outcome, which is distributed to the involved parties At this stage, the arbitration process is complete, and the arbitration center or association finalizes its records.
The key differences between mediation and arbitration
Although mediation and arbitration have the same goal in mind, a fair resolution of the issues at hand, there are some major differences which both parties must understand beforehand
Arbitration and mediation differ primarily in their processes; arbitration involves an arbitrator who listens to evidence and makes a binding decision, resembling a court trial but in a less formal setting In contrast, mediation is a collaborative negotiation facilitated by a neutral third party, where a resolution is only achieved if all parties reach a consensus.
Mediators facilitate settlement discussions by assisting with communication and exploring options, rather than issuing orders or making determinations Typically, mediation begins with a joint meeting where parties present their perspectives, followed by individual sessions where the mediator delves deeper into each party's views and potential resolutions This back-and-forth process aims to foster a collaborative environment focused on achieving a mutually beneficial outcome Most disputes are resolved successfully, often culminating in a written settlement agreement Many participants express greater satisfaction with mediation compared to arbitration or court processes, as they have more control over the outcome and actively contribute to the resolution.
Arbitration is a formal dispute resolution process where an arbitrator, who may be a retired judge, senior lawyer, or professional expert, hears both parties present their cases Unlike mediation, arbitration involves limited out-of-court negotiations and allows lawyers to question witnesses The arbitrator's decision is legally binding, requiring compliance from both parties, and the awarded resolution is enforceable in courts across 142 countries.
Table 1.3: Comparison Between Arbitration & Mediation
Arbitrators control the outcome Parties control the outcome
Arbitrator is given power to decide
Mediator has no power to decide
Settlement only with party approval
Often extensive discovery is required
Exchange of information is voluntary and is often limited Parties exchange information that will assist in reaching a resolution
Arbitrator listens to facts and evidence and renders an award
Mediator helps the parties define and understand the issues and each side's interests
Parties present case, testify under oath
Parties vent feelings, tell story, engage in creative problem-solving
Process is formal Attorneys control party participation
Joint and private meetings between individual parties and their counsel h the arbitrator
Decision based on facts, evidence, and law
Outcome based on needs of parties
Result is win/lose award—
Result is mutually satisfactory—A relationship may be maintained or created
More expensive than mediation, but less expensive than traditional litigation
Private and confidential Private and confidential
(Financial Industry Regulatory Authority-FINRA, 2018)
The understanding of arb-med-arb model
To address the diverse legal cultures in today's global marketplace, dispute resolution mechanisms must evolve continuously A recent solution that has emerged from the integration of these legal cultures is multi-tiered dispute resolution, which represents an evolutionary approach rather than a revolutionary one, as it is not a new concept.
In recent years, the "Arb-Med-Arb" process has become a popular dispute resolution mechanism This approach, which stands for Arbitration-Mediation-Arbitration, involves initiating arbitration proceedings, then engaging in mediation to seek an amicable resolution, and resuming arbitration if mediation fails.
Multi-tiered dispute resolution offers multiple pathways for resolving disputes within a single procedure, integrating various methods like mediation and arbitration This innovative approach has emerged recently in commercial and cross-border contexts, enhancing the effectiveness of dispute settlement.
In various regions, particularly in mainland China and other civil law countries, it is common practice for judges and arbitrators to actively encourage settlements during trials and arbitration proceedings.
Multi-tiered dispute resolution offers an effective approach for resolving cross-border disputes by integrating negotiation and mediation with the definitive enforcement of arbitration, as outlined in the UN Convention for the Recognition and Enforcement of Foreign Arbitral Awards This method not only enhances flexibility but also ensures a swift resolution, while presenting distinct challenges that parties must carefully manage.
The necessity of initial arbitration in the "Arb-Med-Arb" process is often questioned, with some suggesting that a simpler "Med-Arb" approach could save time and costs However, experienced mediators emphasize that mediation should only occur after both parties fully understand their own positions and those of their opponents, particularly in complex or contentious disputes.
The "Arb-Med-Arb" process initiates arbitration proceedings only after the exchange of arbitration pleadings, ensuring that parties clearly outline their cases This preparation allows for effective mediation, encouraging good faith negotiations and preventing parties from using mediation as a means to gather additional evidence for litigation Additionally, all case files and documents are transferred from the arbitration center to the mediation center, facilitating access to necessary information and reducing time and costs associated with duplicating materials This collaborative approach between arbitration and mediation in Singapore enhances efficiency, highlighting the growing preference for the comprehensive "Arb-Med-Arb" model over the simpler "Med-Arb" method in alternative dispute resolution.
The specific procedure of Arb-Med-Arb will be described in the next Chapter h
INTERNATIONAL EXPERIENCE ON APPLYING ARB- MED-ARB MODEL: STUDY OF SINGAPORE
Singapore’s development in mediation and arbitration
Singapore is recognized as a premier destination for international alternative dispute resolution (ADR) solutions, having established itself as a leading hub for alternative dispute settlement Notably, it is the only country to implement the arbitration-mediation-arbitration model This research aims to analyze Singapore's journey to becoming a global center for commercial mediation and arbitration, focusing on the development of its institutions and the structure of its mediation and arbitration proceedings.
In the late 1990s, Singapore revitalized its mediation approach due to the overwhelming caseload in its courts Recognizing mediation as a more efficient method for dispute resolution, the country aimed to reduce the lengthy procedures and promote harmonization This shift also served to alleviate the burden of adjudication on backlogged cases Consequently, the establishment of the first three mediation institutions marked a significant step toward achieving these objectives (Sundaresh Menon, 2015).
The Primary Dispute Resolution Centre in Singapore specializes in civil cases with a limit of approximately $200,000 The centre primarily employs judges as mediators, who have undergone advanced mediation training to effectively manage the high volume of cases Due to the substantial caseload and limited number of judges, there is a growing need for additional mediators with the necessary legal expertise to facilitate the mediation process.
The accreditation of Alternative Dispute Resolution (ADR) in the Asia Pacific region has been strengthened by the State Courts Practice Directions in Singapore These guidelines ensure that parties in a conflict are automatically referred to the most appropriate method of alternative dispute resolution, including mediation, unless they explicitly choose not to pursue this option.
The Singapore Mediation Center, established in 1997, primarily focuses on commercial disputes and operates alongside the Supreme Court of Singapore Parties involved in disputes are strongly encouraged to consider mediation as a means of resolution The court retains the authority to mandate mediation when deemed appropriate A significant development is the collaboration between the Singapore Mediation Center and local businesses, which aims to create tailored mediation programs that meet the needs of Singapore's economic landscape Notable initiatives include the Council for Estate Agencies Mediation Sub-Scheme and the Court for Private Mediation Education.
Community Mediation Centres (CMC) are dedicated to addressing issues related to individuals and their homes Given the diverse nature of common life conflicts, these centers manage a wide range of cases, necessitating a team of mediators from various social backgrounds To ensure effective mediation, CMCs implement a Mediator Framework that establishes standards for mediators, oversees training programs, and sets qualifications for recruiting volunteer mediators.
By classifying mediation institutions, the result was noticeable As reported in
Since 2015, the PDRC has managed over 7,000 cases, demonstrating a remarkable resolution rate of 90% Meanwhile, the SMC has addressed nearly 2,500 cases with an impressive success rate of around 80% Additionally, the CMC has effectively resolved about 7,000 community disputes, achieving a commendable resolution rate of approximately 70% (Sundaresh Menon, 2015).
Singapore has recognized the growing demand for quality dispute resolution in response to the increase in foreign direct investment (FDI) and cross-border trade (UN, 2013) As a result, it has established itself as a leading hub for international commercial dispute resolution, becoming one of the world's most sought-after arbitration and mediation centers (White & Cases, 2012) The Singapore International Mediation Center (SIMC) was established in 2013 following a survey on mediation practices, with recommendations for an accreditation system to professionally qualify mediators and a robust legal framework for mediation in Singapore The SIMC offers a diverse range of international-quality mediation services, supported by skilled mediators and specialists, while adhering to established mediation principles Additionally, the Singapore International Mediation Institute (SIMI) plays a crucial role in validating mediators at the SIMC, ensuring high standards in the mediation process.
The Singapore International Commercial Court (SICC) is a vital component of Singapore's Alternative Dispute Resolution (ADR) landscape, functioning under the Singapore High Court to handle international trade disputes that often do not involve the country itself This institution uniquely combines the features of both court litigation and arbitration, leveraging the advantages of each Alongside the Singapore International Mediation Centre (SIMC) and the Singapore International Arbitration Centre (SIAC), Singapore has established itself as a prominent ADR hub globally Parties involved in disputes have the flexibility to choose their preferred resolution method and can opt for mediation voluntarily or upon court referral, all within a robust and efficient mechanism.
Furthermore, the Asian Mediation Association was formed in Singapore on
On August 17, 2007, five mediation centers signed a Memorandum of Understanding (MOU) to enhance the mediation ecosystem across Asia, focusing on improving mediation for business and commercial conflicts The Arb-Med-Arb model uniquely connects these centers, accommodating diverse cultures and jurisdictions The organization primarily addresses disputes involving parties engaged in trading activities in Asia, offering a variety of dispute settlement services, including mediation facilitation in neutral jurisdictions, mediator selection and training, and the establishment of mediation systems Currently, the membership has expanded to twelve centers, including the Bahrain Chamber for Dispute Resolution, CCPIT/CCOIC Mediation Center, Delhi Mediation Centre, and others across the region.
In just twenty-five years, Singapore has transformed from having minimal international arbitration activity to becoming a leading hub for arbitration in Asia and globally This rapid growth is evidenced by the Singapore International Arbitration Centre (SIAC), which was recognized as one of the fastest-growing arbitral institutions, handling 343 new cases in 2016 alone Notably, over 80 percent of these cases involve international parties, highlighting Singapore's significant role in the global arbitration landscape.
Singapore has successfully engaged in regulatory competition to position itself as a leader in international arbitration Minister of Law K Shanmugam emphasized this commitment during the 2011 Arbitration Dialogue, stating Singapore's goal to be at the forefront of international arbitration thinking This reflects the government's clear and determined approach to enhancing its arbitration framework.
In Singapore, our approach to arbitration is proactive and efficient, allowing us to address legislative issues within three to six months For instance, we recently resolved a High Court case that conflicted with our arbitration goals through legislative action in just four months Our judicial system is highly supportive of arbitration, striking a balance between intervention and a hands-off approach, aligning with international standards and practices.
Singapore is emerging as a competitive hub for arbitration, rivaling traditional centers like London, Paris, and Stockholm Over the past 15 years, case filings at the Singapore International Arbitration Centre (SIAC) have surged by over 300% In 2000, Singapore managed only 58 cases, but this figure has significantly increased following the financial crisis.
In 2015, there were 271 filings, marking a 22% increase from 2014 In comparison, the London Court of Arbitration saw 326 arbitrations referred in the same year, reflecting a 10% rise from the previous year Singapore is rapidly closing the gap in arbitration cases.
Figure 2.1: Total Number of New Cases Handled by SIAC (2006-2016)
2016 was a record breaking year for Singapore's main arbitral institution, the Singapore International Arbitration Centre (SIAC), and the ICC (Lim Tat, Singapore, 2017):
- SIAC administered 343 new cases from 56 jurisdictions, representing almost a 400% rise from a decade ago and a 27% increase from 2015
- SIAC handled a total amount in dispute of US$11.85 billion), nearly three and half times the amount in 2014
- The ICC Court recorded 966 new cases filed in 2016, with the average monetary value in dispute rising from US$63 million in 2014 to US$84 million in 2015
- Singapore was also named the number one seat of ICC arbitration in Asia for five years running and the fourth most preferred seat globally for ICC arbitration
Over 84% of all new Singapore seated SIAC arbitrations and 71% of all new Singapore seated ICC arbitrations filed in 2015 were international in nature, involving one or more nonSingaporean parties
The attraction of arbitration in international business transactions in Singapore is attributable to its:
- Arbitration legislation based on the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Arbitration Law)
Singapore's Arb-Med-Arb model
The "arb-med-arb" process is a distinctive feature of Singapore's mediation culture, resulting from collaboration between the Singapore International Arbitration Center and the Singapore International Mediation Center This model allows conflicting parties to opt for either arbitration or mediation voluntarily, emphasizing the importance of binding arbitration agreements while incorporating the benefits of mediation.
2.2.1 SIAC-SIMC Arb-Med-Arb Protocol
The AMA Protocol, developed through collaboration between the Singapore International Arbitration Centre (SIAC) and the Singapore International Mediation Centre (SIMC), consists of three main stages Once arbitration proceedings are initiated and the tribunal is formed, the tribunal will issue a stay of the arbitration.
Upon referral from the SIAC, the SIMC will oversee mediation proceedings, which must be concluded within eight weeks Should the parties reach a settlement during mediation, they can ask the arbitral tribunal to issue a consent award based on their agreement If mediation fails to resolve the dispute, the arbitral tribunal will lift the stay on arbitration and continue the proceedings.
The AMA Protocol can be adopted by the parties at any stage of arbitration or included in a dispute resolution clause in their contract It enforces a strict compliance timeline and includes triggers, such as automatic referral to the SIMC following a stay of arbitration by the tribunal The SIAC manages all fee collections for both itself and the SIMC, ensuring that parties pay only one set of fees throughout the process Additionally, the Protocol maintains a clear separation between arbitration and mediation, with arbitrators not serving as mediators and mediation being administered independently by the SIMC.
The AMA Protocol combines the advantages of mediation and arbitration, offering flexibility while minimizing costs and time delays often linked to changing dispute resolution methods It maintains a clear separation between arbitration and mediation proceedings, addressing concerns of bias by ensuring mediation only begins after arbitration has started This approach clarifies the origins of disputes between parties Additionally, the Protocol allows for the creation of settlement agreements that can be partially or fully recognized as awards, which is crucial since studies indicate that compliance rates for these agreements surpass those of arbitral awards Collectively, these features position the AMA Protocol as the new 'gold standard' in multi-tiered dispute resolution.
Under the AMA Protocol, parties involved in arbitration must first engage in mandatory mediation for their disputes If mediation succeeds, the parties can formalize their settlement agreement before the arbitral tribunal, resulting in an enforceable covenant award.
The AMA Protocol is accessible for all disputes submitted to the Singapore International Arbitration Centre (SIAC) under the Arb-Med-Arb Clause, as well as any disputes mutually agreed upon for resolution under this Protocol Parties involved in mediation at the Singapore International Mediation Centre (SIMC) acknowledge that any dispute resolved during this process will be covered by their existing arbitration agreement.
The SIMC and SIAC advocate for the inclusion of the AMA Clause in contracts, promoting a multi-tiered approach to dispute resolution that strengthens the mechanisms embedded within the agreement.
2.2.2 Procedure of Singapore’s Arb - Med - Arb model
Arb-Med-Arb under the SIAC-SIMC Arb-Med-Arb Protocol works as follows:
Firgue 2.2: Procedure of Singapore Arb-Med-Arb model h
(Source: Edmund Wan and Alex Ma King & Wood Mallesons‘ Hong Kong office)
Arb-Med-Arb model is a hybrid mechanism and combines arbitration and mediation It contains inessence the following steps:
The claimant initiates arbitration and files a notice of arbitration
The tribunal is constituted but immediately stays the proceedings
The parties attempt to settle their disputes by way of mediation
If the mediation is successful, the tribunal enters a consent award
If the mediation is not successful, the parties are referred back to arbitration h
SIAC and SIMC are currently the sole institutions providing a model clause and definitive guidelines for conducting Arb-Med-Arb proceedings Parties wishing to utilize the Arb-Med-Arb model must include this framework in their commercial contracts The standard wording for the Arb-Med-Arb model is available for incorporation.
Any disputes related to this contract, including issues of existence, validity, or termination, shall be resolved through arbitration administered by the Singapore International Arbitration Centre (SIAC) This process will follow the current Arbitration Rules of SIAC, which are incorporated by reference in this clause.
The seat of the arbitration shall be [Singapore] 2
The Tribunal shall consist of _** arbitrator(s) 3
The language of the arbitration shall be
The parties agree to engage in good faith mediation at the Singapore International Mediation Centre (SIMC) following the initiation of arbitration, adhering to the SIAC-SIMC Arb-Med-Arb Protocol in effect Any settlement achieved during mediation will be submitted to the arbitral tribunal appointed by SIAC and may be formalized as a consent award on mutually agreed terms.
The Arb-Med-Arb model stipulates that disputes will be resolved through arbitration in Singapore, followed by an attempt at mediation through the Singapore International Mediation Centre (SIMC) Any settlement achieved during this mediation process is recognized and upheld.
Parties involved in arbitration should clearly designate their preferred seat of arbitration If an alternative location outside of Singapore is desired, simply substitute “*Singapore+” with the chosen city and country (for example, “*City, Country+”).
3 State an odd number Either state one, or state three. h shall be referred to the SIAC appointed arbitral tribunal and made as a consent award
The AMA Clause can be adopted by parties even after a dispute has occurred, and it does not need to be included in the original contract However, the consent of both parties is essential for the implementation of the AMA Protocol.
In AMA proceedings, the arbitrator and mediator are distinct individuals to maintain impartiality; however, parties may agree to appoint one person for both roles This practice is discouraged due to the potential for bias, as the arbitrator may develop a preconceived judgment from observing the parties' discussions during mediation.
APPLICABILITY OF AMA MODEL IN VIET NAM AND
Vietnam’s approach on applying Arb – Med - Arb model
Since the implementation of Doi Moi reforms in 1986, Vietnam has experienced steady economic growth, transforming from a poor nation to one with low average income Since 1990, it has ranked among the fastest-growing countries in terms of GDP per capita, averaging 6.4% annual growth during the 2000s Despite global market fluctuations, Vietnam's economy continues to thrive, with a promising medium-term outlook highlighted by a 6% GDP growth in 2016 The robust foundations for development, including strong internal demand and a stable export-oriented manufacturing sector, are further evidenced by a significant increase in newly established enterprises, according to the Ministry of Planning and Investment.
In 2018, Vietnam saw a significant rise in entrepreneurship, with 10,594 new enterprises and a total registered capital of 119.243 billion VND, marking increases of 9.3% in the number of enterprises and 17.8% in registered capital compared to 2016 Data from May 2014 to May 2018 reveals that the number of new enterprises doubled in May 2018 compared to May 2014 This surge in business activity highlights the potential for increased disputes, as a crowded market often leads to more conflicts The growing diversity of newly established enterprises will likely overwhelm the court system's capacity to handle disputes Therefore, it is essential for Vietnam to strengthen its Alternative Dispute Resolution (ADR) framework to effectively address the rising demand for dispute settlement among both new and established businesses, which face potential conflicts daily.
Figure 3.1: Newly established enterprises of May from 2014 – 2018
Over the past 30 years, foreign direct investment (FDI) in Vietnam has significantly increased, establishing the country's presence in the global market (Bui Quang Vinh, 2013) Since the Doi Moi reforms, foreign investment has played a crucial role in Vietnam's economic development, with 14,095 valid foreign investment projects totaling $206.8 billion in registered capital as of August 2012, of which $97.4 billion has been disbursed This sector has demonstrated remarkable dynamism, achieving a GDP growth rate consistently higher than the national average; for instance, in 1995, the growth rates were 14.98% for foreign investment compared to 9.54% for the overall economy Subsequent years showed similar trends, with rates of 11.44% and 6.79% in 2000, and 13.22% and 8.44% in 2005 The contribution of the foreign investment sector to GDP has steadily increased since 1992, starting at 2%.
From 1992 to 2011, the contribution of the foreign investment sector to Vietnam's economic structure increased from 12.7% to 18.97%, reflecting a growth of 5.4% between 2000 and 2011 Policies encouraging foreign investment have significantly enhanced Vietnam's export capacity, facilitating the country's integration into the global value chain Notably, prior to 2001, exports from the foreign investment sector had already outpaced overall export figures.
In 2012, domestic enterprises contributed significantly to Vietnam's export promotion, accounting for 64% of the total export value Additionally, foreign investment has played a crucial role in expanding the export market to regions such as the USA and EU, leading to a dramatic shift in the export structure, with the US emerging as Vietnam's largest export market.
Vietnam's dynamic economic growth and foreign direct investment (FDI) landscape have paved the way for a surge in international agreements, starting with the ASEAN in July 1995 and the Vietnam-U.S Bilateral Trade Agreement in 2000, followed by its accession to the WTO in January 2007 Currently, Vietnam has signed or is in the process of signing 16 Free Trade Agreements (FTAs), with the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) being the most significant Notably, these FTAs incorporate mediation options in their dispute settlement terms, with the EVFTA providing a clear mediation procedure and a code of conduct for mediators While Vietnam has traditionally viewed mediation as a domestic solution, many of its trade partners utilize it for international disputes, with the EU leading this approach, as highlighted in the preamble of the agreements.
Mediation offers a swift and cost-effective alternative for resolving civil and commercial disputes, with processes customized to meet the specific needs of the parties involved Agreements reached through mediation tend to be honored voluntarily, fostering amicable and sustainable relationships These advantages are especially significant in cross-border disputes.
Source: EU Directive 2008/52/EC (Europa, 2008) h
Vietnam is set to commit to a prominent global mediation center, yet it faces challenges in matching their expertise This discrepancy may lead to confusion during disputes, potentially disadvantaging Vietnam in negotiations, especially against European parties Experts note that dispute resolution in trade and investment is emerging as a key trend in modern Free Trade Agreements (FTAs), although this concept remains relatively unfamiliar to Vietnam.
Vietnam's commercial mediation landscape is marked by several challenges, notably the incomplete legal framework that lacks alignment with international standards Additionally, the advisory role of lawyers in mediation remains limited, impacting the country's representation in these processes Enforceability issues further hinder progress, yet Vietnam has made significant strides in advancing commercial mediation and arbitration This thesis will examine the evolution of Vietnam's legislation governing commercial mediation and arbitration, tracing its development from the initial regulations to the most recent updates.
3.1.2 Vietnam development in commercial mediation and arbitration
The regulation of mediation in Vietnam began with Decree No 13 on Court Organization, issued on January 21, 1946 Subsequently, Article 4 of Decree No 20/TTg, dated January 14, 1960, recognized mediation as an option for disputes under the Central Arbitration Council's jurisdiction The Economic Arbitration Order of March 25, 1991, led to Decree No 70/HDBT from the Council of Ministers, which outlined the principles and procedures for resolving economic contract disputes Although mediation was not explicitly detailed in this Decree, its principles indicated the mediation aspect within Economic Arbitration for settling such disputes.
Assembly issued the Procedure for settlements of Economic Cases Order 73
Later, Commercial Arbitration Order 2003 has been issued and Article 37 has regulated mediation in arbitration adjudication (UBTVQH, 2003) In June 15 th
In 2004, the ratification of the Civil Procedure Code marked a pivotal advancement in civil procedure law, particularly with the recognition of mediation as a fundamental principle in Chapter II (Quoc Hoi, 2004).
Resolution No 49-NQ/TW of the Politics Ministry dated June 2 nd 2005 about Jurisdiction reform Strategy until 2020 concludes:
“… promote to settle some of the disputes by negotiation, mediation, arbitration; the court supports by approved such settlements”
Source: Resolution No 49-NQ/TW (BCHTU, 2005)
This undertaking is crucial for establishing the legal framework for alternative dispute resolution (ADR) methods like mediation and arbitration A key focus of mediation is the voluntary freedom of the parties involved, which is addressed in relevant legislation, including the Civil Code 2005 and the Commercial Code 2005.
In civil relationships, mediation is promoted as a means of resolving disputes in accordance with the law It is essential that parties engage in these relationships without resorting to force or threats, ensuring a peaceful resolution of civil conflicts.
Source: Article 12 Civil Code 2005 (Quoc Hoi, 2005)
Both parties have the right to negotiate freely within the framework of legal regulations, customs, and
Source: Article 11 Commercial Code 2005 (Quoc Hoi 2005)
Vietnam is a member of various international treaties that prioritize negotiation and mediation for conflict resolution, including Protection and Investment Encouragement Agreements and trade agreements Private mediation is viewed as a personal matter for each party, lacking direct legal regulation The Vietnam International Arbitration Center (VIAC), affiliated with the Vietnam Chamber of Commerce, pioneered the development of mediation principles, which took effect on September 10, 2007 These principles, consisting of 20 articles, govern the mediation of disputes arising from commercial legal relationships when parties agree to mediate through VIAC Key features include the freedom for parties to choose their mediators, adherence to principles of independence, impartiality, and respect for trade customs, as well as confidentiality obligations Parties and mediators can propose solutions, and once mediation is successful, the parties are bound by the mediation agreement in accordance with civil law (VIAC, 2014).
Article 9 of the Law on commercial arbitration 2010 also had regulation relating negotiation, mediation in arbitration adjudication: h
Recommendations for Viet Nam
3.2.1.1 Developing the commercial legal environment a) Working group on commercial mediation
To enhance the development of commercial mediation in Vietnam, it is essential to establish a dedicated Working Group focused on this area Following the example of Singapore, which recognized its potential as an international mediation hub in 2003, Vietnam should assemble a team comprising key officials from the Ministry of Justice and global experts This group would conduct research and provide recommendations to the government on strategies to elevate Vietnam's mediation framework The Singaporean Working Group successfully identified critical elements for internationalizing their mediation landscape, resulting in favorable recommendations that significantly advanced the country's mediation capabilities.
In 2007-2008, Hong Kong established a Working Group comprising experts from various sectors, led by the Secretary for Justice, to enhance mediation use in commercial disputes Over two years, the group proposed nearly 50 recommendations addressing key areas: legal framework, training and accreditation, and public education These findings underwent a three-month public review for feedback Subsequently, three Mediation Task Forces were formed, involving mediation institutions, legal authorities, and professionals to focus on these critical areas To further advance mediation practices, a Steering Committee was established, supported by three sub-committees dedicated to the major aspects of study, resulting in a well-developed mediation framework in Hong Kong (CEDR, 2012).
Commercial mediation institutions in Vietnam, particularly under Decree No 22, serve primarily as mediator appointing authorities, facilitating both ad-hoc and institutional mediation The flexibility of ad-hoc mediation allows parties to choose any third party as a mediator However, the proliferation of numerous commercial mediation centers in a nascent legal environment may prove ineffective and costly due to insufficient legal foundations and social need assessments Instead, establishing a large-scale national commercial mediation center, informed by international best practices, could be more beneficial, operating alongside the development of existing institutions Promoting arbitration centers to offer mediation and other Alternative Dispute Resolution (ADR) services can optimize resources, diversify offerings, and enhance income without complicating administrative processes Additionally, encouraging organizations like the Vietnam Chamber of Commerce and Industry to provide mediation services or appoint mediators could significantly improve the effectiveness of commercial mediation, drawing on successful models from international counterparts This approach ensures that parties have multiple options for resolving disputes, enhancing overall conflict resolution mechanisms.
Vietnam currently lacks a unified international accreditation system for mediators, with standards dispersed across various ADR centers To enhance the development of international commercial mediation in the country, the establishment of a National Mediation Accreditation Center is essential International parties often seek resolution from experienced mediators or field experts, necessitating proof that Vietnam's mediation institutions can meet these expectations This initiative aligns with the thesis's recommendation to relax overall mediation practice standards, thereby fostering a more conducive mediation environment in Vietnam The focus is on supporting accredited mediators and mediation institutions rather than ad hoc mediators.
Regulations serve as the backbone of effective mediation processes, making them essential for meaningful discussions The implementation of a mandatory mechanism, similar to the US model, could be beneficial Vietnamese courts can adopt this approach in various commercial sectors where mediation is preferable to litigation, particularly in international cases that necessitate strong relationship preservation, as these involve not just business entities but also the interests of nations.
To enhance the commercial mediation landscape in Vietnam, implementing apology legislation could be beneficial Similar to the regulations in Hong Kong, this legislation would protect parties from being held liable for faults made during negotiations or mediation By alleviating the fear of accusations, such a mechanism would encourage greater openness and honesty among parties, fostering a more collaborative and effective mediation process.
To effectively implement the Arb-Med-Arb process, VIAC and VMC should provide a comprehensive practice note addressing key concerns such as legal basis, timelines, and fees, similar to the approach taken by SIAC and SIMC The collaboration between VIAC and VMC, given that VMC operates under VIAC, facilitates the connection of relevant institutions in Vietnam The AMA Protocol should emerge from a thorough partnership between these two entities and consists of three main stages Initially, once proceedings are initiated and the arbitral tribunal is formed, the tribunal will issue a stay of arbitration, prompting VIAC to refer the case to VMC for mediation The VMC will then oversee the mediation process, which must conclude within eight weeks Should the parties reach a settlement, they can request the arbitral tribunal to issue a consent award based on their agreement; if not, the tribunal will lift the stay and continue with arbitration.
VMC and VIAC should promote the adoption of the AMA Clause in contracts to strengthen the built-in dispute resolution mechanisms The recommended standard wording for the AMA clause should align with Singapore's AMA clause for optimal effectiveness.
Any disputes related to this contract, including issues of existence, validity, or termination, will be resolved through arbitration administered by the Vietnam International Arbitration Centre (VIAC) The arbitration will follow the current VIAC Rules, which are incorporated by reference in this clause.
The seat of the arbitration shall be [Viet Nam]
The Tribunal shall consist of _** arbitrator(s)
The language of the arbitration shall be
The parties agree to pursue mediation at the Vietnam International Mediation Centre (VMC) in good faith after arbitration begins, following the VIAC-VMC Arb-Med-Arb Protocol Any settlement achieved during mediation will be submitted to the arbitral tribunal appointed by VIAC and may be formalized as a consent award based on the agreed terms.
The AMA protocol and AMA clause provide clear guidelines for those studying and applying this model in their cases With the AMA's implementation, successful mediation minutes are automatically recognized as an arbitration award, simplifying the process and eliminating complex issues This efficiency allows parties to save time, as mediation must be completed within a designated period of 8 weeks, and an unsuccessful mediation does not affect the statute of limitations for initiation However, it is important to adjust the fixed mediation timeline when applying Arb-Med-Arb in Vietnam to align with the practical circumstances and capabilities of the mediators.
3.2.1.2 Mediators and arbitrators’ capacity improvement a) Liberalization of mediation and arbitration practice
Commercial mediation and arbitration serve as alternative dispute resolution methods outside of the court system, but they are distinct from adjudication Unlike judges or arbitrators who make binding decisions, mediators act as neutral, impartial, and independent facilitators, assisting parties in negotiating a mutually acceptable resolution to their disputes.
In Vietnam, the criteria for granting mediator licenses or professional certification may not align with best practices observed in other countries, as parties often choose mediators based on trust rather than certification Imposing strict standards for mediation certification could undermine the self-determination of parties in resolving commercial disputes, contradicting the core principle of mediation Notably, countries like the US do not require mediators to possess a legal background or formal certification Therefore, there is no compelling justification for mandating mediator licenses in Vietnam However, given that commercial mediation is relatively new in the country, enhancing the knowledge and skills of mediators is essential Instead of rigid regulations, Vietnam could implement training programs similar to those offered by the NCMA in the US and establish codes of conduct for mediation institutions, akin to practices in Hong Kong and Singapore This approach would indirectly set fundamental criteria for mediators, fostering the development of commercial mediation within institutional frameworks before expanding to ad-hoc mediation.
Vietnam should refrain from imposing regulations on mediation practices, as evidenced by the experiences of the USA and Singapore, where early mediators were primarily volunteers during the initial stages of mediation development.
Engaging the country in mediation practices is a vital step toward fostering its development, particularly in Vietnam, where awareness is limited By inviting individuals interested in mediation to support conflict resolution, we can start with small issues and gradually expand the practice's scope This approach will make mediation more relatable and accessible to the public, which is essential for its proliferation Additionally, enhancing the skills and capabilities of mediators and arbitrators will further strengthen the mediation framework and pave the way for integration into the international commercial mediation ecosystem.
Conclusions
The legal field is evolving alongside technological advancements to address the dynamic needs of the commercial world One notable innovation is the Arb-Med-Arb model, which has emerged as a solution to meet the demands of global businesses.
The combination of mediation and arbitration, known as the Arb-Med-Arb model, offers a compelling alternative dispute resolution option for parties A key advantage of this approach is that any settlement achieved during mediation is enforceable as a consent award by the arbitral tribunal This is particularly advantageous for parties seeking enforcement in foreign jurisdictions, as these awards are recognized as SIAC awards and can be enforced in contracting states under the New York Convention However, it's important to note that traditional arbitration awards typically encompass only monetary awards, injunctive relief, and specific performance orders In contrast, mediation is a consensual process that allows parties to negotiate and agree on their desired outcomes, which may not always align with the standard arbitration awards.
In a mediation scenario, parties may reach an agreement involving commercial arrangements for future dealings, which could include engaging third parties or winding up a company However, if the Arb-Med-Arb model is implemented, the arbitral tribunal cannot convert these commercial arrangements into a consent arbitral award, as such agreements are not legally entitled to be enforced Attempting to do so would risk the award being challenged, rendered unenforceable, or set aside.
In summary, the Arb-Med-Arb model presents a viable alternative to existing dispute resolution mechanisms, offering parties the opportunity to engage in constructive negotiations before resorting to arbitration However, it is crucial for parties to recognize that certain limitations exist regarding the terms of any settlement that can be transformed into a consent award for enforceability Despite these constraints, parties should remain open to discussing other commercial terms that could facilitate a settlement, while understanding that not all terms may qualify for a consent award.
Limitation of research
Due to limited time and limited knowledge, my study will surely have some inevitable shortcomings.:
This thesis primarily examines the multi-tier dispute resolution system in Singapore, which may limit the generalizability of its findings to the global context Consequently, there are valuable lessons for Vietnam to learn from the experiences of other countries Therefore, further research is essential to gain a more comprehensive understanding of multi-tier dispute resolution worldwide.
Due to time and financial constraints, as well as the unique landscape of commercial mediation and arbitration in Vietnam, the data gathered for this thesis is not fully optimized Therefore, future research must prioritize a more comprehensive and targeted data collection approach.
Further research is essential to address the identified shortcomings and to gain a comprehensive understanding of the potential for multi-tiered dispute resolution While this master's thesis does not encompass all facets of mediation, arbitration, and alternative dispute resolution methods, it aims to offer viable solutions for Vietnam by applying the Arb-Med-Arb model based on Singapore's experience It is my hope that this research will serve as a valuable resource in the field.
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