Trang 1 FOREIGN TRADE UNIVERSITYFACULTY OF BUSINESS ADMINISTRATION____***____MIDTERM ASSIGNMENTTopic: Discuss the role of international commercial arbitration inresolving disputes relate
Trang 1FOREIGN TRADE UNIVERSITY
FACULTY OF BUSINESS ADMINISTRATION
***
MIDTERM ASSIGNMENT
Topic: Discuss the role of international commercial arbitration in resolving disputes related to the responsibilities of commercial legal entities in international transactions.
Instructor: Mr Ha Cong Anh Bao
Course: Law for Enterprise - PLUE401.2
Group 2
Hanoi, October 2023
Trang 2TABLE OF CONTENTS
II OVERVIEW OF INTERNATIONAL COMMERCIAL ARBITRATION 4
1 Definition of International Commercial Arbitration 4
2 The role of International Commercial Arbitration 6
3 Responsibilities of Legal entities in International Transactions 7
IV THE APPLICATION OF INTERNATIONAL COMMERCIAL ARBITRATION
2 Hypothetical case study related to the application of CISG in resolving disputes
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Trang 3This research goes into the critical function of international business arbitration in resolving disputes resulting from commercial legal entities' responsibilities in international transactions International transactions are more widespread than ever in an era characterized by globalization and an increasingly integrated global economy As a result, disagreements between parties participating in such transactions have increased This research investigates how international commercial arbitration can be used to resolve these issues more effectively than traditional litigation
The study starts by going through the essential notions of international commercial arbitration, emphasizing its voluntary and consensual nature, flexibility, and neutrality It emphasizes the significance of party autonomy in deciding on arbitration as the preferred method of conflict settlement It also discusses the significance of arbitration agreements and the function of arbitral institutions in the arbitration process
In addition, the paper emphasizes the benefits of international business arbitration, such as confidentiality, arbitrator experience, and the enforceability of verdicts under international conventions such as the New York Convention It also includes noteworthy case studies and statistics to demonstrate the effectiveness of arbitration in practice
In conclusion, this paper emphasizes international commercial arbitration's critical role in fostering efficient, cost-effective, and impartial dispute resolution in the complex environment of multinational transactions It emphasizes its importance in promoting international business partnerships and assuring global commerce's continuous expansion
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Trang 4Due to the expansion of trade and the improvement of transportation, people in the 18th century achieved an increase in international transactions, thus a large number of disputes related to the responsibilities of commercial legal entities in international transactions Facing one of the most controversial issues in the commercializing world, people create international commercial arbitration International commercial arbitration is
a private method of resolving conflicts between businesses from different regions In this process, two parties are in a conflict, and one outsider (third party) has a binding opinion The process happened outside the law of the nation that those parties come from They choose a set of rules to govern the argument such as those of the International Chamber of Commerce (ICC), the United Nations Commission on International Trade Law
(UNCITRAL), The United Nations Convention on Contracts for the International Sale of Goods (CISG),
The purpose of the assignment and your research question or thesis statement is to discuss the significant role of international commercial arbitration in resolving disputes related to the responsibilities of commercial legal entities in international transactions by investigating natural functions and analyzing the process of international commercial arbitration Besides that the report will show the responsibilities of the two conflicted parties and provide a case study in a wide range to strengthen key points
This study consists of three sections The first section introduces the main topic, provides background information, and shows the overall structure The next section consists of the definition, the importance of international commercial arbitration and some case studies The last section will interpret the findings and discuss their implications for the study
II OVERVIEW OF INTERNATIONAL COMMERCIAL ARBITRATION
1 Definition of International Commercial Arbitration
International commercial arbitration (ICA) is a method of resolving disputes between parties engaged in cross-border business transactions through a private, neutral, and legally binding process outside of traditional court systems In this process, the disputing parties agree to submit their dispute to one or more arbitrators who render a final and binding
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Trang 5decision, known as an arbitral award, after considering the evidence and arguments presented by both sides (Moses, M.L The Principles and Practice of International Commercial Arbitration 3rd ed Cambridge: Cambridge University Press, 2017) Key elements of international commercial arbitration include:
Voluntary Process: The parties involved choose arbitration as their dispute resolution mechanism and agree to the terms of the arbitration process in advance
Neutrality: Arbitrators are typically selected for their expertise in the subject matter of the dispute and are expected to be impartial and unbiased
Confidentiality: Arbitration proceedings are often confidential, which can be appealing to businesses seeking to protect sensitive commercial information Final and Binding: Arbitral awards are generally final and enforceable in national and international courts Parties have limited rights to appeal, which promotes efficiency in resolving disputes
Cross-Border Nature: International commercial arbitration is particularly suitable for disputes arising from international business transactions, as it provides a neutral forum for parties from different jurisdictions
Enforceability: The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is a widely adopted international treaty that facilitates the enforcement of arbitral awards in over 160 countries The parties to the dispute often sign an arbitration agreement to start the process of international commercial arbitration The terms and conditions of the arbitration, including the rules of procedure, the choice of the arbitrator or arbitrators, and the location of the arbitration, are set forth in this Agreement
The arbitration process can start as soon as the arbitration agreement is signed After hearing evidence and arguments from each side, the arbitrator or panel of arbitrators will reach a ruling about the issue This decision is final and irrevocable and can only be contested under certain conditions, such as when there is a significant irregularity in the arbitration process or where the result is against the interests of the public
The United Nations Commission on International Trade Law's (UNCITRAL) Model Law on International Commercial Arbitration is one of the international agreements and
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Trang 6national legislation that govern international commercial arbitration A thorough foundation for conducting international business arbitration hearings is provided by this model law
On the international scale, the United Nations on International Commercial Arbitration law was signed in 1985 and nearly updated in 2006, consisting of 36 Articles and 8 Chapters Vietnam was also one of the members of UNCITRAL with 157/193 votes For more information, the Law on Commercial Arbitration is currently published on this
2 The role of International Commercial Arbitration
A significant element of an arbitrator's job is to make sure that each party fulfills their contractual duties, including delivering the goods, paying the price, providing the services, etc An arbitrator is a neutral, impartial third party who weighs the merits of each side's case and renders a decision after carefully examining the information presented to them The arbitrator should be knowledgeable of the relevant laws and policies They are often chosen by the disputing parties in lieu of formal court proceedings, and may be selected specifically for his or her industry knowledge particularly in complex cases where specialized expertise might be required
Before formal arbitration proceedings start, the arbitrator will frequently urge cooperative contact between the parties to the dispute in an effort to achieve a settlement Throughout the arbitration, the arbiter will serve as a referee, fostering conversation The arbitrator will then create a settlement agreement if a settlement is achieved An arbitrator acts like a judge in reviewing and interpreting all the evidence presented to him or her (this may include witness statements, testimony, documentation, and so on), applying the relevant laws and rules to the arbitration, and then making a final decision or 'award' which, like a judge's, is final and binding and can only be appealed against in certain specific circumstances if settlement cannot be reached
It's crucial to remember that an arbitrator's job is to interpret and uphold a contract, not to establish governmental policy Arbitration decisions that are based on an individual arbitrator's personal sense of "justice" and "public policy" rather than the actual terms of the applicable contracts can be successfully challenged in court and overturned In other words, the arbitrator's interpretation of the parties' contract is allowed, but interpolation and rewriting are not
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Trang 8The arbitrator's responsibility includes guaranteeing due process, applying the appropriate law, issuing a reasoned award, maintaining secrecy, and upholding good faith
in the context of intellectual property rights, confidentiality, and other rights and interests Each side must be given a fair chance to present its argument and refute the claims made
by the opposing party, according to the arbiter The applicable laws and regulations must
be applied to the arbitration by the arbitrator This includes regulations governing good faith, secrecy, and intellectual property rights A rational decision must be made by the arbitrator As a result, the arbitrator is required to provide a justification for their decision, explaining how they read and applied the legislation The arbitrator is required to uphold the arbitration's strict confidentiality When sensitive information—such as trade secrets or other confidential information—is at issue in the dispute, this is especially crucial The arbitrator has the right to demand that the parties cooperate in good faith This means that the parties must abide by the arbitrator's rulings and orders and must not try to mislead one another or the arbitrator
3 Responsibilities of Legal entities in International Transactions
3.1 Pre-transaction responsibilities
Transactions that involve foreign entities are subject to continuously evolving regulatory, legal, and compliance obligations Therefore, effectively assessing legal risks and rules that may affect a global deal is critical and considered responsibilities for all international legal entities
When structuring an international deal not only is it important to identify interactions that can be generated between companies but also consider the many factors that can affect the transaction A few of those considerations include local antitrust laws, securities regulations, corporate law, and determining which jurisdiction’s regulations will apply
Legal entities must also comply with tax implications and accounting methods in any international transaction Local payment structure, as well as available forms of financing, should also be considered Not only can these prevent disparity between the power of bargaining and information between parties but they also make sure that two parties reach
an agreement on further contract of how the transaction should be processed
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Trang 9It is key for the success of an international deal that both legal entities understand the business landscape of the other, what regulations govern the industry of business, and the relevant compliance obligations that apply to a particular situation
3.2 During-transaction responsibilities
Once companies reach an agreement on the terms of a contract, the next step is to verify that all responsibilities made up until that point are carried out, and what type of document and actions are required by international and local laws This is accomplished by conducting lists of responsibilities organized in clear order, which is no easy task, especially when multiple countries are involved
It’s important to understand what you are looking to learn from the international and local laws as this will inform the types of documents that will need to be collected during the transaction Conducting an international document search and retrieval requires an understanding of the different document types available locally and the nuances in each jurisdiction such as different naming conventions, etc
The Incoterms, widely-used Terms of sale, are a set of 11 internationally recognized rules which define the responsibilities of sellers and buyers Incoterms specify who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities
The Incoterms are divided into four principal categories: E, F, C and D
Category E (Departure), which contains only one trade term, i.e EXW (Ex Works)
Category F (Main Carriage Unpaid), which contains three trade terms: FCA (Free Carrier)
FAS (Free Alongside Ship)
FOB (Free on Board)
Category C (Main Carriage Paid), which contains four trade terms: CPT (Carriage paid to)
CIP (Carriage and Insurance paid to)
CFR (Cost and Freight)
CIF (Cost, Insurance and Freight)
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Trang 10Category D (Arrival), which contains three trade terms:
DAP (Delivered at Place)
DPU (Delivered at Place Unloaded)
DDP (Delivered Duty Paid)
Of primary importance is that each Incoterms rule clarifies the tasks, costs, and risks
to be borne by buyers and sellers in these transactions Familiarizing legal entities with Incoterms will help improve smoother transactions by clearly defining who is responsible for what and each step of the transaction
3.3 Post-transaction responsibilities
Once the deal closes, companies should work together to merge their operations, which can generate significant compliance implications in the localities involved Parties must consider what local regulations must be adhered to and how they impact the ownership structure In Vietnam, for instance, depending on the type of business activity being conducted; 100% foreign ownership is not allowed and a joint venture with
a local enterprise may be required
Legal entities also need to recheck and complete all the terms and conditions which were in the premade contract with their partners or the third parties involved, as well as comply with tax implications and declare needed information to specific departments
III THE APPLICATION OF INTERNATIONAL COMMERCIAL
ARBITRATION IN VIETNAM
1 Overview
In Vietnam, the Law on Commercial Arbitration was signed by Mr Nguyen Phu Trong - Chairman of the national assembly in 2010 It provides for the jurisdiction of commercial arbitration, forms of arbitration, arbitration institutions and arbitrators; arbitration order and procedures; rights, obligations and responsibilities of parties in arbitral proceedings; courts’ jurisdiction over arbitral activities; organization and operation
of foreign arbitrations in Vietnam, and enforcement of arbitral awards
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