group assignmentsubject legal englishtopic resolution of commercial dispute by arbitration in vietnam

In addition, it helps reduce the burden on Public agencies when the State encourages the parties to resolve disputes through negotiation, conciliation or the allowance of the establishme

MINISTRY OF JUSTICE

HA NOI LAW UNIVERSITY

GROUP ASSIGNMENT

SUBJECT: LEGAL ENGLISH

Topic: Resolution of Commercial dispute by Arbitration in Vietnam

Topic: Resolution of Commercial dispute by Arbitration in Vietnam

I Theoretical background 4

1 Commercial dispute 4

2 Commercial dispute resolution 5

3 Commercial arbitration 5

3.1.Characteristic 5

3.2.Types of arbitration 6

II Resolution of commercial dispute by arbitration under Vietnam Commercial Arbitration Law 7

1 Arbitral Jurisdiction 7

2 Arbitral proceedings 9

2.1.Initiation of lawsuits 9

2.2.Formation of arbitral tribunal 10

2.2.1.Formation of institutional arbitral tribunal 10

2.2.2.Establishment of an ad-hoc arbitral tribunal 11

2.3.Pre-trial stages 11

2.3.1.Inspecting and collecting evidence 11

2.3.2.Summoning witness 11

2.3.3.Applying interim measures 12

2.4.Hearings 12

3 Enforcement of arbitral awards 13

III Situation of commercial dispute resolution by arbitration in Vietnam and recommendation 14

1 Actual state 14

1.1.Advantages 14

1.2.Limitations 15

2 Recommendations 17

C CONCLUSION 18

D LIST OF REFERENCES 19

A INTRODUCTION

Over the years, Vietnam has had commercial relations with many countriesaround the world, and it has signed many bilateral and multilateral trade agreements.

In this context, Vietnam has development opportunities, but there are also manychallenges to address, particularly the issue of trade dispute settlement In traderelations, when disputes arise, the parties can choose the dispute settlement methodthat includes arbitration, which is one of the methods offering many benefits ineconomic disputes Commercial arbitration is a method of dispute settlement thatappeared very early, and it has been used quite commonly in the world, especially indeveloping countries such as Vietnam

“commercial dispute” However, the presence of the definition “commercial activity”has created a similarity in the concept of “commercial” and “commercial disputes” ofVietnamese law with common standards of law and international practices

According to Vietnamese law, the concept of commercial activities is expandedand more comprehensive Furthermore, the definition of commercial activities1expresses similarities with the definition of business in the Company Law 1999, theCompany law in 2005, and 2014

From the diversity of the definition of commercial activities, it can be

understood that: Commercial disputes are contradictions (disagreements or conflicts) about the rights and obligations of parties in the process of carrying out commercial activities.

1 Clause 1, Article 3 of the Commercial Law 2005

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2 Commercial dispute resolution

In general, commercial dispute resolution is the selection of forms andappropriate forms that resolve conflicts of interest between parties

However, depending on each other stage of economic and social development,the level of law enforcement and the influence of culture on different countries willdevelop different modes of dispute settlement In Vietnam, the concept of disputesettlement is understood in numerous ways during each period In the centrallyplanned economy, dispute settlement is conducted principally through State economicarbitration - a State agency set up to perform two main functions: the resolution ofeconomic contract disputes and performing the State management which relates to theeconomic contract Disputes involving foreign elements shall be settled by the ForeignArbitration Tribunal or the Maritime Arbitration Tribunal In the market economy, withthe diversity and complexity of commercial relations, the concept of resolution ofdisputes has substantial changes, and it is constructed in the following two directions:Firstly, the State plays a role in settling disputes by establishing an Economiccourt in the People’s court system which reviews economic cases

Secondly, socializing resolution of commercial dispute activities, facilitating thedisputing parties who have governor-general in selecting the appropriate form ofdispute resolution In addition, it helps reduce the burden on Public agencies when theState encourages the parties to resolve disputes through negotiation, conciliation or theallowance of the establishment of non-governmental arbitration centers

3 Commercial arbitration

3.1 Characteristic

Clause 1, Article 3 of the Vietnam Commercial Arbitration Law 2010 stipulates:

“Commercial arbitration means a mode of dispute settlement agreed by the parties and to be conducted under this Law” According to this definition, the characteristics

of commercial arbitration can be seen as follows:

First of all, arbitration is a jurisdictional agency, which has the competence tosettle disputes in commercial activities Arbitration is a jurisdiction because theconduction of procedure is regular and the principal activity of arbitration centers -

centers have the legal entity status and their seals and bank accounts Similar to thecourt, after conducting dispute settlement, the Arbitration Tribunal will promulgatearbitrary awards, which are legally binding on the parties and it is guaranteed to beenforced under the support of the judgment enforcement agencies.

Moreover, arbitration settles commercial disputes at the request of the disputingparties and that dispute must fall within the arbitration’s jurisdiction When a disputearises, the parties have the right to request arbitration This is one of the provisionsensuring the parties' right of disposition in settling disputes

Finally, commercial arbitration is a dispute settlement mechanism that ensuresconfidentiality With the current social-economic development, disputes in businessand commerce often occur To settle disputes, the parties have the right to choose one

or more methods that are suitable to the needs of each party Compared with othermethods such as negotiation, and conciliation; arbitration is a dispute resolutionmethod that combines many advantages of the remaining methods: ensuring the rigor

of the proceedings and the jurisdiction as the form of the court Furthermore,commercial arbitration also ensures the freedom of spirit, confidentiality and prestige

of the parties, it preserves the relationship between the parties as a method ofnegotiation and conciliation According to Clause 4, Article 4 of Vietnam Commercial

Arbitration Law 2010: “Dispute settlement by arbitration shall be conducted in private unless otherwise agreed by the parties” Therefore, confidentiality is clearly

reflected in the content of the dispute In addition, it meets the need for trust incommercial relations

3.2 Types of arbitration

Commercial arbitration exists in two forms: Ad-hoc arbitration and Institutionalarbitration

● Ad-hoc arbitration

Ad hoc arbitration means a form of dispute settlement under this Law and the

order and procedures agreed by the parties Ad-hoc arbitration has the following3characteristics: this type of arbitration is only established when a dispute arises and it

2 Clause 1, Article 27 of Vietnam Commercial Arbitration Law 2010

3 Clause 7, Article 3 of Vietnam Commercial Arbitration Law 2010

terminates operation when this dispute is resolved, the ad-hoc arbitration has nopermanent head office, executive apparatus, list of arbitrators or rules of procedure.

● Institutional arbitration

According to Vietnamese law, Institutional arbitration is organized in the form

of arbitration centers The arbitration center is a non-governmental organization thathas legal entity status and its seals, bank accounts, and stable transaction office

Institutional arbitration means a form of dispute settlement at an arbitration center

under this Law and the rules of proceedings of such arbitration center Then, this type4

of arbitration has the following characteristics:

First, it is organized in the form of arbitration centers The arbitration is a

non-governmental organization which is not part of State agencies Notwithstanding, theoperation of arbitration centers requires a few of the support of the State, typically:assistance in appointing and changing arbitrators or assistance in the enforcement ofarbitral awards…

Second, the organization of arbitration centers is simple and compact, it is

composed of the Executive Board and Secretariat

Third, each arbitration center decides on its field and procedural rules.

Especially, their activities are conducted by the arbitrators of the center

II Resolution commercial dispute by arbitration under Vietnamof

Commercial Arbitration Law

1 Arbitral Jurisdiction

Firstly, pursuant to Article 2 of Vietnam Commercial Arbitration Law,

commercial arbitration has jurisdiction to settle these following disputes:

1 Disputes among parties which arise from commercial activities

2 Disputes among parties at least one of whom conducts commercial activities

3 Other disputes among parties which are stipulated by law to be settled byarbitration

Vietnam Commercial Arbitration Law 2010 has expanded the jurisdiction ofcommercial arbitration, whereby, business contract disputes are resolved at

4 Clause 6, Article 3 of Vietnam Commercial Arbitration Law 2010

commercial arbitration not only between the parties individuals and organizationsdoing business together as the Ordinance on Commercial Arbitration 2003.

Secondly, in a dispute, arbitration only has jurisdiction when (a) the partieshave an arbitration agreement before or after a dispute occurs and (b) the arbitrationagreement is valid

(a) Pursuant to Article 5.1 of Vietnam Commercial Arbitration Law, disputes

shall be resolved by arbitration if the parties have an arbitration agreement which is anagreement between the parties on a dispute resolution by arbitration that may arise orhas arisen An arbitration agreement is entirely independent from the contract Anymodification, extension, cancellation, invalidation or nonperformance of the contractwill not invalidate the arbitration agreement (Article 19 of Vietnam CommercialArbitration Law) In case the disputing parties have reached an arbitration agreementbut one party initiates a lawsuit at a court, the court shall refuse to accept the case,unless the arbitration agreement is invalid or unrealizable (Article 6 of VietnamCommercial Arbitration Law)

(b) The evaluation of the validity of the arbitration agreement is considered

based on many factors, including the satisfaction of the basic elements of thearbitration agreement under contract law such as the issue of form, the will of theparties (mutual consent), the arbitralable nature of the dispute, the capacity of thesubject, and other factors (additional to proving the above factors) such as theprinciples of good faith, treatment equality between the parties, …

Pursuant to Article 18 of Vietnam Commercial Arbitration Law, an arbitrationagreement is invalid if (1) Disputes arise in the domains falling beyond thearbitration's jurisdiction defined in Article 2 of this Law (2) The arbitration agreementmaker has no competence defined by law (3) The arbitration agreement maker has nocivil act capacity under the Civil Code (4) The form of the arbitration agreement isincompliant with Article 16 of this Law (5) A party is deceived, intimidated orcompelled in the course of making the arbitration agreement and requests a declarationthat such arbitration agreement is invalid (6) The arbitration agreement breachesprohibitions specified by law

The validity of the arbitration agreement is assessed independently by the place

of enforcement For example, in the law of the seat where the arbitration is chosen, the

arbitration agreement is valid, but when it arrives at the place of enforcement theaward does not meet the fundamental principle of that country's law, thus it isunenforceable.

2 Arbitral proceedings

The Vietnamese Law on Commercial Arbitration 2010 contains detailedinstructions on the initiation of arbitration proceedings, including 04 main stages asfollows

II.1 Initiation of lawsuits

If it is institutional arbitration, the claimant should file a statement of claim atthe chosen arbitration center In case of ad-hoc arbitration, the statement of claim isserved to the respondent by the claimant The statement of claim must contain allissues listed in Article 30 of Vietnam Commercial Arbitration Law 2010, including:(i) date of making;

(ii) names and addresses of the parties and witness;

(iii) statement of facts;

(iv) grounds and evidences for initiating the lawsuit;

(v) specific requirements of the plaintiff and the value of the dispute;

(vi) name and address of the person whom the plaintiff selects as arbitrator

or requests to be designated as arbitrator

The proceedings are deemed to start at the time the arbitration tribunal or therespondent receives the statement of claim (Article 31) Noticeably, pursuant to Article

33, the Law on Commercial Arbitration in Vietnam sets a statutory limitation of 2years for arbitral claims which runs from the date that legal rights and interests areinfringed

If the parties do not have specific agreement, the respondent has to prepare astatement of defense which includes a number of issues as prescribed in Article 35,and submit it to the arbitration center or the respondent’s arbitrator within 30 daysfrom the date that proceedings were initiated Arbitral proceedings are not affected ifthe respondent fails to do this Respondent can also file a counterclaim Before thearbitration tribunal makes the final decision, parties can still amend or withdraw

statements of claim and defense, and counterclaim unless the tribunal decides that suchactions are to delay the proceedings (Article 37).

II.2 Formation of arbitral tribunal

Article 38 of the Vietnam Commercial Arbitration Law 2010 allows parties tothemselves negotiate and agree to terminate the dispute settlement When thenegotiation is successful, they may request the chairman of the arbitration center tomake a decision of suspension of the dispute resolution In case that agreement cannot

be reached, an Arbitral Tribunal shall be formed to resolve the dispute Parties have theright to agree on the number of arbitrators as well as the selection of arbitrators Threearbitrators will be appointed if parties cannot agree on the number (Article 39).Depending on the characteristics of the dispute, the party may agree to form anarbitral tribunal at an arbitration center or establish an ad-hoc arbitral tribunal to settlethe dispute The particular sequence to form the arbitral tribunal is specified inspecified in Article 40, Article 41 of the Law on Arbitration 2010

II.2.1 Formation of institutional arbitral tribunal

With regard to institutional arbitration, if parties do not have their ownarrangements or if the chosen arbitration center does not have specific rules forselection of arbitrators, the selection process will be as follows:

- Within thirty days of receiving a claim and request to select an arbitrator from

an arbitration center, the respondent has to notify the arbitration center of his/herselected arbitrator or request the chairman of the arbitration center to appoint anarbitrator If the respondent fails to do so, the chairman of the arbitration center willappoint an arbitrator for the respondent within a further seven days

- If a dispute involves multiple respondents, then the respondents will agree onselection of an arbitrator or agree on requesting appointment of an arbitrator for suchrespondents within thirty days from the date of receiving the claim and request toselect an arbitrator from the arbitration center

- Where the parties agree to have a sole arbitrator but fail to select an arbitratorwithin thirty days from the date of receiving the claim, the chairman of the arbitrationcenter will appoint the sole arbitrator at the request of one or both of the parties withinfifteen days from the date of receiving such request (Article 40)

II.2.2 Establishment of an ad-hoc arbitral tribunal