Group Assignment Subject Legal English Topic Resolution Of Commercial Dispute By Arbitration In Vietnam.pdf

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 c

MINISTRY OF JUSTICE HA NOI LAW UNIVERSITY

GROUP ASSIGNMENT SUBJECT: LEGAL ENGLISH

Topic: Resolution of Commercial dispute by Arbitration in Vietnam

Group Class

Member

Ha Noi - 2021

Topic: Resolution of Commercial dispute by Arbitration in Vietnam

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3 Enforcement ofarbifral awards ch HH HH Hay 13 III Situation of commercial dispute resolution by arbitration in Vietnam and FECOMMENAGAGION 88A 14

Over the years, Vietnam has had commercial relations with many countries around the world, and it has signed many bilateral and multilateral trade agreements In this context, Vietnam has development opportunities, but there are also many challenges to address, particularly the issue of trade dispute settlement In trade relations, when disputes arise, the parties can choose the dispute settlement method that includes arbitration, which is one of the methods offering many benefits in economic disputes Commercial arbitration is a method of dispute settlement that appeared very early, and it has been used quite commonly in the world, especially in developing countries such as Vietnam

B DEVELOPMENT 1 Theoretical background

1 Commercial dispute Commercial disputes are a common and frequent phenomenon in the market economy Because of the regular nature and its consequences for the parties participating in disputes and the economy Vietnamese law has been concerned with this activity and how disputes are settled by specific provisions in numerous legal documents Nevertheless, Vietnamese law does not clearly define the term “commercial dispute” However, the presence of the definition “commercial activity” has created a similarity in the concept of “commercial” and “commercial disputes” of Vietnamese law with common standards of law and international practices

According to Vietnamese law, the concept of commercial activities is expanded and more comprehensive.' Furthermore, the definition of commercial activities expresses similarities with the definition of business in the Company Law 1999, the Company 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

2 Commercial dispute resolution In general, commercial dispute resolution is the selection of forms and appropriate 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 will develop different modes of dispute settlement In Vietnam, the concept of dispute settlement is understood in numerous ways during each period In the centrally planned economy, dispute settlement is conducted principally through State economic arbitration - a State agency set up to perform two main functions: the resolution of economic contract disputes and performing the State management which relates to the economic contract Disputes involving foreign elements shall be settled by the Foreign Arbitration Tribunal or the Maritime Arbitration Tribunal In the market economy, with the diversity and complexity of commercial relations, the concept of resolution of disputes has substantial changes, and it is constructed in the following two directions:

Firstly, the State plays a role in settling disputes by establishing an Economic court in the People’s court system which reviews economic cases

Secondly, socializing resolution of commercial dispute activities, facilitating the disputing parties who have governor-general in selecting the appropriate form of dispute resolution 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 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 to settle disputes in commercial activities Arbitration is a jurisdiction because the conduction 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 the court, after conducting dispute settlement, the Arbitration Tribunal will promulgate arbitrary awards, which are legally binding on the parties and it is guaranteed to be enforced under the support of the judgment enforcement agencies

Moreover, arbitration settles commercial disputes at the request of the disputing parties and that dispute must fall within the arbitration’s jurisdiction When a dispute arises, the parties have the right to request arbitration This is one of the provisions ensuring the parties! right of disposition in settling disputes

Finally, commercial arbitration is a dispute settlement mechanism that ensures confidentiality With the current social-economic development, disputes in business and 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 other methods such as negotiation, and conciliation; arbitration is a dispute resolution method 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 of negotiation 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 in commercial relations

3.2 Types of arbitration Commercial arbitration exists in two forms: Ad-hoc arbitration and Institutional arbitration

® 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 following characteristics: 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 no permanent head office, executive apparatus, list of arbitrators or rules of procedure

e Jnstitutional arbitration According to Vietnamese law, Institutional arbitration is organized in the form of arbitration centers The arbitration center is a non-governmental organization that has 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 type 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, the operation of arbitration centers requires a few of the support of the State, typically: assistance in appointing and changing arbitrators or assistance in the enforcement of arbitral 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 of commercial dispute by arbitration under Vietnam 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 by arbitration

Vietnam Commercial Arbitration Law 2010 has expanded the jurisdiction of commercial 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 organizations doing business together as the Ordinance on Commercial Arbitration 2003

Secondly, in a dispute, arbitration only has jurisdiction when (a) the parties have an arbitration agreement before or after a dispute occurs and (b) the arbitration agreement 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 an agreement between the parties on a dispute resolution by arbitration that may arise or has arisen An arbitration agreement is entirely independent from the contract Any modification, extension, cancellation, invalidation or nonperformance of the contract will not invalidate the arbitration agreement (Article 19 of Vietnam Commercial Arbitration Law) In case the disputing parties have reached an arbitration agreement but 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 Vietnam Commercial 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 the arbitration agreement under contract law such as the issue of form, the will of the parties (mutual consent), the arbitralable nature of the dispute, the capacity of the subject, and other factors (additional to proving the above factors) such as the principles of good faith, treatment equality between the parties,

Pursuant to Article 18 of Vietnam Commercial Arbitration Law, an arbitration agreement is invalid if (1) Disputes arise in the domains falling beyond the arbitration's jurisdiction defined in Article 2 of this Law (2) The arbitration agreement maker has no competence defined by law (3) The arbitration agreement maker has no civil act capacity under the Civil Code (4) The form of the arbitration agreement is incompliant with Article 16 of this Law (5) A party is deceived, intimidated or compelled in the course of making the arbitration agreement and requests a declaration that such arbitration agreement is invalid (6) The arbitration agreement breaches prohibitions 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 the award does not meet the fundamental principle of that country's law, thus it is unenforceable

2 Arbitral proceedings The Vietnamese Law on Commercial Arbitration 2010 contains detailed instructions on the initiation of arbitration proceedings, including 04 main stages as follows

IL1 Initiation of lawsuits If it is institutional arbitration, the claimant should file a statement of claim at the chosen arbitration center In case of ad-hoc arbitration, the statement of claim is served to the respondent by the claimant The statement of claim must contain all issues listed in Article 30 of Vietnam Commercial Arbitration Law 2010, including:

(i) date of making; (1) | 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 the respondent receives the statement of claim (Article 31) Noticeably, pursuant to Article 33, the Law on Commercial Arbitration in Vietnam sets a statutory limitation of 2 years for arbitral clatms which runs from the date that legal rights and interests are infringed

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

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

IL2 Formation of arbitral tribunal Article 38 of the Vietnam Commercial Arbitration Law 2010 allows parties to themselves negotiate and agree to terminate the dispute settlement When the negotiation is successful, they may request the chairman of the arbitration center to make 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 the right to agree on the number of arbitrators as well as the selection of arbitrators Three arbitrators will be appointed if parties cannot agree on the number (Article 39)

Depending on the characteristics of the dispute, the party may agree to form an arbitral tribunal at an arbitration center or establish an ad-hoc arbitral tribunal to settle the dispute The particular sequence to form the arbitral tribunal is specified in specified in Article 40, Article 41 of the Law on Arbitration 2010

11.2.1 Formation of institutional arbitral tribunal With regard to institutional arbitration, if parties do not have their own arrangements or if the chosen arbitration center does not have specific rules for selection of arbitrators, the selection process will be as follows:

- Within thirty days of receiving a clatm and request to select an arbitrator from an arbitration center, the respondent has to notify the arbitration center of his/her selected arbitrator or request the chairman of the arbitration center to appoint an arbitrator If the respondent fails to do so, the chairman of the arbitration center will appoint an arbitrator for the respondent within a further seven days

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

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

11.2.2 Establishment of an ad-hoc arbitral tribunal

10