November 26, 2024
THE ROLE OF ARBITRATION IN VIETNAM
INTRODUCTION
Arbitration in Vietnam was originally developed in the 1960s in the forms of the State Economic Arbitration System (“SEAS”), the Foreign Trade Arbitration Committee (“FTAC”) and the Maritime Arbitration Committee (“MAC”) in line with the former socialist pattern. SEAS was organised as an administrative branch of the Government like any other ministry. FTAC and MAC were under the auspices of the Vietnam Chamber of Commerce and Industry (“VCCI”). SEAS was replaced by the system of economic courts belonging to the Supreme Court in September 1994. Instead of SEAS, a number of economic arbitration centres (“EAC”) were established. On 28th April 1993, FTAC and MAC were merged to establish the Vietnam International Arbitration Centre (“VIAC”) at the VCCI. EACs and VIAC were then re-structured under the Ordinance on Commercial Arbitration in 2003.
WHY ARBITRATION?
Arbitration offers several advantages over traditional litigation, making it an attractive option for resolving disputes in Vietnam:
- Efficiency: Arbitration proceedings are generally faster than court litigation, which can be prolonged due to procedural backlogs.
- Expertise: Arbitrators are often experts in specific fields, ensuring informed decisions on complex issues.
- Confidentiality: Unlike court cases, arbitration proceedings are private, protecting sensitive business information.
LEGAL FRAMEWORK GOVERNING ARBITRATION IN VIETNAM
Vietnam’s legal system supports arbitration through the following key instruments:
- The Law on Commercial Arbitration (2010): This law provides the framework for domestic and international arbitration, emphasizing party autonomy and aligning with international standards.
- The Civil Procedure Code: It outlines the role of courts in supporting arbitration, including the enforcement of arbitral awards and the setting aside of awards in limited circumstances.
- International Treaties: As a member of the New York Convention, Vietnam ensures that arbitral awards are enforceable across member countries.
ARBITRAL INSTITUTIONS IN VIETNAM
Among the country’s other arbitral options, the Vietnam International Arbitration Centre VIAC is the most well established and well run. VIAC enjoys a large stock of reputable and experienced culture and industry, and manages an agile range of traders and construction and investment dispute cases.
At the same time, ad hoc arbitration is rapidly gaining popularity and allows the parties to choose the procedure and the arbitrators.
CHALLENGES IN THE ARBITRATION LANDSCAPE
While arbitration has made significant strides in Vietnam, several challenges remain:
- Awareness: Many businesses, especially small and medium enterprises, lack awareness of arbitration’s benefits.
- Cost: Arbitration can be expensive compared to traditional court proceedings, deterring smaller firms.
- Judicial Intervention: Despite improvements, occasional inconsistencies in court enforcement of arbitral awards undermine confidence in the system.
EMERGING TRENDS
- International Investment Arbitration: Vietnam’s integration into global trade agreements like the CPTPP and the EU-Vietnam FTA has heightened interest in investor-state arbitration.
- Digital Transformation: Online arbitration and e-dispute resolution platforms are becoming increasingly relevant, driven by the need for efficiency and accessibility.
- Specialized Arbitration Rules: Sectors such as intellectual property and energy are developing tailored arbitration frameworks to address industry-specific disputes.
CONCLUSION
Arbitration is becoming a commonly used remedy of commercial dispute resolution in Vietnam involving litigation as an alternative course. As a result of arbitration, the redundancy on disputes will help the companies to create an investor conducive environment in Vietnam.
HOW WE CAN HELP?
- Our team provides the comprehensive arbitration services tailored to meet the needs of businesses operating in Vietnam.
- We also assist in drafting and reviewing the arbitration clauses in contracts to ensure they are enforceable and aligned with the business goals.
For more information or queries, please email us at
[email protected]
Key Contact
Surendra Singh Chandrawat
Managing Partner
