Resolving Contract Disputes Between Vietnamese and Foreign Traders Through Commercial Arbitration

Resolving Contract Disputes Between Vietnamese and Foreign Traders Through Commercial Arbitration

1. Legal Basis for Commercial Arbitration

Commercial arbitration in Vietnam is clearly and specifically regulated in the following legal documents:

• Law on Commercial Arbitration 2010: This is the primary legal document regulating commercial arbitration in Vietnam. This law includes regulations on the scope of application, the authority of arbitration, dispute resolution procedures, and the validity of arbitral awards.

• Civil Code 2015: This code regulates general principles on contracts and civil obligations, forming an important legal foundation for resolving contract disputes.
• Commercial Law 2005: This law specifies details about commercial activities and goods sale contracts, serving as an important legal basis in commercial disputes.

2. Dispute Resolution Process Through Commercial Arbitration

a. Signing the Arbitration Agreement:

The arbitration agreement can be made before or after the dispute arises. According to Article 16 of the Law on Commercial Arbitration 2010, the arbitration agreement must be made in writing and has legal validity. This agreement can be part of the main contract or a separate agreement.

Resolving Contract Disputes Between Vietnamese and Foreign Traders Through Commercial Arbitration

b. Selecting Arbitrators:

The parties can mutually agree to select arbitrators. If they cannot agree, the parties can request the arbitration center to appoint arbitrators. The arbitrators must ensure fairness, impartiality, and no interest related to the disputing parties.

c. Filing an Arbitration Claim:

The claimant submits the arbitration claim and evidence to the arbitration center. The claim must include information about the disputing parties, the content of the dispute, the request of the claiman, and accompanying evidence.

d. Dispute Resolution Hearing:

The arbitrators conduct a hearing to review and resolve the dispute based on the evidence and arguments of the parties. The hearing can be held publicly or privately depending on the agreement of the parties.

e. Arbitral Award:

The arbitrators issue a final award. This award is enforceable like a court judgment and cannot be appealed or reviewed, except in cases where the award is requested to be annulled under Article 68 of the Law on Commercial Arbitration 2010. An arbitral award can be annulled if there are grounds that the arbitrators violated serious legal regulations or the award is inconsistent with the arbitration agreement.

3. Rights of Foreign Traders in Commercial Arbitration

a. Right to Choose Arbitrators:

Foreign traders have the right to participate in the process of selecting arbitrators. The parties can agree on the choice of arbitrators or request the arbitration center to appoint them. This ensures fairness and professionalism in dispute resolution.

b. Right to Fair and Impartial Hearing:

Foreign traders are guaranteed the right to a fair and impartial hearing. Arbitrators must adhere to principles of fairness, impartiality, and must not have any interest related to the disputing parties.

c. Right to Confidentiality:

Arbitration procedures are usually conducted privately, protecting the business secrets and other sensitive information of foreign traders. This helps safeguard trade secrets and the reputation of the business.

d. Right to Choose Language and Applicable Law:

Foreign traders have the right to agree with the counterpart on the language and applicable law in the arbitration process. This helps reduce language barriers and facilitates the protection of the rights.

e. Right to Enforcement of Arbitral Awards:

Arbitral awards are enforceable like court judgments and can be enforced in many countries participating in the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Foreign traders have the right to request enforcement of the award in the country or other countries where the counterpart has assets.

4. Advantages and Disadvantages of Commercial Arbitration

4.1. Advantages:

• Quick and Efficient: Arbitration procedures are generally faster than court procedures. The parties can freely agree on the timeframe for dispute resolution.
• Confidentiality: Arbitration hearings are usually held privately, ensuring business secrets and sensitive information of the parties are protected.
• Flexibility: The parties can agree on the choice of arbitrators, language, location, and applicable law for the arbitration.

4.2. Disadvantages:

• Cost: The cost of resolving disputes through arbitration is often higher than through courts due to fees paid to arbitrators and arbitration centers.
• Enforcement of Awards: Enforcement of arbitral awards can be challenging in some countries, especially those not participating in the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Resolving Contract Disputes Between Vietnamese and Foreign Traders Through Commercial Arbitration

5. Practical Application of Commercial Arbitration

In practice, commercial arbitration has been widely applied in international trade transactions between Vietnamese and foreign traders. Arbitration centers like the Vietnam International Arbitration Center (VIAC) have resolved many large and complex disputes, bringing satisfaction to the parties involved. However, to optimize the effectiveness of this method, the parties need to:

• Carefully Select Arbitrators: Arbitrators should have deep knowledge of law and international trade, ensuring fairness and impartiality in dispute resolution.
• Prepare Thorough Evidence and Arguments: The parties need to prepare carefully regarding evidence and arguments to protect the rights before the arbitration.
• Clearly Define Agreements in Contracts: Sales contracts should clearly define commercial arbitration, including arbitration clauses, applicable law, language, and dispute resolution location.

Apolo Lawyers is a legal consulting service provider with a team of high quality and professional lawyers and litigation attorneys, ensuring to provide customers with a full package of legal services. For more detailed information, please contact:

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