Understanding Vietnamese Legal Regulations on Commercial Arbitration Agreements

Commercial arbitration represents a popular method to resolve disputes in Vietnam. Businesses often prefer arbitration over court litigation for reasons of privacy and speed. However, for an arbitration process to begin, a valid arbitration agreement must exist. The following article from Apolo Lawyers explores the Vietnamese legal framework regarding the effectiveness of an agreement to resolve disputes through commercial arbitration. For professional consultation and dedicated support, please contact our Hotline at +84 979.489.879. Apolo Lawyers remains committed to assisting clients through every step of their legal issues. 

1. Conditions for Resolving Disputes Through Arbitration

In accordance with Article 5 of the Law on Commercial Arbitration 2010, specific conditions must exist to resolve disputes through arbitration. To initiate and maintain the arbitration process, the following rules apply:

• Existence of an Agreement: an arbitration agreement must exist between the involved parties. The parties can create this agreement before or after a dispute arises.
• Individual Incapacity or Death: if an individual party dies or loses civil act capacity, the arbitration agreement remains valid. The agreement applies to the legal representative or heir, unless the parties agreed otherwise.
• Organizational Changes: if an organization involved in the agreement terminates operation, goes bankrupt, dissolves, consolidates, merges, divides, or transforms, the arbitration agreement remains valid. The agreement binds the new organization that assumes the rights and obligations, unless the parties agreed otherwise.

Understanding Vietnamese Legal Regulations on Commercial Arbitration Agreements

2. Form Requirements for a Valid Agreement

An arbitration agreement must exist in a written format. The Law on Commercial Arbitration 2010 recognizes various written forms. A clause within a contract or a separate agreement both qualify. Communications through telegram, fax, telex, or electronic data messages also count as written agreements. Verbal agreement on commercial arbitration will not be accepted, and the arbitration award can be invalidated by a competent court.

3. Situations Causing Invalidity

If a court or an arbitral tribunal identifies any of the followings, the arbitration agreement will be declared null and void:

• The dispute lies outside the scope of arbitration (i.e., outside commercial aspects).

• The agreement lacks the mandatory written form.

• The signatory lacked the proper authority to sign the document.

• A party lacked the necessary civil capacity at the time of signing.

• A party signed the document under duress, fraud, or threats.

• The terms directly violate mandatory provisions of the law.

4. Independence of the Arbitration Clause

In Vietnamese law, an arbitration clause within a contract operates independently from the main contract. If the main contract becomes invalid or is canceled, the arbitration clause remains effective. This ensures that the chosen dispute resolution mechanism still applies to handle the fallout of the canceled contract.

Understanding Vietnamese Legal Regulations on Commercial Arbitration Agreements

5. How A Lawyer can help

Navigating dispute resolution requires careful attention to detail. Drafting a clear and compliant document ensures that the chosen method of arbitration will hold up under legal scrutiny. By adhering strictly to the Law on Commercial Arbitration 2010, businesses can secure a reliable pathway to resolve conflicts efficiently and legally.

If you still have difficulties or further questions on Vietnamese commercial arbitration, as well as any other legal issues, please contact Apolo Lawyers via Email contact@apolo.com.vn or Hotline +84 979.489.879 for the best advice and support.

We are a law firm operating on a foundation that prioritizes prestige and a sense of responsibility. Our lawyers are highly qualified professionals with years of practice experience who always work with dedication and enthusiasm. Client information is kept strictly confidential. We are dedicated to bringing satisfaction to our customers.

>>> See more: How to Handle Shareholder Disputes in Vietnamese Companies

>>> See more: Professional Legal Services for ERC and IRC Applications in Vietnam