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Q&A for dispute resolution in Vietnam

:: Question:: Please advise about methods of dispute resolutions/ settlements in Vietnam.

:: Question No.1:: Please advise about methods of dispute resolutions/settlements in Vietnam.

Answer:

Like many other countries, Vietnam adopted two methods for commercial dispute resolution: namely court process and nonjudicial methods.

  • Arbitration:

Arbitration has become a widely accepted alternative mechanism for dispute resolution in Vietnam (since 2003) but applicable to commercial disputes only. Arbitral award made by a Vietnamese arbitration tribunal is binding and enforceable, i.e. the winner can submit application to the Civil Judgment Enforcement Agency for enforcement, if such arbitral award is not appealed to the court. It is noteworthy that the court is only empowered to review and make judgment against an arbitral award on the matter of jurisdiction, compliance with procedures etc. but not on the merit of the award. The New York Convention 1958 was acceded by Vietnam, which allows the enforcement of Vietnamese arbitration award across all the Convention countries. Vietnamese courts respect and recognise the choice of arbitration by parties to contract.

 

:: Question No.2:: What about the organization structure and operation of the court and the arbitration centre in Vietnam?

Answer:

  • Courts in Vietnam:

Vietnam has a two-tier court system, comprising of courts of first instance and courts of appeal. Judgments and decisions issued by the court of appeal shall be effective and enforceable. However, in special cases, effective judgments and decisions may be subject to further review by judge councils of the Municipal People’s Court or the Supreme People’s Court at their respective jurisdiction based on a protest made by the Chief Judge of respective level and discretion or at the request and based on a protest made by the President of the People’s Procuracy of the same level. The court system consists of the Supreme People’s Court, Municipal People’s Courts and District People’s Courts. District People’s Courts deal with almost all cases in the first instance level, while Municipal People’s Courts deal with cases relating to some specific areas, such as: investment, finance, banking, insurance, or cases relating to foreign elements in the first instance level. Municipal People’s Court also deal with those cases which had been judged by District People’s Courts but appealed or those cases which fall under the jurisdiction of the District People’s Court but the Municipal People’s Court deems necessary to be heard and judged by itself. The Supreme People’s Court, through its Supreme Appeal Court, deals with cases judged by Municipal People’s Courts but then appealed.

  • Commercial arbitration in Vietnam:

i) Arbitration proceedings by an arbitration centre:

Arbitration proceedings by an arbitration centre are initiated when the claimant files a “statement of claim,” which provides information about the disputing parties, a summary of the dispute, the desired remedy, the value of assets claimed, and the arbitrator selected by the claimant from the arbitration centre. Other requisite documents include certified copies of the arbitration agreement and evidence to support the claim. Within ten (10) days of receipt of the claimant’s statement of claim and other required documents, the arbitration centre is responsible for sending a copy to the respondent. The respondent then has thirty (30) days from the date the statement of claim was received to file a “statement of defence.” If the respondent does not select an arbitrator or requests the chairman of the arbitration centre to choose an arbitrator on its behalf, the chairman will have seven (7) days to select an arbitrator counted from the date by which the respondent is required to respond. If there are multiple respondents, then they must collectively select an arbitrator. In a dispute involving foreign elements, the parties may also have a competent foreign court appoint an arbitrator. The two arbitrators will appoint a third arbitrator, who will head the arbitral tribunal. Moreover, if a sole arbitrator is desired, then the parties must jointly appoint an arbitrator, or the chairman of the arbitration centre shall have fifteen (15) days to select an arbitrator.

Counterclaims may be filed by the respondent in the same way an initial statement of claim is filed, except the respondent is responsible for providing the arbitration centre and the claimant with a copy of the statement of counterclaim and other required documents.

Arbitration hearings may be attended by authorised representatives of the parties and invited witnesses. Arbitral decisions are decided by majority vote and minutes of the proceedings must be kept by the arbitration centre.

In Vietnam, there have been 7 dispute resolution institutions, of which the following are the major ones:

-The Vietnam International Arbitration Centre at the Vietnam Chamber of Commerce and Industry (“VIAC”);

-The Pacific International Arbitration Centre based in Ho Chi Minh City;

-The Hanoi Commercial Arbitration Centre based in Hanoi;

-The Ho Chi Minh City Commercial Arbitration Centre;

-The Can Tho Commercial Arbitration Centre;

-The Vien Dong Arbitration Centre based in Hanoi; and

-The Asia Arbitration Centre based in Hanoi.

The Vietnam International Arbitration Centre (“VIAC”) is the most well-known institutional arbitration centre in Vietnam and, for our judgment that, they are likely to be the preferred institution and the only one efficiently operating in Vietnam.

ii) Ad-hoc arbitration proceedings:

The Commercial Arbitration Law provides for ad-hoc proceedings, but in practice ad-hoc proceedings are rarely, if ever, used in Vietnam. Rather, foreign parties in Vietnam usually prefer to arbitrate disputes in either Hong Kong or Singapore.

To initiate ad-hoc arbitration in Vietnam, the claimant sends the respondent a statement of claim, certified copies of the arbitration agreement, supporting evidence and the claimant’s choice of arbitrator. The respondent has thirty days from the date the statement of claim was received to provide the claimant with a statement of defence and select an arbitrator. If the respondent fails to appoint an arbitrator, the claimant can request the local Provincial People’s Court to appoint an arbitrator for the respondent. The two arbitrators will appoint a third arbitrator who will head the arbitral tribunal. If a single arbitrator is desired, then the parties must jointly appoint an arbitrator or one of the parties may request a competent court to appoint an arbitrator.

Counterclaims may be filed by the respondent in the same way counterclaims are filed in arbitration proceedings at an arbitration centre.

Arbitration hearings may be attended by authorised representatives of the parties and invited witnesses. Arbitral decisions are decided by a majority vote and minutes of the proceedings must be kept by the arbitration centre. At a party’s request, an ad hoc arbitral award may be registered with the local court where the arbitral tribunal issued the award. However, the registration or nonregistration of an award does not affect the contents and validity of the award.

 

:: Question No.3:: What about the enforcement of judgment/arbitration awards in Vietnam?

Answer:

In September 1995 Vietnam became a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the “New York Convention”), and its provisions have been incorporated into Vietnamese law.

i) Enforcement of domestic awards:

If a party fails to comply with an arbitral award within thirty days after compliance is required, a party may submit a written request to the court’s judgment enforcement agency to enforce compliance with the arbitral award.

ii) Enforcement abroad of awards made in Vietnam:

Enforcement abroad of awards issued in Vietnam will depend on the applicable arbitration law and whether there is reciprocity between Vietnam and the country in which enforcement is sought. The enforcement process should be easier in countries that are signatories to the New York Convention. This requires the courts of a country that has ratified the New York Convention to recognise and enforce foreign arbitral awards as court judgments unless one or more of the limited exceptions apply.

Provisions of the New York Convention have been incorporated into Vietnamese law. The Civil Proceedings Code (“CPC”) allows for bilateral enforcement of arbitral awards in accordance with the principles of the New York Convention.

iii) Enforcement of foreign arbitral awards in Vietnam:

Like foreign court judgments and decisions, foreign arbitral awards cannot be enforced in Vietnam until they are formally recognised by the local Provincial People’s Court. The court’s judgment regarding enforcement of a foreign arbitral award is appealable. Foreign arbitral awards are arbitral awards made outside of Vietnam or within Vietnam by a foreign arbitrator mutually appointed by the parties. As indicated above, subject to certain exceptions, Vietnamese courts are required to recognise and enforce an arbitral award made in another New York Convention state as if it were a judgment of a Vietnamese court. Courts may also choose to recognise and enforce foreign arbitral awards on the basis of reciprocity without requiring membership to the New York Convention. In practice, however, enforcement of foreign arbitral awards in Vietnam can be onerous and difficult. To date, only a limited number of foreign awards have been submitted to the enforcement agencies and local courts for enforcement. For a foreign arbitral award to be recognised and enforced by the Provincial People’s Courts, a petition must be lodged with the Ministry of Justice (“MOJ”). The petition must also include any documentation required by the relevant international treaty, if applicable. If the treaty does not set forth any procedural requirements, the petition must include a valid copy of the foreign arbitral award and a copy of the arbitration agreement of the parties. Within seven (7) days, the MOJ must forward the petition to the appropriate Vietnamese court. The court assigned to consider the petition will notify relevant parties, agencies, or organisations. If the consideration process is not suspended, the court will formally meet to consider the petition. Ten (10) days prior to the court’s meeting, the procurator of the same jurisdiction may review the petition files. Court meetings must be attended by a presiding panel of three judges, a prosecutor, and the person or legal representative of the person against whom the petitioner is trying to enforce the award. Formal recognition and enforcement of a foreign arbitral award does not involve a substantive review of the dispute, but consideration of whether the procedural and provisional requirements are met. A foreign arbitral award recognised for enforcement has the same effect as any civil judgment or decision of a Vietnamese court.

Foreign arbitral awards will not be recognised when:

• The parties to the arbitration agreement did not have the capacity to sign the agreement in accordance with the applicable law of each party;

• The arbitration agreement is unenforceable or invalid in accordance with the governing law, or the laws of the country in which the award was made if the arbitration agreement does not stipulate the governing law;

• The individual, body or organization against which enforcement is sought has not been properly notified of the appointment of the arbitrator or the procedures for resolving the dispute by foreign arbitration, or had reasonable cause for failing to exercise his/her/its right to participate in the proceedings;

• The foreign arbitral award was made in respect of a dispute which was not referred to arbitration by the parties, or which exceeds the scope of the request of the parties. If it is possible to sever the arbitration award, that portion which was correctly referred to arbitration by the parties shall be recognized and enforced in Vietnam;

• The composition of the foreign arbitration panel, or the foreign arbitration procedure, was inconsistent with the arbitration agreement or the laws of the country in which the foreign arbitral award was made, in cases where such matters are not stipulated in the arbitration agreement;

• The foreign arbitral award is not yet enforceable or binding on the parties;

• The foreign arbitral award has been revoked or suspended by a competent body of the country in which the foreign arbitral award was made, or of the country whose law governs the arbitration agreement.

• The court of Vietnam concludes that:

- The relevant dispute cannot be resolved by arbitration in accordance with the laws of Vietnam;

- The recognition and enforcement of the foreign arbitral award is contrary to the fundamental principles of the laws of Vietnam.

The concept of a foreign arbitral award being “contrary to the fundamental principles of Vietnamese law” is still very vague and is the subject of some concern in relation to the enforcement of foreign arbitral awards in Vietnam.

 

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