What are the cases of dispute settlement by arbitration in Vietnam?

Hello, Lawnet would like to answer as follows:

1. Conditions for dispute settlement by arbitration in Vietnam

Dispute settlement by arbitration is a method of dispute resolution in commercial activities. Currently, in commercial relations, this method is more and more widely used both nationally and internationally because of the following advantages:

- The procedure is quick, the parties can agree on a time and place for settlement, without going through many levels of trial like a court.

- Appointed arbitrators to establish arbitration councils to settle the case

- The principle of non-public adjudication helps the parties to maintain their reputation.

According to Article 05 of the Law on Commercial Arbitration 2010, the conditions for dispute settlement by arbitration are as follows:

Article 5. Conditions for dispute settlement by arbitration

A dispute shall be settled by arbitration if the parties have an arbitration agreement. An arbitration agreement may be made either before or after a dispute arises.

When one of the parties being an individual to an arbitration agreement dies or loses his/her act capacity, such arbitration agreement remains valid for his/her heir or representative at law. unless otherwise agreed by the parties.

When one of the parties being an institution to an arbitration agreement has to terminate its operation, goes bankrupt, or is dissolved, consolidated, merged, divided, split up or reorganized, such arbitration agreement remains valid for an institution that takes over the rights and obligations of the institution to such arbitration agreement, unless otherwise agreed by the parties.

Thus, to settle a dispute by arbitration, the parties must have an arbitration agreement, which can be made either before or after a dispute arises.

2.  Case ineligible for dispute settlement by arbitration in Vietnam

According to the provisions of Clause 3, Article 2 of Resolution 01/2014/NQ-HDTP on guidelines for the Law on Commercial Arbitration 2010, in one of the following cases, the dispute shall be handled by the court though it is under an arbitration agreement, unless otherwise agreed by the parties concerned or prescribed by law:

- The court issues a decision to annul the arbitral award or the decision made by the arbitral tribunal to certify the parties’ agreement made;

- There is a decision to suspend the arbitral tribunal or arbitration center from resolving disputes as prescribed in Clause 1 Article 43, Points a, b, d, and dd Clause 1 Article 59 of LCA;

- The dispute is one of the cases mentioned in Clauses 1, 2, 3, and 5 Article 4 of Resolution 01.

+ The parties concerned have an agreement to resolve their disputes at a specific arbitration center which has now shut down without any arbitration center that inherit its cases, and the parties concerned fail to reach an agreement on another arbitration center to resolve their disputes.

+ Bother parties have an agreement on appointment of a specific arbitrator to resolve disputes, but when the dispute arises, because of force majeure events or objective difficulties, such arbitrator cannot resolve the case, or the arbitration center or court cannot find a substitute arbitrator as agreed by the parties concerned, and the parties concerned also fail to reach an agreement to select a substitute arbitrator.

+ Bother parties have an agreement on appointment of a specific arbitrator to resolve disputes, but when the dispute arises, such arbitrator refuses the appointment or the arbitration center refuses the arbitrator appointment, and the parties concerned also fail to reach an agreement to select a substitute arbitrator.

+ The goods/service seller and consumers have an overall agreement on provision of goods/services that contain arbitration terms drafted by the seller as prescribed in Article 17 of LCA, but the consumers refuse to have the dispute that arises resolved by an arbitral tribunal

3. Void arbitration agreement in Vietnam

In some cases where there is an arbitration agreement but the arbitration agreement is void, the Court will have jurisdiction to settle it.

In case the arbitration agreement is void, it is guided in Article 03 of Resolution 01/2014/NQ-HDTP. Thus, an arbitration agreement is void if:

- The dispute that arises is related to the fields beyond the competence of arbitral tribunals

- The arbitration agreement is negotiated by incompetent persons as prescribed by law

- The arbitration agreement is negotiated by persons in capable of civil acts as prescribed by law

- Format of the arbitration agreement is not conformable with Article 16 of LCA

- Either party is cheated, threatened, or forced to reach the arbitration agreement

4. Applicable laws for dispute settlement by arbitration in Vietnam

According to Article 14 of the Law on Commercial Arbitration 2010, the provisions of law applicable to dispute settlement are as follows:

Article 14. Applicable laws for dispute settlement

For a dispute involving no foreign element, the arbitration council shall apply Vietnamese law for settling the dispute.

For a dispute involving foreign elements. the arbitration council shall apply the law selected by the parties. If the parties have no agreement on the applicable law, the arbitration council shall decide to apply a law it sees the most appropriate.

When the Vietnamese law or law selected by the parties contains no specific provisions concerning the dispute, the arbitration council may apply international practices for settling the dispute, provided such application or consequence of such application does not contravene the fundamental principles of Vietnamese law.

Thus, in dispute cases involving no foreign element, Vietnamese law will be applied. For cases involving foreign elements, the law selected by the parties by the parties will apply. When the Vietnamese law or law selected by the parties contains no specific provisions concerning the dispute, international practices will apply.

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