Should a dispute over commercial contracts be resolved in court or arbitration in Vietnam?
Based on: the 2015 Civil Procedure Code and the 2010 Law on Commercial Arbitration.
For disputes related to business and commerce, the parties may choose either the Court or Arbitration for resolution, each option having its own advantages and disadvantages. To be specific:
| Judicial Proceedings | Arbitral Proceedings | |
| Advantages | - Strict procedural order and process. - High enforcement power as the Court is a State adjudicating body. - Court fees are clearly stipulated. |
- Confidential resolution. - Diverse languages, right to choose the language. - Parties have the right to choose the venue for dispute resolution. - In disputes with foreign elements, parties can choose the applicable law. - Right to choose arbitrators. - Arbitral awards are internationally recognized through international conventions, especially the 1958 New York Convention. |
| Disadvantages | - Judgments may be appealed or protested. - The litigation process may be prolonged due to multiple levels of adjudication. - No right to choose the presiding judge. |
- Arbitral awards are final and binding, thereby giving no opportunity for appeal or protest by the litigants. |
Thus, in the dispute resolution clause, you can choose either the Court or Arbitration, each with its own pros and cons.
In practice, for contracts signed with foreign partners, parties often choose Arbitration for dispute resolution. If your company signs a contract with a foreign partner without legal entity status in Vietnam and your side is the contract drafter, it is recommended to include a dispute resolution clause at Vietnam’s arbitration centers. This is because Arbitration has advantages in information confidentiality, with arbitrators being top experts in the field your company operates in, awards are final and the resolution time is not prolonged like court litigation.
Respectfully!
