06 important contents to better understand commercial arbitration in Vietnam

1. What is commercial arbitration?

According to Clause 1 Article 3 of the Law on Commercial Arbitration 2010 of Vietnam, commercial arbitration means a mode of dispute settlement agreed by the parties and to be conducted under this Law.

The commercial arbitrator's authority to resolve disputes arises on the basis of the parties' agreement. So, in case the parties have not previously agreed that if a dispute arises, it will be resolved by commercial arbitration, when a dispute occurs, can they still choose commercial arbitration to resolve it? This depends on the agreement of the parties. If both parties agree to choose commercial arbitration to resolve the matter, the law still allows it. Because, resolving disputes by commercial arbitration greatly reduces the "burden" on the judicial system in general and the Court in particular. Therefore, in the spirit of voluntariness and agreement of the parties, the State also encourages the resolution of disputes at the Commercial Arbitration Center.

2. Characteristics of commercial arbitration

Commercial arbitration has the following characteristics:

- The commercial arbitration center is a non-governmental organization with a social and professional nature;

- The authority to resolve disputes is based on the parties' agreement;

- The arbitrator's award is final, enforceable, and cannot be appealed or protested;

- The arbitrator's award may be overturned by the Court's decision.

3. Arbitration's jurisdiction to settle disputes

Although commercial arbitration is also an agency with the same dispute resolution function as the Court, the difference is that not all disputes fall under the jurisdiction of commercial arbitration.

According to Article 2 of the Law on Commercial Arbitration 2010 of Vietnam, commercial arbitrators shall have the jurisdiction to settle:

- Disputes among parties which arise from commercial activities.

- Disputes among parties at least one of whom conducts commercial activities.

- Other disputes among parties which are stipulated by law to be settled by arbitration.

It can be seen that commercial arbitration mainly has the authority to resolve disputes related to business and commercial activities. In other cases, it depends on the agreement of the parties and in accordance with the provisions of law.

4. Forms of commercial arbitration

According to the Law on Commercial Arbitration 2010 of Vietnam, dispute resolution by commercial arbitration shall be carried out in the following two forms:

- Institutional arbitration means a form of dispute settlement at an arbitration center under this Law and rules of proceedings of such arbitration center.

Specifically, institutional arbitration is a form of dispute resolution at an arbitration center that has been established and operates in accordance with the law. 

- Ad hoc arbitration means a form of dispute settlement under this Law and the order and procedures agreed by the parties.

Specifically, ad hoc arbitration is only established to resolve the dispute and ends when the dispute is resolved based on the agreement of the parties.

5. Conditions for dispute settlement by arbitration

Disputes resolved by commercial arbitration must meet the conditions specified in Article 5 of the Law on Commercial Arbitration 2010 of Vietnam, specifically as follows:

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.

6. Dispute resolution procedures by commercial arbitration

Dispute resolution procedures by commercial arbitration shall be carried out as prescribed in the Law on Commercial Arbitration 2010 of Vietnam, specifically as follows:

Step 1: Determine the authority and statute of limitations for initiating a lawsuit to resolve disputes by arbitration.

Step 2: Submit a lawsuit requesting the Arbitration Center to resolve.

Step 3: Receive notice of lawsuit petition.

Step 4: The arbitration center establishes an Arbitration Council.

Step 5: Open a dispute resolution meeting.

Step 6: The Arbitration Council issues a decision.

Derived from the advantages of a quick, simple, convenient dispute resolution mechanism that is consistent with the psychology of businesses, choosing to resolve disputes at a Commercial Arbitration Center is becoming increasingly popular. This is also an effective solution to relieve the burden of the judiciary from the current backlog of cases.

Thuy Tram

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