Enterprise - Investment IN HANOI, VIETNAM

Settlement of disputes over business investment activities in accordance with the Law on Investment 2020 of Vietnam

14:50, 19/12/2020

From January 01, 2021, the Law on Investment 2020 of Vietnam will be effective, according to which provisions on settlement of disputes over business investment activities will be basically similar to those specified in the Law on Investment 2014.

Giải quyết tranh chấp trong hoạt động đầu tư kinh doanh

According to Clause 8 Article 3 of the Law on Investment 2020 of Vietnam, “business investment” means an investor investing capital to do business. However, in business investment activities between the parties, it is difficult to avoid the occurrence of disputes. Therefore, Article 14 of the Law on Investment 2020 of Vietnam has stipulated that disputes over business investment activities in Vietnam shall be settled through negotiation and conciliation. Specifically, the two solutions are as follows:

	Negotiation	Conciliation
Definition	The parties themselves negotiate with each other on contradictions, conflicts and disagreements in order to reach a reconciliation of interests between the parties on the basis of jointly discussing and solving.	- The parties together discuss and agree to resolve arising disputes with the support of a third party; - The third party only acts as an intermediary to give opinions on the settlement of disputes arising between the parties, does not have the right to judge and the final decision still belongs to the disputing parties.
Advantage	- Convenient, simple, flexible procedures; - Ensure the confidentiality and prestige of the parties, save time and money, and do not harm the cooperative relationship of the two parties; - In case the negotiation is not effective, the parties can choose another method of settlement without any obstacles.	- Be proactive in choosing the time and place for mediation and the third party to support the mediation; - Create opportunities for both parties to express their views on the dispute and reduce tensions between the parties even when their rights are being violated; - Be able to maintain the inherent relationship of the parties, business secrets will still be protected.
Disadvantage	- Depends on the goodwill and voluntariness of the parties; - There is no mandatory mechanism to perform the obligations of the parties after negotiation.

However, Article 14 of the Law on Investment 2020 of Vietnam has also stipulated that every dispute between a Vietnamese investor and a foreign-invested business organization, or between a domestic investor or a foreign-invested business organization and a regulatory agency over business investment activities within Vietnam’s territory shall be settled by a Vietnam's arbitration body or Vietnam’s court. In case no negotiation or conciliation is possible, the dispute shall be resolved at arbitration or court, specifically as follows:

- Every dispute between investors, one of which is a foreign investor or a business organization defined in Points a, b and c Clause 1 Article 23 of this Law, shall be settled by one of the following agencies/organizations:

+ Vietnam’s court;

+ Vietnam’s arbitration body;

+ Foreign arbitration body;

+ International arbitration body;

+ An arbitral tribunal established by the parties in dispute.

- Every dispute between a foreign investor and a regulatory agency over business investment activities within Vietnam’s territory shall be settled by Vietnam’s arbitral tribunal or Vietnam’s court, unless otherwise agreed under a contract or prescribed by an international treaty to which the Socialist Republic of Vietnam is a signatory.

It can be seen that the method of settling investment disputes by way of Arbitration or Court will overcome the disadvantages of the method of negotiation or conciliation, and have a mechanism to ensure that the parties perform their obligations after settling disputes. However, this method is difficult to ensure the confidentiality of the parties as well as to maintain a good relationship between the parties that have been formed.

Thus, depending on the nature, extent as well as partners, the parties choose the appropriate investment dispute settlement method.

Le Vy

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE

- The legal regulations in this article are according to Vietnamese Law;
- This English translation is for reference purposes only and not a definitive translation of the original Vietnamese texts;
- Articles may be compiled from a variety of sources;
- Applicable Terms may have expired at the time you are reading;
- If you have any questions about the copyright of the article, please contact us via email banquyen@lawnet.vn