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Vietnam commercial arbitration for contract disputes

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Vietnam commercial arbitration lets two businesses settle a contract dispute outside the courts. A private panel hears both sides and issues a decision. Vietnam has a national law for this, the Law on Commercial Arbitration 54/2010/QH12, and a well known institution, the Vietnam International Arbitration Centre (VIAC). If your contract names arbitration, you give up court as your first stop. Read the clause before you sign.

Source: Law on Commercial Arbitration 54/2010/QH12, National Assembly of Vietnam.

When a contract can use arbitration

The law applies to disputes tied to commercial activities. It reaches disputes too when at least one side is a business. A sale of goods, a supply deal, a distribution deal or a service contract are common examples.

Both sides must agree to it. Arbitration cannot be forced on a party that never accepted it. The agreement can be a clause inside the main contract, or a separate document made before or after the dispute starts. It should be in writing. Letters, faxes and emails can count, so keep the whole chain.

A clause that is vague is a risk. If it does not clearly name arbitration, a court may decide it has no effect, and the dispute goes back to the courts.

Source: Law on Commercial Arbitration 54/2010/QH12, National Assembly of Vietnam.

What the VIAC is

The VIAC was set up in 1993 by a decision of the Prime Minister, Decision 204/TTg of 1993. It came from the merger of two older bodies. One handled foreign trade disputes and started in 1963. The other handled maritime disputes and started in 1964.

The VIAC does not decide cases itself. It runs the process and keeps a list of arbitrators. Each tribunal then hears the case and writes the award. The centre publishes its own arbitration rules, including a 2017 edition, and it offers model clauses that you can copy into a contract.

Other choices exist. Parties may pick another Vietnamese centre or a foreign one, if the law and their agreement allow it. The key point is to name one institution clearly.

Source: Vietnam International Arbitration Centre (VIAC), About VIAC page, https://www.viac.vn/en.

What to write in the clause

A good clause is short and clear. It should state five things.

  • That disputes will go to arbitration, and which institution will run it.
  • Which rules apply.
  • The place of arbitration, meaning the city.
  • The language of the hearing.
  • How many arbitrators sit, usually one or three.

Check that the names are exact. A clause that points to a body that does not exist is a common cause of delay. Ask a Vietnamese lawyer to read it before you sign, especially if your partner is a foreign firm.

Also think about the governing law. The law that governs the contract and the rules that govern the arbitration are two separate choices. State both.

Source: Law on Commercial Arbitration 54/2010/QH12, National Assembly of Vietnam; VIAC model arbitration clauses, https://www.viac.vn/en.

How awards are final and enforced

An arbitral award is final. There is no appeal on the facts to a court. A losing party can ask a court to cancel the award, but only on grounds the law lists, such as a missing or invalid agreement. The request must be filed within a short time after the award is received, which is 30 days under the law. Missing that deadline closes the door.

If the losing party does not pay, the winner can ask the civil judgment enforcement agency to carry out the award. In practice, this step can take time, so plan for it when you judge a deal.

Many firms pick arbitration for a second reason. An award made abroad can often be enforced in Vietnam, and an award made in Vietnam can often be enforced in other countries, through the New York Convention of 1958. Vietnam joined that treaty on 12 September 1995. It said it would apply the treaty to awards made in other member states, and only to disputes that Vietnamese law treats as commercial.

Source: Law on Commercial Arbitration 54/2010/QH12; United Nations Treaty Collection and NewYorkConvention.org, status and declarations for Viet Nam, https://www.newyorkconvention.org/countries.

Practical checklist before you sign

  • Read the dispute clause, not just the price page.
  • Confirm the exact name of the arbitration centre.
  • Pick a city and a language both sides can work in.
  • Keep signed copies and the emails that led to the deal.
  • Decide who pays for the tribunal and the lawyers.
  • Ask a lawyer whether the award could be enforced where your partner holds assets.

This is general information, not legal advice. Laws change and every contract differs, so ask a Vietnam commercial arbitration lawyer before you rely on any clause.

Sources

  • Law on Commercial Arbitration 54/2010/QH12, National Assembly of Vietnam.
  • Vietnam International Arbitration Centre, https://www.viac.vn/en
  • New York Convention status for Viet Nam, https://www.newyorkconvention.org/countries