Vietnam commercial mediation: a faster way to settle disputes

Vietnam commercial mediation is a way for businesses to settle a dispute with the help of a neutral person, without going to court or to an arbitration panel. The parties stay in control. The mediator does not give a ruling. The mediator helps both sides find terms they can accept. The main rules sit in Decree 22/2017/ND-CP, which the Government signed on 24 February 2017 and which took effect on 15 April 2017.

What the decree covers

The decree applies to disputes that arise from commercial activities. It also covers disputes where at least one party does business, and other disputes that a law says may go to commercial mediation. It sets rules for the mediation process, for mediators, for mediation centres and for foreign mediation bodies that work in Vietnam.

Mediation under the decree rests on a few simple principles. Taking part is voluntary. Both sides have equal rights and duties. What is said in mediation is confidential, unless the parties agree in writing to share it or the law demands it. The State encourages mediation, and parties may agree to use it before a dispute starts, after it starts, or at any stage while it is being resolved.

Informal talks, or mediation by a person or body that does not meet the decree, fall outside it. Those are left to what the parties agree between themselves.

Sources: Vietnam Mediation Center, "Decree No. 22/2017/ND-CP on commercial mediation" (vmc.org.vn), for the scope, principles and dates.

Who can be a mediator

The decree sets a clear list of criteria. A mediator must have full civil legal capacity and good standing. A mediator must be independent, impartial and objective. The person needs a university degree or higher and at least two years of work experience in the field they studied. They also need mediation skills and knowledge of law, business and commercial practice. A mediation centre may set stricter rules for its own list.

Some people cannot act. These include people who are accused or defendants in a criminal case, people serving a criminal sentence, and people with a criminal record that has not been cleared.

Mediators have duties too. They must act honestly and keep case information private. They must tell the parties about their skills, fees and costs before they start. They may not take money beyond the agreed fee. Unless the parties agree otherwise, a mediator may not advise one side in the same dispute or later sit as an arbitrator in it.

Sources: Vietnam Mediation Center, "Decree No. 22/2017/ND-CP on commercial mediation" (vmc.org.vn), for the mediator criteria, rights and duties.

How a mediation runs

The process is flexible. The parties can pick the rules of a mediation centre or agree their own steps. If they agree on nothing, the mediator may set a procedure that suits the dispute, as long as the parties accept it. The parties can name one mediator or several. They also agree on the place and time. If they cannot, the mediator decides.

At any point the mediator may suggest settlement terms. That is the heart of the method. A good mediator listens to each side, finds what each really needs and tests ideas for a deal.

The parties can agree to mediate in a contract clause before any problem arises. Many firms add such a clause to supply and service contracts so that a dispute has a first step that is private and less formal than a lawsuit.

Sources: Vietnam Mediation Center, "Decree No. 22/2017/ND-CP on commercial mediation" (vmc.org.vn), for the procedure and the agreed or mediator-set process.

Mediation centres in Vietnam

The decree lets a Vietnamese citizen who meets the mediator criteria apply to the Ministry of Justice for a licence to set up a commercial mediation centre. The Ministry decides within 30 days of getting a valid file. The centre then registers its activities with the provincial Department of Justice and may start work once it receives the registration certificate.

Foreign mediation bodies that are lawfully set up abroad may open a branch or a representative office. A branch may offer mediation services in Vietnam. A representative office may promote mediation and look for opportunities, but it may not run mediations.

One well-known centre is the Vietnam Mediation Center. It was set up on 27 April 2018 under a decision of the Vietnam International Arbitration Centre, and it describes itself as the first unit in Vietnam to offer professional commercial mediation under the decree. It has offices in Hanoi and Ho Chi Minh City and publishes its own mediation rules, model clause and mediator list.

Sources: Vietnam Mediation Center, "Decree No. 22/2017/ND-CP on commercial mediation" (vmc.org.vn), for licensing and foreign bodies; Vietnam Mediation Center home page, for its founding.

What a settlement is worth in law

A written settlement is not just a handshake. It can be carried out as a civil agreement, like a contract. If one side does not keep its part, the other side may ask a court to recognise the deal. The steps are in Chapter 33 of the Civil Procedure Code of 2015 (Law 92/2015/QH13). Once a court recognises the agreement, it can be enforced like a court judgment under the law on enforcement of civil judgments.

There are limits. A settlement may not break a legal ban, offend social morality, help a party dodge its duties or harm the rights of a third party. A court can refuse recognition for those reasons. The court may not change what the parties agreed. It only checks that the deal is voluntary and lawful.

A practical checklist

Before you mediate, check that the mediator or centre meets the decree. Put the agreement to mediate in writing. Decide who may attend and how fees are shared. Write the final deal clearly, with dates and amounts, and have everyone sign it. If a party might not comply, think early about asking the court to recognise the result.

This article is general information about commercial rules, not legal advice. If your own business is in a dispute, a Vietnam-licensed commercial lawyer can tell you which route fits.

Sources: Vietnam Mediation Center, "Recognition of out-of-court mediated settlements in commercial matters" (15 March 2021), for Chapter 33 of the Civil Procedure Code, court recognition and enforcement; Vietnam Mediation Center, "Decree No. 22/2017/ND-CP on commercial mediation" (vmc.org.vn), for the limits on settlements.