Dispute Resolution in Vietnam
- General Information
Parties to business activities, including investments, are encouraged to resolve disputes through negotiations or conciliation. In case such preliminary negotiation or conciliation fails, a dispute may be brought to a Vietnamese or foreign or international arbitration body if agreed upon by the parties, otherwise settlement shall be sought at economic) courts. Under current regulations, parties may agree on the type (institutional, ad-hoc), place (Vietnamese, foreign, international) as well as procedures of arbitration.
Currently institutional arbitration bodies in Vietnam includes the Vietnam International Arbitration Center and Economic Arbitration Centers in Hanoi and other main cities.
- Arbitration Procedures
The arbitration proceedings will be initiated by a party's written request. Currently the provisions of the arbitration laws are not quite clear in respect of the possibility of choice of law by the parties. It is very likely, that the lex fori will be applied in both material and procedural questions. The arbitration language is Vietnamese. The parties may be represented by lawyers.
Decisions of the arbitration body will be issued in writing. The final award shall be send to the parties within 3 days from the date of decision.
Arbitral awards should be voluntarily complied by the parties in question. They may not be compulsorily enforced by execution bodies that are only empowered to enforce courts' judgements. If a party refuses to accept an arbitral award, it may bring the case to the competent economic court. The court will consider and resolve the case de novo. Thus, the effect of the arbitration proceedings may be fully reversed.
- Foreign Arbitral Awards
The enforcement in Vietnam of a foreign arbitral award requires a formal recognition by a Vietnamese Court in accordance with the Ordinance on Recognition and Enforcement of Foreign Arbitral Awards in Vietnam. In principle, recognition and enforcement in Vietnam may be permitted
(a) for awards from countries being members to a relevant international multinational convention or bilateral agreement with Vietnam; or
(b) on the basis of reciprocity for awards from other countries.
Vietnam has been a signatory of the New York Convention of 1958 since 1995; therefore, the award by an arbitrator in any other member country of the Convention is, subject to certain resolution, now enforceable in Vietnam and vice versa. For countries which are neithers members of the New York Convention nor signators of relevant bilateral agreements with Vietnam, arbitrator's awards are recognized and enforceable on a reciprocal basis. However, those arbitral awards are in fact not recognizable and thus unenforceable, as there is still lacking of detailed legal rules.
- Recognition Procedures
To be enforced in Vietnam a foreign arbitral award must be formally recognised and held enforceable by a Vietnamese People's Court at provincial level. To obtain an enforcement order, the party which seeks enforcement of the award shall lodge a formal application for its recognition and enforcement that, if accepted, is subject to a preliminary review by the Court.
The Court, in the preliminary review, will decide whether a formal hearing should be convened. The formal hearing, if ordered, will be conducted by a panel of three judges, which has to examine the formal and material cerrectness of the award as well as its conformity with basic principles of Vietnamese law. The panel is not empowered to re-open the substantive dispute.
At the end, the Court will make a decision on a simple majority basis and may either grant or refuse recognition and enforcement of the award.
II. Ordinary Court Proceedings
The courts in Vietnam are devided in Economic, Civil, Administrative and Labour Courts. Business disputes may be resolved either by the Civil or the Economic Courts, whose competence is strictly provided for by law. There are two trial instances with the competence of the Supreme People's Court to revert effective judgments (res judicata) within three years from the date the judgments became effective. Court trials shall be public, closed hearings may be held only in special cases provided for by law. Generally, the courts will decide collectively, i.e. in a panel of one judge and three laymen or three to five judges. The Code of Civil Procedures is to setting common rules for all kinds of civil and economic proceedings.
A law suit shall be commenced by a written statement of claim with the court. The statement of claim can, except for divorce cases, also be submitted by an authorized representative of the plaintiff, including by an attorney at law (Luật sư). The plaintiff will be required to pay an advance for the court fee, unless exemption is provided for by law. The normal duration of a law suit is around one year, but may vary widely from case to case.
- Provisional Measures
Before the trial will be held, the court may upon application of the plaintiff or at its own discretion decide on provisional measures to meet the plaintiff's urgent needs or to preserve evidence. Those measures may be:
- decisions on fulfilment of a maintenance obligation;
- decisions on safe custody of a minor;
- decisions on payment of salary or wages;
- impoundment of property in dispute;
- prohibition of disposal of property in dispute;
- permission to harvest and retain dispute related fruits;
- prohibition or order of certain actions.
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