Law boosts effectiveness of arbitration

Laws - The National Assembly passed the Law on Commercial Arbitration (Law 2010) in June, replacing the 2003 Ordinance on Commercial Arbitration. Notable new points embodied in Law 2010 are:

Commercial arbitration

Law 2010 has extended commercial arbitration to encompass disputes in which at least one party engages in commercial activities and means that arbitration can be used to settle disputes arising from contractual or non-contractual obligations. The expansion of arbitration is a significant innovation and should have arbitration services to meet a wider range of real community needs. Arbitration can not only be used to settle disputes between “organisations and individuals doing business” but also where only one party does business. The number of disputes that go to arbitration are expected to rise once Law 2010 is enacted.

Provisions of documents

Apart from arbitration agreements established between the parties by telegram, fax, telex, email as stipulated in Ordinance 2003, Article 16.2, Law 2010 widens the phrase “any other form which clearly shows the intention of the parties to resolve disputes by arbitration” of Ordinance 2003 to include:

(1) An agreement established by the exchange of written information between the parties;

(2) An agreement prepared in writing by a lawyer, notary or competent organisation at the request of the parties;

(3) Reference by the parties during the course of a transaction to a document such as a contract, source document, company charter or other similar document/s which contain/s an arbitration agreement;

(4) Exchange of a statement of claim and defence which express the existence of an agreement proposed by one party and not denied by the other party.

Law 2010 re-visits the circumstances in which an arbitration agreement may be invalid. Specifically, it has revoked Article 10.4 of Ordinance 2003 which states “the arbitration agreement shall be invalid if it fails to specify or to specify clearly, the subjects of the dispute or the arbitration organisation authorised to resolve disputes, and the parties have failed to enter into any supplementary agreement” and replaced it, an arbitration agreement may be invalid if “the arbitration agreement breaches a prohibition prescribed by law”. This provision may or should reduce the situations in which the arbitration agreement shall be deemed invalid and effectively help increase the volume of disputes to be settled by arbitration.

Consumer rights

Although a clause is included in the general terms and conditions for the supply of goods and services, Article 17 of Law 2010 gives the consumer the right to seek arbitration or go to court to resolve a dispute. The provision is intended to protect the rights and benefits of consumers in standard contracts with providers of goods and or services.

Foreign arbitrators

Article 29 of Law 2010 maintains the Ordinance 2003 qualifications for a person to become an arbitrator with one change. Law 2010 does not require that an arbitrator to be a Vietnamese national. As a result, foreigners can now be appointed arbitrators if they satisfy all the applicable conditions and are selected by the parties to a dispute or appointed by an arbitration centre or court.

Global integration

Law 2010 allows foreign arbitration institutions to work in Viet Nam as a branch or a representative office in accordance with Vietnamese law and international treaties to which Viet Nam is a party.

The provision is intended to meet the demands arising from Viet Nam’s increased integration into the global economy and foreign parties may choose arbitration because they can freely select the most convenient person to participate and represent them in at the arbitration tribunal.

Injunctive relief

Law 2010 provides parties to a dispute the right to ask both courts and arbitration tribunals to provide injunctive relief. Arbitration tribunals, which previously were unable to grant injunctive relief, can now provide one or more forms of injunctive relief at the request of one of the parties. This provision should enable more effective arbitration proceedings and better protect the rights and legitimate interests of parties to a dispute.

Setting aside an award

Any party wishing to have an arbitrated award set aside must have sufficient grounds to establish that the tribunal made its award in one of the circumstances specified in Article 68 of Law 2010. In particular, Article 68 provides an additional ground on which the parties may apply to set aside an award. This ground arises where either the arbitration tribunal, in making its award, relied on forged evidence supplied by the parties or an arbitrator received money, assets or some other material benefit from one of the parties to the dispute that affected the objectivity and impartiality of the proceedings. Applicants should carefully consider whether they have sufficient evidence to support the claim before lodging it.

Law 2010 stipulates that courts shall refuse to consider a claim brought by either party in disputes where an arbitration agreement has been reached, unless it considers the agreement null and void or non-enforceable. Law 2010 also lists a number actions courts can take to help with arbitration. These include procedures to declare an arbitration agreement null and void; determining a tribunal’s competence, appointing and replacing arbitrators, assisting in the collection and storage of evidence; ensuring the attendance of witnesses, applying injunctive relief; requesting the setting aside of an arbitrated award and registering an ad-hoc arbitration award.

Law 2010 and its accompanying regulations substantially comply with international arbitration laws while taking into account actual conditions in Viet Nam. This should ensure that arbitration proceedings will be conducted smoothly with clear procedures for both domestic and foreign enterprises.