Dispute Resolution

As in many other jurisdictions, Vietnamese law gives parties to commercial disputes the general freedom to select adjudication or alternative dispute resolution methods as of mediation or arbitration.

Vietnamese Courts
Disputes resolved by Vietnamese Courts must be conducted under procedures and by the competent court the Code of Civil Procedure and Law on Organization of Court. The choice of court as a dispute resolution method should be carefully considered based on a deep understanding of Vietnamese law because of the complex and time-consuming procedures.
In addition, handing disputes requires litigation law firm with trial lawyers in Vietnam having experience and knowledge to provide resolutions to complex cross-border issues, commercial and civil disputes.
 
Decisions and judgment issued by Vietnamese courts are enforceable in Vietnam. A court’s first-instance judgment or decision which are not appealed against by the any party shall take legal effect as from the day on which the appeal time limit expires (30 days in maximum). An appellate judgments shall be effective as from the date they are pronounced. The judgment required to be implemented, including by coercive power of the state agencies and by obligors.
 
Alternative dispute resolutions methods (“ADR”)
In general, the ADR means a replacement of adjudication procedures by courts. Following the general tendency of the world, the ADR, particularly mediation and arbitration, are using more and more popular in Vietnam due to their flexibility, promptitude, confidentiality and validity. These methods shall be agreed in writing by the parties, either as a clause within a contract or a separate agreement, as a prerequisite for the next procedures.
 
Arbitration
Arbitration has become an extremely popular method of dispute resolution, as many businesses prefer it over the high costs of litigation. Under Vietnamese law, arbitration is available for disputes arising from commercial activities.
 
In case a party attempts to initiate court proceedings on a dispute that is expressly subject to a preliminary arbitration agreement, the court shall refuse to accept jurisdiction over, unless the arbitration agreement is invalid or unrealizable.
 
According to the Law on Commercial Arbitration of Vietnam, the parties may negotiate to select at least 01 arbitrator with suitable expertise and practical experience to the nature of the dispute or approve the arbitration(s) appointed by the Arbitration Centre or the competent court (in case the parties do not choose by themselves).
 
Arbitral awards are as legally enforceable as court verdict, final and binding, and may be challenged only in certain circumstances mainly involving procedural errors that arose during the process of arbitration. Within Vietnam’s territories, Vietnamese arbitral awards might be sent directly to enforcement agencies (Department of Civil Judgment Enforcement) to be enforced legally. Furthermore, the arbitral awards in Vietnam also might be recognized and enforced in more than 150 countries and territories which are Contracting Parties of New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
 
In addition, parties of a commercial transaction with foreign elements are allowed to settle their disputes at a foreign or international arbitration. However, foreign arbitral awards will only formally recognized by the Vietnamese court if they meet the following conditions:
 
  • Arbitral award of a foreign country which is a signatory to an International treaty about recognition and enforcement of foreign arbitral award together with Vietnam (such as New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards);
  • Another foreign arbitral award on the basis of the principle of reciprocity.
 
Mediation
The Vietnamese law provides mediation as a mandatory procedure before starting litigation proceedings to resolve any certain disputes, except for
lawsuits which cannot be mediated under the Code of Civil Procedure. 
 
Besides, only disputes arising from commercial activities are settled under mediation procedures in accordance with Decree No. 22/2017/ND-CP issued by the Vietnamese Government on commercial mediation (“Decree 22”). Any disputes referred to commercial mediation may be either pursued simultaneously with arbitration or conducted independently if the parties achieve a mediated settlement agreement together. Unlike arbitrators, mediators have no right to adjudicate and issue a final judgment but only have the obligation to help the parties conduct mediation in a certain order and ensure that the mediation process takes place in the right direction.
 
Any disputes may be resolved through mediation at mediation centres in Vietnam, or an outward mediation centres in accordance with its mediation rules or other procedures as prescribed by the parties.
 
The mediated settlement agreements are ensured to implement in reality not only by self-compliance of the parties but also by the state agencies. On the one hand, these agreements in writing have legally valid and binding on the disputing parties in accordance with the civil law. On the other hand, under the Decree 22 and regulations of the Code of Civil Procedure, the mediated settlement agreements that are recognized by a competent court must be executed as a full and final judgment.
 
Disclaimer:
 
The materials contained in this Guide were gathered in January 2018 and were based on prevailing laws and information available at the time.
 
This Guide is created for information purpose and general overview of legal aspects that may arise regularly, in our experience, when foreign investors doing business in Vietnam. In case, you encounter specific questions, you should consult with particular professionals. Therefore, the authors are not responsible for any actions taken following or on the basis of information included herein.
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