Recently, in Vietnam, Arbitration dispute settlement has developed alongside the reform of the judicial system of Vietnam which help to achieve a sane and fair judicial system.

However, misunderstanding of the jurisdiction between Arbitration and the Courts has resulted in many arbitration agreements being inconsistent with Vietnamese law as well as the judicial practices.

This misunderstanding raises numerous issues for the parties and can result in wasted resources, time and money in determining which agencies or court has jurisdiction over a dispute.

Arbitration jurisdiction

Arbitration has jurisdiction to resolve disputes:

• between parties arising from commercial activities
• which have at least one party has commercial activities
• which are required by law; and
• the parties are bound by an arbitration agreement.

In circumstances of the parties contract containing an arbitration agreement, a Court, shall refuse to accept it has jurisdiction and remit the matter back to the parties, to resolve in an arbitral instruction.

The exception to the above, is that the arbitration agreement is invalid. In this situation then there would be a pathway through court to resolve the matter.

What makes an arbitration agreement invalid? There are many reasons. Perhaps it could be vague or unclear, be drafted incorrectly, have conflicting or cascading clauses which often do not provide arbitration as a final solution to settlement.

Resolving conflict of jurisdiction between Arbitration and the Court

When resolving the above-mentioned disputes, the Court shall firstly determine whether the parties had a valid arbitration agreement.

The Court must also review the documents attached to the petition to determine whether the Court has jurisdiction over the dispute even regardless of the subsistence of an arbitration agreement between the parties.

On a case-by-case basis, the Court will handle as follows:

• In case the parties did not have an arbitration agreement; or there was a legally effective judgment, or a legally effective Arbitral decision, which held that agreement arbitration did not exist; the Court shall accept and settle the dispute according to its jurisdiction.
• In case the dispute has a valid arbitration agreement, the court shall return the petition as the court does not have jurisdiction.
• In the event parties submit to Arbitration to resolve the dispute, and the proceedings have already commenced, the Court shall return the petition to the plaintiff even though:

• • the Court finds that arbitration does not have jurisdiction;
  • there is no arbitration agreement;
  • arbitration agreement is invalid, but the plaintiff requests the Court to    settle the dispute.

• If the Court has accepted the dispute, the Court shall terminate the dispute unless the Court accepted the dispute prior to the request for arbitration.

Disputes which have arbitration agreement but fall into one of the following category shall be settled by the Court (unless otherwise agreed by the parties or provided by law).

• There was a Court decision to annul arbitral award.
• There was a decision of the arbitral Tribunal to terminate the dispute settlement.
• The parties agreed to settle the dispute at a specific arbitration Center, but that Center was terminated without a successor arbitration organization, and the parties could not agree on the selection of an alternative arbitration Center to resolve the case.
• The parties reached a specific agreement on the selection of the ad hoc Arbitrator, but at the time of the dispute, because of force majeure events or objective obstacles that Arbitrator could not participate in the dispute settlement, and a replacement cannot be found.
• The parties reached a specific agreement on the selection of the ad hoc Arbitrator, but at the time of the dispute, that Arbitrator refused to be appointed or arbitration Center refused to appoint the Arbitrator, and the parties could not agree on the selection of alternative Arbitrator.
• The parties had an arbitration agreement which was recognized in the general conditions for the supply of goods and services prepared by the supplier, but when a dispute occurred, the consumer does not agree to choose Arbitration to settle disputes.

In the event parties reached an agreement to settle the dispute by Arbitration and also had an agreement to settle the dispute by a Court, but the parties did not have a new agreement (without falling into the cases analyzed above).

• In event the plaintiff requested Arbitration to settle the dispute before asking the Court to settle the dispute; or requested Arbitration to resolve the dispute when the Court has not yet accepted the case, the Court shall refuse to accept the case. If the Court has accepted the case, it shall terminate the case because the dispute is not under the jurisdiction of the Court.
• In case the plaintiff requests the Court to settle the dispute, right after receiving the petition, the Court must determine whether one of the parties has requested Arbitration to settle the dispute.
• Within 05 working days from the date of receiving the petition, if the Court determines there has been a request for arbitration to settle the dispute, the Court shall return the petition.
• In case the Court has accepted the case but discovers there was a request for Arbitration before the Court accepts the case, the Court shall terminate the case since it is not under the jurisdiction of the Court.

This article contains legal knowledge and technical terms, for readers who have questions about this area of expertise, please contact our lead trial lawyer Mr. Stephen Le (hoangchuong.le@letranlaw.com). Mr. Stephen Le has participated in resolving many commercial disputes at the Vietnam International Arbitration Center (VIAC) and participated in international dispute cases together with many foreign lawyers at the Singapore International Arbitration Center (SIAC).