Enforcing Foreign Arbitral Awards in Vietnam

Published: December-2023

Even when a foreign arbitral award is granted, its enforcement can face challenges. Discover the crucial factors that influence the recognition of foreign arbitral awards in Vietnam.

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Should Parties Mediate a Dispute?

Published: December-2023

Clients ask this question all the time – should I mediate? There is a universal theme to mediation, no matter the size or complexity of the dispute, it is something most people experience in their lives at some point or another. You can learn all about mediation in this insight.

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Being a formidable force in both domestic and international commercial arbitration, Le & Tran is distinguished as one of the premier Vietnam arbitration law firms, our commercial arbitration lawyers are highly recognized as one of the leading specialists in resolving disputes through commercial arbitration.  This includes active support to foreign law firms in advising and explaining the relevant rules, case law, procedures and government directives under Vietnamese law when disputes are resolved by either domestic or international commercial arbitration bodies.

Le & Tran commercial litigators and arbitration lawyers advise and represent clients during arbitral proceedings, including the use of effective strategies, tactics, procedures.  Over the years, Le & Tran has successfully developed the experience and skills which fully encompass the entire arbitration process and the law on commercial arbitration.  This includes filing a lawsuit in arbitration, effectively representing clients before the arbitral tribunal, the use of legal experts, protecting the rights and interests of the client, and representing clients in requesting revocation/recognition of the arbitral award.

What is commercial arbitration and commercial arbitration law?

Domestic commercial arbitration (e.g. Vietnam International Arbitration Center) or international commercial arbitration (e.g. Singapore International Arbitration Center, Hong Kong International Arbitration Center, Korean Commercial Arbitration Board International) is an alternative method utilized by private parties to resolve issues related to domestic or cross-border commercial transactions.  Many businesses prefer this form of dispute resolution as it allows the parties to avoid the time and expense involved in litigation in the national court systems.  Therefore, in the business context, a commercial arbitration clause is often inserted into bilateral contracts prior to the commencement of the transaction. Another advantage to using commercial arbitration to settle disputes is that the arbitrator or arbitral panel often have specialized expertise in the business sector of the disputants.  For example, if the dispute concerns financial technology, the agreed-upon arbitrator may have a background in information technology and banking, whereas this would likely be more difficulty to obtain from the first instance court.  A further benefit to commercial arbitration is that the proceedings and award may be kept confidential by the consent of the parties.

One of the disadvantages to commercial arbitration is that, unlike a first instance court, the decision of the arbitrator is final.  There is no opportunity for appeal to a higher tribunal so the parties must prepare their case thoroughly.  In addition, the process of arbitration is of shorter duration than traditional litigation, so there is less time to develop evidence and negotiate out-of-court settlements during an ongoing arbitration.

Prior to entering commercial arbitration, the parties must agree to have their dispute, and all legal claims connected to the matter, settled by an arbitrator.  This is often specified in provisions of the commercial contract between the parties before the business transaction occurs.  However, the parties may also agree to submit the matter to arbitration after a dispute arises.  Issues such as selection of arbitrator, venue, choice of law, evidence, and award limits must be contained in the agreement.  By default, many disputing parties agree to abide by the rules of the arbitration tribunal, such as VIAC (Vietnam International Arbitration Center) or another body in order to save time and money in determining the full terms of the arbitration provisions.

There are two main forms of arbitration that are used by businesses and your commercial arbitration litigator should be familiar with them.  The first is Ad Hoc Arbitration, which is agreed to after the dispute arises.  The parties establish their own rules and an established arbitration center usually not involved.  Ad Hoc Arbitration, while recognized in Vietnam and other jurisdictions, is not widely used as the parties must be skilled at determining the ground rules and be proactive in participating.  More commonly utilized is “institutional” commercial arbitration which takes place through an established arbitration body such as VIAC (Vietnam International Arbitration Center), SIAC (Singapore International Arbitration Center) or HKIAC (Hong Kong International Arbitration Center).  These bodies have an approved list of arbitrators for the parties to choose from, often with expertise in the specialized sector (ex. construction law), and operate according to the body’s charter and procedural rules.

In order to navigate the arbitration procedures to protect your business, it is advisable that you retain an experienced commercial litigator who is familiar with the laws on commercial arbitration.  Further, in the era of globalized transactions, it is imperative that the attorney you hire has international commercial arbitration experience.  With over a decade of proficiency in commercial litigation, Le & Tran is trusted by both multinational companies and domestic entities to guide them through the arbitration process and reach an equitable resolution to any dispute.  Le & Tran’s Vietnam arbitration lawyers and commercial litigators have negotiated arbitration contacts, prepared cases for arbitration and appeared before numerous established arbitration bodies.  We are familiar with the effective arbitrators and institutions in a wide array of fields including commercial and transactional disputes, construction, banking and credit, mergers & acquisitions, real estate, employment, shareholder disputes, insurance, and many others. Further, Le & Tran is skilled at enforcement procedures so that your arbitral award will be realized in the shortest possible time frame.  Overall, while there are a number of attorneys that can handle a commercial arbitration case, Le & Tran’s Vietnam commercial arbitration lawyers have the expertise to give your business the best opportunity to succeed and reach your business goals.

What is the difference between investment arbitration and commercial arbitration?

Commercial arbitration differs from an Investor-State Dispute Settlement (or investment arbitration) due to the nature of the claim and the parties involved.  While the first deals with disputes arising out of a commercial contractual relationship, ISDS comprises disputes arising under a public treaty between two contracting States.

International commercial arbitration, usually involves companies that have significant cross-border business relationships of a transactional nature that may possibly result in a dispute.  In anticipation of this, businesses frequently include commercial arbitration agreements in these contracts so that if a disagreement arises they are contractually obligated to resolve the dispute before neutral arbitrators, rather than pursue litigation before a foreign court. These enterprises agree, either before or after the dispute arises, to have this dispute resolved in commercial arbitration, usually pursuant to the rules of established arbitral institutions.  Typically, a non-appealable final award is issued by the arbitral body following the proceedings.

Contrary international commercial arbitration or commercial arbitration, investment arbitration settles disputes that occur as a result of the operation of treaties between nations.  There are numerous treaties that exist that have been created with the purpose of encouraging the flow of investments, usually from more developed nations to less developed ones. These treaties state that if a business based in one of the two countries to the treaty experiences certain kinds of problems in the course of its investment (despite the fact that there may not actually be a contractual relationship with a country where the investment was made), it may present a claim in arbitration against the host country.

It should be noted that the awards of international commercial arbitrators are able to be enforced in the majority of countries around the world due to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. This is one of main advantages in participating in commercial arbitration rather than traditional litigation to settle international commercial disputes.

Signs that you need a good Vietnam arbitration law firm or commercial arbitration litigator

Typically, business will require a commercial litigator (who is good at arbitration) when they conduct significant business transactions with other entities, especially in the context of cross-border commercial transactions.  Although both parties to a commercial contract may start with the best intentions, a disagreement or dispute may occur when one party believes the other did not completely fulfill their obligations under the contract (ex. Insufficient or poor quality goods; late delivery, etc.).  Ideally, businesses should consider including a commercial arbitration clause in every contract to ensure predictability in the event of a dispute and to avoid lengthy and costly litigation in the courts.

Another scenario may involve a larger entity (such as a bank or credit institution) versus a smaller business.  Typically, the larger organization is the party that drafts and includes a mandatory binding arbitration clause in the contract (usually with provisions favorable to themselves) and is more familiar with the arbitration process.  For the smaller entity, a commercial litigator will likely be necessary to level the playing field with a well-prepared adversary.

How much does a commercial arbitration litigator charge?

It is always prudent to have an attorney well-versed in the law on commercial contracts as well as commercial arbitration and litigation review your company’s transactional structure before your business begins operations.  Further, it is prudent to design and negotiate suitable arbitration provisions for each contractual business relationship to avoid any misunderstandings or costly litigation in the future.  As one of Vietnam’s most experienced and competent commercial litigators, Le & Tran clients are often surprised at the both the level of service and the up-front costs and expenses that may be expected.  We work collaboratively with our clients to establish a realistic package that is reasonable and attainable, with the goal of placing your business on a solid legal footing.  As such, Le & Tran has established itself as the unsurpassed and premier international commercial arbitration law firm in Vietnam and internationally.

How to find a good commercial litigator with arbitration expertise?

Le & Tran’s commercial litigators who are sophisticated at arbitration that utilizes industry-leading strategies, tactics and techniques which are shaped to suit the client’s interests and needs. For example, issues surrounding the contractual arbitration provision, as well as documents and evidence to be used in the proceedings, are all regarded as unique and are applied on a case-by-case basis.

Because an arbitral award is final without the opportunity of appeal (which is distinct from a judgment of a court which can be appealed to a higher level), diligence and attention to every single detail and procedure is essential.  Understanding that every step taken is critical, the arbitral services provided by Le & Tran commercial litigators are always given the highest priority and undertaken by our knowledgeable, creative, and diligent team which ensures the protection of the best interests of the client.

In addition, Le & Tran has been recognized as an authority in the law on commercial arbitration by the legal and business community.  As an example, several foreign companies in Vietnam recently requested a workshop on the important topic of arbitration. Le & Tran commercial litigators, in cooperation with the American Chamber of Commerce in Vietnam (AmCham Vietnam), prepared and conducted a successful workshop/seminar entitled “Losing points – Arbitration Procedures”. As such, not only do Le & Tran commercial litigators remain committed to the best interests of its foreign and domestic clients, we are at the forefront of developments in the practice of law on commercial arbitration.

Le & Tran’s internationally recognized international commercial arbitration litigators are available to answer any of your questions related to commercial arbitration. Our main office is located in Ho Chi Minh City, the business center of Vietnam.  Please feel free to contact us at info@letranlaw.com to arrange a free consultation.