The Law on Commercial Arbitration (the Law) which came into force on 1 January 2011 was expected to provide businesses with an effective, speedy and reliable tool to settle commercial disputes. Although being considered an progress in comparison to the Ordinance on Commercial Arbitration, within the last two years, the number of court decisions on annulment of arbitral award has increased notably mostly due to the arbitrary interpretation of the Law by the courts.1 To tackle this issue, the Supreme Court is developing a resolution to provide guidance on the Law. Substantive matters in the 07 Jan 2013 Draft are briefed below.

Determination of jurisdiction between courts and arbitral tribunals has more detailed guidance. In the event that the parties have agreement to settle disputes by both court proceedings and arbitration proceedings, they have the right to choose one in the two methods as dispute arises. In the event that the plaintiff requests the court and the arbitral tribunal to consider the legitimacy of the arbitration agreement, the body that accepts the case first shall have the jurisdiction over the request.

Identification of courts which have competence over arbitral activities

In the event that the parties appoint multiple of court having competence over an arbitral activity or agree to appoint a court in general without specifying the court, the competent court shall be identified as per default law.

In case of requesting the court to collect evidence, to grant interim measures, to summon the witnesses and such activities must conduct abroad, the competent court shall be at the place in which the arbitral tribunal settles dispute.

“The place in which the arbitration council pronounced the arbitral award” and “the place in which the arbitration council issued the decision” are places in which an arbitration council settles disputes. This clarification sheds much light on the above undefined terms in the Law.

Identification of courts which have competence over foreign arbitral activities in Vietnam

The draft resolution offers two options with opposite results in respect of identifying the competence of Vietnamese courts in the case that the parties agree to use foreign arbitration to settle the dispute in Vietnam under the Law on Commercial Arbitration [of Vietnam]. However, the wording in this clause is not in line with the Law, in which “foreign arbitration” is defined ”an arbitration formed under a foreign law on arbitration and selected as agreed by the parties to settle a dispute outside or within the Vietnamese territory”.

Unrealizable arbitration agreement

The arbitration agreement is declared unrealizable in the event that

  • The parties agreed to settle disputes at a specific arbitration center but such center has ceases its operation without any arbitration institution succeeding it and the parties fail to select another arbitration center;
  • When the parties agree to select an ad hoc arbitrator but at the time their dispute arises, the arbitrator cannot conduct the settlement of the dispute due to force majeure circumstances or objectives obstacles, and the parties may agree fail to agree on another arbitrator in replacement;
  • The parties agreed to settle disputes at an arbitration center but they agreed to apply the rule of proceedings which is different from the rule of proceedings of the selected arbitration center, except that the charter of the selected center allows such application; etc.

No arbitration agreement is established in case that the parties have an arbitration agreement but the form of arbitration is not specified or it is unable to determine a specific arbitration center, then they fail to reach consent on the form of arbitration or the specific arbitration center as dispute arises and agree to have the dispute settled by the court.

Loss of the right to protest

The court shall not base on violations against which a party or the parties lose its right to protest to accept a request of a party or the parties.

Arbitration agreement in the event of assigning rights, obligations arising out of transactions, contracts to which the parties have duly arbitration agreements, such arbitration agreements shall be valid to the concerned parties if they have agreement on assigning such arbitration agreement. However, this guidance is not in line with Art.5.3 of the Law which regulates that arbitration agreement remains valid for an institution that takes over the rights and obligations of the institution to such arbitration agreement, unless otherwise agreed by the parties.

The resolution also introduces mechanism to combine and split the disputes.

Invalid arbitration agreement in case of unauthorized signing/signing beyond the scope of authorization of arbitration agreement

In the course of signing and implementation of the arbitration agreement, if the authorized person does not protest, the court shall request the authorized person to give opinion on the arbitration agreement. If he/she consents, the arbitration agreement is not void. In this case, the ruling of the Civil Code should be applied to ensure the principle of honesty and good-faith, if the person having authorization knows of the agreement and does not protest in a reasonable

time, the agreement shall be valid.

Grounds for annulment of arbitral award

The evidence provided by the parties on which the arbitration council bases to issue the award is counterfeit thus affecting the objectivity and impartiality of the award

The evidence to be considered must be relevant and may affect the objectivity and fairness of the award. The court must base on the arbitration law, agreement of the parties and the rules to consider and evaluate evidence that the arbitral tribunal applied to identify if the evidence is counterfeit.

The loss of the right to protest rule is also applied regardless the evidence in concerned is counterfeit or not.

Effective date and transitional provision

As from the effective date of the Law, the resolution of disputes between the parties shall comply with the Law in either case the dispute arose or the arbitration agreement established before or after the Law takes effect.

New Drafts Recently Introduced

  1. Draft Decree providing for the sanctions of administrative violations in the field of securities and stock exchange.
  2. Draft Circular guiding the purchase and sale of gold bars in the domestic market of the State Bank of Vietnam.
  3. Draft Decree detailing the implementation of a number of articles of Labor Code on labor contracts.
  4. The 3rd Draft Decree dated 22/01/2013 detailing the implementation of a number of articles of Law on Tax Administration and Law on amendment, supplementation of a number of articles of Law on Tax Administration.