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PART XI
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DISPUTE RESOLUTION
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With the substantial increase of investment activities in the past years, it is inevitable that complex commercial disputes also arise in larger numbers from the investment and business activities in Vietnam. In order to resolve those disputes where the parties cannot negotiate, conciliate, adjudicating state agency or organization is required. Under the Vietnamese law, in particular the Law on Investment, foreign investors and foreign-invested companies have the right to select the court of Vietnam, Vietnamese arbitrators, foreign arbitrators or the arbitrators appointed by the parties, to resolve the disputes concerning investment activities in Vietnam. With respect to the disputes between foreign investors and the State management authorities of Vietnam, the parties will have to refer the dispute to either an arbitration body or court of Vietnam.
In Vietnam, the People’s court and arbitral bodies have jurisdiction over disputes related to investment or business. Each of them has independent organizational structure and separate rules and procedures for adjudicating disputes brought before them. |
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1. The Court of Vietnam – Judicial system and jurisdiction
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In line with legal system revolution, there have been positive changes as to jurisdiction and procedures for promptly resolving disputes equitably and in compliance with the law. The court system of Vietnam is set up at various levels, with the Supreme People’s Court as the highest, the provincial People’s Court, the district People’s Court and the Military Court.
Each level of the court will have different jurisdiction. The district court as the court of first instance has jurisdiction over cases involving disputes relating to commodities trading; service supply; distribution; representatives and agents; consignment; hire, leasing and lease purchase; construction; technical consultancy; conveyance of goods and passengers by railway and road. The provincial court is the court of first instance hearing cases in investment, financing, banking, insurance, sale & purchase of stocks and bonds, exploration and exploitation, transport by air and sea, technology transfer, intellectual property rights, disputes between the company and its members or among the members. Additionally, the disputes which involves an offshore party (including foreigners, Vietnamese people not present in Vietnam and foreign agencies & organizations without a head office, branch, representative office in Vietnam at the time when the Court accepts the case for handling) or an offshore property; the resolution of a judicial authorization to the consulate of Vietnam abroad also falls under the jurisdiction of provincial courts. The provincial court also conducts appellate hearings or judicial review of cases which has been heard by the district court, but the appeal or protest is lodged with the latter court. The Supreme People’s Court is the highest judicial body, acting as the court of appeal reviewing the judgment of the court of first instance issued by the provincial courts and have the authority to review under retrial and judicial review procedures decisions of the lower courts which have been legally effective, but are found to be contrary to the law, or new circumstances exit. Pursuant to the laws of Vietnam, the court of Vietnam shall have exclusive jurisdiction over all disputes relating to real estate located within Vietnam regardless of the parties’ otherwise agreement. In practice, more than 95% of commercial and investment disputes are settled by the courts of all levels. |
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2. Commercial arbitration
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In parallel with dispute resolution by courts, the disputes resolution by arbitration is also applicable in Vietnam even though it is not common as with the cases settled by courts. The legal system for arbitration activities has been quite fully set forth, and there is mechanism guaranteeing the execution of arbitration awards, thus increasing the effectiveness of dispute resolution by the arbitration. Vietnam’s arbitrators have jurisdiction over commercial disputes; other disputes, such as civil, labor disputes … does not fall into the jurisdiction of arbitration, but that of the courts. The arbitration body which is considered the most experienced and best recognized is Vietnam International Arbitration Centre (VIAC) in conjunction with the Vietnam Chamber of Commerce & Industry (VCCI).
Like other countries, the arbitration in Vietnam has jurisdiction to resolve disputes if so agreed by the parties. Arbitration may be specified in the contract or in a separate document before or after the dispute arises, but it is significant that the contract must state a specific arbitration body to resolve the disputes. Any provision on arbitration which is contrary to the above-mentioned regulation shall be deemed invalid, and a court will have jurisdiction to resolve the disputes. |
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3. Recognition and enforcement of civil judgments and decisions of the foreign court and foreign arbitral awards in Vietnam
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Civil judgments & decisions of a foreign court, foreign arbitral awards will be enforced in Vietnam only if they are recognized and put into effect by a court of Vietnam. The recognition and enforcement of civil judgments & decisions of the foreign court in Vietnam are conducted based on the principle as follows:
• Vietnam and the country which renders such civil judgment or decision have signed or acceded to international treaties on this matter; and • The judgment is not prohibited by the laws of Vietnam from being recognized and enforced. The court of Vietnam also considers the recognition and enforcement of foreign arbitral awards in Vietnam if such awards are rendered in a country which has signed or acceded to international treaties on this matter with Vietnam. Vietnam is a member of New York Convention on Recognition and Enforcement of Foreign arbitral awards and other agreements on legal assistance in civil matters with such countries as China, France, Russia and Republic of Belarus, etc. It should be noted that the court of Vietnam will not review contents of the case or dispute which has been resolved by the foreign court or arbitrator, but only examine and compare the judgment or award with the attached document with the law of Vietnam as to determine whether to recognize and enforce the judgment or award in Vietnam. In some cases, foreign arbitral awards shall not be recognized and enforced in Vietnam. For instance, the parties executing the provision on arbitration are incapable of execution, the provision on arbitration becomes null and void, or neither the arbitral award is given in accordance with its jurisdiction nor it comes into effect, etc. |
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4. Coercive enforcement of judgments & decisions of the court and arbitral awards
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In Vietnam, if the concerned parties fail to voluntarily comply with the valid judgment or award of the court and arbitrator, such parties shall be forced to obey by the body for legal execution. The body for legal execution works independently and is constituted of the legal execution divisions at provincial level, district level and military-zone level. With respect of the judgments and awards involving foreign elements or relating to the intellectual property rights, the enforcement of the awards by the commercial arbitrator will fall under jurisdiction of the legal execution division at provincial level.
Currently the pilot implementation of bailiff institution is being conducted in Ho Chi Minh City. It is a body entitled to carry out certain functions of the body for legal execution in respect to the execution of the court’s judgment or the arbitral award. |