Commercial arbitration is one of the alternative dispute resolution methods, which alternates ordinary court proceedings (ADR) and is increasingly chosen by many disputing parties. According to the 2021 Annual Report of the Vietnam International Arbitration Center (VIAC), one of the arbitration centers popularly chosen by disputing parties, the total number of new cases filed and handled by this center in 2021 was 270 cases, which increased 22.2% compared to those of 2020. With the continuous development of the dispute resolution method by commercial arbitration, the disputing parties have paid more and more attention to this dispute resolution method. One of the usually concerned issues is the enforcement of arbitral awards. In fact, there is a lot of confusion about the identification of judgment enforcement agencies competent to enforce arbitral awards. Within the scope of this article, the author presents the identification of judgment enforcement agencies competent to enforce the arbitral awards and some notes on this issue.
1. Regulations of the Law on Commercial Arbitration 2010 on the identification of judgment enforcement agencies competent to enforce arbitral awards
Pursuant to Article 67 of the 2010 Law on Commercial Arbitration, arbitral awards shall be enforced in accordance with the provisions of the Law on Enforcement of Civil Judgments. Accordingly, agencies competent to enforce arbitration awards are civil judgment enforcement agencies.
According to the Law on Enforcement of Civil Judgments, court judgments and decisions are enforced by district-level or provincial-level judgment enforcement agencies, depending on the courts issuing the judgments or decisions. However, for arbitral awards, point dd, Clause 2, Article 35 of the 2008 Law on Enforcement of Civil Judgments (amended and supplemented in 2014) stipulates that only provincial-level judgment enforcement agencies have the jurisdiction to enforce arbitral awards. In terms of territory, according to Article 8 of the 2010 Law on Commercial Arbitration, the civil judgment enforcement agency where the arbitral tribunal has made the arbitral award is the competent agency to enforce it. Therefore, it can be seen that the arbitral award will be enforced by the civil judgment enforcement agency of the province or municipality under the central government where the arbitral tribunal has made the award.
Compared with the jurisdiction of the civil judgment enforcement agency competent to enforce the arbitral tribunal’s decision to apply interim urgent measures, interim urgent measures will be enforced by the civil judgment enforcement agency in the province or municipality under the central government where the interim urgent measures should be applied, instead of the place where the arbitral tribunal makes its decision. In practice, this is an appropriate provision to perform because the interim urgent measures are inherently urgent, therefore, the civil judgment enforcement agency where the interim urgent measures are applied will have sufficiently favorable conditions for enforcement.
2. Inadequacies of legal regulations on judgment enforcement agencies competent to enforce arbitral awards and some notes for the disputing parties
As mentioned, different from the rationality of the enforcement authority competent to enforce the interim urgent measures, arbitral awards shall be enforced by the civil enforcement agencies where the arbitral tribunal makes an award, instead of where the judgment debtors have asset, reside or work.
Basically, the jurisdiction of the judgment enforcement agency to enforce the court’s judgment or decision depends on the court issuing the judgment or decision. However, in terms of territory, the court issuing the judgment or decision is determined to be the court where the involved parties reside, are headquartered or where real estates are located. Therefore, the judgment enforcement process will likely be more favorable because the judgment enforcement agency competent to enforce the court’s judgment or decision is likely to be the agency where the judgment debtors have assets, reside, or work.
However, for arbitral awards, the places where arbitral tribunals make awards can be anywhere, and it may not be the places where judgment debtors have assets, reside or work. Because in fact, despite the constant development of the dispute resolution method by commercial arbitration, the number of arbitration centers is still relatively small and mainly concentrated in two big cities, Hanoi and Ho Chi Minh. Although in principle, arbitral tribunals have the jurisdiction to make awards anywhere, in practice, the places where the arbitration centers are located are often chosen by the arbitral tribunals to be the places to make the awards. So, the popular judgment enforcement agencies competent to enforce arbitral awards actually are the Department of Civil Judgement Enforcement of Ho Chi Minh City and the Department of Civil Judgment Enforcement of Hanoi City. This problem both brings about the inadequacy of the overloaded number of arbitral awards to be enforced by these two agencies, as well as difficulties in judgment enforcement procedures when the judgment enforcement agencies competent to enforce the arbitral awards are not located at the places where the judgment debtors have assets, reside or work. In this case, the procedures for entrusting judgment enforcement to the judgment enforcement agencies where the judgment debtors have assets, reside or work will be conducted, which will complicate and prolong the enforcement process.
As these arguments, some proposals for expanding the scope on territory of judgment enforcement agencies competent to enforce arbitral awards should include civil judgment enforcement agencies of provinces and municipalities under the central government where the judgment debtors have assets, reside or work have been raised. The consideration of expanding the scope on territory of the agencies competent to enforce arbitral awards depends on the legislators. However, from the perspective of the parties participating in the dispute resolution by arbitration, the selection of an arbitration center and an arbitration seat in advance can contribute to limiting difficulties for arbitral awards’ enforcement process later. For example, in choosing a place to resolve a dispute by arbitration when the plaintiffs initiate arbitration lawsuits, the plaintiffs should choose the arbitration center and the arbitration seat where the defendants have assets or reside or work to facilitate the arbitration process.
After all, the attainment of the parties’ purposes when participating in the dispute resolution by arbitration largely depends on the enforcement of the arbitral awards. Therefore, careful research when starting to participate in the arbitration proceedings will help the parties in achieving the outcome of the dispute resolution process.
This article is for general information only and is not a substitute for legal advice. Apolat Legal is a Vietnamese law firm with experience and capacity to advise on matters related to Dispute resolution. Please click here to learn more about our services and contact our lawyers in Vietnam for advice via email firstname.lastname@example.org.