In arbitration proceedings, if a party discovers that the Arbitral Tribunal or the Arbitration Center has violated the provisions of the law or the arbitration agreement, it has the right to raise an objection. However, such objections are not always accepted. Specifically, if the party continues to participate in the arbitration proceedings without raising its objection to the Arbitral Tribunal or the Arbitration Center within the prescribed time limit, it will be deemed to have lost its right to object to the arbitration or Court for such violations.
1. Provisions on loss of right to object in arbitration proceedings
In international law, there exists a principle that requires a country to act consistently and refrain from denying facts it has previously acknowledged, known as the principle of “estoppel” or “venire contra factum proprium”. (1) To protect the integrity of arbitration procedures and ensure efficiency in the arbitration process, the UNCITRAL Model Law on International Commercial Arbitration (UNCITRAL Model Law) incorporates this principle under the concept of “Waiver of Right to Object.” (2)
Pursuant to Article 4 of the UNCITRAL Model Law, the waiver of the right to object is articulated as follows:
“Article 4. Waiver of right to object
A party who knows that any provision of this Law from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time-limit is provided therefor, within such period of time, shall be deemed to have waived his right to object.”
Pursuant to the above provisions, a party may only have its objection to non-compliance with the UNCITRAL Model Law or the arbitration agreement accepted if such objection is made in a timely manner. In Vietnam, Article 13 of the 2010 Law on Commercial Arbitration (LCA) stipulates the loss of the right to object as follows:
“Article 13. Loss of right to object
A party that discovers a violation of this Law or the arbitration agreement but continues to participate in the arbitral proceedings without raising an objection within the time limit set by this Law shall be deemed to lose its right to object at the arbitration or Court.”
To provide further clarification on this provision, Clause 1, Article 6 of Resolution 01/2014/NQ-HDTP offers the following guidance:
“Article 6. Loss of right to object prescribed in Article 13 of the LCA
If a party is found to have violated the provisions of the LCA or the arbitration agreement, and the arbitral proceedings continue without any objection being raised to such violations before the arbitral tribunal or arbitration center within the deadline imposed by the LCA, the right to object to such violations shall be lost. In cases where the LCA does not specify a deadline, the deadline shall be agreed upon by the parties or stipulated by the arbitration rules. If the parties do not have an agreement or the arbitration rules do not specify a deadline, the objection must be raised before the arbitral tribunal issues its award.”
It can be observed that, similar to the UNCITRAL Model Law, the LCA considers the consensus of the parties regarding the actions of the Arbitral Tribunal or Arbitration Center. Even if such actions violate the LCA or the arbitration agreement, they are not deemed violations if the parties have accepted or acquiesced to them. This stems from the fact that the will of the disputing parties plays a dominant and decisive role in arbitration proceedings. Consequently, if one party discovers a violation but does not raise an objection, it is considered that the parties have effectively consented to the action.(3) To object to such a violation, the parties must raise their objection within a specific timeframe. Based on an analysis of the provisions of the LCA and Resolution 01/2014/NQ-HDTP, the time limit for exercising the right to object is determined in the following order: (i) Provisions of the LCA; The agreement of the parties or the arbitration procedure rules; (iii) Before the Arbitral Tribunal announces the award.(4)
2. Exceptions to loss of right to object
Based on the above analysis, it appears that if a party continues to participate in arbitration proceedings without raising an objection to violations by the Arbitral Tribunal or the Arbitration Center that it has discovered, it is deemed to have lost its right to object. Consequently, that party cannot later rely on such grounds to appeal the decision of the Arbitral Tribunal or request the annulment of the arbitral award for those violations. Similarly, the Court will not consider violations for which one or more parties have lost their right to object when deciding whether to grant such a request.(5)
However, Clause 3, Article 6 of Resolution 01/2014/NQ-HDTP provides an exception. In certain cases, the Court retains the authority to decide whether to annul an arbitral award even if one or more parties have lost their right to object. Specifically, if an arbitral award is contrary to the fundamental principles of Vietnamese law, it will be annulled under Point d, Clause 2, Article 68 of the LCA, regardless of whether any party has lost their right to object.
3. Practical application
In practice, Vietnamese courts have widely applied the provisions on the loss of the right to object under Article 13 of the Law on Commercial Arbitration. Court decisions concerning requests to annul arbitral awards based on Article 13 can be referenced including: Decision No. 04/2022/QD-PQTT dated March 21, 2022, by the People’s Court of Hanoi City.(6) Decision No. 06/2020/QD-PQTT dated December 7, 2020, by the People’s Court of Hai Phong City(7) and Decision No. 1644/2022/QD-PQTT dated September 23, 2022, by the People’s Court of Ho Chi Minh City.(8) etc.
One notable case where the Court applied Article 13 of the LCA is Decision No. 755/2018/QD-PQTT, dated June 12, 2018, by the People’s Court of Ho Chi Minh City, regarding the civil matter of “Request to annul the arbitral award”, which was later developed into Precedent No. 69/2023/AL. Although the precedent primarily relates to determining jurisdiction over disputes concerning confidentiality and non-compete agreements, the Court, in its judgment, cited Article 13 of the LCA to reject the defendant’s objection to the jurisdiction of the Arbitration Tribunal. In this case, the defendant argued that the arbitration agreement was invalid because it violated legal prohibitions and that the dispute was beyond the jurisdiction of the Arbitration Tribunal, as disputes over NDAs were to be resolved by the Court. However, the Court Tribunal determined that the defendant neither raised objections to the arbitration agreement in their self-defense statement nor during the arbitration proceedings. Instead, the defendant continued participating in the arbitration process and attended the dispute resolution sessions. Consequently, the defendant was deemed to have lost the right to object to the arbitration agreement under Article 13 of the LCA, Article 6 of Resolution 01/2014/NQ-HDTP, and Article 9 of the VIAC Arbitration Rules.(9)
In reality, inconsistencies in a party’s actions or statements during arbitration proceedings are not uncommon, even when those actions or statements contradict prior acknowledgments by that same party. Often, such inconsistencies are intended to serve that party’s interests. However, they result in inefficiencies, unfairness, and inconsistencies in arbitration-based dispute resolution. Therefore, the strict application of the provisions on the loss of the right to object in arbitration proceedings is crucial to minimizing these issues and ensuring efficiency and fairness in arbitration.
(1) Nguyen Ba Dien (2010), Applying the principles of territorial acquisition in international law to peacefully resolve disputes in the East Sea, East Sea Studies, https://nghiencuubiendong.vn/nguyen-ba-dien-ap-dung-cac-nguyen-tac-ve-thu-dac-lanh-tho-trong-luat-quoc-te-giai-quyet-hoa-binh-cac-tranh-chap-o-bien-dong.44162.anews#_ftn24.
(2) UN. Secretary-General (1985), Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration: Report of the Secretary General, https://digitallibrary.un.org/record/85728?v=pdf#files.
(3) Tuong Duy Luong (2018), Some issues on considering the annulment of arbitration awards, Electronic People’s Court Journal, https://tapchitoaan.vn/mot-so-van-de-ve-xem-xet-huy-phan-quyet-trong-tai.
(4) Nguyen Thi Thu Trang (2024), Some problems in applying commercial arbitration law to resolve international disputes in Vietnam, Electronic Legal Magazine, https://phaply.net.vn/mot-so-vuong-mac-trong-ap-dung-phap-luat-trong-tai-thuong-mai-de-giai-quyet-cac-tranh-chap-quoc-te-tai-viet-nam-a249355.html.
(5) Clause 2, Article 6 of Resolution 01/2014/NQ-HDTP.
(6) https://congbobanan.toaan.gov.vn/5ta930075t1cvn/Agri__Trong_tai.pdf.
(7) https://congbobanan.toaan.gov.vn/3ta665206t1cvn/.
(8) https://congbobanan.toaan.gov.vn/5ta1288245t1cvn/HOP_XET_YC_HPQTT_NAM_PHAT_DAT_goc_da_ma_hoa.pdf.
(9) https://anle.toaan.gov.vn/webcenter/portal/anle/chitietanle?dDocName=TAND315866.
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