Generally, the Court won’t handle a dispute if the parties have agreed to arbitration. However, under Article 6 of the Law on Commercial Arbitration 2010, if the arbitration agreement is either invalid or unenforceable, the Court can step in to resolve the dispute.
According to Article 4 of Resolution No. 01/2014/NQ-HDTP, issued on March 20, 2014, by the Council of Judges of the Supreme People’s Court (“Resolution 01/2014“), an arbitration agreement is considered unenforceable under Article 6 of the Law on Commercial Arbitration 2010 means any arbitration agreement in the cases below:
- The parties have agreed to resolve their disputes at a specific arbitration center, but the center has shut down without any successor to handle its cases, and the parties concerned fail to reach an agreement on another arbitration center to resolve their disputes.
- Both parties have agreed to appoint a specific arbitrator to resolve disputes but when the dispute arises, due to force majeure or other objective difficulties, the arbitrator cannot handle the case, and the arbitration center or court cannot appoint a replacement as agreed by the parties, and the parties concerned also fail to reach an agreement to select a substitute arbitrator.
- Both parties have agreed to appoint a specific arbitrator to resolve disputes but when the dispute arises, the arbitrator refuses the appointment, or the arbitration center declines to confirm the arbitrator’s appointment, and the parties concerned also fail to reach an agreement to select a substitute arbitrator.
- The parties concerned have an agreement to resolve their disputes at a specific arbitration center but a set of arbitration rules of another arbitration center, which is different from the arbitration rules of the agreed arbitration center, is applied, the charter of the arbitration selected by both party does not allow the application of arbitration rules of other arbitration centers, and the parties concerned fail to reach an agreement on substitute set of arbitration rules.
- The goods/service seller and consumers have an overall agreement on provision of goods/services that contain arbitration terms drafted by the seller as prescribed in Article 17 of Law on Commercial Arbitration 2010, but the consumers refuse to have the dispute that arises resolved by an arbitration.
In addition to the cases mentioned above, there are practical situations where the parties establish an arbitration agreement but fail to specify a particular arbitration organization. When a dispute arises in such cases, will the Court or the Arbitration have the authority to resolve the dispute?
Currently, under Clause 5, Article 43 of the Law on Commercial Arbitration 2010, if this situation occurs, the parties must mutually agree on a specific arbitration organization to resolve the dispute. If no agreement is reached, the arbitration organization is selected at the request of the claimant.
In practice, there has been a case where the arbitration agreement did not specify an arbitration organization, and the dispute was resolved by the Vietnam International Arbitration Center (VIAC) at the claimant’s request. The respondent filed a complaint with the People’s Court of Ho Chi Minh City regarding the Arbitral Tribunal’s jurisdiction under VIAC. The Court ruled that VIAC had jurisdiction to resolve the dispute based on Clause 5, Article 43 of the Law on Commercial Arbitration 2010.(1)
However, in another dispute, reflected in the Final Appeal Decision No. 08/2021/KDTM-GDT dated July 15, 2021, the Council of Judges of the Supreme People’s Court determined that an arbitration agreement without a specified arbitration organization is unenforceable. As a result, the Court decided that jurisdiction to resolve the dispute lies with the Court under Article 6 of the Law on Commercial Arbitration 2010 and Article 4 of Resolution 01/2014.
It is evident that the Supreme People’s Court’s judgment in this case differs from the views of VIAC and the People’s Court of Ho Chi Minh City in the earlier case. Currently, there is an opinion that the Council of Judges’ judgment helps clarify Article 6 of the Law on Commercial Arbitration 2010 and fills a gap in the guidance provided by Article 4 of Resolution 01/2014. It suggests that cases outlined in Clause 5, Article 43 of the Law on Commercial Arbitration 2010 should be treated as instances where the arbitration agreement is unenforceable and could serve as a precedent for consistent application in dispute resolution. (2)
However, no official precedent related to this issue has been issued. Therefore, disputing parties should rely on the provisions of Article 6 of the Law on Commercial Arbitration 2010 and Article 4 of Resolution 01/2014 to determine cases where an arbitration agreement is deemed unenforceable.
(1) https://www.viac.vn/thu-tuc-trong-tai/085-%7C-thoa-thuan-trong-tai-khong-ro-rang-a228.html
(2) https://www.toaan.gov.vn/webcenter/ShowProperty?nodeId=/UCMServer/TAND308180
See more:
1/ Loss of right to object in arbitration proceedings
2/ Core elements of an arbitration agreement
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