Like many other nations all over the world, Vietnam also has two parallel mechanisms for commercial dispute resolution are court and commercial arbitration (shortly referred to as “arbitration”). In fact, arbitration in Vietnam was officially legislated in writing in 1960, which was also called as economic arbitration. However, because of the specific economic and social background over that time, mediation was not widely known and used. Not until recent years, arbitration has been more well-known and widely used instead of the court to settle commercial disputes. So, what are the differences between arbitration and court? What are the features that make the former more outstanding than the latter?
The People’s court (shortly referred to as the “court”) is the sole State’s body entitled to make legal judgments and supervised by the National Assembly. The court is in charge of settling disputes arising from every field in social life. While the arbitration mechanism is determined to be a dispute resolution form outside the court system and arbitration center is a private organization established and governed by the Justice authorities. Pursuant to prevailing law, the arbitration method is only implemented where there is an agreement on applying this method between parties and the subject of a dispute shall relate to commercial activities. In some circumstances, a court must deny settling a dispute where there is an arbitration term between parties.
As mentioned above, the basis on which the arbitration may be applied is a written arbitration term made by parties in an agreement or separately from it, and such term may be established before or after their dispute. Meanwhile, dispute settlement by court commencements where there is a petition filed by one side of a dispute, rather than an agreement between the parties.
In comparison with court dispute resolution under the Civil Procedure Code, the procedure of arbitration dispute resolution under the prevailing Law on Arbitration is more streamlined. Such as:
- Normally, reconciliation in court dispute resolution is a compulsory stage, but in arbitration dispute resolution this stage is optional, upon an agreement between parties. Moreover, the reconciliation and the decision made therewith by an arbitration council may occur at any time during the settlement.
- Participants of a hearing are less than that of court, which reduces the dependence on the appearance of them.
- Arbitration dispute resolution is not divided into trial and appeal level, the decision of an arbitration council is the final one, except there is a request for the termination of the decision.
- The time and location of the settlement are freely negotiated and chosen by parties, which helps both parties save their time and sources.
- Evidence collection procedure in arbitration dispute resolution is not complex compared to that of court dispute resolution.
- In case there is the absence of one of the parties without a reasonable explanation, the hearing will not be postponed for the first time as in the procedure of court dispute resolution. Accordingly, the request for a settlement shall be considered as withdrawn (if the absentee is the plaintiff), or the settlement shall be conducted with such absence (if the absentee is the defender).
The decision of an arbitration council is the final one and the parties in the decision are compelled to comply with it. First of all, the compliance of the parties with the decision bases on their willingness. Then, if the judgment debtor in the decision is not willing to perform its obligations, the judgment creditor may make a request to a civil judgment enforcement agency to ask this agency to force the judgment debtor to comply with the decision.
However, the drawback of the decision of an arbitration council is that it can be terminated by a competent court if such a decision violates conditions as prescribed under the laws and the settlement shall be re-conducted. Additionally, costs for arbitration are much higher than that of a court because it is a private organization.
Despite having some disadvantages, in terms of commercial dispute resolution, arbitration mechanism has been showing its advantages in comparison with court’s procedure. Practically, the number of commercial disputes is settled by arbitration is significantly increasing, which is the most valuable evidence for proving that arbitration mechanism outweighs the court system. In commerce, time and effectiveness are the key factors for all parties in a transaction, and therefore, arbitration is obviously a good approach for being considered.
If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.
This article is for general information only and is not a substitute for legal advice.