Key Problems associated with Commercial Dispute Resolution in Vietnam
Major problems associated with commercial litigations in Vietnam is that Vietnamese the judicial system is somewhat lacking in experience and development of complex commercial litigation skills and procedures. Lengthy and complicated judicial procedures also discouraged people to seek judicial remedies.
However, the Vietnamese judicial system has been undergoing substantial reorganization and has developed very rapidly. In the past few years, significant developments that provided much greater certainty as to civil proceedings and commercial arbitration proceedings have made a gradual impact on those foreign investors’ negative perceptions.
As many foreign investors, are still sceptical of the Vietnamese arbitration system we would like to highlight recent changes to Vietnamese commercial arbitration system herein.
Government’s Efforts to Improve the System
Seven years after Vietnam first introduced comprehensive legislation on arbitration, a new law on commercial arbitration was finally passed by the National Assembly on 17 June 2010 (“LCA”), which replaced the Ordinance on Commercial Arbitration of 25 February 2003 and came into force on January 1st of this year. LCA made a significant impact on commercial arbitration activities, particularly international commercial arbitration, in Vietnam. The LCA is expected to successfully change the flow of legal settlement in Vietnam by facilitating and encouraging the use of arbitration as a form of dispute resolution. Some major changes under the LCA include following: extended scope, flexibility in regard to governing law, language and nationality of arbitrators, and the possibility of interim relief.
Any increase in popularity of Vietnamese arbitration system among Foreign Parties?
Vietnam currently has seven commercial arbitration centres with a total of more than 200 arbitrators. However, only 2.5% of cases are dealt with by means of arbitration, compared to 97.5% of cases judged by the courts. Further, for those disputes in which arbitration is the chosen form of dispute resolution, the parties often utilize the services of foreign arbitration outside Vietnam. Introduction of LCA may, however, change such tendencies and encourage parties to resolve their disputes within Vietnam. Moreover, difficulty in enforcing foreign arbitral awards or foreign judgments in practice may have a further impact on decisions to choose a domestic arbitration system.