LEGAL PROVISIONS ON MEDIATION IN ARBITRATION PROCEEDINGS IN VIET NAM
Commercial arbitration is an out-of-court dispute resolution method that has increasingly become a more popular choice. During the arbitration process, the disputing parties are entitled to mediation before the Arbitral Tribunal makes an arbitral award. Currently, the legal regulations governing Mediation in arbitration proceedings in Vietnam are mainly stipulated in Law on Commercial Arbitration 2010. However, the provisions on mediation in this Law occupy a rather minor position. Only 2 articles (article 9 and article 58) out of a total of 82 articles of the Law on Commercial Arbitration regulating mediation in arbitration proceedings. Nevertheless, these two articles also show some special characteristics and basic features of mediation activities in arbitration proceedings.
1. Conditions for conducting mediation in arbitration proceedings
Mediation in arbitration proceedings could be conducted only on the basis of the parties’ request. In accordance with article 9 of the Law on Commercial Arbitration in 2010, in the arbitration process, the dispute parties have the right to request the Arbitral Tribunal to mediate so that the parties can reach an agreement on dispute resolution. Article 58 of the Law on Commercial Arbitration also stipulates: “At the request of the parties, the Arbitral Tribunal conducts mediation so that the parties can reach agreement on the dispute resolution". Thus, the conditions for conducting mediation in arbitration proceedings as "request of the parties". As such, if the parties do not request mediation during the arbitration proceedings, the Arbitral Tribunal cannot conduct mediation.
Although mediation in arbitration is not a mandatory procedure, the arbitrators, the Arbitral Tribunal tend to encourage the parties to mediate to resolve disputes. In fact, at the Vietnam International Arbitration Center (VIAC), the Arbitral Tribunal normally recommends mediation and the Arbitral Tribunal shall conduct the mediation only if the parties agree to do so.
2. Mediation procedures in arbitration proceedings
2.1. Subjects conducting mediation
Although there is no clear regulation, it is understandable that the subjects requesting mediation in arbitration proceedings are the dispute parties and the subject conducting mediation is The Arbitral Tribunal to settle the case, pursuant to in Article 9 and Article 58 in the Law on Commercial Arbitration. Having clearly identified the Arbitral Tribunal who have the authority to mediate, the dispute parties do not need to select or appoint additional mediators for mediation when requesting mediation in arbitration proceedings. The Arbitral Tribunal will act as a “mediator” during the mediation process.
2.2. Mediation session in arbitration proceedings
There are no provisions on mediation sessions in Law on Commercial Arbitration. This Law only regulates “the dispute resolution session” in Chapter VIII of the Law (Article 54 to Article 59), in which there is Article 58 on mediation in arbitration proceedings. With such a regulatory layout, it is clear that the mediation is conducted in the dispute resolution session. The dispute resolution session will have several continuous parts and procedures under the direction of the Arbitral Tribunal including: the parties presenting the introduction, making questions, argument, conclusion, etc. In case the parties request mediation at the meeting, the mediation process will be performed at that dispute resolution session by the Arbitral Tribunal. As such, The Law on Commercial Arbitration only stipulates the mediation in the dispute resolution meeting (if the parties request as provided for in Article 58) and does not have provisions on a mediation session as a separate meeting from the dispute resolution session.
In practice, mediation outside the dispute resolution session is not highly feasible. This stems from the condition to conduct mediation that there must be a "request of the parties" and it is difficult for the parties to consent outside the dispute resolution session. Normally, at a dispute resolution session, the Arbitral Tribunal suggests mediation. If the parties agree to request mediation, then the Arbitral Tribunal can conduct mediation. Moreover, in practice, the request for mediation in arbitration usually comes from one of the disputing parties rather than from both the disputing parties at the same time. When receiving a request for mediation from one of the disputing parties, the Arbitral Tribunal shall ask the opinion of the other party whether or not they have requested mediation, and whether or not they agree to be mediated by the Arbitral Tribunal. If both parties agree on requesting the Arbitral Tribunal to conduct mediation, it is considered that the parties have requested the mediation and the Arbitral Tribunal will conduct the mediation. If one party makes a request for mediation but the other party refuses, it is considered only one party's request and does not meet the "request of the parties" condition. Therefore, the Arbitral Tribunal will continue to resolve the dispute following the provisions.
Regarding the procedures of the mediation session, the Arbitral Tribunal will manage in the most appropriate manner to save time, and costs and satisfy the aspiration of the parties. The Law on Commercial Arbitration does not detail the order and procedures of the mediation session as prescribed for a dispute resolution session but will empower the Arbitral Tribunal to resolve the dispute.
There are also no specific regulations on the order and procedures for the mediation session in the Rules on Arbitration Procedures of the Arbitration Centers, so it will be flexibly conducted by the Arbitral Tribunal.
2.3. Mediation result in arbitration proceedings
Regarding the results of mediation in arbitration proceedings, similar to other mediation methods, mediation in arbitration proceedings could be successful or unsuccessful. In case of unsuccessful mediation, the Arbitral Tribunal will continue to resolve the dispute following regulations. In case of a successful mediation, according to the provisions of Article 58 of Law on Commercial Arbitration, when the parties reach an agreement on the dispute settlement, the Arbitral Tribunal shall make a minute of successful mediation signed by the parties and certified by the arbitrators, then issue a decision to recognize the agreement of the parties. With regard to the minute of successful mediation, the Law on Commercial Arbitration stipulates that it will be made by the Arbitral Tribunal (the person conducting the mediation). This is also different from commercial mediation. According to Article 9 of Decree 22/2017/ND-CP, commercial mediators do not have the right and obligation to make minutes of successful mediation for the parties.
2.4. Regulations on successful mediation
When the parties reach an agreement after mediation, it is theoretically agreed as a successful mediation without further intervention from the Arbitral Tribunal. However, the parties' agreement is still binding based on Clause 2, Article 3 of the 2015 Civil Code, according to which "Any commitment or agreement which does not violate a prohibition by law or is not contrary to social morals is valid for performance by the parties and must be respected by other subjects.” Therefore, the successful mediation agreement in the arbitration proceedings often results in the participation of the arbitral tribunal. According to Article 58 of the Law on Commercial Centers, “when the parties reach an agreement on the settlement of the dispute, the arbitral tribunal shall make the successful mediation that is signed by the parties and certified by the Arbitrator. At this time, the minute of successful mediation signed by the parties and certified by the arbitrators is enforceable as an agreement based on Clause 2, Article 3 of the Civil Code 2015.
The decision to recognize the agreement: In Vietnam, according to Article 58 of the Law on Commercial Arbitration, “The arbitral tribunal shall issue a decision to recognize the agreement of the parties”. Here, the agreement of the parties is recorded in the arbitral tribunal's decision to create an award as final as an arbitral award. Thus mediation in arbitration proceedings must be the case where the parties reach an agreement on the resolution of the entire dispute and the decision recognizing the agreement of the parties will terminate the arbitration proceedings. The case in which the parties only reach a partial agreement on the settlement of disputes shall not be considered as successful mediation. The Arbitral Tribunal therefore does not establish minutes of successful mediation and does not issue a decision to recognize the dispute agreement of the parties. However, this does not mean partial agreements of the parties are meaningless. What the parties have agreed on would still be the important basis for the arbitral tribunal to consider and decide on relevant issues in arbitral award.
The right/obligation to issue decisions: The law has not clearly stated that the arbitral tribunal is responsible for checking the legality of the agreement the parties have reached. However, due to the decision to recognize the agreement of the parties is subject to the regulation of the annulment of the arbitral award, when issuing a recognition decision, the arbitral tribunal needs to re-check the agreement to avoid the case the decision falls into the case of cancellation.
In the practice of dispute settlement at VIAC, when conducting the recognition of the agreement of the mediators, the arbitral tribunal still has to check the legitimacy of the agreement of the parties before issuing the decision on recognition and also only issuing the decision to recognize the agreement of the parties when the agreement is legitimate. Such as, in the agreement, the parties agree on the interest rate for late payment, but the interest rate in the agreement of the parties is beyond the level allowed by law. In this regard, the Arbitral Tribunal still recommends that the parties comply with the law and proceed to accept the agreement of the parties after the parties adjust the interest rate in accordance with the provisions of the law determined.
Execution of the arbitral tribunal's decision recognizing the agreement of the parties: Even when the parties reach an agreement through successful mediation, the possibility of the party's voluntary execution of the decision to recognize the agreement is very high, but not to exclude the possibility that once again, one of the parties continues to violate the agreement such agreement and then, there must be a mechanism to ensure enforcement of the decision of the arbitral tribunal on the recognition of the agreement of the disputing parties.
The Law on Commercial Arbitration has not stipulated the issue of executing the decision recognizing the agreement of the parties made by the Arbitral Tribunal after successful mediation. However, Article 58 of the Law on Commercial Arbitration stipulates that the arbitral tribunal's decision recognizes the agreement of the parties is final and has the same validity as an arbitral award. Law on Commercial Arbitration does not require recognition and enforcement procedures for Arbitral Award, so the award of the Vietnamese Arbitrator is automatically enforceable after being promulgated. And there is no need for a judicial process for recognition and enforcement. Meanwhile, according to the policy "Encourage the resolution of certain disputes through negotiation, mediation, arbitration” according to Resolution No. 49-NQ/TW dated June 2, 2005 of the Politburo, the results of arbitration must be implemented quickly and effectively. Therefore, the arbitral tribunal's decision recognizing the agreement of the parties (on the basis of a successful mediation) should be immediately enforced without registration or recognition in the Court again, including the decision of the institutional arbitrator and ad hoc arbitrator.
It can be seen that, although the Law on Commercial Arbitration has provisions on mediation in arbitration proceedings, with only two articles of law on mediation in arbitration provided in Law on Commercial Arbitration, the legal framework for mediation in arbitration proceedings has not really been defined clearly. This creates many difficulties and confusion for the parties involved in the mediation. With those inadequacies, the Law on Commercial Arbitration should have more specific provisions on mediation procedures in arbitration proceedings as well as to encourage, guide and assist the parties in legal procedures to serve as the basis for a favorable mediation in accordance with the wishes of the parties.
Above is the general advice of Dai Ha Thanh Law Firm on legal provisions on mediation in arbitration proceedings in Vietnam. If you have any questions or problems, please contact us to receive professional legal consulting services.
