ADVANTAGES AND DISADVANTAGES OF CHOOSING ARBITRATION AS A METHOD TO RESOLVE DISPUTES FOR FOREIGNERS LIVING IN VIETNAM
This article was written by Ms. Dinh Khanh Linh - High-Quality Law Program, Hanoi Law University. A trainee in the internship program at Dai Ha Thanh Law Firm during the fourth quarter of 2024.
In the context of globalization across various fields, the exchange and cooperation between nations are increasingly developing. This has led to a rise in disputes among individuals from different countries due to conflicts of language, culture, and more. In Vietnam, arbitration is becoming one of the popular choices for resolving disputes, especially for foreigners living and working here. In the following article, Dai Ha Thanh Law Firm will provide clients with legal issues regarding the "Advantages and Disadvantages of choosing Arbitration as a method to resolve disputes for foreigners living in Vietnam".
1. General overview of dispute resolution by arbitration for foreigners living in Vietnam
1.1. Concept
According to Article 3 of the 2010 Commercial Arbitration Law: "Dispute resolution by Arbitration is a method of resolution through the activities of Arbitrators as an independent third party to end conflicts by bringing The arbitral award requires the parties to respect and implement it.
According to Clause 1, Article 3 of the Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam 2014, foreigners are people who carry documents identifying foreign nationality and stateless people who enter and exit the country. transit, transit, and residence in Vietnam.
1.2. Characteristics of dispute resolution by arbitration
First, arbitration only resolves disputes when the parties have an arbitration agreement and that agreement must fall under the arbitrator's jurisdiction. Unlike resolving disputes at Court, in all cases, the parties have the right to sue and request the Court to have jurisdiction to resolve when a dispute arises without having to agree in advance. Regarding dispute resolution by arbitration, Clause 1, Article 5 of the 2010 Commercial Arbitration Law clearly states: "Disputes will be resolved by arbitration if the parties have an arbitration agreement. Arbitration agreements can be made before or after a dispute arises", accordingly, if the parties want to choose this method of dispute resolution, the parties must agree in advance and record it in the contract or agreement later. when a dispute occurs.
Second, the subject of dispute resolution is the Arbitrators through an Arbitration Council consisting of an independent Arbitrator or a council of many Arbitrators. An arbitrator is a person selected by the parties or appointed by the Arbitration Center or court to resolve disputes according to the provisions of the 2010 Commercial Arbitration Law. Arbitrators must fully meet the standards set forth in this Law. stipulated in Article 20 of the 2010 Commercial Arbitration Law.
Third, the arbitration award is considered final and effective from the date of issuance and cannot be appealed or protested against according to the provisions of Clause 5, Article 61 of the 2010 Commercial Arbitration Law, unless the award is That decision was annulled by the Court. The implementation of arbitral awards depends on the willingness of the disputing parties; If the debtor does not voluntarily comply and does not request cancellation of the judgment, the judgment creditor has the right to request the civil judgment enforcement agency to execute the judgment.
Fourth, arbitration is a highly confidential dispute resolution mechanism. Arbitration is a separate dispute resolution process. According to the provisions of Clause 4, Article 4 of the 2010 Commercial Arbitration Law, dispute resolution by Arbitration is conducted privately, unless the parties agree otherwise. Confidentiality is clearly shown in the content of the dispute and the identities of the parties are kept confidential.
2. Advantages and disadvantages when choosing arbitration to resolve disputes for foreigners living in Vietnam.
2.1. Advantages of choosing arbitration to resolve disputes for foreigners living in Vietnam.
First, flexibility; not bound by territorial principles.
Flexibility in resolving disputes by Arbitration is shown in that this method allows the parties in the dispute to agree and choose the arbitration council or arbitrator, location, language, and applicable law. dispute resolution and corresponding arbitration procedural rules... . This is very important for foreigners living in Vietnam, because barriers in language, culture, and laws can cause them to have their legal rights and interests more or less affected. Therefore, they can agree on the choice of location, applicable law, and language, which they find convenient and easy to understand.
* Language used:
Article 22 of the UNCITRAL Model Law provides that the parties are free to agree on the language or languages to be used in arbitration proceedings.
Article 10 of the 2010 Commercial Arbitration Law distinguishes between disputes with foreign elements and disputes without foreign elements. For disputes without foreign elements, the language used in arbitration proceedings is Vietnamese; for disputes with foreign elements, the language used in arbitration proceedings is agreed upon by the parties. In case the parties do not have an agreement, the language used is for the Arbitration Council to decide.
* Applicable law:
Clause 1, Article 19 of the 2006 UNCITRAL Model Law stipulates: "According to the provisions of this law, the parties are free to agree on the procedures that the Arbitral Council must follow when conducting proceedings."
Article 14 of the 2010 Commercial Arbitration Law stipulates:
For disputes with foreign elements, the Arbitration Council applies the law chosen by the parties; If the parties do not have an agreement on the applicable law, the Arbitral Tribunal shall decide to apply the law that the Arbitral Council considers most appropriate. In cases where Vietnamese law or the law chosen by the parties do not have specific provisions related to the content of the dispute, the Arbitration Council may apply international practices to resolve the dispute if the application or consequences The consequences of such application are not contrary to the basic principles of Vietnamese law.
Clause 2, Article 19 of the 2006 UNCITRAL Model Law stipulates that in the absence of an agreement between the parties, “the Arbitral Tribunal may, in accordance with the provisions of this law, conduct the arbitration in a manner that the Arbitral Tribunal considers appropriate".
Arbitration is not bound by the principle of territoriality, meaning that the parties can conduct the arbitration anywhere, as long as they reach an agreement. It can be seen that this advantage is especially useful in the context of globalization, where disputing parties may come from many different countries. For foreigners, this can provide greater peace of mind when participating in the dispute resolution process. They do not have to worry about being bound by legal regulations or court procedures in Vietnam, but can choose a legal environment that is more suitable for them.
Thus, the dispute resolution procedure by Arbitration will be based on the parties' choice agreement, and is more flexible than proceedings in Court. At the same time, this method of dispute resolution does not go through many levels of trial like at Court, thus saving time for the parties during the dispute resolution process.
Second, high security. Arbitration provides greater confidentiality than litigation in court. Information related to a dispute is often not made public, helping to protect the trade secrets and reputations of the parties. This is especially important when participants are conscious of protecting sensitive information, such as product formulas, business plans or marketing strategies. For foreign individuals in Vietnam, protecting sensitive information is not only a legal issue but also a strategic factor. Arbitration provides a solution so they can resolve disputes without worrying about information being misused. Therefore, the method of resolving disputes by Arbitration will meet the needs and trust of foreign individuals in Vietnam, playing an important role in today's competitive conditions.
Third, the arbitration award has final value, that is, final effect and cannot be appealed or protested like a court judgment, because when the litigants have trusted and chosen the arbitrator, they must accept it. agree with the referee's decision. Therefore, normally, the parties will voluntarily implement it without the intervention of any competent state agency.
According to the provisions of Clause 2, Article 68 of the 2010 Commercial Arbitration Law, reviewing the grounds for annulled arbitration awards, it is found that the majority of the grounds for annulment of awards are procedural errors. In terms of content, the judgment will only be annulled when it violates basic principles of Vietnamese law. In fact, there are very few cases where arbitral awards are annulled because the Arbitration Council and arbitrators are knowledgeable and experienced in properly conducting the dispute resolution process and making an award in accordance with the law. basic principles of law.
It can be seen that when foreigners choose arbitration, they can rest assured that the award will not be changed or prolonged by other legal procedures. Foreign Arbitration Awards are recognized and enforced in Vietnam according to the provisions of the Civil Procedure Code on procedures for recognition and enforcement in Vietnam according to foreign Arbitration decisions.
2.2. Disadvantages when choosing arbitration to resolve disputes for foreigners living in Vietnam.
First, flexibility; not bound by territorial principles.
One of the main reasons why foreign individuals living in Vietnam consider or refuse to choose dispute resolution by Arbitration is that the cost is quite high and larger than the fee of a similar case. at Court. If the disputing parties only need to pay fees and administrative fees and do not need to pay remunerations to judges when choosing Court, then when choosing Arbitration, the parties must pay additional remunerations. Travel expenses for Arbitrators. In addition, arbitration costs will also depend on the number of Arbitrators selected and the value of the dispute. The greater the value of the dispute and the greater the number of Arbitrators, the higher the cost of resolving the dispute. This causes a concern for foreign individuals in Vietnam, who are concerned that if a dispute occurs, arbitration costs will become a major burden.
Second, the party that must execute can request the Court to cancel the Arbitration Award to prolong the proceedings.
Pursuant to Article 69 of the Commercial Arbitration Law 2010, a party has the right to request the Court to cancel the arbitration award within 30 days from the date of receipt of the arbitration award. Accordingly, the party that must execute the judgment can rely on this regulation to carry out procedures to request the Court to cancel the judgment in order to prolong the proceedings and delay the execution of the judgment. This will cause unwanted loss and damage to the party against whom the judgment is enforced.
Third, the Arbitration Council cannot itself implement the decision to apply temporary emergency measures but must transfer it to a competent enforcement agency for verification and enforcement. Therefore, this procedure is somewhat complicated and time-consuming, so the debtor can take advantage of this inadequacy to disperse assets, cause asset loss, and avoid performing obligations.
Fourth, the actual enforcement of arbitration awards still has many shortcomings in terms of time and procedures. When one party does not voluntarily implement the arbitration award, the other party will have to carry out the following complex procedures:
- Requesting the Court to intervene: To enforce an arbitration award, the injured party must usually make a request to the Court requesting enforcement of the arbitration award.
- Request to the Judgment Enforcement Agency: If the Court approves the request, the requesting party will have to continue to apply to the civil judgment enforcement agency to request enforcement of the judgment, or even make a request to apply measures. ensure and enforce enforcement if the party obliged to perform still fails to perform its obligations. This can create an additional time and financial burden.
Above is an overview of legal issues related to the advantages and disadvantages of choosing arbitration to resolve disputes for foreigners living in Vietnam. Dai Ha Thanh Law Company Limited, with a team of professionally trained domestic and foreign lawyers and legal advisors, is committed to providing professional legal services to our customers. If you need detailed advice, please contact us to receive professional and effective legal consulting services.
