Disputes on business and commerce involving foreign elements and Methods to settle
In present, Commercial Law 2005 does not directly define what a dispute on business and commerce is, however, based on the concept of commercial activities specified in Article 3.1 of the Commercial Law 2005: “Commercial activities are activities aimed at profit-making purposes, including purchase and sale of goods, provision of services, investment, trade promotion and other profitable activities”. Besides, according to the provisions of Article 30.1 of the Civil Procedure Code 2015, disputes on business and commerce are: Disputes arising in business and commercial activities between individuals and organisations that have enterprise registration with each other and all due to profit purposes.
In summary, a dispute on business and commerce need to meets all three below factors:
- Disputes (disagreements or conflicts) related to the rights and obligations of the parties;
- Arrising from commercial activities for profit purpose;
- Arising between individuals, organisations with enterprise registration, or can be called traders.
Besides, disputes on business and commerce involving foreign elements. Foreign elements in business and commercial relations can be referred to through foreign elements in Civil relations specified in Article 663.2 of the Civil Code 2015 as follows:
- Foreign element in terms of subject: When one of the parties is a foreign individual or organisation;
- Foreign factors in terms of legal events: The parties involved are all Vietnamese, but the establishment, change, performance or termination of such relationship occurs in a foreign country;
- Foreign element in terms of object: The parties involved are all Vietnames, but the object of that commercial and business relationship is abroad.
Law to apply when settling disputes on business and commerce involving foreign elements.
Pursuant to Article 664 of the Civil Code 2015, settle disputes involving foreign elements first is an International Treaty to which the Socialist Republic of Vietnam is a member or Vietnamese law.
However, based on the principle of respecting the right of self-determination, freedom of agreement between the parties, the right of negotiate to choose the applicable law of the parties is recognised if it is written in an International Treaty to which Vietnam is a member or the Vietnamese national law.
In case the applicable law cannot be determined under the provisions of an International Treaty or it is impossible to reach an agreement on the applicable law, the applicable law shall be the law of the country which has the closest relationship with the relations involving foreign element.
Methods to settle disputes on business and commerce.
When a dispute on business and commerce involving foreign elements occurs, there are usually three common methods of settling as follows:
Settling disputes on business and commerce involving foreign elements by negotiation and mediations.
Litigation is not only costs the parties money and time but also affects the reputation – that is very important to businesses when conducting commerce or business. Therefore, the parties always consider using the negotiation method and through the parties’ discussion, agreement, self-settlement and resolution of disagreements arising in order to both eliminate disputes and maintain the good relationship between the two parties without the help of any third party.
In addition, according to the provisions of Article 6 of Decree 22/2017/ND-CP dated 24 February 2017 on Commercial Mediation, when the parties have a mediation agreement, disputes on business and commerce can be resolved by commercial mediation before, after a dispute or at any time during the dispute resolution process.
Settling disputes on business and commerce involving foreign elements through commercial Arbitration
This is a method of commercial dispute resolution that the parties choose to settle through an arbitrator or an arbitral tribunal to consider and make a binding judgment on the disputing parties. This method has many points to meet the requirements of the disputing parties because it creates optimal conditions to promote the self-determination ability of the disputing parties, the arbitration shall be settled according to the principle of non-public adjudication, the parties is free to choose arbitrator and the procedure is often flexible, the parties can even agree to develop their own procedural rules to resolve the dispute.
However, depending on each case, the parties can agree before or after a dispute occurs when using commercial arbitration. The arbitration agreement is expressed in the form of a clause of a contract or a separate agreement. However, the agreement must be in writing
Procedures for settling disputes on business and commerce involving foreign elements by arbitration in Vietnam include the following steps: Filing a lawsuit → Conducting a settlement on the dispute → Making an arbitration decision → Carrying out the arbitration decision.
Settling disputes on business and commerce involving foreign elements through procedures at jurisdiction Court
When the parties are unable to end a dispute on business and commerce by means of negotiation or conciliation, choosing a court to settle is a popular and respected method. The court’s adjudication jurisdiction over dispute on business and commerce involving foreign elements is prescribed by the civil procedure law. The settlement in Court is often complicated because the disputing parties have a language disagreement, so of course, the settlement time may take longer than usual due to translation or interpretation activities on evidence. The jurisdiction of the National Court for disputes may arise based on many different bases, in Vietnam these bases are divided into general jurisdiction (regulated in Article 469 of the Civil Procedure Code 2015) and separate jurisdiction (regulated in Article 470 of the Civil Procedure Code 2015).
The above are the provisions of the law on the settlement of disputes on business and commerce involving foreign elements. To ensure the legitimate rights and interests, the disputing parties should consult the legal advice of a lawyer.
Phuoc & Partners is a consulting firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc & Partners is also rated as one of the leading consulting firms specializing in business law in Vietnam that has leading practice areas in the legal market such as Labour and Employment, Taxation, Merger and acquisition, Litigation. We are confident in providing customers with optimal and effective service.