SETTLEMENT OF COMMERCIAL BUSINESS DISPUTES BY COURT OR COMMERCIAL ARBITRATION

Commercial activities are activities for profit-making purposes, including the sale and purchase of goods, provision of services, investment, commercial promotion and other activities for profit-making purposes[1]. Accordingly, commercial business disputes are understood as conflicts and dissent that occur between parties in the process of participating in commercial activities. The question is settlement of commercial business disputes by court or commercial arbitration in Vietnam. This article will prescribe some of the pros and cons of settlement of commercial business disputes by court or commercial arbitration for readers’ reference.

Advantages and disadvantages of settlement of commercial business disputes by court

Advantages

– The judgments or decisions of courts which have been legally enforceable are guaranteed to execute by the agency for legal enforcement.

– The fee for settlement of commercial business disputes by court is lower than that by arbitration. Court fees are described according to Resolution 326/2016/UBTVQH14.

Disadvantages

The sequences and procedures for trial at the Court are not flexible and must comply with the provisions of Vietnamese laws. Time for dispute resolution is actually extended, some disputes can go through many levels of trial.
Judgments and decisions of first instance courts may be appealed or protested against in accordance with Civil Proceedings Code 2015. A legally enforceable judgment or decision of a court shall be reviewed in accordance with the procedure for judicial review or new trial in the case where any serious breach of law or fresh evidence has been found in accordance with Civil Proceedings Code 2015[2].
The applicable law for settlement of commercial business disputes by court is Vietnamese law. The parties do not have the right to choose the location, language and the participants of trial panel to settle the dispute.
The principle of public trial is also detrimental to the reputation and image of enterprises in the market as well as their business secrets.
The recognition and enforcement of judgments of Vietnamese courts abroad are carried out based on bilateral agreements on mutual legal assistance between Vietnam and other countries or the principle of reciprocity. However, at present, Vietnam has only signed about 16 agreements on mutual legal assistance in civil matters with a number of countries and territories, so the recognition and enforcement of judgments of Vietnamese courts abroad will be depends on the principle of reciprocity.

Advantages and disadvantages of settlement of commercial business disputes by commercial arbitration

Advantages

An arbitral award shall be final[3] and immediately enforceable.
Parties shall have the right to negotiate and reach an agreement on the dispute resolution time, location, language, arbitration centre or ad hoc arbitration, composition and number of arbitral tribunals, applicable law of dispute settlement. arbitration rules. Therefore, the sequences and procedures for dispute settlement by arbitration are implemented quickly and flexibly, saving time and minimizing damage that may arise during the dispute settlement process..
Dispute settlement by arbitration is not conducted publicly, so it ensures the confidentiality of information and preserves the reputation and image of the business in the market.
Vietnamese commercial arbitration awards are recognised in many countries abroad under the New York Convention 1958 (approximately 156 countries and territories).

Disadvantages

Arbitral awards are enforced on a voluntary basis. In the case where the obligator does not voluntarily execute the award, the awardee shall carry out additional procedures for requesting the competent civil judgment enforcement agency to enforce the award in accordance with the provisions of law on commercial arbitration. In addition, the arbitral award may be considered annulled by the court at the request of a party.
The investigation, verification, collection of evidence and summoning of witnesses of the arbitration face many difficulties without the willingness and goodwill of the parties involved.
The cost for arbitration procedure is higher than court.

Above is an overview of settlement of commercial business disputes by court or commercial arbitration. If you have difficulty in finding a professional consulting law firm and support regarding to settlement of commercial business disputes, please contact us: Phuoc & Partners is a professional law 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 law on enterprise 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.