What is a foreign arbitral award? And how is a foreign arbitral award enforced?

The question of What is a foreign Arbitral award? And how is a foreign Arbitration award enforced? is of great importance to be resolved before selecting a mode of commercial dispute resolution by arbitration because defining an award subject to a foreign arbitral award will cause a huge impact on the enforcement of such award. Regardless of the benefits of an arbitral award for a party, if it fails to be recognised and enforceable, all efforts to obtain it will be meaningless.

The foreign arbitral award is an award pronounced by a foreign arbitration outside or within the Vietnamese territory which is selected as agreed by the parties to settle their disputes under the Law on Commercial Arbitration 2010. So, Vietnamese arbitration law defines an arbitral award being a foreign arbitral award on the ground of the pronounced arbitral award by a foreign arbitration or Vietnamese arbitration regardless of whether the arbitral award was pronounced within the Vietnamese territory.

Also, under the Law on Commercial Arbitration 2010, commercial arbitration means a mode of dispute settlement agreed by the parties and to be conducted under this Law; and foreign arbitration means an arbitration formed under a foreign law on arbitration and selected as agreed by the parties to settle a dispute outside or within the Vietnamese territory.

Therefore, defining foreign arbitration or Vietnamese arbitration must not base on nationality of an arbitrator who is selected by the parties or designated by an arbitration centre or a court to settle a dispute under the Law on Commercial Arbitration, but on the ground of forming the arbitration council.

Per the viewpoint over the world and Vietnam, there are two basic modes of the arbitration including ad hoc arbitration and institutional arbitration. In Vietnam, the mode of institutional arbitration is conducted in an arbitration centre under the Law on Commercial Arbitration and rules of procedure of such arbitration centre.

Thus in the case the parties select the mode of institutional arbitration at an arbitration centre which is duly established under Vietnamese arbitration law to settle the dispute, the award of the arbitration formed by such arbitration centre is not treated as a foreign arbitral award and is enforced under the law on enforcement of civil judgement. Similarly, although the composition of an arbitration council formed by the aforesaid arbitration centre includes an arbitrator holding foreign nationality, the arbitral award pronounced by such arbitration council is also not treated as the foreign arbitral award.

Further to the case that the parties select the mode of ad hoc arbitration to settle dispute if parties do not get a mutual agreement about the formation of the ad hoc arbitration council, the ad hoc arbitration council will be formed under the Vietnamese Law on Commercial Arbitration. Thus, either composition of the ad hoc arbitration council includes an arbitrator holding a foreign nationality or the ad hoc arbitration council settles dispute and pronounces an award outside of Vietnam territory, such award is not also treated as a foreign arbitral award and is enforced under the law on enforcement of civil judgement. So regarding the question of the What is a foreign arbitral award? And how is a foreign arbitral award enforced?, it is possible to conclude that the award under the above cases is not a foreign Arbitral award.

So which case is subject to the foreign Arbitral award in consideration of the issue of What is a foreign arbitral award? And how is a foreign arbitral award enforced?

As the above analysis, it is possible to conclude a foreign Arbitral award in the following cases:

The institution arbitration council is formed under the foreign arbitration law or rules of procedure of the arbitration centre which is formed under the foreign arbitration law, though the composition of the arbitration council includes Vietnamese nationality of the arbitrator or the arbitration council settles dispute and pronounce an award within Vietnam territory; or
The ad hoc arbitration council is formed under the foreign arbitration law as agreed by the parties.

An issue is as important as the definition of foreign arbitration in consideration of the question of What is a foreign arbitral award? And how is a foreign arbitral award enforced?, that arbitral award shall be a decision of the arbitration council settling the entire dispute and terminating the arbitral proceedings.

Concerning the issue of enforcement of the foreign arbitral award in consideration of the question of the What is a foreign arbitral award? And how is a foreign arbitral award enforced?, when the arbitral award is treated as a foreign arbitral award, the enforcement of such award shall not be immediately conducted under the law on enforcement of civil judgement, but it shall be recognised and enforced in Vietnam by the Vietnamese Court. In order to be recognised and enforced in Vietnam by the Vietnamese Court, the foreign Arbitral award shall fulfil all the following requirements:

The foreign arbitral award shall be subject to the case considered for the recognition and enforcement in Vietnam, including:
a) The foreign arbitral award of a foreign country which is a signatory to an international treaty about recognition and enforcement of foreign arbitral award together with Vietnam;
b) The foreign arbitral award other than those specified in the above point a) based on the principle of reciprocity.
The foreign arbitral award is not subject to the cases in which the Court shall not recognise a foreign arbitral award in Vietnam, including:

when deeming that the evidence provided by the judgement debtors to the Court for appealing against the application for recognition are well-grounded and the arbitrator’s award falls within one of the following cases:

a) The parties of the arbitration agreement cannot conclude such agreement according to the law applicable to each party;
b) The arbitration agreement is not legally effective according to the law of a country which is chosen to be applied or according to the law of where the award is made in case the parties cannot choose a law to be applied to such agreement;
c) The judgement debtors being agencies, organisations, and individuals are not promptly and conformably notified of the appointment of arbitrator officer and of procedures for processing the disputes at foreign arbitrator, or due to other plausible reasons, such agencies, organizations and individuals cannot exercise their procedure rights;
d) The foreign arbitrator’s award over a dispute is not requested to be settled by any parties or exceeds the request of parties of the arbitration agreement. If it is able to separate the parts of the decision on the matter which are requested and not requested to be settled by foreign arbitration, the decision on the matter requested to be settled may be recognised and enforced in Vietnam;
dd) Compositions of foreign arbitration and/or procedures for the settlement of disputes conducted by the foreign arbitration are not conformable to the arbitration agreement or to the law of the country where the foreign arbitral award has been pronounced, in case the arbitration agreement does not provide for such matters;
e) The foreign arbitral award has not taken compulsory legal effect on parties;
g) The enforcement of the foreign arbitral award has been cancelled or terminated by a competent agency of the country where such award is pronounced or the home country of the law that is applied.

(ii) The foreign arbitral award shall not be recognised if Vietnam’s Court deems that:

a) According to Vietnam’s law, the dispute shall not be settled according to arbitral procedures;
b) The recognition and enforcement in Vietnam of foreign arbitral award are contrary to basic principles of the law of the Socialist Republic of Vietnam.

Another noticeable issue in the consideration of the question of the What is a foreign arbitral award? And how is a foreign arbitral award enforced? is that the time limit for submission of applications for recognition and enforcement is within 03 years from the day on which the foreign arbitral award takes legal effects. The judgment creditors and persons with relevant legitimate rights and interests or their lawful representatives may submit their application to Vietnam’s Ministry of Justice according to provisions of the International treaty to which the Socialist Republic of Vietnam is a signatory or to a competent Vietnam’s Court specified in this Code, in case the International treaty to which the Socialist Republic of Vietnam is a signatory does not provide for or there are no relevant International treaty provisions, to request the Court to not recognise and enforce such award.

Above is an overview answer to the question of What is a foreign arbitral award? And how is a foreign arbitral award enforced?. If you have trouble with finding a law firm providing legal assistance regarding the question of What is a foreign arbitral award? And how is a foreign arbitral award enforced, please do not hesitate to contact us: Phuoc & Partners is a professional 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 specialising 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 civil litigation service.