Arbitration law in Vietnam

Although arbitration has become a popular method for business dispute resolutions in other countries, in Vietnam it has only emerged in recent years. Figures show that around 4% of all disputes in Vietnam are currently resolved by arbitration. Yet, considering that court proceedings in Vietnam are heavily criticized for rampant corruption, different advantages make arbitration a good option for foreigners to settle business disputes. Main advantages are:
  • Universal advantages experienced in other jurisdictions, such as a final resolution on the merits, privacy, and faster proceeding.
  • The ability to select language and venue.
  • The ability for parties to choose the lex causae: unless the dispute is completely a domestic affair, parties can choose the applicable law. In contrast, litigants in Vietnamese courts exclusively rely on Vietnamese law.
  • The ability to select qualified and impartial arbitrators: a crucial element considering that judicial bribery is common in Vietnam.
  • As Vietnam is a signatory to the New York Convention, compared to court judgements arbitral awards are recognized and enforceable in more countries.
There are also limitations to arbitration. In certain cases, those involving land use rights for example, disputes must be resolved by a Vietnamese court. In such case arbitration is not possible. Furthermore, the enforcement of arbitral awards in Vietnam remains challenging and the grounds for setting aside awards can be interpreted broadly when compared to the laws and practices in other countries. Although Vietnamese law allows both ad hoc and institutional arbitration, institutional arbitration is the preferred form. Arbitration is regulated by the Law on Commercial Arbitration No. 54/2010/QH12, which took effect on 1 January 2011, and which replaced the Ordinance on Commercial Arbitration of 2003. Commercial arbitration centres were set up in Vietnam by the end of the 1990s and currently there are seven commercial arbitration centres with about 300 arbitrators.