Situation of Dispute Resolution in International Business at Non-Governmental Arbitration Organizations in Vietnam

and the Court; enhance the position of Arbitration by recognizing the enforcement of arbitral awards; prescribe many new mechanisms to ensure the establishment of arbitration centers is more rigorous, thereby improving the quality and reputation of Arbitration Centers.

The new provisions of the Commercial Arbitration Ordinance have created great potential for the development of commercial arbitration in our country, helping to quickly resolve commercial disputes, reducing the burden on the Court... At the same time, together with other legal provisions, the law on arbitration has contributed to creating a clean legal system, serving the requirements of social management by the State's law.

After the Commercial Arbitration Ordinance and Decree No. 25/2004/ND-CP dated January 15, 2004 came into effect, the Ministry of Justice promptly issued Decision No. 125/QD-BTP dated February 27, 2004 on promulgating the Form of Registration of Arbitration Centers. Based on the issued forms, the Ministry directly printed the Establishment License as well as directed the Departments of Justice in the provinces and cities with Arbitration Centers to promptly organize the printing of the Registration of Operation License to promptly serve the issuance of Establishment Licenses as well as Business Registration Licenses for Arbitration Centers. Previously, on February 16, 2004, the Ministry of Justice issued an official dispatch requesting that Arbitration Centers established before the effective date of the Ordinance urgently complete their application dossiers for approval of the amended and supplemented charters in accordance with the provisions of Decree No. 25/2005/ND-CP. At the same time, within the framework of the cooperation program with the STAR project (USA), the Ministry of Justice coordinated with the project to organize three training courses on the Vietnam-US Trade Agreement and the Commercial Arbitration Ordinance to widely disseminate and popularize to businesses and practicing lawyers the new provisions of the Ordinance...

By September 2006, the Ministry of Justice had approved the amended and supplemented Charter for five Arbitration Centers, namely the Hanoi Commercial Arbitration Center, the Ho Chi Minh City Commercial Arbitration Center, the Can Tho Commercial Arbitration Center, the Vietnam International Arbitration Center under the Vietnam Chamber of Commerce and Industry, and the Asia Commercial Arbitration Center (39). At the same time, the Ministry also guided the Bac Giang Economic Arbitration Center to complete the procedures for terminating operations in accordance with the Ordinance and Decree No. 25/2004/ND-CP. Thus, after more than three years of implementing the Ordinance on Commercial Arbitration, no new Arbitration Center has been established, and not only that, the number of centers, which was already small, has also decreased. Currently, the country has 5 Arbitration centers with a total of 136 arbitrators, of which the Vietnam International Arbitration Center next to the Vietnam Chamber of Commerce and Industry has 74 arbitrators (40).

Arbitration centers are not operating effectively because although arbitration is not a new institution, Vietnamese enterprises are not used to using arbitration as one of the basic methods to resolve disputes arising during their operations. For most existing centers, the implementation of the Ordinance has almost stopped at amending and supplementing the Charter of Operations and the Rules of Procedure.

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In addition to its main activity of resolving commercial disputes, a number of centers have presided over or participated in other support activities, such as propaganda, training, law-making, and legal support. In 2004, the Vietnam International Arbitration Center, together with the Vietnam Chamber of Commerce and Industry, coordinated with the Department of Intellectual Property and the Department of Market Management to successfully organize two seminars on “Protection and Dispute Resolution”.

on intellectual property in a market economy and international economic integration” in Hanoi and Ho Chi Minh City; organized to contribute opinions as well as introduce many experts who are arbitrators of the Center to participate in the drafting committee of the Competition Law and the Commercial Law (amended); provided free consultation to hundreds of businesses on issues related to business law...

It can be said that, although the operating results in the past have not been high, the Centers hope that in the coming time, the dispute resolution method by arbitration will be used more by businesses.

2. The situation of dispute resolution in international business at non-governmental arbitration organizations in Vietnam

Currently, there are 5 arbitration centers nationwide with a total of 136 arbitrators. However, the arbitration centers are almost idle. The number of disputes brought to arbitration each year is still too small, although most economic contracts have arbitration agreements. The Vietnam International Arbitration Center, under the Vietnam Chamber of Commerce and Industry (VIAC), is one of the largest, but it only handles 20-25 cases per year (39). Other centers handle about 5 to 7 cases, and some centers even have no disputes in a year (39). During the 1998-2001 term, VIAC handled 74 lawsuits, of which over 67% had a dispute value of less than 100,000 USD. Meanwhile, on average, the Economic Court nationwide handles about 1,000 cases per year, many worth tens of millions of USD. In 2005, VIAC accepted 24 lawsuits, a decrease of 25% compared to 2004 (32 cases), an increase of 71.43% compared to 2003, and an increase of 50% compared to 2002. In the first 9 months of 2006, VIAC accepted 28 cases (VIAC Case Tracking Book). The activities of other centers are even less. By the end of 2000, the Hanoi Economic Arbitration Center only accepted two lawsuits, none of which were successfully resolved, while the number at the Hanoi Economic Arbitration Center was 1.43%.

The number of disputes brought to the Economic Arbitration Center of Ho Chi Minh City (now closed) was 4 and the number of successful cases was 2. The number of disputes brought to the Economic Arbitration Center of Ho Chi Minh City by 2000 was 15 and the number of successful cases was 13. In 2003, the Hanoi Economic Arbitration Center (the predecessor of the Hanoi Commercial Arbitration Center) resolved 2 cases. In the first half of 2004, the Ho Chi Minh City Commercial Arbitration Center did not resolve any cases. In the first half of 2006, this center only resolved 6 business dispute files, the same number as last year.

The reason why businesses are not very interested in arbitration is that Vietnamese businesses still do not know much about the method of dispute resolution by arbitration. They have not really realized the advantages of this method of dispute resolution. There are also many opinions that the shortcomings in current legal regulations are also barriers to arbitration activities. Moreover, the number of arbitrators who are proficient in foreign languages and have the ability to access international commercial contracts can be counted on the fingers of one hand.

II. CURRENT STATUS OF DISPUTE RESOLUTION IN INTERNATIONAL BUSINESS AT THE VIETNAM INTERNATIONAL ARBITRATION CENTER WITH THE VIETNAM CHAMBER OF COMMERCE AND INDUSTRY.

1. Formation and development of VIAC

In Vietnam, in a centrally planned economy, in order to resolve disputes arising in international economic relations, in addition to the model of state economic arbitration organizations, the model of socio-professional economic arbitration organizations has been formed and existed for many years. Before 1993, disputes in international business in Vietnam were resolved by the Foreign Trade Arbitration Council and the Maritime Arbitration Council. These two organizations existed independently and were the predecessors of VIAC later.

Foreign Trade Arbitration Council (FTAC)

The Foreign Trade Arbitration Council (FTAC) is a non-governmental organization, established alongside the Vietnam Chamber of Commerce under Resolution No. 59/CP dated April 30, 1963 of the Government Council. FTAC consists of 15 members appointed for a three-year term. FTAC members are Vietnamese citizens with knowledge and experience in the fields of commerce, industry, finance, banking, insurance, transportation and law, selected by the Chamber of Commerce's Executive Board.

FTAC has the authority to resolve disputes between Vietnamese economic organizations and foreign economic organizations in foreign trade transactions within the scope of implementing Agreements or Agreements, contracts signed between the parties. These are disputes related to payment, transportation of goods, insurance... when at least one of the parties resides outside the territory of Vietnam.

Pursuant to Article 3 of the FTAC Rules of Procedure, FTAC has jurisdiction to deal with cases when:

- That authority is stipulated in an International Treaty or in the law of Vietnam, which the parties must execute, or

- The parties have agreed to acknowledge the jurisdiction of FTAC through an arbitration agreement.

(Source: Rules of Procedure of the Foreign Trade Arbitration Council)

The jurisdiction of the FTAC is limited to foreign trade transactions. The FTAC does not have jurisdiction to resolve domestic civil and economic contract disputes.

Maritime Arbitration Council

The Maritime Arbitration Council (MAC) was established on October 5, 1964 under Decision No. 153-CP of the Government of Vietnam. MAC is a non-governmental organization affiliated to the Vietnam Chamber of Commerce. In general, MAC has the same Charter and Arbitration Rules as FTAC.

The MAC consists of 15 members selected by the Chamber of Commerce Board from among those with knowledge and experience in the field of shipping and foreign trade, for a three-year term.

The difference between MAC and FTAC is only in jurisdiction. According to Article 2 of the MAC Charter, MAC has jurisdiction to resolve disputes on the following maritime transport issues:

- Chartering ships, towing, and transporting goods by sea

- Shipping agency work

- Remuneration for rescue between seagoing vessels, or between seagoing vessels and river vessels

- Ships colliding with each other, ships and river ships colliding with each other, ships damaging structures or equipment serving maritime traffic inside or outside the port area

- Marine insurance

(Source: Rules of Procedure of the Maritime Arbitration Council)

MAC accepts the trial when one of the following conditions is satisfied:

- One or more parties are foreign individuals or organizations

- That authority is stipulated in an International Treaty to which Vietnam is a party and the parties must comply.

- The parties have agreed to accept the jurisdiction of MAC.

(Source: Rules of Procedure of the Maritime Arbitration Council)

Thus, compared to FTAC, MAC has similar jurisdiction: Jurisdiction is provided by the International Treaty and/or assigned by the parties. However, that jurisdiction is limited in the field of maritime transport when at least one of the parties is a foreign organization. MAC does not have jurisdiction to resolve disputes over civil or economic activities signed by Vietnamese individuals and organizations, including investment disputes.

As permanent arbitration organizations, FTAC and MAC have their own rules of procedure, which regulate the arbitration proceedings. The arbitration rules are adopted by the Executive Board of the Chamber of Commerce of the Democratic Republic of Vietnam. Each set of rules consists of 29 articles, including regulations on jurisdiction, arbitration procedures such as petitions, selection and suspension of arbitrators, adjudication, enforcement of arbitration decisions, direct agreements between the parties, etc.

The procedural rules of FTAC and MAC are stipulated in two separate documents, but in general, the procedural provisions of these two organizations are the same. Although the procedural rules of FTAC and MAC lack detailed and specific provisions, they basically ensure the general principles of arbitration proceedings: ensuring the voluntary will of the parties in choosing the arbitration organization, the right to choose and reject the arbitrator, the right to freely protect and appoint a legal representative to defend their rights, the right of the parties to directly negotiate before and during the proceedings, the right to choose the form of trial... And one of the important provisions that shows the basic nature of economic arbitration proceedings is the finality of the arbitration award "The arbitration decision is the final decision, cannot be appealed before any court or other organization". (Article 24 of the procedural rules of the Foreign Trade Arbitration Council and the Maritime Arbitration Council).

The parties are obliged to voluntarily implement the arbitration decision "within the time limit specified in the arbitration decision. In case the arbitration decision is not implemented within the time limit specified, one of the parties has the right to request a competent court to compel the other party to implement it in accordance with the law". (Article 25 of the Rules of Procedure of the Foreign Trade Arbitration Council and the Maritime Arbitration Council).

Although established for a long time, the activities of FTAC and MAC are very few. During the period 1963-1986, FTAC and MAC resolved very few disputes. During this time, Vietnam focused almost exclusively on its international relations with former socialist countries, especially foreign trade and development aid, the nature of which was less commercial. Therefore, foreign trade and maritime disputes were very limited. When there is a dispute, the Vietnamese side and its partners often seek to resolve it through direct negotiation. When a case is brought to FTAC or MAC, these two arbitration organizations often find ways to help the two sides reach an agreement on the basis of mutual concessions. This has had both positive and negative impacts on the activities of arbitration. On the positive side, it demonstrates the spirit of cooperation between the parties. On the negative side, it makes the parties misunderstand the nature of arbitration, consider arbitration as a stressful matter, affecting mutual trust. In addition, it also makes arbitrators less likely to perform their duties, so they have less experience in resolving disputes, and their reputation in the international arena is low.

From 1986 to 1993, when the renovation policy increased foreign investment in Vietnam as well as trade transactions between Vietnam and other countries, especially those outside the socialist bloc, disputes in foreign trade activities occurred more frequently and became more complicated. At this time, FTAC and MAC encountered many difficulties.

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