Uplifting Fidelity of Commercial Arbitrators

In a broad view, although there are relatively progressive provisions, the Commercial Arbitration Ordinance 2003 cannot create a full legal basis for Vietnam’s procedure of encouraging all concerned parties to use arbitrators to settle commercial disputes and other conflicts. The enactment of a new law on commercial arbitration - Law on Commercial Arbitration - to replace the Ordinance on Commercial Arbitration in 2003 on the basis of inheriting progressive regulations and new complete supplements is now crucially important..

 

At a recent conference on Vietnam Commercial Arbitration Law 2010 held in Hanoi by the Vietnam Chamber of Commerce and Industry (VCCI) in coordination with the Danish International Development Agency (DANIDA) and the Vietnam International Arbitration Centre (VIAC), Mr Pham Quoc Anh, Chairman of the Vietnam Lawyers Association and Head of the Compiling Committee for the Draft Law on Commercial Arbitration, said the Commercial Arbitration Ordinance of 2003 is basically in line with international law and practices.

 

However, according to Mr Anh, aside from this positive point, the Commercial Arbitration Ordinance has revealed many limitations and constraints after six years of enforcement. Thus, according to VIAC, the Hanoi People's Court handled nearly 9,000 cases in 2007, including some 300 economic disputes and Ho Chi Minh City People's Court undertook nearly 42,000 cases, including 1,000 economic conflicts, but VIAC - as the largest arbitration institution in Vietnam - received only 30 dispute cases in 2007 and 58 cases in 2008, while a judge in Hanoi and Ho Chi Minh City economic courts had to hear 30 cases and 40 cases a year, respectively, compared with 0.25 case taken by a VIAC arbitrator.

 

Arbitration is unpopular in Vietnam given the insufficient legal basis for the consistent implementation of a policy. According to current laws, verdicts of commercial arbitrators have a high risk of annulment, a deep concern when economic entities use arbitration. These factors have weakened the reliability of disputing parties in arbitration.

 

The policy of encouraging disputing parties to use arbitration to settle disputes originated, first of all, from the desire of business entities, persons and legal entities to resolve disputes conveniently, quickly and efficiently. Using arbitration to get to the bottom of arguments helps reduce hearing work at court.

 

Using arbitration to solve disputes is an inevitable trend. According to statistics, in 2007, the Singapore International Arbitration Centre settled 119 disputes, the America Arbitration Association resolved 621 cases, the International Court of Arbitration - a part of the International Chamber of Commerce (ICC) solved 599 cases, the China International Economic and Trade Arbitration Commission determined 1,118 cases, and the Hong Kong International Arbitration Centre completed 448 cases. In many countries and territories, the law provides that the court must turn down cases settled by arbitration.

According to the compiling committee, the new law will heal shortcomings in the Commercial Arbitration Ordinance in 2003, like unclear demarcation of the jurisdictional scope of an arbitrator in commercial disputes, to ensure consistency with prevailing laws such as Civil Code, Civil Procedure Code, Commercial Law, Investment Law and other laws. The draft law rescinded the Ordinance’s shortcomings related to the authority of an arbitrator by expanding the scope of power of the arbitrator to more types of interest conflicts. This is one of the most important points in the draft law and is completely consistent with international practice and law.

 

The draft law also clarified the Ordinance’s definition of situations invalidating arbitration. This will end or cut down the number of invalidated or unsettled arbitration cases.

 

Besides, according to Article 17 of the draft law on commercial arbitration, for disputes between suppliers of goods and services with consumers, although the arbitration clause is written in the goods and service supply contract prepared by suppliers, consumers may opt for arbitration or the courts in case of a dispute. Suppliers of goods and services shall only take legal action to Arbitration if consumers agree. This provision is aimed at protecting consumers who usually have to accept completed contracts and clauses.

 

According to the draft law, arbitrators do not necessarily hold Vietnamese nationality. That means that foreigners can be appointed as arbitrators in Vietnam, if disputing parties trust them. This provision is also in line with the deepening international economic integration of Vietnam.

 

According to the draft law, when a party is discovered violating this law or arbitration agreements and it does not reject violations; it will lose the right of objection at the Court or Arbitration. This provision is aimed at effectively preventing opportunistic acts in arbitral proceedings.

 

One of the centres of attention in the draft law is the relationship between arbitration and the court in resolving disputes. The new law adds many provisions to define this important relationship.