A new law on arbitration due to take effect in January 2011 is set to change the flow of dispute settlements in Vietnam, persuading more locals to use arbitration methods instead of going to court, according to Vietnamese lawyer Viet Nguyen.
The Law on Commercial Arbitration was recently passed by the Vietnam National Assembly and is due to take effect on 1 January next year.
“At present, arbitration is an underutilised and less popular solution to commercial dispute settlement with locals because many believe it is easier for parties to approach the judge and lobby in court whereas in an arbitration verdict, the sentencing of the arbitrator is seen as fair and unbiased,” Bizconsult Law Firm partner Viet Nguyen told ALB.
According to Nguyen the new law expands the scope of arbitration to other areas such as civil transactions and provides a better grounding than the existing ordinance and better methods for dispute settlements. He believes these changes will see enterprise utilise arbitration more. “In the past, out of ten cases we advise in court, two of our cases would go to arbitration. In the coming years, even next year, I would expect five out of ten cases to be arbitrated,” he said.
Other observers shared Nguyen’s view that the new law would create an equal legal footing for both Vietnamese and foreign enterprises.
“The new law has improved shortcomings in the ordinance such as removing limitations on the application of arbitration to commercial disputes. Commercial disputes, meanwhile, are increasing rapidly, requiring quick and efficient forms of settlement,” Vietnam Law Association chairman Pham Quoc Anh said. “Every judge in Ha Noi and Ho Chih Minh City’s economic courts yearly handles from 30 to 50 disputes while the average arbitrator handles only one.”
The nation currently has a total of seven arbitration centres, but arbitration has not been popular in Vietnam due to the lack of a proper legal framework in the 2003 Ordinance on Commercial Arbitration, according to one report.
But this may not be the sole explanation. “I believe the ordinance already has a sufficient method for arbitration but it is still a habit in Vietnam to use the courts for settlement of disputes. Only for matters involving foreign investor companies do they prefer arbitration, but it is something that will become more popular with the passing of this new law,” Nguyen said.
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