Settlement of commercial disputes through commercial arbitration is a method of resolution through the functions of Arbitrators as independent third parties to end conflicts by issuing arbitral awards that the parties respect and implement.

1. Arbitration Agreement

Arbitration has no natural jurisdiction but can only settle disputes when the parties have relevant rights and obligations to agree on the appointment. When the parties establish an arbitration agreement, they have vested jurisdiction over the dispute to the arbitrator. At this point, the court will have no jurisdiction to settle such a dispute unless the arbitration agreement is invalidated or annulled by the parties. It can be seen that the jurisdiction of the Arbitration is established based on the arbitration agreement.

Clause 2, Article 3 of the Law on Commercial Arbitration 2010 defines an arbitration agreement as follows: “An arbitration agreement is an agreement between the parties on the settlement by Arbitration of disputes that may arise or have arisen”.

From the above definition, it can be seen that an arbitration agreement is the unity of parties’ will on the choice of an arising dispute settlement authorities from contract or outside contract. This is a simple, highly general definition and it can be understood that an Arbitration agreement is an agreement of the parties about the method of dispute settlement, which may be available before or after the dispute has occurred.

2. Features of Dispute Settlement by Commercial Arbitration

Some features of dispute settlement between parties through commercial arbitration can be mentioned as follows:

Firstly, Arbitration only settles a commercial dispute when there is a request from the parties to the dispute and such dispute must fall under the jurisdiction of the Arbitrator

Before or after a dispute arises, the parties have the right to request settlement of the dispute by Arbitration. This is one of the provisions that ensures the right of the parties to self-determination in choosing the method of dispute settlement. The parties’ request for dispute settlement is recognized by an arbitration agreement, an arbitration agreement that can be drawn up in advance, or after a dispute. Disputes  under the jurisdiction of Arbitration include:

  • Disputes between parties arising from commercial activities;
  • Disputes arise between parties in which at least one party carries out commercial activities;
  • Other disputes between the parties provided for by law shall be resolved by Arbitration.

It is necessary to pay attention to cases where an arbitration agreement exists but the arbitration agreement is invalid and cannot be enforced under Article 3 and Article 4 of Resolution 01/2014/NQ-HDTP guiding Article 6 of the Law on Commercial Arbitration 2010.

Secondly, the method of dispute settlement by Arbitration is a dispute settlement mechanism that ensures information confidentiality

Accordingly, clause 4 Article 4 of the Law on Commercial Arbitration 2010 stipulates that dispute settlement by arbitration shall be conducted non-publicly, except if the parties agree otherwise. This provision makes sense in the competitive conditions of the current market economy between business entities. At the same time, solves the concerns of the parties in preserving the reputation, brand, business secrets and secrets technological determination… of the enterprise.

Thirdly, the settlement of commercial disputes by arbitration ensures a combination of two elements: Agreement and Judgment

As mentioned above, the arbitration agreement is the unity of the parties’ will when a dispute arises. In addition, the parties may also agree on the choice of arbitration center, arbitrator, dispute settlement venue or law or applicable language. Moreover, an arbitration decision is a judgment that settles the entire content of the dispute and ends the stage of the arbitration proceedings. The arbitration decision is final and takes effect from the date of promulgation, not subject to appeal or protest.

3. Arbitration Proceedings

Arbitration proceedings have basic steps and are less complicated than Court proceedings. Arbitration proceedings can be summarized according to the following basic steps:

Step 1: Initiate a lawsuit and defend yourself

At this step, the Plaintiff will send the Petition with accompanying documents and evidence to the Arbitration Center. Note that it is necessary to clearly show the existence of an arbitration agreement between the parties to the dispute. Thereafter, the Arbitration Center sends the Petition and related documents to the Defendant. The Defendant should prepare and send the Self-Defence and Re-Claim (if any) to the Arbitration Center within the stipulated time.

Step 2: Establishment of the Arbitration Council

The Arbitration Council shall consist of three arbitrators. The Plaintiff and Defendant each select an Arbitrator or request the President of the Center to appoint an Arbitrator. Two Arbitrators elected by the parties shall elect another Arbitrator to serve as Chairman of the arbitration council. In case of failure to elect the Chairman of the Arbitration Council, the President of the Center shall appoint another arbitrator to be the Chairman of the Arbitration Council.

Step 3: The Arbitration Council studies the documents and conducts a dispute settlement meeting

Step 4: The Arbitration Council issues an arbitration decision

The Arbitration Council shall issue an arbitration decision within 30 days from the end of the final dispute settlement session.

In general, the method of resolving commercial disputes by Arbitration is increasingly preferred by the parties because of its efficiency and distinct advantages such as saving time, ensuring business secrets, and commercial reputation for the parties compared to other settlement methods. The reason why Commercial Arbitration has so many outstanding advantages is because it comes from the principle of self-determination of the parties, which is always upheld and is thoroughly respected in the Arbitration Proceedings. In addition, the arbitration decision is final and binding on the parties to the dispute to comply.

The article is based on laws applicable at the time noted as above and may no longer be appropriate at the time the reader approaches this article as the applicable laws and the specific cases that the reader may wish to apply may have changed. Therefore, the article is for referencing only.


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