When both the Court and the Arbitrator have the authority to settle disputes arising from the performance of a commercial contract, choosing the appropriate settlement method will help the parties to ensure their benefits and save a lot of effort, time, and money.

Principles of resolution

Courts usually adjudicate in the principle of publicity, which is different from the principle of non-public dispute settlement of commercial arbitration. Many businesses choose to settle disputes by arbitration also because of the closed nature of the award to protect business secrets and reputation in the market.

Forms of settlement

The Court hears the dispute through the Judges. The number of Judges depends on the level of trial, and the litigant is not allowed to choose a Judge to settle his/her dispute.

Conversely, when choosing the form of dispute resolution by arbitration, the parties are entitled to choose one Arbitrator or the Arbitration Council consisting of many Arbitrators to resolve. Arbitrators are usually reputable and experienced experts in certain fields such as contracts, international payments, transportation, finance, etc.

In addition, when choosing arbitration, the parties also have the flexibility to choose the language, time, and place of dispute resolution, while if choosing the form of arbitration by the Court, all rules of procedure proceedings must be strictly in accordance with the provisions of the law.

Effect of judgment

Due to the Court’s application of the two-level trial method of first instance and appellate court, the involved parties can still appeal against the Court’s first-instance judgment in case they disagree with the first-instance Court’s decision. Meanwhile, the Arbitral Tribunal’s award is final and immediately enforceable. However, the Commercial Arbitration Law 2010 allows the Court to have the right to annul the arbitral award in some special cases at the request of the litigant. Thus, once the award is annulled, the parties can agree again to bring that dispute to arbitration or one party has the right to initiate a lawsuit at the Court.

Litigation time

The peculiarity of arbitration is that an Arbitrator or an Arbitral Tribunal will pursue a dispute from the time the petition is received until the dispute is completely resolved, and the award is rendered. Normally, a dispute resolved by Arbitration only lasts about 6 – 9 months.

In contrast, the trial in Court is much more time-consuming. Courts daily have to handle many cases in many areas such as commercial, civil, marriage, family, etc. The shortage of judges plus the fact that judges are not specialized in one field, judges The court has to handle too many things, leading to a backlog of cases, in addition to the 2-level trial form, which makes a dispute brought to the Court that can last up to several years and still remain unresolved.

Settlement cost

Court fees are fixed in accordance with the law and are much lower than the costs to be paid to settle disputes by arbitration. Arbitration Fees vary depending on the value of the dispute and are set by the Arbitration Center. With the current VIAC’s Arbitration fee schedule from 16.5 million VND to more than 3.6 billion VND, many small and medium enterprises that cannot meet the requirements will choose the way to settle disputes by Court to save costs.

Execution ability

Due to the nature of the Court as an agency in the name of the State to settle disputes, the Court’s judgments are guaranteed to be enforced by the coercive power of the State, having a full apparatus and means to enforce the decisions. Judgment has taken legal effect. Meanwhile, the implementation of the Arbitrator’s decisions completely depends on the voluntary consciousness of the parties, if the party that has to enforce the award does not voluntarily enforce it and does not request annulment of the arbitral award, the party that must execute the award does not voluntarily execute it and does not request annulment of the arbitral award. The enforcer must request the competent civil judgment enforcement agency to enforce the arbitral award to ensure its interests.

When consulting on drafting contracts with foreign elements for clients, PLF often gives priority to choosing a dispute settlement agency which is commercial arbitration. Because, in the case of disputes involving overseas assets, commercial arbitration awards are easier to enforce thanks to the 1958 New York Convention to which Vietnam is a member. The enforcement of court judgments abroad is quite difficult because we have just signed mutual legal assistance agreements with several countries around the world.

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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