With the growth and expansion of the economy, Vietnamese enterprises are increasingly cooperating with foreign enterprises. We can easily encounter commercial disputes arising between parties in the process of business cooperation, in which the parties wish to resolve the dispute at foreign arbitration (based on the signed contract with provisions on which country will the arbitration held). After the dispute is resolved, the Arbitral Tribunal will issue an arbitral award and that award must be enforced in the territory of the party that must enforce it. This leads to an increase in foreign arbitration awards that are not recognized and enforced in Vietnam. In this article, TNTP will clarify in which cases the Court in Vietnam will not recognize and enforce foreign arbitration awards.
1. Cases where the Court does not recognize foreign arbitral awards
According to Article 459 of the Civil Procedure Code 2015, cases where the Court does not recognize foreign arbitral awards include:
• The Court shall not recognize a foreign arbitrator’s award when deeming that the evidences provided by the award debtors to the Court for appealing against the application for recognition are well-grounded and the arbitrator’s award falls within one of the following cases:
– The parties of the arbitration agreement do not have capacity to conclude such agreement according to law applicable to each party;
– The arbitration agreement is not legally effective according to the law of a country which is chosen to be applied or according to the law of where the award is made in case the parties cannot choose a law to be applied to such agreement;
– The award debtors are not promptly and legally notified of the appointment of arbitrator and procedures for processing the disputes at foreign arbitrator, or due to other plausible reasons, such debtors cannot exercise their procedure rights;
– The foreign arbitrator’s award over a dispute is not requested to be settled by any parties or beyond the request of parties of the arbitration agreement. If it is able to separate the parts of the decision on the matter which are requested and not requested to be settled at foreign arbitrator, the decision on the matter requested to be settled may be recognized and enforced in Vietnam;
– Compositions of foreign arbitrator and/or procedures for settlement of disputes conducted by foreign arbitrator is not comply with the arbitration agreement or to the law of the country where the foreign arbitrator’s award has been made, in case the arbitration agreement does not provide for such matters;
– The foreign arbitrator’s award is not yet binding on the parties;
– The enforcement of the foreign arbitrator’s award has been canceled or terminated by a competent agency of the country where such award is made or the home country of the law that is applied.
• The foreign arbitrator’s award shall not be recognized if the Vietnam’s Court determines that:
– According to Vietnam’s law, the dispute shall not be settled by arbitration;
– The recognition and enforcement in Vietnam of foreign arbitrator’s award are contrary to basic principles of law of the Socialist Republic of Vietnam.
The refusal to recognize a foreign arbitral award if the evidence provided by the award debtor to the Court to object the request for recognition is well-founded and legal is to ensure that the enforcement process is effective and reasonable, as well as comply with the provisions of Vietnamese law. Because not all foreign arbitral awards are made based on objective facts, ensure procedural processes or their contents are contrary with the basic principles of current Vietnamese law.
Thus, when considering and resolving a request for recognition and enforcement of a foreign arbitral award, the Court must comply with the prescribed principles as a basis for deciding whether or not to issue a decision to recognize or not to recognize a foreign arbitral award.
2. When is a foreign arbitral award recognized and enforced in Vietnam?
• Recognition and enforcement of foreign arbitral awards is a special procedure conducted by the Court to consider and recognize the validity of foreign arbitral awards within the territory of Vietnam.
• The procedure for recognizing and enforcing foreign arbitral awards is stipulated in the Civil Procedure Code 2015. The conditions for recognizing and enforcing foreign arbitral awards are stipulated as follows:
– Arbitral award of a foreign country which is a signatory to an International treaty about recognition and enforcement of foreign arbitral award that Vietnam is also a state member; or
– Foreign arbitral award other than those specified above rule, on the basis of principle of reciprocity.
Thus, for a foreign arbitral award to be recognized and enforced in Vietnam, it must satisfy either conditions. When a foreign arbitral award is recognized and enforced by a Vietnamese court in Vietnam, the award will have “legal effect” as if the decision of a Vietnamese court had come into legal effect. Therefore, when the court is requested to recognize an arbitral award, the court is not only required to recognize the legal effect of the award but also to ensure that the award is enforced.
Above is an article by TNTP on “In which cases will the court in Vietnam not recognize and enforce foreign arbitration awards?”. Hopefully, the above article will be helpful to readers.
Sincerely,
