Author: TNTP LAW

Dispute resolution is an important part of the legal system in every society. Nowadays, in the process of dispute settlement, the parties always prioritize negotiation and conciliation. In case the conflict reaches a peak, the parties who cannot negotiate by themselves will choose either Arbitration and the Court. However, there are fundamental differences between dispute resolution in Court and Arbitration. Accordingly, with this article, TNTP will send you the article “The difference between dispute resolution in Court and Arbitration”.

1. Legal nature

• The Court is the judicial body of the State, exercising judicial power. During the proceedings, the Court shall, on behalf of the State, consider and settle the dispute to maintain public order and protect the legitimate rights and interests of the parties.

• Arbitration is non-governmental dispute settlement method, of a social and professional nature. Arbitration can settle through ad hoc or an Arbitration Center, which established based on the agreement of arbitrators and the approval from State authorities. Arbitration is neither part of any structure of the State apparatus nor a judicial body of the State. Arbitration does not represent the judicial power of the State, so it is well suited for resolving disputes involving foreign factors.

2. Jurisdiction

a. Jurisdiction by case

• From the perspective of jurisdiction by case, the Court has broader jurisdiction than arbitration. Courts have jurisdiction to resolve virtually all types of disputes such as commercial business, inheritance, marriage and family-related, tort law…

• Meanwhile, Arbitration only resolves disputes between parties arising from commercial activities; at least one party has commercial activities, or the law provides that it must be settled by Arbitration. The disputing parties may only refer the dispute to Arbitration for settlement when there is an agreement on this. This means the Arbitration agreement is the must-have condition for the parties’ right to initiate arbitration proceedings.

b. Jurisdiction by territory

• In the process of settling disputes at the Court, the jurisdiction by the territory of the Court is specified quite clearly and in detail in the Code of Civil Procedure and the petition is settled only when submitted to the right competent Court agency for settlement as prescribed by law, except where the provisions Code of Civil Procedure allow the claimant to choose the Court.

• In contrast, Arbitration does not have the territorial jurisdiction, the disputing parties have the right to choose any Arbitration Center to settle according to their will and credibility. When the parties agreed to bring the dispute to any arbitration center, that center has is entitled to accept the dispute.

3. Judicial principle, time and cost of dispute resolution

a. Judicial Principles

• The court not only adjudicates for the purpose of protecting the rights and interests of the parties, but also has the meaning of educating the obedience of the law. As a result, most trials are conducted in public, and verdicts are often made public by the public. This makes it difficult to protect business confidential information and affect the reputation of the business.

• Meanwhile, when settling disputes at Arbitration, all facts and results shall not be published without the consent of the parties. Stemming from the need to protect business professional secrets, the law does not force Arbitration hearings to be public. The Arbitral award will also be kept confidential, not made public if the parties do not request to make it public. This principle is quite different from the Court’s principle of public trial.

b. Settlement time

• When the parties settle their dispute at the Court, there are many stages of trial from first instance to appellate, in some cases the judgment or decision of the Court may also be reviewed according to the procedure of cassation and retrial. Because the dispute resolution procedure in the Court must go through many different stages, it can sometimes lead to a lengthy trial time, the time from filing the application to the time of issuing a Judgement/Decision can be extended to several years. This is something that business units often tend to avoid.

• Arbitration only hears business or commercial disputes once. The Arbitral Award is final, enforceable, and cannot be appealed. This is the characteristic principle of Arbitration compared with Court. It comes from the nature of Arbitration that it is the will and right of disposition of the parties, and since the parties have agreed to settle their dispute through arbitration, they must comply with the final award.

At the same time, in settling disputes at Arbitration, the parties may choose the Arbitration organization, choose the arbitrator they trust. Being able to appoint an arbitrator helps the parties choose a good, experienced arbitrator who deeply understands the issue in question, thereby facilitating quick and accurate settlement of disputes.

c. Cost

• When filing a lawsuit petition with the Court, after the petition has been received by the Court, the plaintiff must pay advance Court fees and charges. Thereafter, upon trial, the Court shall declare the amount of court fees incurred by the litigant on the principle that the losing party shall be liable for court fees and charges. In case the plaintiff’s petition requests are accepted in whole, they shall not be liable for court fees and charges and will be refunded by the Enforcement Authority for the advance amount they had paid. Thus, if the case is won, the plaintiff will not lose the advance of court fees and charges paid.

• Unlike resolving disputes at the Court, when filing a lawsuit petition at Arbitration, the Claimant must pay the entire arbitration costs to the Arbitration Center. The amount of arbitration costs are set by the Arbitration Center, usually the more reputation the Arbitration Center is, the higher the costs. In fact, the amount of arbitration costs payable by the plaintiff will be much higher than the advance amount of court fees and charges in resolving disputes through Court.

With the dispute settlement by Arbitration, normally the losing party is subject to arbitration costs, unless otherwise agreed by the parties or otherwise provided by the rules of arbitration, or the arbitral tribunal makes a different allocation. Under this principle, if the plaintiff wins the case but the defendant is unable to enforce the award, it is considered that the plaintiff will be liable for the amount of arbitration cost paid. This is something the Plaintiff needs to consider before initiating arbitration.

From the above contents, we can see the differences between the Court and Arbitration. Therefore, it is necessary to carefully consider the specific characteristics of the dispute, take the context of the legal nature and content of the dispute into consideration to make the decision between choosing a Court or Arbitrator, in order to ensure fairness, efficiency and maximum protection of interests.

Above are the contents and legal sharing of TNTP in the article “The difference between dispute resolution in Court and Commercial Arbitration”. We hope this article is useful to you.

Best regards.

In the course of executing a construction contract, disputes may arise when one or both parties have not complied with the contractual requirements. Common disputes result from project cost overruns, failure to meet construction schedules, design changes, late payments, and non-compliance with safety content during the contract execution. After negotiation and mediation efforts fail, parties can opt for one of two methods to resolve disputes: Court or Arbitration. This article by TNTP will analyse the advantages and disadvantages of both methods, helping parties determine the most suitable method for resolving construction contract disputes.

1. Efficiency

For resolving disputes through Commercial Arbitration, parties can freely choose arbitrators to resolve disputes. Arbitrators can be experts in the construction field without necessarily being legal professionals. With a deep understanding of construction, these experts can accurately and thoroughly resolve disputes.

Additionally, courts in Vietnam may face difficulties in resolving contract disputes involving foreign elements. These difficulties stem from language barriers, the application of non-Vietnamese laws to interpret the contract, differences in business customs, contract interpretation, and expertise in the construction field. Meanwhile, choosing arbitrators in Commercial Arbitration can lead to more accurate and swift dispute resolution.

2. Procedural convenience

Arbitration proceedings are simpler and more flexible than court proceedings, such as scheduling hearings at convenient times for all parties. This flexibility allows for quicker dispute resolution, minimizing business disruption and related costs due to prolonged litigation.

3. Costs

Arbitration costs are higher than court costs. Arbitration fees include the expenses for remuneration of Arbitrators and the expenses for travelling, accommodation and other relevant expenses of the Arbitrators, etc, which are not required in court proceedings. Conversely, dispute resolution in courts requires parties to pay court fees and other legal costs, typically lower than the costs of arbitration. However, because arbitration tends to resolve disputes faster than courts, parties can save time, effort, and money that would otherwise be spent on court litigation.

4. Confidentiality and private dispute resolution

The dispute resolution mechanism by Commercial Arbitration is more confidential and private than the Court. In Vietnam, court trials are mostly public, and court judgments/decisions can be published on the Supreme People’s Court’s electronic portal. In contrast, all information and documents related to the dispute and Arbitral Award remain confidential unless otherwise agreed by the parties. In the construction sector, protecting trade secrets safeguards competitive advantages and maintains relationships with clients, reducing reputational risks.

5. Finality of arbitral award

Parties can appeal against a court’s first-instance judgments/decisions, seeking a review in the appellate court. If they disagree with the appellate court’s judgments/decisions, they can request a higher court for retrial or cassation.

In contrast, the arbitral award shall be final, binding on the parties and take effect from the day of issuance. Like court judgments/decisions, parties can request the competent civil enforcement authority to enforce the arbitration award. However, an arbitration award can be annulled by a competent court if it falls under certain conditions specified in the 2010 Commercial Arbitration Law, such as lack of an arbitration agreement or if the agreement is invalid, non-compliance with the agreed arbitration procedure, etc. If an arbitration award is annulled, parties must resolve the dispute from scratch through negotiation, mediation, courts, or arbitration, depending on their agreement.

Thus, depending on the circumstances of the dispute and the resolution goals, etc, parties can choose the most appropriate method. This article discusses “Court or commercial arbitration – which method is optimal in resolving construction contract disputes?” hoping to provide valuable insights to individuals and organizations involved in construction contracts.

Sincerely,

The settlement of disputes by arbitration method is considered as a convenient out-of-court dispute settlement method, flexible and fast procedures; have finality; keep business secrets as well as the reputation of enterprises in the market. However, the dispute of the Parties must meet the conditions to be resolved by arbitration. In the following article, TNTP will provide an overview of the Key point to consider in arbitration agreements.

I. First, there must be an arbitration agreement

● Pursuant to Clause 1, Article 5 of the Law on Commercial Arbitration 2010, disputes can be settled by arbitration if the parties have an arbitration agreement. The arbitration agreement may be drawn up before or after the dispute has arisen. Thus, the condition for resolving disputes by arbitration is to have an arbitration agreement.

● An arbitration agreement may be a dispute settlement clause written in a separate contract or agreement, may be an Appendix attached at the time of signing the Contract or signed by the parties after a dispute arises in the form prescribed in Article 16 of the Law on Commercial Arbitration 2010.

According to TNTP’s dispute settlement experience, TNTP proposes that the parties, when signing the Contract, should always stipulate in the Contract about the dispute settlement clause to avoid cases when a dispute arises, one party wants to initiate a lawsuit at Arbitration but the other party always avoids signing attached annexes or agreements to settle disputes at Trong talent.

II. Second, the form of the arbitration agreement is established in accordance with the law

The arbitration agreement must be established in writing. The following forms of agreement are also considered established in writing:

● The Agreement shall be established through exchange between the parties by telegram, fax, telex, email and other forms as prescribed by law;
● The agreement is established through the exchange of written information between the parties;
● The agreement is recorded in writing by a lawyer, notary or a competent organization at the request of the parties;
● In the transaction, the parties have a reference to a document showing the arbitration agreement such as contracts, documents, company charters and other similar documents;
● Through the exchange of the lawsuit and the self-defense which demonstrates the existence of an agreement made by one party and not denied by the other.

The arbitration agreement is completely independent of the contract. The change, renewal, cancellation of the contract, the contract is invalid or unenforceable does not invalidate the arbitration agreement.

III. Third, the arbitration agreement does not fall under the circumstances of statutory invalidity

In addition to the necessary condition that an arbitration agreement is required, a sufficient condition to apply the arbitration method is that the arbitration agreement does not fall into the following invalid cases:

● Disputes arising in areas not within the jurisdiction of Arbitration, that is, cases where the arbitration agreement established to settle the dispute does not fall into the following cases: Disputes between parties arising from commercial activities; Disputes arising between parties in which at least one party has commercial activities; Other disputes between the parties provided for by law shall be resolved by Arbitration.

● The person establishing the arbitration agreement does not have jurisdiction under the provisions of law, i.e. the person establishing the arbitration agreement when he is not a legal representative or is not a legally authorized person or is a legally authorized person but exceeds the scope of authorization.

In principle, an arbitration agreement established by a person without jurisdiction, such arbitration agreement is null and void. Where the arbitration agreement is established by a person without jurisdiction but in the process of establishing and performing the arbitration agreement or in the arbitration proceedings that the person competent to establish the arbitration agreement has accepted or known without objection, the arbitration agreement shall not be invalid.

● The person establishing the arbitration agreement has no civil act capacity, i.e. a minor, a person who has lost civil act capacity or a person with limited civil act capacity. In this case, the Court needs to collect evidence to prove that the person establishing the arbitration agreement does not have civil act capacity, must have documents proving the date of birth or conclusion of the competent authority or the decision of the Court determined, declaring that the person has lost civil act capacity or has limited civil act capacity.

● The form of the arbitration agreement is inconsistent with the provisions of Article 16 of the Law on Commercial Arbitration.

● One of the parties is deceived, threatened or coerced in the process of establishing an arbitration agreement, which is the case specified in Article 4, Article 123 of the Civil Code.

● The arbitration agreement violates the prohibition of law, which is an agreement in the case specified in Article 123 of the 2015 Civil Code.

Pursuant to the above conditions, the effective condition of the arbitration agreement is that the parties must have an arbitration agreement, the form in accordance with the law and not in cases where the arbitration agreement is invalid.

Above is the article: ” Key point to consider in arbitration agreements”. We hope this article was useful to you.

Respect.

After an arbitration award is issued, the ideal scenario is for all relevant parties to voluntarily comply with and execute the award. This means there is no need for further legal procedures, saving time and costs for the parties. However, not all parties obligated to execute the award do so voluntarily. In such cases, to protect their rights, the award beneficiaries have the right to request the competent civil enforcement authority to enforce the award. In the following article, TNTP will guide the procedure for parties to request the civil enforcement authority to enforce the award.

1. Registration of Ad hoc arbitration award

If parties request the competent Civil Enforcement Authority to enforce an arbitration award, the award must be registered according to the provisions of Article 62 of the 2010 Commercial Arbitration Law, specifically as follows:

• Within 1 year after an arbitral award is issued, the party requesting registration of an award of ad hoc arbitration shall file an application for such registration to the people’s courts of provinces or centrally run cities where the Arbitration Council issued the arbitration award, enclosed with originals or true copies of the following documents:

 Arbitral award issued by the ad hoc arbitration council;

 Minutes of the ad hoc arbitration council’s dispute settlement meeting, if any;

 Original or certified copy of the arbitration agreement.

The requester shall take responsibility for the truthfulness of the documents sent to the court. If the application for registration of the ad hoc arbitration award is made after the 01-year deadline from the date of issuance of the arbitration award, the Court does not have the authority to consider and resolve the request.

• The content of the arbitration award registration includes:

 Time and place of registration;

 Name of the court making registration;

 Name and address of the requester for registration;

 The registered award;

 Signature of the competent person and seal of the court.

• Within 5 working days after receiving an application for award registration, the court president shall assign a judge to consider such application. Within 10 days after being assigned, such judge shall examine the truthfulness of the documents enclosed with the application and make registration.

 If the arbitral award and documents are deemed authentic, the judge shall carry out the registration.

 If identifying that the arbitral award is untrue, the judge shall refuse to make registration, return the application and enclosed documents and immediately notify such to the requester clearly stating the reason. Within 3 working days after receiving the court’s notice, the requester may complain to the court president about the refusal to make registration. Within 3 working days of receiving the complaint, the court president shall consider and issue a decision settling the complaint. The court president’s dispute settlement decision is final.

 If there is evidence that the cancellation or the arbitral award is being considered at a competent court when receiving the request for registration of the arbitral award, the court shall delay undertaking the request pending the decision on arbitral award cancellation.

• After considering the request for registration of arbitral award, the judge is not required to hold a meeting to consider the request. If necessary, the judge may convene one or all parties concerned and the arbitral tribunal for them to offer their opinions about the registration of arbitral award.

• The applicant requesting the Court to register the ad hoc arbitration award must pay a fee of 500,000 VND to the Court (Based on Resolution No. 326/2016/UBTVQH14 on fees, exemptions, reductions, collection, management, and use of court fees).

2. Enforcement of Arbitration Award

If the deadline for enforcing the arbitration award has expired and the party obligated to enforce the award has neither voluntarily complied nor requested the annulment of the arbitration award, after the award is registered, the beneficiary of the arbitration award has the right to request the competent Civil Enforcement Authority to enforce the arbitration award.

Above is the article “Procedures for enforcement of ad hoc arbitration awards” sent to readers. Hopefully, the information provided is useful to those interested in this issue.

Best regards,