Arbitration has become one of the preferred methods for resolving international commercial disputes. However, according to the principle of territoriality, an arbitration award rendered by a particular country’s arbitrator will only be effective within the territory of that country. Therefore, for an arbitral award issued within the jurisdiction of one country to be enforced in another country, the parties must go through the recognition and enforcement procedures. In this article, TNTP will analyze the cases in which foreign arbitral awards are considered for recognition and enforcement in Vietnam, in accordance with the provisions of the 2015 Civil Procedure Code.
1. Recognition and Enforcement of Foreign Arbitral Awards in Vietnam
Based on Article 424 of the 2015 Civil Procedure Code (“CPC”), for a foreign arbitral award to be considered for recognition and enforcement in Vietnam, it must meet the following conditions:
• It is an arbitral award rendered by a foreign arbitrator;
A foreign arbitrator refers to an arbitrator established according to the laws of a foreign country, chosen by the parties to resolve disputes outside the territory of Vietnam or within Vietnam. The foreign arbitral award is an award rendered by a foreign arbitrator outside Vietnam or within Vietnam, chosen by the parties to resolve the dispute.
• It is an arbitral award issued in a country that has a treaty with Vietnam on the recognition and enforcement of foreign arbitral awards or based on the principle of reciprocity; and
• It is a final arbitral award that settles the entire dispute, terminates the arbitration proceedings, and is enforceable.
2. Cases where Foreign Arbitral Awards are not Recognized and Enforced in Vietnam
A foreign arbitral award will not be recognized and enforced in Vietnam by the Vietnamese courts if it falls under any of the cases specified in Article 459 of the CPC, as follows:
• The court finds that the evidence provided by the party opposing the recognition is substantiated and legal, and the arbitral award falls under one of the following circumstances:
a) The parties of the arbitration agreement do not have the capacity to conclude such an agreement according to the law applicable to each party;
b) The arbitration agreement is not legally effective according to the law of the 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;
c) The party to be enforced against was not promptly and legitimately notified of the appointment of the arbitrator, the arbitral proceedings, or was unable to exercise their procedural rights due to other justifiable reasons;
d) The foreign arbitrator’s award over a dispute is not requested to be settled by any parties or exceeds 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;
đ) Compositions of the foreign arbitrator and/or procedures for the settlement of disputes conducted by the foreign arbitrator are not conformable to 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;
e) The foreign arbitrator’s award has not taken compulsory legal effect on parties;
g) The enforcement of the foreign arbitrator’s award has been cancelled 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 court finds that:
a) According to Vietnam’s law, the dispute shall not be settled according to arbitral procedures;
b) The recognition and enforcement in Vietnam of foreign arbitrator’s award are contrary to basic principles of the law of the Socialist Republic of Vietnam.
TNTP has presented specific cases where foreign arbitral awards are considered/not considered for recognition and enforcement in Vietnam. We hope this article is useful to our readers.