In the field of commerce, there is always a potential dispute because the parties always aim to benefit themselves. The dispute can be considered a disease and the issue is how to treat it both when it arises and even before it does. Within the scope of current legal regulations, there are many ways to resolve disputes in the field of commerce, we will research these methods in the following article.
1. Commercial activities
● According to the provisions of Clause 1, Article 3 of the Law on Commerce of 2005 (“LCM”), commercial activities are understood as activities for profit-making purposes, including activities of buying and selling goods, providing services, investment, trade promotion,…
● Objects in commercial activities are goods, whereby goods are all types of movables, including those to be formed in the future and things attached to land such as trees,…
2. Dispute resolution methods in commercial activities
Article 317 of the LCM stipulates 03 methods of dispute settlement as follows:
● Negotiation: The process involves parties in commercial activities, whereby the parties will negotiate and come to an agreement based on specific arguments and legal regulations to find a suitable resolution that aligns with the intentions of the parties. At this stage, the parties may negotiate on their own or seek the assistance of lawyers or experts. The result of the negotiation will depend on the voluntary nature and compromise of the parties, and it is not legally binding. Therefore, the legal rights and interests of the parties may be difficult to ensure adequate.
● Mediation: Apart from resolving disputes through negotiation, when resolving through mediation, in addition to the parties involved in commercial activities, individuals and organizations are acting as third parties to mediate. These may be commercial mediators or commercial mediation organizations chosen by the parties or designated by the commercial mediation organization at the parties’ request.
The participation of third parties is essential in persuading and encouraging the parties to resolve disputes in the best possible way. However, fundamentally, whether the parties can mediate or not depends largely on the agreement and will of the parties. When the parties reach a mediated settlement, for the settlement to be binding, the requesting party must seek recognition of the mediated settlement in court as prescribed by civil litigation law.
● Arbitration or court
Arbitration: To resolve disputes in this way, the parties must have an arbitration agreement, which can be either institutional or ad hoc arbitration. Institutional arbitration is a form of dispute resolution that takes place at an arbitration centre. Typically, the parties prefer to choose a specific arbitration centre for resolving their disputes.
The arbitration award is binding and enforceable, which is an advantage over other methods of dispute resolution such as negotiation and mediation. In addition, arbitration ensures confidentiality and saves time in resolving disputes. This is also the common trend for resolving international commercial disputes. Therefore, the parties may consider choosing and regulating the contract about arbitration as a dispute resolution mechanism.
Court: Resolving disputes through the court system will involve the power of the state, which means that there will be the involvement of a state agency, specifically the court, acting on behalf of the state in the conduct of legal proceedings. The court’s judgment/decision is binding and enforceable, and if a party fails to voluntarily comply, the other party may request the competent civil enforcement agency to enforce the judgment. One of the parties must file a lawsuit stating the facts of the case and petition, along with relevant evidence, to the competent court. However, resolving disputes in court has limitations, such as prolonged resolution time, complex procedures, and difficulty in ensuring confidentiality.
3. Experience in dispute resolution in commercial activities
● Priority on the agreement: In case of disputes, parties should first try to resolve them through negotiation and mediation as these methods are usually quicker, cost-effective, and help parties to understand each other better. However, depending on the specific circumstances, if one party does not receive the good faith of the other, this party may choose to use dispute resolution methods such as Arbitration or Court;
● Regulate provisions on dispute resolution in contracts: Disputes are not something any party desires when entering into a commercial contract. However, to anticipate potential disputes, parties should regulate provisions on the dispute resolution methods when drafting the contract. In case of disputes, parties can refer to those provisions to achieve the most effective dispute resolution.
Above is the content of the article “Dispute resolution methods in commercial activities”. We hope the article will be useful to you.
Best Regard.
