During the process of contacting and working, TNTP found that many enterprises did not pay attention to the term of Dispute Settlement in the Contract. The consequence is that enterprises often face difficulties and obstacles when submitting the petition and being accepted by the Court/Arbitration. Therefore, by this article, TNTP will give examples, analyze mistakes that enterprises often encounter when specifying the Dispute Settlement term in the Contract, thereby suggesting solutions to ensure legality, clarity, and minimize the risks when litigating.
Based on work experience, TNTP can show mistakes that enterprises often encounter when specifying the term of Dispute Settlement in the Contract as follows:
1. “In case the parties cannot resolve the dispute through negotiation and conciliation, the parties have the right to initiate a lawsuit to the Court of Province A for settlement”
The above is a common mistake that many enterprises make when specifying the jurisdiction to resolve the dispute. According to the Civil Procedure Code 2015, the Court’s jurisdiction is divided into: jurisdiction by case, jurisdiction by level, and jurisdiction by territory. The parties are not allowed to arbitrarily choose any specific Court (for example: Hanoi People’s Court) and must comply with the provisions of the Civil Procedure Code on the Court’s jurisdiction (Chapter III of the Civil Procedure Code).
Normally, commercial disputes between two enterprises established in Vietnam will be under the jurisdiction of the district court where the defendant has headquarters. In case the parties have an agreement, they can only agree on the jurisdiction at the Court where the plaintiff’s headquarter is located. In some special cases, the plaintiff may choose the Court but must comply with the provisions of Clause 1 Article 40 of the Civil Procedure Code.
To overcome this mistake, in case the parties do not clearly understand the legal provisions on the jurisdiction of the Court, the Parties should specify the dispute settlement term as: “In case the parties cannot resolve the dispute through negotiation and conciliation, the parties have the right to initiate a lawsuit at a competent Court.
2. “If the parties cannot resolve the dispute through mediation, the parties have the right to initiate at an Arbitration. If it cannot be resolved by economic arbitration, the dispute will be resolved by the economic Court”
This is another common mistake made by enterprises when choosing an agency to settle the dispute, which is the parties do not have a clear arbitration agreement. According to Article 6 of the Commercial Arbitration Law 2010, in case of arising dispute and the parties signed an arbitration agreement but one party litigates at the Court, the Court must refuse to accept the case, unless the arbitration agreement is invalid or arbitration agreement cannot be performed. It can be understood that the parties cannot both settle the dispute at commercial arbitration and the Court. Enterprises can only choose ONE agency to settle the dispute.
This leads to the situation that when enterprises want to litigate at Arbitration, they will have to explain and prove that the arbitration agreement is valid. Or if enterprises want to litigate at the Court, they will have to prove that the arbitration agreement is invalid. This explanation and proof will prolong the time to accept the case.
In case the parties have not signed the Contract, the parties should consider carefully and only choose one settlement agency, which is Commercial Arbitration or Court.
In case the parties have signed the Contract and have not yet had a dispute, the parties can make an Appendix to amend the term of Dispute Settlement in the Contract.
In case the parties have signed the Contract and have arisen dispute, the parties may base on Point a Clause 4 Article 2 of Resolution 01/2014/NQ-HDTP to litigate at Commercial Arbitration. Specifically, in case the parties have agreed to settle the dispute at Arbitration and also have agreed to settle the dispute at the Court and the parties do not have a new agreement on the agency having authority to resolve the dispute, if a party litigates at Commercial Arbitration first and neither party requests the Court to settle it or the Court has not yet accepted it, the Arbitration will have jurisdiction and the Court must refuse to accept, settle the dispute.
3. “In case it is not possible to negotiate or conciliate, the parties have the right to litigate at the competent Economic Court/ Economic Arbitration”
The next mistake of enterprises when specifying the term of Dispute Settlement in the Contract is not writing the correct name of the dispute settlement agency. In some cases, the dispute settlement agency will give the reason that the name is not correct, or there is no dispute settlement agency named that to refuse to accept and resolve.
The parties should pay attention to learning and writing the correct name of the Dispute Settlement Agency to avoid difficulties in the process of submitting the petition and being accepted by the competent agency.
Currently, the name of Court system in Vietnam is as follows:
The Supreme People’s Court;
The High People’s Court;
The People’s Court of … Province/City;
The People’s Court of … District/Town;
For Commercial Arbitration Centers in Vietnam, enterprises can search on Google, Bing, Baidu, … to write the correct name of the Commercial Arbitration Center which the parties want to choose to resolve the dispute.
Above are the analysis and solutions for enterprises when specifying the term of Dispute Settlement in the Contract. We hope this article is useful to you.
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TNTP & Associates International Law Firm