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.