Commercial arbitration is one of the preferred dispute resolution mechanisms due to its flexibility and efficiency. An arbitral award is final and binding, meaning that courts do not have the jurisdiction to re-adjudicate the case once the award has been made.
However, an arbitral award may still be annulled by a court if the arbitration proceedings violated the arbitration regulations. When an arbitral award is annulled, the entire arbitration proceedings between the disputing parties becomes invalid, which greatly affects the rights of the relevant parties. Therefore, a strict compliance with arbitration procedural is crucial to ensure the arbitral award’s validity.
In this article, TNTP will analyze Decision No. 2515/2023/QĐ-PQTT to determine whether an arbitral award may be annulled when the arbitration center sends notices and documents to an incorrect defendant’s address.
1. Principle of Notifying for Disputing Parties Under the Law on Commercial Arbitration
Pursuant to Clause 2 and 4, Article 12 of the Law on Commercial Arbitration 2010 (“LCA”), which regulates the sending of notices and the order of sending:
“2. Notices and documents to be sent by the arbitration center or Arbitral Tribunal to the parties shall be sent to the addresses or to their representatives at the correct addresses notified by the parties;
…
4. Notices and documents sent by the arbitration center or arbitration council will be regarded as having been received on the date the parties or their representatives receive them or if such notices and documents have been sent under Clause 2 of this Article.”
Thus, the Arbitration Center or Arbitral Tribunal must send documents to the addresses provided by the respective parties.
2. Dispute Content in Decision No. 2515/2023/QĐ-PQTT Regarding the Annulment of the Arbitral Award
On November 29, 2023, the People’s Court of Ho Chi Minh City issued Decision No. 2515/2023/QĐ-PQTT to annul the arbitral award in dispute case No. 94/22 HCM dated June 23, 2023, issued by the Arbitral Tribunal of the Vietnam International Arbitration Center (“VIAC”).
In this case, the plaintiff and the defendants signed an apartment purchase and sale contract and with its annexes. The plaintiff fulfilled all payment obligations according to the agreed schedule, but the defendants failed to complete the acceptance procedures for apartment handover. Consequently, the plaintiff initiated arbitration proceedings at VIAC requesting that the defendants jointly compensate for damages and pay contractual penalties as specified in the previously signed agreements.
3. Legal Basis for Annulling the Arbitral Award in Decision No. 2515/2023/QĐ-PQTT
• Circumstances
One of the defendants filed a petition to the court to annul the arbitral award in dispute case No. 94/22 HCM. The reason given by this defendant was that their address was clearly stated in the Enterprise Registration Certificate. However, during the arbitral proceedings, VIAC sent all notices and documents to this defendant at an alternative address provided by the plaintiff, rather than the official address listed on the Enterprise Registration Certificate.
• Procedural Violation
Since VIAC failed to properly serve procedural documents and the arbitral award, the defendant was unaware of both the ongoing dispute and the issued arbitral award. The defendant later requested VIAC to provide the address which the documents had been delivered. VIAC confirmed that the documents had not been sent to the defendant’s registered office address.
• Legal Basis
The court found that VIAC has violated Clause 2, Article 12 of the LCA regarding the notification rules for disputing parties. Consequently, the defendant requested the annulment of the arbitral award based on Point b, Clause 2, Article 68 of the LCA:
“b) The composition of the Arbitral Tribunal or the arbitral procedures were inconsistent with the agreement of the parties or contrary to the provisions of this Law”
The People’s Court of Ho Chi Minh City subsequently issued a decision to annul the arbitral award in dispute case No. 94/22 HCM.
The recent decision to annul the aforementioned arbitral award underscores a crucial principle: all parties involved in arbitration proceedings, particularly arbitration centers and tribunals, must maintain rigorous procedural standards throughout the dispute resolution process. Failure to adhere to prescribed arbitration procedures may result in the court nullifying the award upon petition by any losing party. This is exemplified by the non-compliant with the document delivery regulation to the defendant, which contravened the provisions set forth in Clause 2, Article 12 of the Law on Commercial Arbitration.
This concludes TNTP’s analysis of the article “Will an Arbitral Award Be Annulled If the Arbitration Center Sends Notices and Documents to an Incorrect Address of the Respondent?” We hope this article is useful to our readers.
Sincerely,
