Articles
Vietnam’s New Commercial Arbitration Law – the world’s local law

10 - 09 - 2010
By Bui Ngoc Hong*

On 17 June 2010, Vietnam's National Assembly passed the Commercial Arbitration Law No. 54/2010/QH12 ("Arbitration Law"), which from 1 January 2011 replaces the 2003 Ordinance on Commercial Arbitration.

In the country's hierarchy of legislation, a law has an implication of something more long-lasting than an ordinance.  That ambition appears to have been realized in this Arbitration Law, through the apparent adoptions of many provisions from the "international standard" one: the UNCITRAL's Model law on international commercial arbitration ("Model Law"). Such adopting efforts can be seen in the Arbitration Law's provisions on arbitration agreement, composition of arbitration tribunal, interim measures, conduct of arbitration proceedings, making award and termination of proceedings, to recognition and enforcement of awards. From these, the Arbitration Law serves as a major step towards what is considered international standard. 

Further, the Arbitration Law has also confirmed the country's market opening for foreign commercial arbitration services, in the forms of branch and representative office. Foreign arbitration centers wishing to expand to Vietnam should note, however, that according to the country's commitments to the WTO, the chief of the branch has to be a resident in Vietnam. 

The Arbitration Law is a country's law, and to some extent, it might have stepped away from the Model Law. For example, there remains some fine print on recognition and enforcement of foreign arbitral awards. In the Model Law, one of the grounds for a State to refuse recognition or enforcement is that the recognition or enforcement of the award would be contrary to the State's public policy.  In the Arbitration Law, State's public policy has been translated to "basic principles of Vietnamese law", which in turn may cover a vaguer term, "interest of the State". Such a translation may become justification for setting aside awards deemed going against the interest of the country's interest.  Although minor, this change may ultimately prove to have a negative effect on enforcement of foreign awards.

Compared with the 2003 Ordinance on Commercial Arbitration, the Arbitration Law shows a lot more court's involvements in arbitration activities.  These involvements may be, in term of legal culture, appropriate in that the courts sound more authoritative to the disputing parties. However, courts are currently overloaded.  And such work referral to the court may result in some delay to arbitration proceedings, which is chosen to speed up the parties' dispute settlement.

Adopting provisions of the UNCITRAL's Model law on international commercial arbitration, Vietnam's Arbitration Law brings the country's arbitration laws closer to international standards. Nevertheless, like many other laws in Vietnam, further clarifications are to be provided by relevant State authorities.  As such, it remains to be seen how localized the law may become.

(*) Please contact the author at hong.bui@indochinecounsel.com or our partners if you wish to have more information or specific advice for the topic of this article.

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