Dispute settlement by Vietnamese courts is popular among Vietnamese people for their civil cases. One of the reasons is the low court fees. The other reasons include their habits and arbitration proceedings are only available for commercial disputes. However, before selecting Vietnamese courts, the parties should take into account the potential time-consuming process for court proceedings. Although the proceeding laws set time limits for courts to settle a dispute (for example, two to four months for first instance proceedings), the possibility of a prolonged process, a lengthy appeal and court reviews make court proceedings in Vietnam a time consuming process. In practice, some disputes have been held for hearing and review for a period of several years.

Another note is that Vietnamese courts are reluctant to uphold the choice of a foreign law as the governing law by the parties. In fact, Vietnamese judges do not normally apply foreign laws, and they do not have the practice of calling foreign lawyers or legal experts for opinions.

Foreign and International Arbitration and Court

Parties of commercial transactions with foreign elements (e.g., where a party is a foreigner or the transaction or transacted property/asset is located outside of Vietnam) are allowed to choose foreign arbitration or court or international arbitration to settle their dispute. However, a foreign court’s judgment or arbitral award cannot be enforced in Vietnam until it has undergone a process of recognition and enforcement conducted by a provincial court of Vietnam. The Vietnamese court’s judgment regarding the recognition and enforcement of a foreign arbitral award is appealable.

In September 1995, Vietnam became a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. Thus, subject to limited exceptions, foreign arbitral awards which are rendered in a country member of the convention can be recognized and enforced in Vietnam.

For a foreign court’s judgment, such judgment can only be recognized and enforced in Vietnam if between the country where the judgment is issued and Vietnam has a judicial accord (for recognition of each country’s court judgments) or Vietnamese courts accept the recognition and enforcement on a reciprocal basis.

In practice, the enforcement of foreign arbitral awards or foreign court’s judgments seems to be more difficult than the enforcement of an award or judgment made in Vietnam. It is worth noting further that the process of seeking recognition and enforcement of a foreign arbitral award in Vietnam is fairly lengthy and stressful (mostly because of the unfavourable attitude of Vietnamese courts over foreign arbitral awards).

Dispute Settlement by Vietnamese Arbitration

The popularity of arbitration is ever increasing since Vietnam adopted the Law on Commercial Arbitration in 2010. Arbitration is available for commercial disputes which are broadly defined to include profit-making purposes or when a disputing party is a business company. Thus, disputes which can be settled via arbitration are various such as those involved with sale of goods, provision of services, construction, investment, and other commercial transactions leaving only few cases which are exclusively reserved for courts such as inheritance or land disputes.

Arbitral awards are final and binding, and may be challenged only in certain circumstances mainly involving procedural errors that arose during the process of arbitration or when the awards are contrary to the basic principles of Vietnamese law. A party of the dispute may request a domestic arbitral award to be set aside within 30 days from the date an award is issued. The court’s decision on a petition to set aside an award may not be appealed and is final and valid for enforcement.

Vietnam currently has about 40 arbitration centers. Of these, the Vietnam International Arbitration Centre (VIAC) is most reputational in terms of its long tradition, panel of experts who are both foreign and Vietnamese known in their fields, and transparency in resolving disputes.