One case dealt with by four arbitrators a year

It takes Vietnamese businesses a lot of time and effort to resolve international disputes because of their inexperience and limited knowledge of international laws. Interestingly, businesses have paid little or no attention to dealing with trade disputes through arbitration centres.

The Hanoi Municipal People’s Court handled 159 trade disputes in 2006 and 226 in 2007. This means that an average of 32 cases tried by each judge annually.  Meanwhile, the Vietnam International Arbitration Centre (VIAC) dealt with only 25 cases a year, meaning that only one case was resolved by four arbitrators per year.

Regarding this issue, lawyer Tran Huu Hung, Head of the Legal Department of the Vietnam Chamber of Commerce and Industry (VCCI) and Vice President of the VIAC says that the previous poor legal framework has made businesses doubt the arbitrators abilities. Businesses also lack a full understanding of the advantages of using arbitrators and are not accustomed to dealing with disputes using arbitrators.

Lawyer Nguyen An Binh attributes this to purely psychological reasons. Normally, businesses prefer to bring trade disputes to court rather than at arbitration centres because they think the courts carry more weight. Also, arbitrators give final judgments, offering no opportunities for businesses to lodge appeal against a court judgment.

Settling disputes by arbitrators – an inevitable trend

Prof. Dr. Le Hong Hanh, an arbitrator from the VIAC, says that disputes are unavoidable in trading and investment activities as there are many factors behind disputes that businesses cannot predict before signing contracts. Even though preparations are made to deal with possible risks, it is hard for businesses to eliminate every dispute, particularly if one of the partners creates a dispute to serve their own purposes. When disputes occur, businesses have many ways of resolving the situation, including using the courts or commercial arbitrators – a popular trend among foreign businesses.

According to Dr. Hanh, commercial arbitrators are part of a regulated mechanism for resolving social disputes, so they are active in organizing events and carrying out their duties. The procedural rules of commercial arbitrators enable businesses to exercise their right to make decisions by themselves. Businesses can even select the procedural rules and the best arbitrators to meet their demands in line with the international economic integration process and international laws.

VIAC Chairman Nguyen Minh Chi says that businesses can save time and money by hiring commercial arbitrators to settle their disputes. In this way, they can also ensure the confidentiality of contracts and issues relating to the disputes. In addition, arbitrators’ final decisions are recognized internationally.