Submittal 10/TTr-HLGVN 2009 Commercial Arbitration Bill

SUBMITTAL

Regarding the Commercial Arbitration Bill

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Submitted to: The 12^th-tenure National Assembly
of the Socialist Republic of Vietnam

In compliance with Resolution No. 11/2007/QH12 dated November 21, 2007, of the National Assembly on the law- and ordinance-making program for the 12^th tenure (2007/2011) and in 2008, Resolution No. 570/2008/UBTVQH12 dated January 23, 2008, of the Standing Committee of the National Assembly establishing the Drafting Committee for the Commercial Arbitration Law, the Vietnam Lawyers Association took the lead in drafting the Commercial Arbitration Law.

To facilitate the drafting of the Law, the Vietnam Lawyers Association and the Drafting Committee established an editorial board consisting of many legal experts in the field of arbitration, representatives from judicial and legal assistance agencies. The Drafting Committee has reviewed five years of implementing the Commercial Arbitration Ordinance and assessed the status quo of arbitration. With the support of the United Nations Development Program (UNDP), STAR-Vietnam, Konrad Adenauer Institute (Federal Republic of Germany), and in coordination with the Vietnam Chamber of Commerce and Industry, the Drafting Committee organized 12 scientific workshops to exchange arbitral experiences with countries across the globe and discuss the Commercial Arbitration Bill of Vietnam in particular. These workshops involved the participation of numerous international and Vietnamese experts, as well as representatives from businesses, lawyers, and arbitrators nationwide. The Drafting Committee also organized fact-finding missions to study the experience of organizing and conducting arbitrations in the United Kingdom and Singapore.

The following are the basic contents of the Bill.

I. Necessity, purposes, perspectives, and principles of enacting the Commercial Arbitration Law

At the end of the 19^th and the beginning of the 20^th century, Vietnam had commercial courts and arbitration rules in civil procedural law. However, for various reasons and different circumstances, arbitration was not widely known and used.

In 1963 and 1964, in the North, the Council for Foreign Trade Arbitration and the Council for Maritime Arbitration were established. In the 1970s, an economic arbitration system was established from the district to the central level to resolve disputes between state-owned enterprises and cooperatives. At that time, economic arbitrators were essentially state administrative bodies responsible for resolving disputes between state-owned enterprises, and their role as arbitrators was not effectively fulfilled. Meanwhile, the people’s courts did not have jurisdiction to resolve these types of disputes but only had jurisdiction over civil disputes between individuals, mainly involving marriage and family issues or disputes related to goods intended for personal use and consumption. In 1998, the economic arbitration system was dissolved. Disputes were then resolved through two channels: The Economic Court within the People’s Court system and economic arbitration centers. To provide a legal basis for the activities of Commercial Arbitration Centers which replaced these economic arbitration centers, on February 25, 2003, the Standing Committee of the National Assembly issued the Commercial Arbitration Ordinance, effective from July 1, 2003.

The Ordinance, in essence, aligns with international law and practices in regulating key issues of arbitration, such as the validity of arbitration agreements, the qualifications for becoming arbitrators, ad-hoc arbitration, expanding the jurisdiction to choose arbitrators, recognizing the relationship between arbitral tribunals and the courts through specific regulations such as assistance in the enforcement of arbitration agreements, appointment of arbitrators, resolution of complaints about the jurisdiction of the arbitral tribunal, application of interim urgent measures, resolution of requests to annul arbitral awards, storage of arbitration records, and more, etc.

The enactment of the Ordinance marks a significant milestone in the development of Vietnam’s arbitration legislation. It serves as the legal foundation for Vietnam’s arbitration to approach and integrate with arbitration in developed countries. From this perspective, arbitration is understood as a dispute resolution method entirely agreed upon and chosen by the parties. However, after six years of implementation and with the emergence of new factors, such as Vietnam becoming a member of the World Trade Organization, the enactment of new laws such as the 2005 Commercial Law, 2005 Investment Law, etc., some regulations of the ordinance have revealed inadequacies and are no longer suitable for the new situation. These shortcomings were thoroughly presented in the summary report on the implementation of the Commercial Arbitration Ordinance 2003.

The encouragement of the use of arbitration in resolving disputes between parties primarily stems from the needs of business entities, natural persons and legal persons that want to settle their cases conveniently, quickly, and effectively. The demand for resolving disputes quickly, effectively, and ensuring confidentiality for the parties has created an urgent need to enact the Commercial Arbitration Law.

An important purpose of enacting the Commercial Arbitration Law is to timely institutionalize and fully reflect the Party’s orientations and policies for constructing and developing the country during the industrialization and modernization period; building a socialist-oriented market economy which deeply integrates itself into the global economy, and establishing the law-governed socialist state of Vietnam. Accordingly, this Law acknowledges the policy of expanding forms of dispute resolution in business, trade, and other legally recognized relationships falling within the jurisdiction of arbitration, and encouraging parties to disputes to employ arbitration.

From the key perspective, the Commercial Arbitration Law - which should be based on theoretical studies and hands-on experiences from real-life enforcement of the Commercial Arbitration Ordinance, appropriate relevant regulations previously adopted, and international experiences to the greatest extent possible - must create the most complete and favorable legal basis for the employment of arbitration to resolve disputes.

Adhering to Resolution No. 49 of June 2, 2005, of the Politburo on the Judicial Reform Strategy which regards further improvement of civil procedural formalities, the resolution of some disputes through mediation, conciliation, and arbitration is encouraged and the courts supports such resolution by recognizing it.

To overcome the shortcomings of the Commercial Arbitration Ordinance 2003 and to fulfill the increasingly high requirements of international economic integration, the Drafting Committee unanimously defined fundamental principles for enacting the Commercial Arbitration Law as follows:

Firstly, the Commercial Arbitration Law must be suitable and meet the practical needs of current business activities and dispute resolution practices and predict future needs as the socialist-oriented market economy in Vietnam is expanding.

According to the statistics of the Vietnam Chamber of Commerce and Industry, there are currently over 300,000 businesses nationwide, especially with the increasing number of small and medium-sized enterprises playing an increasingly important role in the country’s economy. Consequently, the number of future dispute cases is expected to rise, and the demand for flexible and expeditious dispute resolution becomes more pressing than it is now.

Dispute resolution practices worldwide indicate that arbitration is playing an increasingly vital role in settling disputes between traders. In Vietnam, opting for arbitration to resolve disputes will contribute significantly to alleviating the judicial burden on the courts. According to statistics from judicial authorities, at the Economic Court of the Hanoi People’s Court, the number of cases has doubled annually since 2005. The Economic Court of the People’s Court of Ho Chi Minh City handles between 1,000 and 1,100 economic disputes each year. However, the number of cases resolved through arbitration appears quite modest when compared to this figure. While VIAC, Vietnam’s largest arbitration organization, only handled 30 disputes in 2007 and 58 cases in 2008, each judge at the Hanoi Economic Court must preside over more than 30 cases annually. If each judge at the Economic Court of Ho Chi Minh City manages 50 cases per year, each VIAC arbitrator hears only 0.25 case annually. This situation adversely impacts the quality of trials, places immense pressure on judges, and significantly influences businesses’ perceptions of the legal security level in commercial activities. Research on the practical application of selected forms of dispute resolution worldwide also indicates that promoting the use of arbitration in resolving various disputes is an unavoidable trend. According to publicly available documents, in 2007, the Singapore International Arbitration Center resolved 119 disputes, the American Arbitration Association handled 621 cases, the International Court of Arbitration, in conjunction with the International Chamber of Commerce (ICC), managed 599 cases, the China Economic and Arbitral Tribunal resolved 1118 cases, and the Hong Kong International Arbitration Center settled 448 cases. In numerous countries and territories, regulations stipulate that the court must reject a dispute if the parties have an arbitration agreement. Even in the United Kingdoms, Hong Kong, India, and Saudi Arabia, there are regulations stating that, in the absence of an arbitration agreement, disputing parties must initially bring the case to arbitration. Otherwise, they must provide a satisfactory explanation before the court will accept the dispute.

Secondly, the Commercial Arbitration Law must meet the increasing demands of international economic integration.

The scope and regulated entities of the Commercial Arbitration Law must be situated within the context of international economic integration and in compliance with international trade treaties of which Vietnam is a contracting party. First of all, it must ensure the fulfillment of commitments to open the service market, including arbitration services. Accordingly, after three years of joining the World Trade Organization (WTO), the arbitration service will open, and all restrictions will be lifted. The drafting of the Commercial Arbitration Law has concentrated on referencing and incorporating the regulations of the Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law (UNCITRAL), issued on June 21, 1985, and subsequently supplemented and amended on July 7, 2006. The bill has also assimilated the experiences of countries and territories with well-established arbitration service markets, such as the United Kingdoms, the United States, Hong Kong, Singapore, as well as other countries like China, Thailand, and Japan. The adoption of the Model Law will facilitate foreign traders in choosing Vietnamese arbitration to resolve their disputes, thereby creating a new attractive element for foreign trade and investment activities in Vietnam.

Thirdly, the Commercial Arbitration Law needs to further ensure the parties’ right to self-determination of dispute resolution forms. Essentially, arbitration is a consensual process where the primary basis for determining the jurisdiction of Arbitration is the arbitration agreement between the parties. This is an important principle of arbitration, maximally ensuring the right to self-determination of the disputing parties, and explicitly indicating the private jurisdiction nature of this dispute resolution form. The consensual nature of arbitration provides it with the potential to be a flexible dispute resolution method. The parties’ right to self-determination is also considered one of the fundamental principles of the UNCITRAL Model Law and the arbitration laws of many countries over the world. Therefore, regulations on arbitration need to be established on the basis of allowing disputing parties the right to choose the method of dispute resolution they desire, ensuring the right of parties to employ arbitration to the maximal extent.

II. Major contents of the Commercial Arbitration Bill

The Commercial Arbitration Bill comprises 11 Chapters and 75 Articles, detailed as follows:

Chapter I - General regulations, including 12 Articles, Chapter II - Arbitration agreements, including 4 Articles; Chapter III - Arbitrators, including 4 Articles; Chapter IV - Arbitration centers, including 8 Articles; Chapter V - Initiating a lawsuit, including 8 Articles; Chapter VI - Arbitral tribunals, including 16 Articles; Chapter VII - Dispute resolution sessions, including 6 Articles; Chapter VIII - Arbitral awards, including 6 Articles; Chapter IX - Enforcement of arbitral awards, including 3 Articles; Chapter X - Annulment of arbitral awards, including 5 Articles; Chapter XI - Implementation regulations, including 3 Articles.

The Drafting Committee hereby presents the major contents of the Commercial Arbitration Bill to the National Assembly, as follows:

1. The jurisdiction of Commercial Arbitration:

Regarding the jurisdiction of Commercial Arbitration, the Drafting Committee has concurred on specifying that the jurisdiction of Commercial Arbitration covers:

a. Disputes between parties engaged in commercial activities arising therefrom. A “commercial activity” has its meaning as defined in the Commercial Law.

b. Disputes between parties, where at least one party is involved in commercial activities.

c. Disputes between parties, which do not arise from commercial activities but are specified in other Laws.

With the jurisdiction of Commercial Arbitration as defined above, the scope of arbitration legislation is confined to the commercial transactions of traders, guided by the commercial concepts specified in the 2005 Commercial Law. This perspective is grounded in the following reasons: Firstly, the number of cases resolved at commercial arbitration centers is currently limited (Vietnam International Arbitration Center (VIAC), with 140 arbitrators, only handles 48 cases in 2008). The expertise and professional reputation of arbitrators in some centers need improvement; secondly, the Model Law of the United Nations Commission on International Trade Law (UNCITRAL Model Law 2006) also underscores arbitration’s jurisdiction in commercial disputes. Hence, the law is appropriately titled the Commercial Arbitration Law.

However, in practice, the Drafting Committee believes that the Commercial Arbitration Law is not exclusively restricted to commercial activities under the 2005 Commercial Law. It also encompasses cases related to a party involved in commercial activities, as well as cases unrelated to commercial activities but governed by other Laws. The expansion to cases not arising from commercial activities results from the reason that such cases, which may involve non-contractual disputes such as compensation for damages in construction, maritime, and transportation, etc., can also be resolved by arbitration based on the parties’ mutual agreement. Even though such disputes do not originate from traders’ commercial conduct in accordance with the 2005 Commercial Law, in Vietnam there are various legal documents defining arbitration’s jurisdiction over disputes of a non-commercial or broader commercial nature. For example, in the Civil Procedure Code, Article 342 differentiates between business, commercial, and labor legal relationships. The 2005 Enterprise Law provides a broader connotation of business than commerce. Article 32 and Article 173 of the 2006 Law on Civil Aviation of Vietnam regards arbitral awards over cancellation of aircraft mortgage. The Law on Negotiable Instruments in Article 3 and Article 79; the Law on Securities in Article 6 and Article 131, the 2006 Law on Technology Transfer in Article 55; the 2003 Law on Construction in Article 110, and the 2005 Maritime Code in Chapter VIII all specify cases under the jurisdiction of arbitration that are not commercial in nature.

Nevertheless, during the drafting of this Bill, there were numerous opinions advocating the necessity to broaden the jurisdiction of arbitration. The Bill was thereby titled the Arbitration Law. The arguments supporting this approach are outlined below:

Firstly, with the exception of certain disputes that the State deems necessary to be adjudicated by the Court, the practicality of dispute resolution in Courts and Arbitration in Vietnam underscores the challenge of distinguishing between civil disputes and business or commercial disputes. In reality, making this distinction proves to be quite challenging. This difficulty may result in many cases not being accepted, and arbitral awards may easily be invalidated by the courts on grounds of improper jurisdiction, believing that the disputes do not stem from commercial conduct or due to the challenge of determining what constitutes a profit-making activity. This is the most crucial reason among the relevant ones.

Secondly, in contrast to the regulations of the 2003 Commercial Arbitration Ordinance, the 2005 Investment Law in Article 12 "Dispute resolution," stipulates that disputes between Vietnamese regulatory authorities and investors can be resolved by domestic and foreign arbitration. According to the World Trade Organization, disputes between countries over trade policies can also be resolved through arbitration. Many disputes between the State of Vietnam and foreign individuals and organizations can be resolved through arbitration, even if they do not qualify as commercial disputes under the 2005 Commercial Law.

Thirdly, various authorities and organizations established by the State, even if not classified as traders, such as management boards of public investment projects, public non-business units participating in bidding or execution of contracts (including government procurement contracts), are increasingly engaged in civil transactions. Disputes between these entities can and should be resolved through arbitration based on the parties’ will. In fact, international donor organizations and financial institutions like the International Monetary Fund, World Bank, and Asian Development Bank recommend using arbitration to settle disputes when entering into their credit agreements.

To ensure the applicability of the Bill towards expansion with the name “Arbitration Law” and in accordance with Vietnam’s situation, the Bill has specifically enumerated disputes that do not fall under the jurisdiction of the arbitration, as stated in Article 2 of the Bill. Disputes not falling under the jurisdiction of arbitration are those that the State deems necessary to protect or those due to their complexity and sensitivity that should not be transferred to arbitration, which is considered a private judicial institution.

2. The applicable laws in resolving disputes through commercial arbitration

The Commercial Arbitration Bill establishes rules whereby the Arbitral Tribunal applies Vietnamese laws to resolve non-foreign disputes, unless otherwise specified by specialized laws. In contrast to the 2003 Ordinance, the Bill stipulates that for disputes involving foreign elements, the Arbitral Tribunal applies the law chosen by the parties. If the parties fail to reach an agreement on the applicable law, the Arbitral Tribunal shall decide to apply the law it deems most appropriate. Article 11 of the Bill emphasizes the right of the Arbitral Tribunal to apply practices and customs to resolve disputes, provided that the application or consequences thereof do not contravene the fundamental principles of the law of the Socialist Republic of Vietnam.

3. Arbitration agreements

Unlike court proceedings, arbitration proceedings can only take place when there is an established and valid arbitration agreement between the disputing parties. Therefore, this is regulated in a separate chapter, serving as the foundation for the entire arbitration proceedings.

Addressing the ambiguity of the 2003 Commercial Arbitration Ordinance concerning situations that may invalidate an arbitration agreement, Article 14 of the Bill limits five situations where an arbitration agreement is invalid: first, if the area of dispute falls outside the jurisdiction of arbitration; second, if the person establishing the agreement lacks authority according to law regulations; third, if the person establishing the arbitration agreement lacks civil capacity as specified by the Civil Code; fourth, due to a violation of the regulations requiring the agreement to be made in writing; fifth, if the parties were threatened, coerced, or deceived during the establishment of the arbitration agreement, and thus request to declare the arbitration agreement invalid.

4. Protection of consumer rights

According to the Commercial Arbitration Bill (Article 16), for disputes between businesses and consumers, even if the arbitration clause has been acknowledged in the boilerplate general conditions of providing goods and services made by the supplier, the arbitration agreement is only valid provided that the supplier gives prior notice and obtains the consumer’s consent in a separate document.

One of the new regulations of the Commercial Arbitration Bill is the adoption of a principle prohibiting contradictory behavior in proceedings, a crucial principle long established in the procedural law of developed countries. The new regulation of the Bill (Article 36) determines that when a party perceives a violation of the regulations of the Law or the arbitration agreement and does not object within the regulatory time limit, it forfeits the right to complain in arbitration or court. This regulation is intended to effectively prevent opportunistic behavior in arbitration proceedings.

5. Arbitrators

Based on Article 17 of the 2003 Commercial Arbitration Ordinance, the Commercial Arbitration Bill maintains regulations on minimum standards for Arbitrators to set forth proper orientations for the formation and development in Vietnam of a core team of arbitrators who exhibit capability, professionalism, knowledge, and social reputation. Accordingly, individuals with civil capacity, a university degree or higher, and a practice experience of five years or more are eligible to become arbitrators. Particularly, the Bill introduces new regulations granting Arbitration Centers the authority to establish higher standards for arbitrators on their list. However, in principle and as per the global practices, in all cases, whether the dispute is resolved at an arbitration center or through ad-hoc arbitration, the arbitrator is chosen by the parties themselves based on their trust in the individual’s professionalism, expertise, and reputation. In such cases, any qualified professional can be selected by the parties as the arbitrator for their case. Most countries’ Arbitration Laws do not provide rigid standards for arbitrators. Embracing that spirit, the Bill adds new regulations: "In cases where the requirements stated in item b above are not met, experts with high professional qualifications and extensive practical experience can be appointed by the Arbitration Center."

Overcoming the limitations of the 2003 Commercial Arbitration Ordinance, the Commercial Arbitration Bill does not mandate arbitrators to have Vietnamese nationality. This means that foreigners can also serve as arbitrators in Vietnam if the disputing parties or the Arbitration Center trust them. This regulation meets practical needs as Vietnam endeavors to enhance international economic integration.

The Bill introduces new regulations on the scope of arbitrators’ responsibilities (Article 19). Accordingly, arbitrators are only held responsible for their actions when they intentionally violate the regulations of this Law. This regulation is essentially consistent with the legislative practices and experiences of many countries, aiming to promote awareness of law compliance and the impartiality and objectivity of arbitrators.

To encourage arbitrators’ activities, create conditions for them to enhance their professional arbitration qualifications, protect their rights, and fulfill their obligations effectively, the Bill stipulates the establishment of the Arbitration Association (Article 20). The establishment and operation of the Arbitration Association align with the regulations of the law on Professional Associations.

6. Types of arbitration

Concerning arbitration regulations, in comparison to the 2003 Commercial Arbitration Ordinance, the Commercial Arbitration Bill supplements the following contents:

Firstly, compared to the 2003 Ordinance, the Commercial Arbitration Bill introduces a legal definition of Statutory Arbitration to replace the concept of "Arbitral Tribunal established at the Arbitration Center" specified by the 2003 regulations. Accordingly, Statutory Arbitration is a form of arbitration conducted at the Arbitration Center and follows the procedural rules of the Arbitration Center (Clause 7, Article 3).

Secondly, to promote arbitration activities, the Bill stipulates that in dispute resolution activities, arbitration centers are non-profit organizations with legal status, a distinct seal, and accounts (Article 25).

Thirdly, the Bill permits foreign arbitration organizations to open branches and representative offices in Vietnam following Vietnamese law and international treaties to which Vietnam is a party (Article 28).

Ad-hoc arbitration: This type of arbitration, popular in many countries, meets the demand for dispute resolution in the market economy, especially for the rapidly growing small and medium-sized enterprises today. This type has the advantage of accommodating the flexible choices of the disputing parties. The Bill introduces the concept of Ad-hoc Arbitration as a form of arbitration established by the parties to resolve disputes according to the order and procedures agreed upon by them, replacing the concept of an Arbitral Tribunal established by the parties under the previous Ordinance.

7. Arbitration fees and seat of arbitration:

The Bill clearly defines arbitration fees, stating that they are revenues generated from providing dispute resolution services by arbitration (Article 33). Arbitration fees may include:

a. Remunerations, travel expenses, and other expenses for Arbitrators;

b. Fees for expert consultation and other assistance at the request of the Arbitral Tribunal;

c. Administrative charges;

d. Fees for appointing an ad-hoc arbitrator at the request of the disputing parties;

dd. Fees for using other utilities provided by the Arbitration Center.

Overcoming the limitation in Article 23 of the Ordinance regarding the set of arbitration, the Bill removes the regulation stating that "the seat must ensure convenience for the parties in dispute resolution" and only stipulates that "the parties have the right to agree on the seat of arbitration to resolve their dispute. In case there is no agreement, the Arbitral Tribunal shall decide" (Article 34 of the Bill).

8. Interim urgent measures

The Bill significantly enhances the position of Arbitration by allowing the Arbitrators to request the disputing parties to take interim urgent measure(s) (Article 48). This regulation aims to make arbitration proceedings more effective. With respect to this, the Bill incorporates the regulations of the UNCITRAL Model Law passed in 2006. The Bill clearly defines the cases in which the Arbitral Tribunal or Court is required to apply interim urgent measures. Additionally, the Bill determines that if a party brings the application of interim urgent measures to the Court, this request will not be considered a rejection of the arbitration agreement or a waiver of the right to arbitrate disputes (Article 52).

9. Dispute resolution sessions

Regarding dispute resolution sessions in arbitration proceedings, two crucial issues are addressed:

- Concerning the location of the dispute resolution session, as specified in Article 34 of the Bill, the parties have the right to agree on the location for dispute resolution, including the meeting location convenient for the parties, even abroad. If the parties do not agree, the Arbitral Tribunal will decide.

- Concerning the language for conducting dispute resolution sessions, the Bill specifies that the language used in arbitration proceedings is Vietnamese, and for disputes with foreign elements, the language used is the one agreed upon by the parties. If there is no agreement, the language for arbitration proceedings will be decided by the Arbitral Tribunal (Article 9).

The Bill provides more specific regulations on the procedure for postponing the dispute resolution session. When there is a legitimate reason, one party or both parties can request the Arbitral Tribunal to postpone the dispute resolution session. The request must be made in writing, clearly stating the reason with evidence, and received by the Arbitral Tribunal no later than seven working days before the opening date of the dispute resolution session. If the Arbitral Tribunal does not receive the request within this deadline, the party requesting the postponement of the dispute resolution session must bear all costs incurred, if any. The Arbitral Tribunal shall consider and decide whether to accept the request for postponement and promptly notify the parties. If it considers that there is not enough basis to conduct a dispute resolution session, the Arbitral Tribunal can postpone the meeting and promptly notify the parties (Article 56 of the Bill).

10. Arbitral awards

To distinguish it from other decisions of the Arbitral Tribunal throughout the proceedings, the award represents the final decision on the claim after the Arbitral Tribunal has reviewed the records, collected evidence, taken witness statements, heard the parties, engaged in debates among the arbitrators, and voted by majority rule.

The Bill introduces the case that if a majority is not reached, the award will be made according to the opinion of the Chairman of the Arbitral Tribunal (Article 59 of the Bill).

The arbitral award must be signed by the arbitrators. However, if an arbitrator refuses to sign the award, the Chairman of the Arbitral Tribunal shall record this in the award and clearly state the reason. In this case, the arbitral award remains valid.

If the arbitral award contains mathematical or other technical errors, one party or any parties may request the Arbitral Tribunal to correct those errors. Additionally, one or more parties have the right to request the Arbitral Council to explain the award (Article 63 of the Bill). Even in cases where the Arbitral Tribunal’s award contains errors that may lead to the court’s consideration of annulment of the award, the court, on its own or at the request of a party, may create conditions for the Arbitral Tribunal to have the opportunity to correct those errors (Article 71 of the Bill).

The draft also includes the obligation to keep records and specifies the record retention period of the Arbitration Center. If the parties so request, the arbitral award may be registered at a competent court.

11. Enforcement of arbitral awards and annulment of arbitral awards

a. Enforcement of arbitral awards:

In principle, domestic arbitral awards are final and valid, requiring strict implementation by state agencies, organizations, and individuals. The executing party has the right to request the competent authority to enforce the arbitral award according to the regulations of Article 66 of the Bill on Commercial Arbitration.

b. Annulment of arbitral awards:

The Bill has mitigated the risk of an arbitrator’s award being annulled by the Court, addressing inappropriate regulations of the 2003 Ordinance. For instance, regulations granting a party the right to submit an application to the Court to request the annulment of an arbitral award merely because they "do not agree with the arbitral award" have been revised because such regulations in the Ordinance increased the risk and jeopardized the finality of the arbitral award, which is recognized by the laws of our country and most other nations.

12. Relationship between Arbitration and Courts

A crucial focus of the Commercial Arbitration Bill is the relationship between Arbitration and Courts throughout the process of resolving disputes between parties. The bill introduces a series of new regulations to define this significant legal relationship. Article 7 recognizes the Court’s authority, and several other articles detail specific instances of Court support for Arbitration.

The clarity and certainty provided by these new regulations in the Commercial Arbitration Law will create favorable conditions for Courts, Arbitral Tribunals, and disputing parties to avoid confusion in specific cases. This clarity is conducive to the effective arbitration.

III. Controversial issues

(1) Regarding the jurisdiction of Arbitration:

During the drafting of the Commercial Arbitration Law, two groups of opinions emerged on the scope of the jurisdiction of Arbitration. The first group advocates limiting the scope to encompass commercial activities according to the regulations of the 2005 Commercial Law. This group also suggests expanding the jurisdiction to include cases involving only one party with commercial activities and cases that, although not arising from commercial activities, are governed by other laws. The rationale behind this viewpoint includes: first, the relatively low number of cases resolved at current arbitration centers, limited popularity and awareness of the arbitration dispute resolution method in the country, and concerns about the ability and professional reputation of some arbitrators; second, the concept of "commercial activities" which has been relatively expanded under the 2005 Commercial Law allowing parties to refer disputes mostly to arbitration for resolution; third, the Model Law of the United Nations Commission on International Trade Law (UNCITRAL Model Law 2006) also underscores the jurisdiction of arbitration in commercial disputes. Consequently, the first group argue that, in the short term, the scope of the Arbitrator's jurisdiction should not be broadened. The Drafting Committee concurred with the proposal to confine the jurisdiction of Arbitration to commercial activities as outlined in the Commercial Law.

The second group of opinions contends that it is necessary to broaden the jurisdiction of Arbitration to cover all disputes related to the rights and interests of parties arising from contractual or non-contractual obligations between civil entities, regardless of commercial or civil nature. Further analyses of the arguments for this idea have been mentioned at the beginning hereof.

(2) Regarding standards of Arbitrators

As is customary in other countries, the selection of arbitrators is entirely agreed upon by the parties on a voluntary basis. Therefore, the Commercial Arbitration Law does not impose regulations on general standards for arbitrators. However, there are still two different perspectives on this matter. The first perspective contends that there should be no standardized criteria for arbitrators, aligning with international practice. The second perspective argues that, given the expansion of the arbitrator’s authority, it is crucial to pay special attention to the professional qualifications of arbitrators, particularly in consideration of Vietnam’s socio-economic characteristics. Therefore, standards for selecting arbitrators are deemed necessary to prevent procedural errors in arbitration dispute resolution. Article 17 of the Bill outlines the Drafting Committee’s perspective on this matter.

(3) Regarding foreign arbitration in Vietnam

Foreign arbitration remains an issue with varying opinions. Some countries, like Singapore, have separate laws for the regulation of foreign and domestic arbitration. However, considering Vietnam’s circumstances, the Bill does not address this issue in a separate section but mentions it in different regulations, such as Article 28 regarding branches and representative offices of foreign arbitration bodies in Vietnam, and Article 66 covering the enforcement of arbitral awards, which stipulates the recognition and enforcement of foreign arbitral awards in Vietnam, etc.

(4) Regarding the authority of the Arbitral Tribunal to apply interim urgent measures

The authority of the Arbitral Tribunal to apply interim urgent measures is a matter that engenders two divergent groups of opinions. The first group asserts that only the court holds the authority to implement interim urgent measures when deemed necessary, ensuring their effectiveness and feasibility. Thus, the existing regulations of the 2003 Commercial Arbitration Ordinance should be retained, allowing the court, upon request by the parties and the Arbitral Tribunal, to consider applying certain interim urgent measures. The second group maintains that, in addition to the court’s authority to assist the arbitrator in applying interim urgent measures, the Arbitral Tribunal should also possess the right to apply measures aiding the parties in maintaining and restoring the current status of the dispute. This includes taking necessary asset preservation measures to ensure judgment enforcement, preserving relevant evidence, or safeguarding assets linked to the dispute. Specifically, for certain disputes involving perishable assets and goods, waiting for court procedures might not be timely and could lead to unnecessary losses. The Commercial Arbitration Bill aligns with this second approach. Accordingly, alongside the court’s mandatory authority, the Arbitral Tribunal is granted the authority to request the disputing parties (limited only to these parties and not extending to other individuals or authorities) to apply interim urgent measures, as specified in Article 48 of the Bill. Simultaneously, to ensure the legal binding and feasibility of these measures, the Bill specifies that the party requesting the application of interim urgent measures must take responsibility for their request. If the requesting party incorrectly applies interim urgent measures, resulting in damage to the other party or a third party, compensation must be provided (Article 51). An essential guarantee for the enforcement of the interim urgent measures issued by the Arbitral Tribunal is the regulation that a party can request the enforcement agency to enforce these interim urgent measures (Article 48).

(5) Registration of ad-hoc arbitral awards

The registration of ad-hoc arbitral awards remains a controversial issue. Objections to this regulation primarily arise from the argument that its incorporation into the Commercial Arbitration Law deprives the right to choose ad-hoc arbitration, as this clause is deemed to prioritize regulatory arbitration. There is also a perspective that, in Vietnamese practice, ensuring the legality of ad-hoc arbitration, especially during the enforcement of awards, plays a crucial role. Therefore, registration with the court is necessary to support the enforcement of the ad-hoc arbitral awards.

Because there are still various opinions on this issue, the Bill provides two options:

Option 1: Article 62 on the registration of ad-hoc arbitral awards will not be included.

Option 2:

1. At the request of one party or the disputing parties, the ad-hoc arbitral award may be registered with the competent court, as per the regulations of Article 7 of this Law, to support the enforcement of such ad-hoc arbitral award.

2. The party requesting the registration of the ad-hoc arbitral award must submit an application for registration to the competent court, including the following documents:

   - The arbitral award issued by the Ad-hoc Arbitral Tribunal;

   - Minutes of the dispute resolution session of the Ad-hoc Arbitral Tribunal;

   - Arbitration agreement.

3. Within 5 working days from the date of receiving the application for the registration of an ad-hoc arbitral award and the attached documents mentioned in Clause 2 above, the competent court must notify the disputing parties about the registration or refusal to register the ad-hoc arbitral award in that case. In case of refusal to register the ad-hoc arbitral award, the court must clearly state the reason.

(6) Regarding the organizational model of Arbitration in Vietnam

In accordance with arbitration practices in other countries, there is no national arbitration body overseeing the activities of local arbitration bodies. Instead, arbitration bodies are established based on the needs of socio-economic development. Therefore, the Drafting Committee holds the opinion that, in addition to the law regulations promoting ad-hoc arbitration, Arbitration Centers (Regulatory Arbitration) should be responsible for providing administrative and office services to support ad-hoc arbitration. According to the Drafting Committee, there should not be a single national arbitration body directing local arbitration bodies. Instead, the establishment of local arbitration bodies should be driven by the requirements of local socio-economic development. In principle, if there are at least 5 arbitrators meeting the regulatory standards, they can apply to establish an arbitration center. However, the Arbitration Association should serve as a consulting bodies for the State authorities to ensure that the formation of arbitration centers aligns with the development needs of the economy and maintains rigor, avoiding rampant or arbitrary development thereof.

The above constitutes the fundamental aspects of the Commercial Arbitration Bill. The Drafting Committee respectfully submits it to the National Assembly for consideration and decision.