Resolving disputes in business and commerce

In trade and commerce, if either party has a debate but cannot be negotiated with each other, the method of the settlement will be as follows: (i) by commercial mediation, (ii) by the court, and (iii) by arbitration.

Legal grounds

Based on the latest business and commercial dispute resolution laws in 2019.
– 2005 Commercial Law.
– 2015 Civil Code.
– 2010 Arbitration Law.
– Decree 22/2017/ND-CP on commercial mediation.

Counseling on resolving disputes in business and commerce for free

At the first meeting between the consulting lawyer and the client, the lawyer will provide free consultation on business and commercial disputes to the client, giving the procedures and order of settlement under the provisions of the law of Vietnam.

1. Solving business and trade disputes with commercial mediation

What is commercial conciliation?

Commercial mediation is a method of resolving commercial disputes agreed upon by the parties and has a mediator on trade to act as an intermediary to support the dispute settlement.

The Government officially announced Decree 22/2017/ND-CP on trade mediation. This decree encourages the business community to consider commercial conciliation as an alternative dispute resolution process.

Advantages of commercial mediation:

– The conciliation procedure is quick, no restricted, and saves time.

– The parties have the right to decide and choose any person to mediate and the venue for the mediation. Therefore, they can find a mediator with professional knowledge of the dispute.

– Amicable conciliation aims to continue preserving and developing business relationships for the benefit of both sides. Therefore, it is less harmful to the inherent cooperative relations of the parties.

– It can keep disputes and business issues confidential.

Limitations of commercial mediation:

– Whether conciliation is conducted or not depends on the agreement of the parties. The mediator has no right to make a binding decision or impose any matter on the parties. The mediation agreement is not enforceable like the decision of
arbitration or a court.

Model terms of mediation in business and commerce

PA Law Firm recommends that the parties use the following sample mediation clauses in the contract:

Model terms of conciliation:

“Any dispute arising out of or relating to this contract will be resolved by conciliation at (place) under this Center’s Mediation Rules.”

2. Settlement of business and commercial disputes by arbitration

Disputes in trade and commerce will be settled by arbitration if the parties have agreed on arbitration in commercial contracts or have a separate agreement to resolve the case by arbitration after the dispute occurs.

Advantages of resolving disputes in business and commerce by arbitration

– Neutrality: The parties to international contracts often come from different countries and locations. This method allows the parties to select arbitration from a neutral organization/country by an arbitral tribunal set up by a procedure that also ensures its neutrality.

– Flexibility: The dispute resolution process is built following the requirements of the parties in each dispute. The arbitration award is legally binding, and the final judgment – equivalent to the court’s active sentence. Accordingly, the arbitration award is recognized to be valid and enforceable immediately at the national and international levels. Meanwhile, if you want to know and enforce a judgment of a National Court abroad, it depends on the specific international treaties signed between those two countries.

– Confidentiality: The settlement of disputes in business and commerce by arbitration aims to protect business secrets as well as avoid adverse effects from the conflict to the operation and reputation of the parties.

Form of Arbitration Terms

PA Law Firm recommends that the parties use the following Arbitration Terms in the contract.

Any dispute arising out of or relating to this contract shall be resolved by arbitration at the Arbitration Center following the Arbitration Rules of this Center.

(a) The number of arbitrators is [one or three].
(b) The venue of the arbitration is [city or country].
(c) The law applicable to contracts is []. *
(d) The language of arbitration is []. **

3. Resolving disputes in business and commerce by court

The settlement of conflicts by the court is a form of resolving disputes through the activities of courts, on behalf of the State, to make coercive judgments to force the parties to implement.

In the course of resolving business disputes, the court must follow a particular order and procedure specified by law, such as lawsuits, court proceedings, court decisions, and enforce the sentence.

Dispute resolution in court can be made through two levels of trial: first instance and appellate. Judgments with legal validity may also be reviewed according to procedures: supervisory or retrial.

Advantages of resolving disputes in business and commerce by court

– The order and procedures are strict. The validity of the verdict is more feasible than arbitration. As a state judicial body, the court’s judgment is highly coercive. Therefore, when the dispute is brought to court, the rights of the person who won will be guaranteed.

– The parties do not have to pay the judge, so the court fee is cheap and very reasonable.

Limitations of dispute resolution in business and commerce by court

– Court procedures are not flexible, complicated, and cumbersome, so the time for resolving cases is often very long.

– Court judgments are often appealed. The proceeding process can be delayed and prolonged, going through many levels of trial, thus adversely affecting the business and production processes.

– The principle of the public examination of the court reveals business secrets and reduces the prestige in the marketplace.