In the context of deepening global economic integration, foreign arbitration has emerged as a preferred method for resolving disputes, both globally and in Vietnam. This approach not only ensures fairness and independence but also reflects Vietnam’s commitment to fostering a transparent and conducive legal environment for international investment and cooperation. As a rapidly developing nation, Vietnam recognizes the critical importance of establishing a legal framework aligned with international standards. In the realm of commercial dispute resolution, the recognition and enforcement of foreign arbitral awards play a pivotal role in creating a stable, secure, and equitable business and investment climate. This article provides a detailed overview of the procedures, conditions, and legal framework governing the recognition and enforcement of foreign arbitral awards in Vietnam.
Mục lục bài viết
1. Methods for Resolving Commercial Disputes
According to Article 317 of the Commercial Law 2005, commercial disputes can be resolved through the following four methods:
- Direct negotiation between the parties;
- Mediation facilitated by an agency, organization, or individual mutually agreed upon by the parties as a mediator;
- Resolution through commercial arbitration;
- Litigation in a court.
These methods offer flexibility, allowing parties to choose the approach best suited to their needs and circumstances.
2. Commercial Dispute Resolution through Arbitration
Commercial arbitration is a dispute resolution mechanism where an independent third party, the arbitrator, resolves conflicts by issuing a binding arbitral award that the parties are obligated to respect and implement. Arbitration is characterized by the following key features:
- It is initiated only upon the request of the disputing parties and for disputes within the jurisdiction of arbitration.
- The resolution is conducted by arbitrators, acting independently or as part of an arbitration tribunal composed of multiple arbitrators.
- It combines party agreement with a binding decision, balancing autonomy and legal enforceability.
- Arbitration ensures confidentiality, protecting sensitive commercial information.
This method is highly valued for its efficiency, flexibility, and ability to preserve business relationships.
3. What is a Foreign Arbitral Award?
A foreign arbitral award is an award issued by a foreign arbitration tribunal, regardless of whether it was pronounced within or outside the territory of Vietnam. As defined in Clause 12, Article 3 of the Commercial Arbitration Law 2010:
“A foreign arbitral award is an award issued by a foreign arbitration tribunal outside the territory of Vietnam or within the territory of Vietnam to resolve a dispute chosen by the parties’ agreement.”
4. Conditions for a Foreign Arbitral Award to Be Effective in Vietnam
For a foreign arbitral award to be recognized and enforced in Vietnam, it must satisfy two primary conditions: the country issuing the award and the nature of the award.
First, the condition regarding the issuing country:
A foreign arbitral award is eligible for recognition and enforcement in Vietnam only if the country where the arbitration is seated and Vietnam are both parties to an international treaty on the recognition and enforcement of foreign arbitral awards, such as the 1958 New York Convention.
Second, the principle of reciprocity:
If the country issuing the award is not a party to an international treaty with Vietnam, recognition and enforcement will be considered based on the principle of reciprocity. This principle ensures fairness in international legal relations and protects the rights of Vietnamese citizens and entities abroad.
As stipulated in Article 424 of the Civil Procedure Code 2015:
“1. The following foreign arbitral awards shall be considered for recognition and enforcement in Vietnam:
a) Awards issued by a foreign arbitration tribunal in a country that, together with the Socialist Republic of Vietnam, is a party to an international treaty on the recognition and enforcement of foreign arbitral awards;
b) Awards issued by a foreign arbitration tribunal not covered under point a of this clause, based on the principle of reciprocity.
Foreign arbitral awards specified in Clause 1 of this Article eligible for recognition and enforcement in Vietnam are final awards of the arbitration tribunal that resolve the entire dispute, terminate arbitration proceedings, and are enforceable.
Foreign arbitration and foreign arbitral awards specified in Clause 1 of this Article shall be determined in accordance with the provisions of Vietnam’s Commercial Arbitration Law.”
Additionally, the award must be a final award, resolving the entire dispute, terminating arbitration proceedings, and being enforceable.
5. When is the Procedure for Recognition and Enforcement of Foreign Arbitral Awards Required?
The procedure for recognition and enforcement of a foreign arbitral award is required when the party entitled to enforcement or their legal representative requests a Vietnamese court to recognize and enforce the award. According to Article 425 of the Civil Procedure Code 2015:
“1. The party entitled to enforcement or their legal representative has the right to request a Vietnamese court to recognize and enforce in Vietnam a civil judgment or decision of a foreign court or a foreign arbitral award if the individual obligated to comply resides or works in Vietnam, or the agency or organization obligated to comply has its headquarters in Vietnam, or the assets related to the enforcement of the foreign court’s civil judgment or decision or foreign arbitral award are located in Vietnam at the time of the request.
2. The party obligated to comply or their legal representative has the right to request a Vietnamese court not to recognize a foreign court’s civil judgment or decision.
3. The parties, persons with legitimate rights and interests, or their legal representatives have the right to request a Vietnamese court not to recognize a foreign court’s civil judgment or decision that does not require enforcement in Vietnam.”
6. Principles for Recognition and Enforcement of Foreign Arbitral Awards
The recognition and enforcement of foreign arbitral awards in Vietnam are governed by two fundamental principles under Article 424 of the Civil Procedure Code 2015:
- Based on international treaties: Awards from countries that, together with Vietnam, are parties to international treaties, such as the 1958 New York Convention, are eligible for recognition and enforcement.
- Based on the principle of reciprocity: Awards from countries not party to such treaties with Vietnam are considered based on reciprocity, ensuring mutual fairness in international legal relations.
Furthermore, the award must be a final award, resolving the entire dispute, terminating arbitration proceedings, and being enforceable.
7. Procedure for Recognition and Enforcement of Foreign Arbitral Awards
The procedure for recognizing and enforcing foreign arbitral awards in Vietnam is detailed in Chapter XXXVII of the Civil Procedure Code 2015, comprising the following steps:
Step 1: Preparing the Application File
The party entitled to enforcement or their legal representative prepares an application file, including:
- An application for recognition and enforcement of the foreign arbitral award, complying with the requirements under Clause 1, Article 452 of the Civil Procedure Code 2015.
- Documents as required by international treaties to which Vietnam is a party. If there is no treaty or the treaty does not specify, the following must be included:
- The original or a certified copy of the foreign arbitral award;
- The original or a certified copy of the arbitration agreement between the parties.
Documents in a foreign language must be accompanied by a legally certified or notarized Vietnamese translation.
Step 2: Submitting and Transferring the Application File
The application file is submitted to the Ministry of Justice of Vietnam or a competent Vietnamese court.
- If submitted to the Ministry of Justice:
- Within 5 working days, the Ministry of Justice transfers the file to the competent court.
- If the Ministry receives notification from a foreign competent authority that the award is under review, annulled, or suspended, it must immediately notify the court in writing.
- If submitted to a court:
- If the court finds that the matter falls under the jurisdiction of another Vietnamese court, it will issue a decision to transfer the file, remove the request from its register, and promptly notify the competent Procuracy and the parties involved.
Step 3: Acceptance of the Application File
Within 5 working days from receiving the file from the Ministry of Justice or the applicant, the competent court accepts the case and notifies in writing:
- The party entitled to enforcement;
- The party obligated to comply or their legal representative in Vietnam;
- The Procuracy at the same level;
- The Ministry of Justice.
Step 4: Reviewing the Application and Issuing a Decision
The review of the application is conducted under Articles 457 and 458 of the Civil Procedure Code 2015.
Within 2 months from the date of acceptance, the court may issue one of the following decisions:
- Temporarily suspend the review of the application;
- Terminate the review of the application;
- Convene a hearing to review the application.
After reviewing the application, accompanying documents, and hearing the opinions of summoned parties and the Procurator, the panel deliberates and decides by majority vote, issuing one of two decisions:
- Recognize and enforce the foreign arbitral award in Vietnam;
- Refuse to recognize the foreign arbitral award.
8. Cases Where Foreign Arbitral Awards Are Not Recognized or Enforced
According to Article 459 of the Civil Procedure Code 2015, foreign arbitral awards will not be recognized or enforced in Vietnam in the following cases:
Cases based on evidence provided by the party obligated to comply:
- The parties signing the arbitration agreement lacked the capacity to do so under the law applicable to each party.
- The arbitration agreement is not legally valid under the law chosen by the parties or the law of the country where the award was issued (if no law was chosen).
- The party obligated to comply was not properly or timely notified of the appointment of arbitrators, arbitration proceedings, or was unable to exercise their procedural rights for justifiable reasons.
- The award addresses a dispute not requested by the parties or exceeds the scope of the arbitration agreement. (Note: If the valid portion of the award can be separated, it may still be recognized and enforced.)
- The composition of the foreign arbitration tribunal or its dispute resolution procedures did not comply with the arbitration agreement or the law of the country where the award was issued.
- The award is not yet binding on the parties.
- The award has been annulled or suspended by a competent authority in the country where it was issued or under the applicable law.
Cases determined by the Vietnamese court:
- The dispute cannot be resolved through arbitration under Vietnamese law.
- The recognition and enforcement of the award would be contrary to the fundamental principles of Vietnamese law.
The recognition and enforcement of foreign arbitral awards in Vietnam not only demonstrate respect for international commitments but also contribute to creating a transparent and favorable legal environment for global economic cooperation. The procedure is meticulously designed to ensure fairness and compliance with international standards while protecting the legitimate rights and interests of the parties involved. With clear provisions in the Civil Procedure Code 2015 and the Commercial Arbitration Law 2010, Vietnam is solidifying its position as a reliable destination for international investors and businesses.
Disclaimer:
This article is intended for informational purposes only and does not constitute legal advice from HTH & Partners. The content represents the views of HTH & Partners and is subject to change without prior notice.
The legal provisions referenced in this article were valid at the time of publication but may have been amended or repealed by the time of reading. We strongly recommend consulting a qualified legal professional before applying any information contained herein.
