More consistent foreign arbitration rules needed for investment

The rule of law and its enforcement is crucial for an improved business environment. - Photo sblaw.vn

That content was among the discussion of experts at the launch of the ‘Judicial Manual for Commercial Mediation and Arbitration’ on Tuesday held by International Finance Corporation (IFC) and Viet Nam’s Supreme People’s Court.

Viet Nam is a signatory to many international treaties governing international trade and investment, including the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (New York Convention 1958). Becoming a member of an international framework for resolving business conflicts is an important step to persuade foreign businesses to consider business engagements in Viet Nam.

The country is aiming to complete its legislative and regulatory framework to ensure consistency between Viet Nam’s law and international regulations on commercial dispute resolutions.

According to Chu Trung Dung, deputy director of the Ministry of Justice’s International Co-operation Department, Vietnamese judges have lacked understanding and experience in dealing with the cases relevant to foreign arbitral awards in the country.

Viet Nam officially joined the New York Convention 1958 in 1995 but only since the Civil Procedural Code was promulgated in 2015 have various former legal issues and inconsistencies between the Vietnamese regulations and the convention been overcome and improved.

Dung said the number of cases requiring the recognition and enforcement of foreign arbitral awards in Viet Nam is not large. The cases are concentrated in big cities with many industrial parks and commercial investments such as Ha Noi, HCM City and Dong Nai.

“The number of cases has been increasing, however, and judicial authorities have organised many meetings to discuss solutions to address this issue,” Dung said.

Nguyen Dinh Tien, deputy chief judge on the Economic Court of Ha Noi People’s Court, said there are still shortcomings between the recognition of foreign arbitral awards and enforcement. He explained that the enforcement procedure must comply with the law on judgment enforcement.

Though the 2015 Civil Procedural Code has made progress in enhancing the roles of courts in promoting alternative dispute resolution and the court’s recognition of out-of-court mediated settlement agreements, experts have called for greater improvements in enforcement capacity.

“The rule of law and its enforcement is crucial for an improved business environment,” said Kyle Kelhofer, IFC Country Manager for Viet Nam, Cambodia and Lao PDR.

“Businesses and investors need clarity on rights and procedures to enforce contracts in Viet Nam. When something goes wrong, both parties should know what to expect from the legal and arbitration system,” Kelhofer said.

The Judicial Manual for Commercial Mediation and Arbitration, jointly developed by IFC, a sister organisation of the World Bank and member of the World Bank Group, and Viet Nam’s Supreme People’s Court, provides reference information for judges related to alternative dispute resolution and offers a how-to on applying arbitration laws in a uniform manner.