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Contract dispute resolution methods according to Vietnamese law. Let’s explore through this article.
What is a Contract Dispute?
A contract dispute is understood as a disagreement or conflict between parties in a contractual relationship regarding their rights and obligations under the signed contract.
Contract disputes include civil contract disputes and commercial contract disputes.
Characteristics of Contract Disputes
- Disputes arise directly from the contractual relationship.
- Disputes typically involve assets or other interests related to the disputing parties.
- The principle of resolution is equality and agreement.
Contract Dispute Resolution Methods in Vietnam
According to Vietnamese current legal regulations, there are four methods of resolving contract disputes:
1/ Negotiation.
2/ Mediation.
3/ Litigation at Court.
4/ Arbitration.
Resolving Contract Disputes Through Negotiation
Resolving contract disputes through negotiation involves the disputing parties discussing and agreeing on a solution to the conflict without the involvement of the state or any third party. Most current contract disputes are resolved through negotiation.
Characteristics of Resolving Contract Disputes Through Negotiation
The parties voluntarily agree on a solution to the conflict regarding rights and obligations in the contract.
There is no involvement of a third party outside the disputing parties.
After agreeing on the solution, the disputing parties must voluntarily implement the agreed solution.
Advantages of Resolving Contract Disputes Through Negotiation
Simple, quick, and flexible.
No costs involved.
Does not harm the cooperative relationship between the disputing parties, allowing for future collaboration.
No need to provide information or documents to a third party, thus preserving business secrets.
Disadvantages of Resolving Contract Disputes Through Negotiation
This method requires goodwill and effort from all parties to resolve the dispute; otherwise, the chances of success are low.
The negotiation result is not binding and is voluntarily implemented by the parties, so if one party does not follow through, the negotiation is ineffective.
One party may exploit the negotiation process to delay fulfilling their obligations, which could cause the other party to lose the right to sue due to the expiration of the statute of limitations.
Resolving Contract Disputes Through Mediation
Resolving contract disputes through mediation involves a third party acting as an intermediary to help persuade the disputing parties to find solutions to resolve the conflict. Currently, there are several forms of mediation:
Commercial Mediation: A commercial mediator acts as an intermediary to help resolve contract disputes.
Court Mediation: Before the court accepts a civil case, the parties can request a court-appointed mediator to assist in mediating the dispute.
Civil Procedure Mediation: Mediation is a mandatory procedure in resolving civil cases (except in specific cases where mediation is not allowed). During the case resolution process, the court facilitates an agreement between the parties on dispute resolution.
Arbitration Procedure Mediation: At the parties’ request, the arbitration council mediates the dispute.
Advantages of Resolving Contract Disputes Through Mediation
Simple, quick, and flexible.
No costs involved.
Does not harm the cooperative relationship between the disputing parties, allowing for future collaboration.
Mediation originates from the parties’ voluntary agreement, so they are likely to implement the mediation agreement seriously.
The parties can request the court to recognize the mediation result, making it enforceable between the parties.
Disadvantages of Resolving Contract Disputes Through Mediation
This method requires goodwill and effort from all parties to resolve the dispute; otherwise, the chances of success are low.
One party may exploit the mediation process to delay fulfilling their obligations, which could cause the other party to lose the right to sue due to the expiration of the statute of limitations.
Resolving Contract Disputes Through Litigation at Court
Resolving contract disputes through litigation at court involves the competent people’s court resolving the contract dispute according to the procedures specified in the Civil Procedure Code.
Characteristics of Resolving Contract Disputes at Court
The resolution must follow the strict procedures stipulated in the Civil Procedure Code.
The resolution is conducted through two levels of trial: first instance and appellate.
The court trial is public.
The court’s enforceable judgment is ensured by state enforcement.
Advantages of Resolving Contract Disputes at Court
The court’s enforceable judgment is binding.
Resolving disputes through multiple levels of trial ensures the court’s judgment is accurate and lawful.
Low dispute resolution costs.
Disadvantages of Resolving Contract Disputes at Court
Court procedures are often complex and lengthy.
Public court trials may expose business secrets during the dispute resolution process.
Resolving disputes at court creates a tense adversarial atmosphere, making it difficult to maintain future business relations.
A Vietnamese court judgment to be enforced abroad must go through a strict recognition procedure by the country where the judgment is to be enforced.
Resolving Contract Disputes Through Commercial Arbitration
Resolving contract disputes through commercial arbitration involves an arbitration council or arbitrator resolving the contract dispute between the parties according to arbitration procedures agreed upon by the parties.
Resolving disputes through commercial arbitration only applies to commercial contract disputes and not to civil contract disputes.
Forms of Commercial Arbitration
There are two forms of commercial arbitration: ad-hoc arbitration and institutional arbitration.
1/ Ad-hoc Arbitration:
- Established by the parties to resolve the dispute and ceases to exist after the dispute is resolved.
- No specific arbitration procedure; the arbitration procedure for each case is agreed upon by the disputing parties.
2/ Institutional Arbitration:
- Has an organizational structure and management established according to legal regulations.
- Has a list of arbitrators for the disputing parties to choose from.
- Each arbitration center has its own arbitration procedure.
Advantages of Resolving Contract Disputes Through Commercial Arbitration
Arbitration has only one level of trial and is final, enforceable for the parties.
Flexible and quick dispute resolution in terms of time and place.
Arbitrators chosen by the disputing parties facilitate a less tense resolution process compared to court, allowing for possible settlement.
Arbitration is confidential, protecting business and technological secrets.
Disadvantages of Resolving Contract Disputes Through Commercial Arbitration
High costs.
Parties can only file a lawsuit with commercial arbitration if there is an agreement to resolve the dispute through arbitration.
Commercial arbitration often faces difficulties in collecting documents, evidence, or summoning witnesses due to a lack of state authority like courts.
The arbitration award can be reviewed and annulled by the court if there are grounds for annulment according to the law.
Each dispute resolution method has its own advantages and disadvantages. Therefore, depending on the specific case, the disputing parties should choose the most suitable resolution method according to their conditions and circumstances.
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