Duong Hoai An[1]
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| A court hearing at the Hanoi People’s Court__Photo: Kim Anh/VNA |
Identification of business and commercial disputes subject to courts’ resolution
Article 30 of the Civil Procedure Code (the Code) enumerates business and commercial disputes that Vietnamese courts have jurisdiction to resolve. Compared to the 2004 Civil Procedure Code and its 2011 amendments, Article 30 of the Code adds two types of business and commercial disputes falling under courts’ jurisdiction to resolve, including (i) disputes between non-members of a company who have transactions involving transfer of capital contributions with the company or a company member, and (ii) other business and commercial disputes, except those falling within the competence of other agencies and organizations as specified by law. These provisions are similar to those of the 2005 Commercial Law and the 2010 Law on Commercial Arbitration.
Delineation of jurisdiction to resolve disputes between arbitrations and courts
As in other countries around the world, in Vietnam, an arbitral tribunal may become competent to settle a business and commercial dispute if disputing parties establish an arbitration agreement, before or after the dispute arises, to refer their dispute to arbitration. If either of the disputing parties, after reaching an arbitration agreement, initiates a lawsuit at court, the court should refuse to accept the case, unless the arbitration agreement is null and void, inoperative and incapable of being performed.
The 2010 Law on Commercial Arbitration stipulates that an arbitration agreement may be established before or after a business and commercial dispute arises. However, it fails to specify at which time such agreement should be established, giving rise to a question whether disputing parties can agree to have their dispute arbitrated if they have no arbitral agreement before the dispute arises and, when the dispute arises, either of them initiates a lawsuit to bring the dispute to the court. Therefore, it is required to clearly define the jurisdiction to settle business and commercial disputes either at court or arbitration with more specific regulations on the time for selection of arbitration or court to settle disputes.
Determination of jurisdiction to resolve a dispute in case both court agreement and arbitration agreement exist
On general principles, upon the occurrence of a dispute, disputing parties may choose to have their dispute resolved by a court or an arbitration. If no prior agreement is reached, the body that accepts the dispute case first is competent to resolve it. In case either of the disputing parties requests a commercial arbitration to resolve the dispute before filing a lawsuit to a court or simultaneously requests the court and the arbitration to resolve the dispute, the court will, based on Article 6 of the 2010 Law on Commercial Arbitration, have to refuse accepting the case for resolution. This approach follows the guideline provided in Article 2.4[2] of Resolution 01/2014/NQ-HDTP dated March 20, 2014, of the Supreme People’s Court’s Judicial Council, guiding the implementation of a number of provisions of the Law on Commercial Arbitration (Resolution 01).
However, Article 2.4 of Resolution 01 only provides general provisions but does not specify the case of exclusion, i.e., “unless the agreement on settlement of business and commercial disputes at court is ultra vires”. That means, guidelines of Resolution 01 respect the disputing parties’ freedom of will and voluntariness in reaching agreement on which body will resolve their dispute in case of presence of both court agreement reached ultra vires and arbitral agreement.
In reality, not a few businesses remain unaware that dispute resolution by commercial arbitration is agreed upon by the disputing parties and is independent from the court litigation. Moreover, the dispute resolution competence is based on disputing parties’ agreement. In case a contract states both arbitration agreement and court agreement, theoretically, if the disputing parties agree to refer their dispute to the court even after the arbitration agreement is reached, the court may accept the dispute case. In case the disputing parties cannot agree on selection of the dispute resolution body, the choice of commercial arbitration to resolve the dispute will rest with the plaintiff. If the plaintiff files a lawsuit to the court, the court will accept the dispute case provided it satisfies the conditions guided in Resolution 01.
Absence of regulations on how to handle cases in which disputing parties’ agreement on choice of courts to resolve their disputes is reached ultra vires
The Code provides the right of disputing parties to choose courts to which they file lawsuits for resolution of their business and commercial disputes. Nevertheless, current regulations keep silent about how to handle cases in which disputing parties’ choice of courts is contrary to the regulations on jurisdiction of courts to resolve such disputes. Theoretically, courts would have to refuse to accept the dispute cases that are beyond their jurisdiction specified in the Code (as stated in Article 1 of the 2025 Law Amending a Number of Articles of the Civil Procedure Code, the Administrative Procedure Law, the Law on Justice for Minors, the Law on Bankruptcy, and the Law on Conciliation and Dialogue at Court)[3]. In reality, disputing parties face difficulties in filing a lawsuit to the court competent to resolve the dispute because if filing the lawsuit not to the competent court, they will have to spend much time for carrying out litigation procedures. This would reduce the attractiveness of courts for dispute resolution.
Recommendations to improve regulations on dispute resolution by courts
Firstly, the Code should add provisions prioritizing the agreement of disputing parties on choice of courts with the first-instance jurisdiction, provided such agreement is not contrary to regulations on ad hoc jurisdiction of courts. It is also a need to specify the territory-based jurisdiction of courts over matters related to operation of commercial arbitrations, and should not refer to other legal texts as currently.
Secondly, when making amendments to Resolution 01 (if any to make it consistent with revised provisions of the Code, particularly those on determination of the jurisdiction to resolve disputes in case the agreement of choice of courts is made ultra vires or the arbitration agreement is unclear, it is suggested to provide more specific guidance to prevent inconsistent law interpretation and application in practice. At the same time, other legal texts should not be referred to with a view to creating favorable conditions for disputing parties and courts to apply relevant laws.
Thirdly, the Code should be supplemented toward prioritizing disputing parties’ agreement to choose courts with jurisdiction to resolve their disputes provided such agreement is not contrary to regulations on ad hoc jurisdiction of courts or jurisdiction over real estate-related disputes or disputes involving foreign elements.
Finally, the Supreme People’s Court should issue as soon as possible resolutions and circulars to guide the uniform application of regulations on dispute settlement by courts.-
[1] Deputy Chief of the Office of the People’s Court of Region 14, Can Tho city.
[2] Regarding delineation of jurisdiction to resolve disputes between arbitrations and courts.
[3] Article 1.2 of the Law stipulates: “Regional people’s courts have the jurisdiction to settle according to first-instance procedures disputes and claims under Articles 26 thru 33 of this Code.”.
Article 1.4 of the Law stipulates: “Provincial-level people’s courts may settle according to appellate procedures cases and matters on which judgments and rulings of regional people’s courts have not yet become legally effective and are appealed or protested against; or according to cassation or reopening procedures legally effective judgments and rulings of regional people’s courts in accordance with this Code.”.
