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| Footwear production at Ha Tay Chemical-Weave Company Limited__Photo: Tran Viet/VNA |
Tran Minh Tien, LL.D.[1]
The 2010 Law on Commercial Arbitration (the Law) is considered a landmark in the development of the method of alternative dispute resolution by arbitration, meeting urgent requirements and following the general trend in resolving domestic and international business and commercial disputes. However, the number of cases requiring the court to nullify arbitral awards tends to increase, affecting the lawful rights and interests of business entities and posing a significant challenge to the building of the business circle’s trust in this method of dispute resolution.
In order to help improve Vietnam’s law on commercial arbitration in the context of building and improving the socialist law-ruled state in the new period, this article points out problems and inadequacies in the existing legal provisions and application thereof so as to make recommendations to improve the regulations on nullification of commercial arbitral awards in Vietnam.
Vietnam’s current regulations on settlement of requests for arbitral award nullification
The legal framework for settling requests for nullification of arbitral awards in Vietnam is provided by both the civil procedure law and the commercial arbitration law. This legal framework[2] regulates two groups of issues regarding the grounds for arbitral award nullification and the procedures for settling requests for arbitral award nullification. Since 2011, there have been 184 cases of arbitral award nullification request[3], making up nearly one quarter of the total number of arbitral awards delivered, making businesses and investors in the country feel insecure when choosing arbitration to resolve their disputes.
Under Vietnam’s law, the procedures for settling requests for arbitral award nullification are as follows:
Firstly, the settlement of requests for nullification of arbitral awards at court is regarded as a business or commercial matter[4] carried out in accordance with the Civil Procedure Code and the Law.
Secondly, the court with jurisdiction to settle requests for nullification of arbitral awards is the provincial-level People’s Court of the locality where the Arbitration Tribunal has pronounced the arbitral award, unless otherwise agreed upon by the parties[5]. Reality in Vietnam shows that most of the award nullification requests have been filed to and settled by the People’s Courts of Hanoi and Ho Chi Minh City because most of the arbitration centers and arbitration tribunals are established and located in these cities. Courts in other provinces and centrally run cities have rarely received and settled such requests.
Thirdly, the person having the right to request arbitral award nullification must be one of the disputing parties in the arbitration proceedings, either the plaintiff or the respondent[6]. The third party and persons involved in the case do not have this right. This means that there is no mechanism for annulling the arbitral award that infringes upon the lawful rights and interests of a third party if the disputing parties file no request for the court to nullify such arbitral award.
Fourthly, the time limit for filing a request for nullification of an arbitral award at the court is 30 days after the arbitral award is received[7], except cases affected by force majeure events[8].
Fifthly, the time limit for the court to hold a meeting to settle an arbitral award nullification request is 37 days after it accepts the request[9]. This time limit covers the time limit for appointing a request consideration council (seven working days) and the time limit for the council to hold a meeting to consider the request (30 days from the designated date). This time limit is also similar to the time limit set under the Civil Procedure Code for the court to settle civil matters[10].
Sixthly, the law clearly provides formats and contents of arbitral award nullification requests and court rulings on the settlement of such requests (nullification of or refusal to nullify arbitral awards).
Seventhly, the law clearly defines the burden of proof depending on grounds for arbitral award nullification upon the settlement of arbitral award nullification requests at the court. The requester must give proofs if making a request for nullification of an arbitral award due to the lack of an arbitral agreement or due to the fact that the arbitral agreement is null and void, or that the composition of the arbitration tribunal or arbitration proceedings is/are inappropriate, the case does not fall under the jurisdiction of the arbitration tribunal, the evidence based on which the arbitration tribunal makes the award has been forged, or the arbitrator receives money, property or other material benefits, thus affecting the objectivity and fairness of the arbitral award.
For a request for nullification of an arbitral award for the reason that the award is contrary to the basic principles of Vietnam’s law, the court is responsible for proactively verifying and collecting evidences to decide whether to nullify the arbitral award[11].
Eighthly, the court’s ruling to nullify an arbitral award may neither be appealed nor protested against[12]. This ruling is final and takes effect on the date of its signing, the parties and the arbitration tribunal have no right to complain or appeal and the procuracy has no right to protest against.
When an arbitral award is nullified, the law permits the disputing parties to select another entity having the jurisdiction to settle their disputes or to continue to choose arbitration or may request a competent court to settle their disputes[13]. Trial practice shows that most parties would choose to request the court to settle their disputes instead of choosing arbitration again. This has somehow invalidated the previous arbitration agreement between the disputing parties, especially when the clause of the dispute settlement arbitration agreement is independent from other terms of their contract.
In addition, non-permission for appeals and protests against rulings to nullify commercial arbitral awards is a big problem. The grounds for arbitral award nullification remain vague and could be interpreted in different ways. That’s why in many cases, the court makes a ruling to nullify an arbitral award while failing to give a convincing reason or giving controversial reasons[14].
Ninthly, the settlement of a request for arbitral award nullification at the court fetches a court fee (which is VND 500,000 if the requester invokes a reason related to the arbitration agreement or the arbitration tribunal’s jurisdiction to resolve the dispute), though the court may accept the request for settlement according to general procedures[15] without requiring the requester to pay such a fee.
Recommendations to improve the legal framework on procedures for settling arbitral award nullification requests
Though the procedures for settling requests for arbitral award nullification are relatively sufficient under Vietnam’s law and carried out effectively in practice, there remain not a few limitations. The most prominent limitation is the adjudicative capacity of judges, particularly those of the municipal courts, because the settlement of arbitral award nullification requests requires judges to be not only proficient in arbitral proceedings but also knowledgeable about laws in business and commercial activities since the majority of disputes resolved by arbitration are complicated and involve different business domains.
From the objective perspective, the current regulations on procedures for settling requests for arbitral award nullification remain unspecific and merely qualitative and can be diversely construed. Therefore, the application of these regulations remains inconsistent among courts, or even within the same court for different cases.
In order to contribute to comprehensively revising the Law, the author gives some statutory improvement recommendations below.
First, the provisions on procedures for settling requests for arbitral award nullification (in Articles 70, 71 and 72 of the Law) should be transferred for inclusion in the Civil Procedure Code.
The practical settlement of arbitral award nullification requests over the recent years shows that judges have often treated these requests as commercial-business matters which, they think, are subject to settlement procedures specified the Civil Procedure Code. They actually do not pay due attention to the Law’s provisions on settlement procedures. Moreover, due to their poor knowledge about arbitration practices and because of the complexity of disputes settled by arbitration, in many cases, judges even held different viewpoints on how to settle arbitral award-related cases. The transfer of provisions on procedures for settling requests for arbitral award nullification from the Law to the Civil Procedure Code will help judges more conveniently carry out those procedures and make it easier for courts to make nullification rulings according to set forms.
Second, the Law should add provisions that allow the parties to reach agreement to waive the right to request arbitral award nullification in certain cases.
The possibility of an arbitral award to be nullified by a court is a disadvantage affecting the mechanism of dispute resolution by arbitration. Since arbitral awards should neither be delayed from execution for too long nor nullified too easily, requesting arbitral award nullification need to be approached in a very limited manner. In fact, not a few countries in the world have regulations that allow disputing parties to waive the right to request arbitral award nullification at the court. In the author’s opinion, when the law allows disputing parties to reach agreement on the choice of arbitration to resolve their dispute, it may also allow them to agree not to request the court to nullify the arbitral award.
Third, it is suggested to add provisions on review of court rulings to nullify arbitral awards in certain cases.
Upon settling an arbitral award nullification request, the court would issue a ruling to nullify or not to nullify the arbitral award. This ruling takes effect immediately and is not subject to appeal or protest[16]. However, as analyzed above, in reality, there remain cases in which the court ruling to nullify an arbitral award is not totally accurate, affecting the effect and effectiveness of arbitration proceedings. Therefore, it is necessary to add provisions allowing the review of court rulings on arbitration award nullification.
Fourth, it should be provided in the Law that in case the arbitral award is nullified by the court while the arbitration agreement is not invalidated, the arbitration still has the jurisdiction to resolve the dispute. Such provision aims to prevent any party from managing to seek arbitral award nullification for shifting to court proceedings.
Fifth, it is a need to differentiate legal consequences of arbitral award nullification due to violations of arbitration proceedings and those due to breach of other grounds for the nullification and clearly stipulate the payment of a fee for requesting arbitral award nullification.
Regarding legal consequences of arbitral award nullification, an arbitral award nullified due to a violation of arbitration proceedings might lead to waste of time and cost for repeated resolution of the dispute while the contents of such award are impartial and not prejudicial to the lawful rights and interests of the parties. So, the court may decide to uphold the arbitral award or return it to the arbitration tribunal for review and modification. Besides, the Law should also clearly and specifically stipulate the fee for requesting arbitral award nullification in order to prevent parties from abusing the right to request arbitral award nullification to delay the arbitral award execution.
Finally, the Law should specify a criterion requiring a wannabe arbitrator to possess a arbitrator training certificate, and add the content on incorporation of arbitral award nullification in lawyer training and adjudication training programs.
Arbitrators not only are required to have professional and in-depth knowledge in fields where disputes arise (investment, international trade, construction, insurance, etc.) but also must be proficient in arbitration procedures in order to help raise the quality of arbitral awards so that they can hardly be nullified by the court. Arbitrator training aims to build and develop an “arbitration market”, build a pool of lawyers to support businesses when participating in domestic and international arbitration proceedings, improve the adjudication capacity of judges for settling arbitral award nullification requests, and build businesses’ trust in the method of alternative dispute resolution.-
[1] Principal Lecturer, Head of the Training and Student Affairs Division, the Judicial Academy.
[2] The 2015 Civil Procedure Code, the 2010 Law on Commercial Arbitration, and the Supreme People’s Court’s Judicial Council’s Resolution 01/2014/NQ-HDTP, guiding a number of provisions of the 2010 Law on Commercial Arbitration.
[3] According to statistics of the Supreme People’s Court.
[4] Articles 31 and 414 of the 2015 Civil Procedure Code.
[5] Articles 37 and 39 of the 2015 Civil Procedure Code, and Article 7 of the Law.
[6] Articles 68.1 and 69.1 of the Law.
[7] Article 69 of the Law.
[8] The period during which the force majeure event occurs is not counted into the request-filing time limit. Under the UNCITRAL Model Law, this time limit is 30 days. In the United Kingdom and the United States, this time limit is 28 days and three months, respectively.
[9] Article 71 of the Law.
[10] In reality, it has usually taken 3-5 months for the court to settle an arbitral award nullification request, greatly affecting the lawful rights and interests of disputing parties.
[11] Article 68.3 of the Law.
[12] Article 71.10 of the Law.
[13] Article 71 of the Law.
[14] “Arbitral award (being) contrary to the basic principles of Vietnamese law” is too general and might lead to arbitrary application of law.
[15] Article 16 of the Supreme People’s Court’s Judicial Council’s Resolution 01/2014/NQ-HDTP dated March 20, 2014, guiding the implementation of a number of provisions of the Law on Commercial Arbitration.
[16] This approach complies with the 1985 UNCITRAL Model Law on International Commercial Arbitration.
