Hoang Vu Cuong, LL.M.[1] and Huynh Quang Thuan, LL.M.[2]
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| The Thu Thiem new urban area project in Ho Chi Minh City__Photo: VNA |
Land use rights-related transactions take place everyday in Vietnam and are usually of high value, hence likely to make a big change in value of property of transacting parties. Therefore, there should be a legal framework for those transactions to be conducted in a secured manner so as to guarantee lawful rights and interests of related parties. Particularly, the formulation of mechanisms for effective and fair settlement of disputes arising from land use rights-related transactions is extremely significant for the protection of lawful rights and interests of related parties.
The 2024 Land Law (the Law) adds a new method that parties may use to settle their disputes arising from land use rights-related transactions, e.g., dispute settlement through arbitration. This revision is important, meeting the reality’s demand and make Vietnam’s land law more consistent with land laws of other countries around the world. Due to special characteristics of this method compared to the court trial method, it may only be applied to settling land disputes in practice with the analysis and clarification of the relevant provisions of the Law and the arbitration law.
In this article, the authors analyze and comment the Law’s novel points on the settlement of land disputes by arbitration as well as point out inadequate provisions and make some recommendations on regulatory improvement.
This article focuses on the following three issues: competence of commercial arbitration to settle land disputes; responsibility of state administrative agencies for the settlement of land disputes by commercial arbitration; and consequences of the settlement of land disputes by commercial arbitration.
Competence of commercial arbitration to settle land disputes
Before the effective date of the Law, the competence of commercial arbitration to settle land disputes remains unclear as the 2013 Land Law is silent about arbitration’s competence in this domain. However, the 2010 Law on Commercial Arbitration defines arbitration’s competence based on disputing parties and purposes of transactions giving rise to disputes, instead of objects of disputes[3].
As a result, apart from specific cases of dispute settlement, any dispute arising from a transaction conducted for commercial purposes or arising between parties, one of whom is engaged in commercial activities, falls under arbitration’s competence. This shows that arbitration’s competence does not depend on the objects of disputes, regardless of whether such disputes are related to land use rights or not. In reality, not a few land and house-related disputes have been settled by arbitration for the reason that they all arose from the transactions specified in Article 2 of the 2010 Law on Commercial Arbitration.
The enactment of the Law helps clearly define arbitration’s competence to settle land-related disputes. Article 236.5 of the Law stipulates: “Disputes arising from land-related commercial activities shall be settled by courts in accordance with the civil procedure law or by Vietnam’s commercial arbitration in accordance with the law on commercial arbitration.” Therefore, the settlement of land-related disputes by arbitration is limited to disputes arising from commercial activities. Arbitration is not competent to settle disputes falling beyond this scope.
In the authors’ opinion, the above definition conforms to the practical settlement of real estate-related disputes by arbitration and helps avoid the risk that arbitral awards for land-related disputes might be quashed by the court for the reason that the arbitration council is not competent to settle such disputes. More importantly, the above Article 236.5 lays a foundation for the Law to give provisions defining the responsibility of state administrative agencies to coordinate with arbitration in settling land-related disputes or other provisions on legal validity of arbitral awards.
This move also makes Vietnam’s dispute settlement regulations more conformable with the global trend of settling commercial disputes (including also land-related disputes). The empowerment of arbitration tribunals to settle land-related disputes not only helps reduce the burden on the court system but also contributes to increasing the country’s contractual dispute settlement index, thereby improving the national competitiveness and creating a transparent and attractive investment environment for foreign investors.
Inadequacies and recommendations on regulatory improvement
Regarding responsibility of state administrative agencies for the settlement of land-related disputes by arbitration
The Law’s Article 236.6 provides: “People’s Committees at all levels shall provide dossiers and documents related to land management and use when so requested by courts and Vietnam’s commercial arbitration for use as a basis for the settlement of land-related disputes.” This provision creates favorable conditions for arbitrations to take the initiative in collecting information, documents and evidences to serve dispute settlement.
To date, due to lack of provisions on the responsibility to provide information upon request of arbitrations, therefore, agencies, organizations and individuals that currently manage and preserve documents and evidences, particularly land-related ones preserved by land management offices, rarely agree to provide such documents and evidences for dispute settlement. In fact, as per the 2010 Law on Commercial Arbitration, there still exists a mechanism for arbitrations to collect necessary documents and evidences for dispute settlement, i.e., by proposing competent courts to request agencies, organizations and individuals to provide such documents and evidences. Specifically, Article 46.5 stipulates: “If the arbitration council or one party or all parties has/have applied necessary measures to collect evidences but cannot itself/themselves do so, it/they may propose in writing a competent court to request agencies, organizations and individuals to provide legible, audible or visible documents or other objects related to the dispute. Such a proposal must clearly indicate the circumstances of the dispute and evidences to be collected, reasons for the failure to collect evidences, and names and addresses of agencies, organizations and individuals that currently manage and preserve such evidences.” However, the collection of documents and evidences through the court’s requests usually takes much time and therefore affects the effectiveness of dispute settlement by arbitration.
Regretfully, the Law does neither specify a time limit for People’s Committees at all levels to provide dossiers and documents to arbitrations for land-related dispute settlement nor define the responsibility of related organizations and individuals for failure to do so. However, we may refer to the 2015 Civil Procedure Code’s Article 106.3 on collection of documents and evidences by courts, which clearly states: “An agency, organization or individual that currently manages or keeps documents and evidences shall provide all documents and evidences requested by the court within 15 days after receiving a request; if failing to provide all documents and evidences within this time limit as requested, it/he/she shall issue a written reply stating the reason. Failure to comply with the request of the court without a plausible reason shall, depending on the nature and severity of the violation, be subject to administrative sanctioning or examination for penal liability in accordance with law. The administrative sanctioning or examination for penal liability is not an excuse for exemption from the obligation to provide documents and evidence to the court.”
The above provision is really explicit and serves as an effective tool for law enforcement agencies to collect documents and evidences to serve dispute settlement. The upcoming revision of the Law, if any, should add a similar provision to specify the time limit and define the responsibility of People’s Committees at all levels for providing documents and evidences for use for dispute settlement. The addition should read as follows:
“A People’s Committee at any level that currently manages and preserves documents and evidences shall fully provide such documents and evidences at the request of an arbitration council within 15 days after receiving the latter’s request. Past this time limit, if failing to provide all documents and evidences as requested by the arbitration council, the requested People’s Committee shall issue a written reply stating the reason. The responsible individual(s) in the requested People’s Committee who fail(s) to fulfill the request of the arbitration council without a plausible reason shall, depending on the nature and severity of the violation, be administratively sanctioned or examined for penal liability in accordance with law. The administrative sanctioning or examination for penal liability is not an excuse for exemption from the obligation to provide documents and evidence to the arbitration council.”
Regarding consequences of land-related dispute settlement by arbitration
The final result of the settlement of a dispute by arbitration is an arbitral award that is binding on the disputing parties. The Law also contains provisions concerning consequential effects of an arbitral award on disputing parties.
Firstly, the arbitral award serves as a basis for identifying the party(ies) entitled to acquire land use rights.
Parties that may acquire land use rights under arbitral awards must be those eligible for having such rights as specified at Points m and n, Article 28.1 of the Law. They include domestic organizations, individuals, people of Vietnamese origin residing overseas who are permitted to enter Vietnam, foreign-invested economic organizations, residential communities, and religious organizations and affiliated religious organizations.
Secondly, the arbitral award serves as a condition for conducting land use rights-related transactions. The land law specifies transactions that may be conducted by land use rights holders and conditions for land use rights to be put in such transactions. As per Article 45.1.b of the Law, one of such conditions is that the land is dispute-free or the dispute involving the land has been settled by a competent state agency or under a legally effective court judgment or ruling or arbitral award.
However, it should be noted that an arbitral award that becomes legally effective immediately after being issued under Article 61.5 of the 2010 Law on Commercial Arbitration may still be cancelled if, within 30 days after receiving the award, a disputing party files a written request to the court for cancellation of the arbitral award and the court accepts such request[4]. Once such arbitral award is cancelled, the land would return to the state of being disputed and the remaining parties’ interests would be seriously affected. To avoid this case, the authors recommend adding to the Law a provision stating that holders of the land use rights may carry out land-related transactions only when the time limit for requesting arbitral award cancellation expires but no request is filed or the court refuses to cancel the arbitral award. Specifically, Article 45.1.b of the Law should be revised into:
“If a dispute that has been settled under an effective arbitral award constitutes a condition for the land user to exercise the right to convert, transfer, lease, sublease, leave as inheritance, donate, put in mortgage or contribute as capital land use rights, the time limit for requesting cancellation of such arbitral award must have expired in accordance with the law on commercial arbitration or the competent court issues a decision not to cancel such arbitral award after receiving a request within the aforesaid time limit.”
Thirdly, the arbitral award serves as a basis for registration of land use rights and ownership of houses and other land-attached assets[5]. Article 148.1.e of the Law stipulates:
“1. Households and individuals that own houses may be granted certificates of land use rights and ownership of land-attached assets when having one of the following papers:
…
e/ Court judgments or rulings or legally effective papers of competent state agencies evidencing their house ownership;
…”
As noted above, arbitral awards constitute a basis for households and individuals to acquire land use rights or establish their house ownership and then carry out procedures for land and house registration in order to be granted certificates of land use rights and ownership of houses and land-attached assets[6]. They may, in practice, also become parties to disputes, which are subject to settlement by arbitration, with entities engaged in commercial activities, e.g., commercial housing project owners, or disputes over house purchase/sale or lease contracts with enterprises engaged in trade activities. So, the authors recommend adding the phrase “arbitral awards” to Article 148.1.e of the Law to make a new Point e as follows:
“e/ Court judgments or rulings, arbitral awards or legally effective papers of competent state agencies evidencing their house ownership”.-
* The Vietnamese version of this article is published on the People's Court Magazine No. 14/2024
[1] Lecturers of Ho Chi Minh City University of Law, arbitrators of the Southern Trade Arbitration Center (STAC).
[2] Lecturers of Ho Chi Minh City University of Law, arbitrators of the Southern Trade Arbitration Center (STAC).
[3] Under Article 2 of the 2010 Law on Commercial Arbitration, arbitration is competent to settle:
(1) Disputes arising from commercial activities;
(2) Disputes between parties, at least one of whom is engaged in commercial activities; and
(3) Other disputes that are allowed by law to be settled by arbitration.
[4] Article 69.1 of the 2010 Law on Commercial Arbitration stipulates: “If, within 30 days after receiving the arbitral award, a party that has sufficient grounds to believe that the Arbitration Council has issued the award in one of the cases specified in Article 68.2 of this Law may file a written request to the competent court for cancellation of the award.”
[5] Land registration is compulsory for land users and those assigned land for management while registration of houses and other land-attached assets may be carried out at the request of house and asset owners.
[6] This is specifically provided in Articles 133.1.k, 137.6 and 145.3.b of the Law.
