Pham Diem
State and Law Institute of Vietnam
Commercial arbitration appears in Vietnam later than the economic tribunal, together with the emergence and development of economic contracts.
On January 4, 1960, the Vietnamese Government issued Decree No. 04/TTg, promulgating the Provisional Regulation on Economic Contracts and ten days later, on January 14, 1960, it promulgated another decree on organization of the State economic arbitration, thus giving rise, for the first time in Vietnam, commercial arbitration referred to as “State Economic Arbitration.”
On February 23, 1962, the Government promulgated Decree No. 29-CP, prescribing the principles for handling disputes over economic contracts.
Under the said Decrees, the Vietnamese economic arbitration was then organized at the central, ministerial and provincial levels with the State Economic Arbitration Council, the Economic Arbitration Councils of ministries and the Economic Arbitration Councils of provinces or centrally run cities.
These Economic Arbitration Councils functioned to settle disputes over economic contracts. They were placed under the direct control of the Government, ministries or provincial-level People’s Committees. These Councils were composed of part-time members working in financial, banking, pricing or planning sectors and met once every three months.
On March 10, 1975, the Government promulgated Decree No. 54-CP on economic contracts, which replaced the 1960 Decree. Later on April 14, 1975, it issued another decree, promulgating the Charter on Organization and Operation of Economic Arbitration, under which the Economic Arbitration was established as a state body, functioning to manage economic contracts, namely to maintain state discipline on economic contracts, to settle disputes over and handle violations of economic contracts.
Later, with Decree No. 24-HDBT promulgated on August 10, 1981, by the Council of Ministers (now the Government), the Economic Arbitration Councils were renamed Economic Arbitrations and particularly, the scale of different ranks and grades of arbitrators was established for the first time in the country.
On April 17, 1984, the Council of Ministers promulgated Decree No. 62-HDBT, defining the functions, tasks, powers and organizational apparatus of the Economic Arbitrations, which were especially set up even at the district level.
On January 10, 1990, the State Council (now the National Assembly Standing Committee) passed the Ordinance on Economic Arbitrations, providing for the organization and decentralized competence of economic arbitrations and the procedures for settlement of disputes over economic disputes.
Particularly, this Ordinance disbanded the ministerial-level Economic Arbitrations and recognized, for the first time, the principle that disputing parties might agree to select arbitrators for settlement of their disputes over economic contracts.
In the spirit of this Ordinance, the Economic Arbitrations belonged to the system of state administrative agencies, functioning to perform the state management of activities related to economic contracts. The peculiarity of the Economic Arbitrations was that their activities of settling disputes and handling violations of economic contracts constitutes a mode of direct administration and organization of economic relations.
As compared to the 1960-1975 period, the Economic Arbitrations in the 1975-1994 period were not only expanded organizationally but also enhanced in their functions and competence. Being state bodies formerly with the main function of handling breaches of economic contracts, they were developed into ones functioning to manage activities related to economic contracts, including the settlement of contractual disputes, examination and handling of unlawful economic contracts, guidance in the implementation of the law on economic contracts and economic arbitration, and provision of trainings in professional operations related to economic contracts and economic arbitration.
In a nutshell, the Economic Arbitrations in the 1960-1994 period were characterized with the following striking features:
First, they were not non-governmental organizations but state agencies within the system of administrative agencies from the central to local level; arbitrators were salaried by the State; and the Economic Arbitrations existed and operated with state budget funds.
Second, they were organized into a system and inter-related in organization and proceedings from the central to provincial and district levels.
Third, they functioned not only to settle economic disputes but also to manage economic contracts.
Fourth, practically in this period, the economic tribunals no longer existed and the economic arbitrations constituted the only economic jurisdiction. Though being state bodies, the State Economic Arbitrations’ decisions were not guaranteed with coercive enforcement by the State like judgments and rulings handed down by economic tribunals.
The State Economic Arbitrations, which came into being and existed with the above-said characteristics, were naturally an outcome of a period when the economy operated under the planning and highly administrative mechanism.
Since Vietnam embarked upon the cause of “doi moi” (renewal) in 1986, starting to build a market economy and adopt the open-door policy for international integration, substantial changes have been seen in economic sectors and economic administration mechanisms. The diverse and equal development of various economic sectors with different forms of ownership has led to changes in the form and nature of economic disputes. Therefore, the settlement of economic disputes only through economic arbitration was no longer suitable and requires substantial renewal.
For that reason, on December 28, 1993, the National Assembly passed the Law Amending a Number of Articles of the Law on Organization of the People’s Courts, under which the Economic Tribunals were established within the system of the People’s Courts to settle economic disputes while the system of State Economic Arbitrations was disbanded.
Yet, on September 5, 1994, the Government promulgated Decree No. 116-CP on organization and operation of economic arbitrations, under which Economic Arbitration Centers were set up in provinces and centrally run cities, having the jurisdiction to settle the following economic disputes:
- Disputes over economic contracts;
- Disputes between companies and their members; between company members, which are related to stock and bond trading;
- Disputes related to stock and bond trading.
With the issuance of Decree No. 116-CP, the Economic Arbitrations were renamed Economic Arbitration Centers with substantial renewals in their organization, functions and nature.
First, the Economic Arbitration Centers are no longer state bodies as before, but non-governmental organizations. Such change helps ensure their independence in the settlement of economic disputes between different economic sectors and to protect legitimate rights and interests of various economic sectors.
Second, their competence to settle economic disputes is not restricted only to disputes over economic contracts as before, but broadened to cover other types of disputes as mentioned above.
Third, the economic arbitration proceedings prescribed in this Decree are more comprehensive and specific.
However, the practical activities of Economic Arbitration Centers revealed numerous limitations and shortcomings. The economic dispute-settling scope and jurisdiction of the Economic Arbitration Centers remain restricted. Their activities, especially in ensuring the enforcement of arbitral awards, have not enjoyed support from the court.
In order to redress the shortcomings and further renew the economic arbitration, on February 25, 2003, the National Assembly Standing Committee passed the Ordinance on Commercial Arbitration, under which the Economic Arbitration was renamed Commercial Arbitration to suit the international commercial customs and practices.
However, the arbitrations remain to be non-governmental organizations being considered Arbitration Centers. The via-arbitration settlement of disputes abides by the following principles:
- Disputes will be settled through arbitration, if so agreed upon by the disputing parties before or after the occurrence of disputes.
- Upon settlement of disputes, arbitrators must be independent, objective and impartial, base themselves on law and respect the agreement of the disputing parties.
- For disputes between Vietnamese parties, Vietnamese law will apply. For disputes involving foreign elements, the applicable law will be selected by the parties concerned. If foreign laws are applied, they must not contravene the basic principles of the Vietnamese law.
The Ordinance on Commercial Arbitration reveals new steps of development as compared to the previous Decree No. 116-CP, with the arbitration scope and jurisdiction being broadened as the scope and jurisdiction of courts for almost all economic disputes. It has enabled the disputing parties to select either court or arbitration for settlement of their disputes.
The said Ordinance has, for the first time, prescribed in detail the inter-relations and mutual support between arbitration and court. For instance, in the arbitration proceedings, the parties concerned may request the court to apply provisional urgent measures, to cancel arbitral awards or to issue decisions on enforcement of arbitral awards. Such inter-relations and mutual support has thus guaranteed the effect and efficacy of arbitration proceedings.
Panoramically, the economic arbitration in Vietnam remains quite new. It has developed through two periods: The period of central planning and administrative mechanism and the period of “doi moi” (renewal) under the market economy mechanism, open-door policy and international integration.-