i Overview of Vietnam's legal system
Since its independence in 1945, Vietnam has applied a socialist legal system based on the civil law system.2 However, there have been major changes in the country in recent years, including the reorganisation and harmonisation of its laws inspired by other civil law jurisdictions such as France or Germany, as well as the recognition of some court precedents as another source of law.3 In light of these developments, Vietnam is a peculiar jurisdiction, mixing aspects of socialist law, civil law and common law.
In Vietnam, legislation is still the most important source of law. Laws are passed by the National Assembly and enacted by the President. Courts are subordinate to the National Assembly and must issue rulings based on the laws in effect.
In 2015, as part of its efforts to reorganise existing legislation, the National Assembly passed the Law on the Promulgation of Legal Documents in which all Vietnamese legal documents are classified by 'level of validity' (the equivalent of the hierarchy of sources in other civil law jurisdictions).4 Article 4 of this statute categorises Vietnamese legal documents into 15 levels, with the Constitution at the highest level of validity. The second level is Vietnamese laws. At a lower level are implementing regulations for these laws issued by the government in the form of decrees of the government or decisions of the Prime Minister. Ministries and government agencies with ministerial rank (such as the State Bank of Vietnam, the Supreme People's Court, the Supreme People's Procuracy) may then issue circulars or joint circulars to further implement the decrees of the government.
ii Overview of Vietnam's judicial system
In Vietnam, the judicial system comprises of 'people's courts' (which include military courts) and people's procuracies.5
There are four levels of courts, and the highest court is the Supreme People's Court.6 The Supreme People's Court is organised into a council of judges and supporting apparatus. The Council of Judges consists of the Chief Judge (who is appointed by the National Assembly on nomination by the President),7 the deputy chief judges (who are appointed by the President on the nomination of the Chief Judge of the Supreme People's Court)8 and other judges of the Supreme People's Court (who are appointed by the National Assembly on the nomination of the Chief Judge of the Supreme People's Court).9 The Supreme People's Court is the court of last resort on all matters arising under Vietnamese law. It also recommends bills to the National Assembly and passes resolutions directing lower courts on the uniform enforcement or implementation of the law across the country.10 The three other levels of courts are (1) the superior people's courts (three courts across the country); (2) the provincial-level people's courts (63 in the country); and (3) the district-level people's courts (one for each district).11
Military courts are established at various levels in the Vietnam People's Army, with the highest one being the Central Military Court.12
The people's procuracies (also known as the people's offices of inspection and supervision) serve as the prosecutorial authority in Vietnam. Their role is to supervise and inspect judicial compliance by judicial agencies and officials. There is a people's procuracy for every people's court, and the military has its own military procuracies. The highest procuracy is the Supreme People's Procuracy, headed by the Chief Procurator of the Supreme People's Procuracy, who is elected by the National Assembly.13
With respect to arbitration, there is no specialist arbitration court in Vietnam. However, the Supreme People's Court and the Ministry of Justice have recognised in public fora that the enforcement of foreign arbitral awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention) has been uneven and inconsistent largely because courts located throughout the country do not have the same experience dealing with enforcement issues. Accordingly, there have been active discussions on the need for a specialist court to promote greater uniformity and predictability in enforcing foreign arbitral awards.
iii Vietnam's Arbitration Law
In Vietnam, arbitrations are mainly governed by the Arbitration Law 2010, which came into force on 1 January 2011.14 Prior to the entry into force of the Arbitration Law 2010, arbitrations were governed by the Arbitration Ordinance 2003, which came into force on 1 July 2003.15 Although the Arbitration Ordinance 2003 has been superseded and replaced by the Arbitration Law 2010, it remains applicable to arbitrations conducted pursuant to arbitration agreements signed between 1 July 2003 and 31 December 2011.16
The Arbitration Law 2010, which is based on the UNCITRAL Model Law and incorporates international arbitration norms, reflects Vietnam's intention of becoming a pro-arbitration jurisdiction.17 For example, Article 10.4 of the Arbitration Ordinance 2003 invalidates an arbitration agreement if the arbitral institution is not specified and there is no additional agreement in this regard. Under the Arbitration Law 2010, such ground for invalidating an arbitration agreement is no longer provided. Rather, such arbitration agreement is considered unclear, and the claimant has the right to select the arbitral institution.18
Unlike arbitration laws in other jurisdictions, Vietnam's Arbitration Ordinance 2003 and its successor, the Arbitration Law 2010, do not recognise the concept of 'international arbitration' (as opposed to domestic arbitration). Rather, these arbitration statutes distinguish between 'foreign arbitration' and 'non-foreign' arbitration. Foreign arbitration is defined as 'arbitration under foreign arbitration law as agreed by the parties to resolve the disputes, whether inside or outside of Vietnam.'19 Therefore, an arbitration seated inside of Vietnam under the rules of a foreign arbitral institution (such as the ICC, SIAC, etc.) is still considered as a foreign arbitration. As more fully discussed in the next section, the law regarding the recognition and enforcement of an award is different depending on whether the award is issued in a foreign or non-foreign arbitration.
Another significant distinction is 'dispute with a foreign element' and 'dispute without a foreign element.'20 A dispute with a foreign element means that the dispute involves either (1) at least one foreign individual or foreign legal entity; (2) all parties are Vietnamese but the establishment, modification, implementation or termination of their relationship occurred in a foreign country; or (3) all parties are Vietnamese but the subject matter of their relationship is located in a foreign country.21 A contrario, a dispute without a foreign element does not involve any of the above. The presence of a foreign element in a dispute does not necessarily define whether an arbitration is foreign or not. Rather, as discussed below, the distinction is significant to determine, for example, the applicable substantive law or language of the arbitration.
If the dispute does not involve a foreign element, the applicable substantive law shall be Vietnamese law.22 If the applicable substantive law is not agreed upon by the parties and the dispute involves a foreign element, the applicable substantive law shall be the law the arbitral tribunal deems most appropriate.23 If the dispute does not have a foreign element, the applicable language shall always be Vietnamese regardless of the parties' agreement, except in a dispute where at least one party is an enterprise with foreign invested capital.24 If the dispute has a foreign element, or has at least one party that is an enterprise with foreign invested capital, the applicable language shall be the language agreed upon by the parties and in the absence of such an agreement, the applicable language shall be determined pursuant to the arbitration rules at issue.25
The Arbitration Law 2010 is supplemented by (1) Decree No. 63/2011/ND-CP, which includes implementing regulations on the Arbitration Law 2010,26 and (2) Resolution No. 01/2014/NQ-HDTP, which guides the implementation of certain provisions of the Arbitration Law 2010.27 Notably, Resolution No. 01/2014 clarifies the provisions on the validity of arbitration agreements, the grounds for setting aside arbitral awards, and the supervisory and supporting role of Vietnamese courts and their power over foreign arbitrations seated in Vietnam.
iv Recognition and enforcement of arbitral awards in Vietnam
In Vietnam, the procedure relating to the recognition and enforcement of arbitral awards varies depending on whether the award is foreign or non-foreign.
With respect to the recognition of arbitral awards, non-foreign arbitral awards are automatically recognised and are, therefore, effective from their date of issuance.28
On the other hand, foreign arbitral awards must be formally recognised and held enforceable by the competent provincial People's Court.29 In 1995, Vietnam became party to the New York Convention. The New York Convention has then been adopted into Vietnamese law through the Civil Procedure Code (the Civil Procedure Code 2004,30 as amended by the Civil Procedure Code 2015) and the Supreme People's Court's Practice Note 246/TANDTC-KT.31 The Civil Procedure Code 2015 includes a specific procedure for the recognition and enforcement of foreign arbitral awards,32 and the Practice Note gives internal guidance on the consideration of petitions for the recognition and enforcement of foreign arbitral award. In principle, a foreign arbitral award shall be recognised and enforced in Vietnam if (1) the award is issued in a country party to an international convention on the recognition and enforcement of arbitral awards to which Vietnam is also a party (such as the New York Convention), or (2) on the basis of reciprocity if such country is not party to such convention.33 Under the Civil Procedure Code 2015, the grounds for refusing the recognition and enforcement are substantially similar to those in Article V of the New York Convention.34 Once the foreign arbitral award is recognised and held enforceable by the competent provincial people's court, the award is legally effective like any decision or judgment of a Vietnamese court.35
With respect to the enforcement of arbitral awards in Vietnam, the enforcement procedure is the same regardless of whether the award is non-foreign or foreign. The enforcement procedure is governed by the Civil Procedure Code 2015 and the Law on Enforcement of Civil Judgments.36 The Law on Enforcement of Civil Judgments is supplemented by Decree No. 62/2015/ND-CP providing certain guidelines (Decree No. 62/2015).37 Decree No. 62/2015 in turn, is supplemented by Circular No. 01/2016/TT-BTP38 and Joint Circular No. 11/2016/TTLT-BTP-TANDTC-VKSNDTC,39 which provide specifications on the provisions of Decree No. 62/2015.
If the award debtor fails to comply with a non-foreign arbitral award, and the award is not set aside, the award creditor shall have the right to request the competent civil judgment enforcement agency to enforce it.40 Likewise, if the award debtor fails to comply with a foreign arbitral award, and the award is recognised and held enforceable, the award creditor shall also be entitled to request the assistance of the competent civil judgment enforcement agency for its enforcement.41
It is worth mentioning the peculiar requirement for non-foreign ad hoc arbitral awards in such case. Like non-foreign arbitral awards, non-foreign ad hoc arbitral awards are automatically recognised, and therefore, effective from their date of issuance. If the award debtor does not comply with the award, the award creditor shall also be entitled to request the assistance of the competent civil judgment enforcement agency. However, non-foreign ad hoc arbitral awards are required to be registered within one year of their issuance with the competent provincial people's court in order for the enforcement agency to enforce them.42
v Arbitral institutions in Vietnam
The Ministry of Justice of Vietnam reports that, as of April 2018, there are 20 arbitral institutions in Vietnam.43 The most active is the Vietnam International Arbitration Centre (VIAC) at the Vietnam Chamber of Commerce and Industry, based in Hanoi and Ho Chi Minh City. Other arbitral institutions include the Pacific International Arbitration Centre (PIAC) based in Ho Chi Minh City, and the ASEAN Commercial International Arbitration Centre (ACIAC) based in Hanoi and Ho Chi Minh City.
According to the VIAC, for the year 2017, there were 151 cases filed with 284 arbitrators appointed by this arbitral institution.44 The average time to resolve a VIAC case was 158.93 days.45 The total value in dispute for all 2017 VIAC cases was 1,390 billion dong, and the highest dispute amount in a case was 525 billion dong.46 The top-three foreign parties in 2017 were from China, the United States and Singapore.47 Finally, the main areas of dispute in 2017 were as follows: purchase and sale (44 per cent or 66 cases), construction (24 per cent or 36 cases), services (8 per cent or 12 cases), leasing (7 per cent or 11 cases) and insurance (5 per cent or 8 cases).48 The above numbers for 2017 were substantially similar to those reported by VIAC for 2016.49
II THE YEAR IN REVIEW
i Developments affecting international arbitration
A new Civil Code
The Civil Code 2015 became effective on 1 January 2017.50 It serves as the foundation of all other Vietnamese laws governing civil and business relationships.51 The Civil Code 2015 introduces the concept of 'basic principles of civil law',52 which could not be contradicted by any other civil laws that are lower in hierarchy. Indeed, Article 4 of the Civil Code 2015 generally provides that these 'basic principles of civil law' takes precedence over inconsistent provisions of other civil laws.53 This new concept, which did not exist under the previous Civil Code of 2005, is another effort by Vietnam to harmonise its legal system.54
The Civil Code 2015 does not provide any new provisions on international arbitration. However, its entry into force as general law cannot be ignored since it affects international arbitration in Vietnam in multiple ways.
For instance, the Arbitration Law 2010 (which is now considered as a 'specific law' as opposed to the 'general law' that is the Civil Code 2015) expressly refers to the provisions of the Civil Code 2015. Article 18.3 of the Arbitration Law 2010, which set forth the grounds for invalidating arbitration agreements, provides that an arbitration agreement shall be invalid if the person who entered into it lacked legal capacity pursuant to the Civil Code (2015). Likewise, Article 20.1(a) of the Arbitration Law 2010, which lists the minimum qualifications of an arbitrator, provides that the arbitrator must, inter alia, have 'full civil legal capacity as prescribed in the Civil Code '.
Furthermore, specific laws include terms that are defined in the Civil Code 2015 rather than in the specific laws themselves. For example, the definition of 'dispute with a foreign element' discussed above is set forth in Article 663.2 of the Civil Code 2015. These examples illustrate the ways in which the new Civil Code 2015 could affect international arbitration in Vietnam.
A new Civil Procedure Code
The Civil Procedure Code 2015 also became effective on 1 January 2017.55 Like the Civil Procedure Code 2004, the Civil Procedure Code 2015 includes substantial provisions related to international arbitration (such as the procedure for the recognition and enforcement of foreign arbitral awards). These provisions, however, remain substantially unchanged in the Civil Procedure Code 2015.
The substantial provisions related to international arbitration include those pertaining to interim reliefs. Similar to the Civil Procedure Code 2004, the Civil Procedure Code 2015 gives Vietnamese courts broader power to grant interim reliefs than the power given to arbitral tribunals under the Arbitration Law 2010. The broad powers given to Vietnamese courts include the ability to freeze bank accounts or assets held by third parties or to prohibit a party from leaving the country.56
There were some key changes under the Civil Procedure Code 2015 pertaining to the types of disputes that are not arbitrable (i.e., those that fall under the exclusive jurisdiction of Vietnamese courts). Under the previous Civil Procedure Code 2004, the following disputes shall be exclusively resolved by Vietnamese courts:57
- civil cases involving rights to properties being immovables in the Vietnamese territory;
- disputes arising out of transportation contracts where the carriers have their head offices or branches in Vietnam; and
- the divorce case between a Vietnamese citizen and a foreign citizen or a stateless person if both spouses reside, work or live in Vietnam.
Under the new Article 470.1 of the Civil Procedure Code 2015, Vietnamese courts now have the exclusive jurisdiction to rule on the following disputes:
- civil lawsuits involving rights to properties being immovables in the Vietnamese territory;
- divorce case between a Vietnamese citizen and a foreign citizen or a stateless person if both spouses reside, work or live permanently in Vietnam; and
- other civil lawsuits where parties are allowed to choose Vietnamese courts to settle according to Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a signatory and parties agreed to choose Vietnamese courts.
The introduction of the first legislation on commercial mediation
In February 2017, the government of Vietnam promulgated Decree No. 22/2017/ND-CP on commercial mediation.58 This is the first legislation in Vietnam governing commercial mediation and recognising mediation as another method of alternative dispute resolution.
Decree No. 22/2017 provides 'the scope, principles, order and procedures for dispute resolution by commercial mediation, commercial mediators, commercial mediation institutions, Vietnam-based foreign commercial mediation institutions, and state management of commercial mediation activities'.59 Like arbitration, Decree No. 22/2017 provides that mediation can only take place if the parties have agreed to it in writing either before or after the dispute has arisen.60 A settlement agreement reached via mediation can be recognised by a Vietnamese court, just like an arbitral award, pursuant to the procedure set forth in Chapter 33 of the Civil Procedure Code 2015.61 Once recognised by the Vietnamese court, the settlement agreement achieved through a successful mediation is enforceable pursuant to the Law on Enforcement of Civil Judgment.62
In February 2018, the Ministry of Justice issued Circular No. 02/2018/TT-BTP to guide the application, organisation and operation of commercial mediation.63
The recognition of some court precedents as a source of law
The Law on Organisation of People's Courts, which became effective in 2015, empowers the Council of Judges of the Supreme People's Court to select judgments and decisions issued from any court at any level, and to declare them 'court precedents'.64 Court precedents are defined as 'reasoning, rulings in effective judgments and decisions on specific cases of the courts that are selected by the Council of Judges of the Supreme People's Court and published as the precedents by the Chief Judge of the Supreme People's Court in order for other courts to study and adopt them when deciding later cases.'65 As of the end of 2017, the Chief Judge of the Supreme People's Court has published 16 judgments, none of which pertains to arbitration. It is expected that the Chief Judge of the Supreme People's Court will publish rulings pertaining to arbitration in the near future given the increased popularity of arbitration in Vietnam and the need for uniformity in the application of arbitration laws among the lower courts, particularly with respect to the recognition and enforcement of arbitral awards.
VIAC Rules of Arbitration 2017
On 1 March 2017, VIAC issued its new set of Rules of Arbitration (the New VIAC Rules).66 The highlight of the New VIAC Rules is the introduction of provisions on multiple contracts, consolidation of arbitration and expedited procedure.67 According to VIAC, these new provisions are meant to significantly reduce arbitration costs.68
Under the New VIAC Rules, a claimant can now file a single request for arbitration regarding claims arising out of, or in connection with, multiple contracts and have them resolved through a single arbitration (Article 6 on multiple contracts). The arbitral tribunal may also, at the request of a party, consolidate claims made in separate, but pending, arbitrations into a single arbitration with the earliest commencement date (Article 15 on the consolidation of arbitrations). Finally, the parties may agree to have their dispute resolved via an expedited procedure (Article 37 on expedited procedure).69
ii Arbitration developments in local courts
Qualifications and liability of arbitrators
Pursuant to Article 20 of the Arbitration Law 2010, arbitrators must have the following minimum qualifications: (1) full civil legal capacity as prescribed in the Civil Code 2015; (2) a university qualification and at least five years of work experience in the discipline that he or she studied; and (3) in special cases, an expert with highly specialised qualifications and considerable practical experience may still be selected as an arbitrator notwithstanding that he or she fails to satisfy requirement (2).
Article 20 of the Arbitration Law 2010 further provides that if a person has all the qualifications above but falls within one of the following categories, he or she may not act as arbitrator: (1) a judge, prosecutor, investigator, enforcement officer or official of a people's court, of a people's procuracy, of an investigative agency or of a judgment enforcement agency; or (2) a person who is currently under a criminal charge or prosecuted, or a person who is serving a criminal sentence or who has fully served his or her sentence but his or her criminal record has not been cleared yet.
The Arbitration Law 2010 contains a provision imposing personal liability on an arbitrator for a specific situation: Article 49.5 of the Arbitration Law 2010 provides that 'if an arbitral tribunal orders a different form of interim relief or interim relief which exceeds the scope of the application by the applicant, thereby causing loss to the applicant or to the party against whom the interim relief was applied or to a third party, then the party incurring loss shall have the right to institute court proceedings for compensation in accordance with the law on civil proceedings.' We are aware of at least one civil proceeding in which an arbitral tribunal was sued in a Vietnamese court under this provision.
Recognition and enforcement of foreign arbitral awards
The recognition and enforcement of foreign arbitral awards under the New York Convention has been uneven and inconsistent in Vietnam.70 This is largely because courts located throughout the country are unfamiliar with, and do not have the same experience of dealing with, enforcement issues.71 As a result, the recognition and enforcement of foreign arbitral awards is to be considered on a case-by-case basis.
In previous years, there were several instances where a losing party was able to convince a Vietnamese court to set aside or refuse to enforce a foreign arbitral award on the grounds that the recognition and enforcement of the foreign arbitral award would violate 'the fundamental principles of Vietnamese law' (i.e., public policy),72 a vague concept that is not defined under Vietnamese law and therefore subjected to incomprehensible and inconsistent interpretation by Vietnamese courts. Recently, the Supreme People's Court has provided some useful guidance in this regard via its Resolution No. 01/2014. Pursuant to this Resolution, the competent court is now required to consider the three following questions when considering the 'fundamental principles of Vietnamese law' ground:
- whether the principles that are purported to be breached are ones of the 'basic principles on conduct, and which effects are most overriding in respect of the development and implementation of Vietnamese legal system';
- whether the principles that are purported to be breached are related to the tribunal's resolution of the dispute; and
- whether an arbitral award 'extremely violates the interests of the government, and the legitimate rights and interests of third party(ies)'.
If the answer is 'no' to these questions, the court shall recognise and enforce the foreign arbitral award.
In addition, Vietnamese courts have made an effort to provide clearer and more consistent rulings on petitions to recognise and enforce foreign arbitral awards. For example, on 30 March 2017, the Superior People's Court of Hanoi issued Decision No. 84/2017/KDTM-PT (Decision No. 84/2017). Decision No. 84/2017 confirmed the People's Court of Nam Dinh Province's refusal to recognise and enforce a foreign arbitral award on the ground that there was no arbitration agreement between the parties.73 The foreign arbitral award was issued pursuant to the arbitration rules of the 'International Association B'.74
The parties in the underlying arbitration were Company G, from the Netherlands, and Company N, from Vietnam. The parties had entered into three international contracts for the purchase and sale of cotton. One of the three contracts contains an arbitration agreement but was not signed by Company N, while the other two contracts did not contain any arbitration agreement, but were signed by Company N. Company G initiated an arbitration against Company N for the compensation of certain payments based on the three contracts.75 The arbitration proceeded, and the arbitral tribunal issued an award in favour of Company G, which in turn petitioned for the recognition and enforcement of the award before the People's Court of Nam Dinh Province.76
The People's Court of Nam Dinh Province refused to recognise the award and Company G appealed before the Superior People's Court of Hanoi.77 The Superior People's Court of Hanoi held that Company N was not bound by the arbitration agreement as it had not signed the contract containing such agreement, and therefore, the arbitral tribunal constituted under the 'International Association B' had no jurisdiction to hear the case. The Superior People's Court of Hanoi concluded that the People's Court of Nam Dinh Province was justified to refuse to recognise and enforce the award.78 This case illustrates the recent efforts by Vietnamese courts to explain more clearly their ruling on the recognition and enforcement of arbitral awards on defined ground (e.g., the absence of an effective arbitral agreement between the parties).
Setting aside non-foreign arbitral awards
In Decision No. 167/2017/QD-DKPQ issued on 22 February 2017, the People's Court of Ho Chi Minh City refused to set aside an ad hoc non-foreign arbitral award after having clearly assessed and responded to each ground alleged by the petitioner.79 The arbitration was administered by VIAC under the UNCITRAL Rules of Arbitration, the seat of arbitration was Ho Chi Minh City, Vietnam and the arbitration was heard by a sole arbitrator.80
The parties in the underlying arbitration were DWP Company and Co Dong Company. DWP Company initiated an arbitration against Co Dong Company claiming certain expenses incurred in a real estate project. On 28 May 2016, the sole arbitrator ordered Co Dong Company to pay the claimed expenses to the claimant along with the arbitration costs.81
Co Dong Company then petitioned for the setting aside of the award before the People's Court of Ho Chi Minh City, alleging that the constitution of the arbitral tribunal and the proceedings were not in compliance with the parties' agreement.82 Notably, Co Dong Company objected to the competence of the People's Court of Ho Chi Minh City to appoint the sole arbitrator and that the award violated the fundamental principles of Vietnamese laws.83
With respect to the appointment of the sole arbitrator, the People's Court of Ho Chi Minh City opined that such appointment was in compliance with Articles 41.4 and 41.5 of the Arbitration Law 2010. Articles 41.4 and 41.5 of the Arbitration Law 2010 indeed empower the competent court (in this case, the People's Court of Ho Chi Minh City) with the competence to appoint the sole arbitrator when the parties are unable to agree on his or her selection.84
With respect to the argument according to which the award violated the fundamental principles of Vietnamese laws, the same court held that the arbitral award was final pursuant to Article 4.5 of the Arbitration Law 2010. Accordingly, the court held that there was no legal ground for Co Dong Company to request the reconsideration of the merits of the award.85
The People's Court of Ho Chi Minh City rejected the respondent's petition, and refused to set aside the award.86
As discussed, an ad hoc non-foreign arbitral award must be registered with the competent provincial people's court within one year of their issuance to be enforced.87 DWP Company thus petitioned the People's Court of Ho Chi Minh City to register the award for its enforcement.88 In light of its decision not to set aside the award and the compliance with the one-year time limit to request such registration, the People's Court of Ho Chi Minh City accepted the request to register the ad hoc non-foreign arbitral award on 22 February 2017, well within one year from the issuance of the award on 28 May 2016.89
This case further shows Vietnamese courts, the People's Court of Ho Chi Minh City in particular, endeavour to provide clear reasoning in their decisions when refusing to set aside non-foreign arbitral awards.
iii Investor–state disputes
There have been at least four reported investor–state disputes involving Vietnam as a party.90 Three cases were decided in favour of Vietnam (McKenzie v. Vietnam (2010), DialAsie SAS v. Vietnam (2011) and Recofi SA v. Vietnam (2013)) and one case, discussed below, is still pending (Trinh Vinh Binh v. Vietnam).91 Based on these cases, it appears that arbitral tribunals have sought to redress the balance of power between foreign investors and host states.92 Arbitral tribunals have also been willing to acknowledge that consideration should be given to host states since they might be under pressure to shoulder constitutional responsibilities – this is readily displayed in cases between investors and Vietnam.93
The Trinh Vinh Binh v. Vietnam case was originally initiated in 2003 before the Stockholm Arbitration Institute of the Stockholm Chamber of Commerce by Mr Trinh, a Dutch-Vietnamese businessman against the government of Vietnam. The case arose out of Mr Trinh's investment in real estate, food processing and several tourism assets in Vietnam in the 1980s.94 Mr Trinh was accused of asking his family and relatives to put their names on his Vietnamese assets and businesses, a violation of the Law on Investment.95
In 1996, Mr Trinh was arrested and charged with several civil and criminal offences and sentenced to 11 years in prison, with all assets confiscated.96 Mr Trinh escaped Vietnam and returned to the Netherlands.97 In 2003, Mr Trinh initiated an UNCITRAL arbitration with the Stockholm Arbitration Institute of the Stockholm Chamber of Commerce against the government of Vietnam alleging illegal asset confiscation, illegal detention and torture by the Vietnamese authority based on the Netherlands–Vietnam BIT. He sought US$100 million in damages.98 In 2006, the parties settled under a confidential agreement signed in Singapore.99 However, in 2014, Mr Trinh initiated another arbitration against the government of Vietnam before the ICC to enforce the settlement agreement and demanded US$1.25 billion in compensation.100 It is reported that the final hearing took place at the end of August 2017 in Paris. At the time of writing, no decision has yet been made public.101
III OUTLOOK AND CONCLUSIONS
The year 2017 witnessed significant changes in the Vietnamese legal system, including in the arbitration field. With the entry into force of the new Civil Code and the new Civil Procedure Code, Vietnam has confirmed its willingness to reorganise and harmonise its legal system, inspired by other civil law jurisdictions, and its intent to become a more pro-arbitration jurisdiction.
The outlook of arbitration in Vietnam, which has one of the fastest-growing economies in the world, appears promising. In addition to the above legislative changes, Vietnamese courts are also making an effort to provide clearer and more consistent rulings when asked to recognise foreign arbitral awards. Moreover, the Vietnamese government's efforts to reassure and stimulate foreign investment and trade, notably via the signing of the EU–Vietnam Free Trade Agreement and the Comprehensive and Progressive Trans-Pacific Partnership (formerly known as the TPP), will only increase the need for arbitration as the preferred dispute resolution forum for the relevant foreign investors.
1 K Minh Dang is a senior partner, and Do Khoi Nguyen and Luan Tran are both partners at YKVN. The authors are grateful to Ms Cam Tu Vo Nguyen, an associate, and Mr Khoa Nguyen, a paralegal, for their kind assistance with the drafting of this chapter.
2 A look at Vietnam's legal system, The Report: Vietnam 2017, Oxford Business Group (2017).
3 Law No. 62/2014/QH13 on Organisation of People's Courts passed by the National Assembly on 24 November 2014, effective from 1 June 2015 (the 'Law on Organisation of People's Courts').
4 Law No. 80/2015/QH13 on the Promulgation of Legal Documents passed by the National Assembly on 22 June 2015, effective from 1 July 2016.
5 Articles 102 and 107 of the Constitution of the Socialist Republic of Vietnam passed by the National Assembly on 28 November 2013, effective from 1 January 2014.
7 Article 26.1 of the Law on Organisation of People's Courts.
8 Id. at Articles 28.1 and 27.7.
9 Id. at Articles 72 and 27.7.
10 Id. at Articles 21, 22 and 26.
11 Id. at Article 3.
12 Id. at Articles 49 and 50.
13 Articles 7.1, 40 and 62.1 of Law No. 63/2014/QH13 on Organisation of People's Procuracies passed by the National Assembly on 24 November 2014, effective from 1 June 2015.
14 Law No. 54/2010/QH12 on Commercial Arbitration passed by the National Assembly on 17 June 2010, effective from 1 January 2011 (the 'Arbitration Law 2010').
15 Ordinance on Commercial Arbitration No. 08/2003/PL-UBTVQH11 passed by the Standing Committee of the National Assembly on 25 February 2003, effective from 1 July 2003 (the 'Arbitration Ordinance 2003').
16 Prior to the issuance of the Arbitration Ordinance 2003, arbitrations were governed by Decision No. 204-TTg on organisation of VIAC issued by the Prime Minister on 28 April 1993, Decision No. 114-TTg on expanding VIAC's scope of jurisdiction to settle disputes issued by the Prime Minister on 16 February 1996 and Decree No. 116-CP on organisation and operation of economic arbitration issued by the government on 5 September 1994.
17 K. Minh Dang, Do Khoi Nguyen and Luan Tran, GAR Know-How Commercial Arbitration 2017 – Vietnam (2017).
18 Do Van Dai, Pháp luật trọng tài thương mại tại Việt Nam - Bản án và bình luận bản án [Law on Commercial Arbitration in Vietnam – Cases and Review] (in Vietnamese), 115-117, Volume 1 (2018).
19 Article 3.11 of the Arbitration Law 2010.
20 See Id. at Article 3.4. See also Article 2.4 of the Arbitration Ordinance 2003.
21 Article 663.2 of Civil Code No. 91/2015/QH13 passed by the National Assembly on 24 November 2015, effective from 1 January 2017 (the Civil Code 2015).
22 Article 14.1 of the Arbitration Law 2010.
23 Id. at Article 14.2.
24 Id. at Article 10.
26 Decree No. 63/2011/ND-CP detailing and guiding a number of articles of the Law on Commercial Arbitration issued by the Government on 28 July 2011, effective from 20 September 2011.
27 Resolution No. 01/2014/NQ-HDTP providing guidelines for a number of provisions of the Law on Commercial Arbitration issued by the Council of Judges of the Supreme People's Court on 20 March 2014, effective from 2 July 2014 (Resolution No. 01/2014).
28 Article 61.5 of the Arbitration Law 2010.
29 Article 427.2 of the Civil Procedure Code No. 92/2015/QH13 passed by the National Assembly on 25 November 2015, effective from 1 July 2016 (the Civil Procedure Code 2015).
30 Civil Procedure Code No. 24/2004/QH11 passed by the National Assembly on 15 June 2004 (the Civil Procedure Code 2004).
31 Practice Note 246/TANDTC-KT giving internal guidance on the resolution of applications for recognition and enforcement of foreign arbitral awards in Vietnam issued by the Supreme People's Court on 25 July 2014 (the Practice Note).
32 Articles 451 to 463 of the Civil Procedure Code 2015.
33 Id. at Article 424.1.
34 Id. at Article 459.
35 Id. at Articles 37.1(b) and 427.2.
36 Law on Enforcement of Civil Judgments No. 26/2008/QH12, as amended by Law No. 64/2014/QH13 dated 25 November 2014, effective from 1 July 2015 (the 'Law on Enforcement of Civil Judgments').
37 Decree No. 62/2015/ND-CP providing guidelines for the Law on Enforcement of Civil Judgments issued by the Government on 18 July 2015, effective from 1 September 2015.
38 Circular No. 01/2016/TT-BTP guiding a number of procedures for administrative management and professional templates in the enforcement of civil judgment issued by the Ministry of Justice on 1 February 2016, effective from 16 March 2016.
39 Joint Circular No. 11/2016/TTLT-BTP-TANDTC-VKSNDTC on the provision of a number of issues and the coordination in the enforcement of civil judgment jointly issued by the Ministry of Justice, the Supreme People's Court and the Supreme People's Procuracy on 1 August 2016, effective from 30 September 2016.
40 Article 66 of the Arbitration Law 2010.
42 Article 62.1 of the Arbitration Law 2010.
43 Ministry of Justice report accessible on its website at http://bttp.moj.gov.vn/qt/Pages/trong-tai-tm.aspx?Keyword=&Field=&&Page=2.
44 VIAC Report on Summarizing Activities in 2017 (in Vietnamese).
49 VIAC Report on Summarizing Activities in 2016.
50 Article 689 of the Civil Code 2015.
51 Id. at Article 4.
52 Article 3 of the Civil Code 2015 provides as 'Basic principles of civil law' that '1. Every individual or legal entity is equal and may not be discriminated against for any reason; and is equally protected by law for personal and property rights. 2. Individuals and legal entities establish, perform and terminate their civil rights and obligations on the basis of free and voluntary commitments and agreements. Any commitment or agreement which does not violate a prohibition by law or is not contrary to social morals is valid for performance by the parties and must be respected by other subjects. 3. Individuals and legal entities must establish, perform and terminate their civil rights and obligations with good will and honesty. 4. The establishment, performance and termination of civil rights and obligations may not infringe upon national or ethnic interest, public interest, or legitimate rights and interest of other people. 5. Individuals and legal entities must bear self-responsibility for non-performance or incorrect performance of civil obligations.'
53 Article 4 of the Civil Code of 2015 provides that '1. This Code is the general law to govern civil relations. 2. Other related laws governing civil relations in specific sectors must not be inconsistent with the basic principles of civil law prescribed in article 3 of this Code. 3. Where other related laws do not contain provisions [on civil relations] or contain provisions which are in breach of clause 2 of this article, the provisions of this Code shall apply.'
54 It should be noted, however, that Article 4.4 states that in the event of a conflict between the Civil Code of 2015 and an international treaty signed by Vietnam, the treaty prevails. ('Where there is any difference between the provisions of this Code and of an international treaty to which the Socialist Republic of Vietnam is a member on the same issue, the provisions of the international treaty shall apply').
55 Article 517.1 of the Civil Procedure Code 2015.
56 Id. at Article 114.
57 Article 411.1 of the Civil Procedure Code 2004.
58 Decree No. 22/2017/ND-CP on commercial mediation issued by the government on 24 February 2017, effective from 15 April 2017 (Decree No. 22/2017).
59 Article 1(1) of Decree No. 22/2017.
60 Id. at Article 6.
61 Id. at Article 16.
62 Article 419.9 of the Civil Procedure Code 2015.
63 Circular No. 02/2018/TT-BTP guiding the application of a number of templates of organisation and operation of commercial mediation issued by the Ministry of Justice on 26 February 2018, effective from 20 April 2018.
64 Article 22.2(c) of the Law on Organisation of People's Courts.
65 Article 1 of Resolution No. 03/2015/NQ-HDTP on process for selecting, publishing and adopting precedents issued by the Council of Judges of the Supreme People's Court on 28 October 2015, effective from 16 December 2015.
66 The new VIAC Rules of Arbitration 2017, VIAC News, 14 March 2017.
68 Ibid. Article 6 and Article 15 of the New VIAC Rules intend to meet the users' need and to be in line with the current regulations on commercial arbitration, in particular Article 7.4 of Resolution No. 01/2014. Prior to Article 6 and Article 15 of the New VIAC Rules, claims arising out of multiple contracts may only be resolved through a single arbitration if the parties so agreed pursuant to Article 7.4 of Resolution No. 01/2014. Likewise, the consolidation of pending arbitrations was only possible based on the parties' express agreement under the above Article 7.4. Under the New VIAC Rules, any party may move for consolidation even in the absence of such express agreement.
70 K. Minh Dang, Do Khoi Nguyen and Luan Tran, GAR Know-How Commercial Arbitration 2017 – Vietnam (2017).
72 Article 459.2(b) of the Civil Procedure Code 2015.
73 Do Van Dai, Pháp luật trọng tài thương mại tại Việt Nam – Bản án và bình luận bản án (Law on Commercial Arbitration in Vietnam – Cases and Review) (in Vietnamese), 567-570, Volume 2 (2018).
74 Ibid. The author has not, however, given further information with respect to the name of the arbitral institution.
79 Id. at p. 190-192.
86 Decision No. 1032/2016/QDST-KDTM of the People's Court of Ho Chi Minh City dated 29 September 2016.
87 Article 62 of the Arbitration Law 2010.
88 Do Van Dai, Pháp luật trọng tài thương mại tại Việt Nam - Bản án và bình luận bản án (the Law on Commercial Arbitration in Vietnam – Cases and Review) (in Vietnamese), 190-192, Volume 2, (2018).
89 Decision No. 167/2017/QD-DKPQ of the People's Court of Ho Chi Minh City dated 22 February 2017.
90 Investment Dispute Settlement Navigator, Viet Nam as respondent State, available at http://investmentpolicyhub.unctad.org/ISDS/CountryCases/229?partyRole=2.
92 Nguyen Phuong Dung, The Fair and Equitable Treatment in Investor–state Arbitration in Vietnam, International Arbitration Asia, 12 July 2016.
94 Thang Quoc, Vì sao ông Trịnh Vĩnh Bình kiện Chính phủ đòi 1,25 tỷ USD? (in Vietnamese), VN Express (2017).
96 Linh Nguyen Phuong, Anh Dinh Hoang and Giang Chu Thanh, Vietnam Recognition and Enforcement of Foreign Arbitral Awards and Preparation for EVFTA, SSRN Electronic Journal (2017).
98 Luke Eric Peterson, The Future of Moral Damages in Investment Treaty Arbitration, Kluwer Arbitration Blog (2009).
99 Về vụ ông Trịnh Vĩnh Bình kiên VN hơn 1 tỷ USD - BBC Tiếng Việt (in Vietnamese), BBC News (2017).
100 Thang Quoc, Vì sao ông Trịnh Vĩnh Bình kiện Chính phủ đòi 1,25 tỷ USD? (in Vietnamese), VN Express (2017).
101 Vụ kiện Trịnh Vĩnh Bình vs. Chính phủ Việt Nam: Một số nhận định sơ bộ, The Observer, Nghiên Cứu Quốc Tế, 4 September 2017.