In Vietnam, legal disputes may be settled by negotiation, in court or by domestic or foreign arbitration.
The judiciary
The hierarchy of Vietnamese courts include: (i) Supreme People’s Court; (ii) Provincial People’s Courts; and (iii) District People’s Courts. The courts operate in five divisions: (i) Criminal; (ii) Civil; (iii) Administrative; (iv) Economic and (v) Labor.
Unlike common law countries, Vietnam does not follow the doctrine of precedence under which cases decided by judges in the past are used as authority for later cases. Judgments are based only on legislation and principles of interpretation of the laws.
Running parallel to the court systems is the People’s Procuracy which is responsible for supervising the operation of judicial authorities and exercising the power of public prosecution. The People’s Procuracy can lodge protests against a judgment and ask for its review.
Arbitration and dispute resolution
To supplement the court system, Vietnam has a system of independent arbitration centers, established under the Commercial Arbitration Ordinance (2003). An arbitral award given by an arbitration center or an arbitration panel established by the parties in accordance with the provisions of the Ordinance will be enforceable in Vietnam without need for prior recognition.
Disputes involving foreign investors may be also settled by foreign arbitration. In 1995, Vietnam became a member of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. An arbitral award given by a foreign arbitration will be enforceable in Vietnam after it is recognized by a Vietnamese court.
Accordingly, where a dispute occurs between parties in a BCC, between parties in a joint venture contract, or between enterprises with foreign-owned capital or parties in a BCC and Vietnamese economic enterprises: these shall firstly be resolved through negotiation and conciliation. If the negotiation is not successful, the parties involved in the dispute can agree to use one of the following methods to settle:
i) The Vietnamese court
ii) A Vietnamese arbitration body (the Vietnam International Arbitration Center or an Economic Arbitration Center)
iii) An international arbitration body; or
iv) An arbitration tribunal as agreed by the parties, etc.
