What Are Advantages and Disadvantages Resolving Disputes by Commercial Arbitration?

What is Commercial Arbitration?

Commercial arbitration is a method of settling disputes selected by the parties and conducted in accordance with law. Compared with other method of dispute resolution such as mediation, negotiation, court litigation, dispute resolution by commercial arbitration also has advantages and disadvantages. Arbitration law firms in Vietnam would help clients understand the advantages and disadvantages of using arbitration in dispute resolution in Vietnam. 

In accordance with Vietnamese law and international law, the method of dispute resolution by commercial arbitration also stems from the agreement of the parties on a voluntary basis.

However, the difference between these methods is that the settlement of disputes through arbitration in Vietnam will be governed by the Commercial Arbitration Law.

The parties are allowed to agree on appropriate arbitration selection, either before or after the dispute arises.

Advantages Resolving Disputes by Commercial Arbitration in Vietnam

The Practice Of Applying Commercial Arbitration Law In Resolving Disputes Presents Some Advantages:

Firstly, this is a method of resolving disputes on the principle of confidentiality if the parties do not agree otherwise. This is an advantage that all claimants respect because it limits the disclosure of business secrets, and keeps the credibility of the parties.

Secondly, the decision of the arbitrator is final, binding on the parties and the right to appeal in this case is invalid. The trial at Commercial Arbitration takes place only at one trial level, which the trial at the Court is at two levels. Therefore, it creates a premise for the following advantages.

Thirdly, the settlement of disputes arising through commercial arbitration shows flexibility while shortening the proceedings thereby contributing to saving time and effort of the parties.

Fourthly, the settlement of disputes by arbitration is not territorially limited so the parties may agree to choose any arbitrator to resolve their disputes.

Disadvantages Resolving Disputes by Commercial Arbitration

However, the competing parties also need to pay attention that the choice of arbitration method also reveals some disadvantages such as:

The enforcement of arbitral awards depends heavily on the willingness of the parties to the dispute.

If the party who is serving the judgment does not voluntarily follow the arbitral awards and does not request to cancel the arbitral award after the expiration of the time limit for enforcing the arbitral award, the judgment-executing party may send a written request to the civil judgment enforcement agency for judgment execution.

In addition, one of the disputing parties may submit a request to the Court to cancel the arbitration award when encountering one of these following conditions:

(i) There is no arbitration agreement or the arbitration agreement is invalid;

(ii) The arbitration council’s composition or procedures of arbitral proceedings does not comply with the parties’ agreement or regulations;

(iii) The dispute falls beyond the arbitration council’s jurisdiction: when an arbitral award contains the details falling beyond the arbitration council’s jurisdiction, such details shall be cancelled;

(iv) The evidence provided by the parties on which the arbitration council bases to issue the award is counterfeit: an arbitrator receives money, assets or other material benefits from one disputing party, thus affecting the objectivity and impartiality of the award;

(v) The award contravenes the fundamental principles of Vietnamese law.

Finally, when the parties choose to resolve their disputes by arbitration method, the costs are relatively higher than in the proceeding of court litigation.

How Arbitration Law Firms in Vietnam Could Help?

In Vietnam, the practice of resolving disputes through commercial arbitration has started to gain popularity with an increasing number of businesses recognizing the benefits of this alternative to traditional court litigation.

Arbitration offers a confidential, efficient, and flexible means of resolving disputes, and the role of arbitration law firms in Vietnam is crucial in ensuring the effectiveness of this process.

1. The Significance of Arbitration Law Firms in Vietnam

Arbitration law firms in Vietnam play a pivotal role in facilitating and overseeing the arbitration process, providing expert guidance to disputing parties.

These firms specialize in the nuances of commercial arbitration, navigating the complexities of both local and international laws. 

2. Expertise in Arbitration Procedures

Arbitration law firms in Vietnam are well-versed in the procedures and protocols of commercial arbitration.

They guide clients through the entire arbitration process, from the initial agreement to the enforcement of arbitral awards.

This expertise ensures that the proceedings adhere to the principles of confidentiality and efficiency, as outlined in Vietnamese arbitration laws.

3. Ensuring Compliance with Vietnamese Laws:

Navigating the legal landscape in Vietnam can be intricate, and arbitration law firms are essential in ensuring that the arbitration process complies with Vietnamese laws and regulations.

This includes confirming the validity of arbitration agreements, ensuring the arbitrators’ composition aligns with the parties’ agreement, and verifying that the arbitration council’s jurisdiction is appropriately established.

4. Confidentiality and Business Secrets Protection

One of the advantages of arbitration is its commitment to confidentiality. Arbitration law firms in Vietnam prioritize the protection of business secrets and sensitive information, respecting the wishes of the disputing parties.

This confidentiality clause enhances the credibility of the parties involved, fostering an environment conducive to open and honest dialogue.

5. Finality of Arbitral Awards

Arbitration law firms in Vietnam understand the significance of the finality of arbitral awards.

By opting for arbitration, disputing parties agree to a decision that is binding and generally not subject to appeal.

This finality streamlines the resolution process, and the expertise of law firms ensures that the arbitral awards are clear, well-reasoned, and in compliance with Vietnamese law.

6. Flexibility and Time Efficiency

Arbitration law firms contribute to the flexibility and time efficiency of the dispute resolution process.

Unlike court litigation, arbitration typically involves a single trial level, minimizing delays and expediting the resolution.

Firms guide their clients in navigating this swift process, saving valuable time and effort for all parties involved.

7. International Perspective

Vietnamese businesses are increasingly engaged in international transactions, and arbitration law firms bring an international perspective to dispute resolution.

Arbitration law firms in Vietnam assist clients in selecting arbitrators with relevant expertise and experience, regardless of geographical boundaries.

This global outlook enhances the credibility of the arbitration process and ensures a fair and impartial resolution.

8. Enforcement of Arbitral Awards

While the enforcement of arbitral awards depends on the willingness of the parties, arbitration law firms in Vietnam play a crucial role in facilitating the execution of these awards.

Arbitration law firms in Vietnam assist in navigating the enforcement procedures, providing guidance on the steps to be taken if a party fails to comply voluntarily with the arbitral decision.

9. Addressing Challenges and Disadvantages

Arbitration law firms in Vietnam acknowledge the challenges associated with arbitration, such as the higher costs compared to court litigation.

However, arbitration law firms in Vietnam work with disputing parties to optimize cost-effectiveness while emphasizing the numerous advantages that arbitration offers in terms of speed, confidentiality, and finality.

10. Mitigating Risks and Upholding Principles

Arbitration law firms in Vietnam are committed to mitigating risks associated with arbitration and upholding the fundamental principles of Vietnamese law.

They assist in drafting arbitration agreements that are clear and legally sound, minimizing the potential for challenges to the arbitration process.

In conclusion, arbitration law firms in Vietnam play a pivotal role in facilitating effective dispute resolution through commercial arbitration.

Their expertise in arbitration procedures, understanding of Vietnamese laws, commitment to confidentiality, and ability to navigate the complexities of international transactions contribute to the success of the arbitration process.

While challenges exist, the advantages offered by arbitration, coupled with the guidance of experienced law firms, make it a compelling choice for businesses seeking a reliable and efficient means of resolving disputes in the Vietnamese business landscape.

About ANT Lawyers, a law firm in Vietnam

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers has lawyers in Ho Chi Minh city, Hanoi,  and Danang, and will help customers in doing business in Vietnam.