What Conditions for Arbitration Agreement to Take Effect in Vietnam?

Commercial arbitration means a mode of dispute settlement agreed by the parties and to be conducted in accordance with law. Arbitration agreement means an agreement between the parties to settle by arbitration a dispute which may arise or has arisen. Dispute is settled by arbitration if the parties have agreed to arbitration.

In order for the arbitration agreement to take effect, what conditions must be met?

The Commercial Arbitration Law 2010 does not specify the conditions for an arbitration agreement to take effect. However, based on the cases when the arbitration agreement is invalid, we can draw out the basic conditions for the arbitration agreement to be effective.

Parties of the agreement: this condition is considered as the most important when it directly affects the validity of civil transactions in general and arbitration agreements in particular. Accordingly, the person establishing the arbitration agreement has civil capacity as prescribed in the Civil Code 2015.

Jurisdiction of arbitration: the arbitration agreement must belong to the fields under the jurisdiction of the arbitration. Specifically, it is an agreement that requests arbitration to resolve disputes between parties arising from commercial activities; disputes arising between the parties in which at least one party has commercial activities or other disputes between the parties as prescribed by law shall be settled by arbitration.

Arbitration agreement form: the arbitration agreement may be established in the form of an arbitration clause in a contract or in the form of a separate agreement. The arbitration agreement must be established in the form of a document prescribed in Clause 2, Article 16 of the Commercial Arbitration Law 2010, such as an agreement made through communication between the parties by telegram, fax, telex, email or other forms provided for by law; agreement is established through the exchange of written information between the parties;…

The will of the parties when signing: the parties must be completely voluntary in concluding the arbitration agreement. The parties shall not be deceived, intimidated or coerced in the process of establishing an arbitration agreement. The arbitration agreement violates the prohibition of the law.

In case multiple arbitration agreements are made on the same dispute, the latest lawful agreement shall apply.

Besides, there are many matters that impact the dispute which parties should consider and it is important that parties engage with dispute lawyers early in the dispute stages to review relevant matters and prepare a strategic approach to the dispute for most effective solution.