Forms of commercial dispute resolution

To gain the clearest and most comprehensive perspective on commercial dispute resolution and to help parties understand and choose the most suitable resolution method, BKC Law will provide a detailed explanation of this issue in the following article:

Currently, Vietnam is one of the most deeply and comprehensively integrated countries in the global economy. This has significantly promoted cooperation, trade, and business activities both domestically and internationally. However, along with opportunities come challenges and risks in commercial business operations, as conflicts of interest inevitably arise in business relationships between parties. When commercial disputes occur, all parties seek the most effective, swift, and appropriate resolution to maintain business partnerships while ensuring their rights and interests.

Legal basis

• Civil Code 2015
• Commercial Law 2005
• Civil Procedure Code 2015
• Law on Commercial Arbitration 2010
• Decree 22/2017/ND-CP on Commercial Mediation

What is a commercial dispute?

According to Clause 1, Article 3 of the Commercial Law 2005:

“Commercial activities are profit-seeking activities, including the sale of goods, provision of services, investment, trade promotion, and other profit-oriented activities.”

Based on this definition, a commercial dispute refers to conflicts, disagreements, or disputes over interests arising from commercial business activities between related parties engaged in commercial activities such as investment, goods trading, service provision, trade promotion, and other profit-oriented activities.

What are the current forms of commercial dispute resolution?

According to Article 317 of the Commercial Law 2005, commercial disputes can be resolved through four methods:

• Negotiation between the parties
• Mediation
• Arbitration
• Court litigation

Depending on the specific conditions and circumstances of the dispute, the involved parties can choose the most suitable resolution method. Below, BKC Law will analyze each method in detail:

Negotiation Between the Parties

This is the most traditional method of dispute resolution, where parties voluntarily negotiate to resolve conflicts of interest without the intervention or judgment of a third party.

Advantages:

• It is the simplest and first step in resolving disputes.
• It minimizes dispute resolution costs.
• It helps maintain business relationships.
• It does not require any third-party intervention.

Disadvantages:

• The outcome depends entirely on the mutual agreement of the parties.
• The enforcement of the agreement is voluntary and not legally binding.

Mediation

According to Clause 1, Article 3 of Decree 22/2017/ND-CP:

“Commercial mediation is a dispute resolution method agreed upon by the parties, with a commercial mediator acting as an intermediary to facilitate dispute resolution according to this Decree.”

Mediation involves selecting an individual, organization, or institution to act as an intermediary to help resolve the dispute.

Advantages:

• Flexible, cost-effective, and time-saving.
• The mediator is often an experienced expert in the field of dispute.
• More objective and impartial than direct negotiation.
• Higher compliance rate compared to negotiation.

Disadvantages:

• It does not follow a formal legal procedure, as the mediation process is decided by the disputing parties.
• The outcome is not legally binding unless recognized by a court under Article 419 of the Civil Procedure Code 2015.

Resolution Through Commercial Arbitration

Characteristics of Commercial Arbitration

According to Clause 1, Article 3 of the Law on Commercial Arbitration 2010:

“Commercial arbitration is a dispute resolution method agreed upon by the parties and conducted in accordance with this Law.”

This means that the arbitration process and procedures are determined by the parties, following the provisions of the Law on Commercial Arbitration 2010, without being subject to civil procedural regulations.

Structure and Operation of Commercial Arbitration

Commercial arbitration operates independently of state institutions. It is a non-governmental organization with legal status, its own charter, and a fixed list of arbitrators.

Types of Commercial Arbitration in Vietnam

Pros and Cons of Arbitration

Advantages:

• A modern and professional dispute resolution trend.
• Faster and more cost-effective than court litigation.
• Handled by industry experts.
• Not restricted by national jurisdiction.
• Ensures confidentiality.
• Arbitral awards are final and binding.

Disadvantages:

• Arbitration costs vary across arbitration centers.
• If an arbitral decision is biased, the court may intervene.
• Gathering evidence may be challenging in complex cases.

Resolution Through the Court

Court Jurisdiction

According to Article 30 of the Civil Procedure Code 2015, the court has jurisdiction over disputes related to:

1. Business and commercial activities between registered business entities.
2. Intellectual property rights and technology transfer.
3. Shareholding and capital contribution disputes.
4. Internal disputes within companies.
5. Other business-related disputes not under the jurisdiction of other agencies.

If a dispute falls within these categories, the involved party can file a lawsuit and submit the required documents to the court.

Pros and Cons of Court Litigation

Advantages:

• Court decisions have high legal authority.
• Applicable to cross-border disputes.

Disadvantages:

• The litigation process is rigid and time-consuming.
• Trials are public, reducing confidentiality.
• Judgments can be appealed, potentially prolonging the case.

Statute of limitations for filing commercial disputes

According to Article 319 of the Commercial Law 2005:

“The statute of limitations for filing a commercial dispute is two years from the date the legitimate rights and interests were violated, except in cases where a logistics service provider does not receive notice of arbitration or court action within nine months from the delivery date.”

Commercial contract dispute consultation services at BKC LAW

This article by BKC Law outlines the various methods of resolving commercial disputes. Understanding these methods enables businesses to make informed decisions to protect their rights and interests effectively under the law.

For free legal consultation, contact BKC Law:

Phone: 0901 3333 41
Email: info@bkclaw.vn

District 1 Office: 9th Floor, Diamond Plaza, 34 Lê Duẩn, District 1, Ho Chi Minh City
Binh Tan Office: 41 Tên Lửa, Binh Tan, Ho Chi Minh City

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