This is an extract of Eurocham Whitebook 2021 which Mr Anh Tuan Nguyen contributed on the mediation future in Vietnam. At that time, Mr Anh Tuan Nguyen of ANT Lawyers was a member of EuroCham, Legal Sector Committee. This chapter is the contribution to the annual publication of EuroCham Whitebook of the year 2021.
CHAPTER 23 COMMERCIAL MEDIATION OVERVIEW
Commercial mediation is a means of commercial dispute settlement with the assistance of a commercial mediator acting as an intermediary. It is used when at least one party has commercial activities or disputes between parties arising from commercial activities. This definition corresponds with the UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation 2018.
Commercial mediation can be considered alongside other means like commercial arbitration and court proceedings. In Vietnam, mediation also exists in commercial arbitration and court proceedings.
This chapter will also cover the mediation mechanism outlined in the EVFTA as well as the EVIPA which will enter into force after ratification by all EU Member States.
I. COMMERCIAL MEDIATION
Relevant authorities: Ministry of Justice (MOJ), Vietnamese Courts
Issue description
Commercial mediation under the laws of Vietnam.
Commercial mediation is stipulated in Decree 22. This is regulatory mediation in which an independent, impartial third party is chosen by the parties in a dispute to assist them through the mediation process with the hope of reaching a reasonable agreement.
Commercial mediation is proactively implemented and agreed upon by the disputing parties. In commercial mediation, when a successful mediation result is achieved, a written record of the successful mediation result shall be made and signed by the parties and the commercial mediator. This record can then be submitted in order to be recognised by the court under the regulations of the Civil Procedure Code.
There is also the so-called “mediation” in commercial arbitration proceedings regulated in previous regulations like the Law on Commercial Arbitration 2010 or the “mediation” in civil mediation procedures regulated by the Code of Civil Procedure 2015. These are not the commercial mediation form. Rather, they are just a practical part of the procedures in arbitration or court proceedings. Please find more details on the distinction between commercial mediation and mediation activities in commercial arbitration and court proceedings in the Commercial Mediation Chapter of the 2020 Whitebook.
Furthermore, mediation also exists in the Law on Mediation and Dialogue at Court passed by the National Assembly on 16 June 2020, which took effect on 1 January 2021. It is necessary to distinguish mediation under this Law from the above-mentioned commercial mediation.
Mediation under the Law on Mediation and Dialogue at Court will be carried out following petitions submitted at court requesting civil dispute settlement under court proceedings. This mediation will be conducted by a mediator appointed by the Chief Judge of the provincial People’s Court. This can be done before the court accepts cases related to disputes over civil matters, marriage and family, business, commerce and labour; requests for recognition of amicable divorce falling under the court’s jurisdiction in order to assist parties in mediation to negotiate the civil case settlement that may contribute to the timely and correct handling of disputes, grievances and mitigate work for courts in Vietnam.
Mediation in light of the EVFTA and EVIPA
For the EVFTA, the mediation mechanism is one of the dispute settlement mechanisms outlined in Chapter 15 on Dispute Settlement, in addition to consultation and arbitration. Accordingly, parties may – at any time – agree to enter into a mediation procedure pursuant to Annex 15-C on Mediation Mechanism with respect to any measure adversely affecting trade or liberalisation of investment between the parties. Meanwhile, for the EVIPA, the mediation mechanism is one of the dispute settlement mechanisms outlined in Chapter 3 on Dispute Settlement. This states that, for disputes between parties, the parties may, at any time, agree to enter into a mediation procedure with respect to any measure adversely affecting investment between the parties pursuant to Annex 9 on Mediation Mechanism, in addition to consultation and arbitration. For disputes between investors and parties, the disputing parties may, at any time, agree to have recourse to mediation under the rules set out in Annex 10 on Mediation Mechanism, in addition to consultation and submission of a claim.
The objective of providing mediation is to facilitate the finding of mutually agreed solutions through a comprehensive and expeditious procedure with the assistance of a mediator. A mediation procedure is without prejudice to the parties’ rights and obligations under Chapter 15 of the EVFTA on Dispute Settlement and Chapter 3 of the EVIPA on Dispute Settlement and any other agreement. The EVFTA and EVIPA contain provisions on confidentiality as well as on what is not considered as evidence in other dispute settlement procedures. Examples include positions taken by the other party in the course of the mediation procedure; the fact that the other party has indicated its willingness to accept a solution to the measure subject to mediation; or advice given or proposals made by the mediator.
The provisions of the mediation mechanism in Annex 15-C of the EVFTA and the mediation mechanism in Annexes 9 and 10 of the EVIPA have many similarities. Accordingly, the mediation procedure may only be initiated by mutual agreement. Mediation can be conducted at any location and by any means as agreed by the parties. Mediators shall assist, in an impartial and transparent manner, in bringing clarity to the measure and its possible effects on trade or liberalisation of investment between the parties. This could involve organising meetings, consulting the parties jointly or individually, seeking the assistance of – or consulting with – relevant experts and stakeholders after consulting with the parties, and providing any additional support requested by the parties to reach a mutually agreed solution.
There are some differences between the commercial mediation provisions under Vietnamese law and the EVFTA’s mediation mechanism. In particular, Vietnamese law does not state that a party must submit a written request to participate in mediation proceedings; nor that the requested party must respond in writing. However, Vietnamese law allows the parties to be proactive in terms of time and method of entering into the mediation agreement. Vietnamese law also allows the parties to choose the mediation order and procedures. Meanwhile, the EVFTA mediation process rules require the party invoking the mediation to present, in writing, a detailed description of the problem to the mediator and to the other party. The other party shall be required to provide, in writing, its comments to the description of the problem. In addition, Vietnamese law contains provisions on the recognition of successful mediation results in accordance with the civil procedure law, and the Vietnamese court’s decision on recognition may then be enforced at a competent judgment enforcement agency. There are no enforcement provisions in the EVFTA. Under this agreement, where the parties have agreed to a solution, each party shall take the measures necessary to implement the mutually agreed solution within the agreed time frame. The implementing party shall inform the other party in writing of any steps taken to implement the mutually agreed solution, on voluntary principles, goodwill and aims to bring fairness in bilateral commercial relations.
Potential gains/concerns for Vietnam
Commercial mediation in practice over recent years
In general, the application of commercial mediation helps commercial business organisations and individuals resolve disputes quickly and effectively. This is due to the flexibility in finding a solution based on parties’ mutual interest, rather than solely on legal rights. It also helps to save legal costs and maintain cooperative relations between the parties. Mediation procedure is without prejudice to the parties’ rights and obligations in any other proceedings (i.e. commercial arbitration or court proceedings).
It is necessary to continue implementing measures to increase awareness, especially about commercial mediation and develop commercial mediation under Decree 22. Moreover, the regulations – both those developed under Decree 22 and in other previous laws and practice – should be made more uniform and consistent. This will help to simplify and provide a viable option for legal practitioners, business communities, and academics.
Under the laws of Vietnam, a commercial mediation organisation could be a Commercial Mediation Centre which is established and operates in accordance with Decree 22 or an Arbitration Centre established and operating under the Law on Commercial Arbitration that conducts commercial mediation activities in accordance with Decree 22. In addition, Vietnamese law allows foreign commercial mediation organisations to set-up and operate in Vietnam, under the form of a branch or a representative office.
In Vietnam, ad-hoc commercial mediation and the mediator are also recognised by Decree 22. Immediately after Decree 22 came into effect, experts in many fields registered as ad-hoc commercial mediators at Departments of Justice, especially in Hanoi and Ho Chi Minh City. At the same time, commercial mediation centres have also been established. According to information officially provided by the MOJ, 15 commercial mediation centres are licensed by the MOJ. Besides, at present, Vietnam has some arbitration centres offering commercial mediation services.
Mediation in light of the EVFTA
Mediation in the EVFTA and EVIPA, once the latter is ratified, will create a legal corridor for the mediation procedure between a Vietnamese party and a party which is a Member State of the EU. Mediation is convenient and saves time and costs, particularly when the participating parties are in different territories. This has become especially clear during the COVID-19 pandemic. In addition, mediation can be agreed to apply at any phase in the dispute settlement process, creating the most favourable conditions for an amicable dispute resolution. The application of mediation in trade and investment disputes not only helps resolve disputes but also promotes trade and investment. When mediation is successful, these activities will continue to be implemented promptly. This not only minimises undesirable losses for the parties but also maintains their positive image, creating a favourable trade and investment environment.
The challenge for Vietnam mainly comes from compliance with and implementation of the commitments under the EVFTA. This is because the mediation mechanism has not been developed in Vietnam within the framework of both domestic and foreign disputes. On 6 August 2020, the Prime Minister issued Decision 120123 which has been supplemented by Official Document No. 654824 approving the plan for the implementation of the EVFTA. Therefore, ministries, ministerial-level agencies, governmental agencies, provincial People’s Committees and centrally-affiliated cities are required to perform the following tasks: communicate information about the EVFTA and EU markets; make laws and institutions; build competitive capacity and develop human resources; provide guidelines and policies for grassroots trade unions and labour organisations; and draft policy on social security, environmental protection, and sustainable development.
Under the complicated situation of COVID-19, many enterprises encounter disputes arising from the violation of quality, delivery time, or payment obligations. These disputes put parties in a “dilemma” as the “solving” of these disputes requires taking into consideration the time, cost, and risk reduction for both parties. Mediation may, therefore, become a suitable solution in the settlement of general disputes in this case. However, to ensure full and effective implementation of the EVFTA and EVIPA, on the part of State agencies, we urge the Government to focus on raising awareness and guidance of the implementation. This will result in a better understanding of and benefit from the EVFTA by Vietnamese enterprises. On the business side, it is necessary to have available strategies and facilities, and to proactively apply mediation to grasp and comply with the commitments. Enhancing capacity building and training for legal practitioners on mediation should also be done in order to prepare for future demand.
Under the EVFTA, the implementation of a mutually agreed solution is based upon voluntary principles and goodwill. There are no provisions of enforcement of a mutually agreed solution under the EVFTA. Therefore, if one of the parties fails to comply with the agreement, the other may need to carry out the procedure to initiate a lawsuit at court or arbitration. Once these proceedings are in place, the parties may have to settle the dispute again.
The Singapore Convention on Mediation
Up to date, 54 countries including for example China, India, Singapore, Republic of Korea, United States, signed the UN Convention on International Settlement Agreements Resulting from Mediation25, also known as the “Singapore Convention on Mediation”.
Vietnam is not yet one of the signatories to the Convention. However, its participation would strengthen the country’s stature in the international community. Participation in the Convention will then become a viable option for mediation of cross-border disputes.
Recommendations
We would like to make the following recommendations:
Continue implementing measures to increase awareness of commercial mediation and develop it.
Unify regulations of commercial mediation as developed under Decree 22 and in other previous laws and practice.
Focus on raising awareness and guidance on the implementation and impact of the EVFTA and EVIPA regarding the mediation mechanism so Vietnamese enterprises can benefit.
Enhance capacity building and training for legal practitioners about commercial mediation to prepare for the future.
Consider joining the international treaties related to commercial meditation to complete the legal corridor for the entire process of dispute settlement through commercial mediation.
ACKNOWLEDGEMENTS
EuroCham Legal Sector Committee
About VEMC, a Mediation Center in Vietnam
Vietnam Effective Commercial Mediation Center (VEMC) is a a Non-Profit Organization that Promote Mediation as Alternative Dispute Resolution in Vietnam, Provide Training and Mediate Disputes. The idea of mediation is to offer a different way of handling disagreements as compared to litigation proceedings. At VEMC, we pride ourselves on having a team of highly qualified and experienced professionals dedicated to the vision and mission of the center. Contact us to exchange ideas for cooperation in dispute resolution, work with us, or request services.