This is an extraction of Eurocham Whitebooks of the year 2020 which Mr Anh Tuan Nguyen contributed, which has been published and shared to Eurocham member companies in Vietnam. The topic on Mediation is from page 81 to page 85 that walk readers through some legal development on mediation topic in Vietnam.
Extract of Eurocham Whitebook 2020
CHAPTER 5
COMMERCIAL MEDIATION OVERVIEW
Commercial mediation has been used as a mean of commercial disputes settlement in which at least one party has commercial activities or disputes between parties arising from commercial activities with the assistance of a commercial mediator acting as an intermediary.
Definition of commercial mediation under the laws of Vietnam is corresponding to the definition of UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation 2018.
In these agreements mediation is defined as a process, whether referred to by the expression mediation, conciliation or an expression of similar import, whereby parties request a third person or persons (the mediator) to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship.
The mediator does not have the authority to impose a solution to the dispute upon the parties involved. Commercial mediation is one of the methods of disputes settlement besides the other means like commercial arbitration and court proceedings.
In Vietnam, mediation definition also exists in commercial arbitration and court proceedings. Therefore, this session introduces the commercial mediation and it is necessary to distinguish the commercial mediation under the Decree 22/2017/ND-CP on 24 February 2017 of the Government on commercial mediation (Decree 22) from other mediation forms which appear in the previous Vietnamese regulations and the practice.
Issue description
Relevant authorities: Ministry of Justice (MOJ), Vietnamese courts
Distinguish commercial mediation from other mediation activities in other means of commercial dispute settlements.
Commercial mediation is stipulated in Decree 22. This is regulatory mediation in which an independent, impartial third party is chosen by the parties in dispute to assist the parties to go through the mediation process with the hope of reaching a reasonable agreement for the parties. Please find more details in the potential gains/concerns for Vietnam section below.
There is also the so-called “mediation” in commercial arbitration proceedings regulated in the previous regulations like Law on Commercial Arbitration 20104 or the “mediation” in civil mediation procedures regulated by Code of Civil Procedure 20155 .
These are not the commercial mediation form but are just a practical part of the procedures in the arbitration or court proceedings. The mediation in the proceedings at court is a mandatory process, performed proactively by the entities conducting proceedings according to the order and procedures of the Civil Procedure Code, except for civil cases that are not mediated or cannot be mediated.
While the method of mediation in commercial arbitration proceedings and commercial mediation are proactively implemented by the disputing parties, as agreed by the parties. In addition, the scope of mediation at court is wider than that of commercial mediation, commercial arbitration i.e. in all areas governed by the Civil Procedure Code and the Administrative Procedure Law.
The successful mediation results of mediation activities under the proceedings at a court are recorded in the decision to recognise the agreement of the involved parties issued by court, which takes effect immediately after being issued and not being appealed or protested according to appellate procedure. In commercial arbitration proceedings, where the parties reach an agreement on the settlement of a dispute, the Arbitration Council shall make a record of successful mediation signed by the parties. The Arbitration Council issues a decision recognising the agreement of the parties. This decision is final and valid as an arbitral award.
In commercial mediation, when the parties achieve successful mediation result, the mediator shall prepare a written record on the results of successful mediation to be signed by parties. The record on successful mediation results for the parties should then be submitted to be recognised by the court under the regulations of the Civil Procedure Code.
For mediation at the Mediation and Dialogue Center at court, the written record of successful mediation result is recognised by the court and will be enforced by civil judgment enforcement agencies under the law on enforcement.
It is important to note that the court-annexed mediation at Mediation and Dialogue Center at court had been set up and run as a pilot project from March 2018 to August 2018 in Hai Phong province and after that applied to other 15 provinces from January 2019 to October 2019.
Most of the “mediators” in this model would conduct the mediation like a part of procedures in court where the materials of the case are read and examined by the mediators during the “mediation” process.
The draft Law on Mediation, dialogue at court has been published since 1 October, 2018 for public opinions. This kind of mediation aims to assist the disputing parties to find a possible resolution while the party or parties bring their petitions before the competent court to resolve the dispute. In addition, this model is to contribute to the timely and correct handling of disputes, grievances and mitigate work for Vietnamese court. The draft law was introduced to the National Assembly last November for comment and, therefore, the details of the law will be updated in the coming publication promptly.
In summary, in contrast to mediation activities according to the court proceedings and commercial arbitration proceedings where successful mediation results shall be enforced under the laws on civil enforcement upon the judgments/decisions/awards issued by court/commercial arbitrator, mediated settlement agreements of commercial mediation and court-annexed mediation need to be recognised by the court according to the legal proceedings prescribed at the Civil Procedure Code before enforcement.
Potential gains/concerns for Vietnam
In general, the application of the commercial mediation method helps commercial business organizations and individuals resolve disputes quickly and effectively due to the flexibility in finding a solution to the dispute based on mutual parties’ interest, rather than solely on legal rights, save legal costs, and maintain cooperative relations between the parties. Dispute settlement procedures by commercial mediation are simple and flexible, and the disputing parties have the right to choose the order, procedures, time, venue, and professional quality of the mediator participating in the mediation.
In addition, one advantage of this method is that the information on the dispute and the business secrets of the parties are kept confidential, which is extremely important in the context of the current economy when business secrets are the key factor in the survival of a business.
Commercial mediation has been expected to become a trend of dispute settlement in the near future in Vietnam which provides an opportunity for parties to avoid complicated legal procedures, help maintain longlasting cooperation between the parties, and help them find common ground more quickly and develop an agreement with a “win-win” approach and avoid costly and time extension for a more formal settlement in court or commercial arbitration. In the spirit of the Resolution 49-NQ/TW issued by the Politburo on the “Judicial Reform Strategy to 2020”, the mission of encouraging the settlement of a number of disputes through negotiation, mediation and arbitration has been proposed. This is a very strong message of the Government in encouraging out-of-court dispute settlement mechanisms to enhance Vietnam’s national competitiveness index. It could be said that the issuance of Decree 22 has created a clearer legal ground for the parties to apply an alternative dispute resolution.
However, the use of commercial mediation method depends on the awareness and confidence of the business community and the support of the legal community. Apparently, the method of dispute settlement by commercial mediation is new and has not been widely applied in Vietnam.
Under the laws of Vietnam, a commercial mediation organization could be a Commercial Mediation Center which is established and operates in accordance with Decree 22; and Arbitration Center established and operated under the law on commercial arbitration that conducts commercial mediation activities in accordance with Decree 22.
In addition, Vietnam law allows foreign commercial mediation to establish and operate in Vietnam, under the form of a branch or a representative office of a foreign commercial mediation organization in Vietnam.
In Vietnam the ad-hoc commercial mediation and mediator are also recognised by Decree 22. Immediately after Decree 22 came into effect, many 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 been also established.12 Until August 2019, in Vietnam, there are 07 commercial mediation centres licensed by the Ministry of Justice with a team of domestic and international certified mediators who could contribute to resolving disputes in international commercial contracts.
Besides, at present, Vietnam has some arbitration centres offering commercial mediation services, while the number of disputes they have settled remains modest but the value of the disputes can be seen quite large. For instance, one of the first professional commercial mediation centres, setting up in July 2018, is Vietnam Mediation Centre (VMC), belonging to the Vietnam International Arbitration Centre (VIAC) with 51 listed mediators (including 13 foreign and 38 Vietnamese mediators). VMC has now resolved 4 out of 5 cases brought to the centre with the total value of the disputes up to VND 935 billions (equals to USD 40.6 millions).
Mediation in the view of the EU-Vietnam Free Trade Agreement
On the 30th of June, 2019 the European Commission (EC) and Vietnam signed the EU-Vietnam Free Trade Agreement (EVFTA) and Investment Protection Agreement (EVIPA) and on the 12th of February the European Parliament voted to give its consent to the ratification of the EVFTA and EVIPA.
These are the largest trade and investment agreements which Vietnam signed which reaches 28 economies European countries,15 marking a long development step in the cooperative economic relationship between Vietnam and EU countries. EVFTA and EVIPA both regulates commercial dispute settlement by mediation among the Parties (the EU and Vietnam).
It shows the increasingly important role of the mediation mechanism in dispute settlement in order to resolve conflicts between the disputing parties and help maintain long-term economic cooperation between the parties.
EVFTA encourages the parties to choose one of the most friendly forms of dispute settlement such as negotiation, mediation or consultation. EVIPA’s consultation and negotiation rules are very detailed, specific and extended even to dispute between investors and the Parties.
Under the EVFTA and EVIPA, consultations are not required before initiating the mediation procedure. However, a Party should avail itself of the other relevant cooperation or consultation provisions in the EVFTA and EVIPA before initiating the mediation procedure. The mediator may not serve as an arbitrator or panellist in dispute settlement proceedings under these Agreements or under the WTO Agreement involving the same matter for which he or she has been a mediator. He or she may decide on the most appropriate way of bringing clarity to the measure concerned and its possible trade effects. In particular, the mediator may organise meetings between the Parties, consult the Parties jointly or individually, seek the assistance of, or consult with relevant experts and stakeholders and provide any additional support requested by the Parties. Before seeking the assistance of, or consulting with, relevant experts and stakeholders, the mediator shall consult with the Parties. The mediator may offer advice and propose a solution for the consideration of the Parties which may accept or reject the proposed solution or may agree on a different solution. The mediator shall not advise or give comments on the consistency of the measure at issue. However, the solution may be adopted by means of a decision of the Trade Committee and mutually agreed solutions shall be made publicly available and the version disclosed to the public may not contain any information that a Party has designated as confidential. In future, this mechanism could well lead to an instrument on the enforcement of international commercial settlement agreements resulting from mediation. The result could have an effect similar to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Through the EVFTA and EVIPA, Vietnamese legislators will be provided with a sound legal framework to develop commercial mediation and investment mediation.
The Singapore Convention on Mediation
In November 2019, 51 countries including China, India, Singapore, South Korea and the United States signed the United Nations Convention on International Settlement Agreements Resulting from Mediation17, also known as the “Singapore Convention on Mediation”. The Convention makes mediated settlement agreements enforceable by the courts of all members. The Convention does not apply to settlement agreements that: (i) have been approved by a court or have been concluded in the course of court proceedings; (ii) are enforceable as a judgment in the state of that court; or (iii) have been recorded and are enforceable as an arbitral award. Vietnam is not one of the signatories to the Singapore Convention on Mediation yet. Specifically for Vietnam, its’s participation in the Singapore Convention on Mediation would strengthen the country’s stature in the international community. The participation in the Convention will then become a viable option for mediation of cross-border dispute cases. Recent developments in Vietnam have shown that mediation training and international accreditation are supported. In 2018, with funding from the International Finance Corporation (IFC) of the World Bank Group (WBG) trained and certified commercial mediators according to international standards. Through this program, there are nearly 100 experts in many fields who have been trained in knowledge and skills in a professional manner to meet the development needs of the mediation service industry.18 The vast majority of commercial contracts lack mediation clauses that will automatically be in effect should a dispute arise. Future lawyers should be trained to draft such clauses in both international commercial contracts. In addition, professional development programs in drafting contracts should be promoted through the Vietnamese Bar Association and related law associations. The International Chamber of Commerce (ICC) issued ‘Mediation Guidance Notes’ for use by parties, whether or not they are members of the ICC.
Recommendations/guide for implementation
It is recommended that established policies should be developed for individual stakeholders to initiate particular measures to develop mediation and implement measures to increase the awareness of mediation, especially the mediation under Decree 22. Moreover, the regulations, both developed under Decree 22 and other previous laws and in practice, shall be made more unified and consistent to simplify and provide a viable option for the law practitioners, business community and academics. It is also recommended that more awareness be raised about the text of the EVFTA and EVIPA and the implementation on mediation in order to help Vietnam reach its fulfillment of commitments in international agreements. More attention should be paid to commercial contracts which should include a mediation clause to avoid court disputes. Enhancing capacity building and training for the law practitioners on mediation should be also made in order to prepare Vietnam for future demand.
ACKNOWLEDGEMENTS
EuroCham Legal Sector Committee and for this chapter in particular:
Tuan Nguyen, Legal Sector Committee Member, Partner of ANT Lawyers;
Thanh Duong, Legal Sector Committee Member, Partner of DIMAC Law Firm
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 proceeding. 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, work with us, or request services.