Explaining viet nam bloom in business litigition

Explaining Vietnam’s Boom in Business Litigation
Quach Thuy Quynh
Sean McGinty

ABSTRACT
In recent years, Vietnamese courts have faced a caseload that is increasing at a rate of ten to
twelve percent annually. The Economic Courts, which handle business related cases, have been
most affected by this trend, seeing the growth in their caseload outpace that in the regular civil
court system. This paper examines the explanatory power of three factors – cultural,
institutional and economic – in determining this explosion in the number of business disputes
litigated in the Economic Courts.
Using data from 2003 to 2012, the paper finds that institutional and economic factors rather
than cultural ones offer the best explanations for this upward trend in the number of business
cases in Vietnam. The findings enrich the literature on institutions in transition economies, by
identifying them as determinants of choice of enforcement devices. This contributes to the
debate on choice of enforcement device by providing evidence from both an Asian country and
a transition economy. The research findings may also inform current legal reform in countries
which have been allured by the model of strong private enforcement in the United States.

Acknowledgment: The authors are grateful to Nguyen Duc Minh, Lecturer of Business Statistics at RMIT
University Vietnam, for his assistance to analyze data and his comments for this paper. Any errors, of course, are
the authors’ sole responsibility.

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List of Abbreviations
ADR
CPV
FIEs

GSO
LOE
LOS
MOJ
PCI
SOEs
SPC
VCCI
VIAC

Alternative dispute resolutions
Vietnamese Communist Party
Foreign investment enterprises
General Statistic Office of Vietnam
Law on Enterprise 2005
Law on Securities 2006
Ministry of Justice
Provincial Competitiveness Index
State owned enterprises
Supreme People’s Court
Vietnam Chamber of Commerce and Industry
Vietnam International Arbitration Center

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Table of Contents
1. Introduction
2. A Decade-long Upward trend in Business Cases

3. Hypotheses and Indicators
3.1 Cultural Hypothesis
3.2 Institutional Hypothesis
3.3 Economic Hypothesis
4. Findings
4.1 The Small Proportion of SOE and FIE Plaintiffs and Persistent Views about
Litigation Held by Private Entrepreneurs
4.2 Various Impacts of Institutional Arrangements on Caseload
4.2.1. The quantity rather than the competency of judges is correlated with caseload
4.2.2. Variation in number of lawyers and professionalism of lawyers
4.2.3 Weak role of ADR
4.3 Not all Indicators of the Development of Enterprises is Correlated with the
Number of Newly-Filed Cases
5. Discussion
5.1 No Evidence for the Cultural Hypothesis
5.2. Moderate Evidence for the Institutional Hypothesis
5.3. Positive Evidence for Economic Hypothesis
6. Conclusion

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1.

INTRODUCTION

Since 1994 litigation related to business disputes in Vietnam has been handled separately from
other civil cases in the country’s Economic Court system. Earlier literature on the Economic
Courts 1 noted the relatively low number of business disputes being litigated in them.

Particularly Nicholson and Duong, drawing on an overview of the policy, legislation, case law
and user statistics through 2006, concluded that it was premature to describe the courts as
having “either widespread appeal or legitimacy.”2
More recently, however, there has been a marked increase in the number of business cases
being litigated before the courts. Between 2003 and 2012 the number of cases increased at a
rapid rate. While some of this was part of a broader trend in increased litigation not limited to
business cases, the rate of increase in the Economic Courts is much higher than in the normal
civil courts. Business people in Vietnam, in short, are litigating their disputes at a much higher
rate now than they were just a few years ago, which begs the question of what has caused this
mini boom.
In approaching this question, we use data related to judges, lawyers and litigants to evaluate
three different theories that might explain the recent surge in business litigation in Vietnam’s
Economic Courts. These theories are drawn largely from literature outside of Vietnam,
particularly in Japan, which has been subject to what some might describe as an overly
exhaustive debate on what determines its litigation rates, and from the fields of institutional
economics and law and society.
The first of these, which we call the “cultural hypothesis” suggests that cultural norms
dominant within a given country may discourage resort to litigation. This line of thinking has
particularly colored Western views on the role of litigation in Asian countries such as Vietnam.
As Taylor and Pryles describe it:
“One of the much-touted characteristics of ‘Asian culture’ is the reluctance to go to law
– usually interpreted as an unwillingness to mobilize formal legal processes, except as a
last resort, coupled with circumspection (or realism) about the limits of what a legal
‘solution’ can deliver.”3
In Japan a similar idea, that socio-cultural preferences deterred people from settling disputes,
was famously used by Takeyoshi Kawashima in the 1960s4 to explain why litigation rates in
that country were so low in comparison to the United States. More recently arguments have
been made that Asian people rely more on non-litigation devices such as compromise,
mediation, conciliation, or arbitration 5 , are bound by cultural values of harmony and face
1

Pip Nicholson and Minh Duong, Legitimacy and the Vietnamese Economic Court, in NEW COURTS IN ASIA
(Andrew Harding and Pip Nicholson eds, 2010) 31.
2
Ibid, at 49.
3
Taylor, Veronica L., Pryles M., The Culture of Dispute Resolution in Asia, in IS THERE AN ‘ASIAN’ STYLE OF
DISPUTE RESOLUTION? (Michael Pryles ed.) (1997), at 13.
4
Takeyoshi Kawashima, Dispute Resolution in Contemporary Japan, in LAW IN JAPAN, THE LEGAL
ORDER IN A CHANGING SOCIETY (Arthur Taylor van Mehren Ed., 1963) 41.
5
Fletcher, Louise, Mara Olekalns, and Helen De Cieri. Cultural differences in conflict resolution: Individualism
and collectivism in the Asia-Pacific Region. (1998) (presenting data collected by a poll survey of 378 secondyear graduate students at Melbourne University, Australia in April 1997. The survey showed that generally,
Asian students often choose compromising rather than collaborating and accommodating, while Australians
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saving, and are “less adversarial and [less] litigious, less intent on demonstrating right and
wrong, [and] more concerned with avoiding conflict.” 6 Rationales for the existence of this
cultural aversion across such a diverse range of countries differ, Kawashima citing hierarchical
social structures and a preference for harmony in Japan, while others have noted the use of law
primarily as a mechanism for state control and the effects of European colonial legal structures
in other Asian countries.7
The cultural hypothesis is, however, by no means as widely accepted now as it once was.
Empirical studies illustrate that Asians are no less litigious than Westerners in resolving both
domestic and cross-border trade disputes.8 It is also debatable whether a low rate of litigation
in Asian countries, if it actually exists, is unique.9 While advocates of the cultural hypothesis
may point to culture as a hurdle to the importation of Western legal devices, this argument

seems to lack solid footing.10 As John Haley has noted “[t]o ask whether a culturally bound,
Eurocentric definition of law existed in China is almost as silly as asking whether the Chinese
emperor reigned in Rome”. 11 Of perhaps more concern, the culture theory can sometimes
provide a convenient excuse which legal reformers often rely on when an imported legal
scheme does not function well. 12 To challenge the cultural theory, scholars have supplied
empirical data on increasing litigation rates, examined specific institutional arrangements in
Asian countries, or employed rational behavior models to prove that factors other than culture
are at work in forming the patterns of dispute resolution.13
prefer compromising to accommodating and competing. This implies that Asian are led by their culture values
in conflict situations to avoid competing); See also Michael Pryles, supra note 1 reviewed by Gillian Triggs, 23
Melbourne U. L.R. 550, at 552 “[t]he contributors [of the book] confirm the widespread view that mediation and
negotiation are the cornerstones of Asian systems of dispute resolution”.
6
Kahler, Miles, Legalisation as strategy: the Asia-Pacific case, 54.3 International Organisation 571 (2000), at
560.
7
Taylor, Veronica L., Pryles M., The Culture of Dispute Resolution in Asia, in IS THERE AN ‘ASIAN’ STYLE OF
DISPUTE RESOLUTION? (Michael Pryles ed.) (1997), at 13.
8
Haley, John Owen, The Myth of Reluctant Litigant, 4 Journal of Japanese Studies 359 (1978) (presenting data
for a rising rate of cases during the postwar period in Japan); Hisashi Owada, The Rule of Law in a Globalising
World – An Asian Perspective, 8 Wash. U. Glob. Stud. L. Rev. 187 (2009) at 202 (showing that “…countries in
the Asian Pacific region do not appear any less likely to adhere to their WTO commitments than…countries in
the EU. …since 1995, East-Asia countries have participated in as many as ninety-one dispute settlement
procedures before the WTO Settlement Body”)
9
Haley, John Owen , Litigation in Japan: A New Look at Old Problems, 10 Willamette J. Int'l L. & Dis. Res. 121
(2002).
10
Taylor and Pryles, supra note 7 at 4-7 (noting that it is hard to generalise Asian legal local culture due to intrinsic

differences of each nation and economy). See also
11
John O Haley, Law and culture in China and Japan: A framework for analysis, 27 MICH. J. INT'L L. 895
(2005).
12
Tim Lindsey, History Always Repeats? Corruption, Culture, and 'Asian Values', in CORRUPTION IN ASIA:
RETHINKING THE GOVERNANCE PARADIGM 1-23 (Timothy Lindsey & Howard W. Dick eds., 2002).
13
For a discussion of litigation rate in Japan, see John Owen Haley, The myth of the reluctant litigant, 4
JOURNAL OF JAPANESE STUDIES 359 (1978) (presenting data to challenge preceding articles which claim
that Japanese are nonligitious people because they incline to preserve social order and personal reputation
rather than being wealth maximising litigants. The view was challenged by arguments that low numbers of
lawsuits in Japan caused by special institutional arrangements such as mandatory conciliation for some
disputes, delay of cases due to paucity of judges and lawyers, limited available remedies can be found at court);
J Mark Ramseyer, Reluctant litigant revisited: rationality and disputes in Japan, 14 JOURNAL OF
JAPANESE STUDIES 111 (1988) (showing flaws of Haley’s arguments by a model which assumes that
wealth maximising is not the sole cause, for Japanese often choose to settle instead of going to trial. Stability
and predictability of the court system enables the disputants to settle since they may end their dispute with a
result rather identical with court decision, while adhere social norm and their reputation); Tom Ginsburg &
Glenn Hoetker, The Unreluctant Litigant? An Empirical Analysis of Japan's Turn to Litigation, 35 JOURNAL
OF LEGAL STUDIES 31 (2006) (using empirical data to test cultural theory, institutional theory and political
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The second theory we examine is what we deem the “institutional hypothesis”, which suggests
that institutional factors related to the courts which affect their accessibility play a significant
role in determining litigation rates. This theory evolved largely as a response to the cultural
hypothesis, notably with John Haley’s work14 examining the relevance of factors such as the
limited number of lawyers and judges in Japan as explanations for its low litigation rates. The

simple yet obvious point which this theory makes is that these types of factors may influence
the time that courts take to resolve a dispute and the cost they impose, which in turn may make
other means of dispute resolution more desirable.
The third theory we examine is the “economic hypothesis” which suggests that changes in
litigation rates are connected to the development of a country’s overall economy. Varying
branches of this have been developed separately by institutional economists and law and
society scholars. The former15 have posited a strong relationship between the protection of
property and contractual rights on the one hand and economic growth on the other. Litigating
to protect those rights is one (but by no means the only) way of protecting those rights and thus
litigation may be part of a broader set of institutional changes that drives economic change.
The latter 16 , focused more specifically on litigation rather than broader questions of
enforcement, find that economic growth impacts the rate at which people go to court. Rising
complexity, increases in the number of transactions and the replacement of social relationships
favoring informality are among the factors associated with economic growth that may lead to
greater reliance on formal court procedures to resolve disputes. The main difference between
these two views is that institutional economists tend to view the enforcement of legal rights as
a prerequisite to economic growth, while law and society scholars tend to view causation as
running the other way – changes in litigation being the result rather than the cause of economic
growth. For our purposes, we approach the economic hypothesis as a question of whether or
not certain indicators, including the number of enterprises and rates of investment, are
correlated with changes in the litigation rate (regardless of which direction causation flows).
Though we approach these three theories separately there is in fact a great deal of
interdependence between them which is difficult to parse out. Cultural norms on when it is
acceptable to sue for example may themselves be determined by the relative ease with which
courts can be accessed or the degree to which they are trustworthy. Likewise, governments
may find it easier to pursue policies which put institutional limits on such access (such as by
capping the number of lawyers) in societies where cultural norms favor other means of
resolving disputes anyway. And changes in economic wealth and the material well-being of a
society may obviously instigate changes to cultural norms and the ability to provide judicial
explanation for low litigation rates in Japan. Their findings find no support for cultural theory, and strongly

support for institutional theory), and Giorgio Fabio Colombo and Hiroshi Shimizu, Litigation or Litigiousness?
Explaining Japan’s “Litigation Bubble” (2006-2010), 4 OXFORD U. COMPARATIVE L. FORUM (2016),
noting the role of changes in substantive law with respect to interest rates on loans which prompted a short
term flood of litigation in Japan.
14
Haley, supra note 13.
15
Notably DOUGLASS C NORTH, INSTITUTIONS, INSTITUTIONAL CHANGE AND ECONOMIC
PERFORMANCE (Cambridge university press. 1990).
16
See for example Christian Wollschläger, Civil litigation and modernization: The work of the municipal courts
of Bremen, Germany, in five centuries, 1549-1984, 24 LAW AND SOCIETY REVIEW 261 (1990 ); Joel B
Grossman & Austin Sarat, Litigation in the federal courts: A comparative perspective, 9 LAW & SOCIETY
REVIEW 321 (1975 ); Theodore Eisenberg, et al., Litigation as a measure of well-being, 62 DEPAUL L. REV.
247 (2012).
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institutions that run well and are accessible. For this reason most proponents of each theory
have avoided taking exclusivist positions and approached it as a question of which factors have
greater explanatory power rather than seeking to exclude competing explanations entirely.17
We limit ourselves in this paper to addressing the roles these various factors played in
determining the specific increase in litigation before the Economic Courts over the decade to
2012 rather than to explaining the entirety of Vietnamese litigation as a whole. In doing so we
attempt to create an explanation of this trend which accounts for the relevant role played by
each – cultural, institutional and economic. Among the questions we ask are whether a reduced
cultural aversion to litigation may play a role? Or is the increase in litigation the result of
improvements to judicial institutions, through law reforms or other changes, which have made
litigation more attractive? Or is it more the mere by-product of broader economic development

which has expanded the number of firms and transactions taking place, thus increasing the
number of potential litigants and disputes?
Business disputes like those subject to the jurisdiction of the Economic Courts are one of the
most dynamic areas to manifest the effectiveness of law reform. 18 Different from previous
studies on the behavior of businesspeople in Vietnam such as McMillan & Woodruft (1998)19,
McMillan & Woodruft (1999) 20 or Steer & Sen (2010) 21 , the article does not focus on
examining how firms enforce their contracts (through public or private enforcement devices).
Rather, the aim is to explain what has caused the recent turn to litigation. We find that the
evidence provides stronger support for the economic hypothesis as an explanation than the
other two we examine, particularly the cultural explanation. Our findings may extend the
conclusions made by Ginsburg & Hoetker22 about litigation in Japan by providing evidence
from another Asian country. The paper consists of five sections. Section two describes the
upward trend of litigation in Vietnam from 2003 to 2012. The next section presents our
hypotheses for explaining the trend and the indicators chosen to examine the hypotheses.
Section four presents the findings and is followed by section five discussing the empirical
findings. Conclusions follow.
2.

A DECADE-LONG UPWARD TREND IN BUSINESS CASES

Previous research found that the number of civil cases filed in Vietnam’s courts gradually
increased at an annual rate of around 3.3% from 2000 to 2005. 23 A sudden jump in 1999
(compared with the previous year) was implicitly explained as a result of the introduction of
Vietnam’s Civil Code 1997 and its guiding rules which removed obstacles to the filing of civil
See Colombo and Shimizu supra note 13: “Unsurprisingly, the long debate sparked by this line of research
eventually lead to the opinion, shared by the vast majority of scholars, that each position has some elements of
truth and it is very difficult nowadays to find somebody exclusively relying on one or the other theory.”
18
In Vietnam, business cases are named economic cases and are heard by a specific court differing from the court
which hears civil cases. In the context of this paper, for the ease of understanding of Anglo-American readers,

business cases is used as an alternative term for economic cases.
19
John McMillan & Christopher Woodruff, Interfirm relationships and informal credit in Vietnam, 114 THE
QUARTERLY JOURNAL OF ECONOMICS 1285 (1999).
20
John McMillan & Christopher Woodruff, Dispute prevention without courts in Vietnam, 15 JOURNAL OF
LAW, ECONOMICS, AND ORGANIZATION 637 (1999).
21
Liesbet Steer & Kunal Sen, Formal and informal institutions in a transition economy: The case of Vietnam,
38 WORLD DEVELOPMENT 1603 (2010).
22
Ginsburg & hoetker, supra note 13.
23
PENELOPE NICHOLSON, BORROWING COURT SYSTEMS: THE EXPERIENCE OF SOCIALIST
VIETNAM (Martinus Nijhoff Publishers. 2007), at 260-265.
17

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disputes, especially land disputes.24 Cases filed by businesses, however, followed a U-shape
pattern in the period, dropping from 1,514 cases in 1999 to 884 cases in 2001 and then
recovering to 1,495 cases at the end of the period. 25 Given that the Economic Court was
established in Vietnam in 1994, this fluctuation in the number of business cases was explained
as a consequence of “forum testing”. 26 Unlike civil cases, labour cases and administrative
cases, business cases in this period did not show much growth. This demonstrated “the
Economic Court’s unpopularity, more than ten years after its introduction, [and] supports the
arguments that there are strong informal institutional network substituting for the law in
Vietnam.”27

Our data shows that the trend reversed itself in the period from 2003 to 2012.28 During that
decade, both civil cases and business cases increased significantly. However the growth rate of
the latter far exceeded that of the former. The number of new civil cases filed each year
fluctuated significantly during the period with the highest increase of 21% coming in 2012 and
the lowest of -5% in 2004. 29 From 2007 to 2012 the number of new business cases being filed
at courts increased around 300% from 5,198 to 14,103 cases (Figure 1).
The rapid growth of business cases can be seen more clearly when the ratio of civil cases per
1,000 citizens and business cases per 1,000 enterprises are compared. During that period, the
ratio of civil cases remained stable at less than three cases per 1,000 citizens while the ratio of
business cases vastly increased from 10 to 33 cases per 1,000 enterprises. The second ratio rose
year by year from 2003 to 2006 with a trough in 2004 and reached its highest point in 2007. In
the second period from 2009 to 2012, the ratio varied less and maintained a level of around 20
to 24 cases per 1,000 firms (Figure 2)

24

Id.,at 261.
Id. at 262-3.
26
In Vietnam, business disputes are treated differently from civil cases. Even though both types of cases are
regulated by procedures under Civil Procedure Code 2004, the business cases are heard by Economic Courts. The
separation is to specialise function of each court for effective adjudication.
27
NICHOLSON, supra note 11, at 263.
28
Source: Toa an nhan dan toi cao, 28/BC-TA, Bao cao tong ket cong tac nam 2003 va nhiem vu trong tam nam
2004 (The Annual Reports 2003 of the Vietnamese People’s Supreme Court (SPC dated 25 December 2003;
Toa an nhan dan toi cao, 35/2004/BC-TA, Bao cao tong ket cong tac nam 2004 va nhiem vu trong tam nam
2005 (The Annual Reports 2004 of the SPC dated 30 December 2004; Toa an nhan dan toi cao, 42/BC-TA, Bao
cao tong ket cong tac nam 2005 va nhiem vu trong tam nam 2006 (The Annual Reports 2005 of the SPC) dated

28 December 2005; Toa an nhan dan toi cao, 01/BC-TA, Bao cao tong ket cong tac nam 2006 va nhiem vu trong
tam nam 2007 (The Annual Reports 2006 of the SPC) dated 05 January 2006; Toa an nhan dan toi cao, 05/BCTA, Bao cao tong ket cong tac nam 2007 va nhiem vu trong tam nam 2008 (The Annual Reports 2007 of the
SPC) dated 17 January 2008; Toa an nhan dan toi cao, 05/BC-TA, Bao cao tong ket cong tac nam 2012 va
nhiem vu trong tam nam 2013 (The Annual Reports 2012 of the SPC) dated 18 January 2013; Vietnam Chamber
of Commerce and Industry & USAid, Policy Paper #14, PCI 2009: The Vietnam Provincial Competitiveness
Index 2009 (2009); Vietnam Chamber of Commerce and Industry & USAid, Policy Paper #15 PCI 2010: The
Vietnam Provincial Competitiveness Index 2010 (2010); Vietnam Chamber of Commerce and Industry &
USAid, Policy Paper #16, PCI 2011: The Vietnam Provincial Competitiveness Index 2011 (2011).
29
Statistic numbers of the year 2008 and 2013 cannot be collected since in the year 2008, the SPC’s statistics
did not include breakdown of business cases. This lack of data represented by gap or zero value in the figure
exaggerates the difference between civil cases and business cases.
25

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Percentage

100%
80%
60%
40%
20%
0%
-20%

200 200 200 200 200 200 200 201 201 201
3

4
5
6
7
8
9
0
1
2

Civil cases growth
1% -5% 18% 7% 17% 2% 11% 1% 4% 21%
rate
Business cases
growth rate

1% 2% 69% 92% 81%

29% 9% 29% 49%

Figure 1: Annual growth rate of civil cases and business cases from 2003-2012

40
35
30

Civil cases/1000
citizens

25

20

Business
cases/1000 firms

15
10
5
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Figure 2: Newly-filed civil cases per 1000 citizens v. Newly-filed business cases per 1000 firms
from 2003-2012

The above analysis seems paradoxical in light of the conventional view that Vietnamese
businesspeople do not want to use the court system. It also refutes any assumption that an
increase in the number of business cases is the consequence of a growth of litigation in general.
Businesspeople tend to be leaders rather than followers on the litigation bandwagon, having
become more litigious than disputants in any other type of civil dispute. This is made all the
more puzzling by the fact that Vietnamese businesspeople have persistently held skeptical
views about the capacity of the legal system to protect their legal rights.30 These doubtful
views held by businesspeople are difficult to reconcile with the sharp increase in their use of
the Economic Courts in Vietnam since 2003. In the next section we set out three hypotheses
that might explain this puzzling divergence.

30

See more about the skeptical views of Vietnamese businesspeople about the capacity of the legal system in
part 4.1.
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3.

HYPOTHESES AND INDICATORS

3.1

Cultural Hypothesis

With regards to the cultural hypothesis it must be noted from the start that on its face it seems
unlikely to provide a convincing explanation for Vietnamese entrepreneurs’ turn to litigation.
In Japan, another Asian country where a cultural aversion to suing was once said to explain its
comparatively low litigation rates, the theory has long since fallen out of favor. 31 We do
however consider the cultural hypothesis for a couple of reasons. First is the fact that even
critics of it acknowledge that culture likely plays some role in explaining recourse to litigation,
albeit perhaps not as a leading determinant.32 The second, and perhaps related, reason is that
“culture” is, especially in the early literature on Japan, sometimes portrayed as a fixed
endowment of society – something received from past generations which is slow to change
such as the suggested Asian cultural aversion to litigation. In fact however cultural norms can
be contingent on the institutional and economic factors we also examine. Vietnamese business
people are perhaps unlikely to find their decisions to sue influenced by an immutable set of
traditional Asian values, but may be guided by a more malleable set of cultural norms that are
molded by the efficacy of the judicial system they must use. In order to explore these issues,
we use the cultural hypothesis to check two assumptions:
First, if a common cultural value against litigation does act as a hurdle, it would suggest that
the upward trend in litigation in Vietnam may be caused by businesspeople who do not adhere
to that cultural value. Accordingly, one would anticipate that plaintiffs in business cases in
Vietnam would be mostly foreign businesspeople or representatives of state-owned enterprises

(SOEs) who act collectively and are thus less likely to be influenced by traditional cultural
values. To examine this hypothesis, we first aimed to find who constituted the majority of
plaintiffs in newly filed business cases in the country: Are they mostly foreign entrepreneurs,
SOEs’ representatives or owners of private domestic enterprises?. Data of 2009, 2010, 2011,
and 2012 was used as proxies for the whole period as the statistics are not available for the
years from 2003 to 2008
Second, if Asian culture is no longer (or never was) a hurdle to litigation due to changes in
norms held by business people, we may expect to see not only a rise of newly-filed business
cases but also more and more Vietnamese business people expressing confidence in the
effectiveness of the court system. In other words, we need to answer the question: Has there
been any gradual change of Vietnamese businesspeople’ attitude towards litigation? To
examine this, the Provincial Competitiveness Index (PCI)’s soft data on how businesspeople
assess the effectiveness of the courts was examined. PCI measured the ratio of businesspeople
who agree with statement that their “firm is confident that the legal system will uphold [the
firm’s] property rights and contracts.” This reflects the preference of businesspeople who may
choose litigation over informal means of solving their disputes.

3.2

Institutional Hypothesis

Institutional theory has been dominant in the search for explanations for the effectiveness of
legal transplants in Asian countries and transition economies. 33 According to institutional
31

Haley, supra note 8; Ramseyer, supra note 13; Colombo and Shimizu, supra not 13.
See for example Ramseyer, supra note 13.
33
For a general view, see JOHN L. CAMPBELL & OVE KAJ PEDERSEN, THE RISE OF NEOLIBERALISM
32

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theory, the specific patterns of litigation in a country are shaped by its institutional
arrangements. 34
By its nature, litigation is dependent on the institutions in which it takes place. The
effectiveness of litigation as well as the frequency of its use depends on the availability of other
institutions including: (i) strong courts with proficient judges; (ii) professional lawyers and a
developed legal service market; (iii) availability and cost of alternative dispute resolution
mechanisms; and last but not least (iv) the procedural and substantive regulations which govern
the process of litigation. 35
Our hypothesis takes as an assumption the existence of rational disputants.36 When one has to
choose an enforcement device in a legal dispute a rational disputant is likely to choose the
device which has the lowest cost, requires the lowest time commitment and which offers the
most predictable outcome. This means that disputants are more likely to sue if the court is
staffed by more capable judges with greater authority. Similarly, people are more likely to sue
if there are more lawyers who can help them to navigate the legal process in court, and if the
time and cost incurred in resolving a case are reduced by legal reforms.
To measure the number and competency of judges, we use data reported by SPC from 20032012. However it is important to note that data for some years was estimated or is lacking
because of inconsistencies in the way it was reported. To measure the competency of judges,
we use three indicators: (i) the number of unresolved cases each year; (ii) the median months
to resolve a case, and (iii) litigation costs to resolve a case. The assumption is that the more
competent the judges are, the lower the number of cases unresolved each year, the fewer
months needed to resolve a case and also the lower the litigation cost is. The median months
needed to resolve a case were retrieved from entrepreneur’s assessments in PCI reports. The
litigation cost was measured by the median of the sum of formal and informal costs as a
percentage of the case.
To measure the number and professionalism of lawyers, we use data at the provincial level

from 63 provinces in 2012 to examine the relationship between the number of lawyers and the
number of new cases filed in a province. We limit the data to a single year due to the
AND INSTITUTIONAL ANALYSIS (Princeton University Press. 2001). Also see Lucian Arye Bebchuk &
Mark J. Roe, A Theory of Path Dependence in Corporate Ownership and Governance, 52 STANFORD LAW
REVIEW 127 (1999) (applying historical institutionalism to explain the interconnection between initial
corporate governance arrangements and its subsequent ownership); Troy A. Paredes, A systems approach to
corporate governance reform: why importing U.S. corporate law isn't the answer, 45 WILLIAM AND MARY
LAW REVIEW 1055 (2004) (stressing the ill-suited features of the US corporate law to existing institutional
settings of developing countries and suggesting some proposals for corporate governance reform in these
countries.). For application of institutional analysis to reason litigation pattern, see Haley, supra note 8
(arguing that institutional arrangement rather than culture values caused specific pattern of litigation in Japan)
34
Katharina Pistor, et al., Law and finance in transition economies, 8 ECONOMICS OF TRANSITION 325
(2000).
35
For the role of the (i), (ii) and (iii) factor, see Haley, supra note 8; for the role of (iv), see Luke R. Nottage &
Stephen Green, Who Defends Japan?: Government Lawyers and Judicial System Reform in Japan, 13 ASIANPACIFIC LAW & POLICY JOURNAL 129 (2011) (presenting evidences to show that a low number of disputes
over patents and other industrial property rights in Japan is a result of effective Japan Patent Office’s internal
appeals process – an ex-ante mechanism run by the government, i.e. a public enforcement device).
36
We acknowledge that this may not be a safe assumption but do so for the sake of simplicity. On irrationality
as a determinant of litigation see Dan W. Puchniak & Masafumi Nakahigashi, Japan's Love for Derivative
Actions: Irrational Behavior and Non-Economic Motives as Rational Explanations for Shareholder Litigation,
45 VANDERBILT JOURNAL OF TRANSNATIONAL LAW 1 (2012).
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unavailability of data in other years.37 To estimate the professionalism of lawyers we measure
three aspects: (i) number of law firms, (ii) firms’ revenue and (iii) number of business cases in

which lawyers represent litigants in court. We assume that the number of law firms and revenue
of the firms are positively associated with the professionalism of lawyers. Greater involvement
of lawyers in disputes at court can also be seen as a sign of the development of their litigation
skills.

To examine the availabilities and cost of alternative dispute resolution, we use the number of
arbitration cases at the Vietnam International Arbitration Center (VIAC) from 2003-2012. We
hypothesize that the enforceability of arbitral awards results in more cases being brought before
arbitration and less brought to the courts.

3.3

Economic Hypothesis

For a long period of time law in general and litigation in particular have been seen as indexes
of market development.38 Within the field of institutional economics there is a well developed
literature arguing that the enforcement of property and contractual rights through courts (and
through other means) is key to the process of economic development. 39 While this suggests a
causative role for legal institutions, other research also suggests that litigation may increase as
a result of economic development. This view, pursued in the law and society scholarship, is
premised on two basic trends. 40 The first is that economic growth produces greater social
complexity, which increases the number of transactions in which disputes might erupt. Second
is that such complexity also leads to the breakdown of relationships which rely on informal
means of resolving disputes (such as in close knit communities) and their replacement by those
which require more formal means of adjudication (such as between businesses transacting at a
distance). This is not necessarily a linear relationship as studies indicate that economic growth
can produce disequilibrium which either encourage or discourage growth in litigation. 41
Nonetheless, it has been argued in one recent study of litigation rates in India that “people are
more likely to use the courts to resolve disputes when they are economically, socially, and
physically better off”.42

In light of the above we define the economic hypothesis to mean that an upward trend in
litigation is the consequence of economic development and an increase in the number,
complexity and formality of business transactions conducted in the market. To check the
37

According to Ministry of Justice, Final Report for Five Years of Implementation of Law on Lawyers. (2012),
available at numbers of lawyers are only available from 2010
to 2013, whilst numbers of cases are not available for 2012. Additionally, numbers of lawyers in 2003 through
2009, could not be achieved owing to absence of relevant reporting rules of Ministry of Justice. Number of lawyer
population has been officially reported since 2011, pursuant to Circular number 08/2011/TT-BTP on giving
guidelines to conduct statistics of justice sector
38
Rafael La Porta, et al., Law and finance, 106 JOURNAL OF POLITICAL ECONOMY 1113 (1998); Tom
Ginsburg, Does Law Matter for Economic Development-Evidence from East Asia, 34 LAW & SOC'Y REV. 829
(2000); Eisenberg, et al., supra note 16.
39
DOUGLASS C NORTH, INSTITUTIONS, INSTITUTIONAL CHANGE AND ECONOMIC
PERFORMANCE (Cambridge university press. 1990); AVNER GREIF, INSTITUTIONS AND THE PATH
TO THE MODERN ECONOMY: LESSONS FROM MEDIEVAL TRADE (Cambridge University Press.
2006).
40
These are elaborated in, among others, Grossman & Sarat, supra note 16, at 323-325.
41
Wollschlager, supra note 16, at 275.
42
Eisenberg, et al., supra note 16, at 290.
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economic hypothesis, we examine the relationship between the number of enterprises per
citizen, investment per capita and profit per enterprise following the PCI’s reports against the
number of newly-filed business cases.43 Under the economic hypothesis, we expect that the
litigation rate is correlated with these three indicators.
4.

FINDINGS

4.1

The Small Proportion of SOE and FIE Plaintiffs and Persistent Views about
Litigation Held by Private Entrepreneurs

As for the first questions of “Who initiates business cases in Vietnam?” for the most part they
are neither SOEs nor FIEs, which only made up a small proportion of the total number of
plaintiffs. While the percentage of SOEs plaintiffs remained stable at 16-18% from 2009 to
2012, a significant decline in the number of FIE plaintiffs can be seen. During the four years,
the figure went down gradually from 5% to 1%. (See more at Figure 3). This finding is
consistent with the statistics in the 2012 PCI report which revealed that from 2006-2012, the
ratio of non-state claimants as a percentage of claimants at Provincial Economic Courts
significantly climbed from 50% in 2006-2007 to around 73% in 2009-2010 and peaked at 90%
in 2012.44
Does this mean that the plaintiffs in business cases in Vietnam are generally private
entrepreneurs? This is not necessarily the case. Under Article 29 of the Vietnam Civil
Procedure Code 2004, business disputes are defined as:45
1. Disputes arising from business or trade activities among individuals and/or
organisations with business registration, which are all for the purpose of profits,
including: …
2. Disputes over intellectual property rights or technology transfers among individuals
or organisations, which are all for the purposes of profits.

3. Disputes between a company and its members or among members of a company
regarding the establishment, operation, dissolution, merger, consolidation, division,
separation or organisational transformation of the company.
4. Other business, trade disputes prescribed by law. [emphasis added]

PCI’s reports employed the three outcome variables to measure the effect of selected index on each variable.
The index which causes greater effect is given higher weight. The final PCI ranking represents the weighted sum
of the scores of the ten sub-indices. See more at Vietnam Chamber of Commerce and Industry & USAid, PCI
2013: The Vietnam Provincial Competitiveness Index 2013 (2013), at 17-8.
44
Vietnam Chamber of Commerce and Industry & USAid, PCI 2012: The Vietnam Provincial Competitiveness
Index 2012 (2012), at 91. There is a slight difference between our calculation and PCI’s statistics, it would be
caused by different categorisation. PCI’s authors grouped all non-state plaintiffs as a whole, while we deducted
SOEs, FIEs and other plaintiffs.
45
Code of Civil Procedure, Law No. 24/2004/QH11 of June 15, 2004.
43

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1%

2012

83%

16%
3%

2011

78%

18%
4%

2010

5%

20%

SOEs

79%

16%
0%

Others

77%

18%

2009

FIEs

40%

60%

80%

100%

Figure 3: Plaintiffs of business cases from 2009-2012
(Source: Own compilation based on data provided by PCI research team)

The plaintiffs in business disputes thus include business entities (enterprises and entrepreneurs),
sole traders, company members, patent holders, owners of intellectual property rights, and
other entities and individuals who entered transactions with the above for a profit-seeking
purpose. In brief, the profit-seeking purpose and business registration are the two features
which distinguish plaintiffs in business cases from those in other civil cases. This means that
business cases in Vietnam for the most part have been filed by those who are involved in
business activities regardless of their capacities as entrepreneurs, investors, shareholders or
contract partners of companies.
For the second question as to whether there has been a gradual change in the attitudes of
Vietnamese business people towards litigation an analysis of PCI’s reports from 2006 to 2012
demonstrates that their views have been fairly consistent. Despite the upward trend in the
number of business cases, their confidence ratio, which is the ratio of Vietnamese
businesspeople who are confident that the legal system will uphold their property rights and
contracts, slightly decreased over the same period. The ratio was high at around 70% in 2006,
went down to 62% in 2009-2010, then went back up to 70% in 2011 before ending up at 63.8%
in 2012. During that period, Vietnamese entrepreneurs did not express a significant change in
their attitude towards litigation.

4.2

Various Impacts of Institutional Arrangements on Caseload

4.2.1 The Quantity rather than the Competency of judges is correlated with caseload

New filed cases (log)

Pearson
Correlation
Sig. (2-tailed)

Correlations
Percentage
of pending
cases
New filed against filed
cases (log) cases (log)
1
-.001
.999

Median
month to
Median cost
resolve a
to resolve a Number of
case (log)
case (log) judges (log)
-.653

-.445
.919**
.347

.555

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.000


N
Percentage of pending Pearson
cases against filed
Correlation
cases (log)
Sig. (2-tailed)

10
-.001

N
Pearson
Correlation
Sig. (2-tailed)

4
-.653

4
.529

.347

.471

N
Pearson
Correlation
Sig. (2-tailed)

4
-.445

4
.521

4
.961*

.555

.479

.039

N
Pearson
Correlation

Sig. (2-tailed)

4
.919**

4
.387

4
-.452

4
-.285

.000

.613

.548

.715

10

4

4

4

Median month to
resolve a case (log)

Median cost to
resolve a case (log)

Number of judges
(log)

N

4
1

.999

4
.529

4
.521

10
.387

.471

.479

.613

4
1

4
.961*

4
-.452

.039

.548

4
1

4
-.285
.715
4
1

10

**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).

Table 1: Correlation matrix between the number and competency of judges to newlyfiled cases

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The number of judges is statistically significantly correlated to the number of newly-filed cases

Figure 6: Number of judges v. new filed cases 2003-2012
(Source: Own compilation based on data collected from SPC Annual Reports)

The Pearson Correlation between the number of judges and newly-filed cases from 2003 to
2012 (both are log-transformed) is .92 indicating a strong and possitive correlation between the
two variables (p<.01, R2=.84). Therefore it can be concluded that when the number of judges
increases (decreases), the number of newly-filed cases also increases (decreases) and vice
versa.

No significant correlation was found between newly-filed cases and competency of judges
We measure the competency of judges using three indicators: (i) the percentage of pending
cases against filed cases, (ii) the median number of months needed to resolve a case and (iii)
the median cost of resolving a case. The above correlation matrix suggests that these three
indicators have no statiscally significant correlation with the number of newly-filed cases (p >
.05). Therefore, we can conclude that the competency of judges and the number of newly-filed
cases are independent of each other.
4.2.2 Variation in number of lawyers and professionalism of lawyers

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Correlations

Filed cases (log)

Pearson Correlation
Sig. (2-tailed)
N

Number of
business cases
with the
presentation of a
Filed cases (log)
lawyer (log)
1
.723**
.000

Law firm's
revenue (log)
.613**
.000

Number of law
firms (log)
.750**
.000

63

54

46

62

Pearson Correlation
Sig. (2-tailed)

.723**
.000

1

.876**
.000

.881**
.000

Law firm's revenue (log)

N
Pearson Correlation
Sig. (2-tailed)

54
.613**
.000

54
.876**

.000

42
1

54
.848**
.000

Number of law firms (log)

N
Pearson Correlation
Sig. (2-tailed)

46
.750**
.000

42
.881**
.000

46
.848**
.000

46
1

62

54

46

62

Number of business cases
with the presentation of a
lawyer (log)

N
**. Correlation is significant at the 0.01 level (2-tailed).

Table 2: Correlation matrix between the number and professionalism of lawyers to the newly-filed cases

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Statistically significant correlations between the number of newly-filed cases and three
selected indicators measuring the professionalism of lawyers
The correlation matrix indicates that the number of newly-filed cases in each province is
strongly and positively correlated with the number of law firms in the province, the law firm’s
revenue in the province and the number of business cases in which the parties were represented
by lawyers before the courts in the province. (See more at Figures 10,11,12) (p < .01,
R2=.56, .38, .52 respectively). Therefore, it can be concluded that if the professionalism of
lawyers increases (decreases), the number of newly-filed cases also increases (decreases) and
vice versa.

Figure 4: Number of law firms v. the number of newly- filed cases in 2012 in 63 provinces

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Figure 5: Law firm’s revenue v. the number of newly-filed cases in 2012 in 63 provinces

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Figure 6: Number of business cases with the representation of a lawyer at the provincial
court v. number of newly-filed cases in the province (Data of 63 provinces in 2012)

Further evidence between professionalism of lawyers and number of cases across provinces
The concentration of law firms in big cities results in a high number of cases which lawyers
in those cities handle at court. The revenue of law firms in the cities is also much higher than
those in other provinces. Therefore, it is not a surprise to see that the professionalism of
lawyers in the cities is more highly developed than their counterparts in smaller cities or rural
areas. With a few exceptions in Da Nang, Nghe An, Khanh Hoa, Dong Thap, Ca Mau, Binh
Phuoc where the number of filed cases follows the same pattern as found in the provinces,
other provinces illustrate a significant gap between the number of cases and the
professionalism of lawyers. In most provinces, most notably the two biggest cities Hanoi and
Ho Chi Minh City, the number of filed cases is much lower than the development of the legal
profession. In a small number of provinces such as Quang Nam, Phu Yen, Binh Duong the
legal profession was not as developed as the number of filed cases would otherwise suggest.
More support for the correlation between the professionalism of lawyers and the number of
newly-filed cases is found in the fact that the top ten provinces with the most highly developed

legal profession is almost identical with the top ten provinces ranked by number of filed cases
at provincial courts (See more at Table 3)

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Ranking

Top 10 by # of lawyers

Top 10 by # professionalism of lawyers Top 10 by # of new filed
cases

1

Ho Chi Minh city

Ho Chi Minh city

Ho Chi Minh city

2

Ha Noi city

Ha Noi city

Ha Noi city

3

Can Tho city

Ba Ria Vung Tau

Dong Nai

4

Dong Nai

Dong Nai

Can Tho city

5

Ba Ria Vung Tau

Hai Phong city

Binh Duong

6

Da Nang city

Can Tho city

Da Nang city

7

Hai Phong city

Da Nang city

Ba Ria Vung Tau

8

Binh Phuoc

Binh Duong

An Giang

9

Lam Dong

Hai Duong

Long An

Binh Duong

Quang Ninh

Gia Lai

10

Table 3: Ranking of provinces by number of lawyers, professionalism of lawyers
and by number of filed cases in 2012

4.2.3 Weak role of ADR
A tiny proportion of cases are resolved by arbitration
From 2003 to 2012, the number of cases resolved by VIAC – the biggest and most frequently
used arbitration centre in Vietnam – quadrupled from 18 to 64 cases. However, during that
decade the number of arbitration cases was tiny in proportion to the number of business cases
filed at court. At its peak in 2004 the ratio only reached as high as 3%. The number of arbitration
cases only exceeded 1% of the number of cases filed at court in three other years, falling below
that mark in all other years during that time period. It is hard to find any correlation between
the number of court cases and the number of arbitration cases year by year. For example, from
2003 to 2004 the number of court cases slightly decreased, but the number of arbitration cases
doubled. In contrast, from 2006 to 2007, the number of court cases increased approximately
two times while the number of arbitration cases went down by around 20%. (See more at Table
4)
Business cases
filed at courts

Cases resolved by
arbitration

%

2003

868

16

1.84

2004

885

32

3.62

2005

1495

27

1.81

2006

2866

36

1.26

2007

5198

30

0.58

2008

4810*

58

1.21

2009

6689

48

0.72

2010

7281

63

0.87

2011

9421

83

0.88

2012

14013

64

0.46

Table 4: Business cases filed at courts v. Cases resolved by arbitration 2003-2012

Low enforceability of arbitration awards
A survey conducted by VIAC shows that, from 2003-2013, 12% of arbitral awards were
challenged in the courts of which 34% were set aside. In particular, from 2011 to 2013, when
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the Law on Commercial Arbitration came into force, 36% of arbitral awards were set aside by
courts.46
4.3

Not all Indicators of the Development of Enterprises is Correlated with the Number
of Newly-Filed Cases

Data shows that from 2003 to 2011 the number of enterprises grew more than fivefold from
less than 1 enterprise per 1000 citizens to 5.2 enterprises per 1000 citizens. Capital that firms
invested also proliferated from around 24 billion VND per enterprise in the first three years to
around 30-35 billion VND during the next two years and 41 billion VND per firm in 2011.
However, the profit of enterprises did not change accordingly. This variable remained almost
constant at around 1.2 billion VND per enterprise from 2003 to 2011. Therefore, the increase
of the economic indicator, i.e. the development of enterprises, was mostly caused by growth in
the number of enterprises and capital rather than by growth of the profits that firms gained.
(See more at Annex 1).
Correlations
Enterprise per
1,000 citizens
.890**
.001

Profit per firm
(log)
.490
.180

Investment capital
per firm (log)
.905**
.001

N

Pearson Correlation
Sig. (2-tailed)

9
.890**
.001

9
1

9
.315
.409

9
.935**
.000

N
Pearson Correlation
Sig. (2-tailed)

9
.490
.180

9
.315
.409

9
1

9
.372
.324

N
Pearson Correlation

9
.905**

9
.935**

9
.372

9
1

.001

.000

.324

9

9

9

Pearson Correlation
Sig. (2-tailed)

New filed case (log)

Enterprise per 1,000**
citizens

Profit per firm (log)

New Filed Cases
(log)*
1

Investment capital per firm Sig. (2-tailed)
(log)***
N
**. Correlation is significant at the 0.01 level (2-tailed).

Table 5: Correlation matrix between the development of enterprises and newly-filed cases

Examining the relationships between the development of enterprises and the number of cases
filed at court using a correlation matrix, we found that the number of newly-filed cases is
strongly and positively correlated with the number of enterprises and the investment capital per
firm (Pearson Correlation > .8, p<.01, R2=.79 and .82 respectively).

46

D. A. Vu, (Phap luat ve huy phan quyet trong tai va thuc tien ap dung tai Viet Nam) [The laws and
implementation of setting aside the arbitral awards in Viet Nam] [Paper presented at the Conference of Setting
Aside Arbitral Awards, Acknowledgment and Implementation of Foreign arbitral awards in Vietnam, Hanoi,
Vietnam, 18 October, 2013), available at />22 | P a g e

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9


Figure 7: Number of enterprise per 1000 citizens v. number of filed cases from 2003 –
2010

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Figure 8: Number of firm’s capital v. number of filed cases from 2003-2011

5.

DISCUSSION

5.1

No evidence for the cultural hypothesis

The results cast doubt on the validity of the cultural hypothesis. There is no evidence that the
cultural values of the Vietnamese businesspeople restrain them from initiating cases. From

2009-2012, business cases in Vietnam were filed mostly by Vietnamese businesspeople such
as entrepreneurs, investors, shareholders, managers or the contract partners of companies.
Foreign businesspeople and SOE representatives only made up a small proportion of plaintiffs.
This finding is further supported by the results of the PCI Report 2011 which stated that FDI
enterprises prefer to use ex-ante mechanisms such as anticipation terms of future contracts or
well-written (and more sophisticated) contracts rather than ex-post forms of conflict dispute
resolution such as litigation or arbitration.47 This finding, interestingly, suggests that foreign
businesspeople in Vietnam, rather than their local counterparts, are more averse to litigation.
In addition, the rapid growth of business cases does not mean that the Economic Court is the
first preference of Vietnamese enterprises. Changes in neither the perceptions of Vietnamese
businesspeople nor in their choice of enforcement devices can be seen. The Vietnamese
businesspeople have constantly held the view that the legal system may not uphold their rights
and contracts.
Analysis of the litigation behavior of businesspeople in Vietnam, both local and foreign,
indicates that their choice of enforcement mechanism is formed by factors other than their
cultural values. The Economic Court is still far from being the preferred dispute resolution
forum for enterprises, with the number of cases filed representing just the tip of the iceberg of
the total number of disputes in the business world. The results therefore support the findings
of previous studies which found that Vietnamese firms often employ informal institutions such
as ties with friends and family, social and business networks, and repeat players to avoid or
resolve conflicts.48
One thing is still missing here. If entrepreneurs have consistently not favored litigation as a
means of dispute resolution, does this mean that an aversion to litigation still persists? From
the analysis, our answer is yes. Businesspeople in Vietnam have been quite consistent in their
apathy towards litigation. Why this is so remains somewhat outside the scope of our study,
though an answer may fortunately be found in previous studies. The explanation may lie in
the insufficient performance of the Economic Court owing to the paucity of judges, their low
level of competence, the low level of enforceability of judgments, and the burden of litigation
costs.49 This is illustrated in the finding of the PCI Report 2011 “It would be worth noting that
enterprises which experienced litigation had lower credence on court system than the

enterprises which never experienced litigation. Only 66% of enterprises which used courts
47

USAID & Vietnam Competitiveness Initiative, THE VIETNAM PROVINCIAL COMPETITIVENESS
INDEX 2011: MEASURING ECONOMIC GROWTH FOR BUSINESS DEVELOPMENT (2011) at 73.
48
Steer & Kunal, supra note 20.
49
For a full account, see Quynh Thuy Quach, Does more litigation mean more justice for shareholders?: The case
of derivative actions in Vietnam, in COLLECTIVE ACTIONS: ENHANCING ACCESS TO JUSTICE AND
RECONCILING MULTILAYER INTERESTS (Stefan Wrbka, et al. eds., 2012)..
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(compared with 86% of those who never used courts) expressed that they are confident that
court system may protect their lawful rights and contracts…In brief, experience of enterprises
with court system would significantly affect their confidence on quality of legal system.”50 This
argument sheds more light on the effect of institutional arrangements, especially the number
and competency of judges on the number of filed cases, which we now turn to.
5.2

Moderate evidence for institutional hypothesis

If cultural factors neither encourage nor constrain business litigation, what does? Our research
shows that institutional arrangements play a role, though not as significant as might have
initially been expected.
Among the institutional factors we analyzed the number of judges shows a stronger correlation
to the number of newly-filed cases than their competence level does. While we cannot make a
definitive conclusion with respect to causation – the increasing number of judges may be a

response to rather than cause of the increasing case load - this finding is at least consistent with
the most common complaint that the SPC has made during the last decade – the understaffing
of the courts. The SPC has asked the National Assembly to increase their staff quota since 2003.
In that year, it was reported that Vietnam had a shortage of 1,210 judges.51 In 2010 the courts
nationwide were short by around 800 judges compared to the staff quota.52 The Chief Judge of
the SPC claimed that the courts’ staff was only sufficient to tackle around 30 per cent of their
workload. It is anticipated that around 70% of cases could not be resolved in a timely manner
because of the lack of human resources.53 However, despite the common complaint of the
SPC’s leaders, from 2003-2012, while growth in the number of judges was no greater than 10%,
the growth rate of resolved cases increased significantly by 200% (from 6100 cases in 2007 to
12,736 cases in 2012). This means the number of cases resolved grew at a rate disproportionate
to the rate at which the number of judges grew, and in fact almost matched the 300% growth
in the number of newly-filed cases over the same period. There are two possible explanations
for this discrepancy. The first is that the number of judges has a large effect on both the number
of resolved cases and the number of filed cases. Therefore, even a small increase in the number
of judges will have a large impact on the number of cases resolved. The second is that the
number of judges, although significantly correlated, is not determinant of the number of cases,
both resolved and newly-filed. This would make sense as from 2002-2012 the Vietnamese
government implemented a number of measures to reform the justice sector generally and court
procedures particularly. The increase in the number of judges was, in other words, just one
among many reforms. Anecdotal evidence also suggests that the development of the judges’
competency should not matter less (and in fact may matter more) than the number of judges
does.54 Unfortunately, due to a lack of data, we cannot run data regressions to find causal links
between these two indicators and the number of newly-filed cases. Further research on this
question is warranted should a more extensive set of data become available.

50

USAID & Vietnam Competitiveness Initiative , supra note 46 at 33.
Supreme People’s Court, ANNUAL REPORT (2003), at 14 (in Vietnamese); ‘Staff quota’ is the maximum

number of staff that courts can recruit. This quota is decided by the National Assembly based on the calculated
social need of staff in each sector or ministry.
52
Id. at 32.
53
Supreme People’s Court’s Chief Judge, Remarks at the National Assembly Meeting (March 2010).
54
Quach, supra note 48.
51

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