commercial mediation development international experiences and lessons for vietnam

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

MASTER THESIS

COMMERCIAL MEDIATION DEVELOPMENT - INTERNATIONAL
EXPERIENCES AND LESSONS FOR VIETNAM

Major: Economics
Specialization: International Trade Policy and Law

Full Name: Phan Thi Phuong

Ha Noi, 2019


MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY

MASTER THESIS

COMMERCIAL MEDIATION DEVELOPMENT - INTERNATIONAL
EXPERIENCES AND LESSONS FOR VIETNAM

Major: Economics
Specialization: International Trade Policy and Law
Code: 8310106

Full Name: Phan Thi Phuong
Supervisor: Assoc.Pro.,Dr. Nguyen Minh Hang,

Ha Noi, 2020


STATEMENT OF ORGINAL AUTHORSHIP
I hereby commit that this thesis is my sole work with the best devotion,
endeavor and hard-working period given and there is no information used with the
unauthorized data source. The research contents in this topic are completely honest
and have not been used or published in any form.
I guarantee that the master thesis has been carried out in conformity with the
thesis writing regulation and process issued by the Foreign Trade University.
I would like to express my sincere and grateful thanks to Doctor. Nguyen Minh
Hang, who enthusiastically guided me during my process of completing this study.

Student: Phan Thi Phuong


ACKNOWLEDGEMENT
The process of writing this thesis is the continuous learning and researching
process resulting in not only the solutions proposed in chapter 3 of the thesis but
also various experiences and knowledge for the author. In completing this thesis, it
is undeniable that the author has received recommendations, contributions and
significant help from many people.
Foremost, it is the author’s honor and luck to have the guide of Associate Prof.
Dr. Nguyen Minh Hang, my supervisor at Foreign Trade University who has a
broaden knowledge and experiences in the fields of law and dispute settlement and I
cannot thank her enough. I could not complete this thesis without her guidance and
recommendations.
Secondly, I would also like to give my thanks to the authors of the books and
articles that I have referred to in this thesis.
My last appreciation is to the Faculty of Graduate Studies of Foreign Trade

University for providing us – the after graduated students with helpful master
course and the support during learning and writing thesis process
th

Hanoi, February 28 2020
Phan Thi Phuong


TABLE OF CONTENTS
STATEMENT OF ORGINAL AUTHORSHIP
ACKNOWLEDGEMENT
STATEMENT OF ORGINAL AUTHORSHIP ................................................. 1
ACKNOWLEDGEMENT ................................................................................... 2
STATEMENT OF ORGINAL AUTHORSHIP ................................................. 3
ACKNOWLEDGEMENT ................................................................................... 3
LIST OF TABLES ................................................................................................ 7
LIST OF ABBREVIATION ................................................................................ 8
SUMMARY OF THESIS RESEARCH RESULT ............................................. 9
INTRODUCTION ................................................................................................ 1
1. Rationale ......................................................................................................... 1
2.

Literature review ............................................................................................ 3

3. Research questions ......................................................................................... 5
4. Research’s objective ....................................................................................... 6
5. Scope of study ................................................................................................. 7
6. Methodologies ................................................................................................. 7
7. Research structure ......................................................................................... 8
CHAPTER 1: THEORETICAL FRAMEWORK ............................................. 9

1.1. Overview of commercial disputes ................................................................. 9
1.1.1.Definition of commercial disputes ........................................................ 9
1.1.2.Characteristics of commercial disputes ..............................................12
1.2. The definition of commercial disputes resolution ..................................... 13
1.3. Methods to solve commercial disputes. ...................................................... 13
1.3.1. Negotiation............................................................................................... 14
1.3.1.1. Definition: ............................................................................................ 14
1.3.1.2.

Characteristics of Negotiation: ........................................................... 14

1.3.1.3.

Advantages of negotiation ................................................................... 15

1.3.1.4. Disadvantage of negotiation ................................................................ 15


1.3.2. Mediation............................................................................................... 15
1.3.3. Arbitration.............................................................................................. 15
1.3.3.1.

Definition:........................................................................................... 15

1.3.3.2.

Characteristic of arbitration............................................................... 16

1.3.3.3.

Advantages of arbitration................................................................... 16

1.3.3.4.

Disadvantage...................................................................................... 16

1.3.4. Litigation/jurisdiction (Going to Court)................................................ 16
1.3.4.1.

Definition:........................................................................................... 16

1.3.4.2.

Characteristic of litigation.................................................................. 17

1.3.4.3.

Advantages of Litigation..................................................................... 17

1.3.4.4.

Disadvantages of Litigation................................................................ 17

1.4. Mediation.................................................................................................... 17
1.4.1.

Rationale of mediation....................................................................... 17

1.4.2.

Definition and characteristic of mediation........................................ 20

1.4.2.1. Definition:........................................................................................... 20
1.4.2.2. Characteristic...................................................................................... 21
1.4.2.3. Advantages of mediation.................................................................... 22
1.4.2.4. Disadvantages of mediation................................................................ 23
1.4.3.

Type of mediation............................................................................... 25

1.4.4.

Commercial mediation process.......................................................... 27

1.4.4.1. First step - Agreement to mediate......................................................... 27
1.4.4.2. Second step - Select mediator................................................................ 27
1.4.4.3. Third step - Mediation conducted......................................................... 27
1.4.4.4. Forth step - Mediation closed................................................................ 28
1.4.5.

Commercial mediation in the international organization................. 28

CHAPTER 2: INTERNATIONAL EXPERIENCE ON APPLYING
MEDIATION: STUDY OF SINGAPORE AND EU (ITALY)............................ 31


2.1. Mediation development over worldwide................................................... 31
2.1.1. On the countries’ aspect......................................................................... 31
2.1.2. On the worldwide aspect........................................................................ 35
2.2. Mediation development in Singapore........................................................ 36

2.2.1. Rationale for choosing Singapore case to study.................................... 36
2.2.2. Overview of mediation development in Singapore................................ 37
2.2.3. Legal frame work for mediation in Singapore...................................... 39
2.2.3.1.

Support from Singapore’s Judiciary................................................... 40

2.2.3.2.

Promotion from Singapore government............................................. 41

2.2.4. Singapore’s organizations for mediation............................................... 43
2.2.4.1.

Singapore Mediation Centre (SMC).................................................. 43

2.2.4.2.

Singapore International Mediation Centre (SIMC)..........................45

2.2.4.3.

Singapore International Mediation Institute (SIMI).........................48

2.3. Mediation development in EU................................................................... 48
2.3.1. Rationale for choosing EU case to study............................................... 48
2.3.2. The overview and legal framework for mediation in EU......................49
2.3.3. The Italian Experience — An On/Off Switch....................................... 59
2.3.4. Experiences from Singapore and EU (Italy)......................................... 62
CHAPTER 3: RECOMMENDATIONS FOR THE DEVELOPMENT OF

MEDIATION IN VIETNAM................................................................................ 63
3.1. Vietnam’s approach on applying mediation............................................. 63
3.1.1.

Vietnam economy review.................................................................... 63

3.1.2.

Legal frame work for mediation......................................................... 66

3.1.3. Legal issues arise when developing mediation in Vietnam...................79
3.2. Recommendations for Viet Nam................................................................ 82
3.2.1.

For Government................................................................................. 82

3.2.1.1. Developing the commercial legal environment.................................. 82
a. Forming Working group on commercial mediation...................................... 82
b. Orientation and improve legal framework on commercial mediation..........83


3.2.1.2. Improving the mediator’s capacity..................................................... 86
3.2.1.3. Raising public and business ‘s awareness.......................................... 87
3.2.2.

For associations and enterprises........................................................ 89

3.2.2.1. The legal affairs improvement............................................................ 89
3.2.2.2. Improvement of information channel to the Government.................90
CONCLUSION................................................................................................. 91

REFERENCES.................................................................................................. 93


LIST OF TABLES
Table 1.1: Comparing ADR and Court Procedure.............................................. 20
Table 1.2: Comparison of 4 method of dispute resolution..................................24
Table 2.1: Mediation legal document in EU........................................................ 50
Table 2.2: Estimated number of mediations per year in the EU in 2018...........57
Table 2.3. Mediations in Italy – First Semester 2018.......................................... 60
Table 2.4. Number of incoming civil litigious cases in some dispute matters in
Italian first instance courts................................................................................... 61
LIST OF FIGURES

Figure 1.1: Commercial mediation process......................................................... 28
Figure 2.1: Mediation process at SIMC............................................................... 47
Figure 2.2: Time and money saving when using mediation compared to litigation

57
Figure 3.1: Value, growth rate of exports, imports and trade balance in 20112019 period............................................................................................................ 64
Figure 3.2. Number of dispute cases of VIAC from 1993-2017..........................77


LIST OF ABBREVIATION

ADR

Alternative Dispute Resolution

AFTA

Asian Free Trade Agreement

ASEAN

Association of Southeast Asian Nations

CPTPP

Comprehensive and Progressive Agreement for Trans-Pacific
Partnership

EU

European Union

EVFTA

EU-Vietnam Free Trade Agreement

ICC

International Chamber of Commerce

UNCITRAL

The United Nations Commission on International Trade Law

VIAC

Vietnam International Arbitration Center

VMC

Vietnam Mediation Center

SMC

Singapore Mediation Center

SIMC

Singapore International Mediation Center

SIMI

Singapore International Mediation Institution

UN

United Nations

WB

World Bank

WTO

World Trade Organization

SUMMARY OF THESIS RESEARCH RESULT
The thesis “Commercial Mediation development: international experiences
and lessons for Vietnam” focuses on giving recommendation on how Vietnam can
apply the experiences of developed jurisdiction around the world in promoting the
Mediation in order to improve the country’s commercial dispute resolution context.
Although witnessing the remarkable step forward in promoting alternative dispute
resolutions in general and mediation in specific to solve commercial disputes,
Vietnam regulation still possessed many drawbacks. From the overview of the
mediation development worldwide and focusing on analyzing the cases of
Singapore and EU, the thesis provides solutions on the aspect of the Government as
well as enterprises to foster the domestic development of mediation in dispute
settlement. The solutions which have been found in the thesis resulting from
outstanding cases study shall help the government issue more suitable policy and
provides the deeper understanding for Vietnam enterprises on using Mediation to
settle disputes as well as enhance their competitiveness in the international
economy, improves the standard and conduct of mediator, fortify the enforceability
of the mediation settled agreement award.


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INTRODUCTION
1. Rationale
In this era of international economic integration and flat world, all the
economic borders are being erased and eliminated day by day which created valuable
opportunities for countries and economies to enjoy their comparatives advantages and
to do business cross borders. Along with this integration progress, Vietnam has been
refocused every efforts to integrate with the worlds, taken part in bilateral and
multilateral agreements such as AFTA, ACTA, CPTPP, EVFTA,…to seek for
opportunities to strengthen and develop economy. Together with this development of

economy and increasing of business opportunities are the rising in number of
international commercial contracts between parties. The diversity of nationality of the
parties in a contract from all over the worlds with differences law sources and legal
bases required the carefully preparation and discuss of applicable law and a wellwritten dispute settlement clause in the contract. In those agreements Vietnam has
joined in, besides the regulations and detail of tariff, trade remedies, competition
policy, and dispute settlement always plays an important part. However, for the
developing countries like Vietnam whether the legal framework for commercial dispute
resolution still has certain gap compared to developed countries’, the need for
reforming and innovating the legal system on dispute resolutions to create a more
effective and diverse legal corridor in accordance with international practices is
becoming necessary than ever. For example, in the text of the EVFTA between Vietnam
and EU there is a whole chapter – Chapter 15 which states about dispute settlement and
two annexes about code for conduct for mediator and mediation mechanism which is
an unpopular method of resolving dispute in Vietnam.

In the world, in the past, among other disputes settlement measures,
mediation, which grown rapidly in many common law jurisdictions such as the US,
Australia, England and Wales since the 1970s and 1980s, is relatively unpopular in
civil law countries. However, recently, the dispute settlement by mediation is
gaining more and more interests and applied in many cases in the European Union
and civil law countries because of its undeniable advantages.


2

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On August 7 , 2019, delegations from 70 countries, including about 1,600
leaders and government officials, businessmen, judges, lawyers and scholars
gathered in Singapore to attend conferences and contract signing ceremony of the

Convention. A total of 46 countries have signed in the Convention, including the
two largest economies in the world (USA and China); three out of Asia's four largest
economies (China, India and South Korea); and five ASEAN countries (Brunei,
Malaysia, Laos, Philippines and Singapore). The Singapore Convention is
established to provide an internationally uniform framework to recognize and
enforce mediated settlement agreements.
In legal documents of Vietnam such as civil code, mediation is referred to as a
method of resolving disputes without detail guidance and regulations especially the
enforcement when the negotiation and conciliation complete. Due to the absence of a
legal corridor, not only does advantages of these methods not being promoted, but also
they, sometimes become the problems in the process of solving conflicts between
parties, especially damages to those small and inexperienced traders.
In recent years, the Government has paid more attention and efforts in
promoting legal mechanisms on trade mediation. In 2015, The National Assembly has
promulgated the Civil Procedure Code, including an entire chapter to regulate the
procedure for recognizing successful mediation results outside the court. Accordingly,
the court will recognize the results of mediation conducted under the mediation
procedure. On 24 February 2017, the Government of Vietnam promulgated Decree
No.22/2017/ND-CP on Commercial Mediation (the “Decree”). It is the first legislation
specifically governing commercial mediation in Vietnam. This can be considered as a
step forward the international trend of Vietnam. However, this is still a new concept
and practices in Vietnam and need more studies and experiences from other countries.
From 2007 to 2015, statitics of VIAC show that during that period, VIAC only settles 5
mediation cases but in 2019, through the VIAC, there have been 19 cases of disputes
resolved by commercial mediation between both domestic and foreign enterprises and
the parties continue to maintain trade relations with each other. On the morning of May
29th 2018, the Vietnam International Arbitration


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Center held a launching ceremony of the Vietnam Mediation Center ("VMC"),
under the Vietnam International Arbitration Center in Hanoi. VMC is the first unit
to provide professional commercial mediation services in Vietnam in accordance
with Decree 22/2017/ND-CP dated February 24th 2017 on commercial mediation.
VMC's Board of Directors includes leading and reputable experts in the business
community as well as society.
For all above-mentioned reasons, the author would like to look into this new
approach of dispute settlement in Vietnam and see what advantages that mediation
could have for the parties. Moreover, the author also wants to show the key points
for question: “Can and how Vietnam be able to apply this method in practice to
resolve the disputes in the future?”. Consequently, with the desire to devote my
knowledge to the better Vietnam’s dispute resolution aspects so as to keep pace with
the global standards, the author selected the topic: “Commercial mediation
development - international experiences and lessons for Vietnam”.
2. Literature review
Although commercial mediation has long developing journey all over the
world, Vietnam’s mediation is still inexperienced and the term is new to some
extent. As a result, there has not been any same or analogous topic up to the
moment that the author has finished the paper. The author would like to review
some experiential researches from both Vietnamese and foreign sources as follows:
-

The Article “Beyond International Commercial Arbitration? The Promise
of International Commercial Mediation, 45 WASH. U. J. L. & POL’Y 011
(2014), written by S. I. Strong stated that “International commercial arbitration
has long been the preferred means of resolving complex business disputes in the
cross-border. However, the international corporate community has become
somewhat disenchanted with that particular mechanism because of concerns
about rising costs, delays, and procedural formality and parties are looking for

other means, that is mediation” and focused on analysis the characteristics of
international commercial disputes and showed in which cases that mediation


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was more suitable than arbitration and vice versa. “This Article has
suggested that businesses may be more likely to choose international
commercial mediation over international commercial arbitration and
litigation if mediation agreements and settlement agreements were as easily
enforceable as arbitration agreements and arbitral awards.”
-

“Overview of negotiation, mediation (ADR) in Vietnam” (2015) is an
Article wrote by Dr. Le Hong Hanh at the Out-of-Court Dispute Resolution
(ADR) International Workshop organized by the Ministry of Justice and JPP.
The article provides an overview on the methods to resolve disputes outside
the court and evaluates that the regulations and practices on solving disputes
by mediation still has many disadvantages and has not been selected by
business entities. The article also shows the reasons for that and proposes
suggestions to complete the legal corridor for this method.

-

The article of “Commercial Mediation and Developing Commercial
Mediation in Vietnam” (2015) by Luu Huong Ly is published in the Journal
of Electronic Court (hvta.toaan.gov.vn). The article analyzes mediation in
terms of a method of resolving disputes and show the needs to form a
professional mediation organization to conduct the mediation. The article
also shows that in Vietnam, the mediation cases are mainly solved by

arbitrators or judges according to arbitration proceedings or courts so that
ADR has not been paid attention and provided a legal corridor.

-

The Article “Mediation – a means of Alternative Dispute Resolution
(ADR)” (2015) written by M.A Duong Quynh Hoa – Institute of Nation and
Law has pointed out the overview, characteristics and advantages of mediation
and indicated the reality of legal framework for dispute settlement by mediation
then proposed solutions for completing the methods of resolving disputes by
mediation in the field of perfecting the legal corridor for it.

-

Article “Settlement of trade disputes by negotiation and mediation under
Vietnamese law” by Assoc. Dr. Doan Duc Luong and the authors (2018), at
an international seminar between the University of Law, Hue University and


5

Japan Research Center. This legal has analyzed legal basis and problems in
the method of dispute resolution by negotiation and mediation. Through the
article, it is emphasized that regulations on mediation and negotiation are
still scattered in various documents and the legal value is still based on the
voluntary basis of the disputing subjects.
-

The Master thesis named “Resolving disputes by negotiation, mediation in
Vietnam” (2018) written by Nguyen Xuan Dung: this thesis focuses legal

basis and reality of disputes settlement by negotiation, mediation in Vietnam,
showing the limitations of those methods and proposes solutions and
orientation on organizing and implementing law on settlement of commercial
disputes by negotiation and mediation in Vietnam.

Some of the above researches show the characteristics, the advantages of the
mediation in resolving commercial disputes but does not mention the solution to
apply effectively this method in Asian country such as Viet Nam. Some of the
articles analyze the Vietnam situation in detail and propose suggestions but these
articles are not updated after the enforcement of Decree No.22/2017/ND-CP on
Commercial Mediation or some analysis do not focus only on mediation but see it
as a part of ADR.
In short, up to now, there has not been any comprehensive study researched on
all-sided of commercial mediation development both in the world and in Vietnam
and the method that used to apply the international experiences in Viet Nam. My
contribution will focus on the experiences of taking advantages of commercial
mediation in the world and answer the question: “How can we apply that effectively
in Viet Nam?”.
3. Research questions
There are some key questions of this study including: “What is commercial
disputes” and “What is commercial mediation?”, “How it has been developed and
evolved?” “How is mediation applied in the world? “Which countries are successful
in promoting commercial mediation and what are their experiences” And “Which


6

lessons can be applied in Vietnam”. In order to find out the answers for such
research questions, we need to focus on these sub questions:
-

What is the commercial disputes?

-

What are the methods to solve disputes in commercial activities as well
as their pros and cons?

-

What is the commercial mediation?

-

What are the characteristics as well as its advantages and disadvantages
of mediation?

-

Which countries successful in promotion commercial mediation?

-

What can be learned from those case study?

-

How is Vietnamese’s current approach to apply mediation?

-

What are implications for Viet Nam?

4. Research’s objective
The general objective of the paper is to provide recommendations on
enhancing the Vietnam’s commercial mediation from the lessons of Singapore and
EU (detail study of Italy). To achieve this overal aim, there are specific tasks that
the thesis needs to solve:
 Summarizing the basic theories of commercial disputes resolutions and
commercial mediation, the characteristics and advantages of using mediation in
settlement of commercial disputes.
 Studying the current status of Singapore and Italy’s commercial mediation
implementation, then identifying the core experiences behind these countries’s
practices.
 Analyzing the overall situation of commercial mediation in Vietnam,
Forecasting the difficulties that Vietnam has to face with when promoting
commercial mediation
 Giving suggestion and proposal for Vietnam Government, mediation service
providers to facilitate the development of dispute settlement mechanism and
suggestion for enterprises and businesses to apply this method effectively.


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5. Scope of study
The methods of mediation can be used in various dispute categories ranging
from civil, family, commerce however, in this study, author only focus on mediation
in the field of commerce (do not study mediation as a step of Arbitration and Court
procedure)
The research time shall cover the period in from the late of nineteen centuries

until now because the research will refer to the case of Italy (a civil-law country),
Singapore (a common law country) and Viet Nam. If Vietnam and Singapore have a
later phase of mediation in comparison with other developed countries in the world,
the mediation in Italy is a long and winding road. However, the author shall focus
on the period from early century because most of legal documents on commercial
mediation of international bodies from the late nineteen to early twenty centuries
shall also be included.
6. Methodologies
This thesis is completed based on the application of theory research method
including analytical method, synthesis method and reference to the laws and
regulations in order to achieve the requirements set for a research project.
Data which is used in the analysis of the thesis is mostly secondary one. The
data is collected, quoted from reports, researches of experiential researchers and
organizations in the field of mediation. Primary data for such study is hard to
conduct since mediation is quite new in Vietnam going along with the limitation of
capital and time of the author.
In Chapter 2, the author use synthesis method and reference to the laws and
regulations to show the experiences and find the implications for Viet Nam ...
In Chapter 3, the method of reference to the laws and regulations is also used
so as to figure out some unsuitable points regarding to laws and regulations of Viet
Nam. Synthesis method will be also used in this chapter to conclude the thesis and
suggest opening the new issues.


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7. Research structure
Beside Introduction, Conclusion, Reference, the paper consists of four chapters:
-

Introduction.

-

Chapter 1: Theoretical framework

-

Chapter 2: International experience on applying mediation: study of
Singapore and EU (Italy). (Anderson & Shiraz, 2018)

-

Chapter 3: Recommendations

-

Conclusion


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CHAPTER 1: THEORETICAL FRAMEWORK
1.1.

Overview of commercial disputes

1.1.1.

Definition of commercial disputes

Nowadays, with the development of commercial globalization and free trade,

Vietnamese economy is growing fast with market mechanism. In this situation, the
commercial relationship is becoming more diversity and complicated, especially the
enormous increase of multinational trade. Together with this, there are more and
more commercial disputes arising is an inevitable problem which needs to be
addressed promptly.
Commercial dispute is term which is popularly used in the socio-economic
life in various countries. However, this term is only moderately and popularly used
in Vietnam in recent years to replace for the term “economic disputes” in the
planned economy in the past.
In Vietnam, the term “commercial disputes” in different stages has different
understanding and definition. This term raised first time in Commercial Law 1997
in Article 238 as follow “commercial disputes mean the disputes arising from a
failure to perform or improper performance of a contract in commercial activities”.
This definition is based on definition of commercial activities at Item 2, Article 5 of
Commercial Law 1997 detailed “"Commercial activities are the performance of one
or more commercial activities of traders, including sale and purchase of goods,
provision of commercial services and trade promotion activities to gain profit or to
conduct socio-economic policies”. In the Article 45 of this Law details commercial
activities including “1. Purchase and sale of goods; 2. Representing the trader; 3.
Commercial brokerage; 4. Consignment purchase and sale of goods; 5. Sale agents
of goods; 6. Processing in trade; 7. Auction of goods; 8. Bidding on goods; 9. Goods
forwarding services; 10. Goods assessment service; 11- Sales promotion; 12Commercial advertising; 13- Display of goods; 14. Trade fairs and exhibitions.”
In short, comparing to other countries in the world, the definition of commercial
activities in accordance with Commercial law 1997 is quite narrow including 14 abovementioned activities regulating sales and purchasing of goods and


10

services. Besides, objectives of these commercial activities is limited in tangible
assets (item 3, article 5). Hence, non-residential real estate such as factories,
constructions, property rights such as shares, stocks, bonds; activities directly
related to the purchase and sale of goods with commercial nature such as
transportation and payment of goods through the banking system, etc., are also not
governed by the Commercial Law 1997.
In other countries around the world, the concept of commerce/trade is
increasingly expanded with broad connotations, including all activities for profitseeking purposes. In the agreement establishing the WTO, the concept of commerce
is also broadly regulated covering many areas not only in trade of goods but also
including trade in services, investment and intellectual property (as defined in the
Appendix of the Agreement). All the disputes related to commercial activities are
solved in accordance with procedure stated in Agreement signed in Uruguay
negotiation round. Hence, the definition of commercial activities stated in Vietnam
Commercial Law 1997 has eliminated many disputes which can be considered as
commercial disputes in nature. This has created various conflicts between national
and international law including important Agreement that Vietnam had joined up to
that point of time. After the Agreement between the United States of America and
the Socialist Republic of Vietnam on Trade Relations (US-VN-BTA) 2000 was
ratified by Vietnamese Congress on November 28

th

2001, the definition of

commercial activities and commercial disputes has been broaden including trade in
goods, services, intellectual property and investment. Moreover, in this Agreement,
in Article 9.4 of Chapter I, the term “Commercial disputes” was defined as
“disputes arise between parties in commercial transactions”. The conception related
to commercial in US-VN-BTA 2000 has been represented in the Ordinance on
Commercial Arbitration 2003, the Civil Code 2004 and the Commercial Law 2005.

st

The Ordinance on Commercial Arbitration 2003 enforced on July 1 2003 has
defined “commercial activities” by listed them as follow “Commercial activities are the
performance of one or many commercial activities of individuals and business
organizations, including purchase and sale of good, service provision; distribution;


11

representative, commercial agent; deposit; rent, lease; construction; advisory;
licensing; investment; finance and banking; insurance; exploration and exploitation;
transport of goods and passengers by air, sea, rail, road and other commercial
activities as prescribed by law. This definition has created the similarities in the
concept of commerce and commercial disputes between Vietnamese law and
international law.
In the scenario that Vietnam has joined WTO and turn to market-orientation
economy, it is inevitable that the disputes in commercial activities shall arise and
increase rapidly in the aspect of volumes and fields. In Article 29 of the Civil Code
2004, revived in 2011, the term of commercial disputes has listed in 4 groups: (1)
disputes arise in trading and commercial activities between individual and
organizations with the purpose of profit-seeking, (2) disputes in property rights and
technology transfer between individual and organizations with the purpose of profitseeking, (3) disputes between the enterprise and its members and among member of the
companies related to establishment, operation and termination of the enterprise,

(4) other disputes relating to trading and commercial activities regulated by law.
The Vietnam Commercial Law 2005 ratified by the National Assembly on
June 14

th

2005 had completed the legal framework on our country's commercial

activities. It does not define “commercial disputes” but define “commercial
activities” at item 1, Article 3 as follow “commercial activities are activities with
the purpose of profit seeking including trade of goods, provision of services,
investment, commercial promotion and other profit-seeking activities”. This
definition is more broaden than stipulated in other previous legal document and
compatible with the definition of “commercial and trading activities” stated in
Resolution No. 03/2012/NQ-HDTP.
From above analysis, the definition of “commercial disputes” has not been
defined consistently in legal documents of Vietnam but can be understood as
disputes raised among parties during the commercial activities with the purpose of
profit seeking including trade of goods, provision of services, investment,
commercial promotion and other activities.


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In accordance with course book “Commercial Law”, episode 2 of Hanoi Law
University, stated that “commercial disputes are contradictions (disagreements or
conflicts) of rights and obligations between parties during the process of
conducting commercial/ business activities”
1.1.2.

Characteristics of commercial disputes
Commercial disputes are disputes arising relationship regulated by

commercial law field so that it shall have several differences comparing to civil
disputes or labor disputes. Basically, commercial disputes have following

characteristics:
Firstly, subjects of commercial disputes are mostly traders and in some cases
are individual or organization but most popular are the disputes in which there is a
party which is a trader or an economic organization. Therefore, to solve these cases,
both Civil Law 2005 and Commercial Law 2015 can be applied.
Secondly, for the contents of disputes: the commercial disputes arise from
conflicts on implementing rights and obligations among parties in business
relationship which integrated with business activities. The final purposes of the
parties in the relationship are mostly profit seeking and the liabilities of this party
shall be the related rights of the other parties. Hence, conflicts are unavoidable in
the explaining and the implementation of rights and obligations of parties.
Moreover, these disputes are the product of commercial activities so that the
diversities and complication of the commerce field links to the diversities and
complication of commercial disputes. In addition, commercial disputes are linear,
from one dispute can lead to another. Therefore, these conflicts need to be solved
quickly and effectively which the least effects to the business relationship.
Thirdly, the settlement of commercial disputes is at the discretion of the
parties. This shows that the disputing parties have the right to choose the method of
settlement of commercial disputes prescribed by law such as mediation, negotiation,
arbitration and court. However, the parties must respect each other's interests and
the interests of the state.


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Along with the development of economic relations and under the influence
of competition laws, commercial disputes also become more diversified in type,
fiercer and more complex in nature and scale. Therefore, the selection and
application of appropriate and effective dispute settlement measures is an
indispensable requirement to protect the rights and interests of business entities and

ensure the principle of legal regulations thereby contributing to create a healthy
legal environment to promote economic development.
1.2.

The definition of commercial disputes resolution

“Disputes are part of life, and we all experience them sometimes. They give
us an opportunity to solve problems and to improve relationships, but they carry a
risk of being destructive if not managed well.” - Mediation Series: Mediation
Essentials (Washington, DC: IFC/World Bank Group, 2016)
Disputes are as old as humankind. Dispute resolution is probably just a bit
younger. Whether the first disputants settled their own disputes with direct party
negotiation, with violence, or with the assistance of a third party for conciliation,
mediation, arbitration, or adjudication remains a question for anthropologists and
historians to study and debate.
Disputes resolution is the selections of suitable methods or measures to solve
conflicts and disagreements in interests among parties to create the balance in interest
that parties can accept in which the violating party is obliged to perform its
responsibilities to the violated party. Or disputes resolutions can be understood as the
process that parties, through suitable methods and procedures, to find the solutions to
eliminate conflicts and disagreements to protect their own rights and interests.

1.3.

Methods to solve commercial disputes.

When commercial disputes are solving effectively, it can bring following
benefits: creating motivation for the development of economy, minimizing the
disruption of business activities and minimizing costs, effectively protecting the
legitimate and justifiable interests of the parties when participating in economic and

commercial activities, thereby creating trust and fairness for domestic and foreign


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businesses. The selection of the methods for commercial disputes resolutions bases
on the most important principle which is the right of self-determination of the
parties. At the beginning, when disputes arise, both parties can negotiate together.
Then, if the negotiations fail, they can seek for the support from a third parties such
as mediator, arbitrator or court.
In short, there are different ways to classify measurements or methods of
commercial disputes resolutions which are litigation, arbitration, negotiation,
mediation/conciliation and in some countries now appear the method of mini trial
but they can lie in two main types are litigation method and non-litigation or
alternative dispute resolution (ADR) methods. In accordance with Law on
Commerce of Vietnam 2005, there are four methods of disputes resolution including
negotiation, mediation, arbitration and court (litigation). These four methods of
resolving (the author only focus on the aspect of commercial dispute) has their own
characteristics, pros and cons as follows:
1.3.1.

Negotiation

1.3.1.1.

Definition:

This is the most basic means of dispute settlement in which two parties of the
conflict shall try to communicate back-and-forth themselves to find the solutions for
the disputes without the participation of a third parties.

1.3.1.2.

Characteristics of Negotiation:

-

Voluntary

-

Private and confidential

-

Quick and inexpensive

-

Informal and unstructured

-

Parties control the process, make their own decisions and reach their own
agreements (no third party decision maker)

-

Negotiated agreements can be enforceable

-

Can result in a win-win solution