Ho Chi Minh City Economic Court’s recognition of an award by Australia’s Queenlands State arbitration committee last May has aroused the interest of businesses, especially foreign, here.
It pertained to a commercial dispute over a construction contract of Indochina Hotel at Da Nang between Tyco Services Pte., Ltd – a subsidiary of US giant Tyco International and Leighton Company. This is the first foreign arbitration award recognized and enforced in Ho Chi Minh City.
The legal framework to enable the court’s recognition and enforcement has been available in Vietnam for some time. The Ordinance on recognition and enforcement of foreign arbitration awards dated 14 September, 1995 (1995 Ordinance) regulates all matters in this regard: procedures, application files, competent authority, and all other matters relating to recognition and enforcement of foreign arbitration in Vietnam.
Here are some pivotal points of the 1995 Ordinance:
Under Article 1, foreign arbitration is construed as an award rendered outside the territory of Vietnam by an arbitral organization selected by parties to settle disputes arising from commercial legal relations. It also includes those rendered on Vietnam territory but not by a Vietnamese arbiter.
This definition is principally built on the basis of Article 1 of the 1958 New York Convention on recognition and enforcement of foreign arbitration, of which Vietnam is a member, combining both territory and nationality criteria of the arbitration to clarify the "foreign" nature of the arbitration.
Under the definition of this 1995 Ordinance, Vietnam has acknowledged the existence of the standing arbitration (the institutional arbitration) and the ad-hoc arbitration.
However, the 1995 Ordinance mentioned only awards of foreign arbitration selected by the involved parties to settle the dispute arising from the commercial legal relations. The concept of "commercial legal relations" is hereby to be construed as those formed, changed or terminated on the basis of the provisions of the Commercial Law dated 10 May, 1997.
Article 2 of the 1995 Ordinance provides principles for recognition and enforcement according to which Vietnamese courts shall consider the recognition and enforcement where those awards are rendered in a country or by the arbitration of a country which is a signatory or a member along with Vietnam to the International Treaty in this regard. But also, foreign arbitration may be considered by the Vietnamese courts for recognition and enforcement on "reciprocity" basis without any International Treaty.
With regard to formalities and procedures for processing application for recognition and enforcement of decisions of foreign arbitrations, the 1995 Ordinance provides that the organization, individual being judged creditors, or their lawful representatives can request the recognition and enforcement if the organization being judged debtor is headquartered, or if the individual being judged debtor resides, in Vietnam, or the property related to the enforcement is located in Vietnam at the time of filing the application.
The request shall be first submitted to the Ministry of Justice, which shall deliver it to the competent court for filing. When examining the request, the court shall not re-open the disputes already settled by foreign arbitration but only examine and compare the awards and attached documentation with respect to conformity to Vietnamese law or international treaties. The court shall then decide on recognition and enforcement if there is nothing contrary to Vietnamese law.
Nevertheless, the Court can reject the request if either party has no capacity to enter into agreement on arbitration, or the composition of the arbitration or procedures for dispute settlement by foreign arbitration do not conform to signed agreements on arbitration or to the law of the country where the award was issued.
To the best of our knowledge, there are only two awards of foreign arbitration to be recognized by the Court till date: the first, the Queensland arbitration and the other, an award by an arbiter in Geneva, recognized by People’s Court of Lam Dong Province over a commercial dispute between Kyunggi Silk Co., Ltd (Korea) and Viseri (Vietnam).
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.