Macro-Trends in the Development of Commercial Mediation in Vietnam

Abstract

Vietnam and the EU formally completed the legal review of the EVFTA and Investment Protection Agreement (IPA) in August 2018.[1] The specific regulations on mediation included in the EVFTA demonstrates the special attention given by Europe and Vietnam to dispute resolution through mediation.[2] An entire chapter of the EVFTA is devoted to outlining the protocols of the dispute mechanism in the trade agreementVietnam is not one of the signatories to the Singapore Convention. There is concern is that Decree 22 Law of Mediation in Vietnam requires that the parties apply their mediated settlement agreements to Vietnamese Courts.

ANNEX 15-C of the EVFTA sets out the procedure for resolving commercial trade disputes involving the trade agreement. In future, this trend is to include dispute resolution mechanisms such as mediation and conciliation. This could well lead to an instrument on the enforcement of international commercial settlement agreements resulting from mediation. The result could have an effect similar to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.[3] Through the EVFTA, Vietnamese legislators will be provided with a sound legal framework to develop commercial mediation and investment mediation.  

The EVFTA also details a working framework for the settlement of investment disputes through mediation. The Vietnamese regulations mirror Directive 2008/52/EC of the European Parliament and Council of 21 May 2008.[4] In recent years, commercial medication has been gradually legalised in Vietnam and the country has expanded its legal framework for commercial mediation.[5] The Government formally announced Decree 22 on Commercial Mediation.[6] This Decree encourages the business community to refer to commercial mediation as an alternative dispute resolution process. The Mediation Decree provides, in detail, the principles, conditions, and procedures of commercial mediation. This includes certifying settlement agreements through the courts, as well as conditions for the establishment of mediation centers in Vietnam.[7] The Decree recognises two distinct modes of operation for foreign mediation institutions. First, ‘branches’ of foreign commercial mediation institutions may provide mediation services in Vietnam. Second, ‘representative offices’ may conduct business development, and promote mediation practice in Vietnam.[8] The Decree also permits the operation of foreign mediation institutions and centres within Vietnam. However, the parties’ appointment of commercial mediators, who have not registered with the Justice Department or commercial mediation centre, would be in breach of provisions in Decree 22. In the absence of an agreement on the commercial mediation procedure, the mediator(s) may apply the procedure that is most appropriate to the nature of the dispute, as long as the parties approve the procedure.

Recent developments in Vietnam have shown that mediation training and international accreditation are supported. The IFC, in partnership with the Swiss Secretariat for Economic Affairs (SECO), has been recently supporting capacity building by offering mediation training for a select group of participants. With the IFC’s support, over 60 participants have been accredited by the well-known London-based Centre for Effective Dispute (CEDR) the largest conflict management and resolution consultancy in the world. The World Mediation Organisation has also been involved in accrediting mediators in Vietnam through pro bono initiatives in the business community and with law students as part of clinical legal education programs.

To date, there are only two registered mediation centres in Vietnam: The VMC in Hanoi and Chambers Mediation in HCMC[9], both reporting only one successfully mediated case at the VMC for 2018.[10] EuroCham, together with the Italian Chamber of Commerce in Vietnam (ICham), recently partnered with the Asia Pacific Mediation Forum and Hue University in Vietnam to convene the largest international mediation conference ever held in Vietnam, with over 40 domestic and international speakers and over 15 professional development workshops.[11] There have also been some efforts to promote a court-annexed style of mediation in Vietnam through pilot projects in various court jurisdictions.[12]

International developments on mediation have also been made. On the 26th of June 2018 the United Nations (UN) Commission on International Trade Law UNCITRAL the final drafts of the Convention on the Enforcement of International Settlement Agreements were approved. This development is significant as it facilitates, for the first time, the enforcement of international commercial settlement agreements resulting from mediation.

The UN Convention on International Settlement Agreements Resulting from Mediation, also known as the Singapore Convention, is similar to The New York Convention and the Hague Convention, which deal with settlement agreements in international arbitrations. This new Convention will promote the use of mediation as an option for businesses to resolve their disputes. It lists specific conditions to be fulfilled in order for a State to enforce a mediated settlement agreement. It excludes settlement agreements which (a) have been approved by a court or have been concluded in the course of court proceedings, (b) are enforceable as a judgment in the state of that court, or (c) that have been recorded and are enforceable as an arbitral award.[13] A signing ceremony for the Singapore Convention on Mediation is expected in Singapore in 2019.[14]

Potential gains / concerns for Vietnam

Mediation procedures for labour disputes are outlined in Article 164 of the Labour Code, which states that: Within 7 days from the date of receipt of the request, the labour conciliatory council of the enterprise shall commence the resolution process of a labour dispute. Both parties and their authorised representatives must be present at the conciliation meeting.[15] However, some shortcomings have arisen from the mediation of labor disputes, namely that the members of the mediation council include employer-related persons (representatives of enterprises). Thus, the true meaning of mediation sessions is not ensured. Also, the enforceability of mediation settlement agreement is not clearly provided for in the legal regulations.[16]

The Singapore Convention

Vietnam is not one of the signatories to the Singapore Convention. Our concern is that Decree 22 requires that the parties apply their mediated settlement agreements to Vietnamese Courts. Parties that certify their dispute with the Vietnamese courts will not be protected by provisions of the International Convention. The Convention does not apply to settlement agreements that: (i) have been approved by a court or have been concluded in the course of court proceedings; (ii) are enforceable as a judgment in the state of that court; or (iii) have been recorded and are enforceable as an arbitral award.[17]

Recommendations:

Vietnam’s participation in the Singapore Convention would strengthen the country’s stature in the international community. Moreover, as the current Decree 22 does not recognise foreign mediated settlements, participation in the Convention will then become a viable option for foreign investors and traders when the Vietnamese courts recognise mediation settlements from overseas proceedings.


[1] “EVFTA: Acceleration and expectations”, Nhan Dan, 23 October 2018. Available at: <http://en.nhandan.org.vn/business/item/6754602-evfta-acceleration-and-expectations.html> last accessed on 5 February 2019.

[2] “Update on commercial mediation”, VIAC, 17 November 2017. Available at: <http://eng.viac.vn/enforcement-of-mediated-settlement-agreements-in-vietnam:-a-step-forward-the-international-trend-a483.html> last accessed on 5 February 2019.

[3] Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958).

[4] More information is available at: <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32008L0052>

[5] Code of Civil Procedure No. 92/2015/QH13 of the National Assembly dated November 25, 2015.

[6] Decree 22/2017/ND-CP of the Government on commercial mediation dated 24 February 2017.

[7] The Decree also specifically governs: the process of commercial mediation and the process to register as a mediator in the following steps; the registration and range of disputes which can be referred to commercial mediation, the style of mediation to be used and the recognition of settlement disputes; the qualifications of commercial mediators namely; the procedure for the establishment of commercial mediation institutions.

[8] “Vietnam Series: Four Key Features of the Commercial Mediation Framework”, Kluwer Mediation Blog, 9 August 2018. Available at: <http://mediationblog.kluwerarbitration.com/2018/08/09/vietnam-series-four-key-features-commercial-mediation-framework/> last accessed on 5 February 2019.

[9] “Vietnam Mediation Centre Makes Debut”, Vietnam Law Magazine, 30 May 2018. Available at: <http://vietnamlawmagazine.vn/vietnam-mediation-center-makes-debut-6243.html> last accessed on 5 February 2019.

[10] As was recently reported by Le Net, Mediator of the VMC, at a Court Annexed Mediation Seminar November 2018 given by Thomas G. Giglione at the National Economics University Faculty of Law

[11] More information available at: <https://apmf2017.mediation.vn>

[12] “Building Support for the Expansion of Court-Annexed Mediation in Vietnam”, Harvard Law School. Available at:      <http://blogs.harvard.edu/clinicalprobono/2018/09/19/building-support-for-the-expansion-of-court-annexed-mediation-in-vietnam/> last accessed on 5 February 2019.

[13] “UN mediation convention”, Law Society Gazette, 3 September 2018. Available at: <https://www.lawgazette.co.uk/legal-updates/un-mediation-convention/5067371.article> last accessed on 5 February 2019.

[14] More information available at: <https://bit.ly/2Rq30sn>

[15] More information available at: <http://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=91650>

[16] Professor Le Hong Hanh and Le Thi Hoang Thanh LLM. “Mediation and mediation law of Vietnam in the context of ASEAN integration”, ASEAN Law Association. <https://www.aseanlawassociation.org/11GAdocs/workshop5-vn.pdf> last accessed on 5 February 2019.

[17] Article 1, Scope of Application, Singapore Convention

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