According to the provisions of Vietnamese as well as international and foreign laws, there are two forms of arbitration used mainly: Ad hoc arbitration and institutional arbitration (permanent arbitration). Disputing parties may choose between ad hoc arbitration and institutional arbitration. To help clients to have information about these two types of arbitration, Hong Bang Law Firm will provide the following analysis:
Ad hoc arbitration
Ad hoc arbitration is a form of arbitration established at the request of the involved parties to resolve a specific dispute and dissolves itself when that dispute has been resolved completely. Parties that agree to conduct arbitration without the assistance of an arbitration institution need to create their own rules of procedure or may opt for the UNCITRAL Arbitration Rules designed for arbitration. case. Ad hoc arbitration specified in the Law on Commercial Arbitration is a form of dispute settlement under the Law on Commercial Arbitration and the order and procedures for arbitration as agreed by the parties (Clause 7, Article 3 of the Law on Commercial Arbitration).
The fundamental advantage of the form of ad hoc arbitration is that the parties’ right to self-determination is very large. The ad hoc arbitration procedure is entirely agreed upon by the parties themselves and the Arbitrators must follow. In addition, the conduct of ad hoc arbitration has low costs and a fast settlement time because the parties can agree to skip some unnecessary proceedings to shorten the time for dispute settlement.
The biggest disadvantage of ad hoc arbitration is that it depends entirely on the goodwill of the parties. If a party is not in good faith, the proceedings will always be in danger of being delayed, and oftentimes unable to create an Arbitral Tribunal because no procedural rules applied.
Institutional Arbitration
By agreeing to conduct the dispute at an arbitration center, the parties actually choose the rules of that center. The arbitral institution shall administer the arbitration proceedings in accordance with these rules. Institutional arbitration is defined in the Commercial Arbitration Law as a form of dispute settlement at an arbitration center under this law and according to the procedural rules of that arbitration center (Clause 6, Article 3 of the Commercial Arbitration Law).
When the parties choose Institutional Arbitration, the parties receive certain assistance from this arbitration institution in relation to the arrangement and supervision of the arbitration proceedings. However, in order to obtain such assistance, the parties must pay certain costs considered as administrative costs that are included in the arbitration fees or are segregated. If the parties wish to choose the Institutional Arbitration, the parties must specify the name of the specific arbitration center in the arbitration clause or specify that the dispute will be resolved in accordance with the Arbitration Rules of that specific arbitration center. Without a clear agreement, the arbitration provisions risk being void or not resolved by anybody when a dispute arises.
The biggest advantage of Institutional Arbitration is the detailed regulation of the proceedings including the steps of the proceedings, ensuring in all cases the dispute will be resolved, regardless of whether a party has participated in the arbitration proceedings or not. The second advantage is that most arbitration centers have well-trained professionals to assist with the arbitration process.
The biggest disadvantage of Institutional Arbitration is that it is costly, because, in addition to paying the arbitrator’s remuneration, the parties also have to pay additional administrative costs for the Arbitration Center. The second disadvantage of Institutional Arbitration is that sometimes the proceedings are prolonged, which the Arbitral Tribunal of the parties must comply with because of the time limit prescribed by the Rules of Procedure.
Above are some of our company’s analyses on this issue. If you need more detailed advice and answers as well as how to access this service, please contact directly the Deputy Director of Sales: Lawyer Nhat Nam via hotline: 0912.35.65.75, 0912.35.53.53 or call the toll free legal consultation hotline 1900.6575 or send a service request via email: lienheluathongbang@gmail.com
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