Commercial arbitration is a method of settling disputes arising in commercial activities agreed by the parties by the existence of an arbitrator. There would be no arbitration without an arbitration agreement. This means that the arbitration agreement is a precondition for conducting arbitration proceedings. To help you with information on this issue, we will provide the following analysis:

Binding of the arbitration agreement

Whether the parties’ dispute can be resolved by arbitration is based on a valid arbitration agreement. When the parties reach an arbitration agreement (the arbitration agreement can be made before or after the dispute), the legal dispute covered by their arbitration agreement must be resolved by arbitration ( Article 5.1 Law on Commercial Arbitration). This means that when the parties have entered into an arbitration agreement, then another party initiates a lawsuit in a Court, the Court must refuse it, unless the arbitration agreement is invalid or unenforceable (Article 1. 6 Law on Commercial Arbitration).

Independence of the arbitration agreement

According to the principle of independence of arbitration agreement, an arbitration agreement is completely independent of the contract containing the arbitration agreement. Therefore, the modification, extension or suspension of the contract or the invalid or unenforceable contract does not render the arbitration agreement null and void (Article 19 of the Commercial Arbitration Law).

Form of the arbitration agreement

Article 16 of the Law on Commercial Arbitration provides for the form of an arbitration agreement:

“1. An arbitration agreement may be made in the form of an arbitral clause in a contract or in the form of a separate agreement.

2. An arbitration agreement must be in writing. The following forms of agreement may also be regarded as written form:

a/ Agreement made through communication between the parties by telegram, fax, telex, email or other forms provided for by law;

b/ Agreement made through exchange of written information between the parties;

c/ Agreement recorded in writing by a lawyer, notary public or competent institution at the request of the parties:

d/ In their transactions, the parties make reference to a document such as a contract, document, company charter or other similar documents which contains an arbitration agreement;

e/ Agreement made through exchange of petitions and self-defense statements which reflect the existence of an agreement proposed by a party and not denied by the other party.”

Thus, Vietnamese law stipulates that an arbitration agreement must be established in writing.

Contents of the arbitration agreement

The content of the arbitration agreement should be simple and precise, and should clearly state the following:

• Arbitration form (institution arbitration or ad hoc arbitration)
• Arbitration center that the parties choose to bring the dispute to settlement.
• Number of arbitrators (1 or 3)
• Location of arbitration proceedings
• Law applicable to dispute settlement
• Arbitration language.

Law applicable to the arbitration agreement

For disputes without foreign elements, the applicable law to the arbitration agreement is Vietnamese law, that is, the provisions of the Law on Commercial Arbitration and Resolution 01/2014.

For disputes involving a foreign element, the arbitral tribunal or the court, it is first necessary to determine under what law the merits of the arbitration agreement should be considered. The applicable law to the arbitration agreement is not automatically the governing law of the contract containing the arbitration agreement or arbitration agreement that invokes the contract. The applicable law to an international arbitration agreement must be chosen by the parties. In the event that the applicable law to the arbitration agreement has not been chosen by the parties, the law of the location of the arbitration – known as lex arbitri – will be applied.

Consider the legal validity of the arbitration agreement.

“Before considering the circumstances of a dispute, the arbitration council shall consider the validity of the arbitration agreement and whether such agreement can be realized, and consider its jurisdiction. If the dispute falls within its jurisdiction, the arbitration council shall settle it under this Law. If the dispute falls beyond its jurisdiction or the arbitration agreement is invalid or unrealizable, the arbitration council shall decide to terminate the dispute settlement and immediately notify the parties thereof”.

According to the principle that the arbitral tribunal has the authority to review its own jurisdiction (the Jurisdiction on Jurisdiction Principle), if the parties bring a dispute to arbitration and the respondent requests to dismiss the validity of the arbitration agreement, then the arbitral tribunal must consider the legal validity of the arbitration agreement. In this case, the validity of the arbitration agreement must be considered by the Arbitral Tribunal before settling the content of the dispute, right at the beginning of the arbitration proceedings (Clause 1, Article 43 of the Commercial Arbitration Law).

The decision on the jurisdiction of the arbitral tribunal may be reviewed by the Court. After the arbitral tribunal decides whether it has jurisdiction or not, at the request of a party, the court shall review the decision on the legal validity of the arbitration agreement that the arbitral tribunal has issued. The review of the decision on the arbitral tribunal’s jurisdiction aims to:

• If the arbitral tribunal considers that the arbitration agreement of the parties is invalid and issues a decision that it has no jurisdiction, then at the request of one of the parties, the Court shall review this decision (Article 44.1. Commercial Arbitration Law).
• If the arbitral tribunal considers that the arbitration agreement is valid and issues an arbitral award, at the request of one of the parties, the arbitral award issued by the arbitral tribunal may be annulled if the Court The court considers that there is no arbitration agreement or that the arbitration agreement is invalid (Article 68.2.a Law on Commercial Arbitration).

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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