When a commercial dispute arises, many businesses instinctively think of going to court. Litigation is familiar, authoritative, and often seen as the “official” way to resolve disputes. However, court proceedings are not always the most effective or commercially sensible option.
In many cases, commercial arbitration offers significant advantages over court litigation, especially for businesses involved in cross-border transactions, FDI operations, or long-term commercial relationships.
The key question is not whether arbitration is better than court in general, but when arbitration should be chosen instead of court.
Courts and arbitration tribunals serve different purposes.
Courts focus on:
Applying statutory law
Following strict procedural rules
Public hearings and judgments
Arbitration, on the other hand, is designed to:
Resolve disputes privately
Offer procedural flexibility
Allow parties greater control over the process
For businesses, the choice between arbitration and court is ultimately a strategic decision, not just a legal one.
One of the most important reasons to choose arbitration is confidentiality.
Court proceedings are generally public. This means:
Disputes may become visible to competitors
Sensitive commercial information may be disclosed
Reputational risks may arise
Arbitration proceedings are typically private. For businesses concerned about protecting trade secrets, pricing structures, customer data, or internal processes, arbitration is often the safer option.
For disputes involving foreign parties, enforcement is a critical factor.
Vietnam is a signatory to the New York Convention, which facilitates the recognition and enforcement of foreign arbitral awards in many jurisdictions worldwide. In contrast, enforcement of foreign court judgments often depends on bilateral treaties or reciprocity, which may be limited or uncertain.
When a dispute involves assets or parties in multiple countries, arbitration often provides a more enforceable outcome than court litigation.
In court litigation, judges are assigned by the court system. Businesses have no control over who hears their case.
In arbitration, parties can:
Choose arbitrators with industry or technical expertise
Appoint arbitrators familiar with international commerce
Select arbitrators with experience in complex contractual disputes
This can be particularly valuable in disputes involving technical issues, complex supply chains, or specialized industries.
Court proceedings often involve multiple procedural stages, hearings, and potential appeals. This can significantly extend the timeline of a dispute.
Arbitration allows parties to:
Agree on procedural rules
Limit the number of hearings
Streamline evidence presentation
While arbitration is not always faster than court proceedings, it often provides greater control over timelines, which can be critical for businesses seeking certainty.
Litigation is adversarial by nature. Once a dispute goes to court, the commercial relationship between the parties is often permanently damaged.
Arbitration, while still a formal dispute resolution mechanism, is generally perceived as less confrontational. In some cases, it allows parties to:
Maintain a working relationship
Continue cooperation during proceedings
Reach negotiated settlements more easily
For long-term partners, distributors, or strategic suppliers, arbitration may align better with business objectives.
International contracts often involve:
Multiple legal systems
Different business cultures
Language barriers
Arbitration provides a neutral forum where parties can:
Choose the governing law
Select a neutral seat of arbitration
Avoid home-court advantage concerns
This neutrality is one of the main reasons arbitration is favored in international commercial agreements.
Arbitration is not always the right choice.
Court litigation may be more suitable when:
No arbitration agreement exists
Interim or urgent court measures are required
The dispute involves third parties not bound by an arbitration clause
Costs of arbitration outweigh the benefits
Choosing arbitration without careful assessment can create jurisdictional issues or enforcement challenges.
One of the most common problems businesses face is poorly drafted arbitration clauses.
Common mistakes include:
Ambiguous wording
Conflicting dispute resolution clauses
Unclear seat or institution selection
A defective arbitration clause can delay dispute resolution or even render arbitration unavailable.
This is why arbitration should be considered at the contract drafting stage, not only after disputes arise.
Many businesses think about arbitration only after a dispute has already escalated. By then:
The contract may already dictate court litigation
Strategic options are limited
Costs and delays increase
Dispute resolution strategy should be built into contracts from the beginning.
Choosing arbitration should be part of a broader legal strategy that considers:
Nature of the business
Geographic scope of operations
Likely dispute scenarios
Enforcement priorities
This level of planning is rarely possible with case-by-case legal advice alone.
Businesses that use ongoing legal consultancy benefit from:
Strategic contract drafting with dispute prevention in mind
Properly structured arbitration clauses
Early assessment of dispute resolution options
Alignment between legal strategy and business goals
Instead of reacting to disputes, businesses are prepared for them.
Foreign-invested enterprises and companies engaged in international trade face higher dispute resolution risks due to:
Cross-border enforcement challenges
Regulatory differences
Language and procedural barriers
Without legal guidance, arbitration clauses may fail to deliver their intended benefits.
DEDICA provides ongoing legal consultancy services and dispute strategy support for businesses operating in Vietnam.
DEDICA assists clients by:
Advising on court vs arbitration strategies
Drafting and reviewing arbitration clauses
Assessing enforcement risks
Representing clients in arbitration proceedings
Preventing disputes through early legal oversight
DEDICA’s approach focuses on commercial practicality, enforceability, and long-term risk management.
Commercial arbitration is not a universal solution—but in many situations, it is the smarter and more strategic choice compared to court litigation.
Arbitration is particularly suitable when:
Confidentiality matters
Cross-border enforcement is critical
Neutrality and expertise are required
Business relationships should be preserved
The key is to make this choice before disputes arise, not under pressure.
By engaging ongoing legal consultancy, businesses can structure contracts, dispute resolution clauses, and legal strategies that protect their interests and reduce uncertainty—long before conflicts escalate.
📞 Hotline: (+84) 39 969 0012 (Available via WhatsApp, WeChat, Zalo)
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Contact us today for a free initial consultation with our experienced lawyers!
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