Methods of Resolving International Commercial Disputes in Vietnam: Latest Updates
1. Primary Methods under the Current Legal Framework
1.1 Negotiation
This is the most basic and initial step: the disputing parties sit together and negotiate to resolve the issue without the intervention of a third party. It is popular due to its simplicity and cost-effectiveness, but it lacks binding mechanisms and relies entirely on the goodwill of the parties involved.
1.2 Mediation
Mediation involves a neutral third party who facilitates the discussion without issuing a decision, helping the parties reach a mutual agreement. This agreement can be documented and legally enforceable as a contract.
Decree 22/2017/ND-CP and the 2015 Civil Procedure Code clearly regulate commercial mediation, including mediator qualifications, procedures, and recognition of out-of-court settlement results.
Advantages: Quick, confidential, cost-saving, and helps preserve business relationships. If unsuccessful, parties still have the right to proceed with arbitration or litigation.
1.3 Commercial Arbitration
Arbitration offers a final and binding resolution recognized and enforceable by law. The parties must have an arbitration agreement — either pre-existing or made after the dispute arises — but it must be in writing.
VIAC (Vietnam International Arbitration Centre) is the leading institution in Vietnam for international commercial arbitration, having resolved thousands of disputes involving parties from over 63 countries.
1.4 Litigation
Litigation is handled by the state courts and produces binding rulings with strong enforcement. However, if the parties have a valid arbitration agreement, courts must decline jurisdiction (unless the agreement is invalid).
Still, courts remain the final resort when there is no alternative agreement or when ADR methods fail.
2. Emerging and Supplementary Dispute Resolution Methods
2.1 Mediation-Arbitration Hybrid
This new model allows parties, after initiating arbitration proceedings, to request mediation at VMC (Vietnam Mediation Centre under VIAC).
If mediation is successful, the result can be recognized by the VIAC arbitration tribunal and enforced like an arbitral award.
This method combines flexibility with the legal enforceability of arbitration.
2.2 Online Dispute Resolution (ODR)
ODR is a global trend that Vietnam is beginning to pilot. It supports negotiation, mediation, or arbitration via digital platforms.
However, Vietnam's legal framework for ODR is still underdeveloped, lacking specific legislation. Only a few guiding provisions exist in laws such as the 2005 Law on E-Transactions, 2005 Commercial Law, 2010 Law on Commercial Arbitration, and Decree 22/2017.
Experts suggest expanding the legal framework to include: definitions of “online arbitration,” procedural mechanisms, the legal nature of electronic rulings, digital signatures, and legal venue recognition.
ODR has gained more attention recently due to the rapid growth of Vietnam’s e-commerce, projected to reach USD 52 billion by 2025.
2.3 WTO Dispute Settlement Mechanism
Vietnam, as a WTO member, may use this mechanism for state-level disputes (e.g., anti-dumping, safeguards, subsidies).
The process includes consultations, panels, and appeals before the Appellate Body, based on principles of fairness, speed, effectiveness, and compliance with international law.
3. Conclusion: Choosing the Right Method
When to choose which method?
For long-term partnerships where preserving relationships is a priority → Prefer negotiation or mediation.
For a binding resolution → Choose arbitration (or mediation-arbitration hybrid for more flexibility).
When there is no arbitration agreement or when government intervention is needed → Go to court.
For e-commerce disputes → ODR is a promising approach; monitor legal updates.
For cross-border disputes involving state actors → Use the WTO dispute resolution mechanism.
Important notes for international contract clauses:
Always specify the dispute resolution method, priority order (e.g., ADR before litigation), institution, governing law, venue, and cost-sharing terms.
4. Practical Advice
Begin with an ADR clause when drafting contracts to establish a clear roadmap in the event of a dispute. If a strong legal enforcement mechanism is needed, arbitration remains the top choice. ODR and mediation-arbitration hybrids are new, efficient approaches — but require careful legal and technical setup. For state-involved international disputes, the WTO offers a formal and binding mechanism.
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