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May 17, 2018 / 08:10

Many FDI firms choose commercial arbitration in resolving disputes

The proportion of FDI enterprises selecting to use commercial arbitration, instead of going to court, in cases of dispute is 40 percent thanks to its effectiveness and transparency.

Phan Trong Dat, Deputy Secretary General of the Vietnam International Arbitration Centre (VIAC) said at a recent seminar that the rate of disputes in Vietnam has increased in the last three years with over a half of commercial arbitration cases at VIAC being resolved in foreign languages (mainly English).
 
Commercial arbitration is helpful for foreign investors in Vietnam
Commercial arbitration is helpful for foreign investors in Vietnam
Some 24 percent of disputes, which were resolved at VIAC, involved FDI as one of the parties. Of these, 32 percent were in the purchasing of goods, 24 percent in construction and 20 percent in leasing, Dat said.
At the seminar, participants focused on discussing the necessity and efficiency of the commercial arbitration method, as one of the most effective ways of resolving disputes related to FDI enterprises.
Vu Anh Duong, VIAC’s secretary general, said Vietnam has been considered among countries with high and stable economic growth in the region and the world. One of the reasons for the significant momentum for this growth was FDI activities in Vietnam.
Pham Manh Dung, VIAC’s arbitrator and a lawyer from Rajah and Tann LCT Lawyers Company Limited, said that by the end of 2017, Vietnam had 24,700 FDI projects with total registered capital of US$318.7 billion, accounting for 25 percent of the total investment in the country and more than half of the nation’s total industrial production value.
Dung noted that FDI has had a large impact on Vietnam’s integration into the world economy. This has been an important factor for the country’s infrastructure development and in completing legal systems to develop market mechanisms that are suitable with international norms.
VIAC has striven to become a trusted address to resolve disputes, thus helping ensure the rights and benefits of investors seeking to invest in Vietnam.
Commercial arbitration in Vietnam has been increasingly developed to become a useful tool for foreign investors in the country.
Disputes in investment activities have many mechanisms for resolving conflicts, such as courts, commercial arbitration and foreign affairs. However, the courts have not been an attractive solution, while resolving disputes through foreign affair mechanisms have been used in certain cases.
Commercial arbitration and investment arbitration have been mostly preferred as it is an effective tool in preserving capital inflows from legal risks in business investments.
The dispute resolving mechanisms of commercial arbitration also faced challenges, said Fan Mingchao, Regional Director of Arbitration and ADR for North Asia at the International Chamber of Commerce.
He said the majority of challenges were concerning competitiveness, as the scale of disputes become larger and more complicated, resulting in prolonged time, which reduces its effectiveness.
The issues relating to security and transparency of arbitration procedures have also been a problem.
Security is a core feature of international arbitration, but transparency requirements are also increasingly high. In order to address this issue, agencies have approved and joined the transparency framework of the United Nations, he said.
The benefit has also been seen in commercial arbitration. He said that governments should build a transparent arbitration procedure to control the quality of arbitration decisions.
The seminar is considered to be an important forum for lawyers and leading experts to share knowledge with enterprises and help Vietnamese enterprises to better understand and more effectively use the commercial arbitration method. Commercial arbitration is an effective tool in preserving capital inflows from legal risks in business investment.
More than 100 delegates from FDI enterprises, counterpart enterprises, potential partners with FDI enterprises, many prestigious lawyers, and representatives from state management agencies attended the event.