Decree No. 22/2017/ND-CP dated 24 February 2017 on Commercial Conciliation (“Decree 22”) sets out the legal framework and requirements applicable to commercial conciliations. With effect from 15 April 2017, parties to a commercial contract or agreement will have the option to resolve their disputes through commercial conciliation as an alternative to the usual options of arbitration or court proceedings. “Commercial conciliation” is defined under Decree 22 to mean a method of dispute resolution agreed upon by the parties and facilitated by a commercial conciliator.
Key highlights of commercial conciliation in Vietnam
Some advantages of commercial conciliation include:
- Parties more active in reaching resolution. Unlike arbitration and court proceedings which are generally more adversarial in nature, parties in conciliation proceedings take on a more active role in the discussions and negotiations, with a view to reaching an amicable solution.
- Confidentiality. Information exchanged during conciliation proceedings are kept confidential, unless otherwise agreed by the parties or required by law.
- Flexible procedures. Parties have the flexibility of choosing the time and venue for the conciliation proceedings.
- Settlement. If the parties are able to reach an amicable decision through commercial conciliation, they may enter into an agreement documenting the results of the completed conciliation, and such agreement shall be legally binding. If an amicable decision is not reached, the parties may instead opt to continue conciliation proceedings or file an application for the dispute to be resolved by commercial arbitration or a competent court.
2. Key conditions and requirements under Decree 22
Decree 22 sets out the framework and requirements that apply to conciliation proceedings, including the following:
- A dispute may be resolved by commercial conciliation if it is within the competence of the conciliators to do so. Competence is determined on the following basis:
- disputes between the parties arise from commercial activities;
- disputes arise where at least one of the parties is engaged in commercial activities; and/or
- disputes that may be resolved by commercial conciliation, as stipulated by the law.
- A dispute shall be resolved by commercial conciliation if the parties have a conciliation agreement. The conciliation agreement may be made: (i) prior to a dispute; (ii) after a dispute arises; or (iii) at any time during the process of dispute resolution. The conciliation agreement must be made in writing either through a conciliation clause in a contract or via a separate agreement.
- Parties to the dispute have the following rights:
- the right to agree or refuse to conciliate
- the right to request suspension or termination of conciliation
- the right to express their will and decision on the contents of conciliation.
- If the parties agree to resolve a dispute by commercial conciliation under Decree 22, they must select commercial conciliators from (i) the list of commercial conciliators of the commercial conciliation organisation or (ii) from the list of commercial conciliators of the Department of Justice.
- Parties may choose to adopt either the procedural rules of the commercial conciliation organisation or the procedures agreed among themselves.
- Commercial conciliation organisations include (i) commercial conciliation centres and (ii) the arbitration centres which are licensed by the Ministry of Justice to carry out commercial conciliation activities.
- A foreign commercial conciliation organisation may operate through its branch or representative office set up in Vietnam.
If you have any questions or require any additional information, you may contact Phuc Nguyen, Quynh Lien Nguyen or the ZICO Law partner you usually deal with.
This alert is for general information only and is not a substitute for legal advice.