Dispute Resolution through Arbitration and Court

Dispute resolution is a critical component of maintaining commercial relationships and ensuring justice in Vietnam. The two predominant methods of resolving disputes—arbitration and court litigation—offer distinct advantages and challenges. This article provides a detailed comparison of these procedures and examines emerging trends in 2025 that are shaping dispute resolution practices in Vietnam.

1. Overview of Dispute Resolution in Vietnam

Vietnam’s legal system provides parties with two primary avenues for resolving disputes: through the courts or via arbitration. Each option is governed by specific laws and regulations:

Court litigation is regulated by the Civil Procedure Code 2015 (amended in 2019).
Arbitration is governed by the Law on Commercial Arbitration 2010.

These frameworks aim to provide fair, efficient, and accessible mechanisms for dispute resolution, tailored to different needs.

2. Comparison of Arbitration and Court Litigation

Court Litigation

Legal Basis: Governed by the Civil Procedure Code.

Jurisdiction: Courts have general jurisdiction and can resolve a wide range of disputes.

Neutrality: Courts may lack perceived neutrality, particularly in disputes involving foreign parties.

Time and Cost: Typically slower and less expensive upfront but may involve prolonged appeals.

Confidentiality: Court proceedings are public.

Enforceability: Court judgments are enforceable within Vietnam but may face challenges internationally.

Finality: Decisions are subject to appeal or cassation.

Arbitration

Legal Basis: Governed by the Law on Commercial Arbitration and international treaties.

Jurisdiction: Arbitration is limited to disputes agreed upon by the parties, often commercial in nature.

Neutrality: Arbitration allows parties to choose neutral arbitrators and venues.

Time and Cost: Faster but more costly due to arbitrators’ fees and administrative costs.

Confidentiality: Arbitration proceedings are private and confidential.

Enforceability: Arbitral awards are enforceable globally under the New York Convention 1958, to which Vietnam is a signatory.

Finality: Arbitral awards are generally final and binding.

3. Trends in Dispute Resolution in Vietnam (2025)

3.1 Increased Preference for Arbitration

Recent years have witnessed growing confidence in arbitration, particularly for international and high-value disputes. Key reasons include:

Global enforceability: The New York Convention’s provisions make arbitral awards easier to enforce across jurisdictions.

Specialized expertise: Parties can appoint arbitrators with specific industry knowledge.

3.2 Modernization of Court Procedures

Vietnam’s judicial system has been implementing reforms to enhance efficiency and transparency. Notable developments include:

Adoption of e-court systems for filing and managing cases.
Improved training programs for judges to handle complex commercial disputes.

3.3 Hybrid Dispute Resolution Methods

There is a rise in combining mediation with arbitration (“med-arb”) or mediation with court litigation (“med-lit”). These hybrid approaches aim to leverage the benefits of both amicable resolution and adjudication.

3.4 Focus on Investor-State Disputes

With Vietnam’s increasing involvement in international trade agreements, disputes between foreign investors and the state have become more prominent. Mechanisms under treaties such as the CPTPP and EVFTA provide arbitration as a preferred option.

4. Practical Considerations for Businesses

Businesses operating in Vietnam should consider the following when choosing a dispute resolution method:

Nature of the dispute: Arbitration may be better for technical, high-value, or international disputes, while courts are suitable for simpler, domestic cases.
Confidentiality requirements: Opt for arbitration if privacy is a priority.
Cost implications: Weigh the long-term cost of arbitration against the possibility of prolonged court proceedings.
Enforceability needs: International contracts often favor arbitration for ease of enforcement.

Arbitration and court litigation each have unique advantages that cater to different dispute resolution needs. In 2025, the preference for arbitration is expected to grow, driven by its neutrality, confidentiality, and enforceability. However, recent reforms in Vietnam’s judicial system signal a more efficient and reliable court process, making it a viable option for many disputes.

Businesses should carefully evaluate their priorities and the specific circumstances of their disputes to select the most appropriate method. Engaging legal counsel with expertise in Vietnamese dispute resolution is essential for navigating these complexities effectively.