THE EFFECT OF ARBITRATION AGREEMENTS UNDER VIETNAMESE AND SWEDISH LAW

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Joint Swedish-Vietnamese Master’s Programme MASTER’S THESIS by Phan Hoai Nam THE EFFECT OF ARBITRATION AGREEMENTS UNDER VIETNAMESE AND SWEDISH LAW Supervisors: Professor Michael Bogdan Professor Mai Hong Quy Field of study: Comparative and International Law Spring 2008 CONTENTS ABBREVIATIONS EXECUTIVE SUMMARY INTRODUCTION OVERVIEW ON ARBITRATION AGREEMENTS 2.1 Definition of an arbitration agreement 2.2 Construction of arbitration agreement 2.3 Relationship between the arbitration clause and contracts 10 2.4 Relationship between arbitration and courts based on the arbitration agreement 11 REQUIREMENTS FOR VALIDITY OF ARBITRATION AGREEMENTS 17 3.1 Requirements concerning to the parties 17 3.2 Requirements as to form of agreement in order to establish consent 20 3.3 Material requirements .22 CONCLUSION 28 TABLE OF STATUTES AND OTHER LEGAL INSTRUMENTS 30 International Treaties and Conventions .30 National Legislations .30 Sweden 30 Vietnam 30 Others 30 TABLE OF CASES 31 BIBLIOGRAPHY 32 Monographs 32 Articles in Journals, Anthologies, and others .33 In English 33 In Vietnamese 33 Abbreviations AA(Swe): OCA(Vie): CC(Vie): SCC Rules: VIAC: The Model Law The Swedish Arbitration Act (1999:116) The Ordinance on Commercial Arbitration in Viet Nam (2003:08) The Vietnamese Civil Code 2005 The Arbitration Rules of the Arbitration Institution of the Stockholm Chamber of Commerce The Vietnam International Arbitration Center at the Vietnam Chamber of Commerce and Industry 1985 Uncitral Model law on International Commercial Arbitration, with amendments as adopted in 2006 Executive Summary Resolving disputes by arbitration is becoming more and more popular because of its advantages compared to other measures such as mediation or the courts However, a valid arbitration agreement is needed, if arbitration is to be the basis for resolving disputes An arbitration agreement has the effect of excluding the jurisdiction of the court and it is also needed if a court is later to recognize and enforce arbitral awards, especially if they are decided in foreign countries A valid arbitration agreement is an agreement which complies with the provisions of the relevant law Its effect is based on many factors such as the parties who signed it and its form and content According to the Vietnamese legal system, only individuals and business organizations have the right to enter into an arbitration agreement The Swedish legal system does not impose any restrictions on this point Similarly, the form of arbitration agreements and their contents are also treated differently by the two legal systems Vietnamese Law by way of the Ordinance on Commercial Arbitration 2003 (hereinafter referred to as the OA(Vie)) specifies the permitted forms of agreement by way of a list in paragraph of Article of the OA(Vie) This method has limitations as it may not list all written forms of arbitration agreements For example, the contracting parties could have a bill of lading, a ship leasing contract lease or a company charter as the document which contains an arbitration agreement In this regard, the Swedish law does not make specific requirements about the form When disputes arise, the parties must simply prove that an agreement on arbitration between the parties did exist The scope of an agreement is also linked to the validity of an arbitration agreement Swedish law allows wide scope to such agreements though it does exclude some agreements such as consumer contracts or agreements regarding the carriage of passengers or goods by sea or aviation Meanwhile, Vietnamese law only accepts arbitration in commercial activities where the parties have so agreed Clearly, this limits the contracting parties’ capacity to choose suitable measures for resolving non - commercial disputes On the advantages and disadvantages of arbitration see: Finn Madsen, Commercial Arbitration in Sweden, 3rd edition, Oxford University Press, Oxford, 2007, pp.23 - 28 The Swedish Arbitration Act of 1999, Five Years On: A Critical Review of Strengths and Weaknesses, p10, Editors: Jernej Sekolec and Nils Eliasson, The UNCITRAL Model Law on Arbitration and the Swedish arbitration Act: a Comparison Introduction Along with the development of the market economy, the number of disputes in commercial activities is increasing With its flexibility, resolving disputes by arbitration is being more and more relied on by enterprises The practice in Viet Nam shows that the number of cases resolved by arbitration has increased This demonstrates that the position of arbitration compared with other methods such as courts and ADRs (Alternative Dispute Resolution) has changed However, in comparison with other countries, the figures are still modest There are many reasons to explain this, which include imperfections in the arbitration law of Viet Nam In general, the authority of arbitrators depends on the arbitration agreement which the parties consented to “No arbitration if no valid arbitration agreement” Unlike courts, which have jurisdiction over any disputes based on the procedural law of their country, arbitrators only have authority when the contracting parties have agreed to choose arbitrators to resolve their disputes The law on arbitration in Viet Nam appeared later than in other countries The Arbitration Ordinance of 1990 is the first document to cover arbitration It was then replaced by the Ordinance on Commercial Arbitration 2003 (OCA(Vie)) Along with the documents guiding its implementation in legal practice, the OCA(Vie) now cover issues relating to arbitration in general and arbitration agreements in particular However, regarding arbitration agreements, the ordinances and guiding documents still have many problems which makes the resolution of disputes in Viet Nam by arbitration present many difficulties Because of the importance of the arbitration agreement, as well as the differences between Vietnamese arbitration law and the law of other countries, I has chosen the topic: "The Effect of arbitration agreements under Vietnamese and Swedish law” for my master’s thesis The thesis is divided into four parts as follows: Part 1: Introduction- generally introduces the thesis and its purpose, method and delimitation; Part 2: Overview on arbitration agreements – comparing and analyzing Vietnamese and Swedish law on the definition and structure of arbitration agreements, the relationship between an arbitration agreement and the contract and between arbitration and courts, According to http://www.viac.org.vn/vi-VN/Home/thongke/2008/10/156.aspx VIAC resolved 22 cases in 2005, 23 cases in 2006 http://www.mediate.com/articles/sturzakerD.cfm Part 3: Requirements for the validity of arbitration agreements – comparing and analyzing the requirements regarding parties, form and content of arbitration agreements in Vietnam and Sweden Part 4: Conclusion - some conclusions and proposals are made by way of a summary Methods The methods used in this thesis combine law and economics with the descriptive method, the comparative legal method and the analytical method In addition, to strengthen the argument on the effectiveness, as well as the restrictions in the law on arbitration agreements in both Viet Nam and Sweden, I have also used case law analysis Delimitation My thesis focuses on studying and analyzing legal issues relating to the validity of arbitration agreements in the Vietnamese legal system In addition, I also compared this legal framework with the Swedish one for the purpose of suggesting improvements to the Vietnamese law on the issue Overview on arbitration agreements 2.1 Definition of an arbitration agreement According to Article (2) of the Ordinance on Commercial Arbitration the Republic of Socialist Viet Nam in 2003 provided: “Arbitration agreement means an agreement between the parties to commit to use arbitration to resolve disputes which may arise or which have arisen from commercial activities” Specifically, the arbitration agreement is the basis for granting authority to arbitrators regarding a specific dispute relating to commercial activities These activities are carried out by business individuals or organizations “Commercial activities means the performance of one or many trading acts by business people or organizations, including goods purchase and sale, service provision; distribution; trade representation and agency; consignment; renting and lease; hire purchase; construction; consultancy; technology; licensing; investment; financing; banking; insurance; exploration and exploitation; transport of goods and passengers by air, sea, rail, land, and other commercial acts as prescribed by law5” Not all business individuals or organizations have the right to decide that their disputes will be solved by arbitration However, even when they have the right to chose arbitration, if the disputes are not regarding commercial activities, such arbitration agreements will not be recognized This is an important matter for enterprises (including enterprises established under the Enterprise Law, the Law on Foreign Investment, the Law on State enterprises and the Law on Cooperatives…) as they need to know when to sign arbitration agreements The AA(Swe) does not contain any actual definition of an arbitration agreement However, a definition is implied in section of the Arbitration Act, which deals with arbitrability: “Disputes concerning matters in respect of which the parties may reach a settlement may, by agreement, be referred to one or several arbitrators for resolution Such an agreement may relate to future disputes pertaining to a legal relationship specified in the agreement” Unlike the position in Vietnamese law, the AA(Swe) does not apply to commercial disputes only Consumer disputes also come under the Act, but Section states that an arbitration agreement referring to future consumer disputes is not Article 2(3) of OCA(Vie) valid6 And it also does not expressly state that non-contractual disputes can be the subject of an arbitration agreement However, it is clear that such disputes can be arbitrated under the AA(Swe) (See conditions for the effect of arbitration agreements relating to the content of disputes in the section 3.3) In both Vietnam and Sweden, an arbitration agreement can be established in advance (for future disputes) or after a dispute occurs (to settle the dispute has) and their conditions of validity are similar In the process of negotiations leading up to a contract, the contracting parties may agree to take disputes to arbitration if those disputes arise during the implementation of the contract or relate to it In this case, the arbitration agreement can be included in the contract as an arbitration clause or can be made as an independent document Although the contracting parties did not have an arbitration agreement in the past, after a dispute between them occurs, they may also reach an agreement to arbitrate at any time Such agreements may be established at any time that the parties choose In reality, once disputes have arisen, especially disputes involving foreign elements, each party would like to choose his own authorities to solve them So, if the parties lack the goodwill needed to resolve their disputes, it will be equally difficult for them to establish an arbitration agreement then Establishing an arbitration agreement before disputes occur is the better way and should be done if the parties intend to use arbitration to resolve disputes In brief, although between Viet Nam and Sweden have different ways of defining the concept of arbitration agreement: a specific concept in Vietnamese Law, but one only implied in Swedish Law, the connotation of the two is similar There is only a difference concerning the types of disputes which can be subject to arbitration 2.2 Construction of arbitration agreement The authority of arbitrators to resolve disputes arises through an arbitration agreement which is negotiated and signed by the contracting parties and is in essence independent of the underlying contract To be workable and effective, a long and detailed arbitration agreement is not needed The two basic principles that any arbitration agreement needs are simple Note that an arbitration agreement which is unclear or incomplete may well be contrary to the expectations of the contracting parties, who want to use arbitration to resolve their disputes Section of the AA(Swe) Arbitration agreements are often required to have two basic elements, namely, the identity of the arbitration organization and the arbitration proceedings rules In addition, its scope and the types of disputes covered are also necessary terms When establishing an arbitration agreement, the contracting parties should aim to cover all dispute types which can arise from or relating to the contract between the parties They should avoid listing specific disputes as this could limit the authority of the arbitrators who would not have standing in disputes that were not mentioned The agreement should refer to the number of arbitrators If the parties want the case to be decided by any number of arbitrators other than three that should be stated in the clause The other additions suggested by the SCC Institute refer to the place of arbitration and to the language(s) to be used in the proceedings If not agreed upon by the parties the place of arbitration is decided by the SCC Institute and the language is decided by the arbitrators The SCC Institute recommends the following wording: The Arbitral tribunal shall be composed of arbitrators (a sole arbitrator) The place of arbitration shall be The language to be used in the arbitral proceedings shall be There are two types of commercial arbitration; institutional or ad hoc arbitration Institutional arbitration is conducted under arbitration rules offered by an arbitral institution Ad hoc arbitration is based on the applicable arbitration law in the country where the arbitration is To avoid the uncertainty of knowing whether the parties have opted for institutional or ad hoc arbitration, the clause should be very clear by stating the national law or the given set of institutional rules, according to which the arbitral proceedings shall be conducted Giving the name of the specific arbitration organization chosen in the arbitration agreement is also extremely important In practice, there are many cases where the arbitration agreement has clearly stated that the contracting parties will refer their disputes to arbitration8 However, the name of the arbitration organization is not specifically recorded which could result in arbitration being refused Because, according to item 4, article 10 of the OCA(Vie), the arbitration agreement would be invalid: “Arbitration agreements shall be invalid in the following cases, where… the arbitration agreement fails to specify or specifies unclearly the disputed Ulf Franke, Introduction to Arbitration, speech at the Introduction to Arbitration seminar held in Stockholm on 13 - 16 June, 2001 http://www.viac.org.vn/vi-VN/Home/baivietlienquan/2008/10/178.aspx objects, or the arbitration institution competent to settle the dispute, and later the involved parties have no additional agreement” In such cases, Resolution 05 had specifically provided as follows: if the court bases itself on an arbitration agreement that did not record the name of any arbitration council or center in Vietnam, the court should have the authority to settle disputes, unless the parties have agreed on a new specific arbitration council in Vietnam to resolve their disputes For example: an arbitration agreement only contains the following: “In case disputes can not be solved by negotiation, the contracting parties shall refer their disputes to arbitration according to Vietnamese law” In the above example, the arbitration agreement is null and void because the parties did not agree clearly that their disputes should be resolved either by an arbitration council named by the parties or by ad – hoc arbitration, or by the arbitration council of a specific arbitration center in Vietnam alone, unless the parties agree or have agreed to add the specific name of an arbitration council in Vietnam to resolve their disputes However, Resolution 05 and even item 4, article of the OCA(Vie) are inappropriate in practice Clearly, through the arbitration agreement, the parties intended to refer their disputes to arbitration without any court or conciliation or mediation organizations The arbitration laws of Sweden (and of other countries) not make any such concrete requirements about stating the name of the arbitration organization Stating the full name of the arbitration rules is equally important There are many cases leading to problems; VIAC has had to ask parties to determine a specific proceedings rule to use in resolving their disputes because the arbitration agreement was too unspecific: "choose rules of international arbitration" In reality, the parties may only be able to agree on this if they still retain enough goodwill to each other If not, the arbitration agreement will be considered as invalid In the legal practice of Sweden, in the case No 038/2003 of the SCC, the parties agreed on an arbitration agreement whose content was obscure In the contract, the parties agreed that: “All arguments and/or disagreements which arise through the Contract or because of it should be settled by negotiations between both sides If the parties cannot come to an agreement the argument shall be settled in the http://www.bakernet.com/NR/rdonlyres/1698E9C9-6ADA-4420-B142334512CA278B/0/IntlArbitrationSwedenSep06.pdf However, where disputes have arisen and one of the parties has requested the Court to solve them, the Court must ask the party who had authority to sign the arbitration agreement If he or she accepts it (the acceptance must be recorded in writing), their arbitration agreement is not null and void and their case will be referred to arbitration If not, their case will stay with the competent court 30 However, in practice, this provision is applied in a different way For an example, see where a VIAC arbitral award was challenged by the People's Court in Hanoi by the Decision 02/2005/XQĐTT - ST dated May 11 th 2005 based on the requirements of Thu Do II Co Ltd The Award of the VIAC pronounced on August 31st 2005 was cancelled by the Court because Mr Phan Ba Hung, who was considered as the person acting on behalf of the foreign company, did not have authority at the time when the contract was signed The Court said that he was neither a legal nor an authorized representative The foreign company later agreed to authorize Mr Hung The Court did not accept this because it said that this authorization was not in place at the time of signing the contract, including the arbitration agreement This is all clearly contrary to the guidance of Resolution 05 In the private international law of most countries, a foreign party’s capacity and authority are determined under the laws of the countries where he is a citizen or resident However, the OCA(Vie) does not say this specifically, it only provides a general rule: "The signers of the arbitration agreement are not competent to sign according to the law’s provisions" What country’s law provisions will be applied if the dispute involves foreign elements? This is a shortcoming Clearly, the Ordinance has omitted important provisions concerning disputes involving foreign elements, such as determining legal capacity, authority to sign the agreement arbitration, the form and content of the arbitration agreement Unlike in Vietnam, the situation is clearly covered in Sections 46 - 51 of AA(Swe) on international connections They determine the choice of law to cover the authority of parties, the form and content of the arbitration agreement, applicable law For example, where an arbitration agreement has an international connection, the agreement shall be governed by the law agreed upon by the parties Where the parties have not reached such an agreement, the arbitration agreement shall be governed by the law of the country in which, by virtue of the agreement, the proceedings have taken place or shall take place 31 The issue of whether a party was authorized to enter into an arbitration agreement or was duly represented falls outside the ambit of the above provisions 30 31 Point a of section 1.2 of the Resolution 05 Section 48 of the AA(Swe) 19 Instead, these questions must be determined in accordance with the legal system to which a person has a permanent nexus through citizenship or domicile, as established in accordance with Swedish conflict of law rules The rule accords with Article V.1(a) of the New York convention on the Recognition and Enforcement of Foreign Arbitral Awards on 10 June 1958 3.2 Requirements as to form of agreement in order to establish consent An arbitration agreement is a special agreement which is the basis for giving authority to arbitrators to resolve disputes Although the original contract can be oral, the arbitration agreement normally cannot Whether the arbitration agreement was established before or after the dispute occurred, the laws of most countries provide that it must be made in writing The purpose of this formal requirement is to ensure that the consent of the parties has been fully established The form of an agreement has an important role and it is also the best evidence for determining that a contract has been established If any agreement does not comply with a formal condition, it will be invalid Vietnamese law stipulates that arbitration agreements must be made in writing Arbitration agreements reached through mails, telegrams, telex, fax, electronic mails or other written forms clearly expressing the wills of the involved parties to settle their disputes through arbitration shall be regarded as written arbitration agreements32 If the arbitration agreement is not made in writing, it is null and void by Article 10(5) of the OCA(Vie) On the other hand, the AA(Swe) does not make any request concerning the form of arbitration agreement Although most arbitration agreements in Sweden are in practice made in writing, the lack of a formal requirement makes this Act more flexible in covering arbitration agreement In practice, there are arbitration agreements which are only implied agreements between the contracting parties or they are expressed by electronic means; binding commercial practices are also accepted This has increased the opportunity for the arbitrators to perform their duties where the arbitration agreement is informal Most foreign laws however require that an arbitration agreement be in writing for it to be effective The reason for this is that an arbitration clause, being such an important term of a contract, has to be clearly expressed Swedish law does not have any such formal requirement, but there is precedent for saying that an arbitration agreement only comes about if it is clear that the parties have agreed on arbitration and not on any other kind of dispute resolution This does not mean that 32 Article 9(1) of the OCA(Vie) 20 an arbitration agreement will come about only if the parties have expressly agreed on arbitration It should be observed, however, that there are numerous examples of parties having been bound by an arbitration agreement on the basic of the same principles as apply to other contracts, and that, apart form one specific situation, there is no express support in case law or doctrine for stricter requirements applying in order to bind parties to an arbitration agreement The focus of the account which now follows is on Swedish law If foreign law is to apply to the arbitration agreement, a stipulation that the agreement be in writing may result in its not becoming binding The interpretation that formal requirements for the arbitration agreement are governed by the law of the place of arbitration (if there is no other agreement) becomes significant in the case where the award has been made in a country where there is no specific formal requirement for the arbitration agreement, such as Sweden (or a country that would enact the revised article of the Model Law, which will recognize an arbitration agreement entered into orally as long as the agreement refers to a document in writing) and the enforcement of the award is sought in a country that requires an arbitration agreement to be in a document signed by the parties or in an exchange of messages (see e.g article II of the New York Convention or current article of the Model Law) If the principle that the formal requirement for the arbitration agreement is governed by the law of the place of arbitration were generally recognized, this would mean that, when an award made in Sweden is sought to be enforced in a country that has stricter formal requirements than Sweden, the law of the place of origin of the award would apply and would thereby prevent the refusal of the enforcement of the award on the ground that the arbitration agreement does not meet the formal requirements of the law of the place of enforcement A wide acceptance and confirmation of the principle expressed in section 48 of the Arbitration Act (that the form of the arbitration agreement is governed by the law of the place of arbitration) would facilitate international commercial arbitration considerably “Where an arbitration agreement has an international connection, the agreement shall be governed by the law agreed upon by the parties Where the parties have not reached such an agreement, the arbitration agreement shall be governed by the law of the country in which, by virtue of the agreement, the proceedings have taken place or shall take place The first paragraph shall not apply to the issue of whether a party was authorized to enter into an arbitration agreement or was duly represented” 21 Vietnamese arbitration law only contains a few provisions concerning arbitration involving foreign elements, including articles 2(4) and 7(2) However, because an arbitration agreement is considered as a contract, its form will be governed by the law of the place where the contract was signed 33 Where an agreement is signed in a place where it is formally valid, but it is not in conformity with Vietnamese law, the local form of the agreement can still be recognized in Viet Nam The Arbitration Act does not contain any formal requirements for the validity of an arbitration agreement Although most arbitration agreements would in practice be documented in writing, the flexibility of the Swedish approach is still of great importance and useful when parties enter into agreements to arbitrate, for example, by tacit acceptance of a written contract proposal; with the assistance of a broker when the parties themselves not issue any written message; by means regarded as binding by trade usages; in relation to oral or implied modifications of the arbitration agreement; and in relation to bilateral investment treaties The purpose of this requirement is to draw a party’s attention clearly and distinctly to the fact that an arbitration clause applies to dealing between the parties The absence of a formal requirement in Swedish law does not in any way imply that this requirement of distinctness is inessential A contracting party wishing to invoke an arbitration agreement in his own favour must be able to prove the agreement This can be extremely difficult if the agreement was concluded orally on matters other than the arbitration clause Having regard to the difficulties of proof, the parties should ensure that an arbitration agreement is drawn up in writing 3.3 Material requirements Beside the requirements analyzed above, such as form and the parties to the arbitration agreement, the scope of an arbitration agreement is also an important element regarding its effect May all disputes be settled by arbitration? According to Vietnamese law, only parties in disputes concerning commercial activities may use arbitration for resolving their disputes 34 In fact, this has caused some trouble for the parties who are obliged to demonstrate that their disputes are commercial This provision makes the process of resolving disputes more complex and time-consuming In addition, there are many disputes relating to buying or selling stocks or bonds in enterprises where it is not clear whether they are commercial disputes or not 35 33 34 Section of article 770 of the Vietnamese Civil Code 2005 Article 2(3) of OCA(Vie) and article of Resolution 05 22 There is a view that if they are not listed in item of Article of the OCA(Vie), they must be resolved by courts based on Article 29 of the CPC(Vie) " However it is said that such agreements also aim at commercial benefits so they should be considered as “other commercial acts as prescribed by law” It is not easy for judges to determine whether a dispute is a commercial or non-commercial one The OCA(Vie) still follows the separation of economic/commercial from mere civil/consumer’s disputes Because of the open ended and loosely terms of article 2.3, VIAC and other arbitration centers are not willing to accept a wide range of disputes, such as disputes on stocks, securities market, disputes among shareholders, partners and members of companies If the courts did not accept such disputes as commercial, they might well cancel any arbitral awards This uncertainty has also had an impact on the recognition of foreign arbitral awards in Vietnam In one case relating to the services of a golf-provider, the court refused to accept maintenance of grass as a commercial activity, and rejected arbitration on the case (cancellation of an arbitration award under article 54.4 of the OCA(Vie)) However, it is clearly arguable that they belong to “other commercial acts as prescribed by law” 36 Moreover, determining the scope of the arbitration agreement by the listing method is inconsistent with more recent Vietnamese legal documents which have not been using the listing method For example, the Vietnamese Commercial Law in 2005 provided that: “Commercial activities mean activities for the purpose of generating profits, including: sale and purchase of goods, provision of services, investment, commercial promotion and other activities for the profit purpose”37 In addition, it is not consistent with common practices of other countries Few countries determine the scope of a relationship by the listing method They only provide some exceptions allowing arbitration to be excluded for the purpose of protecting a subject or a legal relationship For example, Articles 2059, 2060 of the French Civil Code provide that all persons may make arbitration agreements relating to rights of which they have the free disposal One may not enter into arbitration agreements in matters of status and capacity of the persons, in those relating to divorce and judicial separation or on controversies concerning public bodies and 35 Th.s Vũ Ánh Dương, Thực tiễn áp dụng Pháp lệnh Trọng tài Thương mại Trung tâm Trọng tài Quốc tế Việt Nam, Legal Science Journal, No 03/2008, p 36 Phd Do Van Dai, the lecturer of the Civil Faculty of The HCMC Law University 37 Article 3(1) of the Vietnamese Commercial Law 2005 23 institutions and more generally in all matters in which public policy is concerned38 This provision is expressed clearly in Section of the AA(Swe) According to this, arbitration is allowable if there is an arbitration agreement between the contracting parties, regardless of the disputes’ content: commercial or noncommercial disputes; domestic disputes or international disputes; contractual or non-contractual disputes39 However, for disputes between enterprises with customers relating to the purchase and sale of goods or services only for the purpose of personal, an arbitration agreement is only accepted if disputes have occurred In addition to this provision in the AA(Swe) concerning consumer cases, there exist other restrictive provisions regarding the right to enter into arbitration agreements Article 21(4) of the Maritime Act (1994:1004) stipulates that an arbitration agreement, which is to resolve issues concerning responsibility regarding the transport of passengers or goods, cannot be in force before the dispute arises We can also find similar provisions in Section of Chapter of the part labor disputes in the Swedish Code of Judicial Procedure (1974:371) and Section 31 (1.3) of the Employee Law (1976:580), the Railway Traffic Act (1985:192), Section 38 of the Air Transport Act (1937:73)40… The restriction in the section on the right to enter into an arbitration agreement concerning future disputes is based on the interest in protecting the economically weaker party But when a dispute has arisen, the consumer is free to enter into an arbitration agreement with a business enterprise 41 In brief, although expanding the scope of arbitration is necessary in Vietnam, we should consider several legal relationships where it is difficult to guarantee equal rights for all parties in the proceedings For example, disputes relating to the rights of employees or the interests of consumers as in Swedish law The Vietnamese Arbitration Law DraftDraft Law should have provisions similar to those in the Swedish law It does need to list disputes that are not to use arbitration for resolution The draft Law on Arbitration also took a progressive step compared with the OCA(Vie) when the compilers boldly proposed expanding it to cover all types of 38 Two articles were amended by Act no 75-596 of July 1975 http://www.sccinstitute.se/_upload/shared_files/artikelarkiv/report_sekolec.pdf, page 2; Lars Heuman, Arbitration law in Sweden: Practice and Procedure, JP Juris, 2003, p.4 40 Finn Madson, p.109 41 Finn Madson, p.110 39 24 disputes relating to civil rights and obligations 42 This would eliminate situations where an arbitration agreement is considered as null and void agreement or arbitral awards are not recognized in practice because the underlying matter does not relate to commercial activities However, this provision should be contained in general provisions As its content relates to the exclusion jurisdiction of arbitration, it should be placed close to terms on scope One could follow the Chinese Arbitration Law 199443 or the Japanese Arbitration Law in 200344 in this The scope of excluded disputes: Article 17 of the first law draftDraft Law on arbitration45 and article 18 of the second law draftDraft Law on arbitration46 stipulate that the following disputes shall not fall within the arbitration jurisdiction: “1 Personal-right-related disputes including those involved in marriages and families under the provisions of the Civil Procedure Code Administrative disputes that fall within the jurisdiction of relevant administrative agencies” Item of the above provision is necessary because personal rights are connected closely to the individual, and can not be transferred to others The personal rights of each person will be protected in ways that are not similar to those protecting rights in property, including intellectual property rights, which can be transferred in civil transactions It would be difficult to allow the participation of private institutions to act on behalf of state agencies to solve these problems Their resolution is of too much concern to the State Regarding marriage and family matters, Swedish arbitration law does not impose any restriction on using arbitration for resolving disputes However, personal relationships should not be subject to arbitration when resolving disputes Because awards relating to these issues may affect the rights and obligations of a third party, , they should only be settled by the authorities Property relations, such as holding and using joint properties of husband and wife, the disposition of obligations between husband and wife, parents and children could perhaps go to arbitration if the parties request Regarding administrative disputes, as analyzed in Section 3.1, state agencies and independent state are able to take part in arbitration proceedings However, does this apply to only disputes in private domains or even administrative relationships? As above analysis, the equality position between state agencies, even an 42 The law daft on arbitration at http://www.viac.org.vn/vi-VN/Home/sukien/2008/11/220.aspx) http://www.lehmanlaw.com/resource-centre/laws-and-regulations/civil-proceedings/arbitrationlaw-of-the-peoples-republic-of-china-1994.html 44 http://www.jseinc.org/en/laws/new_arbitration_act.html#01 45 It was proposed on June 29, 2008 46 It was proposed in November 2008 43 25 independent state and private parties is affirmed Moreover, in Article of the Ordinance on procedures for resolving administrative cases of 1996, amended and supplemented in 2006, raised a basic principle on resolving administrative disputes: "In the process of resolving an administrative case, the Court should be facilitating the parties to be able to reach agreement on the resolution of the case" However, should this be applied to all administrative disputes? Swedish law does not have any specific regulations restricting arbitration in administrative disputes In practice, according to the guidance of the Swedish Supreme Court, arbitration is only accepted to resolve disputes that concerns measures taken by the state of a commercial or other private law nature Obviously, Sweden does not accept arbitration for resolving purely administrative disputes Some countries have similar stipulations However, there are two ways to provide for this: not prohibiting such disputes as is done in Singapore47 and Japan48 or listing the types of allowed disputes as Thailand does in Section 15 of the Arbitration Act (2002:2545) 49 regulations: “In a contract between a government agency and private party, whether an administrative contract or not, the parties thereto may agree to settle their disputes by arbitration The parties to the contract shall be bound by such arbitration agreement” As Vietnam has changed so in recent years, it should permit the parties in administrative disputes to use arbitration Because of secrecy issues, speed of resolution in administrative disputes is an important element that the parties would appreciate The special rules of the Law on Investment 2005 will remain, i.e disputes between investor and the state authorities in issues relating to an investment may fall under arbitral jurisdiction50 On consumer cases, the 1st Draft provide in Article 16 as follows: “In case of a dispute between an enterprise and a customer over goods, service or any other product supplied for personal consumption purpose, the arbitration agreement shall not be referred to as a proof against the consumer” Thus, under this provision, an arbitration agreement in disputes relating to the consumer will not be valid, and may not be referred to as a proof against the 47 http://statutes.agc.gov.sg/non_version/cgi-bin/cgi_retrieve.pl?actno=REVED-10&doctitle= %20ARBITRATION%20ACT%0a&date=latest&method=part 48 http://www.jseinc.org/en/laws/new_arbitration_act.html 49 http://chanyakomol.com/thailaws/law/t_laws/tlaw0023.htm 50 Article 12 of the 2nd Law DraftDraft Law 26 consumer This may make dispute resolution more complicated The arbitration or court must decide whether it is considered as a proof against the consumer If the consumer still wants arbitration, it is said that it is not against him Moreover, the consumer clause in this Draft only mentions cases where the parties are consumers and enterprises (known as enterprises in the Vietnamese Enterprise Law) It has omitted many other persons, such as business households, cooperatives and the like The 2nd Draft provides for this issue in Article 17 with some changes as follows: "For disputes between businesses and domestic consumers, not under the jurisdiction of international arbitration as defined in Article 13 of this Law, to protect consumers, although arbitration agreements are included as general terms on providing goods and services provided that the supplier composed, but they only apply to the consumer if the consumer, through a separate written agreement, determine that he/she has read and understood the arbitration agreement and agreed to be bound by the agreement that is being written " The second draft has made changes the use of arbitration in disputes concerning consumers The parties to consumer contracts are not only businesses (based on the Vietnamese Business Law), but also others, known collectively as the "supplier of goods or services"51 and consumers In addition, courts or arbitrators no longer have an obligation to prove whether the arbitration agreements are against consumers or not They simply determine whether consumers had a separate written agreement to consider that he/she has read and understood and agreed to be bound by that agreement; The economic position of the parties in the consumer contract, including contracts concerning to the transport of goods or passengers by sea or aviation, is completely different and consumers may be forced into signing a contract, including the arbitration agreement, just because they have read and understand the content of the arbitration agreement Comparing the content of this provision in the Draft with Section of AA(Vie), we can see that Section is better Only when a dispute has arisen can the position of the parties to a consumer contract be equal to each other And at that time, arbitration could indeed be allowed if there is consent between providers and consumers 51 Article 18(2) of the 2nd Law DraftDraft Law 27 Conclusion The number of disputes settled by arbitration is growing not only in developed countries like Sweden, but also in developing countries, like Vietnam The legal framework of arbitration in Vietnam has been improving so as to be compatible with international practice and the laws of other countries However, many provisions of this framework are not so suitable There are many problems relating to arbitration agreements, such as: Only business individuals and organizations have the right to sign an arbitration agreement and only for resolving disputes which may arise or which have arisen from commercial activities; Thethe form of arbitration agreements must be in writing the details being determined in accordance with a listing method Compared with the arbitration law of other countries, especially Sweden - one of the countries which seemsseem to have the best arbitration law - the law on arbitration in Vietnam needs some changes On the parties to am arbitration agreement, the Vietnamese arbitration law should allow state agencies to use arbitration for settling disputes concerning the administrative domain Allowing them to this will contribute to reducing the overload of the courts, while still ensuring them the choice of a method which brings many benefits About the form of the an arbitration agreement, the Draft Law should provide specifically all written forms which are accepted in practice After Vietnam has become a member of the World Trade Organization in 2007, although how regulation towards open as Swedish law on this issue to the quite effective, making the parties in dispute are not bound by how dependent the cases were identified as forms of text by law on Sunday In fact, when disputes occur, the parties just to prove the existence of an arbitration agreement is the legal arbitrators would have incurred their jurisdiction However, in terms of the number of disputes arising in Viet Nam, specially disputes concerning to foreign elements, in recent years appears have been more and more If Vietnam still use article of the OCA(Vie) to cover on the form of arbitration agreement, this will restrict rights to use arbitration for resolving parties’ disputes But if this provision on this issue shall be stipulated similar to Swedish Law, it is difficult for competent authorities to determine existence of an arbitration agreement in practice So, the Draft Law should add some other form to article of the OCA(Vie), such as the forms which are , staff of judges, arbitrators, there are many fewer restrictions on the quantity and quality, and therefore an ability to prescribe the direction is not really appropriate How stipulated in the ordinance as is reasonable in time now However, it is necessary to 28 bring them to prescribe some day form is also seen as a written agreement as cases leading to a reference text can appear arbitration agreement as single campaign by sea, lease ships , The charter established by way of exchange of information in writing; contained in exchanges of statement of claims and defence where the existence of the arbitration agreement is referred to by one party and is not opposed by the other party ; evidenced by way of documents if it is recorded by either party or a third party authorized by the parties to such agreement… Swedish arbitration law does not restrict the scope of an arbitration agreement to disputes concerning commercial activities as does Viet Nam Arbitration should be expanded to cover all disputes, except disputes relating to consumer contracts, transport contracts by sea and aviation This would be entirely reasonable because of equal rights and the freedom of private subjects Therefore, the Draft Law on arbitration in Vietnam should expand the scope of arbitration 29 Table of Statutes and other Legal Instruments International Treaties and Conventions The New York convention on the Recognition and Enforcement of Foreign Arbitral Awards on 10 June 1958 National Legislations Sweden The Swedish Arbitration Act (1999:116) The Swedish Code of Judicial Procedure (1974:371) The Swedish Employee Law (1976:580) Vietnam Constitution (1992) of the Socialist Republic of Vietnam The Civil Code of Vietnam 2005 by the National Assembly of the Socialist Republic of Vietnam The Civil Procedure Code of Vietnam 2004 by the National Assembly of the Socialist Republic of Vietnam The Commercial Code of Vietnam 2005 by the National Assembly of the Socialist Republic of Vietnam The Ordinance on Commercial Arbitration in Viet Nam (2003:08) The Vietnamese Decree 25/2004/NĐ-CP of the Government to stipulate some articles in the Ordinance on Commercial Arbitration in Vietnam dated August 29, 2006 The Vietnamese Resolution 05 of the Judges’ Council of the Supreme People's Court has been adopted in 31 July 2003 The Vietnamese Decree 88/2006/NĐ-CP of the Government to stipulate on business registration dated August 29, 2006 Others The Chinese Arbitration Law 1994 The Japanese Arbitration Law in 2003 The Thailand Arbitration Act in 2002 The Singapore Arbitration Act in 2002 The UNCITRAL Model law on International Commercial Arbitration 1985, with amendments as adopted in 2006 30 Table of Cases Sweden The case No 038/2003 of the SCC on “determining the issue of jurisdiction as a preliminary matter based on the arbitration agreement” Vietnam Truong Sanh Co.Ltd v Mr Kuo Chi Seng on “arbitration agreement in the joint venture contract” The Thu Do II Company Ltd v PT VINDOEXIM Corporation on “authority to sign the arbitration agreement” The Dialasie Vietnam Int’l Hospital v B.Brour Hanoi Pharmacy Company on “challenging the arbitral awrad due to ineffective of the arbitration agreement” 31 Bibliography Unless otherwise stated, all Internet links shown in this bibliography have been assessed on 28 November 2008 Official Reports and other Documents Sweden The Swedish Arbitration Act of 1999, Five Years On: A Critical Review of Strengths and Weaknesses, The UNCITRAL Model Law on Arbitration and the Swedish arbitration Act: a Comparison, Editors: Jernej Sekolec and Nils Eliasson Vietnam Support for Trade Acceleration Project – USAID – Funded project, a commentary on Arbitration Law draftDraft Law, dated in July 21st 2008 Dao Tri Uc, the general overview on Arbitration Law, a report for compiling the Arbitration law in Vietnam in 2008 Monographs In English ICCA, International Handbook on Commercial Arbitration, Kluwer, 2000 Finn Madsen, Commercial Arbitration in Sweden, 3rd edition, Oxford University Press, Oxford, 2007 Lars Heuman, Arbitration Law of Sweden: practice and procedure, Juris Publishing inc., Stockholm, 2003 Ronald R Volkmer, Validity and Scope of Arbitration Provisions, Estate Planning, Sep 2006 David Joshep Q.C, Jurisdiction and arbitration agreements and their enforcement, London, Sweet and Maxwell, 2005 In Vietnamese Do Van Dai and Mai Hong Quy, Vietnamese Private International law, the National University Publisher, Ho Chi Minh city, 2006 Michael Bogdan, Comparative Law, (Kluwer, Norstedts Juridik 1994) in Vietnamese translation by Le Hong Hanh & Duong Thi Hien, (unknown publisher and year) International Trade Center – UNCTAD CNUCED, Arbitration and ADRs, (Geneve, 2001) in Vietnamese translation by VIAC - The Vietnam International Arbitration Center at the Vietnam Chamber of Commerce and Industry 32 Articles in Journals, Anthologies, and others In English Ulf Franke, Introduction to Arbitration, speech at the Introduction to Arbitration seminar held in Stockholm on 13 - 16 June, 2001 Ronald R Volkmer, Validity and scope of arbitration provisions, Estate Planning, sep 2006; 33, 9; ABI/INFORM Global pg 54 BakerMc&McKenzie, International Arbitration in Sweden, at website http://www.bakernet.com/NR/rdonlyres/1698E9C9-6ADA-4420-B142334512CA278B/0/IntlArbitrationSwedenSep06.pdf (dated in September 2006) In Vietnamese Vũ Ánh Dương, Thực tiễn áp dụng Pháp lệnh Trọng tài Thương mại Trung tâm Trọng tài Quốc tế Việt Nam, Legal Science Journal, No 03/2008, pp – 14 Phạm Duy Nghĩa, Góp ý xây dựng Luật Trọng tài, Legal Science Journal, No 03/2008, pp3 -4 Do Van Dai, Giải tranh chấp phương thức trọng tài Việt Nam, Legal Science Journal, No 06/2007 Dao Thien, Lựa chọn trọng tài cho giải tranh chấp thương mại: Doanh nghiệp cần hiểu biết hơn, Vietnamese Business Forum www.dddn.com.vn Nguyen Minh Hang, Giải hợp đồng mua bán quốc tế, at website: http://www.dddn.com.vn/Desktop.aspx/TinTuc/PhapluatKd/Giai_quyet_hop_dong_mua_ban_quoc_te/ Nguyen Ba Bình, Xác định quan có thẩm quyền giải tranh chấp tính hợp pháp việc lựa chọn luật áp dụng hợp đồng dân có yếu tố nước ngồi, Legislation and Rechearch Journal, No.3 2006 Đang Quang, Tranh chấp thương mại: Trọng tài hay Tòa án, at the website http://www.saga.vn/Kynangquanly/Lanhdao/Giaotiep-Damphan/11113.saga (dated in April 05th 2008) 33 ... (2003:08) The Vietnamese Civil Code 2005 The Arbitration Rules of the Arbitration Institution of the Stockholm Chamber of Commerce The Vietnam International Arbitration Center at the Vietnam Chamber... the name of any arbitration council or center in Vietnam, the court should have the authority to settle disputes, unless the parties have agreed on a new specific arbitration council in Vietnam... named by the parties or by ad – hoc arbitration, or by the arbitration council of a specific arbitration center in Vietnam alone, unless the parties agree or have agreed to add the specific name
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