Dispute resolution by Arbitration is increasingly popular for international commercial activities. Vietnam is a party to the 1958 New York Convention on the recognition and enforcement of foreign arbitral awards, therefore, in principle, the arbitral awards from countries that are parties to this Convention will be recognized and enforced in Vietnam.
The recognition and enforcement of foreign arbitral awards are extremely important in the situation that the arbitral judgment debtor has most or all assets in Vietnam. Therefore, understanding the legal framework for the recognition and enforcement of foreign arbitral awards in Vietnam will be useful and create more favorable conditions for the arbitral judgment creditor to recover outstanding debts and assets.
Currently, the statistical analysis on recognition and enforcement of foreign arbitral award in Vietnam has not yet been well conducted by Vietnamese State Bodies. The databases from the Vietnam Ministry of Justice indicate that the number of foreign arbitral awards recognized and enforced in Vietnam is low, and the rate of non-recognition is at a high level compared to that of the world.
I. The right to request recognition and enforcement of foreign arbitral award in Vietnam
In the event that the arbitral judgment debtor is an individual currently residing, working or a legal entity whose address of head office or assets related to enforcement of the award in Vietnam, the arbitral judgment creditor or his/her lawful representative has the right to request the competent court in Vietnam to recognize and enforce that foreign arbitral award.
II. Cases of non-recognition of a foreign arbitral award in Vietnam
Pursuant to the provisions of Article 459 of the Civil Procedure Code 2015:
1. The Court in Vietnam shall not recognize a foreign arbitration award when deeming that the evidence provided by the arbitral judgment debtors for appealing against the request for recognition is well-grounded, lawful, and the arbitration award falls under one of the following cases:
- The parties of the arbitration agreement do not have capacity to conclude such agreement according to law applicable to each party;
- The arbitration agreement is not legally effective according to the law of a country which is chosen to be applied or according to the law of where the award is made in case the parties cannot choose a law to be applied to such agreement;
- The judgment debtors being agencies, organizations and individuals are not promptly and conformably notified of the appointment of arbitrator officer and of procedures for processing the disputes at foreign arbitrator, or due to other plausible reasons, such agencies, organizations and individuals cannot exercise their procedure rights;
- The foreign arbitration award over a dispute is not requested to be settled by any parties or exceeds the request of parties of the arbitration agreement. If it is able to separate the parts of the decision on the matter which are requested and not requested to be settled at foreign arbitrator, the decision on the matter requested to be settled may be recognized and enforced in Vietnam;
- Compositions of foreign arbitrator and/or procedures for settlement of disputes conducted by foreign arbitrator is not conformable to the arbitration agreement or to the law of the country where the foreign arbitrator’s award has been made, in case the arbitration agreement does not provide for such matters;
- The foreign arbitration award has not taken compulsory legal effect on parties;
- The enforcement of the foreign arbitration award has been canceled or terminated by a competent agency of the country where such award is made or the home country of the law that is applied.
2. The foreign arbitration award shall not be recognized when the Vietnam Court considers that:
- According to Vietnam’s law, the dispute shall not be settled according to arbitral procedures;
- The recognition and enforcement of foreign arbitral award in Vietnam are contrary to fundamental principles of law of the Socialist Republic of Vietnam.
III. Scope of the Court’s review
The Vietnam court is not obliged to review the content of the dispute settled by foreign arbitration.
However, in case of non-recognition of the arbitral award, the Vietnam Courts often invoke that “the foreign arbitral award is contrary to the fundamental principles of Vietnamese law”.
That the Courts invoke and explain such principles of Vietnamese law in an inconsistent, unclear and ambiguous way may affect the rights and interests of the arbitral judgment creditor.
IV. Enforcement of foreign arbitral award
A foreign arbitral award that has been recognized and enforced in Vietnam has the same legal effect as a decision or judgment of a Vietnam Court that has taken legal effect. The above judgments will be enforced according to judgment enforcement procedures at Vietnam civil judgment enforcement departments.
In addition, the State of Vietnam ensures the transfer of money and assets recovered to the judgment creditors after the foreign arbitral judgments have been recognized and enforced in Vietnam.
Should Clients need further information on this issue in Vietnam, feel free to contact ALB & Partners Law Firm. With a team of experienced lawyers, some of whom are former judges and arbitrators, we are recognized and appreciated by Clients as one of the leading law firms in the field of arbitration in Vietnam.