In today’s globalized economy, resolving disputes through foreign arbitration is a widely adopted practice by many countries, including Vietnam. Recognizing and enforcing foreign arbitral awards play a critical role in fostering a stable, safe, and fair business environment. Vietnam’s legal framework, outlined in the 2015 Civil Procedure Code, supports the resolution of cross-border commercial disputes with efficiency and transparency.
1. What is a foreign arbitral award?
According to Clause 12, Article 3 of the 2010 Law on Commercial Arbitration, a foreign arbitral award refers to a decision issued by a foreign arbitration tribunal either:
- Outside Vietnam’s territory, or
- Within Vietnam, if agreed upon by the disputing parties.
2. When is it necessary to apply for recognition and enforcement of an arbitral award?
The recognition and enforcement of foreign arbitral awards in Vietnam are necessary when the award creditor or their legal representative files a request with the Vietnamese court.
Under Article 425 of the 2015 Civil Procedure Code, recognition and enforcement apply if:
- The award debtor resides or works in Vietnam.
- The organization or agency involved has its headquarters in Vietnam.
- Assets related to the enforcement are located in Vietnam.
Additionally, the award debtor or their representative may request non-recognition of the foreign award under specific conditions.
3. When are foreign arbitral awards recognized and enforced in Vietnam?
Pursuant to Article 424 of the 2015 Civil Procedure Code, foreign arbitral awards are recognized and enforced in Vietnam in two cases:
- International Treaties: Both Vietnam and the country of the award are signatories to an international treaty, such as the New York Convention.
- Reciprocity Principle: The award is recognized under reciprocal agreements between Vietnam and the foreign nation.
4. Cases where foreign arbitral awards are not recognized
Under Article 459 of the 2015 Civil Procedure Code, foreign arbitral awards may not be recognized or enforced in Vietnam in the following situations:
- Lack of Legal Capacity: Parties involved lacked legal capacity under applicable law.
- Invalid arbitration agreement: The agreement was invalid per the chosen or relevant laws.
- Procedural violations: One party was not properly notified about arbitration proceedings or could not exercise procedural rights due to legitimate reasons.
- Exceeding jurisdiction: The award ruled on matters outside the arbitration agreement’s scope.
- Non-compliance with procedures: Tribunal composition or procedures violated the agreed terms or relevant laws.
- Non-binding award: The award is not legally binding.
- Award nullified or suspended: The award was annulled or suspended by a competent authority.
- Non-arbitrable dispute: The dispute type is not arbitrable under Vietnamese law.
- Violation of fundamental legal principles: The award contravenes fundamental principles of Vietnamese law.
5. Vietnam’s alignment with the New York Convention
As a signatory to the New York Convention, Vietnam’s legal provisions align closely with the Convention’s rules. However, while the New York Convention considers “public policy” as grounds for non-recognition, Vietnam emphasizes “fundamental principles of Vietnamese law.”
Resolution 01/2014 by the Supreme People’s Court of Vietnam interprets this as core principles that shape the creation and application of Vietnamese law. Courts may annul awards that seriously violate these principles, affecting state interests or the legitimate rights of parties.
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