I. INTRODUCTION
In the context of deep international economic integration, international commercial arbitration has increasingly become a preferred dispute resolution mechanism for businesses due to its flexibility, confidentiality, and cross-border enforceability. Vietnam is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter referred to as the New York Convention), demonstrating its strong commitment to respecting and enforcing international arbitral awards.
However, in practice, a significant number of foreign arbitral awards have been refused recognition and enforcement by Vietnamese courts. This reality raises serious concerns regarding the compatibility of Vietnamese law with international standards, as well as the degree of arbitration-friendliness of Vietnam’s legal environment.
This article analyzes the legal grounds and principal reasons leading to the refusal of recognition of foreign arbitral awards in Vietnam, thereby offering several observations and recommendations for improvement.
II. LEGAL FRAMEWORK GOVERNING THE RECOGNITION OF FOREIGN ARBITRAL AWARDS
1. The 1958 New York Convention
Pursuant to Article V of the New York Convention, recognition and enforcement of a foreign arbitral award may be refused only on limited grounds, including:
- The arbitration agreement is invalid;
- A party was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings;
- The award deals with matters beyond the scope of the arbitration agreement;
- The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the parties’ agreement;
- The award has not yet become binding;
- Recognition or enforcement would be contrary to the public policy of the enforcing State.
2. Vietnamese Law
In Vietnam, the recognition and enforcement of foreign arbitral awards are primarily governed by:
- The 2015 Civil Procedure Code (Chapter XXXVII);
- The 2010 Law on Commercial Arbitration.
Under Article 459 of the 2015 Civil Procedure Code, Vietnamese courts may refuse recognition of a foreign arbitral award if it falls within one of the prescribed grounds, which are generally consistent with Article V of the New York Convention.
III. MAIN REASONS FOR THE REFUSAL OF RECOGNITION
1. Arbitration Agreement Deemed Invalid or Unclear
One of the most common reasons for refusal is that the arbitration agreement fails to meet the validity requirements under Vietnamese law.
According to Article 18 of the 2010 Law on Commercial Arbitration, an arbitration agreement is invalid if:
- The signatory lacks the authority to enter into the agreement;
- The dispute does not fall within the jurisdiction of arbitration;
- The form of the arbitration agreement does not comply with statutory requirements.
In practice, Vietnamese courts often adopt a strict interpretation of formal requirements and signing authority, leading to the invalidation of arbitration agreements and, consequently, the refusal to recognize the arbitral awards.
2. Violation of Fundamental Procedural Rights
Pursuant to Point b, Clause 1, Article 459 of the 2015 Civil Procedure Code, recognition of a foreign arbitral award may be refused if:
“The party against whom enforcement is sought was not duly and timely notified of the appointment of the arbitrator or of the dispute resolution proceedings.”
In reality, recognition has been denied in several cases due to:
- Procedural notices being served through methods not accepted by Vietnamese courts;
- The losing party alleging that it was not given a full and fair opportunity to present its case.
The Vietnamese courts’ stringent assessment of what constitutes “proper notice” sometimes exceeds the flexible spirit of the New York Convention.
3. Awards Exceeding the Scope of the Arbitration Agreement
Under Point c, Clause 1, Article 459 of the 2015 Civil Procedure Code, a court may refuse recognition if the award:
“Resolves disputes beyond the scope of the arbitration agreement.”
Some Vietnamese courts tend to review the substantive content of arbitral awards to determine the tribunal’s jurisdiction, thereby risking undue interference with the merits of the dispute—an approach generally discouraged under international arbitration practice.
4. Violation of Vietnam’s Public Policy
This is the most controversial ground for refusal.
According to Clause 2, Article 459 of the 2015 Civil Procedure Code, Vietnamese courts may refuse recognition if:
“The recognition and enforcement of the award would be contrary to the fundamental principles of Vietnamese law.”
In practice, the concept of “fundamental principles of Vietnamese law” has been broadly interpreted to include:
- The principles of voluntariness and good faith;
- The principle of equality;
- Protection of public interests and State interests.
Such broad interpretation grants courts considerable discretion to refuse recognition, thereby reducing the predictability of the legal system.
5. Judicial Caution in Adjudication
Beyond legal grounds, an important non-legal factor is the cautious (and sometimes reluctant) attitude of Vietnamese courts toward foreign arbitral awards. This stems from:
- Concerns over judicial sovereignty;
- Uneven understanding of international arbitration;
- The absence of consistent and guiding precedents
IV. OBSERVATIONS AND RECOMMENDATIONS
First, although Vietnamese legislation is formally aligned with the New York Convention, its practical application remains inconsistent with the Convention’s arbitration-friendly spirit.
Second, the concept of “fundamental principles of Vietnamese law” should be interpreted narrowly, in closer alignment with the notion of “international public policy.”
Third, it is necessary to strengthen:
- Uniform judicial guidance on the application of law;
- Specialized training for judges in international arbitration;
- The development of case law on the recognition and enforcement of foreign arbitral awards.
V. CONCLUSION
The refusal to recognize foreign arbitral awards in Vietnam results from both legal provisions and judicial practice. Strict interpretations of arbitration agreements, procedural rights, jurisdictional scope, and particularly the concept of public policy constitute significant barriers.
As Vietnam continues to deepen its international economic integration, improving the legal framework and adopting a more arbitration-supportive judicial mindset is essential. Such efforts will enhance foreign investor confidence and contribute to a stable, transparent, and predictable legal environment.
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