It has been said that: “[a]s Vietnam solidifies its position as a highly attractive destination for investment, it is expected that the inflow of investments would be even greater, and with it, an increasing demand for international arbitration as a means of dispute resolution”(Asian International Arbitration Journal, Volume 18 Issue 1, L Chen & Nguyen S V, Rising Giants: Charting the Growth of Arbitration in Vietnam and China).
Of the arbitral institutions commonly used in disputes with a Vietnamese nexus, the International Chamber of Commerce (ICC), Singapore International Arbitration Centre (SIAC), and Vietnam International Arbitration Centre (VIAC) are the most prominent. No doubt sophisticated parties will consider the differences between the arbitral rules before deciding on the most suitable one for each transaction.
We take a closer look at the VIAC Rules in this article. The current VIAC Rules were released in February 2017, and introduced new provisions on consolidation and expedited procedure. 2023 is an apt time to rethink the 2017 Rules. Of which, three aspects may merit a rethink.
Expedited procedure
Article 37 of the 2017 Rules provides for the application of an expedited arbitration procedure, where the parties have agreed to it. The procedure includes the appointment of a sole arbitrator, the potential for the shortening of time limits laid down in the 2017 Rules and for the holding of remote hearings. When the 2017 Rules were introduced, VIAC stated that article 37 was to help parties control the time and costs of the arbitration and keep up with the best international practices.
We think article 37 may be improved in two ways.
First, article 37(1) provides that the expedited procedure applies only if parties agree. In practice, if parties can agree to expedite the conduct of the arbitration, they already can do so with a shorter timeline in an agreed procedural timetable. Thus the arbitration can be expedited without resorting to article 37.
We suggest that article 37 be amended to set out certain objective criteria, for example, by reference to the amount in dispute, which, if met, would allow one party to make an application to use the expedited procedure, without requiring the agreement of the other parties, and that VIAC shall retain the ultimate discretion whether to apply the expedited procedure. Parties should retain the right to exclude the application of the expedited procedure but they should be required to expressly opt out in advance of the relevant dispute arising, for example in their arbitration agreement. By setting out the objective criteria in the rules, there will be commercial certainty for the parties and this will encourage parties to consider VIAC over litigation in appropriate cases. This may also assist VIAC in efficient case administration because if the criteria for the application of the expedited procedure are not met in a particular case, a party (properly advised by counsel) is unlikely to waste VIAC’s time and resources by filing an application for expedited procedure.
Second, article 37 should include a deadline for the tribunal to render the final award (albeit with the option for VIAC to extend this time limit in exceptional circumstances at the request of the tribunal). For example, a final award must be rendered within nine months from the tribunal’s constitution. VIAC previously explained that they did not prescribe a time limit for the expedited procedure as their case experience indicated that disputes were resolved relatively quickly. However, our experience is that parties often want to know how long a dispute will take to be resolved. Having a clear timeline gives parties the certainty and confidence in choosing VIAC over litigation in appropriate cases.
Emergency arbitrator
None of the domestic arbitral institutions in Vietnam have provisions on emergency arbitrators. This is also the case for VIAC.
We think VIAC Rules should include emergency arbitrator provisions for two reasons.
First, this ensures that parties have a one-stop dispute resolution forum when they choose VIAC arbitration over litigation. This reinforces parties’ autonomy of choice. Parties will not need to seek national courts’ assistance for interim relief while the tribunal is being constituted. While there may be instances where seeking interim relief from the national courts is more appropriate, providing for emergency arbitrators in the VIAC Rules does not preclude that.
Second, as compared to a national court judgment, parties arguably may find it easier to enforce a VIAC award issued by an emergency arbitrator in certain other jurisdictions such as Singapore and Hong Kong. As an example, in the recent Singapore case of CVG v CVH [2022] SGHC 249, the Singapore court confirmed that a foreign award by an emergency arbitrator is enforceable in Singapore. It held that an award by an emergency arbitrator is a “foreign award” under the Singapore International Arbitration Act. In other words, a Singapore court is likely to enforce, with minimal judicial scrutiny, a VIAC award by an emergency arbitrator against the award debtor’s assets in Singapore, for example, bank accounts. That said, this will not be the case everywhere. An award from an emergency arbitrator is not a final award and, as such, is not enforceable under the New York Convention, meaning their enforcement will turn on the specific provisions of national legislation.
Joinder
The 2017 Rules contain provisions on disputes in relation to multiple contracts (article 6) and the consolidation of arbitrations (article 15). However, there are no provisions for the joinder of third parties.
We think the VIAC Rules should include new provisions on joinder where the third party is prima facie bound by the arbitration agreement or where all parties agree to the third party being joined.
A joinder mechanism reduces the likelihood of parallel proceedings and the possibility of inconsistent decisions for the same case. It also increases the efficacy of the final award because all the relevant parties are bound by the same award. In cases where the additional party has evidence that is crucial to the dispute and is willing to be party to the arbitration, joinder offers a direct solution without parties having to begin satellite proceedings.
In the event VIAC includes new provisions on joinder, we suggest that VIAC may consider including specific guidelines for a joinder application. Having clear guidelines enables VIAC and tribunals to be more effective in deciding unmeritorious joinder applications. It also gives certainty to parties in a VIAC arbitration. For example, these guidelines may include a requirement to provide a brief statement of facts and a statement of the legal basis supporting the joinder application.
In conclusion, our proposed changes will bring VIAC Rules up to date with the best practices in the international arbitration community. We believe these changes will help to improve parties’ experience. They will also reflect VIAC’s focus on continued improvement which started with the release of VIAC Rules 2017 six years ago.
