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1 ASIAN DISPUTE REVIEW OCTOBER 2014 pp Asian Dispute Review Since 1999 October 2014 SPONSORED BY HONG KONG INTERNATIONAL ARBITRATION CENTRE HONG KONG INSTITUTE OF ARBITRATORS CHARTERED INSTITUTE OF ARBITRATORS (EAST ASIA BRANCH) HONG KONG MEDIATION COUNCIL
2 CONTENTS October 2014 Romesh Weeramantry Peter Caldwell (Editorial Board Chairman) ( International Arbitration Centre) Chiann Bao ( International Arbitration Centre) Paul Barrett (Chartered Institute of Arbitrators, East Asia Branch) YK Chan John Choong Khong Cheng Yee Kanice Chan (Chartered Institute of Arbitrators, East Asia Branch) Julian Stargardt ( Mediation Council) Mary Thomson Christopher To Paul Varty Samuel Wong ( Institute of Arbitrators) Michal áp John Choong (A division of Reed Elsevier (Greater China) Ltd) 3901, Hopewell Centre, 183 Queen s Road East, Tel: (852) Fax: (852) Robert Morgan 159 EDITORIAL FIFTEENTH ANNIVERSARY EDITORIAL Asian Dispute Review Robert Morgan ARBITRATION & ADR IN ASIA The Hon Yves Fortier PC CC OQ QC & Olga Boltenko Blue Bank Dr Sam Luttrell Stephen Wong & Alfred Wu 199 Des Voeux Road, Sheung Wan, Tel: (852) Fax: (852) enquiries@ninehillsmedia.com Bruce Andrews bruce@ninehillsmedia.com Portia Le Tel: (852) Abid Shaikh abid@ninehillsmedia.com Jennifer Luk jennifer@ninehillsmedia.com Phan Trong Dat Vincent Connor & Mohammed Talib Anthony Houghton SC FirstLink 38/F, Two Exchange Square, 8 Connaught Place, Central, Tel: (852) Asian Dispute Review is sponsored by: International Arbitration Centre Chartered Institute of Arbitrators, East Asia Branch Institute of Arbitrators Mediation Council Circulation: 7,500 copies Cover image: RPMGsas All enquiries relating to Asian Dispute Review should be directed to Bruce Andrews (adr-editor@ninehillsmedia.com) Copyright in all material published in the Asian Dispute Review is retained by the may be reproduced or transmitted in any form or by any means, including recording and photocopying without the written permission of HKIAC, application for which should be addressed to HKIAC. Written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature. The journal does not accept liability for any views, opinions, or advice given in the journal. James Rogers & Matthew Townsend Gary B Born Pierre A Karrer EVENTS
3 EDITORIAL This issue marks the 15th anniversary of the publication of the Asian Dispute Review Robert Morgan The Hon Yves Fortier PC CC OQ QC Olga Boltenko Dr Sam Luttrell Stephen Wong article on arbitrations in China Phan Trong Dat Vincent Connor Mohammed Talib Anthony Houghton SC Our Case Notes section features the Singapore High Court FirstLink International Commercial Arbitration, Introduction to International Arbitration Practice the publication of this anniversary issue of the Review Review has CONTRIBUTORS Olga Boltenko Arbitral Clerk to Neil Kaplan CBE QC SBS Phan Trong Dat Vietnam International Arbitration Centre Vietnam Asian Dispute Review James Rogers Norton Rose Fulbright Vincent Connor Pinsent Masons Mohammed Talib Pinsent Masons The Hon Yves Fortier PC CC OQ QC Cabinet Yves Fortier Matthew Townsend Norton Rose Fulbright Beijing Anthony Houghton SC Des Voeux Chambers Stephen Wong Haibu Attorneys-at-law Shenzhen Dr Sam Luttrell Clifford Chance Alfred Wu Fried Frank Harris Shriver & Jacobson Robert Morgan Barrister (England & Wales, Queensland) Special Counsel, WunschArb, Fribourg and Beijing 159
4 Introduction Since the coming into force of the Law on Commercial Arbitration of Vietnam 2010 (No 54/2010/QH12) (LCA) 1 on 1 January 2011, two legal instruments guiding its implementation have been enacted. 2 These are (i) Decree No 63/2011/ND- CP, dated 28 July 2011 (the Decree), which took effect on 20 September 2011, 3 and (ii) Resolution No 01/2014/NQ-HDTP (Guidelines for the Law on Commercial Arbitration (LCA)) of the Justices Council of the Supreme People s Court (the Resolution), which took effect on 2 July Positive court support for the law of arbitration in Vietnam Arbitration has always had a close relationship with the local courts. The Resolution demonstrates both continuing and increased judicial support for the law of arbitration in Vietnam. It contains 19 articles and 8 forms which govern and guide various issues at the court-arbitration interface. The following discussion focuses selectively on two significant aspects of the Resolution: (i) its pro-arbitration provisions, and (ii) notable new provisions. The LCA and the Resolution govern domestic arbitral proceedings in Vietnam. 5 The recognition and enforcement of foreign arbitral awards in Vietnam is governed by the Vietnam Civil Procedure Code (CPC) (as amended and supplemented in 2011) 6 and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, of which Vietnam has been a Contracting State since Pro-arbitration provisions court-arbitration agreement Whilst art 43.5 of the LCA is considered to be a progressive provision of that legislation, the Resolution takes its scope a further step forward. 7 Article 43.5 of the LCA unties defective arbitration agreements by providing that where parties have 186
5 agreed to arbitration to settle their disputes but have not specified the applicable arbitration form or a specific arbitral institution and cannot agree on this matter, the claimant may apply to the court for an order in this regard. Statistics held by the Vietnam International Arbitration Centre (VIAC) show that claimants have resorted to art 43.5 in more than 10 cases. Some highly practical provisions in art 7.3 on the transfer of rights and obligations arising from transactions or contracts deal thoroughly with issues arising out of subrogation in disputes related to (inter alia) insurance and carriage of goods by sea. Notable new provisions With regard to the jurisdiction of the court, the Resolution provides that if the place where the arbitral tribunal makes a decision or arbitral award is overseas, the competent court shall be either (i) the court where the respondent is resident or locates its head office, if in Vietnam, or (ii) the court where the claimant is resident or locates its head office, if the respondent is resident or locates its head office overseas. 11 When the previous Ordinance on Commercial Arbitration 2003 (the Ordinance) was in force, arbitration agreements were invalid if the arbitration agreement fails to specify or specifies unclearly the disputed objects, or the arbitration institution competent to settle the dispute, but later the involved parties have no additional agreement. 8 This provision had been a common legal ground for setting aside most arbitral awards in Vietnam. Article 43.5 of the LCA has eliminated this ground. 9 The Resolution goes further by dealing with cases where parties have both an agreement to arbitrate and an agreement to litigate; in such parallel agreement cases, the Resolution refers the parties to arbitration. Guidance on invalid arbitration agreement Although the Resolution still follows the principle that an arbitration agreement entered into by a signatory who has no authority to sign is invalid, it supplements this guidance by stating that where the arbitration agreement was entered into by a signatory without authority to sign but, during the signing and implementation of the arbitration agreement or during the arbitral proceedings, the person with authority to conclude the arbitration agreement has accepted such an agreement or, despite knowing, has not objected to such agreement, the arbitration agreement is not invalid. 10 Moreover, the courts of Vietnam shall have jurisdiction to support almost all foreign arbitration proceedings, except with regard to (i) requests to set aside foreign arbitral awards, and (ii) registration of foreign ad hoc arbitral awards. 12 Loss of right to object Article 6 of the Resolution amplifies the provisions on loss of the right to object stipulated in art 13 of the LCA. The Supreme People s Court takes the view that objections must be made before an arbitral award is made, failing which a party loses its right to object. The objecting party is not permitted to complain about decisions of the arbitral tribunal or request the setting aside of its award on the ground of procedural violations in respect of which the right to object has been waived. There is, however, an important exception, in that the court has an independent right to examine, of its own accord, whether or not an award is contrary to the fundamental principles of the law of Vietnam (discussed below), even where parties have lost their right to object. In practice, this approach in fact predates the Resolution. A decision of the Ho Chi Minh City Court rendered in July 2011, long before the Resolution was enacted, applied the approach of the Resolution in rejecting a request to set aside an arbitral award under art 13 of the LCA. [2014] Asian Dispute Review 187
6 Decision on the jurisdiction of the arbitral tribunal Article 44.1 of the LCA has generated debate among practitioners as to whether or not the arbitral tribunal must render a separate decision on its jurisdiction. This is dealt with in art of the Resolution, which provides that where a separate decision on jurisdiction is not issued, the petitioner must provide documents and evidence proving that the tribunal has no jurisdiction to determine the dispute. By empowering the tribunal to determine matters of jurisdiction, the arbitration law of Vietnam has been made more compatible with international arbitration law and practice. Where, however, the arbitral tribunal does not issue a separate decision on its jurisdiction in writing, how can the objecting party complain? The answer is given in Form No 03 enclosed with the Resolution. This requires a party to provide documents or evidence in order to prove that the tribunal has made a decision on the validity or capability of performance of the arbitration agreement or on the tribunal s jurisdiction. 14 with by the courts demonstrate that a violation must be obviously serious, and show the degree of seriousness, in order to constitute a ground for setting aside an arbitral award. In the first case, the respondent did not properly receive the request for arbitration. In the second, an arbitral award was made by a sole arbitrator in accordance with the applicable law of Vietnam, whereas the parties had agreed that the tribunal should comprise three arbitrators and that the applicable law should be that of Singapore. Other types of error or violation which are not as serious as those illustrated above will not, by contrast, be considered to constitute serious procedural errors or violations and will therefore not provide grounds for setting aside awards. Moreover, even where a serious procedural error or violation is demonstrated, it shall first be corrected by the arbitral tribunal, as the pro-arbitration provisions stipulate. Only where the tribunal cannot correct a violation will the court set aside an award. In another recent case, Ho Chi Minh City Court applied art 71 of the LCA to order a VIAC arbitral tribunal to correct a procedural error, which the tribunal duly did in July Fundamental principles of the law of Vietnam The concept of fundamental principles of the law of Vietnam is referred to in the Resolution as basic principles on conduct, of which effects are most overriding in respect of the development and implementation of Vietnamese law. 17 The Resolution provides that Consolidation of disputes Disputes may be consolidated either where (i) the parties agree to consolidate separate disputes for resolution in one proceeding, or (ii) arbitration rules provide for this. 15 In the light of (ii), arbitration institutions in Vietnam will certainly have to amend and supplement their arbitration rules accordingly. Serious procedural violations as a ground for setting aside arbitral awards Two recent examples of serious procedural violation 16 dealt 188
7 the Court shall set aside an arbitral award only after pointing out that the award has a content which is contrary to one or more fundamental principles of Vietnamese law not observed by the Tribunal in making the arbitral award; and the arbitral award seriously violates the interests of the State, the legitimate rights and interests of a party or the parties or the third party. It goes on to give an example of where an arbitral award is contrary to fundamental principles of the law of Vietnam: [...] In this case, the arbitral award violates the principle of free and voluntary agreement in the field of commerce as stipulated in Article 11 of the Commercial Law and Article 4 of the Civil Code). 18 The effect of the Resolution is to (i) clarify the application of the fundamental principles of the law of Vietnam, and (ii) require the court to identify specifically which provision(s) concerning fundamental pri nciples it applies as a ground for setting aside an arbitral award. Demerits of the Resolution There is only one drawback of the Resolution, from the author s own perspective. Where the Court has dealt with complaints concerning decisions of the arbitral tribunal (on (i) the existence of arbitration agreement, (ii) whether the arbitration agreement is void or incapable of being performed, and (iii) the tribunal s jurisdiction 19 ), it shall not consider these grounds when determining a request to set aside arbitral awards. Unfortunately, art 15.1 of the Resolution provides for overlapping decision-making by the court. Conclusion As a country that is still developing in every respect, including as to law reform, it can be said that Vietnam has made a rapid advance towards world standards and practice by virtue of its arbitration law. The LCA plays a significant part in the development of commercial activities and commercial dispute settlement between foreign individuals or organisations doing business in Vietnam and Vietnamese individuals or organisations. It is hoped that dispute settlement by arbitration in Vietnam will increase in volume in the short term to ensure justice and equality between disputing parties. adr 1 Editorial note: For critical commentaries on the LCA, see Dinesh Raj Shiwakoti, A Review of Vietnam s Law No 54 on Commercial Arbitration [2014] Asian DR 60; Tam Shu Ching & Gregory Crovo, The New Law on Commercial Arbitration in Vietnam: Some Positive Changes in Theory and How It Can Work Out in Practice publication/pb4d64adddc/the-new-law-on-commercial-arbitration-invietnam-some-positive-changes-in-theory-and-how-it-can-work-out-inpractice. For an English language translation, see US/Document/Download.aspx?DocumentID=12. 2 Editorial note: Translations of provisions in these instruments are those 3 By virtue of art 1 (scope of application), the Decree guides the implementation of certain provisions of the LCA on state controls over arbitration, providing principally for the establishment, registration, operation and termination of arbitration centres. 4 Article 1 of the Resolution (scope of application) provides for the implementation of certain provisions of the LCA on the powers and procedures of the courts over arbitration and the registration of ad hoc arbitral awards. 5 Except for art 5.5 of the Resolution on determining the Court s jurisdiction over foreign arbitration in Vietnam (discussed below). 6 Chapter XXIX, Part VI of the CPC. 7 Article 2.4 of the Resolution. 8 Articles 10.4 and 54.2 of the Ordinance. 9 It should, however, be noted that the Ordinance still governs the legitimacy and validity of arbitration agreements made between 1 July 2003 and 31 December 2010: art 18 of the Resolution. 10 Article 3 of the Resolution. 11 Ibid, art 5.4.c. 12 Ibid, art Ibid, art 10, on the resolution of objections to decisions of the arbitral tribunal as to the existence of the arbitration agreement, whether the arbitration agreement is void or incapable of being performed, and the tribunal s jurisdiction, per art 44 of the LCA. 14 Guidance (9) on the use of Form No Ibid, art Ibid, art 14.2.b. 17 Ibid, art 14.2.dd. 18 Editorial note: see Vietnam Business Law Blog, Further Guidance on Fundamental Principles of Vietnamese Law 19 Ibid, art 10. [2014] Asian Dispute Review 189
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