Commercial activities conducted for the purpose of profit-making, including buying and selling of goods, providing services, investing, promoting trade, and other activities for profit-making purposes. Commercial dispute means conflicts and disagreements over rights and obligations between parties in the process of carrying out commercial activities. In this article, LSX legal firm will give you an insight into: “Causes of business and commercial disputes in Vietnam”
Legal grounds
- Law on Commercial Arbitration 2010
- Civil Procedure Code 2015
- Law on Commercial 2005
Causes of business and commercial disputes in Vietnam
Features of commercial disputes:
- Conflicts between the parties in a specific relationship over their rights and obligations.
- Commercial activities result in conflicts of rights and obligations between the parties.
- Commercial disputes are typically between traders.
Commercial business disputes may come from:
- Profit Conflict: The purpose of business is profit. However, some individuals and organizations break the contract for the sake of profit, resulting in a breach of contract. They can sell their credibility for a profit, willing to deceive, cheat customers…. cause harm to the partner, resulting in a dispute.
- Disagreements arise as a result of differences in business practices.
- The law still has some gaps that prevent it from covering all of the relationships that occur. Changes in the law, embargoes, wars, and so on, all have an impact on contract performance. Despite the fact that these are force majeure cases, the damage caused and the settlement of those damages are the source of disagreements between the parties.
- Businesses’ lack of legal knowledge also leads to contract disputes.
Forms of commercial dispute settlement
3 forms of commercial dispute settlement specified in Article 317 of the Commercial Law 2005:
- Negotiations between the parties.
- Conciliation between the parties by a body, organization, or individual selected by the parties to act as the conciliation mediator.
- Resolution by the Arbitration or the Court.
Negotiations between the parties
Negotiation defined as a method of dispute resolution in which the parties voluntarily discuss, agree, self-settle, and resolve arising disagreements in order to eliminate disputes together without the assistance or judgment of a third party.
The parties’ negotiation process is not based on or bound by any legal regulations governing the order and procedures for settlement.
Without any legal mechanism to ensure the enforcement of the parties’ agreement during the negotiation process, the outcome of the negotiation is entirely dependent on the voluntariness of each disputing party.
Conciliation between the parties
Conciliation between the parties by a body, organization, or individual selected by the parties to act as the conciliation mediator.
Pursuant to Clause 1, Article 3 of Decree 22/2017/ND-CP, Commercial mediation means a method of resolving commercial disputes agreed upon by involved parties with the assistance of a commercial mediator acting as an intermediary in accordance with this Decree.
Decree 22/2017/ND-CP stipulates that conciliation must be based on the following principles:
- Disputing parties shall participate in mediation on an entirely voluntary basis and are equal in terms of rights and obligations.
- Information relating to a mediation case shall be kept confidential unless otherwise agreed upon in writing by involved parties or otherwise prescribed by law.
- Mediation agreement contents must neither violate prohibitory provisions of law nor contravene social morality, nor aim at shirking obligations nor infringe upon the rights of a third party.
Besides, a dispute shall be resolved through commercial mediation if the involved parties so agree. The parties may reach an agreement on dispute resolution through mediation before or after a dispute arises or at any time in the process of dispute resolution.
Resolution by the Commercial Arbitration
Clause 1, Article 3 of the Law on Commercial Arbitration 2010 stipulates that Commercial arbitration means a mode of dispute settlement agreed upon by the parties to conducted under this Law.
According to Article 4 of the Law on Commercial Arbitration 2010, the principles of dispute settlement by arbitration include:
- Arbitrators must respect the parties’ agreement if such agreement neither breaches prohibitions nor contravenes social ethics.
- Arbitrators must be independent, objective, and impartial and shall observe the law.
- Disputing parties are equal in their rights and obligations. The arbitration council shall create conditions for disputing parties to exercise their rights and fulfill their obligations.
- Dispute settlement by arbitration shall be conducted in private, unless otherwise agreed by the parties.
- Arbitral awards are final.
Conditions for dispute settlement by arbitration:
- A dispute settled by arbitration if the parties have an arbitration agreement. An arbitration agreement may be made either before or after a dispute arises.
- When one of the parties being an individual to an arbitration agreement dies or loses his/her act capacity, such arbitration agreement remains valid for his/her heir or representative at law unless otherwise agreed by the parties.
- When one of the parties being an institution to an arbitration agreement has to terminate its operation, goes bankrupt, or is dissolved, consolidated, merged, divided, split up, or reorganized, such arbitration agreement remains valid for an institution that takes over the rights and obligations of the institution to such arbitration agreement, unless otherwise agreed by the parties.
Disputes settled by Court
According to Chapter II of the Civil Procedure Code 2015, principles of dispute settlement by the Court include:
- Compliance with laws in civil procedures.
- Right to request Courts to protect legitimate rights and interests.
- Involved parties’ right to decision-making and self-determination.
- Supply of evidences and proof in civil procedures.
- Responsibility of competent individuals, agencies, and organizations to supply materials and evidences.
- Equality in rights and obligations in civil procedures.
- Ensuring the involved parties’ right to protect legitimate rights and interests.
- Mediation in civil procedures.
- Participation of People’s Jurors in the adjudication of civil lawsuits.
- Judges, People’s Jurors are independent in the adjudication of civil lawsuits and settlement of civil matters and only comply with the law.
- Responsibilities of civil proceeding authorities and proceeding officers.
- Collective trials by Courts.
- Prompt, equal, and public trials by Courts.
- Ensuring impartiality and objectiveness in civil procedures.
- Following the two-level adjudication regime.
- Assurance of the effect of Courts’ judgments and decisions.
- Assurance of oral argument in adjudication.
Business and/or trade disputes falling under the courts’ jurisdiction
1. Disputes arising from business or trade activities among individuals and/or organizations with business registration, which are all for the purpose of profits.
2. Disputes over intellectual property rights or technology transfers among individuals or organizations, which are all for the purposes of profits.
3. Disputes between persons not members of a company but involved in a transaction in the transfer of capital holding and the company and/or its members.
4. Disputes between a company and its members; disputes between a limited liability company and its manager or between a joint-stock company and members of its Board of Directors, its Director or its General Director, or among members of a company regarding the establishment, operation, dissolution, merger, consolidation, total division, partial division, property transfer and/or organizational transformation of the company.
5. Other civil disputes relating to business or trade activities, except for cases within the jurisdiction of other agencies and organizations as prescribed by law.
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Frequently asked questions
Depending on the nature, seriousness, and consequences of violations, violating organizations and individuals shall be handled in one of the following forms:
a/ Sanctions according to the provisions of the law on handling administrative violations;
b/ Where an act of violation involves all elements constituting a crime, the violator shall be examined for penal liability according to the provisions of law.
Where an act of violation causes harm to the interests of the State or legitimate rights and interests of organizations and/or individuals, compensation must be paid according to the provisions of law.
Firstly, disputes arising from commercial activities.
Secondly, disputes between parties at least one of them is engaged in commercial activities.
Thirdly, other disputes which are prescribed by law to be resolved through commercial mediation.
Conclusion: So the above is Business and commercial disputes in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
