Question:
I am the owner of a business in Hanoi and am considering resolving a dispute through arbitration. Could the Center please clarify the legal status of arbitral awards issued by VTIAC? Are such awards enforceable, and what happens if the losing party refuses to comply?
Answer:
When parties choose to resolve disputes at VTIAC, one of the key concerns is the legal validity and enforceability of the arbitral award. Below are the essential points businesses should be aware of:
1. Arbitral awards are final and legally binding upon issuance
An arbitral award is final (non-appealable) and takes legal effect from the moment it is rendered. This means:
- Once the arbitral tribunal has issued its decision, the parties are no longer entitled to bring the same dispute before a court, provided the dispute and parties remain the same. However, the court retains jurisdiction to set aside an arbitral award upon request by a party, based on specific legal grounds.
- The dispute is considered conclusively resolved, avoiding the lengthy multi-tiered procedures of the court system.
2. Arbitral awards may be enforced through compulsory execution
While arbitral awards are expected to be voluntarily complied with, in practice, the losing party does not always fulfill their obligations as ordered in the award.
To protect legitimate rights and interests, the prevailing party has the right to request the competent civil judgment enforcement authority to enforce the arbitral award, subject to certain conditions.
According to Article 66 of the 2010 Law on Commercial Arbitration of Vietnam:
- If the time limit for performance has expired and the obligated party fails to comply voluntarily, and no application to set aside the award under Article 69 has been filed, the prevailing party may submit a request to the competent civil judgment enforcement agency for enforcement.
- For ad hoc arbitration awards, enforcement is only possible after the award has been registered with the Court pursuant to Article 62 of the Law.
3. Practical notes for businesses
- Ensuring a clear and valid arbitration agreement from the outset helps to secure the enforceability of the award and minimize risks of annulment.
- Selecting a reputable arbitral institution such as VTIAC ensures that the arbitral process is conducted professionally and impartially—reducing the risk of court rejection.
- After receiving the award, parties should monitor the deadline for compliance and prepare enforcement documentation if necessary.
The arbitral award issued by VTIAC is final, legally enforceable, and may be executed similarly to a court judgment. This is a significant advantage, making arbitration a highly attractive option for many businesses: fast, effective, and efficient.
If you need specific advice regarding enforcement of an award or are currently facing a commercial dispute, please contact VTIAC for in-depth support.
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VIETNAM TRADE AND INVESTMENT ARBITRATION CENTER
M: 0934565488 | W: http://vtiac.vn/ | E: vtiac.contact@gmail.com