To Settle Disputes, Many Businesses Use Gangland Rules

VietNamNet Bridge - Four percent of businesses use ‘other informal modes to settle disputes, according to the Vietnam International Arbitration Center (VIAC).

The disputes between foreign invested enterprises (FIEs) are estimated to account for 20 percent of total disputes, while the disputes between FIEs and Vietnamese account for 40 percent, of which 41 percent are in merchandise trade, construction and infrastructure.

According to VIAC’s chair Tran Huu Huynh, 4 percent of businesses don’t settle their disputes through official channels.

If this cannot be stopped, it will have a negative impact on the business environment, where there are many existing problems, including slow integration and low productivity.

Huynh said Vietnam is undergoing strong institutional reform, but noted ‘judicial reform is not as strong as executive reform’, though the country has made great strides when enacting the Civil Procedural Code and government Decree 22 on commercial mediation.

He went on to say that Vietnamese enterprises now tend to choose other modes for dispute settlement, rather than bring cases to court. In the past, 60 percent of cases were judged by the court, while the figure now is 36 percent.

A survey on hundreds of thousands of private companies conducted by the Vietnam Chamber of Commerce & Industry (VCCI) in 63 provinces and cities also found that businesses use many non-court methods, including arbitration (47 percent in 2016), relations (32 percent), mass media (14 percent) and other informal methods (4 percent).

Explaining FIEs’ decision, Dat said FIEs don’t want to follow time- consuming and costly procedures.

One important reason that FIEs prefer arbitration is that the number of cases tried in foreign languages (mostly English) accounts for more than 50 percent.

With the launch of the 2017 version of the arbitration procedural code, the time for procedures has shortened, creating better conditions for enterprises to have litigation settled by VIAC.

Kevin Kim, vice president of ICC (International Court of Arbitration), said that ICC considers Vietnam an important market and will give stronger support to VIAC to fulfill its tasks, thus creating a safe investment environment and attracting more foreign direct investment.

The Vietnam Mediation Center (VMC) officially was introduced before the public on May 29, 2018.

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