It seems that recently, the Government has updated the rules for the creation of Commercial Arbitration Centers in Vietnam. While this seems like an effort to encourage dispute resolution within the country, it also creates a schism of capabilities.
Where China has one or two main centers and several ad hoc arbitrators, they do not have a plethora of centers that can divide the efforts of one or the other. Singapore has one main arbitration center as does Hong Kong and Malaysia. It is a different strategy, perhaps, that Vietnam is pursuing, but is it the right one.
Having assisted a client go through arbitration at Singapore, and then Malaysia, and then discover that there is no arbitration center in Macau, I’ve seen the importance of having a centralized arbitration center. Singapore has perhaps been the most aggressive with their center: Singapore International Arbitration Centre, or SIAC. I have met with SIAC arbitrators and promoters, and they seem quite keen on promoting the impartiality of their services, and the independence from the judiciary, though this is not entirely the case.
In Singapore there is quite a meddlesome system from the judiciary, on at least one occasion we were forced to go to the courts for a decision on the procedures to be followed by the arbitrators, and this took quite some time, and quite some cost. But there was no other option in Singapore, as there was no other option in many of the other countries of Asia.
Is Vietnam trying to provide a different experience? Vietnam resists court interference with arbitration procedures, waiting their turn for the time when the arbitration decision is to be enforced. At this point the courts have the right to overturn the arbitral decisions for several procedural and one or two substantive reasons. This is a different approach from the larger countrywide centers throughout the region, and one which allows for a more diverse arbitration personnel.
But is it the best thing for a country that is still a fledgling arbitrator. I know in Cambodia, when they first began to set up their arbitration system, there were several disputes between potential arbitrators and the government influenced arbitration center. I know my boss at the time, was among several arbitrators who took a test and then were told they had to take another test. They were disqualified because of their disputation with the center.
This is not the case in Vietnam, but it is a question, does the presence of, or the ability to set up, several arbitration centers create a better system for customers?
Let’s look at it. It offers greater choice. If one of the problems with the centralized arbitration centers is government oversight, there is less of that over individual arbitration centers in Vietnam. As such, it offers less control by a government questioned by several international investors. That’s a good thing, leaving the interference from the government to a court decision to enforce the arbitral decision, and provides a slightly cheaper and more streamlined process to enforcement.
That’s not to say that enforcement of decisions of either an arbitral panel or court of justice are quick and streamlined, but that’s another story for another time.
I’ll close with this. While looking at more mature markets like the United States where arbitration is a booming business and there is little regulation outside of contract, there is a tendency for big companies to impose their preferred arbitration centers on customers in contract, contract that is non-negotiable. This may eventually happen in Vietnam, and the knock on effect of this is that the preferred arbitration center sees its business grow as the large party sees more conflict. They are likely to rule in favor of the big client rather than the small individual litigant simply as a preservation of their cash flow.
In Vietnam, it’s essentially too early to see.