In 2018, a range of FTA agreements have been into effect, the competition becomes more cutthroat. Therefore, the risk of disputes among Vietnamese enterprises as well as disputes between Vietnamese enterprises and foreign enterprises have increased.

In 2018, Decree No. 22/2017/ND-CP on commercial mediation issued by the Government on February 24, 1977 has created the legal foundation for the establishment and development of commercial mediation services in Vietnam. Strikingly, Decree 22 established the effect of mediation result, ensured the benefits of the parties when using mediation.

Long ago, there was no mechanism to determine the effectiveness of mediation results, but now Decree 22 has solved this problem. However, it is noticeable that this method requires the goodwill and cooperation of both of the parties. Because if the parties are not careful at the mediation stage, it may be disadvantageous to initiate proceedings for commercial arbitration or court litigation, such as the limitation period has expired.

However, there is one problem that Decree 22 does not mention, does the time for mediation proceeding account on the limitation period? A limitation period for initiating legal action is the time-limit within which an entity has the right to initiate legal action to request an arbitration or a court to resolve a dispute to protect the infringed legal rights or interests of the entity. When such time-limit expires, the right to initiate such legal action shall be lost.

At the present time, some statutes, such as the Law on Commercial Arbitration, stipulate that limitation period for initiating proceedings for dispute resolution by arbitration shall be two (2) years from the date of infringement of legal rights and interests, unless otherwise stipulated by specialized law (Article 33). Therefore, when participating in mediation, the parties need to pay attention to this issue to ensure that they still have time to bring to commercial arbitration or court if the mediation fails.

Another important point is selecting a mediator. Following these experiences, successful or failure mediation depends a lot on experiences, skills of mediation as well as the ability to mobilize and convince the parties of the mediator. Therefore, when participating in mediation, the parties should give attention to this point to ensure that the dispute is resolved efficiency.

In fact, there has been a significant increase in business and commercial disputes. Data from the Vietnam International Arbitration Center (VIAC) show that the number of disputes resolved at VIAC in just the past three years has been equal to that of the previous 10 years. The type of disputes is also diverse, including goods trading, services trading, investment trading. Up to now, more than 60 countries and territories have enterprises disputing with Vietnamese enterprise resolved at VIAC. The number of commercial disputes solved by the court also increases by 20% annually.

Nowadays, many countries have adopted a policy of encouraging mediation. Korea, Thailand enforce financial incentives for parties trying to settle the cases by mediation (for example, if dispute can be resolved by mediation, the party will be returned a portion of court fees or corporate income tax).

In Korea, in many cases, the court will refer the dispute to settle by the mediation process. The court only will accept jurisdiction if the disputes can't be resolved by mediation.  According to statistics from the Korea Council of Commercial Arbitration (KCAB), every year Korean Courts transfer thousands of disputes to KCAB for settlement according to mediation procedures.

England and Netherlands are two of the most successful European countries solving disputes by mediation. According to the statistics of the Dutch Mediation Center, the number of cases enrolled at the organization in 2011 was 51,690 case. Meanwhile, CEDR, the European Center for the Commercial Dispute Resolution Services outside the European Court, had 9,500 successful civil and commercial disputes mediation in 2014. Furthermore, conciliation saves businesses around £ 2.4m per year.

Obviously, in investment, business activities, the dispute is inevitable. Therefore, enterprises should actively take measures to prevent and minimize risks, the consequences, the loss of property that may push enterprises into difficulties or even bankrupt. In addition, enterprises should learn how to resolve disputes so that when the dispute occurs, they can choose the most appropriate and efficiency method to protect their lawful rights and interests.

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Lawyer Vu Anh DUONG

Vice President cum Secretary General of Vietnam International Arbitration Centre