Contractual relationships are linked to interests, so disputes can easily arise when there is a conflict of interests. This conflict often occurs due to non-fulfillment or improper performance of contractual commitments. When there is a dispute, the parties often look for different dispute resolution methods to resolve conflicts, disagreements, conflicts of interest, and restore a balance that the parties can accept. There are many methods of dispute resolution. Practice and legal science recognize the following four methods of dispute resolution: Negotiation; Reconcile; Referee; Court.
1. Negotiation method
“Negotiation is a discussion aimed at reaching an agreement to resolve a problem between the parties. Negotiation is an informal form of dispute resolution, without the intervention of any state agency or third party. Negotiation represents the freedom of agreement and decision of the parties. Most dispute resolution provisions in the parties’ contracts stipulate dispute resolution by negotiation when there is a breach of contract. In addition, Article 329 of the Commercial Law stipulates: Commercial disputes must first be resolved through negotiation between the parties.”
However, this is understood as an optional law, not a mandatory regulation.
– Advantage:
+ Does not require complicated procedures;
+ Not bound by strict legal procedures;
+ Minimize costs;
+ Little harm to the relationship between the parties;
+ Keep business secrets.
– Defect:
+ Requires all parties to have goodwill, honesty with a high spirit of cooperation, otherwise, the negotiation will fail and must be resolved in another way.
2. Mediation method
– Mediation is a form of dispute resolution that appeared earliest in the history of human society in many fields, not just specifically with Contract disputes.
– Mediation is when the disputing parties discuss and agree to come to an agreement on a solution to resolve their disagreements and voluntarily implement the plan agreed upon through mediation.
– In Vietnam, conciliation of contract disputes is considered important. The parties must negotiate and reconcile with each other when a dispute arises. Only when negotiations or conciliation fail will the matter be brought to court or arbitration for settlement. Even at Court, the parties can still continue to reconcile with each other. In Vietnam, on average each year, the number of economic disputes resolved by mediation accounts for about 50% of the total number of cases that the Court has to resolve.
– Advantages of resolving economic contract disputes in practice by mediation:
+ Is a simple, quick, and inexpensive method of resolving disputes.
+ If the parties successfully reconcile, there are no winners or losers, so it does not cause confrontation between the parties, thus maintaining the cooperative relationship that still exists between the parties.
+ Parties can easily control the provision of documents and use of documents, thus preserving the business secrets and reputation of the parties.
+ Mediation comes from the conditional willingness of the parties, so when a mediation solution is reached, the parties often seriously implement it.
– Limitations of mediation in contract disputes:
+ If conciliation fails, the advantage of low costs becomes an additional burden for the disputing parties.
+ People with bad faith will take advantage of the conciliation procedure to delay the performance of their obligations and may result in the party whose interests are violated losing the right to sue in court or arbitration because the time limit has expired. lawsuit deadline.
– Forms of mediation:
+ Self-conciliation: is when the disputing parties discuss themselves to come to an agreement on a solution to the dispute without the influence or help of a third party.
+ Mediation through mediation: is the process by which disputing parties conduct mediation with each other with the support and help of a third person (mediator). The mediator can be an individual, organization or Court chosen by the disputing parties or prescribed by law.
+ Mediation outside of legal proceedings: is a mediation conducted by the parties before filing a lawsuit in court or arbitration.
+ Conciliation in legal proceedings: is conciliation conducted in Court, in arbitration when these agencies resolve disputes according to a lawsuit filed by one party (conciliation with the assistance of the Court or referee). The court will issue a decision recognizing the parties’ agreement and this decision will be enforceable for the parties.
3. Method of resolution by Arbitration
– The parties agree to submit disputes that have arisen or will arise between them to arbitration and the Arbitrator, after considering the dispute, will issue an enforceable judgment for the parties. beside.
– The arbitration method also originates from the agreement of the parties on a voluntary basis.
– The parties have the right to agree to choose a suitable arbitrator and appoint an arbitrator to establish an Arbitration Contract (or Committee) to resolve disputes.
– Different from negotiation and conciliation, arbitration is a judicial (trial) body. The arbitrator’s jurisdiction is reflected in the arbitral decision’s enforceability.
– The Vietnam International Arbitration Center has the authority to resolve disputes arising from economic relations, including Contract disputes (disputes arising from purely civil contracts do not fall under its jurisdiction to resolve of Arbitration).
– The Arbitrator’s jurisdiction is determined regardless of the nationality, main transaction address of the disputing parties or where the disputing parties have assets or where the Contract is signed or performed.
– The condition for an arbitrator to have authority to resolve a dispute is that the parties must have an arbitration agreement.
– Arbitration agreement is the agreement of the parties to submit disputes that have arisen or will arise between them to arbitration.
– The arbitration agreement must be in written form and must name a specific arbitration center.
– The arbitration agreement can be a provision of the Contract (arbitration clause) or a separate agreement (Arbitration Agreement).
– Any change, suspension, cancellation or invalidation of the Contract does not affect the validity of the arbitration agreement (except in cases where the reason for making the Contract invalid is also the reason for the arbitration agreement). void).
– The arbitration agreement is not binding on the parties when it is invalid or unenforceable.
– Once there is an arbitration agreement, the parties can only sue in arbitration according to the agreement only. The court does not participate in the settlement if the parties have agreed to arbitration, except in cases where the arbitration agreement is invalid or the arbitration agreement is unenforceable.
– Arbitration operates on the principle of one-time trial. The arbitration award is final: the parties cannot appeal before the Court or any other organization.
– The disputing parties must implement the arbitration award within the time limit of the award.
– Advantages of contract dispute resolution through arbitration:
+ Arbitration procedures are simple and fast.
+ The disputing parties have the ability to influence the arbitration process.
+ The right to appoint an arbitrator helps the parties choose a good, experienced arbitrator who deeply understands the issue in dispute. Thereby, there are conditions to resolve Contract disputes quickly and accurately.
+ The principle of non-public arbitration helps parties limit the disclosure of business secrets, maintaining the reputation of the parties in the marketplace.
+ Arbitration does not represent state power, so it is very suitable to resolve disputes involving foreign factors.
– Limitations of arbitration method:
+ The enforcement of arbitration decisions is not high (because the Arbitrator does not represent the judicial power of the state).
+ The implementation of arbitration decisions depends entirely on the voluntariness of the parties.
4. Method of resolving contract disputes according to judicial proceedings
– When a Contract dispute arises, if the parties do not negotiate and reconcile with each other, it can be resolved in Court. Depending on the nature of the Contract, whether it is economic or civil, arising disputes can be resolved by the Court according to economic or civil proceedings.
– Advantages of resolving Contract disputes through Court:
+ The decisions of the Court (representing the judicial power of the state) are enforceable for the parties.
+ With the principle of 2 levels of adjudication, errors in the dispute resolution process are likely to be detected and corrected.
+ Under actual conditions in Vietnam, court fees are lower than arbitration fees.
– Limitations of resolving Contract disputes through Court:
+ Dispute resolution time is often long (because Court proceedings are too strict).
+ The parties’ ability to influence the proceedings is very limited.
