Research paper online arbitration opportunities and challenges in vietnam

FOREIGN TRADE UNIVERSITY FACULTY OF ENGLISH FOR INTERNATIONAL BUSINESS*** RESEARCH PAPER ONLINE ARBITRATION: OPPORTUNITIES AND CHALLENGES IN VIETNAM... Online arbitration is one of the m

FOREIGN TRADE UNIVERSITY FACULTY OF ENGLISH FOR INTERNATIONAL BUSINESS

***

RESEARCH PAPER ONLINE ARBITRATION: OPPORTUNITIES AND CHALLENGES IN VIETNAM

ONLINE ARBITRATION: OPPORTUNITIES AND CHALLENGES IN VIETNAM

Thuong Ha T Tran, Linh T Pham, Thao P Le, My Huyen T Nguyen, Linh Khanh T Dang,

Trang Thao D Nguyen, Bach X NguyenSchool of Economics and International Business, Foreign Trade University

ESP231: English for Specific Purpose 3M.A Phan Kim ThoaDecember 2023

TABLE OF CONTENTS

ABSTRACT 3

INTRODUCTION 4

SECTION 1: THEORETICAL FRAMEWORK 5

1.1 Definition 5

1.2 Impact 6

1.3 Overview 7

SECTION 2: LITERATURE REVIEW 8

2.1 Arbitration 8

2.2 Previous Study 8

2.3 Research Gap 9

SECTION 3: PROCESS AND METHODOLOGY 11

3.1 Background 11

3.2 Research Methods 13

3.3 Research Findings and Analysis 14

3.3.1 Phase 1: Prior to arbitral proceedings 14

3.3.2 Phase 2: During arbitral proceedings 15

3.3.3 Phase 3: Post-arbitral proceedings 17

3.3.4 A Right to Physical Hearing Exists under the Lex Arbitri 18

3.3.5 Opportunities and Challenges 20

SECTION 4: CONCLUSION AND LIMITATION 23

REFERENCES 24

TABLE OF FIGURES

TABLE 1: Chapters of Law No 54 of 2010 concerning Commercial Arbitration 13 TABLE 2 Chapters of Law No 20 of 2023 concerning Electronic Transactions 14

Online arbitration is one of the method for resolving business disputes.However, the Vietnamese arrbitration law (Law No.54 of 2010 concerningCommercial Arbitration) does not explicitly address online arbitration This paperproposes a more extensive interpretation of Law No.54 of 2010 regarding toCommercial Arbitration and combines it with the execution of Law No.20 of 2023concerning Electronic Transactions, thereby clarifying the opportunities andchallenges for Vietnam’s online arbitration It adopts a normative legal researchwith a qualitative methodology The paper concludes that business people shouldnot hesitate to utilize online arbitration to settle their disputes as it is legallyrecognized and its awards are enforceable in Vietnam

Keywords: arbitration, online arbitration, opportunities, challenges, business,

Vietnam

In the era of rapid technological advancement, electronic transactions haveintensely developed; in many cases, they replace the traditional commercetransactions As a result, disputes over them arise and increase significantly;therefore, Online Dispute Resolution (ODR), in particular online arbitration, israpidly becoming popular

In Vietnam, there has also been an explosion in the number of e-commercetransactions in the past decade Contemporaneously, Vietnam has faced up withchallenges in resolving disputes over e-commerce transactions, leading to theexpansion of online arbitration

However, Vietnam’s online arbitration is still in its nascent stage Besides theopportunities, there are also challenges that Vietnam has to encounter

Having been well aware of this, the authors chose to conduct a research papertitled: “Online arbitration: Opportunities and challenges in Vietnam”

In the following study, the authors aim to analyze significant prospects andobstacles to Vietnam’s online arbitration

The paper seeks answers for these questions:

- What are the opportunities for Vietnam’s online arbitration?

- What are the challenges for Vietnam’s online arbitration?

The structure of the research paper is as follows:

SECTION 1: THEORETICAL FRAMEWORK

SECTION 2: LITERATURE REVIEW

SECTION 3: PROCESS AND METHODOLOGY

SECTION 4: CONCLUSION AND LIMITATION

SECTION 1: THEORETICAL FRAMEWORK 1.1 Definition

-As stated by Hong Kong International Arbitration Center, “arbitration is aconsensual dispute resolution process based on the parties' agreement to submittheir disputes for resolution to an arbitral tribunal usually composed, of one orthree independent arbitrators appointed by or on behalf of the parties.”

-Farzaneh Badiei said that “online arbitration (OA) is a process by whichparties may consensually submit a dispute to a non-governmental decision maker,selected by or for the parties, to render a binding, non-binding or unilaterallybinding award, issuing a decision resolving a dispute in accordance with neutralprocedure which includes due process in accordance with the parties' agreement orarbitration tribunal decision The online arbitration process may be conductedentirely online or partly online by the use of internet technology.” An arbitration isconducted in accordance with the terms of the parties' arbitration agreement whichare often found in the provisions of a commercial contract or applicable investmenttreaty Arbitration is known for its procedural flexibility, which allows parties toengage in an efficient, confidential and fair process leading to a final, binding andenforceable award Arbitration awards are enforceable in over 150 countriesaround the world due to the application of the New York Convention on theRecognition and Enforcement of Foreign Arbitral Awards (the New YorkConvention)

As explained by Legal Information Institute - Cornell Law School,

“arbitrator is a neutral third party that oversees the alternative dispute resolution

method of arbitration While arbitration as a whole is governed by the FederalArbitration Act, the requirements to become an arbitrator are determinedexclusively by state law.” For example, to be an arbitrator in Cook County, Illinois,

a person must be a lawyer In New York, however, non-attorneys can also becomearbitrators so long as they have relevant experience to disputes Disputesundergoing arbitration can be overseen by either a single arbitrator or a panel ofarbitrators These arbitrators have the authority to bind both parties to the remedies

or courses of action determined through arbitration That said, an arbitrator’sdecision can be overturned if a party can show that the arbitrator was clearlypartial, corrupt, or guilty of other misconduct

Arbitration agreements require that persons who signed them resolve anydisputes by binding arbitration, rather than in court before a judge and/or jury

There are two different types of arbitration, institutional and ad hoc, theessential features of each are set out below:

-Institutional Arbitration: Institutional arbitrations are administered by anarbitration institution, such as the HKIAC Typically, proceedings are conductedunder the arbitration rules selected by the parties which have been drafted by thechosen institution, for instance, the 2013 HKIAC Administered Arbitration Rulesand the updated 2018 HKIAC Administered Arbitration Rules, which establish theparameters of the procedure, from the submission of the notice of arbitration to theissuance of the award

-Ad Hoc Arbitration: Ad hoc arbitrations are arranged solely between thearbitrators and the parties The parties must envisage and advance the arbitrationprocedure themselves under the supervision of the tribunal The parties maychoose to adopt a ready-made set of arbitration rules (such as the UNCITRALRules of Arbitration) or the proceedings may be conducted in accordance with aset of bespoke rules, drawn up by the parties specifically for that particular case.According to a 2008 study by the Queen Mary University andPricewaterhouseCoopers, 86% of arbitration awards rendered arose frominstitutional arbitration, in comparison with 14% made in ad hoc proceedings

-Enhanced transparency and accountability: Potential for greater transparency

in the arbitration process

-Promotion of e-commerce: Increased trust and confidence in onlinetransactions

Negative impacts:

-Digital divide: Potential for exclusion of individuals lacking access totechnology or digital literacy

-Security and privacy concerns: Data security and privacy risks associatedwith online platforms.

-Lack of awareness and trust: Limited public awareness and trust in OAcompared to traditional courts

-Potential for procedural irregularities: Challenges in ensuring fair andimpartial proceedings in a virtual setting

1.3 Overview

This research will explore the opportunities and challenges presented by OA

in Vietnam using normative legal research method which is also known asdoctrinal method Normative legal research is a process to find a legal rules, legalprinciples, and doctrines of the law to address the legal issues at hand Results ofthe study of law are the argument, theory, or the new concept as a prescription insolving the problems faced problems (Peter Mahmud MarzuNi, 2005) Thisresearch will draw upon secondary data collected from reliable sources includingreputable news outlets, academic journals, government websites, peer-reviewedarticles legal doctrines, case law, scholarly literature, and comparative legalanalysis to provide a comprehensive picture of the legal landscape surrounding OA

in Vietnam Through rigorous normative analysis, we will identify legal gaps,inconsistencies, and areas for improvement, proposing concrete recommendationsfor legislative amendments, policy changes, and best practices for effectiveimplementation of OA within the Vietnamese legal system

SECTION 2: LITERATURE REVIEW 2.1 Arbitration

Hugo Grotius wrote extensively on arbitration as a means of resolvingdisputes between states Grotius defined arbitration as "a reference by mutualconsent to the decision of a private person, who should judge according to equityand good conscience." He emphasized that arbitration was a voluntary process thatshould be based on the consent of the parties involved Grotius believed thatarbitration was a more peaceful and efficient way to resolve disputes than war Heargued that arbitration could help to preserve the relationships between states andavoid the destruction that often accompanied war Grotius's views on arbitrationwere influential in the development of international law, and they continue to berelevant today

While Belloni didn't offer a single, concise definition of arbitration, hisnumerous writings and arbitral awards paint a clear picture of his perspective Heviewed arbitration as:

arbitration as the means of settlement

-A private dispute resolution mechanism: Arbitration occurs outside theframework of state courts, relying on private individuals or tribunals chosen by theparties

and ethical considerations should guide the arbitral proceedings and the ultimatedecision

at the conclusion of the process is definitive and cannot be appealed throughtraditional court systems

2.2 Previous Study

Lagiewska, M (2023) New Technologies in International Arbitration: a

GameChanger in Dispute Resolution? International Journal for the Semiotics of Law Revue Internationale De Sémiotique Juridique examines the increasing popularity

-of online arbitration and its potential to transform the landscape -of internationaldispute resolution It explores the benefits and challenges associated with onlinearbitration, emphasizing its potential for efficiency, cost-effectiveness, andaccessibility.

Sulistianingsih, D., Lembang, A a R., Adhi, Y P., & Prabowo, M S (2023) Online dispute resolution: Does the system actually enhance the mediation framework? Cogent Social Sciences 9(1), delves into the intriguing world of Online Dispute Resolution (ODR) and its potential impact on the traditional mediation framework Authored by Muhammad Iqbal and a team of researchers, the study specifically focuses on the Indonesian context, offering valuable insights applicable to a broader audience and analyzes the effect of the Online Dispute Resolution system on enhancing the mediation framework

The Use of Technology in International Arbitration (2018) In M Piers & C

Aschauer (Eds.), Arbitration in the Digital Age: The Brave New World of

Arbitration (pp 25-148) Cambridge: Cambridge University Press explores thediverse ways technology is being used in international arbitration, including onlineplatforms for document management, video conferencing for hearings, andartificial intelligence for legal research and case analysis It provides a comparativeoverview of the adoption and regulation of technology in different arbitralinstitutions and jurisdictions

Larson, D A (2022, November 4) The Future of Online Dispute Resolution (ODR): Definitions, standards, disability accessibility, and legislation argues for amore universally accepted definition of ODR that acknowledges its evolvingnature and ability to integrate new technologies It proposes the development ofclear standards for ODR platforms and processes, emphasizes the importance ofensuring disability accessibility in ODR, analyzes user-protective legislationrelated to ODR, such as the Ontario Online Dispute Resolution Act and theproposed U.S Online Dispute Resolution Improvement Act

Benyekhlef, K (2005, July 1) Online dispute resolution provides anoverview of ODR and its growing importance in the digital age, discusses thechallenges and opportunities presented by ODR, such as legal issues, technologicallimitations, and user trust; and outline the scope and objectives of the paper, whichcould be to analyze a specific aspect of ODR, propose solutions to address itschallenges, or compare it to traditional dispute resolution methods

2.3 Research Gap

As available studies have suggested, online arbitration has been instrumental intransforming the landscape of dispute resolution However, recent research has notmentioned the online dispute resolution’s awards, procedural fairness and due process.Especially, traditional arbitration has to change its appearance into online arbitration toadapt to the adjustment of the economic landscape

Meanwhile, even though the online arbitration awards have been examined, theirlevel of impact has not been discussed yet It is not clear about the validity of this kind ofarbitration and additionally, the enforceability of its awards could be doubted

As the reasons stated above, there is a need for a study to find out the legitimacy of online dispute resolution and the enforceability of its awards Besides, it is crucial to have

a comprehensive finding about the level of impact of this issue on the commerciallandscape

SECTION 3: PROCESS AND METHODOLOGY 3.1 Background

Business is a means to improve a country’s economic growth, thereforeVietnam as a developing country should encourage their nationals to activelyparticipate in business activities nationally, regionally and internationally.However, business engagements do not always run smoothly Disagreementsamong business people may occur at any time and these may result in legaldisputes Arbitration has become the most popular dispute resolution amongbusiness people because of its unique characteristics, such as being less formal,proceedings are usually private, and the confidentiality of disputes is generallyassured More importantly, arbitral awards are enforceable in Vietnam under LawNo.54 of 2010 concerning Commercial Arbitration In addition, international(foreign) arbitral awards may be enforced in Vietnam since we have ratifiedConvention on the Recognition and Enforcement of Foreign Arbitral Awards 1958(the New York Convention) through Presidential Decree No.453 of 1995.Today, developed technology has penetrated business transactions Electroniccommerce and the use of the Internet offer unprecedented opportunities forbusiness people to expand their businesses Similar to off-line businesses, E-commerce transactions may result in E-disputes; consequently it should beresolved by E-dispute resolution mechanism Online arbitration is one of thedispute settlement mechanisms which can be utilized by business people Thosewho engage in businesses may also use online arbitration to settle their disputeseven though their business transactions are off-line This is because onlinearbitration can transcend national boundaries, accordingly online arbitration fits forinternational business engagements and other advantages listed in the theoreticalframework

On 17 June 2010 the Vietnamese Government enacted Law No 54 of 2010concerning Commercial Arbitration to complete all of the regulations concerningarbitration in Vietnam This Law not only deals with arbitration but also governsother types of alternative dispute resolution such as consultation, negotiation,mediation, conciliation, and expert assessment The Law contains 13 Articleswhich are divided into eleven chapters as follows:

Table 1: Chapters of Law No 54 of 2010 concerning Commercial Arbitration

Arbitrator CenterLawsuitArbitral TribunalTemporary Emergency MeasuresDispute Resolution Session ArbitralDispute Resolution SessionEnforcement Of Arbitral AwardsAnnulment Of Arbitration AwardOrganization and Operation of Foreign Arbitrations in Vietnam

Enforcement Clause

Source: Law No.54 of 2010

In addition to Law No.54 of 2010 concerning Commercial Arbitration, Law

No 20 of 2023 concerning Electronic Transactions is also the legal base for onlinearbitration This Law was enacted to respond to the development of informationtechnology and communications The General Elucidation of realization thatelectronic transactions for trade via electronic systems (electronic commerce) havemade a part of national and international trade This fact shows that theconvergence in the field of information technology, media, and informatics(telematics), inevitably, keeps developing in line with the invention in the field ofinformation technology, media, and communications

Law No 20 of 2023 concerning Electronic Transactions consists of 8 chapters

as follows: