On February 24, 2017, The Government promulgates the Decree No. 22/2017/ND-CP on commercial mediation.
According to that, this Decree prescribes the scope, principles, order and procedures for dispute resolution by commercial mediation, commercial mediators, commercial mediation institutions, Vietnam-based foreign commercial mediation institutions, and state management of commercial mediation activities. Disputing parties’ self-mediation or request for mediation by other agencies, organizations or individuals other than commercial mediators, commercial mediation institutions or Vietnam-based foreign commercial mediation institutions defined in this Decree may be carried out under the agreements of the parties in accordance with law, and are not regulated by this Decree. This Decree applies to commercial mediators, commercial mediation institutions, Vietnam-based foreign commercial mediation institutions, the state management agency in charge of commercial mediation, and other organizations and individuals involved in commercial mediation activities.
The scope of resolving dispute through commercial mediation includes: Disputes between parties arising from commercial activities; Disputes between parties at least one of them is engaged in commercial activities and other disputes which are prescribed by law to be resolved through commercial mediation.
The principles of dispute resolution through commercial mediation in this Degree are: Disputing parties shall participate in mediation on an entirely voluntary basis and are equal in terms of rights and obligations; Information relating to a mediation case shall be kept confidential, unless otherwise agreed upon in writing by involved parties or otherwise prescribed by law. Furthermore, mediation agreement contents must neither violate prohibitory provisions of law nor contravene social morality, nor aim at shirking obligations nor infringe upon rights of a third party.
State encourage disputing parties to use commercial mediation to resolve their disputes in commercial activities and other disputes which are prescribed by law to be resolved through commercial mediation. It is encouraged to mobilize all resources for commercial mediation activities and training to build capacity for commercial mediators and commercial mediation institutions.
A dispute shall be resolved through commercial mediation if involved parties so agree. The parties may reach agreement on dispute resolution through mediation before or after a dispute arises or at any time in the process of dispute resolution.
Criteria for a commercial mediator
A person who fully satisfies the following criteria may act as a commercial mediator: Having full civil act capacity as prescribed by the Civil Code; having good moral qualities and prestige, and working in an independent, impartial and objective manner; Possessing a university or higher degree and having at least 2 years’ working experience in the discipline he/she has studied; Having mediation skills and knowledge about law, business and commercial practices and relevant issues.
A commercial mediator may conduct commercial mediation in the capacity as an ad hoc commercial mediator or a commercial mediator of a commercial mediation institution in accordance with this Decree.
A commercial mediation institution may set criteria for its commercial mediators which are higher than those prescribed above.
The accused or defendants or those who are serving criminal sentences or have not had their criminal records expunged or are serving the administrative measure of consignment to a compulsory education institution or compulsory detoxification establishment may not act as commercial mediators.
Rights and obligations of commercial mediators
According to this Degree, a commercial mediator has the following rights: To accept or refuse to carry out commercial mediation activities; To refuse to provide information relating to a dispute, unless the information provision is agreed upon in writing by involved parties or required by law; To enjoy remuneration for commercial mediation activities as agreed upon with disputing parties; Other rights as prescribed in this Decree and relevant laws.
A commercial mediator has the following obligations: To comply with law and the codes of ethics and conduct applicable to commercial mediators; to work in an independent, impartial, objective and honest manner; To respect the agreement reached by involved parties if such agreement neither violates law nor contravenes social morality; To keep confidential information about the disputes of which he/she mediates the resolution, unless otherwise agreed upon in writing by involved parties or prescribed by law; To notify involved parties of his/her competence and mediation remuneration and costs before conducting mediation; To refrain from acting as a representative of or an advisor for any of involved parties or concurrently acting as an arbitrator for the same dispute of which he/she is mediating or has mediated the resolution, unless otherwise agreed upon by the parties; Other obligations as prescribed in this Decree and relevant laws.
Prohibited acts of commercial mediators
This Decree prescribes the following prohibited acts of commercial mediators: Disclosing information about disputes or clients they know in the mediation process, unless otherwise agreed upon by disputing parties in writing or prescribed by law; Violating the code of ethics applicable to commercial mediators; Receiving or demanding any sum of money or benefit from involved parties in addition to remuneration and costs already agreed upon and other prohibited acts as prescribed by law.
Order and procedures for commercial mediation
Involved parties may select to apply the Mediation Rule of a commercial mediation institution for conducting mediation or reach agreement on the mediation order and procedures. If the parties do not reach such agreement, the commercial mediator may conduct mediation according to the order and procedures he/she finds suitable to the circumstances of the dispute and the aspirations of the parties, which are accepted by the parties. The resolution of a dispute may be mediated by one or more than one commercial mediator as agreed upon by involved parties. At any time in the mediation process, a commercial mediator may put forth proposals for dispute resolution. The venue and time of mediation may be agreed upon by involved parties or selected by the commercial mediator in case the parties reach no agreement thereon.
Procedures for establishment of commercial mediation centers
A Vietnamese citizen who fully satisfies the criteria for a commercial mediator specified in this Decree and wishes to establish a commercial mediation center shall send 1 set of dossier to the Ministry of Justice, comprising: A written request for establishment of a commercial mediation center, made according to a form issued by the Ministry of Justice; A list of the center’s founders; Papers proving the founders’ full satisfaction of the criteria for a commercial mediator specified in Clause 1, Article 7 of this Decree; The draft Mediation Rule of the center. The contents of the center’s Mediation Rule must not contravene law.
Within 30 days after receiving a valid dossier, the Ministry of Justice shall grant an establishment license to the commercial mediation center; in case of refusal, it shall notify the reason in writing. The person having his/her request for establishment of a commercial mediation center rejected may lodge a complaint or initiate a lawsuit in accordance with law.
Registration of operation of commercial mediation centers
Within 30 days from the effective date of the decision on grant of its establishment license, a commercial mediation center shall send a dossier for operation registration to the provincial-level Department of Justice of the locality where its head office is located. Past this time limit, if the center fails to register its operation, its establishment license shall be invalidated, unless it has a plausible reason.
A dossier for operation registration of a commercial mediation center must comprise: A written request for operation registration, made according to a form issued by the Ministry of Justice; A certified copy, or a copy enclosed with the original for comparison, of the center establishment license; Papers proving the center’s head office.
Within 15 days after receiving a valid dossier, the provincial-level Department of Justice shall grant an operation registration certificate to the commercial mediation center; in case of refusal, it shall notify the reason in writing. The provincial-level Department of Justice shall send a copy of such operation registration certificate to the Ministry of Justice.
A commercial mediation center may start to operate on the date it is granted an operation registration certificate and use its seal in accordance with law.
Within 30 days after being granted an operation registration certificate, a commercial mediation center shall publish in 3 consecutive issues of a central daily or a newspaper of the locality where it registers its operation the following basic information: Name and head-office address of the mediation center; Operation areas of the mediation center; Serial number, issuer and date of issuance of the operation registration certificate; Starting time of the mediation center’s operation.
Conditions for and forms of operation of Vietnam-based foreign commercial mediation institutions
Foreign commercial mediation institutions that are lawfully established and operate in foreign countries and respect the Constitution and laws of the Socialist Republic of Vietnam may operate in Vietnam in accordance with this Decree.
Foreign commercial mediation institutions may operate in Vietnam in the following forms: Branches of foreign commercial mediation institutions (below referred to as branches); Representative offices of foreign commercial mediation institutions (below referred to as representative offices).
Representative offices of foreign commercial mediation institutions (below referred to as representative offices).
This Degree prescribes, branches of Vietnam-based foreign commercial mediation institutions have some following rights and obligations: 1- To rent a working office to serve its operation; 2- To recruit Vietnamese and foreign employees in accordance with law; 3- To open Vietnam dong and foreign currency accounts at banks licensed to operate in Vietnam to serve its operation; 4- To transfer its incomes abroad in accordance with Vietnamese law; 5- To have a seal as prescribed by law; 6- To operate for proper purposes and within the scope and period stated in its establishment license; 7- To appoint mediators to conduct mediation as authorized by the foreign commercial mediation institution; 8- To provide commercial mediation services; 9- To archive files and provide copies of written records of mediation results at the request of disputing parties or competent state agencies; 10- To report on the organization of commercial mediation activities to the provincial-level Department of Justice of the locality where it has registered its operation on an annual basis and upon request; 11- Other rights and obligations as prescribed by law.
Apart from rights and obligations of branches (1,2,3,4,5,11), Representative offices also have the right To seek and promote opportunities of commercial mediation activities in Vietnam; To refrain from carrying out commercial mediation activities in Vietnam; to carry out only activities to promote and advertise commercial mediation activities in accordance with Vietnamese law; to report on its organization and activities to the provincial-level Department of Justice of the locality where it is located on an annual basis and upon request.
This Decree takes effect on April 15, 2017.
In essence, mediation (or Reconciliation, Conciliation) is the process of negotiating between parties in order to settle the disputes with the help from a third party (called mediator).
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.
On 24 February 2017, the Government of Vietnam promulgated Decree No.22/2017/ND-CP on Commercial Mediation (the “Decree”). It is the first legislation specifically governing commercial mediation in Vietnam.
On February 24, 2017, The Government promulgates the Decree No. 22/2017/ND-CP on commercial mediation.
Misconceptions about commercial mediation
Enterprises' decision to choose a dispute resolution method is greatly influenced by what attorneys or in-house counsels advise them. In particular, commercial mediation is a method that brings high efficiency and has the potential for development. However, this method has yet to receive good recognition from many attorneys and has not been chosen by clients. The cause of this comes from several misconception, mainly as follows.
Up to 2023, 25 institutions, including 17 mediation centres and 8 arbitration centres with the additional unit providing mediation, were established in accordance with the approval of the Ministry of Justice. Currently, KCAB International Arbitration Committee (KCAB International) is the first and only arbitration institution to open its liaison office in Vietnam; however, there is no foreign mediation institution’s office opened in Vietnam. Regarding the number of mediators, according to the list established by the Ministry of Justice, there are more than 100 registered ad-hoc mediators, not to include the listed mediators of mediation institutions. Regarding the number of cases, Vietnam Mediation Centre (VMC) has received 36 cases from 2018 to March 2023, 91% of which parties reached a mediation settlement agreement and enforced it voluntarily.
Introduction
Mediator is not a commonly known job in Vietnam, contrary to the deep-rooted development of Mediators in other countries. In developed jurisdictions, namely the UK, Hong Kong, and Singapore, a Court, prior to accepting the case, usually encourages parties in dispute to resolve at an out-of--Court mediation center to assure the objectivity of a mediator and the confidentiality of the mediation process.
Normally, to be a professional mediator, a person needs to meet specific standards of expertise, soft skills, ethics, and – in the circumstances – age limit. The age limit depends on an individual’s experience, but to be a professional mediator, it is commonly advisable that he is older than 35 or 40 years old.
The causes leading to disputes in the construction sector.
Construction disputes are varied. With more than 25 years of experience in dispute resolution in Arbitration and Court, the author finds that construction disputes are mainly concentrated in 5 main causes:
Mediation
Mediation is one of four dispute resolution methods: Negotiation, Mediation, Arbitration, and Court. In fact, it is very common to achieve that the two parties negotiate on their own, negotiating with each other is mediation or self-reconciliation. Legally, mediation must always have a third person or mediator as a mediator. If there is no third factor, it is the method of negotiation.
