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.
Financial dispute
A third party in mediation is a mediator, which may be a commercial or civil mechanism with an individual or organization, namely the Mediation Center. There are many different types of disputes, but there is no official definition of what a financial-banking dispute is. However, it can be understood that a financial – banking dispute is a dispute over the purchase and sale of shares of enterprises, insurance, securities, deposits, credit, foreign currency, foreign exchange,… It is called a financial – banking dispute, but when classified as settled according to legal procedures, it is always classified as a civil dispute or a business or commercial dispute. Thus, financial – banking disputes are like other disputes but have additional specific elements related to financial and banking agencies and institutions such as tax, customs, treasury, securities, commercial insurance, banks, other financial institutions (such as financial companies, financial funds, people's credit funds, pawn services,...).
Finance
Article 3.1 on "Interpretation", Decree No. 165/2018/ND-CP "Regulations on electronic transactions in financial activities" listed 20 "financial activities", which "are professional activities: state budget, state treasury, taxes, fees, charges and other revenues of the state budget, state reserves, public assets, state financial funds, financial investment, corporate finance, cooperative finance, customs, accounting, state management of prices, securities, financial services, accounting services, audit services, insurance business and other financial services under the state management of the Ministry of Finance".
Article 4.3 on "Interpretation" of the 2012 Anti Money Laundering Law explains that a financial institution is an organization licensed to carry out one or more of the following 13 activities: Receiving deposits; lending; financial leasing; payment services; issuance of negotiable instruments, credit cards, debit cards, money orders, electronic money; bank guarantees and financial commitments; provision of foreign exchange services, monetary instruments in the currency market; consulting, underwriting securities, securities distribution agents; investment portfolio management; managing cash or securities for other organizations or individuals; providing insurance services; investment activities related to life insurance; currency exchange.
When it comes to "finance", the above two documents refer to securities and insurance, while the rest of the issues do not overlap. Each financial activity in it can also be understood very differently. For example, money exchange in bank-related services is the activity of financial institutions, while money exchange between people is outside the scope of the law on financial activities.
Bank
Credit institutions are financial institutions, so all arbitration and mediation litigation between individuals and financial institutions can be called financial disputes, with all 3 groups of services: Banking activities (Receiving deposits, granting credits and paying via accounts), Banking Services (Banking Consulting, Currency Brokerage, Cash Management) and other activities.
Characteristics of disputes in financial – banking sector
Financial – banking disputes mainly occur between credit institutions and customers, in financial transactions of lending, buying and selling shares between enterprises. Particularly for credit disputes, in addition to the determination of debts, interest rates, and collaterals that have been relatively clearly demarcated by law, there are a number of disputes that are easily controversial because they belong to the right to consider and apply rather than the obligations of credit institutions. Even the Law on Credit Institutions stipulates: “It is forbidden for all organizations and individuals to illegally interfere in banks' lending decisions.” For example, banks do not extend debts, do not keep the same group of debts, do not continue to lend, do not exempt from principal debt, do not reduce interest rates and service fees to support businesses in difficult periods.
In fact, these things are mostly rights rather than obligations of the bank. Even in principle, the law does not allow banks in all or some cases to extend debts, keep the same group of debts, or reduce principal. Therefore, in one batch, there have been resolutions and circulars allowing to do differently from the general principle to support businesses. However, whether and to what extent a bank can do it depends on the relevant factors, their financial capabilities, and their business perspective. When settling disputes in these cases, the Arbitrator and the Court cannot apply non-binding provisions of law. Therefore, Mediation is the first priority solution and is easy to achieve effectively. In short, litigation will be easy to handle if the parties violate the agreement or the law and will be difficult to handle if the law is not required but mainly based on the bank's goodwill to cooperate and support. At that time, Mediation will be the best solution to resolve the dispute.
Methods of resolving financial – banking disputes
According to the current law, there are 04 methods of dispute resolution: Negotiation, Mediation, Arbitration, and at-Court litigation.
Negotiation and Mediation are both based on common interests; Arbitration and Court are essentially the same, they are also adjudication agencies, Arbitrators can almost replace Courts in issuing binding decisions. Negotiation, Mediation and Arbitration are three methods of resolving disputes outside of court and are all confidential. Independent mediation is a method outside of litigation proceedings, while mediation at Arbitration and Court is within proceedings.
The choice of method is made based on the type of contract and the nature of the dispute, as well as time and cost. Mediation can be more easily resolved in all cases. Negotiating and Mediating, the ability to control is within the hands of the parties, 50% each. When it comes to consideration at a meeting of the Arbitrator or a trial at the Court, the parties cannot control the situation and the outcome decided by the Arbitrator or the Judge.
The Model Mediation Clause of Vietnam Mediation Centre (VMC) stated: “All disputes arising out of or in connection with this contract shall be resolved through mediation at the Vietnam Mediation Centre (VMC), a division of Vietnam International Arbitration Centre, in accordance with its Mediation Rules”
The Vietnam Mediation Centre (VMC) has a model mediation clause: "All disputes arising out of or in connection with this contract shall be resolved by mediation at the Vietnam Mediation Centre (VMC) under the Vietnam International Arbitration Centre in accordance with its Mediation Rules."
In Mediation at the Court, the parties do not entitle right to appoint the mediator, in constraty, they should follow to the mechanism according to relevant law; Mediation at Arbitration is also not appointed and no specific appointment is required because by the nature of the dispute settlement agreement at Arbitration, there is no mediation agreement anymore; Negotiation has no regulations so there are no designations; Mediation must be appointed, mediation agreements without designation are meaningless agreements. The advice for businesses when writing a mediation agreement is to write specifically where and how to mediate.
What to do to enable the efficiency of the mediation?
To achieve the most effective, practical, and fastest mediation with a positive outcome, the following conditions are required:
The relationship between the parties is not severely bad, and they have a will to maintain the relationship in the future.
Ability to perform obligations
The legal record is weak and lacks many elements, uncertainty to carry out the proceedings.
Notes for conducting mediation
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.
