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.

Commercial mediation in Vietnam is operated in accordance with 3 main legal bases. Firstly, Chapter XXXIII of the 2015 Code of Civil Procedure on Procedure for Recognition of Out-of-Court Mediated Settlement Agreement grants the mediated settlement agreement the recognition and enforcement as if the Court's final judgment. This legislation is a big step for Vietnam toward other regional jurisdictions.

Secondly, the 2010 Law on Commercial Arbitration prescribes on the hybrid process of mediation and arbitration. The other legal document directly associated with mediation practitioners is Decree 22/2017/ND-CP (Decree 22/CP) on Commercial Mediation. In a historically comparative manner, Decree 22/CP is closely similar to Decree 116-CP dated 05 September 1994, which regulates non-governmental arbitration institutions' operation and sets out the basis for commercial arbitration nowadays. The other identicality between Decree 116-CP and Decree 22/CP is that they are the first legislation on arbitration and mediation, respectively.

The history of Decree 22/CP

The Ministry of Justice established the Drafting Board of Decree 22/CP project on 16 May 2013 and then the Editorial Group five days later. On 14 February 2014, The Ministry of Justice officially established the Drafting Board and Editorial Group. It was my honor that I was a member of the Editorial Group. The Decree 22/CP project was initiated in 2013, but it was only on 24 February 2017 that the Decree 22/CP was officially issued. There were two reasons accounting for the 4-year prolonged drafting process:

Firstly, The Drafting Board of the Decree 22/CP project had to follow up the working of the Drafting Board of the 2015 Code of Civil Procedure project, as there are provisions on legal empowerment of the mediated settlement agreement prescribed in the Code are needed to taking into consideration when drafting the Decree.

Decree 22/CP and its legislative history are generally compared with that of the Singapore Convention on Mediation. In my opinion, they are incomparable since the drafting process of Decree 22/CP started in 2013, Singapore Convention on Mediation was never taken into consideration. In fact, Singapore Convention on Mediation was only drafted between 2015 and 2018, signed in 2019, and entered into force in 2020; therefore, it is evitable that the Drafting Board and the Editorial Group of the Decree 22/CP project were totally unaware of the Singapore Convention on Mediation.

Although there are Vietnamese representatives in the meeting held by the United Nations Commission On International Trade Law (UNCITRAL) regarding the Singapore Convention on Mediation draft, the drafting of Decree 22/CP is irrelevant to the Convention draft. Fortunately, the Decree 22/CP project received immense assistance from international projects and organizations, namely: the U.S. Agency for International Development (USAID) in assisting the Ministry of Justice in hosting conferences; and the United Nations Development Programme (UNDP ) and the International Finance Corporation (IFC) – a division of World Bank (WB) in actively assisting the Ministry of Justice during the drafting process of the Decree.

Secondly, Even when the 2015 Code of Civil Procedure was passed, the Decree 22/CP project was critically hindered because of the continuous substitutions of certain positions in the Ministry of Justice and leaders who are in charge of judicial support; furthermore, it took time for relevant Ministries to present their commentary and add-on opinion on the draft of the Decree.

IFC's contribution to Decree 22/CP is recognized as their experts from various jurisdictions and those working at its headquarter submit sophisticatedly constructive commentary to the draft Decree. Dr. Francis Law, President of the Hong Kong Mediation Centre also contributed to the draft Decree. Back then, there were controversies among the Ministry of Justice that regulation on ad-hoc mediation was unnecessary. More specifically, it is difficult to administer ad-hoc mediators and mediations, and it requires a complex procedure for recognition of mediated settlement agreement at the Court. When the Drafting Board was about to remove provisions prescribing ad-hoc mediation in the draft, Mr. Francis Law sent various legislative documents on ad-hoc mediation in Hong Kong and other Common Law jurisdictions to the Ministry of Justice. Because of it, Decree 22/CP still regulated ad-hoc mediation; and up to now, there are more than 100 registered ad-hoc mediators.

Last but not least in contributing to the draft Decree is United Nations Commission On International Trade Law (UNCITRAL). UNCITRAL tends to encourage countries to ratify UNCITRAL Mediation Rules rather than having their legislation on mediation. However, assessing the exceptional status quo in Vietnam, the Ministry of Justice firmly determined the Decree as it will be the first legislative document to regulate mediation, accordingly satisfying UNCITRAL's recommendations on assisting mediation. However, in fact, Decree 22/CP was an adoption with supplements of the UNCITRAL Mediation Rules' fundamental principles, such as the legal empowerment of mediated settlement agreement. Decree 22/CP, with its historically remarkable position, has set the concrete ground for the mediation market in Vietnam.

At the moment, the Ministry of Justice has been proposing to the National Assembly the Law on Commercial Mediation project, as it would be accordingly systematic to the Law on Court-annexed Mediation and Dialogue, which has just been issued. We are looking forward that Decree 22/CP will be adopted and advanced to a law, therefore playing a similar role as the UNCITRAL Mediation Rules.

Enforcement of “domestic” mediated settlement agreement

It took the Drafting Board and Editorial Group lots of time to draft Article 4.3 of Decree 22/CP, which defines "a mediated settlement agreement". At last, the Drafting Board decided to use the term "mediated settlement agreement" instead of "mediated settlement contract". The reason is that it creates a uniform system with terms used in the 2015 Code of Civil Procedure; consequently, if parties seek mediated settlement agreement recognition at the Courts, as the Judges knew of such system and terms, the procedure is expected to be simpler. A notable remark of Decree 22/CP is its inclusion of both institutional mediation and ad-hoc mediation. First, this inclusion is especially beneficial in dispute resolution since it might help parties partially resolve the dispute if they cannot reach an agreement on all issues. Second, arbitration practitioners also enjoy the benefit as it limits the arbitration tribunal's jurisdiction in case parties-in-dispute have a partially mediated settlement agreement.

There are three approaches to the recognition and enforcement of mediated settlement agreement in Vietnam.

The first approach is to recognize a mediated settlement agreement as a contract. Article 15.1 of Decree 22/CP stipulates: "If the parties reach a mediated settlement, they shall conclude a mediated settlement agreement. The mediated settlement agreement is enforceable in accordance with civil legislation." The underlying purpose of this Article is to impose the legal empowerment of a contract and the enforcement of it to a mediated settlement agreement.

The second approach is to recognize and enforce a mediated settlement agreement as a judgment of the Court according to civil procedural legislation and Law on Enforcement of Civil Judgments. According to Chapter XXXIII of the 2015 Code of Civil Procedure, if parties have a mediated settlement agreement but either a party does not voluntarily execute as per the agreement or parties voluntarily execute once granted recognition from the Court, then the promisee has the right to request the Court recognition accordingly with the procedure set forth in the Code. As a result, the recognized mediated settlement agreement has commandingly legal empowerment, and any parties, if needed, can request the imperative enforcement procedure as other Court judgments.

The third approach is to recognize and enforce a mediated settlement agreement as an arbitral award according to commercial arbitration legislation and Law on Enforcement of Civil Judgements. Parties take this approach if they neither want the mediated settlement agreement to be merely a contract – due to their cautiousness of contract non-performance – nor want the Court recognition – as an obligated party based in a foreign country. In this case, parties might request the arbitration tribunal award of recognition according to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

A mediated settlement agreement as a judgment of the Court

Regarding the regulation on recognition of out-of-court mediated settlement agreements, Article 417.1 of the 2015 Code of Civil Procedure prescribes parties’ civil capacities when signing a mediated settlement agreement as if they when signing a contract. Furthermore, Article 417.2 regulated that “Parties in a mediated settlement agreement has their rights and obligations as per such agreement”, or in other words, the subject matter of the contract/agreement shall be the parties’ rights and obligations. If the subject matter of the mediated settlement agreement involves a third party, there shall be consent from that third party. This Article is among the regulations that are especially noticeable to the Courts.

There are two issues raised when revising Chapter XXXIII of the 2015 Code of Civil Procedure, namely the involvement of a third party and the parties’ duties owed to the State. The Supreme People’s Court expresses its concern that parties might use mediation to conclude an agreement that fraudulently frees parties from tax duties and other obligations owed to a third party. Moreover, due to the confidentiality of the mediation, a third party is not allowed to sit in the mediation; however, the mediated settlement might involve his rights. The Courts should closely supervise this issue, as well as come up with a solution.

A mediated settlement agreement shall be on the basis of voluntary; be free from the law's prohibition, which sets out a basis to object to the settlement agreement recognition request; not contrary to the public morality; and last but not least, not fraudulently frees parties from tax duties and other obligations owed to a third party. During the drafting of Article 417.1 and Article 417.2, there were many controversial arguments among the Drafting Board, and consequently, the decision-making only ended after a prolonged time. Article 417.3 prescribes that the Court shall accept the case if either a party or all parties in mediation request recognition. In the first instance, the Drafting Board submitted that the case shall only be accepted by the Court if all parties shall request recognition and have no post-mediation dispute. However, after discussions, the Decree prescribes neither all parties' requests for recognition nor the requirement of having no post-mediation dispute, so that it will protect the promisee in case of the other party's non-performance.

A mediated settlement agreement as an arbitral award

This approach is implemented according to the Mediation-Arbitration Protocol prescribed in Article 9 (Negotiation and Mediation during Arbitral Procedure) and Article 58 (Mediation and Recognition of the Mediated Settlement Agreement) of the 2010 Law on Commercial Arbitration. The Mediation-Arbitration Protocol, jointly operated by the Singapore International Arbitration Centre (SIAC) and the Singapore Mediation Centre (SMC), is well-known. In Vietnam, Article 58 of the 2010 Law on Commercial Arbitration is applicable to recognize the mediated settlement agreement.

It is worth noting that recognizing any mediated settlement agreement is not an obligation of the arbitral tribunal. According to Article 58 of the 2010 Law on Commercial Arbitration, the arbitral tribunal shall only grant the recognition if the parties in arbitration requested mediation and that mediation was conducted by the arbitral tribunal at request. Therefore, parties in dispute should select arbitrators who encourage the mediation; then, in case of mediation, they will promote the procedure accordingly. However, that promotion is not an obligation of the arbitrators.

The procedure of enforcing a "foreign" mediated settlement agreement in Vietnam

Vietnam has not been a signator of any Multilateral Convention regarding the recognition of mediated settlement agreements concluded at a foreign mediation centre. Chapter XXXIII of the 2015 Code of Civil Procedure is exclusively applicable to authorized mediators and mediation institutions based in Vietnam. Accordingly, this umbrella term includes mediation as in Decree 22/CP; mediation-arbitration protocol as in the 2010 Law on Commercial Arbitration; mediation in civil procedure as in the 2015 Code of Civil Procedure; mediation and dialogue at the Court as in Law on Court-annexed Mediation and Dialogue and Law on Mediation at Local Authority. The Courts only accept the case and consider the request at mediated settlement agreement concluded at the mediation centre according to the law and might refuse that concluded at foreign mediation centre.

There are several approaches for parties to enforce their mediated settlement agreement concluded in a foreign territory, such as voluntary enforcement as if a contract, enforcement according to the mediation-arbitration protocol, and enforcement according to the procedure of foreign judgment recognition. For instance, if a Court of a country recognizes a mediated settlement agreement as a judgment according to Chapter XXXIII of the 2015 Code of Civil Procedure, reciprocally, it might request a Court in Vietnam to recognize that agreement according to the relevant bilateral treaty on mutual legal assistance. A brand new approach is the enforcement according to the mediation-arbitration protocol between cross-national institutions.

This approach is illustrated in the agreement between Singapore International Mediation Centre (SIMC) and the Beijing Arbitration Commission (BAC), and the Beijing International Arbitration Center (BIAC), the agreement between SIMC and Shenzhen Court of International Arbitration (SCIA). For instance, at SIAC, parties concluded a mediated settlement agreement, and SIAC has successfully negotiated with Chinese arbitration institutions such as BAC or SCIA to recognize that agreement as a Chinese arbitral award. Mediation institutions and arbitration institutions in Vietnam should consider this new approach; as well as the others, such as the mutually-recognition between Vietnam-based institutions to promote the domestic arbitration and mediation market.

Recognition of "foreign" mediated settlement agreement in Vietnam accompanies various risks and uncertainties, such as whether the Court shall recognize the arbitral award which approves the partially mediated settlement agreement. In fact, there have not been any cases; thus, the Court's opinion on this remains questioned.

According to Vietnam’s law, the Courts in Vietnam only recognize and enforce arbitral awards which resolve all issues of the dispute. Moreover, there are other bases to which the Court refuse to recognize the mediated settlement agreement, such as inappropriate arbitral procedure, inappropriate procedure before the arbitral tribunal, and violation of fundamental principles of Vietnam’s legislation.

Recommendations

Suppose either the mediated settlement agreement needed enforcement in Vietnam or the assets of the losing party is in Vietnam. In that case, parties in dispute should mediate in Vietnam to enjoy assistance from Vietnam-based mediation centers and mitigate uncertainties associated with recognizing and enforcing the mediated settlement agreement. If the mediated settlement agreement needed enforcement in a foreign territory, parties should thoroughly consider whether to request a Court in Vietnam for recognition. If that is the case, the parties must request the foreign Court to recognize the judgment of the Vietnamese Court – which is ominous since Vietnam only signed few bilateral treaties on mutual legal assistance.

In this case, the Arb-Med-Arb Protocol (Arbitration-Mediation-Arbitration Protocol) of VIAC-VMC is potentially applicable because arbitral awards at VIAC are recognized and enforced by Courts in 164 contracting parties of the 1958 New York Convention. Besides, arbitration and mediation centres in Vietnam are recommended to arrange cooperation with international partners in Singapore, Korea, Japan, China (HongKong) & Taiwan since they are Vietnam’s top 5 leading economic partners. Mr. Francis Law from Hong Kong Mediation Centre (HKMC) has proposed cooperation between HKMC and VIAC-VMC to promote the Protocol./.