I. Understanding the commercial mediation mechanism in investment disputes
1. What is the commercial mediation mechanism in investment disputes?
According to Article 317 of the Law on Commerce 2005, forms of resolving commercial disputes include:
- Negotiation between the parties;
- Mediation by a body, organization, or individual selected by the parties as a mediator;
- Resolution by Arbitration or Court.
Mediation is a form of dispute resolution conducted by a body, organization, or individual agreed upon by the parties to act as an intermediary mediator. Clause 1 Article 3 of Decree No. 22/2017/ND-CP defines commercial mediation as a method of settling commercial disputes agreed by the parties, supported by a commercial mediator acting as an intermediary to assist in resolving the dispute.
2. Common centers implementing commercial mediation mechanisms in investment disputes today
According to Article 18 of Decree No. 22/2017/ND-CP, there are two types of commercial mediation organizations:
- Commercial Mediation Centers established and operating under Decree No. 22/2017/ND-CP;
- Arbitration Centers established and operating under the Law on Commercial Arbitration that also conduct commercial mediation under Article 23 of Decree No. 22/2017/ND-CP.
Popular examples include the Southern Trade Arbitration Center (STAC), Vietnam International Commercial Mediation Center (VICMC), Vietnam International Arbitration Center (VIAC), among others.
II. Legal regulations on the commercial mediation mechanism in investment disputes
1. Conditions for applying the commercial mediation mechanism in investment disputes
Under Article 6 of Decree No. 22/2017/ND-CP, disputes may be settled by commercial mediation if the parties have an agreement to mediate. This agreement can be made before or after the dispute arises, or at any stage during the dispute resolution process.
- Mediation agreement: This can be formed in two main ways: either directly as a mediation clause within the contract between the parties, or as a separate agreement independent of the main contract. In both cases, the mediation agreement must be made in writing to ensure clarity and binding force.
- Timing: Parties have the right to agree on mediation before a dispute arises, after a dispute has occurred, or at any point during the dispute resolution process.
2. Principles of implementing the commercial mediation mechanism in investment disputes
According to Article 4 of Decree No. 22/2017/ND-CP, the principles include:
- Parties to the dispute participate in mediation entirely voluntarily and equally in rights and obligations;
- Information related to the mediation case must be kept confidential, unless otherwise agreed in writing by the parties or as prescribed by law;
-The mediation agreement must not violate prohibitions of law, social ethics, aim to evade obligations, or infringe upon the rights of third parties.
3. Procedures for implementing the commercial mediation mechanism in investment disputes
Chapter 3 of Decree No. 22/2017/ND-CP sets out the process as follows:
- Mediation agreement and selection of mediator:
+ The mediation agreement can be in the form of a mediation clause in the contract or a separate written agreement.
+ The mediator is selected by the parties from the list of commercial mediators published by a commercial mediation organization or the list of ad hoc commercial mediators announced by the Department of Justice.
+ If selection is through a mediation organization, it is performed according to that organization’s Mediation Rules.
- During mediation, parties have rights and obligations:
- Rights:
+ To choose the mediation process, mediator, venue, and time;
+ To agree or refuse to mediate; request suspension or termination;
+ Request mediation be public or private;
+ Express will and decide on the content of mediation;
+ Other rights under Decree No. 22/2017/ND-CP and relevant laws.
- Obligations:
+ Present truthful facts, provide information/documents at the mediator’s request;
+ Execute the settlement agreement;
+ Pay mediation service fees unless otherwise agreed;
+ Other obligations under Decree No. 22/2017/ND-CP and relevant laws.
- Mediation process:
+ The parties may choose the mediation organization’s rules or agree on procedures. If not agreed, the mediator will conduct the mediation as deemed appropriate to the circumstances and accepted by the parties.
+ One or more mediators may conduct mediation as agreed.
+ At any time, the mediator may propose solutions to resolve the dispute.
+ Venue and time are by the parties’ agreement or chosen by the mediator if the parties do not agree.
- Settlement and recognition of mediation results:
+ If mediation succeeds, a written record of successful mediation is made.
+ This document is binding under civil law and may be recognized by court procedures.
+ It includes:
Basis for mediation;
Basic information of the parties;
Main content of the case;
Agreement reached and implementation plan;
Other agreed content consistent with law.
- The document must be signed by the parties and the mediator.
- The document on the successful mediation result is considered for recognition according to the provisions of civil procedure law.
Notes: If mediation fails, the parties may continue mediation or refer the dispute to Arbitration or Court.
- Mediation ends when:
+ The parties reach a successful settlement;
+ The mediator decides continuation is unnecessary, after consulting the parties;
+ At the request of one or more parties.
III. Questions on the commercial mediation mechanism in investment disputes
1. Are foreign mediation organizations allowed to operate in Vietnam?
According to Clause 1, Article 33 of Decree No. 22/2017/ND-CP, foreign commercial mediation organizations that are legally established and operating abroad, and that respect the Constitution and laws of Vietnam, are permitted to operate in Vietnam.
2. What types of organizations currently implement commercial mediation in investment disputes?
Per Article 18 of Decree No. 22/2017/ND-CP, there are two types:
- Commercial Mediation Centers established under Decree No. 22/2017/ND-CP;
- Arbitration Centers established under the Law on Commercial Arbitration that also conduct commercial mediation.
3. When does the commercial mediation mechanism terminate?
According to Article 17 of Decree No. 22/2017/ND-CP, mediation ends when:
- The parties reach a successful settlement;
- The mediator decides it is unnecessary to continue, after consulting the parties;
- At the request of one or more parties.
4. How are the costs for implementing commercial mediation in investment disputes determined?
Under Clause 2, Article 34 of the Law on Commercial Arbitration 2010, arbitration fees are not state-managed but are determined by arbitration centers or arbitral tribunals. Thus, there is no specific statutory mechanism to calculate commercial arbitration fees; they are set by each arbitration center.
5. What legal value does a mediation outcome have?
According to Clause 4, Article 3 of Decree No. 22/2017/ND-CP, a successful mediation outcome is an agreement between the parties resolving part or all of the dispute. Its essence is the voluntary consensus of the parties, accepting each other’s terms to settle the dispute.
Under Clause 1, Article 15 and Article 16 of Decree No. 22/2017/ND-CP, a written record of successful mediation is binding under civil law and may be recognized under civil procedure law.
IV. Legal advisory services on commercial mediation mechanisms in investment disputes
The above is NPLaw’s explanation on the commercial mediation mechanism in investment disputes. If you have any further questions or require legal assistance, please contact NPLaw at:
