Notes when signing an arbitration agreement

August 15, 2024

1. Factors to check before signing the agreement

For a dispute to be resolved by Arbitration, the parties must have an arbitration agreement (1). Pursuant to the provisions of Article 16 of the 2010 Commercial Arbitration Law, the arbitration agreement must be established in written form, in the form of terms in the contract between the parties or in the form of a separate agreement.

For example: Legal entity A and individual B sign a goods purchase and sale contract. The dispute resolution clause in the contract is as follows: “All disputes arising from or related to this Contract will be resolved.” Arbitration at the BigBoss International Commercial Arbitration Center (BBIAC) in accordance with the Center’s Arbitration Rules.

In reality, there are many cases where the arbitration agreement between the disputing parties can be considered unclear, specifically as follows:

Firstly, the parties have an arbitration agreement, but have not specified the form of arbitration or identified the arbitration organization that will resolve the dispute.

For example: The dispute resolution clause in a construction contract between two legal entities is as follows: “All disputes arising from or related to this Contract will be resolved by arbitration.”

In this case, the law stipulates that when a dispute arises, the parties must re-agree on the form of arbitration or appoint an arbitration organization to resolve the dispute. If the two parties still cannot reach a mutual agreement, the selection of an arbitration organization to resolve the dispute will be made at the request of the Plaintiff.

Second, the parties choose both arbitration and court to resolve the dispute.

For example: The arbitration agreement between the disputing parties is established with the following content: “All disputes arising from or related to this Contract will be resolved by arbitration or court in accordance with the provisions of law.” law”; or in cases where in the contract the parties choose Court as the place to resolve the dispute, but in the contract appendix or other document between the two parties, they choose Arbitration (not replacing the clause choosing Court).

In this case, based on Clause 4, Article 2 of Resolution No. 01/2014/NQ-HDTP dated March 20, 2014 on Instructions for implementing a number of provisions of the 2010 Commercial Arbitration Law, the handling is as follows:

In case the plaintiff requests the Arbitrator to resolve the dispute before asking the Court to resolve the dispute or requests the Arbitrator to resolve the dispute when the Court has not yet accepted the case specified in Point b, Clause 4 of this Article, then The Court based on the provisions of Article 6 of the Law on Commercial Centers to refuse to accept and resolve the case. In this case, upon receiving the petition, the Court must return the petition. If the case has been accepted, then based on the provisions of Point i, Clause 1, Article 192 of the Civil Procedure Code, it shall issue a decision to suspend the resolution of the case because not under the Court’s jurisdiction, return the petition and documents attached to the petition.

In case the plaintiff requests the Court to resolve the dispute, immediately after receiving the petition, the Court must determine whether one of the parties has requested arbitration or not.

Within 05 working days from the date of receiving the petition, if the Court determines that the defendant or the plaintiff has requested the Arbitrator to resolve the dispute, the Court will return the petition to the plaintiff and the school. In case the defendant or the plaintiff has not requested arbitration to resolve the dispute, the Court will consider accepting the settlement according to general procedures.

In case the Court has accepted the case and discovers that the dispute has been requested by the Arbitrator to resolve before the Court accepts the case, the Court shall, based on the provisions of Point i, Clause 1, Article 192 of the Civil Procedure Code, issue a decision to suspend the case. Just resolve the case because it is not under the Court’s jurisdiction, return the petition and documents attached to the petition.

Therefore, it is necessary to carefully consider many important factors to ensure that your rights and obligations are protected and risks are minimized.

First, the detailed content of the agreement needs to be read carefully, each term and condition. All important terms must be clearly stated and leave no ambiguity. In particular, the rights and obligations of both parties need to be considered to ensure fairness. You must be sure that your rights are protected and your obligations can be fulfilled.

Next, the financial terms need to be carefully examined. This includes terms related to payment, such as amount, payment term, and payment method. In addition, provisions related to penalties or interest should also be carefully considered.

Termination and dispute resolution provisions are also factors that cannot be overlooked. You need to carefully read the conditions for terminating the contract and the consequences of termination. Dispute resolution methods such as mediation, arbitration, or court should also be examined.

Ensuring that the agreement complies with applicable legal regulations is important. If necessary, you should seek legal advice to check whether the terms are in accordance with the law. The commitments of each party in the agreement also need to be carefully reviewed and ensured that they are achievable.

The agreement’s validity period and renewal provisions should also be checked. In addition, you should check the partner’s legal status and financial capacity to ensure they can fulfill the commitments in the agreement.

Before signing, the agreement needs to be approved by the parties involved and you should check that the signatures of the parties are complete and legal. Finally, provisions on information and data security, if any, also need to be considered to protect your rights.

The above factors will help you understand and control risks before signing the agreement, ensuring all conditions are transparent and reasonable.

2. How to ensure the agreement is legal and fair

To ensure that the arbitration agreement is legal and fair, the following steps should be taken carefully and in detail.

First, the arbitration agreement needs to be drafted clearly and in detail. The terms must be easy to understand, free from any ambiguity and include the arbitration procedures, venue, language and applicable law.

Next, choosing a reputable arbitration center is very important. This center should have a good reputation, accreditation and experience in dispute resolution. In addition, the center’s arbitration process also needs to be clear and fair to ensure the rights of both parties. The arbitration process needs to be regulated in a transparent manner. From how to file a claim, processing process, timetable to arbitration steps, everything must be clearly described. At the same time, the rights and obligations of the parties in the arbitration process also need to be specifically stipulated.

Besides, businesses also need to choose arbitrators with careful consideration. Arbitrators should be selected based on competence, experience and neutrality, ensuring there is no conflict of interest with any party.

Another important factor is the right to representation. Parties should have the right to be represented by a lawyer or legal representative throughout the arbitration process, ensuring they have sufficient time and opportunity to present and defend their positions.

Regarding information security, the arbitration agreement needs to clearly stipulate to protect the interests of the parties. Sensitive information and documents related to the dispute must be kept confidential. To ensure legality, the arbitration agreement must comply with applicable national and international legal regulations. Arbitration clauses should be consistent with relevant legal provisions and not violate basic principles of human rights and justice. Additionally, confirmation of the agreement by the parties is also important. The arbitration agreement should be signed and confirmed by the parties involved voluntarily, without coercion. The parties need to clearly understand their rights and obligations in the agreement.

Finally, there needs to be clear regulations on monitoring and implementing arbitration results. The parties must commit to comply with the arbitration decision and take remedial measures if one party does not comply.

Businesses should take the above steps to help ensure the arbitration agreement is implemented legally and fairly, protecting the rights and obligations of all parties involved.

3. Risks and prevention measures

When entering into an arbitration agreement, parties need to be aware of many potential risks and apply appropriate precautions to protect their rights.

One of the biggest risks is that the arbitrator is not neutral. The arbitrator may be biased or have a conflict of interest with one of the parties, leading to an unfair decision. To avoid this, parties need to choose arbitrators with good reputations, no conflicts of interest, and may require them to sign a neutrality pledge.

The second risk is that the arbitration process is not transparent. If the process lacks clarity, parties may have difficulty following and implementing it. Therefore, it is necessary to establish a transparent arbitration process, with clear and detailed regulations from filing a claim to making an award, ensuring that all steps are communicated and implemented transparently.

Lack of legality of the agreement is another risk. If the agreement does not comply with applicable laws, it may be unenforceable. As a precaution, it is necessary to check the agreement with a lawyer to ensure compliance with applicable laws and ensure the agreement is enforceable in the relevant countries.

In addition, choosing an unfair arbitrator is also a risk that needs to be kept in mind. One party may have an advantage in selecting the arbitrator, resulting in an unfair decision. To ensure fairness, the parties can agree on a list of potential arbitrators or agree on a neutral arbitrator selection agency, or apply the method of selecting arbitrators from a selected list. both parties approved.

The high cost of arbitration is also a factor to consider. The arbitration process may be more expensive than expected, putting financial pressure on the parties. To manage costs, the parties need to agree on the arbitration fees and other related expenses, ensuring that the cost provisions are clearly stipulated in the agreement.

Finally, failure to enforce an arbitral award is a serious risk. A party may not comply with the award, and arbitration awards may not be recognized in some countries. To ensure enforceability, it is necessary to check and ensure that the award will be recognized and enforced in the relevant countries, it is possible to agree in advance on measures to ensure enforcement of the award, such as deposit or guarantee.

Identifying the risks and taking appropriate precautions will help protect the interests of the parties and ensure that the arbitration agreement is implemented fairly and effectively.

4. How to resolve disputes using Bigboss International Commercial Arbitration Center

To resolve disputes by commercial arbitration at BBIAC. Customers can write in the contract one of the following two contents:

4.1. Model Arbitration Clause

In addition, the parties may add:

(a) the number of arbitrators is [one or three].

(b) the place of arbitration is [city and/or country].

(d) the arbitration language is [ ].** Note: *

Only applicable to disputes with foreign elements **

Only applies to disputes with foreign elements or disputes in which at least one party is a foreign-invested enterprise.

4.2. The Model Arbitration Clause applies to summary proceedings

“Any dispute arising out of or in connection with this contract shall be resolved by arbitration at the BIGBOSS International Commercial Arbitration Center (BBIAC) in accordance with its Rules of Arbitration. The parties agree that the arbitration proceedings will be conducted in accordance with the Summary Procedures set out in Article 37 of the BBIAC Arbitration Rules.”

In addition, the parties may add:

(a) the place of arbitration is [city and/or country].

(b) the law applicable to the contract is [ ].*

Note:

* Only applies to disputes with foreign elements

** Only applies to disputes with foreign elements or disputes where at least one party is a foreign-invested enterprise