What is Commercial Mediation? Overview and Benefits for Businesses

Commercial Mediation: An Overview and Benefits for Businesses

1. What is Commercial Mediation?

1.1. Definition of Commercial Mediation

Commercial mediation is relatively new in Vietnam, although mediation is a familiar term for people and businesses. According to Black’s Law Dictionary, mediation is: “Intervention; the act of a third person who intervenes between two contending parties to permit them to adjust their dispute.”

In Vietnam, commercial mediation is an out-of-court dispute resolution method where disputing parties engage in a negotiation process with the assistance of a neutral and independent mediator. The goal of mediation is to help parties reach a peaceful and effective settlement, minimizing court intervention and avoiding high legal costs.

In Vietnam, commercial mediation is regulated by Decree No. 22/2017 on Commercial Mediation and its implementing guidelines. It is an encouraged and applied dispute resolution method in disputes related to commercial contracts, business rights, and many other commercial issues.

1.2. Differences Between Commercial Mediation and Other Dispute Resolution Methods

• Commercial Mediation vs. Court:
  • Commercial mediation is a voluntary, non-legally binding process where parties control the process and outcome, with the mediator facilitating solutions.
  • Courts are legal authorities resolving disputes through formal procedures and issuing binding judgments.
  • Mediation leads to mutually agreed settlements, while court judgments are enforceable.
  • Mediation is generally less costly and faster than court litigation.
• Commercial Mediation vs. Arbitration:
  • Mediation involves a neutral facilitator without decision-making power, while arbitrators issue binding awards.
  • Mediation results in settlements, while arbitration awards are legally enforceable.
  • Mediation is typically less expensive and quicker than arbitration, though arbitration is faster than court.
• Commercial Mediation vs. Negotiation:
  • Mediation involves a neutral third party, while negotiation is direct between disputing parties.
  • Mediation can lead to formal agreements with mediator assistance, while negotiation agreements are direct.
  • Mediation may involve mediator costs but is less expensive than arbitration or litigation, while negotiation is the least costly.

2. Benefits of Commercial Mediation for Businesses

Commercial mediation offers numerous benefits for businesses, providing a faster, more efficient, and less costly dispute resolution method compared to courts or arbitration.

2.1. Cost and Time Savings

Mediation significantly reduces time and costs compared to litigation or arbitration. It allows businesses to resume operations quickly, avoiding prolonged disruptions. Mediation costs are lower due to simpler procedures and reduced legal fees.

2.2. Confidentiality

Mediation maintains high confidentiality, protecting sensitive business information from public disclosure. This is crucial for businesses with valuable data or those seeking to preserve their reputation.

2.3. Maintaining Long-Term Business Relationships

Mediation helps maintain business relationships by fostering harmonious solutions. It reduces conflict and allows businesses to preserve partnerships with clients, suppliers, and partners. Successful mediation can restore trust and open future collaboration opportunities.

3. When Should Businesses Choose Commercial Mediation?

Businesses should consider mediation in various dispute situations. It is ideal for quick resolutions to avoid business disruptions and for cost-effective dispute settlement.

3.1. Suitable Situations for Commercial Mediation

• Commercial contract disputes.
• Disputes between business partners.
• Disputes with customers or suppliers.
• Intellectual property disputes.
• Labor disputes.
• International or multi-jurisdictional disputes.

3.2. Important Considerations When Participating in Commercial Mediation

• Thorough preparation: Gather documents, define objectives, and understand the other party’s perspective.
• Mediator selection: Choose a qualified, experienced, and neutral mediator.
• Open and cooperative attitude: Focus on mutual benefits and avoid confrontational language.
• Clear and enforceable agreements: Ensure agreements are well-drafted and legally sound.

4. How to Resolve Disputes Through the Bigboss International Commercial Arbitration Center (BBIAC)

To resolve disputes through arbitration at BBIAC, clients can include one of the following clauses in their contracts:

4.1. Standard Arbitration Clause

“Any dispute arising from or related to this contract shall be resolved by arbitration at the Bigboss International Commercial Arbitration Center (BBIAC) in accordance with its Arbitration Rules of Procedure.”

Additional clauses can be added:

• (a) Number of arbitrators: [one or three].
• (b) Place of arbitration: [city and/or country].
• (c) governing law of the contract is [ ].*
• (d) the language of arbitration is [ ].**
  • *Applicable only to disputes with foreign elements.
  • **Applicable only to disputes with foreign elements or disputes with at least one party being a foreign invested enterprise.

4.2. Standard Arbitration Clause for Expedited Procedures

“Any dispute arising from or related to this contract shall be resolved by arbitration at the Bigboss International Commercial Arbitration Center (BBIAC) in accordance with its Arbitration Rules of Procedure. The parties agree that the arbitration proceedings shall be conducted in accordance with the Expedited Procedure provided for in Article 37 of the BBIAC Arbitration Rules of Procedure.”

Additional clauses can be added:

• (a) the place of arbitration is [city and/or country].
• (b) the governing law of the contract is [ ].*
• (c) the language of arbitration is [ ].**
  • *Applicable only to disputes with foreign elements.
  • **Applicable only to disputes with foreign elements or disputes with at least one party being a foreign invested enterprise.