Commercial Arbitration and Third-Party Rights
1. Concept
Commercial arbitration may be understood as a private, consensual dispute resolution mechanism conducted at the request and based on the agreement of the parties. Commercial arbitration is competent to resolve only disputes arising from commercial activities (Article 2 of the Law on Commercial Arbitration 2010) and is primarily governed by the Law on Commercial Arbitration No. 54/2010/QH12 (hereinafter referred to as the “LCA 2010”). A third party refers to an individual or organization that is not a signatory to the arbitration agreement and is not directly involved as a claimant or respondent in the dispute. However, in many cases, the lawful rights and interests of a third party may be directly or indirectly affected by the outcome of arbitral proceedings.
2. Rights and Interests of Third Parties
2.1. Rights and interests of third parties in commercial arbitration
Unlike court proceedings, where the participation of third parties (persons with related lawful rights and interests) is expressly regulated by procedural law, commercial arbitration does not provide explicit statutory provisions on whether third parties may participate in arbitral proceedings. This raises an important legal question: if the rights and interests of a third party are adversely affected, may such party participate in the arbitral proceedings? In principle, the answer is affirmative, provided that the participation of the third party is consented to by both the claimant and the respondent. From Articles 5 and 16 of the LCA 2010, it can be inferred that commercial arbitration is binding only upon parties who have entered into an arbitration agreement, and that third parties are not bound by such agreement in the absence of their participation or the consent of the contracting parties. Accordingly, a third party has the right not to be bound by an arbitration agreement and may seek to protect its lawful rights and interests where an arbitral award is likely to infringe upon or directly affect those rights. Where the disputing parties and the arbitral tribunal consent, a third party may participate in arbitral proceedings for the purpose of directly safeguarding its lawful rights and interests. Although the LCA 2010 does not specifically regulate the procedural rights of third parties, arbitral practice has shown that, in a number of cases, third parties have been permitted to participate within an appropriate scope. Such participation may help mitigate the risk of arbitral awards adversely affecting related stakeholders. In practice, the rights and legitimate interests of third parties in arbitral proceedings remain relatively ambiguous. Examples of third parties having legitimate interests include parent–subsidiary companies, subcontractors involved in asset management, and guarantor banks.
2.2. Protection of third parties’ rights and interests
A third party must demonstrate to the arbitral tribunal that its lawful rights and interests are closely connected to the dispute, and that such interests either prevail over or significantly influence the interests of the disputing parties. In such circumstances, the arbitral tribunal is required to exercise particular caution when deciding whether to exclude or permit the participation of the third party. Nevertheless, the procedural scope granted to third parties in commercial arbitration is generally more limited than in court proceedings, in order to preserve the private, confidential, and consensual nature of arbitration. The law allows third parties to protect their rights through indirect mechanisms, such as initiating proceedings before a competent court or opposing the recognition and enforcement of an arbitral award where their lawful rights and interests have been seriously infringed. Third parties may also pursue independent litigation before the courts. The principle of arbitration by agreement does not deprive non-signatories of their right to initiate court proceedings. Therefore, third parties remain entitled to bring claims before competent courts to protect their lawful rights and interests. In practice, there have been numerous cases where third parties, whose interests were adversely affected by an arbitral award, initiated legal actions against arbitrators, alleging breaches of duty and resulting damages. Such situations may arise, for example, where an arbitral tribunal orders interim or provisional measures that negatively impact the rights and interests of third parties.
To ensure adequate protection of third-party rights, the following issues should be noted:
When drafting arbitration agreements, parties should carefully consider potential legal relationships with other related entities in order to minimize future disputes involving third parties.
Arbitral tribunals should exercise prudence in allowing third parties to participate in proceedings, ensuring that the autonomy of the disputing parties is not infringed while still safeguarding the legitimate interests of related stakeholders.
2.3. The role of third parties in arbitral proceedings
In commercial arbitration, third parties do not play a central role; however, their involvement remains significant. They may contribute to a more comprehensive and objective resolution of disputes and help ensure a balanced allocation of interests among relevant stakeholders. Third parties may provide critical information and evidence essential for establishing the objective facts of a dispute. Even with a limited procedural role, their participation can assist arbitral tribunals in rendering awards that more accurately reflect the factual circumstances of the case, thereby enhancing the persuasiveness and quality of arbitral awards. Third parties also play an indirect role in ensuring the effectiveness and enforceability of arbitral awards. Where a third party’s lawful rights and interests are substantially affected by an arbitral award, this may give rise to subsequent court proceedings, such as applications to set aside arbitral awards under Article 68 of the LCA 2010, or objections to the recognition and enforcement of such awards.
3. Conclusion
Commercial arbitration is an effective and flexible dispute resolution mechanism well-suited to the needs of modern business activities. Due to its consensual nature, the protection of third-party rights and interests has long been a subject of extensive discussion. Clearly identifying the legal position of third parties in arbitral proceedings not only enhances fairness and transparency but also strengthens stakeholders’ confidence in arbitration as a dispute resolution method.
4. Resolving disputes through BIGBOSS International Commercial Arbitration Center (BBIAC)
To resolve disputes by commercial arbitration at BBIAC, parties may incorporate one of the following clauses into their contract:
4.1. Model arbitration clause
“Any dispute arising from or in connection with this contract shall be resolved by arbitration at the BIGBOSS International Commercial Arbitration Center (BBIAC) in accordance with its Arbitration Rules.”
The parties may further agree on:
(a) the number of arbitrators: [one or three];
(b) the seat of arbitration: [city and/or country]
(c) the governing law of the contract
(d) the language of arbitrationNotes:
Applicable only to disputes involving foreign elements.
Applicable only to disputes involving foreign elements or disputes where at least one party is a foreign-invested enterprise.4.2. Model arbitration clause under the expedited procedure
“Any dispute arising from or in connection with this contract shall be resolved by arbitration at the BIGBOSS International Commercial Arbitration Center (BBIAC) in accordance with its Arbitration Rules. The parties agree that the arbitration shall be conducted under the Expedited Procedure provided for in Article 37 of the BBIAC Arbitration Rules.”
The parties may further agree on:
(a) the seat of arbitration: [city and/or country]
(b) the governing law of the contract
(c) the language of arbitrationNotes:
Applicable only to disputes involving foreign elements.
Applicable only to disputes involving foreign elements or disputes where at least one party is a foreign-invested enterprise.📞 Contact 0979 133 955 for consultation and assistance.
