A Discourse on the Utilization of Arbitration for the Settlement of Environmental Disputes

October 22, 2025

1. The Concept of Environmental Disputes

The definition of environmental disputes is currently not uniformly codified within legal instruments and is subject to varied interpretations. Nevertheless, based on pertinent legislation and jurisprudence/practice, a general concept of environmental disputes may be understood as follows: An Environmental Dispute is a conflict, disagreement, or divergence of opinions among various legal subjects arising in the field of exploitation, utilization, and protection of environmental components. Environmental disputes, akin to civil or commercial disputes, also originate from acts constituting a breach of law or an infringement impacting the rights and interests of other parties, consequently affecting the pristine state of the environment.

The causes of environmental disputes stem from conflicts among individuals, organizations, and residential communities concerning their rights and interests related to the prevention and remediation of pollution, environmental degradation, and incidents; as well as the rational exploitation and utilization of environmental resources.

2. Categories of Environmental Disputes

2.1. Substance of Environmental Disputes

Pursuant to the provisions stipulated in Article 162 of the 2020 Law on Environmental Protection regarding the substance of environmental disputes, the following categories are included:

Disputes regarding rights and responsibilities for environmental protection in the exploitation and utilization of environmental components: These disputes arise when multiple subjects jointly exploit or utilize an environmental component within the same or adjacent areas, resulting in a conflict over the determination of which subject bears the rights and responsibilities.
Disputes regarding the determination of the cause of pollution, degradation, or environmental incidents: These disputes typically arise when numerous subjects are involved in the exploitation, utilization, and activities related to the environment, yet the origin, source of pollution, environmental degradation, or incident cannot be definitively identified.
Disputes regarding the liability for remediation, consequence mitigation, and compensation for environmental damage: These disputes arise when a financial necessity is posed for the purpose of settling, resolving, mitigating consequences, and compensating for environmental damage. The resolution of such disputes aims to determine which subject is liable, and the extent of the compensation required to address the environmental consequences caused by the subject’s unlawful acts.

2.2. Categories of Environmental Disputes

The commonly encountered categories of environmental disputes are as follows:

Disputes between individuals, organizations, investors, and producers regarding the exploitation and joint utilization of environmental resources and components.
Disputes between organizations, individuals, or residential communities and other organizations or individuals concerning claims for compensation due to environmental pollution. This category includes disputes demanding compensation for damages resulting from environmental incidents.
Disputes arising during the execution of development projects that affect or are likely to affect environmental components under the lawful management and utilization rights of other legal subjects.

3. Principles and Mechanisms for Environmental Dispute Resolution

3.1. Principles Governing Environmental Dispute Resolution

– Principle of Encouraging Negotiation and Mediation Among Disputing Parties at the Local Level: This principle is built on the basis of respecting the opinions and interests of the disputing parties as well as the societal interest, guiding the subjects to collectively discuss and agree upon a method for resolving their disagreement and voluntarily implementing said method.

– Principle of Prioritizing Measures Aimed at Restoring the Damaged Environmental Status (Degradation, Pollution): When the environment is harmed, it not only impacts the interests of the disputing parties but, more critically, affects the interests of the entire community. The longer environmental degradation or pollution remains unmitigated, the greater and more protracted the damage will be. Consequently, this principle is established upon the goal of upholding environmental protection and considering the common public interest.

– Principle of Expert Consultation:

Firstly, unlike many other disputes, the determination of damage valuation in environmental disputes is highly complex. Hence, this principle allows for consultation with independent experts, such as scientists and legal counsel, to ensure that the dispute resolution decision is grounded in scientific and objective bases.
Secondly, during litigation or mediation proceedings, experts can accurately and scientifically assess the level of pollution or the feasibility of remediation measures. For instance, in a groundwater contamination dispute, the court may summon experts to analyze water samples to establish liability.

3.2. Mechanisms for Environmental Dispute Resolution

Disputes arising from administrative decisions or administrative acts shall be resolved through administrative litigation procedures.
Disputes concerning the utilization and ownership of environmental factors, and disputes regarding compensation for damages caused by environmental pollution shall be resolved in accordance with the provisions of the Civil Procedure Law and other relevant regulations.

4. Arbitration as a Method for Environmental Dispute Resolution

Pursuant to Clause 2, Article 162 of the 2020 Law on Environmental Protection, the resolution of environmental disputes shall be conducted in accordance with the provisions of Civil Law and the relevant laws of the involved parties. As stipulated by Civil Law, the resolution of environmental disputes shall encompass: Negotiation, Mediation, Arbitration, and Litigation (Court).

4.1. How is the Jurisdiction of Arbitration to Resolve Environmental Disputes Regulated?

Pursuant to the laws of Vietnam, Arbitration possesses the jurisdiction to settle disputes arising from commercial activities or disputes where at least one party engages in commercial activity, alongside other types of disputes permitted by specialized legislation (Article 2 of the 2010 Law on Commercial Arbitration). Consequently, an environmental dispute can only be referred to Arbitration if it is inextricably linked to a commercial contract (for example: a contract for investment in a pollution-causing development project) and the parties have executed a valid arbitration agreement. Arbitration may adjudicate claims for compensation for environmental damage between the offending organization and the aggrieved party. However, Arbitration lacks the jurisdiction to address matters falling under the purview of State management authority, such as imposing administrative sanctions, revoking licenses, or other environmental management decisions.

4.2. Advantages of Dispute Resolution via Arbitration

For complex environmental disputes, Arbitration offers numerous advantages regarding specialization, as the parties have the prerogative to select Arbitrators who are experts with profound qualifications in environmental science, damage valuation techniques, and specialized legislation, thereby ensuring a more accurate and equitable assessment of the case. Secondly, Arbitration provides confidentiality, enabling businesses to safeguard sensitive information concerning technology and manufacturing processes related to the dispute.

5. Challenges and Proposed Solutions.

Regarding the actual utilization, in practice, the method of resolution via Arbitration is rarely applied, due to the lack of definitive identification of which arbitral body possesses jurisdiction over environmental damage compensation claims—whether it be commercial or economic arbitration. Commercial and economic arbitration almost exclusively address disputes arising from economic or commercial contracts between parties, whereas disputes concerning compensation for environmental damage are inherently non-contractual disputes. Consequently, claims for damage to property, health, and life of the populace in cases caused by environmental pollution are typically resolved through negotiated settlements between the parties or by instituting proceedings before a court of law.

The popularization of Arbitration utilization is not an indispensable necessity to enhance the quality and fairness in the determination of environmental damages; while simultaneously increasing the attractiveness of the investment environment through a modern dispute resolution mechanism. Therefore, in order to overcome these challenging aspects, we propose the following recommendations:

To supplement the provisions within the Law on Environmental Protection or the Law on Commercial Arbitration regarding the feasibility of utilizing Arbitration for environmental damage compensation claims, provided that the parties execute an arbitration agreement subsequent to the dispute arising. This measure will alleviate the impediment related to the absence of an initial arbitration clause.

Arbitration Centers must establish a Roster of Arbitrators specializing in environmental matters, encompassing legal experts, environmental scientists, engineers, and environmental damage valuation specialists. This action will ensure that arbitral awards are grounded in robust scientific and technical evidence.

Major Arbitration Centers ought to research and promulgate specialized procedural rules for environmental disputes, including provisions governing the admissibility and collection of scientific evidence, the consultation of independent experts, and the quantification of environmental damages.

6. Method for Dispute Resolution via the Bigboss International Commercial Arbitration Center (BBIAC)

To resolve a dispute through commercial arbitration at BBIAC, clients may insert one of the following two clauses into their contracts:

6.1. Model Arbitration Clause

Additionally, the parties may supplement the clause with:

(a) The number of arbitrators shall be [one or three].

(b) The seat of arbitration shall be [city and/or country].

(c) The governing law of the contract shall be [ ].*

(d) The language of the arbitration shall be [ ].**

Notes:

* Applicable only to disputes involving a foreign element.

** Applicable only to disputes involving a foreign element or disputes where at least one party is an enterprise with foreign invested capital.

6.2. Model Arbitration Clause Applicable to Expedited Procedure

“Any dispute arising out of or in connection with this contract shall be settled by arbitration at the BIGBOSS International Commercial Arbitration Center (BBIAC) in accordance with the Arbitration Rules of Procedure of this Center. The Parties agree that the arbitration proceedings shall be conducted under the Expedited Procedure stipulated in Article 37 of the BBIAC Arbitration Rules of Procedure.”

Additionally, the parties may supplement the clause with:

(a) The seat of arbitration shall be [city and/or country].

(b) The governing law of the contract shall be [ ].*

(c) The language of the arbitration shall be [ ].**

Notes:

* Applicable only to disputes involving a foreign element.

** Applicable only to disputes involving a foreign element or disputes where at least one party is an enterprise with foreign invested capital.

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