Commercial mediation – A cost-effective solution for businesses.

1. What is commercial mediation?

 

1.1. Definition of commercial mediation

Commercial mediation is an increasingly popular dispute resolution method in Vietnam, helping businesses handle conflicts flexibly and effectively. According to the definition in Black’s Dictionary of Laws, mediation is the neutral intervention of a third party to persuade disputing parties to reach a voluntary agreement. In Vietnam, commercial mediation is regulated by Decree No. 22/2017/ND-CP on commercial mediation, amended and supplemented by Decree No. 112/2025/ND-CP (effective from May 29, 2025), which details the procedures for establishing mediation centers and granting operating licenses. This is a process in which disputing parties participate in negotiations with the support of a neutral, independent mediator, aiming to reach a peaceful agreement, minimize court intervention, and save legal costs.

 

This method applies to disputes arising from commercial activities, including contracts for the sale of goods, provision of services, investment, and other profit-generating activities, as stipulated in Clause 1, Article 3 of Decree 22/2017/ND-CP. With the latest updates in 2025, the law encourages mediation as part of the Law on Mediation and Dialogue in Courts (amended by Law No. 81/2025/QH15), helping businesses quickly resolve issues related to international and domestic trade.

 

1.2. Differences between commercial mediation and other dispute resolution methods

• Commercial mediation versus court proceedings

Commercial mediation is voluntary and flexible, where the parties control the process and outcome, with the mediator only assisting in finding a common solution. In contrast, court proceedings under the 2015 Civil Procedure Code (amended 2017) are a formal, mandatory process with enforceable judgments. Mediation results are only valid when signed by the parties and can be requested by the court for recognition (according to Chapter XXXIII of the Civil Procedure Code), while court judgments are automatically enforceable. In terms of cost and time, mediation is generally faster (usually 1-3 months) and cheaper (no court fees, limited legal representation) compared to litigation, which typically lasts 6-24 months in court.

• Commercial mediation versus arbitration

The core difference lies in the authority of the third party and the effectiveness of the outcome. A mediator does not issue a ruling but only assists in voluntary negotiations; if negotiations fail, the parties can resort to arbitration or court proceedings. Arbitration (under the Commercial Arbitration Act 2010) produces binding awards similar to court judgments, directly enforced through the enforcement agency. According to the procedural rules of centers like BBIAC, arbitration is faster than court proceedings but still more complex than mediation. Mediation costs are lower (only the mediator’s fee), while arbitration costs are higher due to arbitrator fees and procedures.

• Commercial mediation versus negotiation

Negotiation is direct negotiation between parties without a third party, based on the principle of mutual agreement. Mediation adds a neutral mediator to assist in overcoming impasses and creating a formal agreement. The outcome of negotiation is only an internal agreement and is prone to failure without a mediator; mediation results in a legally binding agreement if recognized by a court. Negotiation is free and the fastest, but mediation is still more cost-effective than other methods due to professional support, suitable when the parties require objectivity.

 

2. Benefits of commercial mediation for businesses

Commercial mediation offers significant advantages to Vietnamese businesses, especially in the context of the digital economy and international integration, helping to resolve disputes quickly, efficiently, and at lower costs compared to courts or arbitration.

 

2.1. Saving costs and time

Mediation significantly reduces legal costs for businesses, costing only about 20-50% compared to court litigation or arbitration, according to a survey by the Ministry of Justice. The process is simple, requires less complex evidence, and is usually completed within 30-90 days, allowing businesses to quickly resume operations without disruption. For example, mediation centers like VMC (part of VIAC) report high success rates, saving an average of 70% of the time compared to court proceedings.

 

2.2. Information security during dispute resolution

Confidentiality is a major advantage, with a discreet process under Decree 22/2017/ND-CP protecting sensitive business data from public disclosure. This is especially important for businesses that possess trade secrets or want to avoid damaging their brand reputation, a stark contrast to a public court trial.

 

2.3. Maintaining long-term business relationships

Mediation focuses on mutual benefit, reduces confrontation, and builds “win-win” solutions, helping to restore trust between partners, customers, or suppliers. According to VIAC research, over 80% of successful mediation cases lead to new collaborations, while litigation often disrupts business relationships.

 

3. When should businesses choose commercial mediation?

Businesses should prioritize mediation when they need a quick, cost-effective solution that protects relationships, especially given that trade disputes are projected to increase by 15% in 2025 due to the global economic impact.

 

3.1. Situations suitable for applying commercial mediation

Businesses should prioritize mediation in the following situations:

1. Commercial contract disputes (payment, delivery, quality, penalties for late payment, etc.).
2. Disputes between shareholders, company members, and joint venture partners.
3. Disputes with major clients or strategic suppliers (where long-term relationships are needed).
4. Intellectual property disputes, trade secrets (requiring absolute confidentiality).
5. Labor disputes involving senior personnel.
6. Construction dispute is ongoing (urgent resolution needed to avoid halting the project).
7. Commercial disputes involving foreign elements and not of excessively large value.
8. The company is preparing for an IPO, M&A, and fundraising (and does not want a public lawsuit).
9. Many parties are in dispute or have attempted direct negotiations but failed due to a loss of trust.

3.2. Things to note when participating in commercial mediation

To achieve a high success rate (over 80%), businesses need thorough preparation: gathering complete documentation and evidence, and clearly defining ideal goals, acceptable levels, and ultimate concession limits. The person with the actual decision-making power (not an employee or lawyer acting on their behalf) must personally attend the mediation sessions.

Choosing a mediator is crucial: they need someone with expertise in the specific area of ​​dispute, practical experience, and strong coordination skills. From the outset, the parties must sign a mediation agreement clearly outlining confidentiality, how the mediator’s fees will be shared, and the non-use of information in court if mediation fails.

During the mediation process, businesses need to maintain an open mind and focus on common interests rather than stubbornly defending their position. They should prepare contingency plans to know when to stop making concessions. Once an agreement is reached, have a lawyer draft a detailed and truthful mediation record and submit it to the court for recognition within 30 days so that the record becomes legally binding.

Ultimately, the best approach is to include a mediation clause (or a combination of mediation first – arbitration later) right from the contract signing stage so that future disputes can be resolved as quickly and effectively as possible.

4. How to resolve disputes using the Bigboss International Commercial Arbitration Centre (BBIAC)

The Bigboss International Commercial Arbitration Center (BBIAC), established in 2023 by a decision of the Ministry of Justice, is a reputable organization for resolving commercial disputes under the 2010 Commercial Arbitration Law. With a team of highly specialized arbitrators, it focuses on contract, investment, and international trade disputes. BBIAC’s awards are enforceable in 170 countries under the 1958 New York Convention, with publicly listed fees (based on the value of the dispute) and flexible procedures (2-6 months). Compared to other centers such as VIAC (the oldest, having resolved thousands of international cases) or STAC (strong in the South), BBIAC stands out with its competitive costs and comprehensive legal support.

 

To apply for arbitration at BBIAC, include one of the following two model clauses in the contract (according to the BBIAC Rules of Procedure, updated 2025):

 

4.1. Model Arbitration Clauses

“Any disputes arising from or relating to this contract shall be settled by arbitration at the BIGBOSS International Commercial Arbitration Centre (BBIAC) in accordance with the Centre’s Arbitration Rules.”

The parties may add:

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

(b) The arbitration venue is [city and/or country].

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

(d) The language of the referee is [ ].**

*Note: This only applies to disputes involving foreign elements.

**Note: This only applies to disputes with a foreign element or disputes where at least one party is a foreign-invested enterprise.**

 

4.2. Model arbitration clauses under simplified procedure

“Any disputes arising from or relating to this contract shall be settled by arbitration at the BIGBOSS International Commercial Arbitration Centre (BBIAC) in accordance with the Centre’s Arbitration Rules. The parties agree that arbitration proceedings shall be conducted in accordance with the simplified procedure provided for in Article 37 of the BBIAC Arbitration Rules.”

The parties may add:

(a) The arbitration venue is [city and/or country].

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

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

*Note: This only applies to disputes involving foreign elements.

**Note: This only applies to disputes with a foreign element or disputes where at least one party is a foreign-invested enterprise.**

 

Contact BBIAC at 25 GS01 Street, Tay B Quarter, Dong Hoa Ward, Di An City, Binh Duong Province for free consultation. Businesses can combine this with pre-mediation to optimize the process.