In the context of increasingly complex commercial activities, disputes between parties are inevitable. In addition to traditional litigation before the Courts, current Vietnamese law allows parties to choose various alternative dispute resolution methods, among which commercial mediation and commercial arbitration are two commonly used mechanisms. However, in not all cases is initiating proceedings immediately before an arbitral tribunal or a court the optimal choice.
The article below, prepared by DNP Viet Nam Law Firm, focuses on analyzing situations in which mediation should be prioritized, as well as circumstances that necessitate shifting to dispute resolution through arbitration or the courts. Accordingly, it assists parties in correctly identifying the nature of their disputes and selecting appropriate resolution methods, optimizing time and costs, while maintaining cooperative relationships between the parties.
1. Overview of the legal framework on mediation, arbitration, and courts in Vietnam
1.1. Commercial mediation
Legal basis: Clause 1 Article 3 of Decree No. 22/2017/ND-CP (as amended and supplemented by Decree No. 112/2025/ND-CP).
- Concept: Mediation is a commercial dispute resolution mechanism based on the voluntariness and agreement of the parties, with the intermediary role of a commercial mediator.
- Characteristics:
- Absolute voluntariness: Parties have the right to participate in, continue, or terminate mediation at any time;
- Equality: No party holds a procedurally dominant position;
- Confidentiality: Information related to the case and the mediation process may not be used as evidence in legal proceedings, unless otherwise agreed by the parties.
- The successful mediation outcome does not automatically have enforceable effect, but may be requested to be recognized by the Court, thereby creating legal value equivalent to a judgment or decision of the Court.
1.2. Commercial arbitration
Legal basis: Clause 1, Clause 2 Article 3; Article 5 of the Law on Commercial Arbitration No. 54/2010/QH12 (as amended and supplemented by Law No. 81/2025/QH15).
- Concept: Commercial arbitration is a dispute resolution method agreed upon by the parties and conducted in accordance with the Law on Commercial Arbitration.
- For arbitration to have jurisdiction to resolve a dispute, a prerequisite condition is the existence of a valid arbitration agreement between the parties (which may be established before or after the dispute arises). In the absence of such an agreement, even if the dispute is commercial in nature, it cannot be resolved through arbitral proceedings.
- Characteristics:
- Arbitrators have the authority to issue arbitral awards resolving disputes;
- Arbitral awards are final and not subject to appeal under appellate procedures;
- Arbitral awards are enforced in accordance with civil judgment enforcement mechanisms, ensuring enforceability in practice.
1.3. Courts
Legal basis: The 2015 Civil Procedure Code (as amended and supplemented by Law No. 85/2025/QH15).
- Concept: The courts are a dispute resolution mechanism characterized by state authority, primarily governed by the 2015 Civil Procedure Code (as amended and supplemented in 2025) and relevant legal instruments. Unlike mediation and arbitration, courts exercise adjudicative authority based on public power and do not depend entirely on the agreement of the parties.
- Characteristics:
- Broad jurisdiction, capable of resolving disputes even in the absence of an agreement on the choice of dispute resolution method;
- Clear and effective enforcement mechanisms, ensuring the actual execution of judgments and decisions;
- Authority to apply interim emergency measures to preserve assets and prevent risks during the dispute resolution process.
- Limitations:
- Resolution time is often prolonged, involving multiple levels of adjudication;
- Procedural formalities are highly structured and less flexible compared to other mechanisms;
- The public nature of court proceedings may affect the reputation, image, and business relationships of the disputing parties.
2. When should mediation be chosen before bringing a dispute to arbitration or the courts?
- The parties still maintain goodwill and wish to preserve their cooperative relationship, especially in long-term or strategic business relationships where legal confrontation may disrupt cooperation.
- The dispute has not yet become highly adversarial, mainly arising from differences in contract interpretation, performance progress, or allocation of costs and risks, and no serious breach or fraudulent conduct has emerged.
- Confidentiality requirements are paramount, particularly for disputes involving trade secrets, investment strategies, financial information, or sensitive business data.
- The parties require a fast, cost-effective, and easily controllable solution to minimize business disruption and avoid protracted disputes through complex litigation procedures.
3. When should mediation be shifted to arbitration or the courts?
- One party lacks goodwill and exploits mediation to delay, prolong time, or evade legal obligations.
- The dispute has become highly adversarial, with indications of serious breaches of obligations, fraud, or risk of asset dissipation.
- There is a need to apply interim emergency measures to preserve assets or prevent irreparable harm.
- A decision with enforceable effect is required to protect the lawful rights and interests of the infringed party.
“The above content is provided by DNP Viet Nam Law Firm for reference purposes only. For detailed, accurate, and tailored legal advice that meets your specific needs, please contact us using the information provided below.”
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