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Global Vietnam Lawyers is pleased to introduce an article by Lawyer Dinh Quang Thuan titled “Changing the Authority to Annul Arbitration Awards: A Perspective on the Investment Environment.” This article was originally published in The Saigon Times Online on 21 May 2025 and is shared here with permission from the publisher.
During international economic integration, the commercial arbitration has gradually become a reliable choice for the domestic and foreign business community in case of arising disputes. With characteristics such as flexibility, pace, confidentiality and specialized dispute resolution, the arbitration mechanism not only helps ease the burden on the court system but also contributes to creating a transparent and stable investment environment.
However, the Draft Law amending and supplementing a number of articles of the Law on Organization of People’s Courts currently being discussed by the National Assembly has proposed adjusting the jurisdiction to hear and request annulment of arbitral awards, from the current provincial people’s court to a new level, the regional people’s court, which is expected to be the lowest court level in the court system under the new regulations.
This is a structural change. Therefore, it should take precaution in assessing this issue not only from a legal perspective, but also from a potential impact on market confidence and investment attraction policies.
Arbitration and investor expectations
For investors, especially foreign investors, the commercial arbitration is favored for its independence and minimal intervention by the traditional judicial system. The ability to challenge an arbitral award exists only in the form of a request to set aside the award in court. Therefore, the agency authorized to resolve this content plays a particularly important role.
In many countries with developed legal systems such as France, Germany, Singapore or Switzerland, the consideration of requests to set aside arbitral awards is assigned to high courts to ensure stability, expertise and uniformity in the application of the law. This shows that the general trend is that this authority needs to be concentrated in agencies with experience and strong legal status.
A cautious approach is essential
Retaining the current jurisdiction in the hands of provincial courts, which have had experience in organizing and adjudicating arbitration cases over the past period, is a solution to preserve stability during transition of the court system.
If there is a need to improve the quality of resolving arbitration disputes, it is possible to consider the option of increasing specialized training or establishing specialized units on arbitration in a number of key provincial courts rather than changing the jurisdiction model too broadly and simultaneously.
In the context of Vietnam aiming to improve national competitiveness, cement investor sentiment and reform the judiciary towards integration, the maintenance of a judicial control mechanism for arbitration which is characterized as specialized, consistent and reliable is something in need of a careful consideration.
A fragmentation-susceptible change
The transfer of jurisdiction from provincial courts to regional courts, which are designed as a new lower level of adjudication, will lead to a potential fragmentation and may increase the unevenness in the application of the law across regions. This raises a number of practical concerns:
- Consistency: With a large number of regional courts across the country, the possibility of different views on the assessment of requests to set aside arbitral awards is high, which may pose the risk of inconsistency in the legal system on arbitration.
- Professional competence: Not all regional courts have a team of judges trained or with practical experience in the field of international commercial arbitration, which is already a unique type of dispute requiring specialized knowledge.
- Impact on the investment environment: If the arbitration award, which has been chosen by the disputing parties in replacement of the courts, is overturned by inexperienced courts, it would negatively affect investor confidence in the stability and ability to protect their rights in Vietnam.