3 notes about the foreign arbitral award under the laws of Vietnam and the New York Convention 1958

Recognition and permission for enforcement of foreign arbitral awards is one of the important issues in the institution of commercial arbitration. Accordingly, for the purpose of correctly and properly recognizing and permitting to enforce the foreign arbitral award, the first issue that needs to be considered is to determine whether an award is a foreign arbitral award. So, how do the New York Convention 1958 and the prevailing Vietnamese law stipulate on the foreign arbitral award?

The above issue will be presented by BLawyers Vietnam through this article.

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1. Introduction to the New York Convention 1958

The New York Convention 1958 is the United Nations’s Convention on the recognition and enforcement of foreign arbitral award.

The purpose of the New York Convention 1958 is to create common legal standards facilitating the recognition and enforcement of foreign arbitral award, to ensure that the arbitral award will be recognized and enforced outside the territory of the country where the award was issued as domestic arbitral awards of the country where the recognition and enforcement are sought.

At present, the New York Convention 1958 has 171 member countries. Vietnam acceded to the New York Convention 1958 on 12 September 1995 and this Convention came into force in Vietnam on 11 December 1995.

2. Defining the foreign arbitral award under the New York Convention 1958 and the laws of Vietnam

First of all, the arbitral award under the request of recognition and enforcement shall be understood as the final award/ decision of the arbitration tribunal settling the entire contents of the dispute, terminating the arbitration proceedings and coming into force.

The definition of the foreign arbitral award under the New York Convention 1958

Pursuant to Article I.1 of the New York Convention 1958, the foreign arbitral award means the arbitral awards made in the territory of any country other than the country where the recognition and enforcement of such awards are sought; the arbitral awards considered as the non-domestic awards of the country where their recognition and enforcement are sought.

Therefore, the key factor to determine the “nationality” of the foreign arbitral award is the place of issuing the arbitral award. In addition, subject to the laws of each country, an arbitral award issued in the territory of such country may be considered as the foreign arbitral award.

The definition of the foreign arbitral award under the laws of Vietnam

Pursuant to Law on Commercial Arbitration 2010, an award of foreign arbitration is an award pronounced by a foreign arbitration outside or within the Vietnamese territory to resolve the disputes which is selected as agreed by the parties.

Based on the above regulation, it can be understood that Vietnamese law defines the foreign arbitral award depends on the “nationality” of the arbitration settling the dispute and issuing the award. Accordingly, if the arbitration chosen by the parties to resolve the dispute is established under foreign law, the awards issued by this arbitration shall be considered as the foreign arbitral award regardless of whether the award is made inside or outside the territory of Vietnam.

In summary, the New York Convention 1958 and the laws of Vietnam are not consistent in defining the foreign arbitral award, which make it difficult to determine whether an arbitral award is foreign arbitral award to consider recognizing and permitting to enforce in Vietnam.

For example, in case an arbitration center established under Vietnamese law has conducted the dispute settlement and issued an arbitral award in the territory of another country, is this arbitral award considered as the foreign arbitral award? According to the New York Convention 1958, this award is the foreign arbitral award in Vietnam. However, according to the prevailing laws of Vietnam, there has been no clear answer for this issue.

3. Note on the application scope of the New York Convention 1958 and Vietnam’s reservations when acceding to the Convention

The New York Convention 1958 is applicable to the recognition and permission for enforcement of awards deemed to be the foreign arbitral award under Article I.1 of the Convention as mentioned in Item 2 above. Accordingly, in principle, the Convention’s members must apply this Convention to settle the request of the recognition and permission for enforcement of the foreign arbitral award even if the award was issued in the country which is not a member of the Convention.

However, upon acceding to this Convention, Vietnam made the following reservations:

a. Vietnam only considers the Convention to be applicable to the recognition and enforcement of the foreign arbitral award issued in the territory of another contracting country.

b. With respect to arbitral awards made in the territories of non-contracting country, Vietnam will apply the Convention on the basis of reciprocity.

c. The Convention applies only to disputes arising out of commercial legal relationships.

Therefore, Vietnam only applies the New York Convention 1958 to consider recognizing and permitting for enforcement of the foreign arbitral award issued in the territory of Convention’s member countries. For non-member countries, Vietnam will apply the Convention based on the principle of reciprocity. However, in case the non-member countries and Vietnam have entered the Mutual legal assistance treaty, the recognition and enforcement of the foreign arbitral award may be considered according to the regulations of this treaty (if any).

It should also be noted that in case the foreign arbitral award is refused to recognize and enforce in Vietnam by the competent Court, the parties are eligible to request the recognition and enforcement of this award in another member countries of the Convention.

The above are important contents that individuals and organizations should pay attention to when requesting the recognition and permission for enforcement of the foreign arbitral award in Vietnam.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. We would love to hear from you.

Date: 07 February 2023

Writer: Trinh Nguyen

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