What should an enterprise notice before initialing a commercial lawsuit?

Date: 6 April 2021

Writer: Thao Bui

Commercial disputes can arise whenever during the performance of a commercial contract. Before initialing a commercial lawsuit against another party, a party should consider some ground elements. By this post, BLawyers Vietnam would like to highlight some notices on this matter.

What should an enterprise notice before initial a commercial lawsuit?

1. Types of commercial disputes

There are 05 types of common commercial disputes, as follows:

  1. Disputes arising from business or trade activities among individuals and/or organizations with business registration, which are all for profits.
  2. Disputes over intellectual property right or technology transfers among individuals or organizations. They are all for the purposes of profits.
  3. Disputes between persons who are not members of a company but involve in transaction in transfer of capital holding and the company and/or its members.
  4. Disputes between a company and its members; disputes between a limited liability company and its manager or between a joint-stock company and members of its Board of Directors, its Director, or its General Director. Or dispute among members of a company regarding the establishment, operation, dissolution, merge, consolidation, total division, partial division, property transfer and/or organizational transformation of the company.
  5. Other civil disputes relating to business or trade activities, except for cases within the jurisdiction of other agencies and organizations as prescribed by law.

So, before initialing a commercial lawsuit, you should consider the type of commercial disputes first.

2. Methods of dispute settlement

The prevailing law of Vietnam allows the parties to settle commercial disputes in some different forms with different advantages and disadvantages. Accordingly, the parties can choose one of the following methods:

  1. Self-negotiation between the parties;
  2. Commercial mediation;
  3. Settlement at Court or Arbitration.

For self-negotiation and commercial mediation, these methods are based on the goodwill of all parties and will help the parties save a lot of time and incurred legal costs. However, for mediation, the parties need to pay an extra cost to resolve the case for hiring the mediator. For settlement at Court or Arbitration, this method is unique and will be clearly analyzed in section 3 below.

3. Authority to settlement

Commercial Arbitration or Court has right to settle commercial disputes. Of note, an Arbitration Center only resolves a dispute when there is an arbitration agreement that involving parties can make such agreement before or after arising dispute.

Dispute settlement by Court or Arbitration also has its pros and cons. The parties can take it into consideration. Here are some highlights advantages of each settlement authority:

  1. Arbitration
    • Firstly, settlement by Arbitration shall be quicker than one by Court.
    • Secondly, parties can keep the arbitration procedures and hearings in confidential unless their otherwise agreement. Thus, it limits the disclosure of business know-how and keeps the company image.
    • Thirdly, the arbitral judgment is final, so it is binding on the parties to enforce immediately and the right to appeal in this case is void.
  2. Court
    • Firstly, fee for settlement by Court is low and reasonable.
    • Secondly, the dispute can be considered on many different views because it goes through many levels of trial.
    • Thirdly, Court’s decision is highly coercive because Court is the State judicial authority.

4. Limitation period for filing a commercial lawsuit

The involving parties only can initiate a lawsuit within 02 years from the date of being violated their legitimate rights and interest. Please note that in some special fields, such limitation can be changed depending on a specific field of dispute.

In conclusion, dispute resolution is now more flexible due to the wide variety of settlement options available. However, depending on the pros and cons of each form, the related party should consider and decide which method to use.

Should you have any questions about the above contents, please revert to BLawyers Vietnam at consult@blawyersvn.com.

Maybe you are interested in reading:

How to determine overdue payment interest, fine for breaching contract and compensation in commercial relation under Judicial Precedent No. 09/2016/AL?

Can a notarized land transfer contract (made by a husband or a wife) be canceled?

Recognition and enforcement of foreign civil judgements and arbitral awards in Vietnam

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