Peter Phillips, Director of Trett Consulting’s Japan office in Kobe, discusses his experience of enforcing arbitration awards in foreign jurisdictions.

THE first and most important thing to bear in mind when considering whether or not to arbitrate in a foreign country is not the applicable law or arbitration rules to be applied or even the strength of your case, but the matter of enforcement. The question you need to know the answer to is“ if you were successful would you be able to enforce your award?”
There are two ways in which you can be sure. The first is if the country in question is a signatory of an international convention which guarantees such recognition. The principal one is the New York Convention. The second is reciprocity so that an award given in one country would be recognized in the other.

The New York Convention operates at two levels. Prior to an arbitration commencing it obliges the courts of signatory countries to stop any attempt by one of the disputing parties to bring an action before the court if there is an arbitration clause in the contract. After an award, with very few exceptions, it obliges the courts of signatory countries to enforce it by simple registration as if it were an order of that country’s court.
Vietnam has long recognized the role of a modern arbitration law in the process of expanding and developing its economic relations with foreign countries. Of course, this has to be balanced with the need to protecting the interests of the State and the legitimate rights and interests of Vietnamese and foreign organizations and individuals undertaking business in Vietnam.

The Ordinance on the Recognition and Enforcement of Foreign Arbitral Awards in Vietnam (Order No. 42-L/CTN.) was passed by the Resolution of the Standing Committee at the Sixth Session of The Ninth National Assembly on the lawmaking activities for 1995 on 14th
September 1995. A ‘foreign arbitral award’ is defined (Article 1) as an award which is madeoutside the territory of Vietnam by an arbitrator selected by the parties concerned to settle dispute arising from commercial law relations and this definition includes awards that are made in the territory of Vietnam but not by Vietnamese arbitrators.

Vietnamese courts will recognize and enforce a foreign arbitral award in Vietnam, within the terms of this Ordinance (Article 2) either:-
i. if the award is made in Vietnam, or is made by an arbitrator of a country which has also acceded to such an international agreement (eg NY Convention, and so so called a Convention award), or
ii. or if that other country would recognize an award made in Vietnam without either of the countries having acceded to an international agreement (Reciprocity).

The organization (and/or individual) in favour of which/whom an award is enforced or their legitimate representatives have the right to request the Court to recognize and enforce a foreign arbitral award in Vietnam (Article 3) if:-
i. the organization against which the award is enforced has its headquarters in Vietnam; or
ii. the individual against whom the award is enforced resides and/or works in Vietnam; or
iii. if the assets related to the enforcement are available in Vietnam at the moment the request is sent.

The competent Courts to handle requests for the recognition and enforcement of foreign arbitral awards in Vietnam are the People’s Courts (Article 4) where the organization against which the award is enforced has its headquarters, or where the individual against whom the award is enforced resides and/or works, or where the assets related to the enforcement are available. The last one perhaps being the most relevant consideration.

Foreign arbitral awards recognized and enforced in Vietnam by Vietnamese Courts have the same legal effect as the already effective decisions made by Vietnamese Courts for the parties concerned, and respected by State authorities, economic and social organizations, the people’s armed forces and all citizens. In case the organization or individual against which or whom the award is enforced is not willing to implement the effective Court decision, enforcement measures shall be applied in accordance with Vietnamese law (Article 6). The ordinance sets out the right of appeal against an enforcement judgement.

The right to transfer of money and assets acquired from the enforcement of foreign arbitral awards from Vietnam to foreign countries is guaranteed providing it is carried out in accordance with Vietnamese law (Article 8).
The procedure to be followed by the Vietnamese Ministry of Justice in the handling of request for recognition and enforcement of foreign arbitral awards in Vietnam are generally as set out in international agreements (Article 10 to 15).

A foreign arbitral award shall not be recognized and enforced in Vietnam if the organization or individual against which the award is enforced has legitimate evidence for the Court to confirm that the arbitration process was legally flawed or is not final in some way (Article 16). A foreign arbitral award will also not be recognized and enforced in Vietnam if the Court decides that under Vietnamese law the dispute shall not be resolved by way of arbitration or that the recognition and enforcement of the foreign arbitral award in Vietnam are contrary to basic principles of Vietnamese law.

The enforcement of foreign arbitral awards in Vietnam must be carried out in accordance with the Vietnamese law on civil verdicts enforcement. Within 15 days from the date the decision on the recognition and enforcement of a foreign arbitral award in Vietnam becomes effective, the Court shall send a copy of that decision and a copy of the award to the enforcement agency in accordance with Vietnamese law on the execution of civil verdicts (Article 20).

If an international agreement which the Socialist Republic of Vietnam has signed or acceded to, contains provisions contrary to the provisions of this Ordinance, the provisions of the international agreement shall prevail (Article 21).

If a decision made by a Vietnamese arbitrator or a request by a Vietnamese organization or individual on the recognition and enforcement of an arbitral award in a foreign country is rejected by the competent authorities of another country on the ground of discrimination, Vietnamese Courts have the right to apply corresponding retaliatory measures to the handling of requests for the recognition and enforcement of arbitral awards by that country in Vietnam, or to requests made by organizations/individuals of that country regarding this matter (Article 22).
This is a very new area of law for Vietnam and this general article is just a brief and cursory look at the ordinance. For any specific questions or advice on particular disputes Trett Japan has a wide network of legal and technical specialists in Asian jurisdictions to call on to protect
any clients interests.

Peter Phillips Managing Director of Trett Consulting (Japan) Limited