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In the business environment, the occurrence of contract disputes is inevitable. To resolve these conflicts effectively and fairly, Vietnam’s legal system has established diverse and flexible methods for resolving contract disputes. Below are some common methods applied in Vietnam:
Negotiation between the parties
The parties involved in the contract discuss to resolve disputes. This option is quick and cost-effective, not bound by legal procedures. However, it requires honesty and cooperation from both parties.
Negotiation and direct dialogue between the parties are often encouraged as the first method. This allows the parties to discuss and seek reasonable solutions without the intervention of a third party.
Mediation
Mediation is a common and encouraged method in Vietnam. Parties may request the intervention of a third party or a mediation agency to help them reach a reasonable agreement.
A third party is used as an intermediary to assist the two parties in resolving disputes. The cost for this option is not excessively high and ensures business confidentiality. However, if mediation fails, it may add additional costs to the contract.
Arbitration
Parties often bring their issues to one or a group of arbitrators independent of the public judicial system.
In cases where the above ‘good faith’ methods fail, the parties involved may opt for arbitration to resolve disputes. Arbitrators must have experience and in-depth knowledge of the specific issue. The decision of the arbitrators is final and legally binding; however, the enforceability of arbitration awards is limited.
Court
If other methods are unsuccessful, bringing the matter to court is the last resort. The court system in Vietnam provides a fair and transparent legal process for resolving contract disputes.
This is the final option, where the state’s judicial power is demonstrated. The time and cost for this process are often higher compared to previous options. However, court rulings are enforceable and binding.
Resolving contract disputes in Vietnam
While the law provides methods to resolve contract disputes, it is crucial for parties to carefully consider and choose the most suitable method for their specific situation. Choosing the right method can help resolve disputes effectively, save time and costs, and maintain positive business relationships between the parties.
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