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Mediation and Arbitration: The Differences

12/12/2017 16:15

Mediation and commercial arbitration are two alternate dispute resolutions (outside courts) recognized by Vietnamese Rules. According to the law, these methods are based on the voluntariness of the agreement between each party and are enforced by number of rules such as: Resolution No.22/2017/NĐ-CP about Mediation and Commercial Arbitration Rules 2010.

Some similarities

Mediation and commercial arbitration has many similarities. These are: the jurisdiction came from agreement between parties. There must be arbitration or mediation agreement between parties in the contract to apply these methods.

The agreement reflects the will of parties to use these methods to resolve disputes and can be set up before or after disputes arise.

The confidentiality is another similarity. Unlike court, confidentiality is one of the most important features of these methods. The confidentiality will help parties to protect the business prestige and secrets.

The dispute can only be known by mediators or arbitrators, parties and authorized personnel form the mediation or arbitration centers. Any third party will not be provided any documents or information about the dispute, unless required by the Law.

Each party has the right to choose a mediator or arbitrator to resolve the dispute. The selection must be made based on some general and specific criteria involving the dispute (experience, knowledge on the subject or language…). The choice that satisfies all the criteria is the best choice to resolve the dispute.

Fundamental differences

The fundamental difference between the two alternative dispute resolution is: The independence of the arbitration or mediation agreement with the contract. If there is an arbitration agreement in the contract, then this agreement is independent from the contract.

Therefore, if the contract violates the law, it becomes ineffective, but the arbitration agreement will not be affected. However, the same will not be applied to a mediation agreement as it will become ineffective with the contract.

Moreover, there is also difference in the role of the third party. Specifically, in the process of mediation, a mediator will only help parties to understand each other without clarifying who’s right and who’s wrong.

The result of the dispute will be decided by parties; the mediator does not have the right to force parties to make a decision. On the other hand, with arbitration, the final decision is made by arbitrators.

The arbitral tribunal will produce the award based on the rules and incidents leading to the disputes. Parties shall not know the result beforehand until the arbitral tribunal promulgate the Arbitral Award.

To create the mutual understanding between each party and help to create a mediation agreement, the mediator will make use of the information, documents provided by parties.

With arbitration, besides the documents, evidences and reasons from parties, the arbitral tribunal have the power to collect evidence, verify fact, summon witnesses to ensure the objectivity and fairness.

Moreover, the procedure and enforceability of the arbitration and mediation are also different. The mediation process is decided by parties or based mediation rules of the mediation centres which both party choose.

The process involves a lot of meeting between the mediator and each party, which is called mediation session. These session can be joined by both party or can be a closed session between the mediators with one of the parties.

The close session is a perfect environment for the mediator to find out what underneath the surface and get to the bottom of the misunderstanding. This is an important features to help parties approach the problem in another aspect and thus, produce a successful mediation decision.

On the contrary, in arbitral process, there will never be a close session for any party. The hearing must be attended by both parties. If any party is absence, the arbitral tribunal will make a decision depends on their roles and status. If the Claimant is absent, it can be considered the withdrawal of Request for Arbitration. If the Respondent is absent, the Arbitral Tribunal shall continue to resolve the dispute with the available evidences and documents.

If the mediation process become successful, the mediation agreement is the final decision. If one party rejects to follow, the other can request the Court to recognize and allow the mediation decision then they can take it to Legal Enforcement Bureau to enforce.

With arbitration, the arbitral award will be the final decision. If one party rejects to follow, the other can request the Legal Enforcement Bureau enforce the decision without the recognition procedure from the court.

Mr. Chau Viet Bac, Lawyer, VIAC Vice Secretary General 

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