Arbitration and Court are popular forms of commercial disputes settlement when the parties cannot resolve through negotiation or mediation. The decision on using commercial dispute settlement by arbitration or court depends on many factors, including the consent of the parties, the legality of the dispute, financial resources and the balance of interests of each individual. So, which agency to choose is a question asked by many businesses when facing a trade dispute.

1. What is commercial dispute?

According to the provisions of the 2005 Commercial Law, commercial activities are defined as activities aimed at profit, including buying and selling goods, providing services, investing, promoting trade and other activities aimed at making profits.

From there, it can be understood that commercial disputes are conflicts and disagreements in commercial activities, arising from failure to perform or improper or incomplete implementation of obligations under commercial agreements or signed contracts.

2. What forms of commercial dispute settlement are there?

Forms of dispute settlement arising in commercial activities include:

Negotiations between the parties.

Conciliation between the parties by a body, organization or individual selected by the parties to act as the conciliation mediator.

Settlement by the Arbitration or the Court.

Note, procedures for commercial disputes settlement at Arbitration and Court are conducted according to the procedures prescribed by law.

3. Should Arbitration or Court be chosen for commercial dispute settlement?

To answer the question of whether to use Arbitration or Court as a commercial dispute settlement agency, businesses need to specifically consider and balance their rights and interests in the respective case, considering the legality of disputes, financial resources, the demand to protect information confidentiality and disruption to business operations, if any.

Settlement of commercial disputes by Arbitration or Court both has its own advantages and disadvantages. Some typical points to be referred as follows:

a. For Arbitration

One of the outstanding advantages when choosing Arbitration as a commercial dispute settlement agency is its speed and flexibility. Compared to trial procedures at Court, the process carried out in Commercial Arbitration only takes place at one trial level. Thereby, dispute settlement is also flexible, while shortening proceedings and saving time and effort of the parties, limiting the time of business interruption that may arise.

The flexibility of the form of commercial disputes settlement by Arbitration is also shown in the fact that there is no territorial limit, the parties can agree to choose the location of Arbitration within or outside the territory of Vietnam. In addition, in case the dispute has a foreign element, the Arbitration language is also a content that the parties can agree on.

Limiting the disclosure of business secrets is also an advantage of Arbitration, because the resolution of commercial disputes by Commercial Arbitration is carried out on the principle of non-publicity unless the parties have otherwise agreed.

However, it is also necessary to pay attention to the following issues when choosing Arbitration as the agency to settle commercial disputes. The enforcement of arbitration awards depends greatly on the willingness of the disputing parties. In case the party against whom the award must be executed does not voluntarily execute and does not request cancellation of the Arbitration Award after the expiration of the time limit, then the party against whom the judgment must be executed may submit a request to the civil judgment enforcement agency for enforcement. In addition, the implementation cost is also relatively high.



Settlement of commercial disputes by Arbitration or Court both has its own advantages and disadvantages.

b. For the Court

Choosing the Court, the results of commercial disputes settlement are guaranteed by the coercive power of the State. Furthermore, the settlement by the Court can go through many levels of adjudication, thus ensuring that the Court’s decision is accurate, fair, objective, and ensures the highest level of rights of the parties in the dispute.

Economically, the cost of resolving commercial disputes at Court is much lower than Commercial Arbitration.

However, because the trial goes through many levels, it can prolong time, cause psychological stress or disruption, affecting the business activities of the parties participating in the proceedings at the Court.

Legal basis:

  • Commercial Law 2005;
  • Commercial Arbitration Law 2010.

𝐋𝐈𝐍𝐂𝐎𝐍 𝐋𝐀𝐖 𝐅𝐈𝐑𝐌 – 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐥𝐞 𝐜𝐨𝐨𝐩𝐞𝐫𝐚𝐭𝐢𝐨𝐧

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