commercial mediation development international experiences and lessons for vietnam

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MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS COMMERCIAL MEDIATION DEVELOPMENT - INTERNATIONAL EXPERIENCES AND LESSONS FOR VIETNAM Major: Economics Specialization: International Trade Policy and Law Full Name: Phan Thi Phuong Ha Noi, 2019 MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS COMMERCIAL MEDIATION DEVELOPMENT - INTERNATIONAL EXPERIENCES AND LESSONS FOR VIETNAM Major: Economics Specialization: International Trade Policy and Law Code: 8310106 Full Name: Phan Thi Phuong Supervisor: Assoc.Pro.,Dr Nguyen Minh Hang, Ha Noi, 2020 STATEMENT OF ORGINAL AUTHORSHIP I hereby commit that this thesis is my sole work with the best devotion, endeavor and hard-working period given and there is no information used with the unauthorized data source The research contents in this topic are completely honest and have not been used or published in any form I guarantee that the master thesis has been carried out in conformity with the thesis writing regulation and process issued by the Foreign Trade University I would like to express my sincere and grateful thanks to Doctor Nguyen Minh Hang, who enthusiastically guided me during my process of completing this study Student: Phan Thi Phuong ACKNOWLEDGEMENT The process of writing this thesis is the continuous learning and researching process resulting in not only the solutions proposed in chapter of the thesis but also various experiences and knowledge for the author In completing this thesis, it is undeniable that the author has received recommendations, contributions and significant help from many people Foremost, it is the author’s honor and luck to have the guide of Associate Prof Dr Nguyen Minh Hang, my supervisor at Foreign Trade University who has a broaden knowledge and experiences in the fields of law and dispute settlement and I cannot thank her enough I could not complete this thesis without her guidance and recommendations Secondly, I would also like to give my thanks to the authors of the books and articles that I have referred to in this thesis My last appreciation is to the Faculty of Graduate Studies of Foreign Trade University for providing us – the after graduated students with helpful master course and the support during learning and writing thesis process Hanoi, February 28th 2020 Phan Thi Phuong TABLE OF CONTENTS STATEMENT OF ORGINAL AUTHORSHIP ACKNOWLEDGEMENT STATEMENT OF ORGINAL AUTHORSHIP ACKNOWLEDGEMENT STATEMENT OF ORGINAL AUTHORSHIP ACKNOWLEDGEMENT LIST OF TABLES LIST OF ABBREVIATION SUMMARY OF THESIS RESEARCH RESULT .9 INTRODUCTION 1 Rationale Literature review 3 Research questions Research’s objective .6 Scope of study Methodologies 7 Research structure CHAPTER 1: THEORETICAL FRAMEWORK .9 1.1 Overview of commercial disputes 1.1.1 Definition of commercial disputes 1.1.2 Characteristics of commercial disputes 12 1.2 The definition of commercial disputes resolution .13 1.3 Methods to solve commercial disputes 13 1.3.1 Negotiation .14 1.3.1.1 Definition: 14 1.3.1.2 Characteristics of Negotiation: 14 1.3.1.3 Advantages of negotiation 15 1.3.1.4 Disadvantage of negotiation 15 1.3.2 Mediation 15 1.3.3 Arbitration .15 1.3.3.1 Definition: 15 1.3.3.2 Characteristic of arbitration 16 1.3.3.3 Advantages of arbitration 16 1.3.3.4 Disadvantage 16 1.3.4 Litigation/jurisdiction (Going to Court) 16 1.3.4.1 Definition: 16 1.3.4.2 Characteristic of litigation 17 1.3.4.3 Advantages of Litigation 17 1.3.4.4 Disadvantages of Litigation 17 1.4 Mediation 17 1.4.1 Rationale of mediation 17 1.4.2 Definition and characteristic of mediation 20 1.4.2.1 Definition: 20 1.4.2.2 Characteristic .21 1.4.2.3 Advantages of mediation 22 1.4.2.4 Disadvantages of mediation .23 1.4.3 Type of mediation 25 1.4.4 Commercial mediation process 27 1.4.4.1 First step - Agreement to mediate 27 1.4.4.2 Second step - Select mediator 27 1.4.4.3 Third step - Mediation conducted 27 1.4.4.4 Forth step - Mediation closed 28 1.4.5 Commercial mediation in the international organization 28 CHAPTER 2: INTERNATIONAL EXPERIENCE ON APPLYING MEDIATION: STUDY OF SINGAPORE AND EU (ITALY) 31 2.1 Mediation development over worldwide 31 2.1.1 On the countries’ aspect 31 2.1.2 On the worldwide aspect 35 2.2 Mediation development in Singapore 36 2.2.1 Rationale for choosing Singapore case to study 36 2.2.2 Overview of mediation development in Singapore 37 2.2.3 Legal frame work for mediation in Singapore .39 2.2.3.1 Support from Singapore’s Judiciary 40 2.2.3.2 Promotion from Singapore government 41 2.2.4 Singapore’s organizations for mediation .43 2.2.4.1 Singapore Mediation Centre (SMC) 43 2.2.4.2 Singapore International Mediation Centre (SIMC) 45 2.2.4.3 Singapore International Mediation Institute (SIMI) 48 2.3 Mediation development in EU 48 2.3.1 Rationale for choosing EU case to study 48 2.3.2 The overview and legal framework for mediation in EU 49 2.3.3 The Italian Experience — An On/Off Switch 59 2.3.4 Experiences from Singapore and EU (Italy) 62 CHAPTER 3: RECOMMENDATIONS FOR THE DEVELOPMENT OF MEDIATION IN VIETNAM 63 3.1 Vietnam’s approach on applying mediation 63 3.1.1 Vietnam economy review .63 3.1.2 Legal frame work for mediation 66 3.1.3 Legal issues arise when developing mediation in Vietnam 79 3.2 Recommendations for Viet Nam 82 3.2.1 For Government 82 3.2.1.1 Developing the commercial legal environment 82 a.Forming Working group on commercial mediation .82 b.Orientation and improve legal framework on commercial mediation 83 3.2.1.2 Improving the mediator’s capacity 86 3.2.1.3 Raising public and business ‘s awareness 87 3.2.2 For associations and enterprises 89 3.2.2.1 The legal affairs improvement 89 3.2.2.2 Improvement of information channel to the Government 90 CONCLUSION 91 REFERENCES 93 LIST OF TABLES Table 1.1: Comparing ADR and Court Procedure 20 Table 1.2: Comparison of method of dispute resolution 24 Table 2.1: Mediation legal document in EU 50 Table 2.2: Estimated number of mediations per year in the EU in 2018 57 Table 2.3 Mediations in Italy – First Semester 2018 60 Table 2.4 Number of incoming civil litigious cases in some dispute matters in Italian first instance courts 61 LIST OF FIGURES Figure 1.1: Commercial mediation process 28 Figure 2.1: Mediation process at SIMC .47 Figure 2.2: Time and money saving when using mediation compared to litigation 57 Figure 3.1: Value, growth rate of exports, imports and trade balance in 20112019 period .64 Figure 3.2 Number of dispute cases of VIAC from 1993-2017 .77 LIST OF ABBREVIATION ADR Alternative Dispute Resolution AFTA Asian Free Trade Agreement ASEAN Association of Southeast Asian Nations CPTPP Comprehensive and Progressive Agreement for Trans-Pacific Partnership EU European Union EVFTA EU-Vietnam Free Trade Agreement ICC International Chamber of Commerce UNCITRAL The United Nations Commission on International Trade Law VIAC Vietnam International Arbitration Center VMC Vietnam Mediation Center SMC Singapore Mediation Center SIMC Singapore International Mediation Center SIMI Singapore International Mediation Institution UN United Nations WB World Bank WTO World Trade Organization 85 some cases to SMC or handle them The government conducted a number of largescale comprehensive researches and surveys to promote the development of mediation and immediately adopted proposals from such projects, such as establishing centers for mediation with clear orientation and strict regulation, state protection, Or apply the opt-out model of Italy to require that litigants make a serious and reasonable initial effort at mediation During this initial stage, they will be allowed the freedom to decide whether or not to continue their efforts at mediation During this initial stage, they will be allowed the freedom to decide whether or not to continue their efforts at mediation c Unified commercial mediation institution For the case of Singapore, instead of various mediation centers, Singapore government focused on developing two main mediation centers of SMC and SIMC to make them famous and well-known For Vietnam, after the issuance of the Decree No.22, there are several commercial mediation center was established and it is supposed that the number shall continue increasing However, the establishment of various commercial mediation centers is not a good solution because the uprising of many commercial mediation center in a context which the commercial mediation is fairly new in Vietnam, the law foundations is incomplete, the social need assessment is meager shall be ineffective and costly Moreover, the commercial mediation institutions play the supporting role in the procedure for mediation and also act as the organization to appoint the mediator However, in accordance with the Decree No 22, both ad-hoc mediation and institutional mediation are allowed, therefore mediation institution only play the role of the mediator appointing authority for the mediation which is conducted at the mediation institution Hence, the establishment of a large scale national commercial mediation is worth learning from the experiences of the study countries, especially in the case of Singapore with the outstandingly famous commercial mediation centers name SMC and SIMC as mentioned Such center can be operated parallel to the development of commercial mediation institution until a suitable time The thesis also supports the idea of promoting the arbitration center at first to have the mediation or other ADR service beside the arbitration service like 86 the case of VMC under VIAC This model shall help the current arbitration center make use of the infrastructure and personnel, diversify the services and earn more income without creating further troublesome administration and licensing procedure Especially, the mediation service model should be encouraged and promoted in organizations that represents the enterprises such as the Vietnam Chamber of Commerce and Industry, profession associations, America Chamber of Commerce, European Chamber of Commerce…, since such organizations often fully understand their member enterprises and therefore shall the dispute resolution need by mediation of them Empowering such organizations to have the right to offer mediation services or at least to introduce or appointing the mediators at the request of the dispute parties shall make commercial mediation even become more effective Such models can be review on the experiences of the Insurance Dispute Resolution Organization, Customer Mediation Department of the Association of the Bank of Singapore, Customer Relation Department of the National Association of Travel Agency of Singapore… The thesis considers the mutual exists of such mediation model shall ensure dispute parties to have many options to solve their conflict and problem Moreover, it is necessary to establish a National Mediation Accreditation Center to qualify and certify the force of mediators who shall work and provide services in a worldwide and active environment Because in this no-border time, the comparison not only arise domestically but internationally and the parties always desires the services to be provided by the experts, the best person and there are no other way for mediators but showing their certificate so that there must be an organization to provide them This does not go against the next recommendation of the thesis to loosen the overall standard of mediation practice which shall promote the mediation context in Vietnam as a whole The thesis means the implication for mediators of mediation institutions and not the ad hoc mediator 3.2.1.2 Improving the mediator’s capacity Firstly, it is necessary to have a comprehensive project to improve the quality of commercial mediators, including lawyers, arbitrators, judges, retired prosecutors and specially to take advantage of good experts with expertise in the field of 87 commercial business such as design, construction consultancy, supervision, to increase the quality of consulting As in the case of Singapore's mediation centers, in addition to mediators with expertise in the law, these centers also have a team of experts in many different fields and know a wide range of different languages to resolve disputes arising from professional conflicts or cases involving many participants, including foreign parties, avoid the need for additional interpreters to ensure deep understanding between the mediators and disputant parties, improving the quality of the solutions, ensuring benefits for the parties to make the successful mediation agreement more easily to be implemented by the parties Secondly, instead of grant license for mediator after the process of checking documents, the license rating authority should have held the training courses for anyone who want to be a mediator must pass the training sessions of at least a number of hours, like the case of US, it requires fourth hours of training nationwide It is because that normally, the mediators all acquire the specific knowledge in the field that they want to handle but lacking of skill to complete a case successfully including soft skill, psychology… In addition, for new one, there should be a requirement for few cases of co – mediation/arbitrator in which an experiences mediator/arbitrator shall supervise and guide the new mediator/arbitrator In addition, the mediator/arbitrator should be regulated to continue the study to keep improving their quality and take a pledge to support the newbie in the field for the greater development of the mediation and arbitration context in Vietnam 3.2.1.3 Raising public and business ‘s awareness In order for the legislation on mediation to come to life, it is necessary to increase the awareness of the community, especially the business community, about the role of dispute settlement through mediation which is an effective and alternative method of dispute resolution The State needs to enhance the effectiveness of legal consultancy activities for businesses because our country y's legal system is very diverse and always changing and reforming, especially commercial law, which makes businesses enterprises cannot hardly learn by themselves, but need the state's attention through legal support activities, so that enterprises can be proactive in 88 resolving commercial disputes arising and confidently choose appropriate dispute resolution, especially mediation This activity can be performed by the following two entities: Firstly, the team of lawyers can participate in legal support activities for businesses Lawyers are a team fully equipped with the knowledge of the law in general and the law of business in particular, including the law on commercial dispute resolution, in addition, most of the lawyers have passed vocational training so that they shall have many skills in legal advice In summary, lawyers with the capacity and qualifications, their knowledge of the law will be one of the active contributors to the legal consultancy network for businesses, helping Vietnamese businesses understand the importance of the law and the role of mediation in resolving trade disputes, creating favorable conditions for Vietnamese enterprises to participate in a market of with fierce competition Secondly, the State can provide legal support to enterprises through the operation of their specialized organizations, such as: People's Committees and provincial/municipal Justice Departments need to promulgate specific guiding documents and details of legal support tasks for businesses to each sector level; consolidating the contingent of law reporters at all levels and adopting timely training At the same time, full-time ministries can consult directly and indirectly via telephone, answer by posting information on the agency's website of enterprises' troublesome situations so that enterprises can manipulate Thirdly, another outstanding solution which was used worldwide is the Pledge (CPR, 2018), a production of The International Institute for Conflict Prevention and Resolution which is signed and follow by thousands of companies around the world, the Pledge is aim to facilitate the use of parties to ADR resolution before resorting to litigation: "We recognize that for many disputes there is a less expensive, more effective method of resolution than the traditional lawsuit Alternative 89 dispute resolution (ADR) procedures involve collaborative techniques which can often spare businesses the high costs of litigation In recognition of the foregoing, we subscribe to the following statements of principle on behalf of our company and its domestic subsidiaries: In the event of a business dispute between our company and another company which has made or will then make a similar statement, we are prepared to explore with that other party resolution of the dispute through negotiation or ADR techniques before pursuing full-scale litigation If either party believes that the dispute is not suitable for ADR techniques, or if such techniques not produce results satisfactory to the disputants, either party may proceed with litigation." Source: Corporate Policy Statement (CPR, 2018) Hong Kong is a very famous example in successfully using this way of attracting public attention A Pledge campaign or making promise on using mediation before other means of ADR with over 100 companies and trade organizations was launched back in 2009, this was a great campaign in attracting target users for commercial mediation They can rely on the Pledge to facilitate the use of mediation every time when dispute occurs, promoting the use of a method with high voluntary, self – determination method in settling commercial conflict Such signing has shown the determination of the country along with trade organizations, companies in exploring the full benefits and possibilities that commercial mediation mechanism could bring Singapore also has such Pledge campaign or the so call “Mediate First” (TLRC, 2010) 3.2.2 For associations and enterprises 3.2.2.1 The legal affairs improvement In the era of global economic integration, when the competition is getting fiercer and harder, not only among domestic companies but also with foreign companies, it is essential that enterprises must improve their own capacity, not only 90 in the field of production and business, improving product quality, reducing costs but also preparing for themselves the basic legal knowledge, especially in the field of dispute resolution to protect the interests of businesses and not at a disadvantage situation when resolving disputes Enterprise should have a team of lawyers or legal personnel with knowledge, experience, well-trained and regularly updated legal provisions not only in the country and around the world The company should also regularly send them to attend the short-term and long-term training courses on international trade law and alternative dispute resolution to have knowledge updated continuously However, not only businesses, but also related agencies such as VIAC, VMC, and VCCI should also organize short-term and long-term courses for businesses’ legal affairs to know the existence rules and regulations of these organizations as well as the great benefits it brings By this way, businesses are encouraged to use more and more ADRs, reduce pressure on courts, reduce costs and save time for themselves 3.2.2.2 Improvement of information channel to the Government Currently, VCCI is the organization responsible for transferring information from businesses to the Government, but this information usually has one-way direction and is obtained by VCCI's initiative in contacting and understanding businesses rather than actively provide from the business side On the other hand, with respect to dispute resolution, unions and businesses should create a single point of contact with authorities These entities will immediately address the difficulties of the business and request information regarding legal regulations and procedures to assess the suitability of dispute resolution on their issues Such information channels will connect small and medium-sized businesses in a specific commodity sector (for example) with relevant government agencies such as VIAC and VMC Through this, businesses can communicate directly with the Government and the agencies responsible for resolving disputes of the Government can support businesses when having problems 91 CONCLUSION Commercial activities are an integral part of the operation and development of worldwide economy and society and this field is constantly changing and evolving from traditional form such as trading of goods to the trade of services, technologies, transportation, real estate all activities with the purpose of seeking profits Along with the development of commercial activities and the sharply increasing of participants in commercial activities is the undeniable development of commercial disputes which requires the continuous improvement of methods for commercial dispute settlement when traditional measures such as court or arbitration are presenting certain limitations such as time and cost consuming Since then, the method of mediation has emerged as an indispensable need in the world and is receiving increasing attention in Vietnam The event of 46 countries including the largest economies in the world and the region such as the United States, China, Singapore, South Korea, India signed together in an International Convention Mediation or referred to as Singapore convention is a turning point in international trade mediation, a typical event illustrating this trend The main objective of the Convention is to promote mediation as an effective means of resolving international commercial disputes, creating favorable conditions for international trade to develop harmoniously, thereby contributing to the implementation of the sustainable development goal In Vietnam, this trend is also developing, reflected by the promulgation of the Decree on mediation and the establishment of domestic mediation centers and other activities for encouraging mediation development Despite the relatively late development compared to other countries, this can be seen as a step forward in the process of promoting the development of commercial mediation in Vietnam However, to achieve this goal requires not only several of such actions, but also a process of continuously improving and learning from the successful lessons of other countries and the cooperation of the government, mediation centers, businesses and all the society 92 Through studying the case of Singapore and Italy, the most important lesson can be withdrawn is that the significant support from the government as well as suitable policy and legal framework of the government play an important and irreplaceable role in promoting the use of mediation in resolving commercial disputes and this should be focused in Vietnam The author hopes that the studies and proposals in this thesis, although having certain limitation, may provide some useful solutions for the government and 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EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS COMMERCIAL MEDIATION DEVELOPMENT - INTERNATIONAL EXPERIENCES AND LESSONS FOR VIETNAM Major: Economics Specialization: International. .. with the global standards, the author selected the topic: ? ?Commercial mediation development international experiences and lessons for Vietnam? ?? Literature review Although commercial mediation has... costs, delays, and procedural formality and parties are looking for other means, that is mediation? ?? and focused on analysis the characteristics of international commercial disputes and showed in
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