Legal Identification of the Effectiveness of Arbitration Agreement in Foreign-related Contract Disputes

In the current international commercial trade, both parties to a commercial contract often choose arbitration as the dispute resolution. When signing a contract, the parties usually only pay attention to the need to agree on the law applicable to the contract, but ignore the need to make a special agreement on the legal application of the effectiveness of the arbitration agreement in the contract. According to the provisions of Article 13 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Arbitration Judicial Review Cases (Fa Shi [2017] No. 22), “the parties should make a clear expression of intention when choosing to confirm the law applicable to the validity of the foreign-related arbitration agreement by agreement. ” Even if both parties agree to adopt arbitration to resolve disputes outside the territory, it is likely that the purpose of the parties to the contract to design arbitration clauses will not be realized because of the invalidity of the judgment of the arbitration agreement by the laws outside the territory. Therefore, in the case of foreign-related contract disputes, the identification of the extraterritorial law to judge the effectiveness of the arbitration agreement has also become the key to determine whether the case can be applied to arbitration.

In accordance with the provisions of Article 13 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Arbitration Judicial Review Cases (Fa Shi [2017] No. 22) and Article 16 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Arbitration Law of the People’s Republic of China (Fa Shi [2006] No. 7), “For the review of the effectiveness of the foreign-related arbitration agreement, the law agreed by the parties shall apply; if the parties have not agreed on the applicable law but have agreed on the place of arbitration, the law of the place of arbitration shall apply; if there is no agreement on the applicable law and no agreement on the place of arbitration or the agreement on the place of arbitration is unclear, the law of the place of arbitration shall apply.” Although the parties have not agreed on the law applicable to confirm the effectiveness of the arbitration clause, they have agreed that the place of arbitration is in Vietnam, Therefore, it is confirmed that the effectiveness of the arbitration clause in the contract is governed by the law of the place of arbitration, that is, the Vietnamese law. After determining that the judgment of the arbitration agreement should be applicable to Vietnamese law, the court identified the relevant provisions of the effectiveness of the arbitration agreement in Vietnamese law.

The Commercial Arbitration Law of the Socialist Republic of Vietnam (2010), which should be applied to this case, actually cancels the provisions of the original Commercial Arbitration Regulations of the Socialist Republic of Vietnam in 2003 that the arbitration agreement must clearly stipulate the arbitration institution, and recognizes the legality of the interim arbitration, only requiring the parties to the arbitration agreement to have the capacity for civil conduct and conclude the arbitration agreement in writing, arbitration agreement shall be legal and effective. In this case, the arbitration clause reached by in the contract is in line with the provisions of the Commercial Arbitration Law of the Socialist Republic of Vietnam (2010) and is legal and effective.