When Vietnamese businesses and foreign investors choose arbitration, the vast majority of cases are resolved through institutional arbitration — that is, resolution at an arbitration center under the procedural rules issued by that center. Understanding what an arbitration center is, what it can and cannot do, is the condition for businesses to properly exploit this mechanism’s value.
This article presents the legal framework for institutional arbitration under the 2010 Law on Commercial Arbitration (Law No. 54/2010/QH12, amended and supplemented by Law No. 81/2025/QH15 effective from 01/7/2025), arbitration centers in Vietnam, and practical guidance on choosing.
What is institutional arbitration
Clause 6 of Article 3 of the Law on Commercial Arbitration defines: institutional arbitration is a form of dispute resolution at an arbitration center under this Law and that center’s procedural rules. In other words, two elements constitute it: a permanent institution (the arbitration center) and a ready-made set of procedural rules issued by that institution.
The key point to understand correctly: the arbitration center is not the adjudicator. The one issuing the award is the arbitral tribunal — comprising arbitrators chosen by the parties or appointed. The center plays an organizational, coordination, and administrative-support role for the arbitral proceedings. Confusing “suing at an arbitration center” with “the arbitration center deciding the case” is one of the most common misunderstandings among businesses encountering this mechanism for the first time.
Arbitration centers under Vietnamese law
Article 23 defines the functions of arbitration centers: organizing and coordinating institutional arbitration activities and assisting arbitrators with administrative, office, and other support aspects during arbitral proceedings.
On organization, arbitration centers have notable legal characteristics under Article 27: they have legal person status, their own seals and accounts; they operate not for profit; they may establish branches and representative offices domestically and abroad; they have an executive board and a secretariat; and they maintain a list of arbitrators of their organization. Article 24 provides the establishment conditions: at least five founders who are Vietnamese citizens qualified as arbitrators under Article 20, licensed by the Minister of Justice and registered for operation with the Department of Justice.
Article 28 lists the centers’ rights and obligations, including three powers directly affecting businesses’ cases: developing the center’s procedural rules; developing standards, selection procedures, and the list of arbitrators; and appointing arbitrators to form arbitral tribunals in cases prescribed by law. Additionally, centers collect arbitration fees, pay arbitrators’ remuneration, store case files, and report periodically to the Department of Justice.
Arbitration centers in Vietnam: VIAC and others
The Vietnam International Arbitration Centre (VIAC) is the oldest and largest arbitration institution in Vietnam, established under Decision No. 204/TTg dated 28/4/1993 of the Prime Minister through the merger of the Foreign Trade Arbitration Council (1963) and the Maritime Arbitration Council (1964). VIAC operates alongside the Vietnam Chamber of Commerce and Industry (VCCI), brings together a large panel of arbitrators, and has resolved thousands of disputes in transport, insurance, sale of goods, construction, investment, and finance–banking, with parties from many countries.
Besides VIAC, Vietnam’s arbitration center system includes other institutions such as the Pacific International Arbitration Centre (PIAC, established under a Ministry of Justice license in 2006), the Southern Trade Arbitration Centre (STAC, established under a Ministry of Justice decision in 2017), and several other centers registered in various localities. Each center has its own procedural rules, fee schedules, and arbitrator lists.
Practice shows VIAC is the most popular choice in foreign-element contracts in Vietnam, partly thanks to its longstanding reputation and the international character of its arbitrator panel. However, businesses should assess each center based on arbitrator expertise in the specific dispute field, not only on general reputation.
The center’s supporting role during proceedings
The greatest value of institutional arbitration lies in the “support machinery” the center provides. Specifically:
- Procedural administration: the center receives statements of claim, transfers documents between the parties, sets time limits for submitting statements of defense (30 days under Article 35, extendable), and organizes the case’s administrative procedures. Businesses need not coordinate a complex proceeding themselves.
- Appointing arbitrators when parties deadlock: under Article 40, if the respondent fails to choose an arbitrator within 30 days, the arbitration center’s Chairman appoints an arbitrator for the respondent within the next 07 days; similarly, if the arbitrators fail to elect the tribunal’s chairman within 15 days, the center’s Chairman appoints the chairman within 07 days. This mechanism ensures proceedings are not stalled by one party’s non-cooperation.
- Deciding on arbitrator replacement: where the tribunal has not yet been formed, replacing an arbitrator is decided by the center’s Chairman; this decision is final (Article 42).
- Financial–administrative support: the center fixes and collects arbitration fees (Article 34), manages fee advances, pays arbitrators’ remuneration, provides meeting rooms, secretarial services, and stores case files for 05 years (Article 64).
Thanks to this machinery, institutional arbitration is particularly suited to parties with little arbitral experience, or complex cases needing a professionally managed process from start to finish.
The center’s procedural rules: a ready-made “rulebook”
Each arbitration center issues its own set of procedural rules — detailing the filing sequence, time limits, tribunal formation, hearing procedures, and fee schedules. When the parties agree to resolve disputes at a specific center, they implicitly accept that center’s procedural rules, unless otherwise agreed.
The advantage of a “ready-made rulebook” is predictability: businesses and lawyers can study the entire process in advance, estimate time and cost, and prepare litigation strategy from contract signing. This is also why reputable centers regularly update their rules toward international practice — e.g., expedited proceedings for small-value cases, consolidation, or interim emergency measures.
However, businesses should read the chosen center’s procedural rules carefully before signing the arbitration clause, as there are significant differences among centers on time limits, fees, and appointment procedures. A clause stating “disputes resolved at VIAC” drafted by someone unaware of what VIAC’s rules provide is a clause drafted in the dark.
Comparing institutional with ad hoc arbitration
The counterpart of institutional arbitration is ad hoc arbitration — a form where the parties themselves agree on the dispute resolution sequence and procedures (Clause 7 of Article 3), without any permanent center. The comparison below sets out the core differences:
- Supporting organization: institutional arbitration has a center administering the entire process; ad hoc arbitration is run by the parties and the tribunal themselves, turning to courts only when deadlocked on arbitrator appointment (Article 41).
- Procedural rules: institutional arbitration applies the center’s ready-made rules; ad hoc arbitration applies procedures agreed by the parties — they may agree to apply the UNCITRAL Arbitration Rules or design their own process.
- Costs: institutional arbitration includes the center’s administrative fees alongside arbitrator remuneration; ad hoc arbitration avoids center administration fees but the parties bear coordination work themselves.
- Flexibility: ad hoc arbitration is maximally flexible, suiting special cases; institutional arbitration is standardized, suiting most ordinary commercial cases.
- Award registration: ad hoc arbitration awards must be registered with the court before enforcement is requested (Article 62); institutional arbitration awards are enforced directly without this registration procedure.
When should businesses choose institutional arbitration
Institutional arbitration is the right choice in most ordinary commercial situations, especially when: the parties — particularly the Vietnamese side — have limited arbitral experience and need professional administrative machinery; the case value is medium to large, making the center’s administrative costs reasonable; the parties want procedural predictability instead of negotiating each procedural detail; or the dispute has foreign elements, where the reputation of an internationally known center (like VIAC) reassures the foreign partner.
Conversely, ad hoc arbitration may suit better where all parties are sophisticated “players” with lawyers experienced in international arbitration, wanting to design a “tailor-made” process for a special case — e.g., disputes in investment projects with complex multi-party structures.
Whichever form is chosen, the arbitration clause must state clearly: the arbitration center’s full, exact name (for institutional arbitration); the number of arbitrators; the language and venue. A generic clause is the source of most jurisdictional disputes we handle.
Frequently asked questions
Is the arbitration center the adjudicating body?
No. The arbitration center functions to organize, coordinate, and provide administrative support for the proceedings (Article 23). The ones directly deciding and issuing awards are the arbitral tribunal comprising arbitrators chosen by the parties or appointed.
If the respondent refuses to choose an arbitrator, does the case stall?
No. Under Article 40, if the respondent fails to choose an arbitrator within 30 days, the arbitration center’s Chairman appoints an arbitrator for the respondent within the next 07 days. Similarly, if the arbitrators fail to elect the tribunal’s chairman within 15 days, the center’s Chairman appoints within 07 days.
Can arbitrators outside the center’s list be chosen?
The Law on Commercial Arbitration does not require arbitrators to be on the center’s list; the parties may choose anyone meeting Article 20’s standards. However, each center’s procedural rules may have specific provisions on this, which should be checked before choosing.
Must institutional arbitration awards be registered with the court before enforcement?
No. The award registration procedure in Article 62 applies only to ad hoc arbitration awards. Institutional arbitration awards, once the enforcement time limit expires without voluntary compliance or a set-aside request, are directly enforced at civil judgment enforcement agencies (Article 66).
May arbitration centers operate for profit?
No. Clause 2 of Article 27 provides that arbitration centers operate not for profit. Centers may collect arbitration fees and other lawful amounts to sustain operations, pay arbitrator remuneration, and provide services (Article 28).
Contact FLAT LAW FIRM
FLAT LAW FIRM is a boutique business law firm specializing in foreign investment (FDI), cross-border transactions, and commercial dispute resolution in Vietnam. We advise on choosing arbitration centers and drafting arbitration clauses suited to each transaction’s characteristics; represent clients in institutional arbitral proceedings at VIAC and other centers, as well as in court support and control procedures.
To choose the right arbitration center for the contract about to be signed, contact us for advice.
Disclaimer
This article is for general information on Vietnamese commercial arbitration law at the time of publication only and does not constitute legal advice for any specific case. The choice of arbitration center and arbitration form depends on each transaction’s specific circumstances; businesses should consult a lawyer before deciding.
Useful links
- Arbitration dispute resolution — FLAT’s overview page on commercial arbitration.
- Ad hoc arbitration in Vietnam — the form where parties design their own procedures.
- Choosing arbitrators in disputes — standards and strategies for choosing arbitrators.
- Validity of arbitration agreements in Vietnam — conditions for valid arbitration agreements.
