Commercial mediation in Vietnam sits in an odd phase: the founding text is still Decree 22/2017/ND-CP from 2017, but the practice around it has changed a great deal — courts actively steer cases to mediation, settlements are recognised for enforcement, and businesses have started writing multi-tier mediation clauses into contracts as a mandatory discipline before suing. This article states clearly what is current law, what is new practice, and when mediation is the right choice over arbitration or court.
Legal basis
The governing frame for commercial mediation at the time of writing remains the Government’s Decree 22/2017/ND-CP on commercial mediation: mediators and mediation centres must meet establishment and operating conditions, mediation rests on voluntariness and confidentiality, and a successful settlement is recorded in writing. No decree has replaced this text at the time of writing; any information about a “new mediation decree” must be checked against an officially promulgated document before being relied on.
The new-practice layer sits at two points. First, the settlement-recognition mechanism: the Civil Procedure Code 92/2015/QH13 carries a chapter on recognising successful out-of-court mediation results, turning a settlement into a decision enforceable like a judgment once recognised by a court. Second, the trend of court-connected and arbitral-institution mediation: Vietnam’s major arbitration centres also operate mediation rules, and multi-tier dispute clauses — negotiation, mediation, then arbitration — are increasingly common in FDI contracts. Internationally, the 2019 Singapore Convention on mediated settlements has been signed by Vietnam but not ratified at the time of writing, so cross-border settlements do not yet enjoy direct enforcement under that convention.
Applied analysis
Mediation beats arbitration and court in three situations: the commercial relationship must survive the dispute, because mediation declares no loser; the information is deeply sensitive, because mediation confidentiality goes further than even closed arbitration; and the real problem is a payment or delivery schedule rather than legal right and wrong — a good mediator turns a dispute into a new commercial deal within weeks instead of a judgment within years. Conversely, mediation loses where a party needs emergency asset freezing, where the counterparty uses mediation to stall and dissipate, or where a precedent decision is needed. Identifying the situation correctly matters more than generic faith in mediation.
What once made mediation sluggish in Vietnam was the perception of it as the weak party’s step. New practice is fixing this by contract design: a mandatory mediation clause with a clear deadline, naming the centre and rules, and attaching cost consequences for a party that unreasonably refuses to mediate when the case reaches arbitration. When mediation is a contractual obligation with teeth, it stops being a polite invitation and becomes a substantive procedural stage.
Recommended actions
An FDI company should standardise three things: a multi-tier dispute clause template for every contract of significant value, with a capped mediation period and a cost-consequence term; a pre-vetted list of mediation centres and mediators by industry; and an internal process sending a person with authority to settle to the table — mediation fails most often because the person seated cannot decide the final number.
This article is delineated from the bilateral arbitration series in this batch such as EXP-3214, EXP-3217 and EXP-3218: those answer which arbitral forum to choose; this one answers the question before it — whether to enter an adversarial forum at all, or to resolve by mediation first.
Frequently Asked Questions
What are the advantages of mediation compared with arbitration and court?
The current governing text remains Decree 22/2017/ND-CP on commercial mediation — the base document on mediator and centre conditions, voluntariness and confidentiality — and at the time of writing no replacement decree has been promulgated. The “new” part belongs to the practice layer and related mechanisms: the procedure for recognising successful mediation results under the Civil Procedure Code 92/2015/QH13 so settlements become enforceable, mediation activity at major arbitration centres, and the context of the 2019 Singapore Convention, which Vietnam has signed but not ratified. Businesses must separate these two layers so as not to expect a document that does not yet exist.
How are mediation outcomes recognized and enforced?
Yes. A successful settlement is recorded in writing under Decree 22/2017/ND-CP, and the parties may ask a court to recognise the successful out-of-court mediation result under the Civil Procedure Code 92/2015/QH13 procedure; the recognition decision is enforceable like a court judgment and goes to the enforcement authority if the other side does not perform voluntarily. Without recognition, the settlement still binds as a contract and the aggrieved party must sue on that contract. The recognition step should therefore be taken right when the settlement is signed, while relations are cooperative, not after the counterparty changes its mind.
How to choose a mediation center and mediators?
Mediation is usually clearly one tier cheaper than arbitration and court: costs comprise the mediation centre or mediator fees and management time, with no value-based court fees and no long arbitral fee chain. On time, a well-run mediation concludes in weeks to a few months, against months to years of litigation. But the cost comparison must include the opportunity cost of a failed mediation followed by proceedings — which is why the mediation clause should carry a hard deadline: expiry without settlement automatically escalates the tier, so mediation cannot become the weaker-obligation party’s cheap delaying tool.
How should a mediation clause be drafted in a contract?
An FDI company should mediate where: the commercial relationship with the partner must continue after the dispute; the dispute turns on money, schedule or quality that can be renegotiated into a new timetable; the matter is too sensitive to surface; or the contract already mandates mediation. It should not rely on mediation where emergency asset freezing is needed, where there are signs of asset dissipation or flight, where a precedent must be set for a chain of similar disputes, or where the counterparty has already shown a stalling strategy. In those cases the right road is arbitration or court with interim measures, and mediation, if used at all, should run in parallel under a disciplined deadline.
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This legal analysis has been verified against current Vietnamese regulations and cross-border FDI transaction practices by the attorneys at FLAT LAW FIRM.
