Commercial Mediation in Vietnam: Process & Checklist

Commercial Mediation: 6-Step Process and Preparation Checklist for Businesses

A VND 5 billion contract dispute: courts take 2–3 years, arbitration is costly and the partnership is effectively over. Between those extremes lies a third path few Vietnamese businesses fully exploit: commercial mediation — sitting back down together, with a neutral mediator's help, reaching your own confidential deal.

Decree 22/2017/ND-CP has provided the full legal framework since 2017. This article presents the 6-step process, the legal force of outcomes, and a preparation checklist.

Contents

• 1. What commercial mediation is and when to use it
• 2. Quick comparison: mediation – arbitration – courts
• 3. The 6-step mediation process
• 4. Legal force of the mediated settlement
• 5. Pre-session preparation checklist
• 6. Illustrative scenario (anonymised)
• 7. Model mediation clause for contracts
• 8. Five common mistakes that kill mediations
• 9. Frequently asked questions
• References

1. What commercial mediation is and when to use it

Under Article 3(1) of Decree 22/2017/ND-CP, commercial mediation is a dispute resolution method the parties choose by agreement, assisted by a commercial mediator as intermediary. Article 4 sets the founding principles:

• Voluntariness and equality: parties decide to participate and decide the content, on equal footing as to rights and obligations; the mediator imposes nothing.
• Confidentiality: case-related information is kept confidential, unless the parties agree otherwise in writing or the law provides otherwise — unlike public court trials.
• Flexibility: no rigid procedural rules; parties can craft creative solutions (debt rescheduling, set-offs, continued cooperation…).

Use mediation when: the parties want to preserve the business relationship; the dispute has technical/commercial elements needing a more flexible solution than "win–lose"; a fast resolution is needed to free cash flow; or confidentiality matters (technology or reputation-sensitive disputes).

Avoid it when: one side is entirely uncooperative (mediation needs minimal cooperation); an immediately enforceable ruling is required; or the dispute involves criminal conduct.

2. Quick comparison: mediation – arbitration – courts

A shrewd practice of many businesses: tiered dispute clauses — negotiation → mediation → arbitration/courts. Mediation is the "filter tier" where a significant share of disputes stop before escalating.

3. The 6-step mediation process

Step 1 — Trigger. One party sends a mediation request to the other (based on the contract's mediation clause or a separate agreement). Without a prior clause, the parties sign a mediation agreement after the dispute arises.

Step 2 — Appoint the mediator. The parties agree on a mediator (individual) or a commercial mediation institution. Criteria: expertise in the dispute's field, independence, trusted by both sides. Agree upfront on fees and fee-sharing.

Step 3 — Preparation. Each side sends the mediator a position paper (its position, key evidence, internal concession limits). The mediator may meet each side privately (caucus) to understand the real interests behind positions.

Step 4 — Joint session. The mediator facilitates: each side presents, common ground and gaps are mapped, options brainstormed together. The mediator does not "judge" who is right but helps the parties see the zone of possible agreement.

Step 5 — Negotiation and closing. When the zone appears, the mediator helps concretise: amounts, payment timelines, continuing obligations, confidentiality, sanctions for breaching the deal.

Step 6 — Record the outcome. Under Article 15, a successful mediation is recorded in a document signed by the parties and the mediator. If mediation fails, minutes record that — parties are free to move to arbitration/courts, and everything exchanged stays confidential.

4. Legal force of the mediated settlement

Two layers:

• Layer 1 — civil effect: the settlement signed by the parties and the mediator takes effect under civil law, binding the parties like a contract. A breaching party can be sued for performance.
• Layer 2 — court recognition: under Article 16, parties may ask the court to recognise the settlement under Civil Procedure Code procedures. Once recognised, it may be enforced like a court decision — with the enforcement authority's coercive machinery.

So draft the settlement as tightly as a contract: specific obligations, deadlines, sanctions, confidentiality. A vague settlement ("the parties shall resolve in good faith…") is nearly unenforceable.

5. Pre-session preparation checklist

Legal file:

1. The original contract with appendices and related working minutes.
2. All evidence supporting your claim (invoices, acceptance records, emails…).
3. The contract's mediation clause or a separate mediation agreement.

Strategy:

1. Define your BATNA (best alternative if mediation fails: sue? arbitrate? walk away?) — the "floor" for every concession.
2. Define the maximum concession (figures, timelines), pre-approved by the decision-maker before the session.
3. List non-monetary tradeables: extended timelines, next-project cooperation, information confidentiality…

People:

1. Attendees must have decision authority (or a live line to whoever does) — a team that must "check back" after every proposal kills the session.
2. Bring a mediation-savvy lawyer to vet the legal feasibility of options on the spot.

6. Illustrative scenario (anonymised)

A construction company and a project owner disputed VND 3 billion in variation costs: the contractor said the owner ordered design changes; the owner said the lump-sum price covered them. They went to commercial mediation under the contract clause.

Over two sessions, the mediator helped them see the dispute really concerned 4 work items, of which 2 had clear change-order records and 2 remained arguable. The final deal: the owner pays 1.8 billion for the 2 clear items plus 400 million as a "goodwill" sum for the rest, with payment spread over 60 days; both sides continue cooperating on the project's phase 2. The settlement was signed and later recognised by the court at both parties' request.

An illustrative scenario generalised from practice; details anonymised, not the outcome of advice to any specific client.

7. Model mediation clause for contracts

"Any dispute arising from or relating to this Contract shall first be resolved by good-faith negotiation within 30 days. Failing that, the parties agree to submit the dispute to commercial mediation under Decree 22/2017/ND-CP, with a mediator jointly appointed by both parties. The maximum mediation period is 60 days from the mediator's appointment. If no agreement is reached, either party may submit the dispute to [arbitration/the courts]."

Customise the clause: a specific mediation institution, venue, language, fee-sharing — the more detailed, the fewer procedural fights.

8. Five common mistakes that kill mediations

1. Sending people without decision authority. A team of specialists who must "check back" after every proposal — the session dies. The person who can close must sit at the table, or be on a live line.

2. No BATNA prepared. Without knowing the fallback if mediation fails, every concession is blind: conceding too much out of fear of litigation, or staying rigid from misjudging your case's strength.

3. Turning mediation into a "mini-trial". Spending the whole session arguing who is right instead of finding the zone of agreement. The mediator is not a judge; the goal is a deal both sides can live with, not a win–lose "judgment".

4. Uncontrolled disclosure in caucus. The private session exists so the mediator understands real interests — not for dumping strategic secrets. Share only what the mediator needs to help reach agreement, and state clearly what must not be passed to the other side.

5. A vague settlement document. A wonderful oral deal but a document saying only "the parties shall cooperate in good faith to resolve" — no figures, no deadlines, no sanctions. When one side defects, that document is nearly unenforceable. Always close the details like a contract.

9. Frequently asked questions

What is commercial mediation? Under Article 3(1) of Decree 22/2017/ND-CP, commercial mediation is a dispute resolution method chosen by the parties' agreement, with a commercial mediator assisting as intermediary. The core principle is voluntariness (Article 4): no party is forced to participate or to accept any outcome.

Which disputes can go to commercial mediation? Commercial disputes between parties — contract, investment, goods and services disputes — where the parties agree to mediate. The decisive condition is mutual consent, expressed through a mediation clause in the contract or a separate mediation agreement after the dispute arises.

What legal force does a mediated settlement have? Under Article 15 of Decree 22/2017, a successful mediation is recorded in a written document signed by the parties and the mediator; the document takes effect under civil law — i.e. binding like a civil transaction/contract between the parties.

Can courts recognise a mediated settlement? Yes. Article 16 of Decree 22/2017 lets parties ask the court to recognise the mediated settlement under the Civil Procedure Code. Once recognised, it may be enforced like a court decision — the key "bridge" between voluntary mediation and enforcement.

How does mediation differ from arbitration and courts? Mediation: the mediator issues no "award" but helps parties reach their own agreement; fast, confidential, low-cost, preserves business relationships. Arbitration/courts: adjudicators issue enforceable decisions; stricter procedure, more public (courts), and relationships usually break down after litigation.

How should a mediation clause be drafted? State clearly: priority for commercial mediation; the mediation institution or mediator-appointment method; venue and language; a maximum mediation period before escalation to arbitration/courts. The more specific, the fewer procedural fights when disputes arise.

Contact FLAT Law Firm to draft mediation clauses and to assist you through commercial mediation: hotline 0988424851.

References

1. Decree No. 22/2017/ND-CP dated 24/02/2017 on commercial mediation — Articles 3, 4, 15, 16.
2. 2015 Civil Procedure Code (recognition procedure for mediated settlements).