Many commercial contracts provide that “disputes must go through mediation first, and only then to arbitration”. But what does “mandatory mediation” mean here, and how do you draft a multi-tier clause so it actually works? The point to clarify upfront: in commercial disputes, mediation is a consensual process (Article 3.1 of Decree 22/2017/ND-CP), not a statutory duty. “Mandatory” means only a contractual obligation created by the clause itself — quite different from mandatory labor mediation under the Labor Code 2019.
Validity conditions for a multi-tier clause
For a “mediate first, arbitrate later” clause to be effective:
- Written form for both tiers: the mediation tier under Article 11.2 of Decree 22/2017/ND-CP, the arbitration tier under Article 5 of the Law on Commercial Arbitration 54/2010/QH12;
- Content must not violate legal prohibitions;
- The arbitration tier must satisfy Article 5 and not fall under the invalidity grounds of Article 18 of Law 54/2010.
Checklist for drafting a med-arb clause
- Sequence of tiers + specific time limits per tier: avoid a vague “mediate first” with no deadline — fix the number of days for each tier;
- Designate the mediation institution + rules: e.g. VMC, VICMC and the applicable mediation rules, leaving nothing open;
- Define “failed mediation”: expiry of the agreed time limit, or a party declaration terminating mediation under Article 17 of Decree 22/2017;
- Consequences of skipping the mediation tier: state clearly whether it is a condition precedent to arbitration or merely a good-faith obligation — the legal consequence of a party going straight to arbitration is a grey area with no case law, so present it as a risk rather than asserting “the claim will be dismissed” or “it will still be accepted”;
- True med-arb: if the mediator is to continue as arbitrator, this must be expressly agreed in writing (Article 9.2(d) of Decree 22/2017 — a mediator may not simultaneously act as arbitrator unless otherwise agreed), with safeguards: waiver of the right to challenge the arbitrator, and caucus information not to be used in the arbitration unless consented to in writing;
- Language, seat and governing law for each tier;
- Non-suspension of interim relief: the mediation tier does not prevent parties from seeking interim measures under Articles 48–53 of Law 54/2010.
Legal effect of a successful mediation
A written record of successful mediation (signed by the parties and the mediator) takes effect under civil law pursuant to Article 15 of Decree 22/2017. In arbitral proceedings, the tribunal may issue a decision recognising the successful mediation with the effect of an arbitral award under Article 58 of Law 54/2010. Article 34 of the VIAC Arbitration Rules 2026 also addresses mediation within arbitral proceedings.
Note: do not write that “a successful mediation is automatically enforceable” — enforcement requires a court recognition decision or a tribunal decision under Article 58. Cross-border: Vietnam has not joined the Singapore Convention on mediation, so mediated settlements do not yet enjoy a direct recognition mechanism.
Also distinguish: commercial mediation is governed by Decree 22/2017/ND-CP — do not write “Vietnam has a standalone Commercial Mediation Law”. And do not confuse it with court-annexed mediation (Law 13/2020) or labor mediation.
Frequently asked questions
Q: What if a party skips mediation and goes straight to arbitration?
A: A grey area with no case law. The risk depends on how the clause is drafted (condition precedent vs. good-faith obligation) — which is why the clause must state the consequence upfront.
Q: Can the mediator also serve as arbitrator?
A: Yes, but only with written agreement permitting it (Article 9.2(d) of Decree 22/2017), plus safeguards on impartiality and caucus confidentiality.
Q: Is a successful mediation immediately enforceable?
A: Not automatically. The settlement record takes effect under civil law; award-like enforceability requires a recognition decision by the court or the tribunal (Article 58 of Law 54/2010).
Sources
- Decree 22/2017/ND-CP (Articles 3.1, 9.2(d), 11.2, 15, 17);
- Law on Commercial Arbitration 54/2010/QH12 (Articles 5, 18, 48–53, 58);
- VIAC Arbitration Rules 2026 (Article 34).
Legal information verified as of the drafting date (14/10/2026). Laws may be amended — check their current validity before applying.
Need a multi-tier dispute resolution clause drafted for your contract? Contact FLAT Law Firm for advice.
Transparency note: This article was quality-reviewed by the FLAW AI Legal Council, not by a human lawyer, and does not constitute legal advice for your specific matter.
