Understanding commercial mediation under Decree 22/2017/NĐ-CP: how to select mediators, organization process, and legal value of mediation agreements.
Commercial mediation is an out-of-court dispute resolution method becoming increasingly popular in Vietnam, especially for cases where businesses want to maintain long-term relationships. For foreign businesses, this is an efficient and cost-effective option.
1. What Is Commercial Mediation?
Commercial mediation is a method where disputing parties voluntarily accept a neutral third party (mediator) to help them negotiate and reach agreement to resolve dispute.
Unlike arbitration/court, mediator does NOT make decisions for parties — only facilitates parties' own agreement.
2. Advantages of Mediation
- Fast: usually 1-3 months vs 6-24 months court/arbitration
- Cheap: significantly lower cost
- Confidential: absolute, not public
- Flexible: solution can be creative, not limited by rigid legal provisions
- Preserve relationship: parties agree, no "win-lose"
- High success rate: 60-80% of mediation cases reach agreement
3. When to Choose Mediation?
- Both parties still have goodwill to negotiate
- Business relationship to be maintained after dispute
- Complex issue with many commercial aspects
- Need creative solution (e.g., change contract terms instead of compensation)
- Confidentiality important
- Before going to formal proceedings
4. Legal Framework
Commercial mediation in Vietnam governed by:
- Decree 22/2017/NĐ-CP on commercial mediation
- Code of Civil Procedure 2015 (on recognition and enforcement of successful mediation agreements)
- Singapore Convention 2019 (Vietnam not yet ratified, but affects international mediation)
5. Two Types of Mediators
5.1. Mediators in Mediation Institutions
Operating at Mediation Centres licensed by Ministry of Justice. Strict regulations on ethics and competence.
5.2. Independent (Ad-hoc) Mediators
Individuals hired directly by parties. More flexible but no institutional support mechanism.
6. Typical Mediation Process
- Parties agree to mediate: through pre-dispute agreement (in contract) or post-dispute
- Select mediator: by parties' agreement or mediation centre appointment
- Opening session: mediator meets parties separately or together, understands issues
- Negotiation sessions: from few to dozens of sessions, in-person or online
- Draft mediation agreement: if achieved, create detailed written agreement
- Recognition of agreement: request court recognition for enforcement
7. Legal Value of Mediation Agreement
Successful mediation agreements have 2 levels of value:
7.1. Contract Effect
Mediation agreement itself is contract between parties. Breach can be sued like normal contract breach.
7.2. Enforceability (After Court Recognition)
If court recognition obtained, agreement equivalent to judgment — can request Enforcement Agency to execute. Important strength.
8. Mediation Fees
Reference:
- Initial fees (registration, filing): VND 5-20 million
- Mediator fees: hourly (VND 3-10 million/hour) or package (VND 30-200 million)
- Court recognition fee: VND 1-3 million
Compared to arbitration (VND 50-300 million) or multi-level court proceedings (large time cost), mediation remains very economical.
9. Mediation Institutions in Vietnam
- VMC: Vietnam Mediation Centre (under VIAC)
- Provincial Commercial Mediation Centres
- Some law firms provide mediation services
10. Effective Mediation Negotiation Tips
- Prepare carefully before session: define goals, BATNA (best alternative to negotiated agreement)
- Focus on interests, not positions: ask "why does other side want this" to find win-win
- Utilize private sessions: speak frankly with mediator about hard-to-say issues
- Be creative in solutions: not just money, can be contract changes, preferences, or amicable termination
- Don't rush signing if uncertain: request time for lawyer consultation before signing final agreement
11. Cross-Border Mediation for Foreign Businesses
For international disputes, foreign businesses should consider:
- Online mediation: increasingly popular, especially post-Covid
- Singapore International Mediation Centre (SIMC): when both parties want neutral location
- Singapore Convention: provides framework for cross-border mediation agreement enforcement (Vietnam not yet ratified but agreements still effective with court recognition)
- Combine mediation with arbitration (Med-Arb): mediate first, fail then to arbitration
This article is for reference only. Please contact a lawyer for accurate advice.
Frequently Asked Questions
Is mediation mandatory before lawsuit?
Not mandatory under Vietnamese law except some special cases (labor disputes must go through grassroots mediation first). However many contracts have clauses requiring mediation before court/arbitration.
If mediation fails, does it affect subsequent proceedings?
No. Information in mediation process is confidential, cannot be used as evidence in subsequent proceedings (under Decree 22/2017). Concession proposals in mediation are also not binding when going to court.
Can mediation be done online?
Yes. Law allows online mediation. Many mediation centres provide video conference platforms. Especially popular post-Covid-19 and with international disputes.
Can mediation agreement be denied court recognition?
Possibly, if: agreement is illegal, violates fine traditions, party forced when signing, or dispute subject not within mediation scope. Denial rate low if mediation conducted per regulations.
Should mediator be lawyer or industry expert?
Depends on case nature. Complex legal disputes → experienced lawyer. Technical disputes (construction, technology, finance) → industry expert. Some cases combine both (co-mediation).