Effective risk management and dispute settlement are contributing to the process of legal improvement, improving the business environment in Vietnam, attracting more Japanese investors.
At the seminar “Japan-Vietnam trade and investment: seeking business opportunities in adversity” on May 11, Dr. Vu Tien Loc, President of the Vietnam International Arbitration Center (VIAC), said that 5 marks the 2023th anniversary of the establishment of diplomatic relations between Vietnam and Japan and the 50th anniversary of the implementation of the Vietnam-Japan Joint Initiative.
With a long history of development cooperation between the two countries, Japan is the only country in the world with which Vietnam has extensive strategic partnership. The phrase “Deep Strategic Partnership” is only for Japan and indeed the cooperation of the two countries in the past 50 years, especially in recent years, has grown very strongly, becoming an exemplary model in the cooperation between a developed country and a developing country.
Japan is Vietnam’s leading partner in all the most important fields, such as investment, trade, tourism, development aid, scientific and technical cooperation, science and technology,…
The Japanese business community is also an extensive strategic partner for Vietnamese businesses. Japanese investment is currently present in most provinces and cities and leads in the fields of industrial trade with investment quality and quality of trade exchanges, science and technology at a high level.
Mr. Tadahiro Kinoshita, Chairman of the Japan Business Association in Vietnam, said that there are more than 2,000 Japanese companies operating in Hanoi, Ho Chi Minh City and Da Nang. Half of them are in the manufacturing sector.
In recent years, in the face of Vietnam’s infrastructure demand and vibrant consumer market, Japanese companies have become increasingly interested in investing in renewable energy generation and other power generation infrastructure, developing urban areas such as shopping malls.
As can be seen from the survey results of the Japan Trade Promotion Organization (JETRO) and the Japan Bank for International Cooperation (JBIC), Vietnam is the most promising business development destination in ASEAN for Japanese companies. More than 60% of Japanese companies operating in Vietnam plan to expand their business in Vietnam in the next two years.
However, Mr. Tadahiro Kinoshita noted that Japanese companies when expanding their business activities in Vietnam need to take into account the risk that trade disputes will increase, such as non-fulfillment of contracts.
The representative of the Japan Business Association cited that last year, there was an inadequacy that enterprises in Japan’s manufacturing sector encountered related to the implementation of newly issued regulations on fire protection.
Mr. Tadahiro Kinoshita said that there were cases where the factory could not be put into operation despite completing the construction of the factory and warehouse due to the failure to obtain a fire protection certificate.
Whether it is a Japanese construction company or a local Vietnamese construction company, it is impossible to hand over the project, so it is impossible to recover construction costs, and the investor is a manufacturing enterprise, it also loses business opportunities due to the delay in putting the factory into operation.
“In the future, the issue of who will bear additional construction costs to meet the new fire regulations … becoming more and more prominent,” Tadahiro Kinoshita said.
If this disputed case is taken to court, this representative said that it will be extremely time-consuming and costly. At the same time, businesses are concerned about whether the court will give a fair ruling. As a result, businesses’ demand for speedy resolution through alternative dispute resolution methods will continue to grow.
In addition, Mr. Tadahiro Kinoshita has a request from an environmental improvement perspective to use more arbitration. In accordance with Vietnamese law and international treaties to which Vietnam is a party, awards of Vietnamese arbitrators and foreign arbitrators are enforceable in Vietnam.
“Therefore, we believe that arbitration will help ensure the performance of commercial contracts and is an effective solution to protect the interests of businesses and investors. However, arbitral awards of foreign arbitrators must be recognized by Vietnamese courts to be enforceable in Vietnam”, Mr. Tadahiro Kinoshita emphasized.
He wondered, because in the past, in order to enforce foreign arbitral awards in Vietnam, there seemed to be cases where enterprises applied to courts in Vietnam to recognize the enforcement of arbitral awards but the court did not recognize them, making them unenforceable.
Mr. Keigo Sawayama, Partner Lawyer, Nagashima Ohno & Tsunematesu, representative of the Japan International Dispute Settlement Center (JIDRC), also said that there were a number of disputes between Japanese and Vietnamese enterprises in the construction sector. The reason is due to procedural delays in real estate exploitation projects.
But making complaints to administrative authorities and criminal whistleblowing is not the optimal method of requesting a refund. We need to study arbitration methods, negotiations and the possibility of enforcing measures thereafter.
“It is often said that in Southeast Asian countries judicial rulings are susceptible to external influences, so it is difficult to expect to receive fair rulings in court. Therefore, we have high expectations for alternative dispute resolution (ADR) proceedings such as arbitration and mediation in Vietnam. We hope that Vietnam’s international arbitration institutions will continue to ensure a high level of neutrality, transparency and promptness in order to be an option for foreign companies”, Mr. Tadahiro Kinoshita suggested.
Dr. Vu Tien Loc agreed: “In the context of “the world without maps”, businesses are like boats on the ocean without a voyage, disputes are always at increased risk.”
Therefore, risk management and dispute prevention are very important in Vietnam-Japan relations. The goal of supporting businesses to manage risks, prevent disputes and resolve disputes effectively is to contribute to the process of improving legal and improving the business environment in Vietnam.