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USAID helps Vietnam improve alternative dispute resolution

Alternative dispute resolution will be helpful for local firms after Vietnam signed over 60 bilateral investment treaties and free trade agreements.

The US Agency for International Development (USAID) will help strengthen Vietnam’s commercial and investment alternative dispute resolution ecosystem amid the country’s stronger engagement in international trade and investment.

 USAID and Vietnam's Ministry of Justice signed MOU on Mar 8. Photo: USAID Vietnam 

Alternative dispute resolution (ADR) refers to any means of settling disputes outside of the courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation, mediation, and arbitration.

Under the Memorandum of Understanding (MOU) signed with Vietnam’s Ministry of Justice on Mar 8, activities of the support may include improving related legislation, such as the adoption of international standards and best practices; strengthening capacity and skills of stakeholders; reinforcing partnerships among stakeholders; and raising awareness among local businesses and other stakeholders of the benefits of alternative dispute resolution.

“Creating an effective alternative dispute resolution ecosystem is critical for developing an enabling business environment that helps spur economic growth,” said USAID Mission Director Yastishock.

She emphasized that the outcomes of cooperation between USAID and the ministry have led to positive legal and regulatory reforms that have improved Vietnam’s economic competitiveness. “We hope that the long-term trust and goodwill built through our past cooperation will extend to this new collaboration on improving the alternative dispute resolution environment in Vietnam.”

The demand for alternative dispute resolution in Vietnam has increased along with the country’s strong economic growth and active integration into the global economy. Alternative dispute resolution allows commercial and investment disputes to be settled outside of a traditional judicial system, which can be lengthy and costly to businesses and can raise the risks of doing business in a country.

In addition, arbitration judgments that are a form of alternative dispute resolution are enforceable in many countries in the world, while court litigation is not.

For that reason, strengthening its alternative dispute resolution framework becomes necessary given the increasing number of international commitments Vietnam has made. So far, Vietnam is a signatory to more than 60 bilateral investment treaties and many free trade agreements with investment protection provisions that subject investor-state disputes to arbitration.

In 1995, Vietnam adopted the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, requiring it to recognize and enforce foreign arbitration judgments.

Regarding this field, USAID successfully collaborated with the Ministry of Justice on the USAID Support for Trade Acceleration Plus (STAR Plus) and USAID Governance for Inclusive Growth (GIG) projects.

STAR Plus helped Vietnam’s agencies implement trade-related legislation, build capacity for trade liberalization and governance, and further economic integration, enabling the country to prepare for the implementation of trade agreements, customs modernization, facilitation of agricultural trade, and legal transparency.

Meanwhile, USAID, through GIG, worked with the public and private sectors in Vietnam to address key reform issues on trade and economic growth, with an emphasis on improving the legal and regulatory environment, systems of accountability, and inclusive growth.