Avoid legal risk for businesses to reach out to the international market

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Dr. Vu Tien Loc, President of the Vietnam International Arbitration Center (VIAC).

What pressures will impact business operations when doing business in the international environment?

According to the latest United Nations report on “World Economic Situation and Prospects for 2024”, the global economy is forecast to grow 2.7% in 2024 and 2.8% in 2025. However, the United Nations Economic and Social Commission also recommends that this growth needs to be viewed carefully because factors that threaten to reduce growth prospects, including interest rates higher for longer time in major developed economies and escalating geopolitical tensions and growing climate risks.

Although Vietnam is considered one of the economies that recovered well after the pandemic, the country is still directly and indirectly affected by these factors. In addition, digital transformation and the digital economy have entered a boom period in countries, posing new pressures, challenges and opportunities.

Vietnam's import and export in the first months of 2024 still see positive results. In investment activities, many Vietnamese enterprises investing abroad have achieved considerable success. The successes of Viettel, FPT, Vinamilk… in foreign markets have further affirmed the upward trend of Vietnamese firms to reach out the international market, promoting Vietnamese intelligence to the world, and bringing “Made in Vietnam” products and services abroad and earning foreign currency for the country, contributing to the national balance of payments and stabilizing the national currency.

However, in international trade, Vietnamese firms have paid attention to revenue, price, sale, profits… but paid little attention to legal issues and partners, so disputes and risks may arise.

Meanwhile, according to the World Bank's (WB) competitiveness ranking, the index of contract enforcement and dispute resolution is one of the important indicators. In recent years, Vietnam has made many progresses to improve this index, but the ranking is still relatively low compared with the world. Therefore, the improvement of contract enforcement and dispute resolution index is an important requirement, requiring great efforts from relevant parties.

Currently, the country has completed legal framework to promote electronic contracts such as the Electronic Transactions Law with regulations on electronic identification, electronic signatures, electronic transaction authentication... which are deployed by ministries and branches. The National strategy for developing the digital economy and digital society to 2025, with a vision to 2030 under Decision 411/QD-TTg also sets a target that over 80% of businesses in Vietnam will use e-contracts by 2025.

What are effective solutions to prevent and handle the risks?

According to VIAC statistics, in the world, more than 90% of cross-border disputes related to trade and investment are handled by arbitration and mediation. In addition to improving the capacity of courts in resolving disputes, promoting the participation of commercial arbitrators and conciliation agencies is expected to help businesses save time and costs and ensure effective resolution.

In Vietnam, over the past 30 years, despite limited resources, the VIAC always contributes to preventing legal risks, managing and resolving disputes in business activities, especially for international trade and investment transactions, creating favorable conditions for Vietnamese businesses to promote investment in foreign countries. The development of operation of commercial arbitrators not only to improve the business investment environment and promote investment abroad, but also aims to achieve the goal of making Vietnam an option for resolving commercial arbitration disputes.

In the context of technological development, in your opinion, what are positive points in resolving legal risks in international trade?

Currently, online dispute resolution or the application of technology to part or all of the dispute resolution process has been a trend in many countries around the world. In Vietnam, in the field of justice, the court system is currently a pioneer in implementing the policy, and has initially created important foundations in building electronic courts. Motivated by commercial arbitration and mediation activities, the application of advanced technology will help commercial dispute resolution activities become more flexible and convenient, saving time and costs for the related parties.

However, from a micro perspective, if electronic contracts as well as regular contracts, are used by civil subjects, there need to have elements to ensure the commitment, implementation, and must be a mechanism to ensure effective contract enforcement if there have any problem during the implementation process. Recently, the use of online dispute resolution will be a mechanism to ensure appropriate contract enforcement for electronic contracts, contributing to the country's goal of moving towards a digital economy.

Thank you Sir!