April 9 2025 | Dr. Nguyen Trung Nam (Tony) | Lexology
ABSTRACT
Adjournment or stays of arbitral proceedings is a significant aspect of flexibility in arbitration. However, as of now, Vietnam’s legal framework lacks specific regulations governing this procedure, leading to numerous challenges in practical dispute resolution. This article focuses on analysing the legal ground related to the adjournment mechanism in arbitration proceedings, examining the application of adjournment measures in Vietnam and internationally. Furthermore, it shares some tips for the disputing parties and proposes recommendations for amending legislation related to adjournment of arbitral proceedings.
1. Introduction
It’s not unusual to find one or more parties to arbitration asking whether the whole arbitral proceedings could be stayed from a few weeks to a few months, for settlement discussions or various other reasons. Though the question is not always easy to be answered, the availability of such stay (and the consideration of granting it) allows flexibility and procedural fairness in dispute resolution.
The decision to grant a stay or arbitral proceedings may be based on various grounds, including the insufficiency of evidence, the absence of a necessary party, or the occurrence of force majeure events. Most preferrably, adjournment should be granted on the basis.
Granting improper or excessive stays of proceedings in arbitration proceedings may cause undue delays to the resolution process and undermine procedural efficiency and obstructing the parties’s right to access justice. Notably, Vietnam’s legal framework governing adjournment in arbitration remains underdeveloped, lacking explicit criteria and procedures to ensure objectivity and consistency in considering and accepting adjournment requests. These legal gaps present significant challenges in safeguarding the rights and interests of disputing parties while also affecting the overall effectiveness and predictability of arbitration.
2. Legal ground for the adjournment of dispute resolution in arbitration proceedings
2.1. Vietnamese legal regulations
Currently, Vietnamese law is silent on stay of arbitral proceedings. While certain provisions of the Law on Commercial Arbitration 2010 (“LCA 2010”) mentioned some aspects which are relevant to stay of proceedings:
- Article 38 of the Law on Commercial Arbitration 2010 (“LCA 2010”) governs negotiations in arbitral proceedings. The parties are entitled to engage in negotiations and reach a mutual agreement to terminate the arbitral proceedings from the lime of commencing arbitral proceedings. In the event that the parties successfully negotiate a settlement and agree to discontinue the proceedings, they may submit a request to the chairman of the arbitration center for the issuance of a decision suspending the dispute settlement. Though the provisions do not deal with the stay of proceedings, there may be a natural need that the parties are given some reasonable time, without the pressure of submissions and deadlines under the procedural orders, to enter into negotiations for settlement. In these situations, a joint submission for stay of arbitral proceedings would be ideal and the Tribunal should grant such stay on the basis of the parties’ agreement. Unfortunately, the LCA 2010 did not provide any further regulations to accommodate such an enquiry.
- Unless otherwise agreed by the parties or provided by the arbitration center’s rules of proceedings, Article 54 of the LCA 2010 stipulates that the determination of the time and venue of the dispute settlement meetings shall be at the discretion of the arbitral council. While this does not particularly deal with stay of proceedings, it gives the parties the opportunity to seek from the Tribunal (and for the Tribunal, the authority to grant) delay a scheduled hearing, so that the parties could have more time to prepare for submissions and evidence, or in fact, to initiate their settlement discussions. This is of great importance if circumstance arises that only one party wishes to delay the hearing date(s) and the other [party] objects to it. The Tribunal is then put to decide whether to grant (and if yes, to what extent) such delayed hearing.
It is evident that Vietnam’s arbitration framework has yet to incorporate regulations governing stay of proceedings, instead providing only provisions in some specific situations. The existing legal framework on arbitral proceedings lacks specific guidance concerning the procedural requirements, time limitations, and additional conditions for the issuance of a stay order. This regulatory gap may be fulfiled by the arbitral rules of the arbitration institutions.
However, arbitration centres in Vietnam don’t either provide any guidance on the above issues. VIAC Rules for example, only provides that “A party or the parties may, if there is a legitimate reason, request the Arbitral Tribunal to postpone a hearing. […] Where necessary, the Arbitral Tribunal may postpone a hearing and notify the parties” . There is no supervisory framework and complaint procedure, as there are no explicit provisions guiding the process of challenging If, for example, a party request an unreasonably long period of time for stay of proceedings and the Tribunal accepts the same, there is nothing the other party can do except waiting for the arbitral proceedings to ressume. On the other extreme case, if the parties mutually agree to stay of proceedings for an excessively long period of time (e.g. one or two years), under current laws and arbitral institutional rules, the Tribunal must follow the parties joint instructions without any reservation (e.g. on its own availability when the proceedings are ressumed).
2.2. International practice
For the resolution of disputes through international commercial arbitration, Article 19 of the UNCITRAL Model Law on International Commercial Arbitration affirms the parties’ freedom to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. In the absence of such an agreement, the arbitral tribunal is vested with the authority to conduct the proceedings in the manner it considers appropriate. A corresponding provision is also enshrined in Article 17 of the UNCITRAL Arbitration Rules on international commercial arbitration.[1]
Thus, in accordance with the principle of respecting the parties’ freedom to agree in dispute resolution, the parties may reach an agreement to request the arbitral tribunal to issue a decision on the stay of proceedings. Alternatively, in cases where no other agreement exists between the parties, the arbitral tribunal may make a decision regarding stay of proceedings, provided there are reasonable grounds and fairness in treatment for all parties. These are important international legal foundations for granting stay of proceedings in arbitration.
One of the situations that usually arise is that a party may request stay of arbitral proceedings even before the tribunal has been established. In that circumstance, institutional arbitral proceedings will have clear advantages, where the arbitral institutional rules usully allow the request to be decided by the (chairperson of) the arbitral institution, or by accepting an emergency arbitrator to be appointed and deal with the request. Article 29 of the Arbitration Rules of the International Chamber of Commerce (ICC) allows a party to request interim measures before the arbitral tribunal is constituted. The President of the ICC may appoint an emergency arbitrator to consider this request.
3. International and Vietnamese Practices
In the international context, the prevailing approach to dispute resolution emphasizes respect for the parties’ autonomy in arbitration proceedings, including agreements pertaining to stay of proceedings. The arbitral tribunal plays a supervisory role, making decisions within its jurisdiction to ensure the fairness and efficiency of the arbitration process. Arbitrators are obligated to assess and compare the potential damages to both parties when deciding whether to approve or reject a request for the stay of proceedings.
One illustrative case involves a child support dispute in Canada (Lockman v. Rancourt (2017) ONSC 2274)[2].. In this instance, the respondent (the party obligated to provide financial support) dismissed their legal counsel due to a loss of confidence and sought to retain new representative. Consequently, the respondent submitted a request for stay of proceedings. However, the arbitrator rejected the request, leading the respondent to petition the Ontario Superior Court of Justice, claiming that they were treated unfairly under these circumstances.
The court identified deficiencies in the arbitrator’s reasoning, particularly the failure to thoroughly evaluate pertinent factors when denying the respondent’s request. Specifically, the arbitrator neglected to consider the potential damages to the respondent if the hearing were to proceed without legal counsel, as compared to the respondent that might be incurred by the claimant if the hearing were adjourned. The judge underscored the absence of evidence suggesting that the claimant would suffer significant harm due to the stay of proceedings. Based on this analysis, the court concluded that the arbitrator had violated the principles of fair and equal treatment of the disputing parties. Consequently, the Ontario Superior Court of Justice annulled the arbitral award and appointed a replacement arbitrator to reconsider the dispute.
This situation also highlights the crucial role of the court in cases where the arbitral tribunal issues an unreasonable decision regarding the approval or rejection of a party’s stay of proceedings request. In comparison with Vietnamese legal provisions, Article 71 of LCA 2010 allows court intervention during the enforcement phase of an arbitral award.
In Vietnam, requests for stay of proceedings based on mutual agreement between disputing parties are typically accepted, reflecting the principle of freedom of contract within commercial activities. For example, in 2018, Company A (India), specialising in the production of electric turbines, entered into a contract with Company B (Vietnam) for the supply of electromechanical equipment and technical services for a hydropower project in Vietnam. Despite Company A fulfilling its contractual obligations and delivering the project, Company B failed to settle outstanding debts owed to Company A.
On 26 December 2023, Company A filed a request for arbitration with the Vietnam International Arbitration Centre (“VIAC”) pursuant to Article 27 of the General Conditions of the Contract signed by both parties. VIAC initiated arbitration procedures accordingly. On 15 April 2024, Company A submitted a notification to VIAC requesting a one-month stay of the proceedings, citing ongoing settlement negotiations between the parties. VIAC subsequently informed Company B that the dispute resolution process would be adjourned until 15 May 2024, per Company A’s request.
Due to the lack of specific regulations, arbitration centres in Vietnam are compelled to handle stay of proceedings requests in a flexible manner, consistent with the fundamental principles of arbitration proceedings. Where there is no mutual agreement between the parties regarding an stay of proceedings request, arbitral tribunals will base their decisions on a careful consideration of multiple factors to ensure fairness and efficiency in dispute resolution.
4. Tips for disputing parties when there’s a need for stay of arbitral proceedings
Based on practical application, the procedure for stay of proceedings can be categorised into two common scenarios: (i) stay of proceedings by mutual agreement of the parties; and (ii) stay of proceedings requested unilaterally by one party but opposed by the other.
4.1. Stay of proceedings by Mutual Agreement
Stay of proceedings by mutual agreement of the parties can help minimize litigation costs and facilitate a more flexible approach to dispute resolution. However, in many cases mediation or settlement negotiations may simply be the debtor’s tactics to delay the arbitral proceedings. For small claims, this could be very frustrating, because procedural delays always come with additional legal costs.
From the risks identified above, the following tips may be helpful to the counsels considering stay of proceedings on the basis of mutual agreement:
- Establishment of clear and specific plans: When parties agree to adjourn proceedings for mediation or negotiation, a detailed roadmap with clear timelines and conditions should be established to avoid unnecessary delays.
- Preparing options for negotiation conditions: Before requesting stay of proceedings for negotiations, parties should carefully define concession strategies and core demands to enhance the likelihood of reaching a final agreement.
- Utilising opportunities prudently: Certain disputes can be resolved more quickly and cost-effectively through mediation and the counsels should support the process with dilligence and sufficient resources. However, if the mediation process does not show clear progress or if the dispute is improper for mediaiton, the parties should proactively resume arbitration to prevent unnecessary delays and waste of time and resources.
4.2. Stay of proceedings requested unilaterally by one party but opposed by the other
Where one party unilaterally requests for stay of proceedings without the consent of the opposing party, the arbitral tribunal’s decision on whether to grant the stay plays a critical role in shaping the course and effectiveness of the dispute. Legally, the arbitral tribunal has the authority to grant a stay if there are valid justifications. However, if the decision to adjourn is not grounded on reasonable grounds, it may lead to unfairness for the opposing party, particularly when there are urging needs to resolve the disputes in a timely manner.
In practice, the applicant for stay usually cites reasons such as the need for additional time to gather evidence or to await a ruling from another competent authority to request stay of proceedings. Many has exploited the external circumstances as an opportunity to prolong proceedings, causing significant prejudice to the opposing party. A sensible Tribunal has to be able to balance the need for the parties’ fair opportunity to present/defend their case, and the need for effective and timely resolution of the dispute.
In the case of Lockman v. Rancourt analysed above, the Ontario Superior Court of Justice set aside the arbitral award on the grounds that the arbitrator had violated the principles of fair and equal treatment of the parties[3]. The risks of “fairness” challenges in Vietnam is even higher, gven the Court practices in favour of scrutinising the content of the award and arbitral procedures. Therefore, if the arbitral tribunal issues a stay decision or denies a stay request without explanation on its consideration of fairness and impartiality in the proceedings, or breaches the fundamental principles of Vietnamese law, this could serve as a key basis for the losing party to later request the Vietnamese courts to set aside the arbitral award pursuant to Article 68 of LCA 2010[4]..
To safeguard their interests in such cases, parties should devise appropriate legal strategies to respond effectively, including:
- Assessing the motives of the requesting party: If opposing the stay of proceedings request, parties should thoroughly analyse whether the request genuinely serves a legitimate purpose or is merely a tactic to intentionally delay the resolution of the dispute.
- Proactively protecting one’s interests: When contesting a stay of proceedings request, the opposing party should prepare robust arguments to demonstrate that the stay sought would result in prejudice to it andprocedural delays would result in significant and/or imparable harm to the opposing party.
- Developing alternative plans: Even when opposing the request, the oposing party should anticipate scenarios in which the arbitral tribunal may approve the stay of proceedings. It is not abnormal for the Tribunal to take a middle-approach, to allow the stay of proceedings for a shorter period than what requested. When this becomes more obvious, the opposing party should suggest the allowance of a shorter stay of proceeding which could justify the reassons for delays. In any event, the stay of proceedings period can also be utilised to strengthen case files and gather additional critical evidence to support the proceedings.
- Closely monitoring the process: If the stay of proceedings request is granted or partially granted, the parties should closely monitor the timeframe and stated reasons to prevent further delays that could hinder the progress of dispute resolution.
In summary, stay of arbitration proceedings is an essential legal tool that provides parties with an opportunity to negotiate and reach reasonable solutions without incuring further costs and time. However, the misuse of this mechanism can lead to negative consequences, such as delaying dispute resolution, increasing costs, and creating unfairness for one of the parties involved. Therefore, disputing parties should carefully evaluate before agreeing to or opposing an stay of proceedings request.
To effectively implement the stay of proceedings mechanism, parties need to develop appropriate legal strategies to closely manage the timing, conditions, and objectives of the stay of proceedings. Moreover, monitoring the progress and preparing contingency plans in all circumstances will help parties optimally protect their interests.
5. Policy-making recomendations
To enhance the effectiveness of dispute resolution through arbitration, the author recommends legislative amendments and additions in two main directions as follows:
Incorporate Article 19 of the Model Law regarding the Tribunal’s power in arbitral proceedings into LCA 2010: Currently, Vietnamese law lacks provisions on stay of arbitration proceedings and the genenral power of the Tribunal in handling the conduct of arbitration. This has reduced the flexibility and efficiency of dispute resolution through arbitration. Therefore, introducing an article akin to Article 19 of the Model Law will provide essential power for the arbitral tribunal in making fair and context-appropriate decisions.
Incorporating provisions on stay of proceedings into the procedural rules of VIAC: The current procedural rules of VIAC do not include specific provisions for stay of arbitral proceedings, especially where the Tribunal has not been established. It is necessary to provide a clear guidance for stay of proceedings, including the circumstances under which stay of proceedings is permitted, the conditions, the time frame, and the determination when the Tribunal has not been in place.
CONCLUSION
The absence of regulations on the stay of arbitration proceedings has led to unstability for disputing parties as well as the arbitral tribunal. While stay of proceedings serve as a useful tool, they also pose risks of abuse, causing unnecessary delays and affecting the fairness of dispute resolution. Therefore, it is essential to establish a transparent mechanism regarding stay of proceedings within the laws and procedural rules. These amendments and supplements will contribute to promoting a fair dispute resolution system that aligns with global trends and practical needs in Vietnam, ensuring the rights and interests of the litigating parties.
- “Article 17.
Subject to these Rules, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the parties are treated with equality and that at an appropriate stage of the proceedings each party is given a reasonable opportunity of presenting its case. The arbitral tribunal, in exercising its discretion, shall conduct the proceedings so as to avoid unnecessary delay and expense and to provide a fair and efficient process for resolving the parties’ dispute.” - Andrew Feldstein (2017), “Arbitration and Requests for Adjournments – Treating Parties Fairly and Equally, and the Importance of Weighing Prejudice”, Feldstein Family Law Group, https://www.separation.ca/blog/2017/november/arbitration-and-requests-for-adjournments-treati/ (truy cập lần cuối ngày 26/3/2025).
- Andrew Feldstein (2017), “Arbitration and Requests for Adjournments – Treating Parties Fairly and Equally, and the Importance of Weighing Prejudice”, Feldstein Family Law Group, https://www.separation.ca/blog/2017/november/arbitration-and-requests-for-adjournments-treati/ (truy cập lần cuối ngày 26/3/2025).
- “Article 68. Grounds for cancellation of arbitral awards
The court shall consider the cancellation of an arbitral award at the request of one of the parties.
An arbitral award shall be cancelled in any of the following cases:
a/ There is no arbitration agreement or the arbitration agreement is invalid;
b/ The arbitration council’s composition or procedures of arbitral proceedings is/arc incompliant with the parties’ agreement or this Law;
c/ The dispute falls beyond the arbitration council’s jurisdiction: when an arbitral award contains the details falling beyond the arbitration council’s jurisdiction, such details shall be cancelled;
d/ The evidence provided by the parties on which the arbitration council bases to issue the award is counterfeit: an arbitrator receives money, assets or other material benefits from one disputing party, thus affecting the objectivity and impartiality of the award;
dd/ The award contravenes the fundamental principles of Vietnamese law.”