Legal developments in arbitration

Supportive courts and advancing legal regimes are strengthening arbitration, but grasping jurisdictional nuances is key to success.

Significant strides in progressing China’s arbitration regime

China’s arbitration landscape has made significant strides in development in the past year. Key initiatives include ongoing pilot programmes in cultivating world-class international arbitration institutions and strengthening development of several centres for international dispute resolution, especially arbitration.

Legislative reform is also advancing with proposed revision of the Arbitration Law. After several rounds of public consultation, with enactment due later in 2025, this is being hailed the most significant arbitration law modernisation in nearly three decades.

Additionally, the Shanghai International Commercial Court has been actively integrating with arbitration processes, offering judicial support in areas such as asset and evidence preservation, and the enforcement of interim measures.

Together, these reforms demonstrate mainland China’s commitment to modernising its arbitration framework, improving international competitiveness, and fostering a cohesive legal ecosystem that harmonises court and arbitral functions.

Cultivating institutions

A Resolution of the Third Plenary Session of the 20th Central Committee of the Communist Party of China – the highest level of policymaking – announced in July 2024 a decision to “cultivate world-class international arbitration institutions”.

With this policy as guidance, a state-driven strategy targets cultivating 22 domestic institutions into world-class institutions. These include the China International Economic and Trade Arbitration Commission (CIETAC), Shanghai International Economic and Trade Arbitration Commission (SHIAC), Beijing Arbitration Commission/Beijing International Arbitration Court (BAC/BIAC) and Shenzhen Court of International Arbitration (SCIA).

A Ministry of Justice symposium in July 2025 affirmed this ambition to leverage the Third Plenary Session’s directives merging Chinese legal characteristics with international standards. This comprehensive approach aims to develop truly world-class arbitration capabilities while maintaining Chinese characteristics, supporting the nation’s growing role in global commerce.

The strategy focuses on serving major national initiatives like the Greater Bay Area and Hainan Free Trade Port through specialised arbitration services. By combining institutional development with human capital investment and global engagement, China seeks to elevate its arbitration ecosystem to international standards while preserving its distinctive legal identity.

China has 285 arbitration institutions with more than 60,000 arbitrators, including more than 3,400 foreign professionals, according to official data from the Ministry of Justice.

In 2024 alone, these institutions handled 4,373 foreign-related cases with a total disputed value reaching RMB197.8 billion (USD27.2 billion), Xinhua News Agency has reported.

Leading institutions like CIETAC, BAC/BIAC and SCIA have established particularly strong reputations, each routinely administering cases exceeding RMB100 billion annually. The combination of institutional scale, strategic government support and increasing international engagement suggests the potential for further advancement in global standing.

Legislative reform

These impressive operational metrics are now being reinforced by foundational legal reforms, as China undertakes its most significant arbitration law modernisation in nearly three decades.

The proposed amendments to the Arbitration Law, unveiled for public consultation in late 2024, represent the first comprehensive overhaul since the law’s 1995 enactment. Though initially limiting its application to maritime disputes involving foreign elements, and commercial disputes among enterprises registered in China’s pilot free-trade zones, the revisions strategically address both domestic needs and international expectations by clarifying arbitration scopes, strengthening institutional governance, and formally recognising ad hoc arbitration.

The Shanghai Arbitration Association marked another significant advancement in China’s dispute resolution landscape by introducing its Rules for Ad Hoc Arbitration in August 2024.

The 58-article framework, structured across five chapters, provides comprehensive guidance covering the entire arbitration process, from initiation and tribunal formation to hearings, awards and expedited procedures.

A notable feature of the above-mentioned rules is the flexibility granted to parties in selecting the seat of arbitration. While parties may freely agree on any arbitral seat, in the absence of such agreement, or where the chosen seat is unclear, Shanghai will serve as the default seat.

To support the effective operation of ad hoc proceedings, the Shanghai Arbitration Association may act as the appointing authority or delegate this function to other recognised institutions. Eligible designated bodies include the Shanghai Arbitration Commission, Shanghai International Economic and Trade Arbitration Commission (SHIAC), China Maritime Arbitration Commission (Shanghai headquarters), World Intellectual Property Organisation Arbitration and Mediation Shanghai Centre, and the KCAB International Shanghai Office. Among these, the first three have already issued their own guidelines or rules specifically tailored to ad hoc arbitration.

In terms of arbitrator selection for ad hoc proceedings, the Shanghai Arbitration Association offers a “recommended panel of arbitrators for ad hoc arbitration” to assist parties in appointing qualified professionals. Alternatively, parties may also select arbitrators from the panels of any of the designated institutions authorised under the above-mentioned rules.

Parties are also free to appoint arbitrators outside these panels, provided that when the seat of arbitration is in mainland China, such appointees must meet the qualifications for arbitrators as stipulated under the Arbitration Law. This initiative reflects Shanghai’s ongoing effort to align with international arbitration practices while offering parties greater autonomy and procedural adaptability.

SHICC’s judicial support

These systemic improvements in arbitration infrastructure find their judicial counterpart in the newly established Shanghai International Commercial Court (SHICC). Launched in December 2024 under the Shanghai First Intermediate People’s Court, the SHICC represents a significant milestone in China’s judicial modernisation.

The SHICC was created to address the growing need for specialised handling of complex cross-border commercial cases as China’s economy continues to integrate with global markets, including judicial review of arbitration awards from leading international institutions.

At its core, the SHICC performs critical judicial functions through specialised divisions that handle the entire spectrum of international commercial disputes. This centralised jurisdiction covers everything from complex cross-border contract disputes to arbitration-related proceedings, including applications to set aside or enforce both domestic and foreign arbitral awards.

According to recent data released by the Shanghai High People’s Court, the SHICC’s bilingual (Chinese-English) proceedings and digital case management system reduce average case processing time to just 38 days, while maintaining a resounding 97.92% enforcement rate for international awards – setting new benchmarks for efficiency in Asia’s commercial litigation landscape. However, the SHICC’s development faces critical challenges that must be addressed to achieve its full potential as a truly international forum. Notably, the Judges Law mandates (mainland) Chinese nationality for judicial appointments, while the Law of the People’s Republic of China on Lawyers restricts foreign legal representation.

Consequently, all judges currently on the SHICC bench are mainland Chinese nationals, and foreign lawyers face restrictions in representing clients in mainland China’s courts. These limitations create perceptions of jurisdictional bias that may deter some international businesses from choosing Shanghai as their preferred dispute resolution venue.

The legislative pathway for overcoming these barriers may lie in article 84 of the Legislation Law, which empowers the National People’s Congress Standing Committee to authorise the Shanghai Municipal People’s Congress and its standing committee to formulate special regulations for the Pudong New Area and implement the same.

This “super legislative power” could theoretically empower Shanghai to pioneer operations of the SHICC, allowing for experimental judicial reforms that address its current limitations. For example, law provisions may be changed to allow non-mainland Chinese judges and lawyers to participate in SHICC litigation proceedings.

This would present a good opportunity for Hong Kong common law experts to bring their common law expertise and participate in mainland legal proceedings. In the long run, the experimental scope could be further expanded to other foreign jurisdictions.

Conclusion

While China has undoubtedly become a major arbitration market, the next challenge lies in transitioning from volume to influence – from being a participant to a standard setter. The ultimate measure of success will be whether international businesses increasingly select Chinese arbitration venues for disputes unrelated to China.

GRANDALL LAW FIRM (SHANGHAI)
25-28/F, Suhe Centre, 99 North Shanxi Road
Jing’an District, Shanghai, China
Tel: +86 21 5234 1668
Email: grandallsh@grandall.com.cn
www.grandall.com.cn

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Insurance, cross-border data breach disputes: India

In a contemporary, hyper-connected economy, data flows across borders raise complicated legal questions in the event of cybersecurity breaches through unauthorised access and data exfiltration.

Complexity arises when data subjects, processors and controllers operate across multiple jurisdictions, with inconsistent legal obligations regarding personal data. Such multi-party and multi-jurisdictional dynamics are prone to challenges concerning applicable laws and the enforceability of judgments, awards and decrees between the concerned parties, along with their respective insurers and reinsurers.

The stakes in such disputes are high, as a single incident of illicit data breach may unleash a cascading transnational trade in personally identifiable data, often on the dark web, threatening data integrity and individual security on a global scale. Against a backdrop of soaring cybercrime typologies, including malware intrusions, ransomware events, identity theft, and digital extortion, aggrieved data subjects frequently aggregate their claims into putative class actions, seeking compensatory and punitive damages, as well as injunctive and equitable relief.

In India, a global hub for IT and back-end services, such disputes assume cross-border dimensions when engaging with jurisdictions hosting vast technology and finance enterprises, including the US, particularly in the context of Indian cyber liability and insurance policies.

Cyber liability disputes differ from classical tort litigation due to specific laws governing the subject. Data breaches litigation generates mass claims, regulatory exposure, reputational risk, and associated costs for litigation, forensics, mandatory notifications and credit monitoring.

Class action litigation predominantly steers towards a settlement, considering the liability exposure, and the time and costs of a full-blown trial. Therefore, class-wide settlements are preferred. Empirical studies also confirm that most cyber incidents are resolved through negotiated settlements rather than full adjudication.

Coverage disputes in India frequently arise belatedly, post-conclusion of settlement, with the jurisdiction of courts or tribunals being invoked to interpret terms of the underlying insurance policy, for challenging coverage, reimbursement of settlement sums, and claims surrounding security breach exclusions and conditions that bar indemnity.

Contentious issues also include prior approvals, and settlement authority and caps, incurring defence costs and indemnity obligations, especially when carriers deny coverage, citing their non-participation in the primary proceedings and therefore not being bound by any judgment or decree passed.

The Supreme Court of India, in National Insurance Company v Nippon Paper Foodpac Pvt Ltd – Special Leave to Appeal (C) No(s) 224-226/2023, while dealing with bifurcation of subject matter in the context of insurance claims, observed that “this invariably leads to confusion, multiple litigation, piecemeal decision, and chances of conflicting orders”.

Cross-border claims create challenges in harmonising domestic coverage with foreign proceedings, often leading to inconsistent outcomes and enabling insurers to deny claims. On conclusion of primary adjudication of liability proceedings in a foreign jurisdiction, the court or tribunal seated in India must preliminarily decide the binding (or non-binding) effect of the foreign judgment or settlement decree passed.

It must determine whether this has a preclusive or evidentiary effect in the coverage and insurance claim dispute, especially if the judgment or decree, although for a fixed debt, was in personam and not between the same parties, in the absence of the carrier in such primary litigation.

The burden of proof to demonstrate conclusiveness rests on the party seeking it. Based on principles of comity, res judicata and estoppel, courts and tribunals in India would have to consider whether there may be “preclusive effects” to issues or claims decided in foreign judgments or decrees.

This inquiry includes arbitrability, recognition, compatibility, evidentiary weightage, and reciprocity and consistency in relation to foreign judgments. In the Nippon Paper case, the Supreme Court questioned the Insurance Regulatory and Development Authority of India’s approach of treating quantum disputes as arbitrable while excluding repudiation and denial of claims from the scope, considering unintelligible bifurcation complicating arbitrability and uncertainty over the conclusiveness of foreign judgments.

The Indian regime on the treatment of foreign judgments and decrees (including settlement agreements) is codified under the Code of Civil Procedure, 1908 (CPC). Section 13 provides that a foreign judgment shall be conclusive “as to any matter directly adjudicated between the same parties”, save for certain exceptions, including when the judgment sustains a claim contrary to Indian law.

Section 44A provides for the execution of decrees from reciprocating territories. Section 19 of the Arbitration and Conciliation Act, 1996, permits tribunals’ procedural autonomy to determine admissibility and evidentiary value, without being bound by the CPC.

So, even a court-sanctioned settlement from a reciprocating territory may not be automatically conclusive in India. Its recognition depends on satisfying the requirements of section 13 of the CPC, and its binding force is limited to matters between the same parties, and where Indian law is not subverted.

This creates a structural difficulty in insurance disputes, where the final decree is typically between the defendants and the claimants only, without the insurers or reinsurers (from other jurisdictions) necessarily impleaded, thereby providing fertile ground for insurers to deny coverage or reimbursement liabilities.

The Supreme Court of Canada, while considering a stay of one of two parallel coverage proceedings in separate jurisdictions, examined multiple approaches to address the issue.

The International Law Association’s final report on res judicata and arbitration (2006) recommends that arbitral tribunals treat res judicata “autonomously” – governed not by the conflict rules of any domestic legal system, but by “transnational substantive and procedural rules” developed for arbitral practice.

Indian carriers often insist on strict compliance with contractual conditions in policy documents, especially those relating to notification requirements, prior authority and consents, and construction of exclusionary clauses, even when non-compliance may not apply (due to carve-outs or ambiguity), be material or prejudicial. They may do this only to unfairly deny coverage or reimbursement liability, despite there being a judgment affixing liability on the insured.

Carriers also tend to unreasonably withhold authority or approvals, or cause delay in granting consents to incur defence costs/defend/settle suits/claims, risking ballooning of the pending litigation. Insurers also insist on unequivocal statements, admissions of guilt, or negligence, which insureds are unable to provide, especially when the primary lawsuit on liability affixation is pending adjudication.

It is to be noted that the Supreme Court of India in Sohom Shipping Pvt Ltd v M/S New India Assurance Co Ltd & Anr, Civil Appeal No 2323 of 2021, held that an insurer cannot reject a claim on the grounds of breach of a policy condition, performance of which is impossible or frustrated.

In coverage arbitrations, private settlements with third parties generally do not bind the insurer. Findings, if any, on liability or causation in settlements or consent decrees may carry initial persuasive value. However, questions on claims and coverage overall, exclusions and performance of policy conditions remain within the tribunal’s scope of independent determination. The rise of cross-border class actions from data breaches has exposed critical misalignments in cyber insurance, often causing policies meant to protect insureds from catastrophic liabilities to fail. Foreign plaintiffs typically sue only the corporate defendant, excluding insurers or reinsurers from the proceedings.

As a result, any judgment or settlement that becomes res judicata in the forum state often lacks privity with the risk carriers. This forces insureds to initiate separate coverage actions in other jurisdictions to secure indemnification, creating inefficiency and uncertainty.

This problem is exacerbated by standard policy clauses – such as consent to settle, co-operation, and “no voluntary payments” – which rarely align with the accelerated timelines of class action settlements.

When settlements approach court approval, driven by certification deadlines and opt-out rights, insurers’ notice and consent requirements often lag behind, with little incentive for carriers to expedite and settle out of their own pockets. If insurers withhold or delay consent, insureds must choose between risking the settlement or proceeding without the insurer’s assent, potentially forfeiting coverage for breach of conditions precedent.

Strict enforcement of policy terms thus threatens the core risk-transfer function of cyber insurance. Courts and arbitral tribunals should interpret such clauses through the lens of commercial reasonableness, implying duties of good faith and co-operation.

Insurers should be barred from denying coverage on technical grounds if they had notice, an opportunity to participate and suffered no prejudice. Courts should require insurers and reinsurers to be impleaded from the outset, ensuring their interests are represented and reducing potential for subsequent disputes.

Recognition regimes should allow insurers to directly enforce indemnity obligations. Without such reforms, data-breach insurance will remain unreliable, leaving policyholders exposed to multi-jurisdictional disputes.

SHARDUL AMARCHAND MANGALDAS & CO
Amarchand Towers 216
Okhla Industrial Estate
Phase III New Delhi 110 020, India
Tel: +91 11 4159 0700
Email: connect@amsshardul.com
www.amsshardul.com

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Indonesia’s arbitration law and institutions

Indonesia’s arbitration regime is governed by Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution. While the law does not adopt the UN Commission on International Trade Law Model Law, the statute has provided a stable and enduring framework for arbitration practice in the past 25 years. In that time, arbitration has grown into a trusted mechanism for commercial dispute resolution in Indonesia.

Recent years have also brought important refinements, even as the arbitration community continues to anticipate a comprehensive reform of the Indonesian Arbitration Law.

The Supreme Court Regulation No. 3 of 2023 (SC regulation 3/2023) reinforced the enforceability of both domestic and foreign arbitral awards, underscoring the significance of arbitration in Indonesia’s dispute resolution landscape. Constitutional Court Decision No. 100/2024 clarified the meaning of “international arbitral award”, aligning domestic interpretation and removing longstanding ambiguities. Together, these developments enhance legal certainty, reassure investors, and further entrench arbitration’s role in cross-border commerce.

Institutionally, Indonesia hosts a range of arbitral institutions catering to specific sectors. The most prominent arbitration institution is the Indonesian National Arbitration Board (BANI). It has recently introduced its new 2025 Arbitration Rules and Procedures.

Modernisation and challenges

2025 marks another step forward in Indonesia’s effort to improve itself as a pro-arbitration jurisdiction in Southeast Asia. Recent judicial and institutional reforms, alongside evolving court practices, suggest a more consistent embrace of arbitration as a preferred dispute resolution mechanism. These developments are gradually enhancing confidence among both domestic and international users.

Still, Indonesia’s aspirations to rival established regional arbitral hubs remain a work in progress. Its progress is best assessed against the more mature arbitral ecosystems of neighbouring jurisdictions in Southeast Asia.

This article reviews the principal changes shaping the Indonesian arbitration regime in 2025, focusing on the new 2025 Arbitration Rules and Procedures of the BANI, introduced in January 2025, and their interaction with the SC regulation 3/2023.

2025 BANI rules

The 2025 BANI rules refine the 2022 version in an effort to bring the institution closer to international standards. A new model arbitration clause is now provided, giving users clearer guidance when designating it as their forum.

Although the BANI has indicated that cases filed after 2 January 2025 will fall under the new rules, one question is whether parties may still select the earlier version by agreement. As with any reform, the effectiveness of the rules will ultimately depend on how their new mechanisms are applied in practice.

Emergency arbitration

The most significant innovation is the introduction of emergency arbitration. The mechanism allows parties to seek urgent interim relief before a tribunal is constituted. This provision aligns with already established practices of leading international arbitral institutions.

Emergency arbitration under the Indonesian Arbitration Law. Indonesia’s Arbitration Law does not explicitly recognise emergency arbitration procedures. It characterises arbitral awards as final and binding, a concept that is unique compared to the interim nature of emergency awards. Their enforceability remains uncertain, particularly since SC regulation 3/2023 only provides for the enforcement of interim measures ordered by an arbitral tribunal.

Emergency arbitration under the 2025 BANI rules. Emergency arbitration allows parties to seek urgent interim relief before the full constitution of the arbitral tribunal. This mechanism is particularly valuable where waiting for the tribunal’s formation could result in irreparable harm. In its procedures, the BANI chairman must appoint an emergency arbitrator within two days of receiving a request. The arbitrator must render a decision within 14 days, extendable by seven days. This is less prescriptive than timelines under other arbitration institution rules.

The rules declare emergency awards as “final and binding” and include a waiver of recourse to the District Court. While aimed at enhancing enforceability, this position must be assessed against article 70 of the Arbitration Law, which permits annulment of awards in certain circumstances. It remains unclear how courts will interpret this waiver.

Further questions arise over whether a subsequently constituted tribunal may modify or set aside an emergency award. Similarly, some questions remain in respect of the scope of relief that an emergency arbitrator may grant, and the enforceability of emergency awards under SC regulation 3/2023, which expressly provides for the enforcement of security attachments issued by a regular tribunal

A useful comparison can be drawn to article 18(5) of the 2025 BANI rules, which empowers a tribunal to order interim measures such as security attachment, the deposit of goods with third parties, or the sale of perishable goods. Whether emergency arbitrators may exercise equivalent authority, and how such measures will be recognised by Indonesian courts, remains an open question.

While the rules permit challenges to emergency arbitrators, they do not clarify whether such challenges suspend the ongoing proceedings. By contrast, rules of other institutions provide for suspension during a challenge, ensuring procedural fairness. Guidance from the BANI on this point would provide welcome certainty. Regarding costs, the BANI sets a flat fee of IDR200 million (USD12,000) excluding VAT, payable on filing. This cost is envisaged to be paid by the requesting party.

Despite these uncertainties, the adoption of emergency arbitration represents an important modernisation and demonstrates the BANI’s intent to align with international best practices.

Indonesian counsel in proceedings

In the spirit of Indonesia’s Independence Day, the 2025 BANI rules reflect a major reform in a similar spirit in arbitration by expanding the role of Indonesian counsel across all proceedings. Previously, the rule applied only to cases governed by Indonesian law. The 2025 rules now require local counsel participation in all BANI arbitrations, regardless of the governing law.

This promotes the role of Indonesian practitioners and builds domestic arbitration capacity, but a question remains as to whether it may narrow party autonomy.

Multi-party and multi-contract

The 2025 BANI rules replace the prior discretionary consolidation mechanism with explicit provisions for initiating multi-party and multi-contract arbitrations at the filing stage. Specifically, parties may submit an arbitration request:

1. 1. Involving multiple parties, provided a clear connection between them can be established; and
   2. Arising from multiple agreements, where the agreements are interrelated and all designate BANI arbitration.

This reform enables parties to commence multi-party or multi-contract arbitrations from the outset, rather than filing separate cases and later seeking consolidation.

That said, uncertainty remains as to whether the consolidation mechanism under the 2022 BANI rules continues to be available. The term “consolidation” is absent from the 2025 BANI rules, which instead only provide for the initiation of such proceedings. Further clarification may be required on whether these requests are subject to the discretion of the BANI chair or secretariat, or whether they will be automatically accepted on filing.

Challenge grounds

The 2025 BANI rules introduced an additional valid ground to challenge an arbitrator at the discretion of the BANI chair, namely, based on a de jure (existing by legal right) or de facto (whether by right or not) failure to act. This new provision allows an arbitrator to be challenged if they fail to perform their duties.

Conclusion

The 2025 BANI rules suggest progress towards modernising Indonesia’s arbitral regime. The introduction of emergency arbitration, multi-party and multi-contract mechanisms, and enhanced arbitrator accountability brings the BANI closer to international norms.

Some questions remain, particularly around the enforceability of emergency awards under national law and consolidation mechanisms. Whether Indonesian courts will support these innovations under SC regulation 3/2023 will be decisive for their long-term impact.

Overall, the reforms reflect Indonesia’s continuing evolution as a more arbitration-friendly jurisdiction. While gaps remain compared to established arbitral centres, the new rules represent a positive step towards improved confidence in Indonesian arbitration as a viable venue for dispute resolution.

SSEK LAW FIRM
Mayapada Tower I, 14th Floor
Jl. Jend. Sudirman Kav. 28
Jakarta 12920, Indonesia
Tel: +62 21 2953 2000
Fax: +62 21 521 2039
www.ssek.com

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Korea stays abreast of global best practices in arbitration

Amid growing concerns that international arbitration has become too slow, too expensive, non-transparent and increasingly vulnerable to geopolitical tensions, Korea is a formidable proponent of international arbitration. Korean courts continue to render decisions that make the country one of Asia’s most arbitration-friendly jurisdictions and the government is actively promoting Seoul as a destination for international commercial disputes. In a similar vein, recent academic discourse and expert commentary increasingly underscore the strategic advantages of choosing Seoul as the seat of arbitration.

Korea offers a robust legal framework based on civil law traditions but is keen to incorporate the advantages of common law procedures. The country’s technological advancements are well reflected and practised in court systems and litigation practice nationwide.

The Korean economy thrives on international trade, foreign investment and cross-border transactions, and every year an increasing number of Korean companies are embroiled in legal disputes with foreign counterparties. Korea’s economic stature attracts leading arbitrators, arbitration practitioners and a support system to the Korean legal market, making its arbitration community diverse, dynamic and highly competitive.

Below are some of the key developments shaping Korea’s international arbitration practice.

International rule reforms

After overhauling its domestic arbitration rules effective 1 March 2025, the Korean Commercial Arbitration Board (KCAB) is preparing substantial revisions to its international arbitration rules – the first major update since 2016. These reforms, scheduled to take effect in the coming year, aim to modernise the arbitral procedures in closer alignment with global best practices. Anticipated changes include establishing a new KCAB Court to oversee arbitrator challenges and consolidation; enhancing efficiency through digital case management, e-filing and virtual hearings; introducing new procedures such as early determination to screen out claims that are manifestly without merit or outside the KCAB’s jurisdiction; and improving transparency by mandating broader arbitrator disclosure concerning impartiality and independence.

In parallel, the KCAB recently introduced its International Mediation Rules effective January 2024. The rules enable parties to convert mediated settlements into arbitral awards enforceable under the Singapore Convention on Mediation.

Arbitrability boundaries

Indirect compulsory damages under Korean law are court-imposed penalties to compel a non-compliant debtor to perform an obligation, typically in the form of a specific amount for each day of non-performance. Such discretionary relief vested in the court of first instance is founded in article 261(1) of Korea’s Civil Execution Act.

There has been a debate over whether article 261(1) vests the power to award indirect compulsory damages exclusively to the first instance courts of Korea or allows arbitral tribunals to order such relief as appropriate. In a 2018 decision, the Supreme Court of Korea sided with the latter view, holding that an award by a foreign arbitral tribunal (seated at The Hague, Netherlands) imposing indirect compulsory damages did not contravene Korea’s good morals and social order.

It is not clear, however, whether Korea’s highest court struck down all potential grounds based on indirect compulsory damages as a basis to set aside foreign arbitral awards in South Korea. In December 2024, an ICC tribunal ordered the respondent to perform an appraisal of the shares in question or pay indirect compulsory damages of USD200,000 per day of non-performance. In April this year, the Seoul Central District Court held that the tribunal’s order of indirect compulsory damages was unenforceable because such a relief could only be ordered by Korean courts. The decision, which has not been made available to the public, is currently on appeal. It remains to be seen whether future rulings may provide categorial clarity on this long-debated issue.

Pathological arbitration clauses

Can a contract drafted in English and Korean, with both languages appearing side-by-side – which

1. 1. does not specify the prevailing language in case of discrepancies and
   2. refers to a non-existent arbitral institution – still be deemed to contain a valid arbitration agreement?

The Supreme Court of Korea considered this question in a recent decision on 23 January 2025. In that case,

1. 1. The English version and the Korean version of the arbitration clause differed;
   2. Neither the text nor the context of the contract provided any clue as to which language should prevail; and
   3. The arbitration clause referred to a non-existent organisation (the Commercial Arbitration Committee of International Commercial Law).

The Supreme Court saw beyond the obvious flaws in the language of the arbitration clause and read the contract as a whole to find that the parties intended their dispute to be resolved through arbitration. According to the Supreme Court, courts must lean in favour of giving effect to the parties’ discernible intent to arbitrate, notwithstanding drafting deficiencies. This latest decision reinforces Korean courts’ pro-arbitration inclination. Korean courts look past formalistic pathologies (such as misnaming the arbitral institution) in favour of compelling arbitration where there is a clear mutual intent to arbitrate.

Enforcing against non-signatory

In November 2024, the Supreme Court issued a judgment holding that an ICC arbitral award may, in certain circumstances, be enforced against a party that was not a signatory to the arbitration agreement.

In rejecting the appellant’s argument that recognition and enforcement should be refused under article V1(a) of the New York Convention because the appellant had never executed the arbitration agreement, the court held that, if a party participates in the arbitration proceedings without timely objecting to the existence or validity of the arbitration agreement, a new arbitration agreement may be deemed to have been formed. The court held that the new arbitration agreement had in fact been formed in this case because the appellant not only signed the terms of reference but also actively participated in the arbitration without raising jurisdictional objections.

Practical tips

For parties and practitioners contemplating or debating Korea as the seat of arbitration, the following points are worth considering:

1. 1. Be on the lookout for the KCAB’s latest revisions to its international arbitration rules. Its new streamlined procedures may truly expedite the resolution of the parties’ dispute in the most efficient manner.
   2. Draft arbitration clauses carefully but when in doubt, choose a forum that would not vitiate an arbitration agreement based on formalistic defects, such as Korea. Seoul is a particularly attractive seat for disputes governed by Korean law, claims that need to be enforced against companies or individuals residing in Korea, claims that need to be enforced in countries where Korea has reciprocally recognised foreign judgments, and disputes that can most benefit from the use of technologically advanced procedural tools.
   3. Consult local counsel on recent court decisions, and their approaches to recognition and enforcement of foreign arbitral awards. An early consultation may provide helpful insights on formulating relief that is uniquely available before, or difficult to obtain from, Korean courts.
   4. Where settlement is a priority or preference, consider taking advantage of the KCAB’s new international mediation rules.

Korea’s arbitration landscape is evolving, creating new opportunities for parties seeking efficient and reliable dispute resolution.

While challenges remain, corporations and individuals may find practical advantages in pursuing arbitration under Seoul’s modernised framework and its steadfast judicial support for arbitration.

JIPYONG LLC
26F, Grand Central A, 14 Sejong-daero
Jung-gu, Seoul 04527, Korea
Tel: +82 2 6200 1600
Email: master@jipyong.com
www.jipyong.com

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Philippine courts demonstrate respect for arbitration

In the past year, the Philippine Supreme Court has continued to issue jurisprudence that actively upholds the fundamental principles of arbitration in this jurisdiction.

The Philippine Construction Industry Arbitration Commission’s (CIAC) jurisdiction may be statutory in nature but is essentially grounded on party autonomy. Recently, the Supreme Court decided cases, which, taken together, affirm the essentially contractual nature of construction arbitration and the importance of the parties’ conduct in determining contractual intent.

CIAC jurisdiction

In Fleet Marine Cable Solutions Inc v MJAS Zenith Geomapping & Surveying Services et al (2024), the Supreme Court was confronted with the issue of whether the statutory jurisdiction of the CIAC over construction disputes would apply in respect of a subcontractor agreement covering technical services related to a future construction contract and project.

In this case, Fleet Marine Cable Solutions (FMCS) entered into a services agreement under which it undertook to perform certain technical services in relation to the intended construction of a new fibre-optic submarine cable network.

To fulfill its contractual obligations under the services agreement, FMCS entered into a subcontract agreement with MJAS Zenith Geomapping and Surveying Services (MJAS), under which FMCS subcontracted the performance of some of its tasks under the services agreement to MJAS. The subcontract agreement contained an arbitration clause that provided for resort to arbitration under the Rules of Arbitration of the International Chamber of Commerce.

FMCS eventually terminated the subcontract agreement on allegations of MJAS’s delay, deficient performance and abandonment of the project, and commenced arbitration against MJAS before the commission. MJAS assailed the jurisdiction of the CIAC on the grounds that the subcontract agreement was not a construction contract and that the dispute did not arise from, or was not connected with, construction in the Philippines.

The CIAC Arbitral Tribunal ruled in favour of MJAS and dismissed FMCS’s complaint for lack of jurisdiction. FMCS questioned the Arbitral Tribunal’s ruling before the Supreme Court.

The Supreme Court applied the competence-competence principle in affirming the CIAC Arbitral Tribunal’s lack of jurisdiction. For the CIAC’s statutory jurisdiction to apply, at minimum, there must be a construction contract in place, even if it is not the primary contract being contested.

Here, the transaction subject of the subcontract agreement and the dispute or controversy that arose were not construction-related, and the services agreement only contemplated the parties’ future intention to construct a fibre-optic submarine cable network. Neither the services agreement nor the subcontract agreement involved the performance of construction works, which the Supreme Court previously defined as “all on-site works on buildings or altering structures, from land clearance through completion, including excavation, erection and assembly and installation of components and equipment”.

On the other hand, in Local Water Utilities Administration v RD Policarpio & Co, Inc (2024), the Supreme Court held that an entity with approving authority over a construction contract should be deemed a party thereto and, therefore, subject to CIAC jurisdiction.

In this case, the Local Water Utilities Administration (LWUA), a chartered government-owned or controlled corporation, entered into a financial assistance contract with the Butuan City Water District (BCWD) for the implementation of a water supply system improvement project.

Under such a contract, the LWUA was constituted as an “agent” of BCWD, with specific authority to undertake bidding and awarding over the engineering and civil works of the project, grant approval for the project, and greenlight the commencement of construction.

The LWUA eventually opened bidding and awarded the project to RD Policarpio and Co (RDPC). The BCWD and RDPC executed the construction contract, which was then approved by the administration.

RDPC commenced arbitration against both the LWUA and the Butuan City Water District before the CIAC, alleging non-payment under the contract. The arbitral tribunal ruled in favour of RDPC and held that the water utilities agency was solidarily liable with the district for the company’s money claims. After losing on appeal (under the old remedial framework), the LWUA brought the matter to the Supreme Court.

The court found that, in facilitating and approving the construction contract between the BCWD and RDPC, the LWUA did not act pursuant to its regulatory or statutory functions under the law, but instead exercised a proprietary or private function. In doing so, the agency wittingly became a party to the construction contract to protect its interest as BCWD’s lender under their financial assistance contract.

Judicial remedies clarified

The court further found that the LWUA could not have been a mere agent of the water district, considering the nature and scope of the discretion granted to, and actually exercised by, the agency in the project. Given the nature of the parties’ contractual arrangement and obligations, as well as their contemporaneous and subsequent conduct, the LWUA should be held solidarily liable with the district.

The Supreme Court also clarified the nature and scope of the judicial remedies available to parties aggrieved by arbitral awards or their execution.

In Bases Conversion and Development Authority v CJH Development Corporation et al (2024), the Supreme Court clarified the applicability and scope of the remedy of certiorari (a court process seeking review of a lower court or government agency decision) in relation to the execution of a court-confirmed domestic arbitral award.

This case involved a final award issued in a domestic arbitration over a lease dispute. The arbitral tribunal directed the rescission of the lease agreement and directed CJH Development Corporation (CJH), as lessee, to vacate the premises and the Bases Conversion and Development Authority (BCDA), as lessor, to return rentals paid.

On the petition of both parties, the final award was judicially confirmed and a writ of execution issued. An issue arose when CJH questioned whether the notice to vacate issued by the court sheriff should cover sub-lessees occupying the lease premises who were not parties to the arbitration.

Court of Appeals

Without waiting for the resolution of such issue before the trial court, CJH brought the matter to the Court of Appeals on certiorari. The court nullified the writ of execution and the notice to vacate, finding that the final award could not be enforced against non-parties to the arbitration.

The court also modified the final award in ordering that CJH may only be made to vacate the premises on payment by the BCDA, and that the agency should respect the contracts of the sub-lessees. In this regard, the Court of Appeals directed CJH, the BCDA, and the sub-lessees to submit themselves to “compulsory arbitration” under the lease agreement for the determination of their respective rights.

The Supreme Court affirmed that certiorari was the proper remedy to question the execution of an arbitral award. However, the court found that CJH availed itself of this remedy prematurely, given the pendency of the issue before the trial court.

Further, the Court of Appeals was found to have overstepped its authority in nullifying the writ of execution, and the notice to vacate and modifying the final award. The Supreme Court emphasised that courts cannot make their own factual findings and legal conclusions over issues already resolved through arbitration. Under Philippine arbitration law and rules, judicial interference is restrained in favour of arbitration, which is meant to be the end (not the beginning) of litigation.

The Supreme Court also had an opportunity to clarify the scope of the limited judicial remedies against the CIAC arbitral awards, as previously delineated in Global Medical Centre of Laguna Inc v Ross Systems International Inc (2021), which has since been incorporated into the latest arbitration rules of the CIAC.

Specifically, in Grand Exploit Builder Development Inc v Hoegaarden Realty Corporation (2025), the Supreme Court emphasised the limited grounds to assail a CIAC arbitral award by way of certiorari before the Court of Appeals, which should be based on allegations of corruption, fraud, misconduct, evident partiality, incapacity or excess of powers within the arbitral tribunal.

In this case, the Supreme Court rejected allegations that the arbitral tribunal’s integrity was compromised, or that it demonstrated evident partiality over one party. The court once again stressed the principle of judicial restraint and deference in the review of arbitral awards. Absent any clear and categorical showing that the arbitral tribunal committed unconstitutional or illegal acts, its findings must be respected.

The above-mentioned cases show that, while arbitration practice in the Philippines has been dynamic and responsive to commercial developments and exigencies, it remains grounded on robust and fundamental principles consistent with regional and international standards.

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Singapore’s recent arbitration jurisprudence

In Wuhu Ruyi Xinbo Investment Partnership (Ltd Partnership) v European Topsoho Sàrl (2025), an award creditor’s failure to comply with an unless order to produce documents in relation to its enforcement proceedings in the High Court resulted in the dismissal of the enforcement application.

On appeal, the award creditor contended that the High Court, in giving effect to the unless order, was tantamount to fashioning a new and unspecified ground under the New York Convention for refusing enforcement of the foreign award.

In dismissing the appeal, the Court of Appeal held that, consistent with article III of the convention, the process of seeking recognition and enforcement of an award in a court necessarily entails compliance with the rules of procedure of the court. It was therefore well within the High Court’s power to enforce the consequence of a breach of an unless order even where this would lead to the denial of recognition and enforcement of the award.

In Cooperativa Muratori and Cementisti – CMC di Ravenna, Italy v Department of Water Supply & Sewerage Management, Kathmandu and another (2025), the Singapore International Commercial Court (SICC) granted an anti-suit injunction restraining a party from pursuing or continuing proceedings commenced in Nepal to annul an arbitral tribunal’s determination of the proper seat of the arbitration.

The SICC held that, by designating Singapore as the “place of arbitration” in the arbitration agreement, the parties have selected Singapore as the seat of the arbitration and hence chosen the Singapore courts as having exclusive curial jurisdiction in respect of the arbitration.

The SICC emphasised that the conventional comity-driven need for caution in the grant of anti-suit injunctions recedes significantly where the injunction is sought for the purpose of enforcing an arbitration agreement, reinforcing once again Singapore’s pro-arbitration jurisprudence.

Due process challenges

In DJP and others v DJO (2025), the Court of Appeal upheld the SICC’s decision to set aside a Singapore-seated award where the tribunal was found to have copied and pasted a substantial portion from awards rendered in two other parallel New Delhi-seated arbitrations involving the same defendant. The tribunals in all three arbitrations shared the same presiding arbitrator, with different co-arbitrators and incongruent sets of counsel across the arbitrations.

The Court of Appeal held that the integrity of the Singapore-seated arbitration process was compromised as a result of the tribunal’s copy-and-paste from the parallel awards, finding that a fair-minded observer would be left with a reasonable apprehension or suspicion that the tribunal’s decision was improperly influenced by bias or prejudgment.

There was also a breach of the fair hearing rule, as only the presiding arbitrator had access to materials drawn from the parallel arbitrations, which parties in the Singapore-seated arbitration did not have access to.

The court also found that the integrity of the Singapore-seated arbitration was further compromised by a breach of “the expectation of equality” between the arbitrators. The co-arbitrators in the arbitration had no direct access to any material or knowledge derived from the parallel arbitrations, which appeared to have significantly influenced the outcome of the Singapore-seated arbitration.

The stringent standard that must be met before the Singapore courts will allow the setting aside of an award on an infra petita challenge (i.e. a complaint that the tribunal failed to determine all material issues in the arbitration) was emphasised in DKT v DKU (2025). There, the Court of Appeal clarified the framework for analysing infra petita challenges, noting an increasing tendency of disgruntled award debtors abusing this ground of challenge by using it as a pretext to reopen the merits of arbitral awards.

The court emphasised that four conditions must be satisfied in bringing such a challenge:

1. 1. The point in question must have been properly brought before the tribunal for determination;
   2. The point must have been essential to the resolution of the dispute;
   3. The tribunal must have completely failed to consider the point; and
   4. There must have been real or actual prejudice occasioned by this breach of natural justice.

State immunity and issue estoppel

In Hulley Enterprises Ltd v The Russian Federation (2025), a case arising from the Yukos-related disputes, the Russian Federation sought to set aside a Singapore High Court order granting leave to enforce a final award made against it.

The ground advanced by the Russian Federation was essentially based on the principle of state immunity under section 3(1) of the State Immunity Act, 1979 (SIA). It was contended in that connection that the “arbitration” exception to state immunity in section 11 of the SIA was not engaged, as the Russian Federation had not “agreed in writing to submit” the underlying dispute to arbitration.

The SICC, analysing and following the Court of Appeal’s previous decision in The Republic of India v Deutsche Telekom AG (2024), held that transnational issue estoppel can arise in the context of international commercial arbitration where its effect is to prevent the parties to a prior decision of a seat court from relitigating points again.

It also held that such estoppel may similarly arise in the situation where state immunity is being claimed under the SIA. There was therefore no requirement under the law that a claim of state immunity under the SIA must invariably be reviewed by the Singapore courts on a de novo (from the beginning) basis.

On the facts, the SICC found that there were two prior decisions of the seat court in the Netherlands that did give rise to issue estoppel on matters pertinent to the Russian Federation’s claim of state immunity under the SIA. The SICC accordingly concluded that the Russian Federation was prevented from asserting state immunity under the SIA in challenging the enforcement of the final award in Singapore.

Hulley Enterprises Ltd v The Russian Federation represents a step towards clarifying the applicability of the doctrine of transnational issue estoppel in the scenario where the public international law principle of state (sovereign) immunity finds intersection with the use of international commercial arbitration in private law.

However, the SICC (per James Allsop IJ’s concurring opinion) left open the question of whether it might be possible that the “public policy” underlying the ius cogens (compelling law) of sovereign immunity should “give one pause for thought as to whether Singapore’s obligation to be satisfied of its authority over a state should be reached by a procedure or principle that allow it to be satisfied of the correct answer to that question, at least where the state contends that it did not agree to the decision-making process of international commercial arbitration”.

This highlights a difficulty in delineating the outer limits of transnational issue estoppel, especially where one finds and regards the issue decided in a foreign seat court (and hence the issue that may give rise to an estoppel) to be of substantive fundamental importance in public international law.

The resolution of this open question in a future appropriate case may well also find the need to reconcile the SICC’s separate holding in Cooperativa Muratori and Cementisti – CMC di Ravenna, Italy v Department of Water Supply & Sewerage Management, Kathmandu and another. There, the SICC held that it was compelled under section 3(2) of the SIA to consider, on its own motion, the issue of state immunity regardless of whether the issue had been raised by any party.

The SICC also observed that the SIA provides for “adjudicative immunity” and “enforcement immunity”, to which separate and distinct exceptions may apply. These are additional considerations that may further compound the complexity of the question left open in Hulley Enterprises Ltd v The Russian Federation.

Through the select arbitration-related jurisprudence reviewed in this article, it can be seen that the Singapore courts continue to enrich and deepen the corpus of legal principles in the field, while also contributing to the development of a transnational rule of law in arbitration. This is a testament to Singapore’s strong and unwavering commitment to continually develop and maintain its status as an arbitration hub of choice in the region.

COLIN SEOW CHAMBERS LLC
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Singapore 018983
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Arbitration and due process in Taiwan

The Arbitration Act of Taiwan (AAT), enacted and promulgated in 1998, is principally modelled on the 1985 UNCITRAL Model Law on International Commercial Arbitration.

Although Taiwan is not a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, its Arbitration Act substantially adheres to the underlying principles of the convention. Taiwan courts have demonstrated a consistent pro-arbitration stance in their approach to the recognition and enforcement of foreign arbitral awards.

This article gives an overview of the recognition and enforcement of foreign arbitral awards in Taiwan. It also examines two recent decisions rendered by the Supreme Court of Taiwan that illustrate the judiciary’s adaptive approach to promoting arbitration while upholding fundamental legal principles.

The first decision shows judicial flexibility in interpreting arbitration agreements lacking an institutional arbitration clause, while the second evinces a more robust stance on safeguarding due process rights in arbitral proceedings.

Recognition of foreign awards

In recent years, Taiwan has cultivated a favourable environment for the recognition and enforcement of foreign arbitral awards. Taiwan courts have recognised awards from a variety of jurisdictions including but not limited to Hong Kong, Singapore, Japan, South Korea, the US, Germany, France, Italy, Belgium, Canada, South Africa, Thailand, Australia, Russia, the Czech Republic and Finland.

The AAT provides for the recognition and enforcement of foreign arbitral awards. According to the AAT and the majority opinions of the courts, the recognition and enforcement procedure does not extend to a substantive examination of the merits of the arbitral award.

Except as otherwise stipulated in articles 49 and 50 of the AAT, courts are generally obligated to recognise foreign arbitral awards. The statutory grounds for refusal under article 49 include violations of public policy, non-arbitrability, and lack of reciprocity.

Article 50 gives further grounds for denial such as incapacity of a party, invalidity of the arbitration agreement, failure to observe due process, awards exceeding the scope of arbitration and irregularities in the composition of the arbitral tribunal or arbitral procedure.

Taiwan courts have consistently recognised foreign arbitral awards. Judges are typically liberal when interpreting and applying the formal criteria for recognition. The prevailing view of Taiwan courts is that the reciprocity requirement under paragraph 2, article 49 of the Arbitration Act does not demand recognition of Taiwan awards by the jurisdiction where the foreign arbitral award was rendered.

This interpretation effectively facilitates the recognition of foreign arbitral awards, and is reinforced by the statutory language, which stipulates that where the foreign jurisdiction in which the award was rendered has refused to recognise arbitral awards issued by Taiwan, the Taiwan court may, rather than shall, deny an application for recognition of such an award.

Institutional v ad hoc

Pursuant to paragraph 1, article 37 of the AAT, arbitral awards are binding on the parties and have the same force as a final court judgment.

Several rulings of the Supreme Court of Taiwan have indicated that only awards issued by arbitral institutions approved by the Ministry of the Interior are recognised as binding and enforceable. This jurisprudential approach raises questions as to the enforceability and binding effect of awards rendered in ad hoc arbitrations.

This same approach likely underpins the Supreme Court’s recent judgment No. 112 Tai Shang Zi 1561 (2024). The judgment indicated that, even in the absence of an explicit reference to a particular arbitral institution or type of arbitration in the arbitration agreement, an interpretation of the agreement on institutional arbitration remains permissible unless expressly excluded.

The case was remanded to the High Court, which further opined that the respondent’s substantive defences and arguments on the merits of the dispute in that case constituted implied consent to institutional arbitration. It seems to have adopted an aggressive approach in finding agreement on the arbitral institution.

A possible and expansive interpretation of the judgment is that, even in instances where the arbitration agreement is silent on or does not specify the choice of arbitration institutional rules or administering institution, the claimant may still be entitled to initiate arbitration by an arbitral institution.

A reasonable reading of the judgment is that the broader interpretation of the institutional arbitration agreement is to accommodate Taiwan courts’ traditionally conservative stance regarding the nature and enforceability of ad hoc arbitral awards.

Due process review

Just like the New York Convention and the UNCITRAL Model Law, due process is integral to the AAT. Article 23 of the AAT requires that the arbitral tribunal:

1. 1. Affords each party a full opportunity to present its case; and
   2. Investigates the parties’ claims.

Subparagraph 3, paragraph 1, article 40 of the AAT permits a party to petition the court to set aside an arbitral award on the grounds that the arbitral tribunal failed to give either party the opportunity to present its case before the proceedings ended, or that either party was not properly represented during the arbitration.

However, Taiwan courts have generally adopted a loose standard regarding reviewing the accusation of due process violations in an arbitration. The prevailing judicial interpretation holds that once the parties have been duly notified and afforded an opportunity to present their views, the arbitral tribunal is not obligated to permit exhaustive debate on every disputed issue, particularly where the tribunal considers the current statements sufficient for adjudication.

Even where a party asserts that it had not fully articulated itself, or that the arbitral tribunal had failed to clarify or direct the parties to address each issue separately, such circumstances do not constitute a breach of due process. See, for example, Supreme Court of Taiwan judgment No. 112 Tai Shang Zi 2778 (2024).

The courts have rarely set aside an award on the basis of article 23, and subparagraph 3, paragraph 1, article 40 of the AAT. But in Supreme Court judgment No. 113 Tai Shang Zi 924 (2024), which annulled an arbitral award on the grounds of a violation of procedural due process, the court signalled a subtle yet noteworthy opinion in its interpretation of due process in arbitration.

The Supreme Court stated that the legislative intent of article 23 of the AAT embodies adherence to the principles of due process in arbitral proceedings. This due process requirement constitutes the fundamental basis for the binding effect of arbitral awards, ensuring the protection of the parties’ right to be heard.

The arbitral tribunal shall afford both parties a reasonable opportunity to be heard prior to issuing any unforeseen legal findings based on specific facts. Failure by the tribunal to provide such an opportunity to present their case before the hearing is closed shall constitute valid grounds for the setting aside of the arbitral award.

It then explained that the arbitral tribunal had based its decision exclusively on the “doctrine of change of circumstances”, while neither party had invoked or addressed this doctrine at any stage of the arbitration.

The tribunal had failed to allow the parties to comment on this legal basis before the hearings ended. On these grounds, the court held that the arbitral award constituted a serious breach of due process and was therefore set aside.

This 2024 Supreme Court judgment arguably showed a more rigorous approach to procedural fairness in arbitration and is particularly significant as it forecast a judicial inclination towards harmonisation with international arbitration standards.

LEE AND LI ATTORNEYS-AT-LAW
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Taipei 11072, Taiwan, R.O.C.
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Email: attorneys@leeandli.com
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Milestone year for international, domestic arbitration in Vietnam

As Vietnam’s economy continues to grow rapidly and integrates into the global market, arbitration has become a common, favoured method of dispute resolution for investors, suppliers and businesses. Since the pandemic, there has been a significant rise in both domestic arbitration cases and international hearings involving parties located in Vietnam.

The trend indicates increased adoption and preference of this faster, more flexible and non-public dispute resolution method. However, at the same time, there is apparently rising concern among foreign investors and businesses over the enforcement of arbitral awards.

Legislative updates

1. 1. 

      Arbitration under IFC framework. A landmark development of 2025 is the National Assembly’s latest enactment of Resolution No. 222/2025, establishing Vietnam’s first dedicated dispute resolution forum. The new International Financial Centre (IFC) initiative, incorporating an IFC Arbitration Centre, is based on a “one centre, two destinations” model with offices in both Ho Chi Minh City and Da Nang.

The IFC Arbitration Centre is expected to house not only local but also international experts in finance and investment, paving the way for an “exclusive” service resolving disputes between IFC members, or between IFC members and non-members.

Resolution No. 222 also marks a milestone in Vietnamese arbitration with its unprecedented provision allowing disputing parties to waive their right to request courts to set aside arbitral awards issued by the IFC Arbitration Centre

Local courts must respect the waiver agreement, which is expected to address a longstanding concern of foreign investors and businesses about their arbitral awards being set aside in Vietnam.

It also gives parties greater freedom to resolve their disputes in a more conclusive and efficient manner, without the fear that arbitral awards may later be annulled, reflecting party autonomy in arbitration and bringing dispute resolution under the IFC framework closer to international pro-arbitration practices.

1. 2. Jurisdictional reforms. As part of the country’s reform towards a two-tier local administration model, the Vietnamese court system has also been significantly restructured to drastically change the jurisdiction of courts in handling arbitration-related matters. Previously, provincial courts, which are often burdened with heavy caseloads, were responsible for all aspects of support and supervision of arbitration proceedings. But now, as of 1 July 2025, all district courts have ceased to exist, and a total of 355 regional courts have been established to assume jurisdiction over almost all arbitration-related matters.

The regional courts will support local arbitrations, such as by granting orders for evidence collection, and be responsible for receiving and handling requests for recognition and enforcement of foreign arbitral awards in Vietnam.

Unlike foreign arbitral awards – when enforcement in Vietnam must first undergo local recognition before a relevant Vietnamese regional court – domestic arbitral awards can be enforced directly, unless the award debtor requests a court to set aside the award.

Interestingly, regional courts do not have the jurisdiction to set aside domestic arbitral awards and register domestic ad hoc awards. Rather, this power is only vested in the provincial courts of Hanoi, Da Nang and Ho Chi Minh City.

This is because lawmakers reportedly aim to ensure the quality and consistency of judicial reviews concerning arbitration by reserving those sensitive functions to the most experienced and well-resourced courts in those three prominent cities.

1. 3. Clarified arbitrability of real estate and PPP contracts disputes. The law is clear and, in practice, there is consensus on the courts’ exclusive jurisdiction over land ownership disputes. However, local courts and researchers have long disagreed on whether local courts have exclusive jurisdiction over disputes arising from transactions relating to land, including leases, transfers of real estate projects, and transfers of shares in real estate companies.

In 2024, the Amended Law on Land was adopted, articulating that disputes “arising from commercial activities relating to land” can be resolved by Vietnamese commercial arbitration. The Amended Law on Public-Private Partnership (PPP) 2020 also provides for disputes over “PPP contracts and related contracts” to be arbitrable. These are positive developments expected to boost the influx of arbitration in real estate and PPP projects.

Institutional modernisation

1. 1. Launch of the VIAC eCase platform. In June 2024, the Vietnam International Arbitration Centre (VIAC), the most recognised domestic arbitration institution, launched its eCase platform, a digital interface designed to enhance procedural efficiency and transparency. The platform offers e-filing capabilities, secure document management and real-time case monitoring. Integrated notifications for procedural steps, hearings and deadlines are synchronised with users’ work calendars, reducing administrative burdens and improving the user experience. This digital transformation marks a significant improvement in the VIAC’s case management and handling of arbitration.
   2. Draft amendments to VIAC Rules of Arbitration (2025). The VIAC is also working on a revised set of arbitration rules for 2025 to incorporate international best practices and address the practical needs of Vietnamese arbitration users. These planned developments include:
      1. Draft Provisions on the Constitution of the Arbitral Tribunal in the VIAC Rules on Arbitration;
      2. Draft Code of Ethics and Professional Conduct for VIAC Arbitrators;
      3. Draft VIAC Arbitrator’s Statement; and
      4. Draft Fee Schedule for Requests to Replace Arbitrators. The expected changes emphasise transparency and fairness in tribunal composition to establish a clearer and more equitable process for appointing arbitrators. The introduction of the code of ethics is also expected to reinforce the integrity of the arbitration process and build confidence among businesses.

Judicial trends

A growing number of arbitral awards were upheld by Vietnamese courts in the first half of 2025, demonstrating increasing support for arbitration. According to the public database of the Supreme People’s Court, in the first half of the year, local courts turned down six out of seven requests for setting aside domestic arbitral awards. This means that only one arbitral award was set aside earlier this year.

On their review of arbitral awards, local courts also appear to be moving closer to the international standards. On 7 January 2025, the Court of Ho Chi Minh City ruled that issues of contractual breaches and compensation of damages are substantive matters that fall under the arbitral tribunal’s jurisdiction. The court refused to review these issues, as well as the merits of the dispute.

A grave concern among businesses – both when enforcing domestic arbitral awards and when bringing international arbitral awards to Vietnam for local recognition and enforcement – is excessive reference by local courts to the “contrary to fundamental principles of Vietnamese laws” as a basis to set aside or refuse to recognise awards.

For example, in Decision No. 16/2025, dated 16 January 2025, the respondent claimed that the tribunal violated the parties’ equality principle by granting the claimant’s request for postponement of the hearing, while refusing the respondent’s request.

The respondent also argued that the tribunal’s rulings on the language of arbitration and late-payment interest rates were inconsistent with the parties’ contract and therefore infringed the principle of parties’ freedom of contract.

In this case, the Court of Ho Chi Minh City found that the issues raised by the respondent were properly handled by the tribunal, and the respondent failed to prove that the tribunal violated the fundamental principles of Vietnamese laws. The court ultimately upheld the arbitral award.

These decisions show an encouraging shift towards a more predictable and arbitration-friendly judicial environment.

Implications for investors

The recent legal developments are expected to give more meaningful support to arbitration and reduce the percentage of arbitral award annulments in Vietnam. However, they require investors and businesses to take greater care of their arbitration clauses and agreements if they really want to enjoy the incentives granted under the IFC arbitration framework, as well as recent positive add-ons in the Land Law, PPP Law and other updated laws.

Dispute resolution clauses must no longer be “midnight clauses” that receive insufficient consideration and as a result contain errors that may jeopardise efforts to negotiate and formulate favourable commercial teams.

The establishment of regional courts that now have jurisdiction over the local recognition of foreign arbitral awards may cast some doubts on the certainty of these being enforced against a local entity or assets in Vietnam.

However, the judicial trends and publication of court precedents lay down clear examples of the pitfalls that parties must avoid during offshore arbitration proceedings to increase their chance of eventually enforcing the awards in Vietnam. Local legal support, including a comprehensive check of local court cases on similar disputing issues, would never be “too early”, whether sought before or even during the offshore arbitration proceedings.

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