The dispute resolution at arbitration centres results in quick, private settlements. But if the disputes are brought to court, the first-instance judgments may be reviewed and retried.

However, banks have avoided arbitration. A representative of the Asia Commercial Bank (ACB), speaking at a workshop held by the banking association recently, said ACB wants to settle disputes through arbitration and set the solution as a clause in credit contracts. 

However, this remains a ‘theoretical solution’ only because it still cannot be implemented in reality. Therefore, bringing the cases to the courts is the top choice.

The credit contracts used in most cases are compiled on the basis of template contracts drafted by commercial banks in accordance with the procedures set by the State Bank. Credit officers are not allowed to add any provision to the contracts.

In addition, banks say that  the arbitration fee is higher than the court fee.

A senior executive of Eximbank confirmed that for debt collection division, arbitration is a good and effective solution. 

However, the solution cannot be applied in many cases. In principle, arbitrators don’t judge the cases related to individuals. 

Meanwhile, a lot of credit contracts are signed between banks and individual clients. In other cases, the clients who sign credit contracts are not owners of the assets mortgaged for loans.

Do Van Dai, secretary general of the Vietnam International Arbitration Center (VIAC), admitted that banks prefer bringing cases to the courts rather to arbitration, though a survey found that 70 percent of businesses want to have their disputes settled by arbitration.

A report showed that from October 2016 to September 2017, there were up to 10,000 commercial cases brought to the courts at grassroots level. 

Of these, 35.7 percent of cases were related to investment and finance; and 20 percent related to goods and services. 

Meanwhile, at VIAC, 44 percent of cases had relations with goods; 20 percent with the construction sector; and less than one percent for finance-related cases.

According to Dai, banks do not use arbitration because of the unreasonable provisions stipulated in the Commercial Law and the flaws of the arbitration center.

In related news, the NPL ratio had decreased to 2.3 percent of total outstanding loans by the end of 2017, just a little lower than the 2.5 percent by the end of 2016.

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