The distinctive procedural aspects of arbitration in the financial sector

In the operational structure of the global economy, the financial market serves as the lifeblood of capital flows and stands as one of the most complex legal ecosystems. The rapid growth of derivative instruments, large-scale cross-border transactions, and multi-layered contractual chains has fundamentally transformed the landscape of traditional commercial disputes.

International practice shows that in major financial hubs such as London, Singapore, and Hong Kong, commercial arbitration is often the preferred mechanism due to its confidentiality, flexibility, and access to arbitrators with specialized expertise. However, financial disputes are not merely a “sub-branch” of commercial disputes—they possess distinctive technical, structural, and systemic characteristics.

These differences require a specialized procedural approach; otherwise, arbitration risks becoming overly formalistic and incapable of fully resolving complex financial disputes.

The Binding Scope of Arbitration Agreements in Interconnected Contract Chains

A modern financial transaction is rarely embodied in a single contract. In practice, it is typically composed of a contractual ecosystem that includes credit agreements, security contracts, guarantees, derivative contracts, and related technical appendices.

Challenges arise when contracts within the same transaction package stipulate different dispute resolution mechanisms, creating risks of “jurisdictional fragmentation” and parallel proceedings before both arbitral tribunals and courts. The consequences are not only wasted resources but also the danger of conflicting awards, which can seriously undermine market stability and liquidity.

International experience demonstrates that the principles of “harmonization of arbitration agreements” and “incorporation by reference” have proven effective solutions. These mechanisms allow arbitral tribunals to extend their jurisdiction to encompass the full chain of obligations arising from multiple interrelated contracts within the same dispute.

As Vietnam develops its International Financial Centers, identifying and internalizing these principles will play a crucial role in building legal confidence among investors, assuring them that disputes will be resolved comprehensively, consistently, and predictably.

“Arbitrability” – The Boundary Between Freedom of Contract and Public Order

One of the key issues in financial arbitration is arbitrability—the question of whether a dispute may be resolved by arbitration. This is not only a matter of jurisdiction but also a test of the balance between party autonomy and the State’s role in safeguarding public order.

For sophisticated financial transactions between large institutions, arbitrability should be interpreted broadly, with maximum respect for the autonomy of parties who possess full legal capacity and understanding. Conversely, in retail financial transactions—where information asymmetry exists—the State must maintain reasonable protective barriers to prevent misuse of arbitration that could undermine weaker parties’ access to justice.

In Vietnam, the boundary between procedural violations and breaches of fundamental legal principles remains unclear, leading to the annulment of some arbitral awards and causing apprehension among foreign investors. Clarifying the scope of arbitrability—especially amid the emergence of new financial products such as fintech, smart contracts, and digital assets—is essential to ensure the stability and consistency of the legal environment.

The Role of Expert Witnesses and “Soft Law” in Financial Arbitration

In modern financial disputes, arbitral tribunals cannot rely solely on statutory rules. Expert witnesses play a vital role in decoding valuation models, derivative structures, and complex financial algorithms, enabling tribunals to grasp the true substance of disputes.

In parallel, the flexible application of “soft law” instruments—such as the IBA Rules on the Taking of Evidence and ISDA guidelines—has helped establish a shared procedural language, fostering arbitral awards that achieve broad recognition and enforceability across jurisdictions.

For Vietnam, developing a specialized ecosystem for financial arbitration—where legal knowledge converges with modern financial thinking—will provide a critical foundation for transforming arbitration into a national competitive advantage, effectively supporting the goal of building an International Financial Center.

Conclusion

Building an International Financial Center is not merely a matter of infrastructure or incentives—it is fundamentally about legal confidence. A financial arbitration mechanism that is open enough to embrace global standards yet firm enough to uphold the core values of justice will provide a solid foundation for Vietnam to affirm its position on the regional and global financial map.

Lawyer Ho Vuong Quoc Su

• CEO – LS Law Firm
• Over 11 years of experience in investment, corporate, real estate, and arbitration practice.

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