CAN REAL ESTATE DISPUTES BE RESOLVED BY COMMERCIAL ARBITRATION?

In the context of a growing real estate market and increasingly diverse transactions involving land use rights, housing, and real estate business, real estate disputes are becoming increasingly common in Vietnam. These disputes often involve multiple parties and are highly complex, requiring an effective legal resolution mechanism.

In the past, when mentioning real estate disputes, the prevailing view implicitly assumed that the Court was the sole judicial body with the jurisdiction to resolve them. However, alongside the development of the arbitration mechanism and the trend of enhancing the parties' right to self-determination in commercial activities, current Vietnamese law has begun to recognize the possibility of resolving certain real estate disputes through Commercial Arbitration.

1. Identifying real estate disputes

1.1. Land disputes

Land disputes are disputes over the rights and obligations of land users between two or more parties in land relations (Clause 47, Article 3 of the 2024 Land Law).

According to the spirit of Resolution 04/2017/NQ-HDTP of the Council of Justices guiding certain provisions of the Civil Procedure Code on returning lawsuit petitions and the right to re-file lawsuit petitions, land disputes include disputes determining who holds the land use right, meaning the land must be the direct object of the dispute relationship (Clause 2, Article 3 of Resolution No. 04/2017/NQ-HDTPTANDTC dated May 5, 2017).

Thus, in essence, a land dispute is a dispute over the legal status of land use rights, including common types of disputes such as:

1.2. Disputes related to real estate

Disputes related to real estate include:

Unlike land disputes, the focus of real estate-related disputes is determining the validity of the transaction, the rights and obligations of the parties, or the legal consequences arising from the contractual relationship, in which the real estate is merely the related object of the transaction.

2. Jurisdiction of Commercial Arbitration under legal regulations

2.1. Conditions for a dispute to be resolved by arbitration

According to the 2010 Law on Commercial Arbitration, for a dispute to be resolved by arbitration, two conditions must be satisfied:

2.2. Disputes under the jurisdiction of Commercial Arbitration

Article 2 of the 2010 Law on Commercial Arbitration stipulates 03 (three) cases to determine whether a dispute falls under the jurisdiction of Arbitration, specifically as follows:

a. Disputes arising from commercial activities

According to the 2005 Commercial Law, a commercial activity is an activity conducted for profit-making purposes, including the sale and purchase of goods, provision of services, investment, commercial promotion, and other profit-seeking activities.

According to Resolution No. 03/2012/NQ-HDTP, the profit-making purpose of individuals and organizations in business and commercial activities is the desire of such individuals and organizations to generate profit, regardless of whether or not profit is actually generated from such business or commercial activities.

Thus, it can be understood that the jurisdiction of Arbitration includes disputes arising from activities conducted for profit-making purposes.

b. Disputes arising between parties in which at least one party engages in commercial activities

Entities engaging in commercial activities include:

c. Other disputes between parties which the law stipulates shall be resolved by Arbitration

3. Can real estate disputes be resolved by Commercial Arbitration?

3.1. The 2023 Housing Law

The 2023 Housing Law has provisions on dispute resolution and recognizes the jurisdiction of Commercial Arbitration in resolving real estate disputes in the following cases:

3.2. The 2024 Land Law

The 2024 Land Law stipulates that disputes between parties arising from commercial activities related to land may be resolved by Vietnamese commercial arbitration (Clause 5, Article 236). However, it has not specifically defined the scope of "commercial activities related to land."

At present, consideration can be given to referencing the content mentioned in Point a, Section 2.2 of this article, to define "commercial activities related to land" as land-related transactions where the parties or one of the parties establishing the transaction aims for a profit-making purpose.

For land disputes/land-related disputes not arising from commercial activities (For example, disputes over the inheritance of land use rights, land boundary disputes between households and individuals, or disputes determining who holds the land use right...) and disputes arising from administrative land relations (For example, disputes of land users with competent State authorities related to administrative decisions or administrative acts such as land recovery, site clearance compensation, issuance of land use right certificates, etc.), Arbitration has no jurisdiction to resolve them.

3.3. The 2023 Law on Real Estate Business

The 2023 Law on Real Estate Business does not contain any provisions restricting the jurisdiction of Arbitration in resolving real estate business disputes.

Pursuant to Clause 1, Article 3 of the 2023 Law on Real Estate Business, real estate business is an activity aimed at seeking profit through the investment of capital to create housing, construction works, or land use rights with existing technical infrastructure in real estate projects for sale, transfer; lease, sublease, lease-purchase of housing, construction works; lease, sublease of land use rights with existing technical infrastructure in real estate projects; transfer of real estate projects; and real estate service business.

Referencing the content stated in Point a, Section 2.2 of this article, real estate business activities are determined as commercial activities because they have a profit-making purpose.

Therefore, based on the content stated in Section 2 of this article, if a dispute arises between the parties during real estate business operations, Commercial Arbitration has the jurisdiction to resolve that dispute provided the parties have a valid arbitration agreement.

Thus, in some cases, real estate disputes can be resolved by Commercial Arbitration.

It can be seen that current Vietnamese law tends to expand the scope of dispute resolution by Commercial Arbitration in the real estate sector, especially for disputes arising from business activities or commercial relations related to real estate.

However, not all real estate disputes fall under the jurisdiction of Commercial Arbitration. For disputes aimed at determining who holds the land use right, disputes reclaiming land, land boundary disputes, or disputes directly related to the legal validity of land use rights, the jurisdiction to resolve them still primarily belongs to the Court and competent state agencies.

Conversely, for disputes arising from real estate business activities, commercial transactions, or property-related relations where the parties have a valid arbitration agreement, Commercial Arbitration has the jurisdiction to resolve them in accordance with legal regulations.

Therefore, correctly identifying the legal nature of a real estate dispute is an important basis for delineating jurisdiction between Commercial Arbitration and the Court, thereby ensuring the efficiency of dispute resolution and limiting legal risks arising in the practical application of the law.

DL PINNACLE LAW FIRM LLC