CASE LAW 69 - SELECTION OF COMMERCIAL ARBITRATION TO RESOLVE DISPUTES BETWEEN ENTERPRISES AND EMPLOYEES ARISING FROM INDEPENDENT CIVIL AGREEMENTS OUTSIDE LABOR CONTRACTS

On October 1, 2023, the Chief Justice of the Supreme People's Court issued Decision No. 364/QD-CA announcing 07 case law approved by the Council of Judges of the Supreme People's Court on August 18, 2023. Accordingly, Case Law No. 69/2023/AL on the jurisdiction of Commercial Arbitration to Resolve Non-Competitive and Non-Competitive Agreements Disputes ("Case Law 69") has been officially published. Case Law 69 is derived from Decision No. 755/2018/QD-PQTT dated June 12, 2018, of the People's Court of Ho Chi Minh City ("Decision 755") on the civil "Request for annulment of the arbitral award" issued by the Vietnam International Arbitration Center (VIAC).

Case Law No. 69 sets out the legal situation: The employee and the employer enter into a non-non-compete and non-disclosure agreement ("NDA") that after the termination of the employment contract, the employee is not allowed to do the same job or work that competes with the employer for a certain period,  if there is a dispute, it will be resolved by Commercial Arbitration.

According to the provisions of Article 187 of the Labor Code 2019, agencies, organizations and individuals competent to settle labor disputes include labor mediators, labor arbitration councils, and People's courts. Thus, disputes related to industrial relations will not be able to be resolved in Commercial Arbitration.

However, this NDA is established outside of the employment contract, completely independent of the employment contract, and is defined as a civil agreement between the employer and the employee.

Therefore, for this situation, Case Law 69 provides that the Court must determine that the dispute over a non-non-competitive non-disclosure agreement between two parties is an agreement independent of the employment contract, which falls under the jurisdiction of Commercial Arbitration.

Thus, according to case law, an NDA is a valid civil agreement if it is concluded independently of the labor contract and disputes from the NDA can be resolved in Commercial Arbitration if the NDA integrates the arbitration agreement in accordance with the law.