Explaining Vietnam’s Boom in Business Litigation

Abstract

In recent years, Vietnamese courts have faced a caseload that is increasing at a rate of ten to twelve percent annually. The Economic Courts, which handle business related cases, have been most affected by this trend, seeing the growth in their caseload outpace that in the regular civil court system. This paper examines the explanatory power of three factors – cultural, institutional and economic – in determining this explosion in the number of business disputes litigated in the Economic Courts. Using data from 2003 to 2012, the paper finds that institutional and economic factors rather than cultural ones offer the best explanations for this upward trend in the number of business cases in Vietnam. The findings enrich the literature on institutions in transition economies, by identifying them as determinants of choice of enforcement devices. This contributes to the debate on choice of enforcement device by providing evidence from both an Asian country and a transition economy. The research findings may also inform current legal reform in countries which have been allured by the model of strong private enforcement in the United States.