Guide to Construction Projects and Disputes (Part 1)

Published: January-2024

In the dynamic world of construction, conflicts can arise from unclear contractual terms, project delays, failure of compliance with project standards or cost overruns. Take an in-depth look at how these disputes unfold and how to deal with them.

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Guide to Construction Projects and Disputes (Part 2)

Published: December-2023

In the ever-changing field of construction, disputes can emerge due to unclear terms in contracts, delays in projects, not following project standards, or going over budget.

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Construction Contract Disputes

Construction projects are inherently uncertain, often resulting in insufficient quality, resource waste, and delays caused by unforeseen factors. Disputes over quality, cost, schedule, and contractual agreements are common in this adversarial environment. Given the paperwork-heavy and tension-filled nature of construction litigation, it is crucial to have an experienced construction law firm to help reach a successful resolution.

At Le & Tran, we are well-equipped to handle construction projects and disputes in Vietnam, drawing upon our extensive legal expertise and familiarity with the industry’s language and procedures. Our construction lawyers and litigation attorneys make it a priority to travel to the site and engage in detailed discussions with our clients to provide legal advice from the beginning of the construction project. We leave no stone unturned in our approach, examining the opposition’s perspective to arrive at the most comprehensive judgment and strategy. Our proficiency, mobility, and diligence set us apart as unmatched in the field.

Whilst recognised for our trial prowess, our construction litigation attorneys have mastered a balance of tenacity and tact. Hence, we are able to modify and adapt our strategy whenever needed to meet our clients’ goals and expectations.

Our law firm has successfully represented numerous transnational companies in highly complex and valuable disputes. Our expertise extends to providing assistance to a diverse range of clients, including project developers, business owners, contractors, and investors. Our team is dedicated to delivering intelligent and effective resolutions, tailored to the unique needs of each client.

What is Vietnam construction law?

Construction law involves any legal issue related to the construction of a building or other structure. It is a tremendously large field encompassing numerous matters and parties connected to construction projects. It can involve construction by private parties for industrial, commercial or residential purposes, public projects by the government, or public private projects (PPP) which is a mixture of the two e.g.: an Airport.

As the Vietnamese economy and infrastructure continue to experience remarkable growth, the construction industry is thriving and attracting substantial foreign investment from around the world, particularly from East Asian countries. The erection of new high-rises, shopping malls, industrial parks, and apartment complexes has become a daily occurrence, with a focus on the economic centers of Ho Chi Minh City and Hanoi and their surrounding areas, as well as expansion throughout Vietnam due to government development incentives. With this increased demand for new construction comes an increased need for legal certainty in construction law and an unavoidable uptick in legal disputes.

Construction law in Vietnam is generally governed by the 2014 Law on Construction (No. 50/2014/QH13) which was amended and supplemented in 2020 (No. 62/2020/QH14, effective on January 1st, 2021). The Construction law encompasses several areas including regulations on construction planning and zoning, construction permits, construction survey and design, specific requirements and obligations at construction sites, project finalization and warranties, construction investment requirements and construction contracts, and qualifications for those involved in the construction process. The construction law of 2020, makes a number of amendments such as expanding pre-feasibility studies, compulsory insurance for contractors, and updated construction permit exemptions, among other changes.

Whether you are an investor, contractor, subcontractor, construction equipment or material supplier, having a knowledgeable lawyer with a thorough understanding of Vietnam’s construction law is crucial. It is equally important to ensure that the law firm or lawyer you engage is well-versed in other areas of law, as construction law in Vietnam often intersects with several other legal fields, each with their own unique legal codes and regulatory bodies. These include investment law, environmental law, contract law, employment law, taxation, and more.

What does construction law involve?

In general, the construction of any structure involves a number of steps, from the bidding on the project to the finalization and warranty of the work. The law on construction in Vietnam has a number of provisions that provide guidance to the various parties during the process.

For bidding, contractors that meet capacity, experience and technical requirements may submit financial proposals for review.  A contractor that submits the lowest price but does not possess the requisite capacity, experience and technical requirements will be eliminated from the bidding. Foreign investors may take part in the bidding but must obtain a permit and form a joint venture with Vietnamese contractors or use Vietnamese subcontractors unless the domestic contractors are not qualified to participate in the work.

Following this, the construction contract will be negotiated and signed by the investor and contractor, which will include, amongst other items, construction unit price, installment payments and provisions for changes that occur during performance. The parties will also enter into a contract with a construction supervision contractor or engineer who will oversee the quality, volume, progress, labor safety and environmental protection during the course of construction.

The project then enters the building stage and the contractor is paid in installments based on the quantity of work actually performed and confirmed by the parties. A number of documents are required under the construction law must be submitted to the authorities during the ongoing building process. After the completion of the construction, the take-over certificates are issued and the project is transferred to the investor for use.

A number of issues tend to arise during the finalization process and the final payment between the parties regarding the price of additional construction materials, delay penalties and other unforeseen costs. This can result in disputes. Further, there is a warranty period under the contract where part of the final payment is withheld by the investor to guarantee the quality of the project pursuant to the contract.

Of course, this is a simplified version and does not encompass the multitude of parties and issues such as subcontracts, insurance, and unforeseen events (eg. workplace accidents, breakdown of equipment, or shortage of materials) that occur before, during and after the project is completed.  With a number of moving parts, it is imperative for the parties to retain a good construction lawyer who is fluent in Vietnam construction law as well as having multi-disciplinary expertise (commercial contacts, tort law, insurance, regulatory, etc.)

What does a Vietnam construction law firm or lawyer do?

There are many services that a good construction law firm or lawyer in Vietnam may provide for investors, contractors, subcontractors and other project participants that include, but are not limited to:

• Establishment of real estate and construction companies;
• Consultation regarding the bidding process;
• Providing legal advice on project financing and real estate issues;
• Contract negotiation and preparation;
• Construction litigation and out of court dispute resolution;
• Lien and surety claims;
• Construction defect litigation;
• Payment disputes and recovery of debts;
• Workplace safety and personal injury;
• Taxation;
• Regulatory inspections and investigations;
• Delay and abandonment claims;
• Insurance coverage and claims.

Do you need a good construction lawyer?

There are a number of complex issues and regulations surrounding the law on construction that need to be handled in a proficient manner. Unless your organization has specialized knowledge of Vietnam construction law, it is strongly advisable that a Vietnam construction lawyer or law firm be retained when considering a construction project.

Further, it is important to find a construction lawyer who understands the economics, culture, language, and technology of modern construction projects. Le & Tran’s Vietnam construction lawyers have over a decade of experience so we are able to anticipate issues, recommend innovative solutions and structure agreements that are advantageous for our clients and equitable to all parties involved. Our construction lawyers are able to rapidly analyze any construction-related claim, communicate with all parties involved, and assist our clients respond confidently.

To resolve construction contract disputes, Le & Tran litigation attorney team has significant experience in commercial mediation and other alternative dispute resolution. Should a negotiated settlement not be possible, our Firm is prepared to go to trial and have years of successful experience in the courtroom and before arbitration panels.

When to call a Vietnam construction litigation attorney

When a new construction project is considered or when problems arise with a construction project, our clients can engage Le & Tran construction lawyers to obtain legal advice and protect their financial interests. We will work with our clients to map a strategy that aligns with their business objectives. Construction transactions and disputes are often extremely complex, involving multiple parties, and our team of litigation attorneys will work to ensure that matters are resolved as efficiently and effectively as possible.

Why engage construction litigation attorneys from Le & Tran?

At Le & Tran, we have a long history of representing clients in all phases of construction projects throughout Vietnam, from bidding and signing of the construction contracts to the finalization and warranty period. Our diverse expertise and numerous years of consultation, trial and advocacy experience uniquely equips us with the ability to offer our clients legal advice in areas pertaining to Vietnam construction law and to proficiently handle construction issues at all stages of the project. We have represented real estate development companies, contractors and subcontractors, material suppliers, architects and engineering firms in high profile projects involving manufacturing facilities, residential developments and subdivisions, industrial parks, high-rise buildings, and numerous other types of commercial and residential projects. The Firm has provided a strong defence to clients in cases involving delay, negligence and breach of contract claims; bid protests; scope of work disputes, collection and enforcement issues, compliance investigations; and other disputes. Le & Tran construction litigation attorneys have extensive experience and success at trial and arbitration and have routinely represented clients in lawsuits at the trial and appellate levels across Vietnam.

As Le & Tran construction lawyers know and can anticipate litigation issues, we have a specialized advantage in advising clients on how to avoid potential costly disputes in the Construction field. This includes assisting clients with pre-dispute contract negotiation and drafting, project oversight and pre-litigation counselling. Significantly, this guidance has proven valuable for placing clients in the best possible position in the event of potential litigation — often resulting in the settlement of claims before litigation has commenced.

The team is led by Mr. Stephen Le who has been shortlisted by a number of independent legal ranking organizations in the South East Asia region including Chambers and Partners- Asia Pacific, Benchmark Litigation and Legal 500. Further, with a number of specialized areas of practice, including construction disputes, tax disputes, securities, insurance, banking and finance, government and regulatory, mergers & acquisitions, and commercial contracts and arbitration, the Firm is uniquely positioned to assist clients through the complex issues of construction law utilizing the most efficient, strategic and comprehensive methods possible. In short, our multidisciplinary approach is the key to providing you with the most successful, holistic and cost-effective solution and ensuring that all of your interests are protected.

Le & Tran’s internationally recognized construction lawyers are available to answer any of your questions. Our main office is located in Ho Chi Minh City, the business center of Vietnam. Besides playing an essential role in ensuring the smooth operation of any construction project, Le & Tran can also be a partner for legal tax advice, shareholder disputes and more.  Please feel free to contact us at info@letranlaw.com to arrange a free consultation.