Issues in selecting arbitration to settle construction disputes in Vietnam

Under the Law on Construction 2014, a dispute relating to a construction contract can be resolved through mediation, by a commercial arbitration or court “in accordance with law”. This standard wording seems to allow parties to a construction dispute in Vietnam to select arbitration to settle the dispute. However, Circular 26/2016 of the Ministry of Construction provides that a dispute relating to quality of a construction work will be resolved in the following steps:

(1)         negotiation between disputing parties;

(2)         engaging an organisation or individual who has capacity to carry out evaluation of the quality of parts, items of construction works, and propose remedies; and

(3)         referring the dispute to a court for settlement.

Sine (3) only refers to courts, the above requirements could be interpreted to mean that disputes relating construction quality in Vietnam can only be resolved by courts not arbitration. On the other hand, it is arguable that (a) an arbitration tribunal could be considered as “an organisation, individual who has capacity to carry out evaluation” the construction dispute described at (2). Accordingly, if the parties have referred to arbitration by virtue of (2) then arguably (3) is not necessary. That said, the provisions of Circular 22/2016 regarding dispute relating construction quality still give rise to unnecessary risk.

This post is contributed by Ha Thi Dung, a partner at Venture North Law.