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:

New regulations on industrial zones in Vietnam

On 22 May 2018, the Government issued Decree 82/2018 on industrial zones and economic zones in Vietnam. Decree 82/2018 replaces Decree 29/2008 as amended from 10 July 2018. The salient points of Decree 82/2018 are as follows:

  • An economic zone located in an area entitled to investment incentive policies is now entitled to be regarded as an area facing extreme socio-economic difficulties.
  • Decree 82/2018 introduces three new kinds of industrial zones which are supporting industrial zone, eco-industrial zone, and industrial-urban-service zone. Certain investment incentives will be available to supporting industrial zones and eco-industrial zones (e.g., land rental exemption, soft loans, or maximum land lease term). An industrial-urban-service area may include a residential and service area which must not exceed one third of the area size of the industrial zone. In addition, an exporting processing zone is now regarded as a type of industrial zone instead of being classified as a separate type of zone.
  • The amended definition of export processing enterprise (EPE) seems to suggest that an EPE does not need to export all of its products. Instead, an EPE only needs to be specializing in manufacturing exported products.
  • Decree 82/2018 allows an industrial zone to have separate dwelling facilities for foreign managers, chief officers and experts.

This post is contributed by Ha Kieu Anh, a trainee at Venture North Law.

ACQUIRING LAND USE RIGHTS THROUGH A BUSINESS COOPERATION CONTRACT IN VIETNAM

In Vietnam, if a real estate investor (Investor) cannot Acquire A Land Area Through Common Options to implement its investment projects, it may consider entering into a business cooperation contract (BCC) with a local land user. Under a BCC structure, the parties do not establish an entity but usually cooperate to use their available resources (including land use rights) to do business. In this case, the party having land use rights (Landlord) retains the title over the land without transferring them to the Investor, but the Investor may obtain certificate(s) which evidence its title over assets attached to the relevant land area (generally, ownership certificate). There is a risk that a BCC contract may be regarded as a land sub-lease contract between the local land user and the Investor.  However, a BCC structure is quite common in practice and there are certain legal basis for such a structure.

HOW CAN A FOREIGN INVESTOR ACQUIRE LAND USE RIGHTS IN VIETNAM?

In Vietnam, private ownership over land is not recognised under the Constitution and Land Law 2013.  Instead, one may acquire certain rights which are close to the ownership rights over the land (land use rights) in accordance with the land regulations. A foreign investor does not fall under the scope of subjects that are entitled to obtain land use rights in Vietnam, but a local company (Local Co) wholly or partly owned by such foreign investor may acquire land use rights to conduct its investment projects.