In what case is the construction contract performance temporarily suspended? What are the principles of settlement of disputes over construction contracts in Vietnam?
In what case is the construction contract performance temporarily suspended?
Pursuant to Article 40 of Decree 37/2015/ND-CP of Vietnam as follows:
Temporary suspension of construction contract performance
1. Situations resulting in temporary suspension of construction contract performance, rights to temporary suspension; procedures for temporary suspension, level of compensation for damages caused by temporary suspension shall be negotiated and agreed by the employer and contractor in the contract;
2. The parties to the contract are entitled to temporarily suspend the contract in the following cases:
a) The employer has the right to temporarily suspend the contract performance when the contractor fails to meet requirements for quality, labor safety and contract progress as agreed in the contract.
b) The contractor has the right to temporarily suspend the contract performance and prolong the contract progress when the employer is in breach of payment terms, specifically no adequate payment is made to the contractor as agreed after 28 days since the payment deadline as prescribed in Clause 10, Article 19 hereof except otherwise as agreed by the two parties; no payment guarantee is made for quantity of work to be executed.
3. Before one party temporarily suspends the contract performance, a written notice must be made to the other party 28 days in advance with reasons for temporary suspension being specified; the employer and contractor shall be responsible for carrying out negotiations to continue to maintain agreements as signed in the contract except force majeure events.
In case one party fails to make a notice about temporary suspension or reasons specified are found contrary to the signed contract, it shall be responsible for making compensation for losses caused to the other party.
Thus, the parties to the contract are entitled to temporarily suspend the contract in the following cases:
- The employer has the right to temporarily suspend the contract performance when the contractor fails to meet requirements for quality, labor safety and contract progress as agreed in the contract.
- The contractor has the right to temporarily suspend the contract performance and prolong the contract progress when the employer is in breach of payment terms, specifically no adequate payment is made to the contractor as agreed after 28 days since the payment deadline as prescribed in Clause 10, Article 19 of Decree 37/2015/ND-CP of Vietnam except otherwise as agreed by the two parties; no payment guarantee is made for quantity of work to be executed.
In what case is the construction contract performance temporarily suspended? What are the principles of settlement of disputes over construction contracts in Vietnam?
In what cases is the employer entitled to termination of construction contracts in Vietnam?
Pursuant to Article 41 of Decree 37/2015/ND-CP of Vietnam on termination of construction contracts as follows:
Termination of construction contracts in Vietnam
1. Situations resulting in termination of the contract, rights to terminate the contract; sequence, procedures for termination of the contract, level of compensation for losses caused by termination of the contract must be agreed in the contract and in accordance with the provisions set out hereof and relevant law provisions.
2. Either party has the right to terminate the contract without compensation for losses caused in the cases as prescribed in Clauses 7 and 8 of this Article.
3. In case the default party (party in breach of the contract) fails to correct its mistakes after 56 days since the date of temporary suspension by notice without proper reason except otherwise as agreed, the other party (party ordering suspension temporarily) has the right to terminate the contract.
4. In case either party unilaterally terminates the contract without the other party’s fault, such party must make compensation for damages caused to the other party.
5. Before terminating the contract, one party must make a written notice to the other party some time in advance but no later than 28 days with reasons being specified except otherwise as agreed in the contract. If the party that terminates the contract fails to make the notice causing losses to the other party, such party must make compensation for the losses.
6. The contract shall become ineffective since the date of termination and the parties must fulfill the procedures for liquidation within a period of time as agreed in the contract but no later than 56 days since the notice about termination is issued except otherwise as agreed in the contract. After this period, if either party fails to fulfill the procedures for liquidation, the other party is fully entitled to liquidate the contract.
7. The employer has the right to terminate the contract in the following cases:
a) The contractor goes bankrupt, dissolved or transfers the contract to other individuals or organizations without consent of the employer.
b) The contractor refuses to execute the construction work under the contract for 56 straight days that results in violations of the contract progress as agreed in the contract except otherwise as approved by the employer.
8. The contractor has the right to terminate the contract in the following cases:
a) The employer goes bankrupt, dissolved or transfers the contract to other individuals or organizations without approval of the contractor.
b) The construction work has been suspended for 56 straight days by the employer’s fault except otherwise as agreed by the two parties.
c) The employer fails to make the payment to the contractor after 56 days since receipt of adequate payment documents except otherwise as agreed by the two parties.
9. Within two working days since the contract is terminated, the contractor must move all the materials, human force, machinery, equipment and other properties in its possession out of the construction site. After this period, if the contractor fails to do so, the employer has the right to settle these properties.
Thus, the employer has the right to terminate the contract in the following cases:
- The contractor goes bankrupt, dissolved or transfers the contract to other individuals or organizations without consent of the employer.
- The contractor refuses to execute the construction work under the contract for 56 straight days that results in violations of the contract progress as agreed in the contract except otherwise as approved by the employer.
What are the principles of settlement of disputes over construction contracts in Vietnam?
Pursuant to Article 45 of Decree 37/2015/ND-CP of Vietnam on settlement of disputes over construction contracts as follows:
Dispute settlement
1. When settling disputes arising during contract performance, the parties must comply with principles and procedures as prescribed in Clause 8, Article 146 of the Law on Construction No. 50/2014/QH13.
2. If the two parties agree that dispute settlement is conducted by an agency, organization or one or some expert individuals (commonly referred to as the settlement committee), the settlement via this committee shall be prescribed as follows:
a) The dispute settlement committee can be specified in the contract at the time of signing or can be formed after the dispute arises. Number of members of the dispute settlement committee shall be negotiated by the parties. Members of the dispute settlement committee are required to be highly qualified and experienced in dispute settlement and have good knowledge of the law provisions on construction contracts.
b) Within 28 days since the two parties receive result of dispute settlement from the dispute settlement committee, if such result is not accepted by either party, the dispute settlement shall then be brought to arbitrator or court as regulated; after this period, if neither party opposes the result, the result shall be deemed as agreed by the parties. Hence, the two parties must comply with such result.
c) Expenses for the dispute settlement committee’s works shall be included in the contract and incurred equally by both parties except otherwise as agreed.
3. Statute of limitations for filing a complaint to the arbitrator or to the court for settlement shall be instructed by relevant law provisions.
Thus, the principles of settlement of disputes over construction contracts are prescribed as follows:
- Observance of contractual agreements and commitments in the course of contract performance, ensuring equality and cooperation;
- Contractual parties shall themselves negotiate on the settlement of disputes. If their negotiation is unsuccessful, their disputes shall be settled through conciliation or commercial arbitration or court proceedings in accordance with law.
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