Cases of modifying investment project contracts in Vietnam

Cases of modifying investment project contracts in Vietnam (Internet image)

Regarding this matter, LawNet would like to answer as follows: 

1. Cases of modifying investment project contracts in Vietnam

According to Clause 1, Article 76 of the Law on Bidding 2023, an investment project contract may be modified in the following cases:

- The investment project which is subject to approval of investment guidelines is modified in accordance with regulations of the Law on investment resulting in changes in contents of the project contract.

Modifications to the contract shall only be made after the modified investment guidelines have been approved by a competent authority. The investor must meet technical and financial requirements for executing the modified investment project;

- The investment project is transferred in accordance with regulations of the Law on investment and relevant laws;

- In other cases as agreed upon by the parties in the contract in conformity with regulations of law.

2. Regulations on security for performance of investment project contract in Vietnam

According to Article 75 of the Law on Bidding 2023, regulations on security for performance of investment project contract in Vietnam are as follows:

- The investor is required to adopt one of the following performance security options for ensuring their fulfillment of responsibility to execute the investment project before or when the contract becomes effective:

+ Submit a letter of guarantee issued by a domestic credit institution or foreign bank branch lawfully established under the law of Vietnam; or

+ Submit a certificate of surety bond insurance issued by a domestic non-life insurer or branch of a foreign non-life insurer duly established under the law of Vietnam.

- Depending on the scale and nature of the investment project, the value of the performance security equaling 1% - 3% of the total investment shall be specified in the bidding documents.

- The validity period of the performance security begins on the official signing date of the contract until the contract is terminated. If the duration of the contract needs to be extended for a specified period, the investor shall be requested to extend the validity of their furnished performance security for a corresponding additional period.

- The performance security shall be forfeited if the investor:

+ refuses to perform the contract that is still effective;

+ violates terms and conditions of the contract; or

+ refuses to extend the validity period of the performance security, in case failure to meet the contract execution schedule is at the investor’s fault.

3. Contents of investment project contract in Vietnam

According to Article 73 of the Law on Bidding 2023, an investment project contract shall, inter alia, have the following primary contents:

- Particulars of the contracting parties, effective date and duration of the contract;

- Details of the investment project, including: objectives, location, and execution schedule; scale and total investment; conditions for use of land and other resources (if any); compensation and relocation measures and requirements, and construction of auxiliary works (if any); safety and environmental protection requirements; force majeure events and actions taken;

- Responsibility to follow compensation and relocation procedures and organize construction of auxiliary works (if any); allocation or lease of land (if any);

- The investor's obligations to fulfill commitments proposed in their bid; establishment of enterprise in charge of managing the investment project (if any);

- Performance security; rules and conditions for modification and termination of contract; transfer of rights and obligations by the parties;

- Governing law and dispute settlement mechanism.

To Quoc Trinh

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