SETTLEMENT OF DISPUTES OVER CONSTRUCTION CONTRACTS

Currently, construction contract disputes are increasing, mainly arising from disagreements between investors and contractors. The settlement of disputes may be based on the terms of the signed contract or in accordance with the provisions of law. An important issue is whether these disputes can be resolved through lawsuits in Court? Understanding the provisions of the law on dispute resolution not only saves time but also prevents construction stoppages and ensures the construction progress. A Dong will guide and analyze the provisions of the law on settlement of construction contract disputes as follows:

1. Concept of Construction Contract

A construction contract under Clause 1, Article 138 of the Law on Construction 2014 (amended and supplemented in 2020) is a civil contract made in writing between the principal and the contractor to perform part or all of the work in construction investment activities.

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Classification of construction contracts:

- According to the nature of the work:

- Construction consultancy contracts

- Construction contract

- Equipment supply contract

- Contract for design – procurement of materials and equipment – construction (turnkey)

- Other construction contracts

- In the form of contract price:

- Package contract

- Fixed unit price contracts

- Contracts based on adjusted unit prices

- Time-based contracts

- Cost-plus contracts

- Combined price contracts

- Other construction contracts

2. Subject of the Construction Contract

A construction contract is signed between the party wishing to build (the principal) and the party performing the construction work (the contractor). Depending on the source of capital and the type of project, the subject of the contract:

- Principal: It can be the investor, general contractor or main contractor. In case of using the State budget capital, the principal must be the State or its representative. For ordinary commercial projects, the contractor can be an individual or organization.

- Contractor: A unit capable of performing construction and construction works at the request of the contractor.

3. Common Disputes

- Violation of payment schedule under the contract

- Failing to ensure the construction progress and quality of the work

- Penalties for breach of contract

- Unilaterally terminate the contract ahead of time

- Compensation for damage in the contract

4. Order and procedures for dispute settlement

According to Article 45 of Decree 37/2015/ND-CP and Clause 8, Article 146 of the Law on Construction 2014, disputes in construction contracts are settled according to the following principles and order:

1. Self-negotiation: The parties to the contract negotiate on their own, if unsuccessful, may resort to mediation, commercial arbitration or the Court.

2. Mediation: Conducted by agencies, organizations or experts. The mediation costs shall be agreed upon by the parties themselves. 3. Commercial arbitration: According to the Commercial Law 2010, including filing a lawsuit, establishing an arbitration council, conducting mediation and organizing a dispute settlement meeting.

4. Court: According to the Civil Procedure Code 2015, including filing a lawsuit, advancing court costs, preparing for trial and mediation, and finally the first-instance trial.