Vietnamese law does not yet have the concept of ‘extraordinary events’

Today (April 25), Vietnam International Arbitration Center (VIAC), Faculty of International Law, Ho Chi Minh City University of Law and Vietnam Construction Law Association (SCLVN) jointly organized the Construction Arbitration Workshop Ho Chi Minh City International Construction Conference 2024 (HICAC 2024) with the theme “Construction Contracts and International Arbitration: When legal traditions conflict”.

Signing a Memorandum of Cooperation

Within the framework of the conference, the Vietnam International Arbitration Center coordinated a professional discussion event on the Intersection of Legal Traditions in International Arbitration with the participation of more than 80 domestic and international delegates. .

Accordingly, the field of International Arbitration always exists at the intersection of diverse legal systems. With the accelerating pace of globalization, it is increasingly common for disputes to involve parties and Arbitrators from different legal traditions. Cross-border disputes and investment disputes are inevitable for deeply open economies.

While the wave of legal harmonization is increasingly spreading, practice shows that there are differences in the laws chosen to regulate, from arbitration agreements to arbitration awards. The intersection between Eastern and Western legal systems in international arbitration has been posing challenges but also opportunities in working towards the fair and effective operation of arbitration proceedings. .

At the program, the signing ceremony of a Memorandum of Understanding between Vietnam International Arbitration Center (VIAC) and Dubai International Arbitration Center (DIAC) also took place. According to the Cooperation Agreement, the two sides commit to accompany each other in activities to promote the development of effective commercial dispute resolution methods through commercial arbitration as well as other dispute resolution methods. other mortgage (ADR).

The Cooperation Agreement between VIAC and DIAC is expected to take another step forward in strengthening economic and investment relations between Vietnamese businesses and Dubai as well as the United Arab Emirates.

The difference between force majeure and extraordinary events

Also today, a discussion took place on some potentially conflicting provisions in international construction contracts coordinated by the Vietnam Construction Law Association.

At this session, Prof. Dr. Do Van Dai (Ho Chi Minh City University of Law) presented about force majeure, fundamental changes in circumstances and unusual events.

According to Prof. Dr. Dai, Vietnamese law currently does not have the concept of unusual events. Extraordinary events are objective and unpredictable, which is common with force majeure events in Vietnam. However, according to Fidic 2017 (model construction contract of the International Association of Consulting Engineers), an unusual event that cannot be overcome “reasonably” shows that it is not force majeure at the Vietnam, how should the phrase “reasonably” be understood?

Regarding changing circumstances, according to Prof. Dr. Dai, it is stipulated in Article 420 of the 2015 Civil Code. Changing circumstances are similar to force majeure in that due to objective reasons, the parties cannot foresee the change. situation. However, unlike force majeure, changed circumstances have some characteristics such as continuing to perform the contract without changing the contract content will cause serious damage to one party…

Prof. Dr. Dai gives a typical example of changing circumstances. The case where a contractor and investor signed a construction contract for 60 billion within 5 years. By the third year of construction, the state raised the minimum wage. The contractor was still committed to building, but the contractor found it very difficult to carry out the contract because the cost increased significantly due to the increase in the minimum wage. Finally, VIAC ruled that this was a change in circumstances and the contract price had to be raised from 60 billion to 69 billion VND.

According to Prof. Dr. Dai, force majeure in Vietnam means that the parties cannot do anything, cannot change and are forced to stop. Changing circumstances can still be changed. If they don’t change, one party will suffer serious damage. For example, during the COVID-19 pandemic, construction contracts can still be performed, but construction costs have increased greatly. This situation is not force majeure because construction can still be done, so this is just a change in circumstances.