Disputes Over Changes in Law in Construction Contracts in Vietnam

1. Overview of Legal Change Disputes
In Vietnam’s construction sector, changes in legislation during project implementation often lead to complex disputes among contracting parties. Although Article 143 of the Construction Law clearly stipulates that contracts may be adjusted when policy or legal changes directly affect execution, applying this provision in practice is far from straightforward. Parties frequently disagree on the extent of the new regulation’s impact, as well as on how to adjust costs, timelines, and the scope of work. Therefore, understanding the nature of such disputes and having appropriate resolution strategies is crucial to ensuring the stability and effectiveness of construction contracts.

2. Common Types of Legal Change Disputes
During the execution of construction contracts in Vietnam, changes in legislation are objective factors that can nonetheless lead to significant legal consequences. These changes often give rise to disputes among the involved parties, especially when the contract does not clearly define mechanisms for handling such situations. The following are the three most common categories of disputes:

Disputes over Contract Price Adjustments: When regulations related to taxes, fees, or input costs change, the contract value may be affected. Contractors often request price adjustments to offset additional expenses, while investors may reject such requests if they believe the changes do not directly impact the contract. Disputes arise when there is no clear mechanism to assess the extent of the impact or determine the method for price adjustment.
Disputes over Project Timeline: Legal changes may introduce new administrative procedures, prolong approval processes, or require additional documentation. This leads to disagreements over whether the project completion deadline should be extended. If the contract does not clearly address force majeure situations caused by legal changes, contractors may be unfairly held responsible for delays.
Disputes over Compliance with New Regulations: When new regulations concerning technical standards, labor safety, or environmental protection are introduced, parties often disagree on who is responsible for implementation and the associated costs. Contractors may request additional budget allocations to meet new requirements, while investors may argue that such obligations are already covered under the contract. These disputes typically stem from a lack of clear agreement on how responsibilities should be allocated when laws change.

Clearly identifying these types of disputes is a crucial step toward drafting robust, flexible contracts that minimize legal risks.

3. Causes of Legal Change Disputes
In the practical implementation of construction projects in Vietnam, disputes arising from changes in legislation typically stem from three main causes:

Lack of Specific Contractual Provisions: Many construction contracts do not clearly stipulate how to handle changes in the law. The absence of adjustment mechanisms leaves parties without a solid legal basis to resolve emerging issues, leading to disagreements and disputes.
Disagreement on the Extent of Impact: Parties often fail to reach consensus on whether a legal change has a direct or indirect effect on the contract’s content. Differences in assessing the level of impact make contract adjustments complex and prone to contention.
Difficulty in Quantifying Additional Costs: Determining the additional costs incurred due to legal changes usually requires in-depth analysis, specific data, and objective evaluation. However, this process often lacks transparency, resulting in disputes over what constitutes reasonable costs and who should bear them.

4. Solutions for Preventing and Resolving Legal Change Disputes
To minimize risks and effectively address disputes arising from changes in legislation, parties involved in construction contracts should proactively implement the following solutions:

Draft Specific Contract Provisions

Contracts should clearly define mechanisms for handling legal changes, including:

• Notification procedures between parties
• Methods for assessing the impact on the contract
• Approaches to adjusting price, schedule, or scope of work
• These provisions establish a clear legal basis for managing emerging situations, helping to avoid misinterpretation or arbitrary application.

Clearly Define Responsibilities

Parties should identify who is responsible for updating legal information, complying with new requirements, and managing resulting impacts. Clear allocation of duties helps prevent blame-shifting and ensures construction progress is not disrupted.

Establish Dispute Resolution Mechanisms

It is advisable to agree in advance on methods for resolving disagreements, prioritizing options such as:

• Direct negotiation
• Mediation through a third party
• Arbitration or litigation if no agreement is reached
• Such mechanisms help control conflicts and reduce unnecessary legal costs.
• Maintain Comprehensive Legal Records

Recording and storing all new legal documents, communications between parties, and impact assessments is essential. These records serve as the foundation for asserting rights and obligations in the event of a dispute.

Implementing these solutions in a coordinated manner not only helps prevent disputes but also enhances transparency and efficiency in construction contract management.

5. Legal Framework Governing Legal Change Disputes
Disputes arising from changes in legislation within construction contracts in Vietnam are governed by the following legal documents:

Construction Law 2014 (amended in 2020): Provides regulations on the adjustment of construction contracts in response to changes in policies or laws.
Decree No. 37/2015/ND-CP and Decree No. 50/2021/ND-CP: Offer detailed guidance on construction contracts and their adjustments.
Circular No. 02/2023/TT-BXD: Specifies regulations on the adjustment of construction contract prices.

6. Conclusion
Disputes over changes in law represent one of the most significant legal challenges in construction contracts in Vietnam, especially in the context of a rapidly evolving and increasingly sophisticated legal system. To mitigate risks and ensure project stability, parties must proactively draft contracts with clear, flexible provisions that can adapt to legal fluctuations. Establishing effective dispute resolution mechanisms—from internal negotiation to mediation or arbitration—helps manage conflicts and safeguard the interests of all parties involved.

Moreover, in Vietnam’s constantly changing legal environment, regularly updating regulatory knowledge and seeking legal expert consultation not only enables parties to fully understand their rights and obligations, but also fosters transparent, sustainable, and practical cooperation. This is a key factor in enhancing contract management efficiency, minimizing disputes, and ensuring the long-term success of construction projects.

To receive a complete set of sample contract clauses and expert legal advice on how to effectively apply them to your construction project, please contact Harley Miller Law Firm:

Email: info@luatminhnguyen.com; miller@hmlf.vn
Website: hmlf.vn
Hotline: 0937215585
Address: 14th Floor, HM Town Building, 412 Nguyen Thi Minh Khai Street, Ho Chi Minh City

We specialize in providing legal consultancy services in the fields of construction and real estate. Our team of experienced lawyers will help you draft contracts that are both secure and effective.