Stakeholders urged to consult arbitrators in PPP project disputes

The workshop on contractual disputes in infrastructure PPP projects taking place on July 4 in Hanoi. (Photo: thoibaotaichinhvietnam.vn)

Vietnam has encouraged PPP projects in recent years to meet the demand for energy and infrastructure development in the context of limited State budget.

According to Vice Chairman of the Vietnam Chamber of Commerce and Industry Hoang Quang Phong, as of January 2019, 336 PPP project agreements were signed with the total capital raised reaching 1.6 quadrillion VND (68.8 billion USD). The figure consisted of 140 build-operation-transfer (BOT) projects and 188 build-transfer (BT) projects.

Do Trong Hai, director of the law firm Bizlink, said disagreements and conflicts might arise between government agencies, investors and people when carrying out a PPP project.

“Disputes must be resolved shortly so that they don’t escalate, assuring the PPP project is carried out quickly and has no negative impact on the nation’s general business environment,” Hai told a two-day seminar that took place in both Hanoi and HCM City last week.

Stakeholders should bring the case to the arbitrator as this is an effective way to deal with conflicts, Phan Trong Dat, deputy general secretary of the Vietnam International Arbitration Centre, told the conference.

“Arbitration is secure, flexible, less time-consuming and cost-saving,” Dat said, adding that experiences in developed countries have proven arbitration can lessen the tensions in PPP projects. Therefore, cases may not be brought to the court.

Professor Pham Duy Nghia at Fullbright Vietnam University said attracting private investment was good for infrastructure development.

“However, PPP projects often have long life cycles, so risks will come along,” he said, adding risks were related to legal framework, finance, tax and management.

“Risks increase spending on projects. It may not only result in losses for stakeholders but also create disputes, leading to the delay, or even worse, the cancellation of the projects.”

In order to limit the risks, there are two solutions, according to Nghia. One is to forecast potential risks when stakeholders prepare mutual contracts.

A PPP project often lasts for 20-30 years. During the period, the regulations and policies could change so there must be appropriate measures to make sure stakeholders would not suffer, Nghia said.

"The second solution is selecting arbitrators to resolve disputes," he added. “If investors are unaware of the administrative procedures, it may prolong the implementation plan and create more risks for both private investors and State agencies.”