Welcome to the

Annual Construction & Engineering Law

Conference 2015

A Light Introduction to Construction

Law & Practice in Viet Nam

Nic Brown

Agenda

The Party

Dispute Resolution

The modes of application The Laws

Peculiarities Distinctions

The Laws

Soviet Ideology

The Constitution (1992) (LPLI/1.1)

National Assembly Laws (C/74.2; LPLI/1.1) including thematic codes prescribed by the Standing Committee of the National Assembly under LPLI/93.2

National Assembly Resolutions (C/70.10)

NA Standing Committee Instruments (LPLI/1.1)

Ordinances (LPLI/1.1)

Presidential Orders and Decisions (LPLI/1.2(a))

Government Resolutions and Decrees (C/74.1; LPI/1.2(b)) and Prime Ministerial Directives (LPLI/1.2(b))

Ministerial Decisions, Directives and Circulars LPLI/1.2(c))

Supreme People’s Court Judicial Council Resolutions (LPLI/1.2(d)) and Supreme Court Inspectorate’s circulars (LPLI/1.2(d))

Certain Joint Resolutions and circulars (LPLI/1.2(dd)

People’s council Resolutions (LPLI/1.3) and People’s Committee’s Decisions and Directives (LPLI/1.3)

International Treaties (C/70.14)

Modes of application

Private individuals

Ministry or Agency

Informal Interpretation

Formal Interpretation

Legislature

Judiciary

Executive

Peculiarities

Breach of Contract

Assessed Damages

Art. 422.3

(Agreed Damages)

Art. 422.3

Agreed Penalty

Art. 422.1

Civil Code, No. 33 of 2005

Peculiarities

Breach of Contract

Assessed Damages

Art. 302

(No middle option)

Agreed Penalty

Art. 300

Commercial Law, No. 36 of 2005

Other main differences

Singapore Viet Nam

1. Sources of law • Statutes and judge made

law

• Statutes and formal

interpretations

2. Contractual terms • Freedom with limited

statutory control

• Uncertain freedom of

contract.

• Extensive mandatory

provisions

3. Discriminatory laws • No local vs. foreign

discrimination

• Special contractual

freedoms for foreign-

related projects

4. Security of performance • SOPA

• Freedom of contract

• Uncertain freedom of

contract

5. Standard/model forms • SIA Contract Form

• PSSCOC

• LTA Conditions

• Engineering

Procurement &

Construction, etc.

• FIDIC Book

Law Review 2015

Mohan Pillay

Law review 2015

Arbitration Review

• New evidence in Court to challenge a

Tribunal Ruling

• Setting Aside of Award

Construction Review

• Performance Bond

Challenging jurisdiction – new evidence?

Gov’t of Laos v Sanum – 2015 High Court

Issue

• Is new evidence in Court allowed to

challenge a Tribunal ruling on jurisdiction?

Gov’t of Laos v Sanum – take away

• High Court: Allowed new evidence

• No absolute bar against new evidence

• 3 conditions

– Strong reason why evidence not produced at

arbitration

– Evidence is credible

– Evidence will (probably) have important influence

on case outcome

Setting aside of award – arbitration agreement

• S.2A(4)

“An arbitration agreement is in writing if its content

is recorded in any form ….” (emphasis added)

AQZ v ARA – 2015 High Court

• Issue #1 : Is one party’s written record of an arbit.

agrm. an “agreement in writing” even if not signed

or confirmed by the other party?

• S.2A(3) International Arbitration Act –

“An arbitration agreement shall be in writing”

Setting aside of award – sole arbitrator

AQZ v ARA - 2015 High Court

• Issue #2 : If the Arbit. Agrm. provides for a 3

member Tribunal, can the SIAC appoint a sole

Arbitrator?

AQZ v ARA – take away

• “In writing” requirement for Arbit. Agrm. - Very light touch

• Tip put any reference to Arbit. Agrm./objection in writing

• Tribunal size – consider Arbitral rules

• Tip if size matters, make clear agreed Tribunal size prevails

over Arbitral Rules

Setting aside of award - long delayed award

Coal & Oil LLC v GHCL Ltd – 2015 High Court

Issue

• Does ~ 2 year delay (19 months) from parties’ closing

submissions to Award allow setting aside Award?

Coal & Oil v GHCL – take away

• Delayed release is not ground to set aside Award

UNLESS

– Breach of a clearly specified time limit for Award

• Tips

– Specify express time limit for Award in Arbit.

Agrm.

– seek removal of Arbitrator for “undue delay”

before Award release (Art. 14 Model Law)

Setting aside of award – breach of natural justice

AKN v ALC – 2015 Court of Appeal

• Issue #1 - What is the standard to establish

breach of natural justice

– Category A : where the Tribunal fails to

consider an important issue in dispute

– Category B : where party not given opportunity

to present its case

AKN v ALC - standard of proof

Issue # 1 – Cat. A

Facts consistent with Tribunal Breach

Misunderstanding a party’s case /the law

Applying poor reasoning

Not dealing with a point

– thought unnecessary (perhaps due to

misunderstanding the law/ argument)

Tribunal (mistakenly) records that a particular

argument was withdrawn

– therefore does not consider it

X

X

X

✓

Natural Justice – Category B : Where party not given

opportunity to present its case

• Facts :

– The Buyers raised a new point on the final day of

hearing (which led to an Award of US$80m)

– No opportunity for the Sellers to present their case

in reply

• CA Held : ✓ Breach

AKN v ALC - standard of proof

Issue # 1 – Cat. B

AKN v ALC – Issue # 2

Breach of Natural Justice – Consequence

• Issue #2 - Is the entire Award set aside for

every breach of natural justice?

AKN v ALC – take away # 1

• NO RIGHT to a legally/factually “correct” Award

• ONLY RIGHT to :

– A decision on the dispute submitted

– Arrived at by a fair process, ie rules of natural justice

• Clear evidence of breach of natural justice

– “clear and virtually inescapable” inference

– Bar set deliberately high

AKN v ALC – take away # 2

• NO BREACH where Tribunal

– Misunderstands a point of submission, fact or law

– Fails to mention a point made by one party in Award

– Displays poor/incomplete reasoning

• BREACH where Tribunal

– Mistaken believes argument withdrawn & therefore

does not consider it

– Fails to allow party opportunity to present its case

Construction review: Performance Bonds

CKR v Asplenium – 2015 Court of Appeal

• On Demand Performance Bond (PB) call

• Issue: Can parties contractually exclude

unconscionability as a ground to restrain PB

call?

• Impact: Limit restrain to only fraud

Performance Bonds

CKR v Asplemium – Exclusion Clause

“… the Contractor agrees that except in the

case of fraud, the Contractor shall not …

restrain .. any [PB] call or demand … on

any ground including … unconscionability”

[emphasis added]

CKR v Asplenium – take away

• Likely to provoke a significant shift in drafting of on-

demand PBs

– To exclude unconscionability

• Fraud only remaining basis

• More difficult for contactors to resist on demand PB

calls

Welcome to the

Annual Construction & Engineering Law

Conference 2015

SOP Update 2015

Toh Chen Han

Security of Payment (SOP)

"… [The SOP Act] creates a statutory right to

progress payments, [but] does not compel a

claimant to [invoke it] … The option … is the

claimant’s … [A] contractual right … upon

service of a [Payment Claim], is elevated to a

statutory right under the Act".

(Kannan Ramesh JC, Libra Building v Emergent Engineering

[2015] SGHC 279 at [76])

Typical SOP Adjudication Steps

1 2 3 4 5 6 7

Pymt

Claim

Pymt

Response

7 day

Dispute

Settlement

Period

Notice

of

Intent

to Adj.

Adj.

App.

Adj.

Resp.

Adj. Det.

(for Const. Cont. + disputed Pymt Resp.)

Typical SOP Adjudication Steps

1 5 6

Pymt Claim Adj. App. Adj. Resp.

• UES Holdings

• LH Aluminium

• Libra Building

• Progressive Builders

• Eng Seng

• UES Holdings

• Newcon

• Libra Building

Citiwall Safety Glass

(for Const. Cont. + disputed Pymt Resp.)

Payment Claims (PC)

s 10 / r 5(1):

Claimant may serve one Payment Claim in respect

of a progress payment:

– at time specified in contract; or

– (if contract silent) by last day of each month

Payment Claims – Late Claims

UES Holdings v Grouteam – Quentin Loh J

• s. 10 timelines - "a mandatory condition” – breach

renders determination liable to be set aside

• SOP timelines - "a key feature of the scheme, [and]

must be complied with”

• Courts will insist on "strict adherence to the

timelines“ – because option of Court or Arbitral

proceedings remains

Payment Claims – “Repeat Claims”

LH Aluminium v Newcon - Lee Seiu Kin J

• "Repeat Claim”: where a Pymt Claim includes amounts

which already the subject of earlier Pymt Claim

• s 10: claimant may serve one Pymnt Claim in respect

of a progress payment

• Repeat claims allowed, unless earlier claim adjudicated

and dismissed on merits

(See: Doo Ree v Taisei; Terence Lee v Chua Sey Eng; JFC

Builders v Lioncity; Admin Const. v Vivaldi)

Payment Claims – Multiple Payment Claims

Libra Building v Emergent Engineering – Kannan Ramesh JC

• “claim period” - the period in which the claimant is permitted

to serve a payment claim

– s 10 / r 5(1): one Pymt Claim … at time specified by

contract or (if contract silent) by last day of each month

• "reference period" - the period of work covered by a payment

claim

• One Pymt Claim per claim period

• To avoid risk of Claimant being ambushed by multiple claims

Payment Claims – served by email

Progressive Builders v Long Rise – Lee Seiu Kin J

• S 37(1): "Where this Act… requires a document to be served

…, the document may be served on the person —

a) by delivering … personally;

b) by leaving … at … usual place of business …; or

c) by … post or facsimile …".

• Language of s. 37(1) permissive

• Email widely used in construction industry

Typical SOP Adjudication Steps

1 5 6

Pymt Claim Adj. App. Adj. Resp.

• UES Holdings

• LH Aluminium

• Libra Building

• Progressive Builders

• Eng Seng

• UES Holdings

• Newcon

• Libra Building

Citiwall Safety Glass

(for Const. Cont. + disputed Pymt Resp.)

Adjudication Applications – Late Applications

• UES Holdings v Grouteam – Quentin Loh J

• Eng Seng Precast v SLF Construction – Lee Seiu Kin J

– late application undermines the adjudicator's

jurisdiction

– determination will be set aside

– whether or not prejudice caused by the late

application

Typical SOP adjudication steps

1 2 3 4 5 6 7

Pymt

Claim

Pymt

Response

7 day

Dispute

Settlement

Period

Notice

of

Intent

to Adj.

Adj.

App.

Adj.

Resp.

Adj. Det.

(for Const. Cont. + disputed Pymt Resp.)

Adjudication Applications – premature

Newcon Builders v Sino New Steel – Quentin Loh J

• Entitlement to make an adjudication application" under s 12(2)

only arises if:

– no payment response, or

– unresolved dispute over a payment response

by the end of the dispute settlement period

• An adjudication application invalid if made before the

entitlement has arisen

• Whether or not there was prejudice is irrelevant

Adj. App. – accompanying documents

• Libra Building v Emergent Engineering – Kannan Ramesh

JC

– r 7(2)(e): Adj. App to be accompanied by copy of relevant

Pymt Claim

• UES Holdings v Grouteam – Quentin Loh J

– r 7(2)(d) – extracts relevant contractual provisions

• Courts rejected overly formalistic / pedantic / unduly technical

complaints where no prejudice caused by alleged breaches

Typical SOP adjudication steps

1 5 6

Pymt Claim Adj. App. Adj. Resp.

• UES Holdings

• LH Aluminium

• Libra Building

• Progressive Builders

• Eng Seng

• UES Holdings

• Newcon

• Libra Building

Citiwall Safety Glass

(for Const. Cont. + disputed Pymt Resp.)

Adjudication response - late

Citiwall Safety Glass v Mansource Interior (CA)

• Adj. Resp. lodged with SMC at 4.32pm on due date

• SMC's Adjudication Procedure Rules (Rule 2.2) :

– SMC’s “opening hours” are from 9.00am to 4.30pm

on weekdays, and 9am – 12 noon on eves of Xmas,

NY and CNY

– SMC reserves right to reject documents submitted after

hours

– But if accepted, documents are treated as being lodged

the next working day

Adjudication response - late

Citiwall Safety Glass v Mansource Interior

• Tan Siong Thye JC (HC):

– Adjudicator wrong to reject Adj. Resp.

– SMC has no role determining whether Adj.

Resp. late - role only to accept documents filed

and note time and date of filing

– Adj. Resp. within time if lodged by 11.59 pm on

due date

Adjudication response - late

Citiwall Safety Glass v Mansource Interior (CA)

• SMC has the power - to make rules restricting the

lodgement of documents to it's official closing time of

4.30pm see s 28(4)(e) & s 37

• SMC entitled to prescribe its business hours – SMC's

rule 2.2 was not ultra vires

• Irrelevant that the Adj. App. was only 2 minutes late

Key take away points

• Breaches of SOP timelines are not tolerated, even if no

prejudice is caused – so take them very seriously!

• Email service of documents is permitted under SOP Act

• Lodge docs with SMC within its “opening hours”

– 4.30pm on weekdays

– 12pm on eves of Xmas / NY / CNY

• Payment Claims (PC):

– Repeat claims allowed

– Maximum of one PC, per claim period

How to Avoid a Dispute

Jon Howes

You cannot avoid conflicts but you can…

1. Run your projects so conflicts are less likely

2. Move through conflicts quickly when they happen

The talk you thought I was going to give?

Some forms of dispute resolution work well

Adjudication / DRB

On-line Dispute Resolution

Interests

What the Academics say…

Rights

Power

Interests

Rights

Power

Ineffective Dispute

Resolution System

Interests

Rights

Power

Ineffective Dispute

Resolution System

E

How does this work in practice

Interest based

negotiation

Communication

Low

Cost/Efficient

Rights based

resolution

Loop

Back

Who When

Uninvolved

Effective

Senior

Often

Early

Tiered dispute resolution (courtesy LTA)

Engineer’s

Decision

Amicable

Settlement

Mediation

Arbitration

Rights-Based

One-Sided

-

Who and How?

-

No Loop

Back

3 months

6 months

2 months

around a year

Power based solution

An effective model?

Dispute Arises

Negotiation

DB / Adjudication

Arbitration

Mediation

Blind Bidding