Nhon railway – Hanoi station is slow to hand over the site, the investor is sued by the contractor

A domestic economic dispute settlement organization has just received a contractor’s application, requesting the investor of the Nhon railway project – Hanoi station to settle compensation for damage caused by delay in handing over the ground, which prolongs the time taken for the project. construction.

This is a rather special case that resolves disputes between contractors and investors through a 3rd party. According to experts, this process is often lengthy and costly.

The contractor brings the dispute to a 3rd party

According to PV Tien Phong’s research, currently the investor of the Nhon – Hanoi station urban railway project, the Hanoi Urban Railway Management Board (MRB), is being complained by two foreign contractors for compensation. usually, and bring the dispute to a third party to arbitrate according to the contract (neutral organization of experts in conciliation, arbitration of economic disputes).

The dispute settlement panel was brought to a domestic conciliation organization by the contractor and the investor, and has been accepted. These are the first steps of dispute settlement, after this step, if the parties still do not agree, the content of the dispute can be submitted to international arbitration.

The move of foreign contractors is expected, after many times the contractor has issued a written request for compensation, stopped construction to put pressure, especially when this project is behind schedule for many years with many stuck.

The contractor for the construction of the tunnel and the underground station of Nhon – Hanoi railway station is stopping construction, bringing the issue of compensation to a third party to solve. Photo of the construction site of Van Mieu station. Photo: Pham Thanh

In the version update Recently, the progress of the urban railway project of Nhon – Hanoi station section, MRB also informed that it is taking steps to handle disputes through a third party. For the elevated section, the contractor for railway package 1 (CP06) has repeatedly requested the investor to set up a dispute settlement panel according to the provisions of the contract. MRB has also proposed to the Hanoi People’s Committee to approve the policy of additional costs related to setting up a dispute settlement committee.

With the package of tunnels and underground stations, the consortium of contractors Hyundai and Ghella also suspended construction from August 2021 until now due to a lack of construction space (due to the slow handover by the investor). At the same time, the contractor sends a notice of complaint to the investor to the Dispute Settlement Board about the delay in handing over the premises and asks the investor to negotiate and sign a contract appendix, including a request to temporarily pay 70 million VND. USD (more than 1.6 trillion VND) in the total cost of complaints from the contractor until the Dispute Settlement Board makes a decision.

The contractor also requested the investor to extend the contract term until the end of August 2026 (instead of February 2022). Previously, this contractor asked the investor to compensate about 114 million USD, but it has not been met.

Currently, the 3rd party dispute settlement board has made and made a decision for the complaint of the contractor, the investor is working with consultants and lawyers to review and implement the next steps under the contract.

However, at the beginning of May, the contractor for the tunnel and underground station package continued to have a second complaint filed with the Dispute Settlement Board related to the investor’s delay in handing over the site, causing costs due to the delay in time. construction.

On the contrary, MRB also started to prepare a complaint file to send to the Dispute Settlement Board about the contractor’s breach of contract, which will suspend construction from August 2021 and notify the termination of the contract, causing damage to the owner’s interests. private.

Costly

Talking to PV Tien Phong, a lawyer who has participated in many international economic dispute settlement cases said that public investment projects, especially ODA-funded projects in the past time, have had many problems that have existed forever. could not be handled, thereby arising disputes with contractors (such as delay in site, delay in capital, poor coordination, etc.). When being complained to handle international economic disputes, it will take a lot of time and costs.

With the case of the Nhon – Hanoi railway project, this lawyer said that the quick or long handling of the case depends on whether the investor is professional in dispute resolution and how he chooses a lawyer. Currently, the new case is stopped in the country, if it goes to international arbitration abroad, the cost is much more expensive.

However, when there is an international dispute, according to the agreement, the handling process does not affect the project implementation, but the dispute settlement is carried out in parallel with the construction.

However, the Vietnamese side must have a competent and capable decision maker to avoid going up and down, going back and forth across many levels, leading to more protracted disputes. Dispute handling steps usually go through 4 steps, which are negotiation between the investor and contractor, conciliator, conciliation panel, then arbitration. However, the dispute resolution steps are not necessarily according to those steps but can be according to the agreement and contract.

Meanwhile, an expert in the field of international contractor consulting said that the Nhon – Hanoi station project that is facing is choosing an international contract model (the FIDIC contract form) that is not suitable for the type of project that has just been completed. Go above and go underground.

When a contractor’s complaint arises, the investor takes a long time to submit it to the competent authority, leading to the contractor’s complaints not being resolved in a timely manner, so the contractor takes steps to file a complaint to handle the dispute. challenge.

As for problems in the construction process, especially in terms of ground, this expert said that projects in Vietnam often find the earliest way to start construction instead of waiting for a clean ground to start. This leads to the fact that when the project is immediately delayed, the contractor will have a dispute and claim compensation.