Comparative Perspectives on Vietnamese Construction Law 2025 | Part IV of IV: Multi-tier Dispute Resolution Clauses

April 20, 2026

This article is Part IV of IV of a four-part series summarizing the panel discussion on “Comparative Perspectives on Construction Disputes: International Practice and Vietnamese Law,” organized by the Swiss Arbitration Association (ASA) as a side-event at HICAC 2026 on 8 April 2026 in Ho Chi Minh City. The four-part series covers: Part I: Delay and Liquidated Damages; Part II: Non-contractual Liability in Construction; Part III: Force Majeure and Fundamental Change of Circumstances; Part IV: Multi-tier Dispute Resolution Clauses (this article).

On 8 April 2026, the Swiss Arbitration Association (ASA) organized a side-event panel discussion at HICAC 2026 held in Ho Chi Minh City, entitled “Comparative Perspectives on Construction Disputes: International Practice and Vietnamese Law.” The panel examined four topics arising under the newly enacted Construction Law 2025 of Vietnam (effective 1 July 2026): (i) delay and liquidated damages (“LD”); (ii) non-contractual liability in construction; (iii) force majeure and fundamental change of circumstances; and (iv) multi-tier dispute resolution clauses. Panelists were Mr. Mino Han (Peter & Kim, Korea/Singapore), Ms. Lesley Tan (WongPartnership, Singapore), and Dr. Alain Grieder (Schellenberg Wittmer, Switzerland/Singapore), with the discussion moderated by Mr. Thang Pham (YKVN, Vietnam/Singapore).

The panel was organized around the concept of “legal transplants” – the phenomenon whereby legal concepts originating in one system are borrowed and integrated into another, where they interact with local legal culture and evolve over time into something that may differ significantly from the original. This concept is directly relevant to the discussion on the new Vietnamese Construction Law 2025. The central question is not merely whether these concepts exist, but how they will function in practice when interpreted by Vietnamese courts and arbitral tribunals, and how their function compares to what practitioners familiar with FIDIC and international standard forms might expect.

This article, Part IV of the series, summarizes the substantive discussion on Multi-tier Dispute Resolution Clauses, focusing on the Vietnamese law position, the open interpretive questions it raises, and comparative perspectives from Switzerland, Korea, and Singapore.

1. Vietnamese Law

Multi-tier dispute resolution clauses, requiring parties to progress through negotiation, mediation, or a dispute board step before commencing arbitration, are increasingly present in Vietnamese construction contracts, driven in part by the use of FIDIC standard forms. Pre-2025 case law showed a consistent judicial approach: Vietnamese courts have generally treated pre-arbitration steps as admissibility conditions, not jurisdictional prerequisites. The practical consequence is that failure to complete a pre-arbitration step does not automatically render an arbitral award subject to set-aside. In DSA Engineering v. Agribank, (Decision No. 04/2022/QD-PQTT dated 21 March 2022 of the Hanoi People’s Court) arbitration proceeded and the award was upheld despite the parties having bypassed the contractually required mediation step. In Shiseido v. Thuy Loc, (Decision No. 1065/2013/QDKDTM-ST dated 6 September 2013 of the Ho Chi Minh City People’s Court) the absence of prior negotiation was held not to be fatal to the arbitration. However, in Hoang Long v. Vietmindo, (Decision No. 10/2014/QD-PQTT dated 28 October 2014 of the Hanoi People’s Court) the court set aside an award where arbitration had been commenced while the parties were still actively engaged in the prior negotiation step.

The Construction Law 2025, Article 86.5(a), takes a significant step by expressly recognizing “dispute resolution mechanisms in accordance with international practice” (“các mô hình xử lý tranh chấp theo thông lệ quốc tế”) as an available dispute resolution method alongside negotiation, mediation, arbitration, and court proceedings. The full text provides:

“Disputes shall be resolved through negotiation, mediation, the application of dispute resolution mechanisms in accordance with international practice, arbitration, or court proceedings.”

This language is widely understood to encompass mechanisms such as Dispute Adjudication Boards (DAB) and Dispute Avoidance and Adjudication Boards (DAAB) as used in FIDIC forms, as well as statutory adjudication and expert determination. Article 86.5(b) provides that for public investment and PPP projects, domestic arbitration is the primary method, and recourse to “international practice” mechanisms requires either a treaty obligation (such as an ODA loan agreement provision) or approval from the competent investment decision-maker. The Construction Law 2025 does not prescribe a mandatory sequence of dispute resolution tiers, preserving party autonomy to agree the order of the steps.

While Article 86.5 recognizes these mechanisms as legitimate dispute resolution methods, the Construction Law 2025 is silent on the mechanism by which a DAB or DAAB decision not complied with by one party can be enforced. Whether Vietnamese courts would treat a binding DAAB decision as directly enforceable or would require an arbitral award as the prerequisite for enforcement remains open.

2. Singapore Law

The enforceability of DAB decisions under the FIDIC Red Book 1999 was directly addressed by the Singapore Court of Appeal in the PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation line of cases. The central question was whether a DAB decision ordering payment could be enforced through a separate arbitration, before the underlying merits of the dispute had been finally resolved. By majority, the Singapore Court of Appeal held that the obligation to comply with a binding DAB decision is immediate and unconditional once the decision is issued, even while the substance of the dispute is being contested in a separate arbitration. The majority reasoning reflects the core design principle of FIDIC dispute boards: “pay now, argue later.” The minority, led by then-Chief Justice Chan Sek Keong, disagreed, holding that the 1999 Red Book did not confer a right to bring a separate arbitration solely to enforce compliance with a binding but non-final DAB decision.

The Persero litigation carries a direct practical lesson: parties using the 1999 FIDIC Red Book should incorporate the FIDIC 2013 Guidance Memorandum into their contract, which was issued specifically to address the procedural gap that the litigation exposed. Parties using the FIDIC 2017 editions, which replaced the DAB with a DAAB and introduced clearer provisions on the immediate obligation to comply with binding decisions, are in a stronger contractual position.

Beyond the FIDIC context, Singapore has built a broader institutional framework for multi-tier dispute resolution in construction. The Integrated Appropriate Dispute Resolution Framework (INTEGRAF), developed by the Singapore International Mediation Centre and the Singapore Mediation Centre, embeds negotiation and mediation into the contract process before arbitration. The Singapore Infrastructure Dispute-Management Protocol (SIDP), launched in 2018 by the Ministry of Law, requires the appointment of a neutral dispute board from the inception of a large infrastructure project, not after disputes have arisen, so that the board is familiar with the project before any dispute develops. The PSSCOC Option Module E on Collaborative Contracting introduces an Early Notification Register: contractors are required to log potential risk events and emerging issues consistently throughout the project, enabling the superintending officer to engage with the contractor before matters escalate to formal disputes. The common thread in these initiatives is the recognition that multi-tier dispute resolution mechanisms only achieve their intended purpose, which is to avoid or resolve disputes early and at lower cost, if they are built into the project governance structure from the outset.

3. Swiss Law

Multi-tier dispute resolution clauses are valid and recognized under Swiss law. Their enforceability, however, depends on a threshold question of contract interpretation: whether the pre-arbitral steps were intended by the parties to be mandatory conditions that must be completed before arbitration can commence, or merely optional procedures available at the parties’ election. This is determined by how the clause is drafted. To be treated as mandatory, a clause must: specify precisely which steps are required and in what sequence; use mandatory language (“shall” or “must” rather than “may” or “are encouraged”); define the duration of each step; and make clear that each step is a precondition to the next. Permissive or ambiguous language creates a real risk that the clause will be treated as optional and therefore unenforceable as a condition to arbitration.

The Swiss Federal Supreme Court has addressed the consequences of non-compliance with a clause that is found to impose mandatory pre-arbitral steps. The Court held that dismissal of the arbitration is not the appropriate remedy, because it would deprive the claimant of access to the agreed dispute resolution mechanism entirely. The preferred approach is a stay: the tribunal assumes jurisdiction but orders the arbitration stayed and directs the parties to complete the outstanding pre-arbitral steps within a defined period. The tribunal sets a clear deadline, retains oversight of the process, and resumes the arbitration once the steps have been completed. As for the enforceability of a DAB decision in Switzerland, there is no conclusive case law on this issue, but the general position mirrors what the Persero minority believed to be the correct answer under FIDIC: a DAB decision is not directly enforceable in a Swiss court. Non-compliance with a (final and binding) DAB decision is considered a breach of contract. The complying party must submit the DAB decision in an arbitration to obtain an award on the non-compliance claim, and enforce that award through the normal channels.

4. Korean Law

The Korean approach to dispute resolution clauses is shaped by a constitutional premise: every person in Korea has a constitutional right of access to court litigation. Arbitration is treated as an exception to this right, and an arbitration agreement, to constitute a valid waiver of the constitutional right to litigate, must be clear, express, and unequivocal. Optional arbitration clauses, providing that parties “may” resolve disputes by arbitration, or may choose between arbitration and court proceedings, are therefore in principle invalid under Korean law. The arbitral clause must unambiguously express the parties’ agreement to arbitrate, not merely offer arbitration as one of several possible routes. This stands in contrast to English and Singapore law, where optional and multi-modal dispute resolution clauses are generally enforceable.

Multi-tier dispute resolution clauses present a related but distinct issue: even where the arbitration clause itself is clear and mandatory, the legal consequences in Korean law of non-compliance with a pre-arbitral step (such as mediation or a dispute board process) have not been definitively determined by the courts. The question of whether non-compliance is fatal to the arbitration, triggers a stay, or merely affects costs has not been clarified by Korean court precedent. The prudent drafting approach, given this uncertainty, is to make each pre-arbitral step explicitly a mandatory time-bound precondition to the next, if that is the intention of the parties, rather than relying on general language or implication.

5. Comparative Observations for Vietnamese Practitioners

Two observations are of direct practical relevance for Vietnamese practitioners.

First, on enforceability of DAB/DAAB decisions: the Construction Law 2025 recognizes “international practice” mechanisms as legitimate dispute resolution methods but provides no mechanism for directly enforcing a DAAB decision in Vietnamese courts absent an arbitral award. The Singapore’s Persero approach provides a contractual workaround, but it depends on whether Vietnamese courts would recognize such an arbitration as within the scope of the parties’ arbitration clause and on whether the underlying DAAB procedure is properly embedded in the contract. Until courts or the legislature address the gap directly, practitioners should include an express provision in construction contracts stating that a binding DAB/DAAB decision with which one party fails to comply gives rise to a separately referable arbitral claim, so that enforcement can be sought without waiting for the underlying dispute to be finally resolved.

Second, on drafting: the consistent lesson across all four systems is that mandatory language and precise sequencing are prerequisites for enforceability. A clause that uses “may” rather than “shall” risks being treated as optional in Switzerland, Korea, and potentially under the general admissibility analysis in Vietnam. A clause that defines the pre-arbitral steps imprecisely — without specifying timelines, the conduct required at each step, and the consequence of non-compliance — leaves enforcement to the discretion of the tribunal.

CONCLUSION

For practitioners advising on construction projects in Vietnam today, whether on contract drafting, risk allocation, or dispute strategy, the Construction Law 2025 offers a stronger and more comprehensive statutory framework than its predecessor. The new provisions on pre-determined damages, force majeure, and dispute resolution mechanisms reflect a clear legislative intention to align Vietnamese construction law more closely with international norms and practice, and that intention is to be welcomed. As this interpretive framework develops, practitioners can assist the process by drafting contracts with the precision needed to address the open questions: pre-determined damages clauses should address burden of proof and the relationship between the contractual rate and actual loss; force majeure provisions should define the qualifying events, notice obligations, and consequences clearly rather than relying on the Article 13 categories as a substitute for careful contractual drafting; and multi-tier dispute resolution clauses should use mandatory language, defined timelines, and an express DAB/DAAB compliance arbitration mechanism. The Construction Law 2025 sets a sound statutory direction for Vietnamese construction law, and careful contractual drafting will help ensure that its provisions operate effectively in practice as the body of interpretive guidance develops.

[1]            Thang Pham is a Partner and Head of YKVN Singapore Office. The views expressed in this article are the individual views of the author and the panelists, and are not attributable to YKVN or to any of the law firms represented by the panelists.

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