Resolve construction contract disputes by commercial arbitration

Resolving construction contract disputes by commercial arbitration is the method chosen by many construction businesses. This method brings many advantages such as high security, quick resolution time and reasonable costs. To better understand how to resolve disputes through Commercial Arbitration, in the following article, Long Phan will analyze the legal regulations and specific implementation procedures.

Types of construction contract disputes

In the construction sector, contract disputes are a common problem and can affect the progress and quality of projects. Below are common types of construction contract disputes:

• Dispute due to violation of payment schedule according to contract.
• Dispute due to failure to ensure construction progress and project quality.
• Dispute over penalties for violations in construction contracts.
• The dispute is due to one party unilaterally terminating the contract ahead of schedule.
• Disputes over compensation for damages in construction contracts.
• Disputes over construction work warranties.

Conditions for resolving construction contract disputes by commercial arbitration

Conditions for resolving construction contract disputes by commercial arbitration according to Article 5 of the Law on Commercial Arbitration 2010 are as follows:

• Disputes will be resolved through Arbitration if the parties have an arbitration agreement, which can be made before or after the dispute arises.
• If a party to an arbitration agreement who is an individual dies or becomes incapacitated, the agreement remains valid for his/her heirs or legal representatives, unless otherwise agreed.
• If a party to an arbitration agreement that is an organization ceases operations, goes bankrupt, dissolves, or changes its organizational form, the agreement continues to be in effect with respect to the human rights organization and its obligations, unless there is another agreement.

Current forms of commercial arbitration

Dispute resolution by commercial arbitration currently has two basic forms: ad hoc arbitration and permanent arbitration.

Referee the case

According to Clause 7, Article 3 of the Law on Commercial Arbitration 2010, ad hoc arbitration is a form of arbitration established by agreement of the parties to resolve a specific commercial dispute, and will automatically terminate when the case is resolved. is resolved.

Characteristics of Ad Hoc Arbitration:

• Temporary establishment: Only formed when there is a conflict and self-dissolve after the dispute is resolved, existing during the time of handling the specific issue.
• No fixed headquarters: There is no management organization or permanent headquarters, as well as a list of individual Arbitrators. The parties may select or appoint Arbitrators from the available list.
• Rules of procedure: There are no fixed rules of procedure; The parties need to agree on specific rules when establishing arbitration. To save time, they can apply rules from reputable Arbitration Centers.
• Practical application: Although regulated in the Law on Commercial Arbitration 2010, this form has not developed strongly due to the requirement to carry out the process yourself without support from the Secretariat, requiring the parties to have experience in arbitration proceedings.

Permanent referee

According to Clause 6, Article 3 of the Law on Commercial Arbitration 2010, permanent arbitration (or statute arbitration) is a form of arbitration that is strictly organized, with a stable operating apparatus and a fixed headquarters. Arbitration centers often have their own list of arbitrators and their own charter and procedural rules.

Features of Arbitration:

• Independent organizations: Usually operate in the form of Arbitration Centers, which are non-governmental organizations not affiliated with state agencies.
• Legal status: Arbitration Centers have legal status, own their own seal and accounts, operate independently and must meet the conditions according to Article 74 of the Civil Code 2015.
• Simple management structure: Each Center has an Executive Board and a Secretariat. The Executive Board includes a Chairman, Vice Chairman and possibly a Secretary General. The list of arbitrators is managed by the Center.
• Field of operation and procedural rules: The Center has the right to determine the field of operation and have its own procedural rules. Expanding or narrowing the field of operations requires approval from state agencies.
• Adjudication: Disputes are resolved by arbitrators from the Center’s list, which is different from the ad hoc arbitration process.

Procedures for resolving construction contract disputes by commercial arbitration

Prepared documents

According to the provisions of Article 30 of the Law on Commercial Arbitration 2010, a lawsuit file to resolve a construction contract dispute at arbitration includes:

• Petition;
• Arbitration Agreement;
• Documents and evidence proving the request;
• Documents proving identity or Business registration certificate;
• Other documents related to the dispute.

Implementation process

The process of resolving construction contract disputes by commercial arbitration includes the following steps:

Step 1: Prepare documents and submit a lawsuit
The parties need to prepare complete documents and submit a lawsuit to the Arbitration Center.

Step 2: Notice of petition
If there is no other agreement, within 10 days after receiving the petition and related documents, the arbitration center must send the defendant a copy of the petition and attached documents (according to Article 32 of the Law on Commercial Arbitration 2010).

Step 3: The defendant sends a self-defense statement and counterclaim (if any)

• The defendant must submit a self-defense statement to the Center within 30 days from the date of receipt of the petition. This period may be extended upon request.
• In the case of ad hoc arbitration, the defendant needs to send a self-defense statement and information about the Arbitrator he chooses to the plaintiff and the Arbitrator.
• The defendant also has the right to re-sue and must submit a re-claim to the Arbitration Center.

Step 4: Establish an Arbitration Council

• The parties have the right to agree to suspend dispute resolution. If an agreement cannot be reached, an Arbitration Council will be established to handle the dispute.
• The parties can choose to establish a Council at the arbitration center or for ad hoc arbitration, according to the provisions of Articles 40 and 41 of the Law on Commercial Arbitration 2010.

Step 5: Review the validity of the arbitration agreement

• Before entering into the content of the dispute, the Arbitration Council must check the validity of the arbitration agreement and consider its authority. If within its authority, the Council will proceed with the resolution.
• Otherwise, they will suspend the settlement and notify the parties.

Step 6: Research the case file
The arbitration council will review all documents related to the dispute.

Step 7: Open a dispute resolution meeting

• The meeting is conducted privately, unless the parties agree otherwise. Parties can attend directly or authorize representatives.
• Disputing parties have the right to invite witnesses and protect their legal rights. The order and procedures of the meeting will be prescribed by the Center’s procedural rules.

Step 8: Issuance of arbitration award

• The arbitration council makes a decision according to the principle of majority voting. If consensus cannot be reached, the decision will be according to the opinion of the Chairman of the Council.
• The parties have the right to request amendments or supplements to the award within 30 days.

Consulting services for resolving construction contract disputes by Arbitration

With a team of consultants with many years of experience, Long Phan provides in-depth consulting services. We have successfully supported many construction businesses to resolve disputes through arbitration mechanisms. Our services include:

• Analyze contract terms to determine the possibility of disputes arising and how to resolve them.
• Develop optimal strategies for dispute resolution.
• Assist in drafting petitions and related documents.
• Legal representation for clients during arbitration proceedings.
• Support the parties in negotiations before conducting formal arbitration.
• Assess actual damages caused by the dispute, provide reports to support the claim.
• Consulting on the process of implementing arbitration awards and solving problems that arise during the implementation process.
• Provide regular legal advice throughout the contract implementation process to prevent disputes.

Resolving construction contract disputes by arbitration is an effective and necessary method in the construction industry today. This method not only helps parties prevent conflicts but also ensures the dispute resolution process is quick and cost-effective. At Long Phan, we support customers in the process of resolving construction contract disputes effectively. For detailed advice on related legal procedures, please contact the hotline 0906735386.