Chinese contractors sue Vietnam hydropower project owner

HANOI - A consortium of Chinese contractors has filed a case against the Vietnamese owner of the Upper Kon Tum hydroelectric project for termination of the contract, according to a report which the Government has passed to the National Assembly.

The report deals with two hydropower projects – Song Bung 4 and Upper Kon Tum. Vinh Son-Song Hinh Hydropower JSC (VSH) is the owner of the Upper Kon Tum hydropower project on the Dak Nghe River, the upstream tributary of the Sesan River.

The consortium comprising East China Investigation and Design Institute under China Hydropower Engineering Group and China Railway 18th Bureau Group has sent a petition against VSH to the Vietnam International Arbitration Center (VIAC).

This move comes after VSH cancelled the contract with the Chinese contractors and reclaimed the entire contract execution and advance payment guarantees.

The termination of the contract resulted from “serious delays” in the construction of the plant and power lines, as well as from the “unfriendly behavior” of the contractors, says the report.

VIAC set May 23, 2016 as the date for verbal argument, with a ruling by the arbitration council expected to come out by the end of this year.

Due to the complexity of the case, the completion of necessary papers, the gathering of evidence and the addition of legal documents must be sufficiently and carefully done. The verbal argument was rescheduled to April 20, 2017, and the ruling is expected in the middle of next year.

The Government says in the report that after the Chinese contractors filed the case, VSH filed a self-protection statement and a proposal to VIAC seeking arbitration in the consortium’s breach of contract terms.

VSH signed a legal consulting service contract with local and international law firms, namely YKVN Singapore with a branch in Vietnam and EP Legal Vietnam. After a review of the records, the two legal consultants proposed VHS invite Singapore’s Drew & Napier LLC to join the case.

VHS is now working with counsels over evidence and documents to prepare a testimony.

The Government said this case is complex with many potential risks. Since the ruling of the arbitration council is slated for mid-2017, the progress and efficiency of this project will be certainly affected.

The Government report notes that VHS has reassessed the remaining workload for the power transmission lines and hydropower plant, which is actually the job of the Chinese contractors. Currently, new contractors have taken over the job of constructing the transmission lines and plant.

The Government says the total investment cost of this project is VND7.4 trillion.