Disputes over electrical and mechanical construction contracts are brought before arbitration.

I. Case Summary

In 2016, Design Consulting Company H (the Client) and Engineering Company NX (the Contractor) signed contract number 001/2016, according to which the Contractor would perform the following tasks:

• 1. Engineering Design
• 2. Design and Construction Drawings
• 3. Author Supervision

The contract value is 3 billion. Company NX has completed the work and delivered the documents to Company H as follows:

• 04 sets of technical construction design drawings (REV.02).
• The Rev.3 technical design drawings consist of 6 sets.
• Construction design drawings (4 sets); A4 explanatory notes (3 sets); Technical instructions (3 sets); Maintenance procedures (3 sets); CDs (2); Electrical design drawings (replacement for previously issued Rev.3 drawings) (6 sets x 11 sheets); HVAC design drawings (6 sets x 11 sheets); Water supply and drainage design drawings (6 sets x 41 sheets); Fire fighting design drawings (6 sets x 19 sheets).
• The technical construction design drawings consist of 7 sets; the design specifications consist of 7 sets; the technical guidelines consist of 7 sets; and the maintenance procedures consist of 7 sets.

Company H has not paid 1.5 billion VND to Company NX. In 2019, Company NX sent a payment request to Company H. Company NX sent notification letters numbered 01 to 10 requesting payment of the above amount and issued invoices for 1.5 billion VND to Company H. However, Company H did not pay. In March 2021, Company H sent a letter to Company NX requesting confirmation for auditing purposes that Company H owes Company NX 1.5 billion VND.

Dispute resolution through arbitration is becoming increasingly popular worldwide.

The contract stipulated that disputes would be resolved through commercial arbitration. Since they were unable to recover their money, NX Company requested advice from Inter Justice lawyers on how to protect their rights.

II. Legal provisions related to the dispute

• The Civil Code stipulates that the obligation to pay must be fulfilled fully, on time, at the agreed-upon location, and in the agreed-upon manner.
• Commercial law stipulates that: In the event that a party breaches a contract by delaying payment for goods or services and other reasonable expenses, the aggrieved party has the right to demand interest on the overdue amount at the average market interest rate for overdue debts at the time of payment, corresponding to the period of delay, unless otherwise agreed or provided for by law.

III. The arguments put forward by Company H:

In October 2022, Company H submitted a defense statement arguing that:

• The plaintiff has not completed the payment documentation and therefore is not eligible for payment.
• The plaintiff has not proven that the work was 100% completed according to the contract terms and scope of work because the project has not been inspected and put into use (to confirm the completion of the plaintiff’s author’s supervision).
• The design documents prepared by the plaintiff have not yet been approved by the investor.
• The defendant argued that it was dependent on the investor, who was involved in another lawsuit related to the failure to approve payment to the design contractor.

III. Legal options for protecting the interests of NX Company

• In 2022, following legal advice, Company NX filed a lawsuit against Company H in commercial arbitration demanding payment of the debt, and also demanding payment of interest at the 1-year deposit interest rate of Vietcombank for the number of days the payment was overdue.
• Inter Justice’s lawyers represented NX Company in the commercial arbitration case.
• Company H confirmed that it still owes Company NX 1.5 billion VND, according to a letter sent for audit purposes. Therefore, it is clear that Company H acknowledged that Company NX completed the contract, and that Company H owes NX the outstanding amount of 1.5 billion VND.
• The obligation to pay must be fulfilled in full, on time, at the agreed place and by the agreed method; the obligation to pay includes interest on the principal debt, unless otherwise agreed.

IV. The referee’s decision

• The arbitration panel accepted all of NX Company’s claims, ordering H Company to pay the outstanding amount of 1.5 billion VND, along with interest calculated at the 1-year deposit interest rate of Vietcombank for the number of days the payment was overdue.