Application of the Dispute Avoidance and Adjudication Board (DAAB) mechanism in Vietnam is vibrant, and its vibrancy was presented by Le The Hung, Lawyer, and Vice President of SCLVN at the PADSK & SCLI International Conference 2024 in Indonesia, July 2024.
In light of the theme “Synchronizing the application of FIDIC Contracts with specific related project country’s regulation to avoid disputes,” Mr. Hung provided numerous examples of the practical application of the DAAB mechanism in Vietnam.
Firstly: the most common and most convenient practice is “not applicable” in the DAAB mechanism. Accordingly, the parties to construction contracts tend to “delete” all provisions related to the DAAB in construction contracts based on FIDIC conditions.
As the meaning and value of the DAAB is signified, the parties focus on modifying contract provisions, and according to Lawyer Hung, it began with amending FIDIC contracts to empower Engineers to act as the DAAB, and then to detail DAAB provisions in each contract implicating positive development in practical application of DAAB in Vietnam.
Through these examples, five common features were acknowledged in the application of the DAAB mechanism in Vietnam, namely:
- DAB or DAAB is not common.
- DAB or DAAB is inapplicable for privately funded projects.
- Public funded projects are more likely to adopt DAB/DAAB.
- Under certaincircumstancesMediation isadopted rather than DAB or DAAB
- Function of DAAB’s dispute avoidance is unacheived.
There are challenges involving practical application of the DAAB mechanism in Vietnam, which involves the following five issues:
- Cost
- Expert availability
- Legal framework
- Enforcement issues
- Complexity of procedures
The perspective of Cost, as an example, Hung shared the challenges realized by each party in obtaining approvals from authorities for fees associated with DAAB members. Many projects may take more than 12 months to receive in-principle approvals for the Costs payable to DAAB members.
More importantly, the fees associated with DAAB members are not considered project management Costs but are considered as legal Costs for dispute resolution. The outcome of this approach is that DAAB Costs are not budgeted in the total investment Cost.
Similarly, Vietnam has practically no legal framework for the DAAB. This reality poses challenges for the parties in determining the criteria for candidates, procedures, and regulations for the operation of the DAAB, as well as recognition and enforcement of decisions issued by the DAAB.
According to Lawyer Hung, only when these five challenges are seriously acknowledged will the application of the DAAB mechanism truly become a common trend, preventing or resolving disputes as they emerge, thereby minimizing costs for all parties for the common goal of the project.
Below are some images from the conference and the SCLVN members in attendance.
