Energy project disputes on the rise

Thursday, May 11, 2023 17:40

Wind turbines at a renewable energy project in the southern province of Ninh Thuan. — VGP Photo

The number of disputes related to energy projects in Viet Nam has been on the rise in recent years, with many attributed to the Vietnamese government's environmental commitments and agreements at the 26th United Nations Climate Change Conference (COP26).

The issues were discussed at a conference on dispute resolution in energy projects held in HCM City on Wednesday.

According to the Vietnam International Arbitration Center (VIAC), disputes arise in both the construction and operation phases, with an increasingly complex nature, growing in value and taking longer to settle. Such disputes are capable of inflicting significant financial damage on all parties involved.

In the cases of major projects, disputes not only had a large impact on the local community but also the entire energy sector as a whole, as well as the country's energy stability and sustainability.

Industry experts said as the majority of disputes involved foreign investors and stakeholders, it's high time the country looked at international procedures and standards as guidelines in order to provide all parties with a dispute resolution method.

Among these, commercial arbitration in accordance with international practices should be considered as an approach to dispute resolution for its compliance with international standards, speed and efficiency. There have been many examples of this method being employed and will likely continue to work in resolving complex disputes including those in the energy sector.

According to Chau Viet Bac, deputy secretary-general of VIAC, between 2013 and 2022, the centre has been involved in dispute resolution activities for numerous energy projects with a total dispute value exceeding US$300 million. The average time required to settle those was over seven months.

Vu Thi Chau Quynh, deputy head of the legal affairs department under the Ministry of Planning and Investment (MPI), said currently disputes involving foreign investors or business organisations can be resolved under a guideline set by the country's Law on Investment.

The law allows disputes to be resolved by one of the following institutes: Vietnamese courts, Vietnamese arbitration bodies, international arbitration bodies, as well as ad-hoc arbitration bodies set up by the disputing parties.

However, disputes among foreign investors and local authorities or state agencies regarding investment activities within Viet Nam's territory must be resolved through either Vietnamese courts or Vietnamese arbitration bodies with the exceptions of contractual agreements and international treaties of which Viet Nam is a signatory but received different provisions.

Quynh said that given the nature of energy projects which often require large capital investment, prolonged implementation process and involve multiple stakeholders, the amount of risk faced by investors is substantially higher.

In addition, communication and connectivity in current legal documents have been lacking, often resulting in unnecessary delays in the implementation of administrative procedures. On the other hand, it is also the investors' responsibility to make sure they fully understand Viet Nam's investment regulations and preferences.

She advised investors, while building investment projects, to refer to Viet Nam's national and regional development plans, sectoral plans and in the case of energy projects, the Power Plan VIII. — VNS

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