Review of Construction contract based on FIDIC Red Book 1999 Templates

CNC assisted Kinden Vietnam in the signing of a construction contract based on FIDIC Redbook 1999 Contract Form.

May 2021, CNC is honored to be chosen by Kinden Vietnam Ltd. Co. to review the construction contract, which used FIDIC Red Book Contract Form as the basis, of a large information technology project in Nghe An Province.

In recent years, FIDIC Redbook 1999 Contract is one of the usual go-tos for customers in Vietnam.

However, for those Contractors who are used to working with Japan-based partners such as Kinden Vietnam, FIDIC Red Book 1999 Contract posed an enormous challenge.

This particular phenomenon could be explained through the following reasons:

Firstly, Japanese-based Contractors and Employers (funders, owners, or managers) have always remained loyal to the contract form which had been proven to be effective in previous transactions and almost no changes could be observed in their usage of the contract form. Therefore, FIDIC Contract Form usage was limited.

Secondly, Japanese–based Contractors and Employers are dedicated, honest, and consistently diligent, so they prefer simple and straightforward construction contracts. Therefore, Construction Contract published by FIDIC in which articles and clauses contain a considerable amount of words are not favored.

Finally, with their traditional cost-effective and good faith approach to dispute settlements, Japanese–based Contractors and Employers always seek the most optimal solution which would benefit the longevity of their business and its diplomatic relationship with their partners.

Consequently, FIDIC Contract Forms which usually contains the tri-factor Contract management systems (managed by the Engineer/Project Management Board) and dispute resolutions through the Dispute Adjudication Board or Arbitration aren’t the most optimal choice for many Japanese businesses.

Why Japanese businesses rarely use FIDIC Contract

The Open-Minded Mindset

In order to adapt to the ever-changing market, especially under the influence of the COVID-19 pandemic currently occurring worldwide, which led to a decrease in investment from Japan, Kinden Vietnam always maintains their open-minded mindset and welcomes changes and new elements such as contracts based on never before seen forms, even if the said changes come at the cost of facing certain challenges.

On that account, CNC is chosen to assist Kinden Garden in their aim to gain a concrete understanding of FIDIC 1999 Contract Forms and directly learning through a real contract with CNC’s input would provide Kinden Vietnam’s personnel with the best opportunity to do so.

With extensive experience, CNC has proven Construction Contracts prepared by following FIDIC’s recommendations would have tremendous advantages, to illustrate:

The Coherent Structure of FIDIC 1999 Contract Forms

The allocation of risk principle in each of the FIDIC 1999 Contract Editions

Webinar No 2: Proper Forms of FIDIC 1999 Contract

Organization and management of contract matching with the progression of the Project
Setting a reasonable timeframe for each event in the FIDIC 1999 Contract
Maintaining the Condition of General Application and Adjusting the Condition of a Particular Application of FIDIC 1999 Condition
Logical process of payment, appeal and dispute settlement

FIDIC 1999 Contract Merits

Naturally, the process of learning and applying the provisions within Construction Contract based on FIDIC Contract Form require time and practical experience. However, CNC still holds the belief that, with the existing foundation, Kinden Vietnam would find an efficient solution to contract management.

This is the basis for the continuation of CNC and Kinden Vietnam’s partnership for future projects

Additional Information:

Kinden Vietnam has operated in Vietnam since 1997, with their main office located in Hanoi and many satellite offices and factories in Hung Yen, Hai Phong, Binh Duong, Bien Hoa, and Ho Chi Minh City.

Over the past few years, Kinden Vietnam has started and completed various important projects, such as Waterina Suites, Binh Tan Aeon Mall, Toto, Konishi Biotechnology, Hitachi Cable, Kyocera Document Technology, and MEKTEC Manufacturing.

Customer Appreciation:

For more Information, please contract:

CNC Counsel

Address: 28 Mai Chi Tho, An Phu Ward, Thu Duc City, Ho Chi Minh City, Vietnam

Phone Number: (84) 28 6276 9900

Hotline: (84) 916-545-618

Email: contact@cnccounsel.com

Website: cnccounsel.com

Administered by:

Mr. Le The Hung| Managing Partner

Phone Number: (84) 916 545 618

Email: hung.le@cnccounsel.com

Mrs. Nguyen Thi Kim Ngan| Partner

Phone Number: (84) 919 639 093

Email: ngan.nguyen@cnccounsel.com

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Disclaimer:

This article is prepared or used for the purpose of introducing or updating clients on information about matters and/or the developments of legal perspective in Vietnam. The information contained within this article does NOT constitute advice of any kind and could be subjected to changes without prior notice.