Vietnam’s construction market is entering a new phase. With the issuance of Decree No. 210/2026/ND-CP on 15 June 2026, effective from 1 July 2026, the Government has introduced detailed guidance on construction contracts under the 2025 Construction Law.
For foreign investors, developers, lenders, EPC contractors and infrastructure sponsors, this is more than a technical legal update. Decree 210 modernizes Vietnam’s construction contract framework and moves it closer to international project practice, including concepts familiar from FIDIC-style contracting. At the same time, it imposes stricter discipline on payment, notices, contract administration, performance security, suspension, termination, dispute management and bilingual contract drafting.
The message for foreign investors is clear: Vietnam is becoming more sophisticated, but also less forgiving of poor contract management.
Why Decree 210 Matters for Foreign Investors
Vietnam continues to require major investment in industrial parks, logistics, data centres, energy infrastructure, transport, real estate, manufacturing facilities, urban development and public-private partnership projects.
In this environment, construction contract risk is often one of the largest project risks. Delayed payments, unclear variation procedures, weak documentation, vague termination rights and inconsistent bilingual contract interpretation can quickly become value-destructive.
Decree 210 is therefore important because it provides a more structured legal framework for:
- payment procedures;
- advance payments;
- performance guarantees;
- suspension and termination rights;
- foreign currency adjustment;
- dispute resolution mechanisms;
- contract administration; and
- bilingual contract interpretation.
For foreign investors, the opportunity is significant. But success will depend on whether contracts and project management systems are updated immediately.
Key Changes Foreign Investors Should Understand
- Clearer Suspension and Termination Rights
One of the most important improvements is greater clarity on suspension and termination.
Under Decree 210, contractors in public investment and PPP projects may suspend performance if the investor fails to pay the fully approved value of a payment phase within the prescribed period. The decree introduces clearer timelines and notice requirements.
Termination rights are also more clearly defined. Serious breaches, such as prolonged non-payment by the investor or arbitrary abandonment of work by the contractor, may give rise to unilateral termination rights.
This is important for foreign contractors because payment delay has historically been one of the most sensitive risks in Vietnam construction projects. A clearer statutory framework allows parties to negotiate stronger contractual protections and manage default scenarios more professionally.
- Better Compatibility with International Contract Practice
Decree 210 moves Vietnam closer to international contracting practice.
It recognizes concepts that are familiar to international contractors, developers and lenders, including structured notices, defined default periods, clearer payment milestones and dispute resolution mechanisms.
Importantly, Decree 210 also recognizes the use of dispute resolution panels in line with international practice. This is particularly relevant for large-scale infrastructure, industrial, energy and PPP projects where disputes should ideally be managed during project implementation rather than only after project failure.
For foreign investors, this creates an opportunity to use more sophisticated contract administration tools, including dispute boards, escalation procedures and project-level dispute avoidance mechanisms.
- Payment Procedures Must Be Managed More Carefully
Decree 210 maintains strict rules on payment timing and payment dossiers. Investors and contractors should not treat payment as a purely commercial issue. It is now a contract administration issue requiring precise documentation.
Foreign investors should ensure that every project has:
- a clear payment schedule;
- agreed payment dossier requirements;
- internal approval timelines;
- clear responsibility for invoice review;
- a dispute mechanism for disputed amounts; and
- documentary evidence of approval, rejection or comments.
For ODA-funded projects and projects financed by foreign commercial loans, payment timelines may follow the relevant international financing agreements. This is important because many major infrastructure and public projects in Vietnam rely on international financing structures.
- Advance Payments and Performance Guarantees Require Careful Structuring
Decree 210 refines the rules on advance payments and performance guarantees.
For EPC, EC, EP, PC and turnkey contracts, the minimum advance payment is expressly recognized, while the maximum advance payment remains subject to statutory limits. Advance payments must also be recovered through progress payments and fully recovered before payment reaches the prescribed threshold.
Performance guarantees for public investment and PPP projects are also standardized within a defined range, with higher guarantees subject to stricter approval.
Foreign investors should review whether their standard forms comply with these requirements. This is particularly important for EPC and turnkey contracts, where front-loaded procurement, imported equipment and mobilization costs can be significant.
- Foreign Currency and Price Adjustment Clauses Must Be Updated
For contracts where foreign currency payment is permitted, Decree 210 introduces more formalized mechanisms for exchange rate and price adjustment.
This is highly relevant for foreign contractors importing equipment, technology, machinery or specialized materials. Currency movement can materially affect project economics.
Foreign investors should ensure that contracts clearly address:
- permitted currency of payment;
- exchange rate source;
- timing of exchange rate determination;
- price adjustment formula;
- imported equipment cost changes;
- inflation and escalation;
- tax changes; and
- responsibility for currency risk.
A weak currency clause can undermine the economics of an otherwise attractive project.
- Bilingual Contracts Need Greater Care
The 2025 Construction Law places greater importance on contract language.
Where a contract is made in Vietnamese and a foreign language, the parties must clearly agree which language prevails. If the parties fail to do so, Vietnamese may prevail for interpretation and dispute resolution purposes.
This is a critical point for foreign investors.
Many international investors rely heavily on English-language versions of contracts, technical schedules, FIDIC-based conditions, EPC annexes and lender documents. If the Vietnamese version is not carefully aligned with the English version, the investor may face serious interpretation risk.
The practical rule is simple: do not treat the Vietnamese version as a formality.
Investor Checklist: Must-Do Items for Foreign Investors in Vietnam’s Construction Sector
- Review All Standard Construction Contract Templates
Foreign investors should immediately review:
- EPC contracts;
- design-build contracts;
- construction contracts;
- procurement contracts;
- turnkey contracts;
- consultancy contracts;
- O&M-linked construction contracts;
- PPP project contracts; and
- employer’s requirements and technical schedules.
The review should confirm whether the contract reflects Decree 210 requirements on payment, notices, suspension, termination, advance payments, guarantees and dispute management.
- Align Vietnamese and English Contract Versions
Every bilingual contract should clearly state:
- whether Vietnamese or English prevails;
- whether technical annexes follow the same language priority;
- how inconsistencies are resolved;
- whether FIDIC terms are accurately translated; and
- whether key legal terms have consistent Vietnamese equivalents.
This should be done before signing, not after a dispute arises.
- Build a Contract Administration Calendar
Decree 210 makes timelines important.
Foreign investors should create a project-level calendar for:
- payment deadlines;
- notice periods;
- suspension rights;
- termination triggers;
- advance payment recovery;
- performance guarantee validity;
- warranty commencement;
- claim notification periods;
- dispute board procedures; and
- approval deadlines.
A good construction contract is only useful if the project team manages it properly.
- Strengthen Payment Dossier Controls
Investors and contractors should agree early on what constitutes a valid payment dossier.
The contract should specify:
- required documents;
- approval process;
- timeline for comments;
- consequences of incomplete submissions;
- treatment of disputed amounts;
- partial payment rules; and
- documentary evidence of approval or rejection.
This can prevent payment disputes from becoming suspension or termination disputes.
- Reassess Advance Payment and Guarantee Requirements
Foreign investors should check whether:
- the advance payment complies with statutory limits;
- the recovery schedule is clear;
- the performance guarantee amount is lawful and commercially reasonable;
- guarantee wording is bankable;
- guarantee expiry dates match project milestones; and
- return conditions are clearly stated.
This is particularly important for EPC, turnkey, infrastructure and PPP projects.
- Include a Dispute Avoidance Mechanism
For major projects, investors should consider including:
- senior management escalation;
- expert determination for technical issues;
- dispute board procedures;
- fast-track determination for payment disputes;
- mediation before arbitration; and
- arbitration clauses suitable for foreign-invested projects.
Dispute boards can be especially useful where the project must continue while disagreements are resolved.
- Train the Project Team
Legal compliance cannot remain only with the legal department.
Project directors, contract managers, finance teams, engineers and site managers must understand:
- when notices must be issued;
- how payment dossiers are reviewed;
- when claims are preserved;
- what events may trigger suspension;
- what conduct may amount to abandonment;
- how variations should be documented; and
- how evidence should be maintained.
In Vietnam, many construction disputes are lost not because the legal position is weak, but because the project record is incomplete.
- Review Existing Projects Before 1 July 2026
Investors should urgently review ongoing projects to identify:
- contracts signed under the old framework;
- pending amendments;
- payment disputes;
- delayed approvals;
- unresolved variations;
- expiring guarantees;
- bilingual inconsistencies;
- ongoing claims; and
- projects likely to be affected by the new rules.
Early review is much cheaper than dispute resolution later.
What This Means for Vietnam’s Investment Climate
Decree 210 is a positive development for Vietnam’s construction and infrastructure market. It supports a more predictable, transparent and internationally compatible contracting environment.
However, it also raises the standard of compliance. Foreign investors should not assume that general international templates will automatically work in Vietnam. FIDIC-style contracts, EPC forms and lender-driven documents must be carefully localized.
The investors who benefit most will be those who combine international contracting discipline with Vietnam-specific legal implementation.
Conclusion
Vietnam remains one of Asia’s most dynamic construction and infrastructure markets. Decree 210 strengthens the legal foundation for that growth by introducing clearer rules on contract management, payment, suspension, termination, guarantees, dispute resolution and bilingual contract interpretation.
For foreign investors, the opportunity is clear: Vietnam is becoming more investable, but also more demanding.
The key to success will be disciplined preparation.
Foreign investors should update their contracts, train their project teams, strengthen payment and notice procedures, review bilingual documents and ensure that every major construction project has a Vietnam-specific legal and contract administration strategy.
Those who act early will be better positioned to avoid disputes, protect project value and participate successfully in Vietnam’s next phase of infrastructure and industrial growth.
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Please do not hesitate to contact Dr. Oliver Massmann under [email protected] if you have any questions or would like to discuss how Decree 210 may affect construction, infrastructure, EPC, PPP or real estate projects in Vietnam.
Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC