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Article Vietnam: Court Orders Five Contractors to Pay $18.7M in Compensation for Delivering Substandard Expressway

On October 27, 2023, the Hanoi People’s Court ordered five contractors from China, South Korea, and Vietnam to pay 460 billion Vietnamese dong (VND) (about US$18.7 million) in compensation for delivering an expressway that did not meet quality standards.

Background to the Court Decision

Construction of the Da Nang-Quang Ngai Expressway in central Vietnam began in 2013. Phase 1, which spans 65 kilometers (40.4 miles) from Da Nang to Tam Ky, was opened in August 2017. Phase 2, which is over 74 kilometers (46 miles) and goes from Tam Ky to Quang Ngai, was opened in September 2018. The expressway was built in five years by the state-run Vietnam Expressway Corporation (VEC) at a total cost of VND34.5 trillion (about US$1.4 billion), funded by government bond sales and loans from the World Bank and the Japan International Cooperation Agency.

The entire road was put into operation on September 2, 2018, but just weeks later, several potholes appeared. By the time of the anniversary of the opening, severe degradation was reported on the road. The Ministry of Public Security (MPS) investigated the cause of the problems, found serious construction mismanagement, and submitted a report to the prime minister in 2020. Subsequently, the government set up a project to repair the expressway.

VEC officials and others involved in the first phase of the construction were investigated and indicted. The damages resulting from poor construction cost about VND811 billion (about US$33.1 million). A trial of VEC officials regarding failure to meet technical and design criteria in the construction and work approval of the expressway on the first phase of the project was held in December 2021. Two senior VEC officials were found guilty and were sentenced to six and seven years’ imprisonment, respectively, while 34 others received lighter sentences.

The mismanagement of the second phase of construction caused damage worth VND460 billion (about US$18.84 million). In the second-phase mismanagement trials, other VEC officials and others involved in the construction were found guilty. In addition, the VEC sued five contractors from China, South Korea, and Vietnam, demanding compensation for delivering an expressway that did not meet quality standards. Two Korean contractors, Posco E&C and Lotte E&C, denied they had breached their contracts. Lotte E&C stated that its work passed the inspection by the state, and during the two-year warranty period Lotte did not receive any complaints. Posco E&C also argued that an independent supervisor had confirmed that the construction met quality standards. However, on October 27, 2023, the Hanoi People’s Court ordered Lotte to pay VND127 billion (about US$5.17 million) and Posco to pay VND71 billion (about US$2.89 million). A Chinese contractor, Shandong Province Traffic Works Corporation, was ordered to pay VND129 billion (about US$5.25 million), while another Chinese contractor, Jiangsu Province Construction Corporation, has to pay VND85 billion (about US$3.46 million). No Chinese representatives appeared at the trial. CC1, the Vietnamese contractor, was ordered to pay VND47.5 billion (about US$1.93 million).

Sayuri Umeda, Law Library of Congress
November 22, 2023

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Chicago citation style:

Umeda, Sayuri. Vietnam: Court Orders Five Contractors to Pay $18.7M in Compensation for Delivering Substandard Expressway. 2023. Web Page. https://www.loc.gov/item/global-legal-monitor/2023-11-21/vietnam-court-orders-five-contractors-to-pay-18-7m-in-compensation-for-delivering-substandard-expressway/.

APA citation style:

Umeda, S. (2023) Vietnam: Court Orders Five Contractors to Pay $18.7M in Compensation for Delivering Substandard Expressway. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2023-11-21/vietnam-court-orders-five-contractors-to-pay-18-7m-in-compensation-for-delivering-substandard-expressway/.

MLA citation style:

Umeda, Sayuri. Vietnam: Court Orders Five Contractors to Pay $18.7M in Compensation for Delivering Substandard Expressway. 2023. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2023-11-21/vietnam-court-orders-five-contractors-to-pay-18-7m-in-compensation-for-delivering-substandard-expressway/>.