Arbitration and Mediation Mechanisms in the Field of Public Investment
1. Public Investment and Key Issues
1.1. What is Public Investment
According to Clause 16, Article 4 of the Law on Public Investment 2024: “Public investment means the State’s investment activities in programs, tasks, projects, and other public investment entities as prescribed by this Law.”
A public investment program is a set of objectives, tasks, and solutions aimed at achieving socio-economic development goals. In essence, public investment activities are State and Government investments conducted for community benefit and overall development, rather than for direct profit as in commercial activities. According to Clause 1, Article 3 of the Law on Commerce 2005, “Commercial activities are activities conducted for profit-making purposes, including the purchase and sale of goods, provision of services, investment, trade promotion, and other profit-oriented activities.” Only contracts, agreements, or transactions arising in the course of implementing public investment projects may possess a commercial nature.
1.2. Agreements in Public Investment
Article 2. Jurisdiction of Arbitration
– Disputes between parties arising from commercial activities;
– Disputes between parties in which at least one party engages in commercial activities;
– Other disputes which are stipulated by law to be resolved by arbitration.
If the parties in a public investment project have an agreement and the law provides that the dispute may be resolved by arbitration, such dispute shall be settled by arbitration in accordance with the law.
In public investment, which constitutes the State’s direct investment activity, the term “agreements” does not carry the same meaning as in commercial or civil relations—where contracts are formed between equal parties. Instead, such agreements are typically associated with state management mechanisms and the relationships among governmental bodies and project-implementing units.
In general, every sector involves agreements and legal contracts to ensure risk management, transparency, and fairness. Under the supervision of the State, such agreements are not limited to contracts between parties, but also encompass investment policy decisions, the implementation of large-scale public investment projects, and the supervision of project progress, total investment capital, and both domestic and foreign funding sources. First and foremost, public investment involves consensus on investment policies, whereby competent authorities such as the National Assembly, the Government, the People’s Councils, or the People’s Committees review and approve the projects. In addition, during the implementation process, ministries and local authorities must often coordinate and reach agreements on project-related matters. For projects utilizing Official Development Assistance (ODA) or concessional loans, such agreements may also take the form of international financing treaties or agreements between the Government of Vietnam and lending institutions, which carry legally binding force under international law. In addition, internal agreements among the project owner, project management unit, and relevant entities play an important role in project implementation, financial settlement, and acceptance procedures. Thus, agreements in public investment represent a consensus on responsibilities, management mechanisms, and financial resources among competent authorities, aimed at ensuring that projects serve the public interest.
2. Dispute Resolution Mechanisms in Public Investment
In public investment activities, when a dispute arises, the dispute resolution mechanism depends on the nature of the legal relationship and the parties involved. The mechanisms for resolving disputes in public investment include:
2.1. Settlement within the State Administrative System
In the field of public investment, most disputes arise from the management, allocation, and use of state capital. Therefore, the primary dispute resolution mechanism lies within the administrative supervision and handling system. Specifically, inspection, auditing, and specialized management agencies—such as the Ministry of Planning and Investment, the Ministry of Finance, the State Audit Office, and the Government Inspectorate—have the authority to inspect, detect violations, and make recommendations for corrective action. Individuals or organizations found in violation may be subject to administrative or disciplinary measures, or required to compensate for material damages. In cases involving serious breaches of contractual obligations or significant economic losses, disputes may be brought before the competent People’s Court for settlement under the Civil Procedure Code 2015 and other relevant legal instruments.
2.2. Commercial Arbitration Mechanism
Although public investment itself is not a commercial activity, the implementation of public investment projects often gives rise to numerous contracts of a commercial nature, thereby creating a connection with commercial arbitration. For instance, construction contracts (EPC, BOT), procurement contracts, consulting and supervision agreements, and service supply contracts are commonly concluded between project owners (state agencies or project management units) and domestic or foreign contractors and investors.
Where such contracts contain an arbitration agreement in accordance with the Law on Commercial Arbitration 2010, the parties may, in the event of a dispute, choose to submit the case to either a domestic arbitral institution such as the BigBoss International Arbitration Center (BBIAC), or an international arbitral institution such as the ICC, UNCITRAL, or ICSID—particularly for ODA-funded or cross-border projects. This demonstrates that, although the core activities of public investment are non-commercial, the ancillary contracts attached to such projects are nevertheless subject to commercial arbitration mechanisms.
3. Arbitration Agreement in Public Investment
Within the commercial arbitration mechanism, public investment projects often involve contracts and agreements of a commercial nature. Arbitration agreements frequently appear during the implementation phase of public investment projects, particularly in commercial contracts and service supply agreements. It is within these contracts that the parties commonly agree to select commercial arbitration as their dispute resolution mechanism, in accordance with the provisions of the Law on Commercial Arbitration 2010.
In particular, for projects financed by ODA or international loans, the financing agreements often include international arbitration clauses (such as ICSID, ICC, or UNCITRAL) to ensure objectivity and transparency. Accordingly, the arbitration agreement in public investment is not directly associated with administrative decisions on investment policy or capital allocation but is primarily reflected in ancillary contracts—including foreign-invested contracts—between state agencies or project management units and domestic or international contractors and partners. This creates a bridge between public sector management and modern commercial dispute resolution mechanisms.
4. Commercial Mediation in Public Investment
In the field of public investment, alongside administrative and judicial mechanisms, commercial mediation is regarded as an effective method for resolving disputes arising from ancillary contracts such as construction, procurement, consulting services, or public–private partnership (PPP) projects involving commercial elements.
According to Article 317 of the Law on Commerce 2005, mediation is one of the recognized forms of commercial dispute resolution, under which the parties may agree to select an institution, organization, or individual mediator. Decree No. 22/2017/NĐ-CP further specifies this mechanism, defining commercial mediation as a dispute resolution method based on the parties’ agreement with the assistance of a commercial mediator. Notably, Clause 1, Article 6 of the Decree allows the parties to agree to mediate at any time—before or after a dispute arises—either through a mediation clause in the contract or by a separate agreement.
The fundamental principles set out in Article 4—including voluntariness, equality, confidentiality, and compliance with the law—ensure the transparency, impartiality, and legal validity of mediation agreements.
In the context of public investment, the application of commercial mediation not only helps reduce conflicts, save costs and time compared to litigation but also fosters a stable and transparent investment environment, thereby enhancing the confidence of contractors and international partners.
Thus, commercial mediation can be viewed as a bridge between the public nature of public investment activities and the flexibility required in commercial relationships arising from related contracts.
5. Conclusion and Recommendations
Public investment plays a crucial role in socio-economic development, yet it is inherently associated with diverse legal relationships that combine both public and commercial elements. Therefore, the dispute resolution mechanism should be structured on multiple levels — ranging from state supervision and inspection to judicial proceedings, arbitration, and commercial mediation. In practice, the integration of arbitration and mediation clauses into ancillary contracts of public investment projects not only protects the rights and interests of the parties but also promotes a transparent, efficient, and internationally aligned dispute resolution process.
Therefore, the following recommendations are proposed:
(i) Improve the legal framework to encourage the application of arbitration and commercial mediation in contracts related to public investment;
(ii) Enhance the capacity of non-judicial dispute resolution bodies, particularly arbitral institutions and commercial mediators;
(iii) Promote training and awareness programs for project management officials, contractors, and investors on negotiation and the implementation of modern dispute resolution mechanisms.
These measures will help ensure transparency and accountability in the management of state capital, while enhancing the efficiency and credibility of Vietnam’s investment environment.
6. How to Resolve Disputes through the BigBoss International Arbitration Center (BBIAC)
To resolve disputes through arbitration at BBIAC, parties may include one of the following sample clauses in their contracts:
6.1. Standard Arbitration Clause
“All disputes arising out of or in connection with this contract shall be settled by arbitration at the BigBoss International Arbitration Center (BBIAC) in accordance with its Arbitration Rules.”
Optional additions:
(a) Number of arbitrators: [one or three];
(b) Seat of arbitration: [city and/or country];
(c) Governing law: [ ];*
(d) Language of arbitration: [ ].***Note: (a) and (b) apply where foreign elements are involved;
*(c) applies where at least one party is a foreign-invested enterprise.
6.2. Expedited Procedure Clause
“All disputes arising out of or in connection with this contract shall be settled by arbitration at the BigBoss International Arbitration Center (BBIAC) in accordance with its Arbitration Rules. The parties agree that the arbitration shall be conducted under the Expedited Procedure set forth in Article 37 of the BBIAC Arbitration Rules.”
Optional additions:
(a) Seat of arbitration: [city and/or country];
(b) Governing law: [ ];*
(c) Language of arbitration: [ ].**Notes as above apply.
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