Construction Warranty and Defects Liability in Vietnam: FIDIC Clause 11

Updated: 22 October 2026 · IVLF Advisors

The hardest construction claims in Vietnam, from factories to hotels and airport terminals, often arrive after handover, when the contractor has demobilised and the final payment is a memory. Who must fix a defect, for how long, at whose cost and against what security are questions the contract has to answer in advance. This guide to construction warranty defects liability Vietnam explains how the statutory warranty under Vietnamese law fits with the FIDIC 1999 Defects Notification Period, and how to draft the two to work together.

Two concepts, one defect: warranty and defects liability

Vietnamese law speaks of bảo hành công trình xây dựng, the construction warranty, which the contractor owes after completion. FIDIC speaks of Defects Liability, with a Defects Notification Period (DNP) during which the Employer may notify defects for the Contractor to remedy. They overlap but they are not identical, and a foreign investor who assumes that the DNP is the whole of the contractor’s post-completion exposure may be mistaken.

The legal sources are different. In Vietnam the baseline is the Construction Law (Luật Xây dựng 135/2025/QH15, effective 1 July 2026) and Decree 210/2026/NĐ-CP on construction contracts, together with the decree on construction quality, works and maintenance (Decree 207/2026). In FIDIC it is Clause 11 and its related sub-clauses. This article deals with the FIDIC 1999 edition. We have not analysed the figures in Decree 207/2026 and do not state them here.

Vietnamese law on construction warranty

Luật Xây dựng Art 64: who warrants what

Article 64 provides that the construction contractor warrants the works, and an equipment supplier warrants the equipment. Warranty means remedying, repairing or replacing defective or faulty items of the works or equipment. The warranty period is set by reference to the type and grade of the works and the manufacturer’s rules or the contract.

Two practical consequences follow. First, the contractor’s duty is to remedy, not merely to compensate. Second, the period is not fixed by the contract alone: it responds to the type and grade of the works and the equipment manufacturer’s requirements. A contract that provides for a shorter period than the statutory minimum risks being unenforceable on that point, so confirm the minimum against the decree.

Decree 210/2026: defects, warranty and security

Decree 210 handles warranty in three places.

• Acceptance and defects (Art 9). The parties agree what must be accepted, and the procedure. Defective products are inspected, assessed and remedied; if they cannot be remedied they are removed or replaced. The party at fault bears all costs of remedy, replacement, testing and inspection, and the consequences for the programme.
• Warranty terms (Art 20). The parties agree the conditions, duration, level and form of warranty security, and its release. The contractor warrants in accordance with the contract and the decree on quality, construction and maintenance. If the contractor does not warrant in time, or the quality or programme is not assured, the Employer may use the warranty security to hire others or, if it has capacity, do the work itself.
• Security (Art 13). For public investment and PPP contracts, warranty security is one of the required security types, at a level set by the decree on quality and maintenance (Decree 207/2026). It is released only after the warranty period ends and the warranty is confirmed. Longer warranty periods are encouraged. Performance security is returned after the contractor completes its obligations or moves to warranty and provides the warranty security.

Note the scope: the mandatory security rules in Art 13 apply to public investment and PPP projects. On private projects the parties agree warranty security, subject to the statute and decree on warranty itself. Decree 210 Art 10(2) also confirms that the contract performance period does not include the warranty period, which matters for liquidated damages and for the Employer’s final account.

FIDIC Clause 11: the Defects Notification Period

The Defects Notification Period is the period stated in the Particular Conditions (default one year if none is stated) calculated from the date of completion certified under Sub-Clause 10.1, with any extension under Sub-Clause 11.3 (Silver Book wording). The mechanics are as follows.

• Remedy duty (11.1). The Contractor completes outstanding work and executes all work required to remedy defects or damage notified on or before the expiry of the DNP.
• Cost allocation (11.2). The Contractor bears the cost of defects attributable to its design, to Plant, Materials or workmanship not in accordance with the Contract, to improper operation or maintenance for which it is responsible, or to its failure to comply with any other obligation. If the cause is anything else, the Employer notifies and the Variation procedure in 13.3 applies.
• Extension (11.3). If, after taking over, the Works or a major item of Plant cannot be used for their intended purpose because of a defect, the Employer may extend the DNP, but by no more than two years. Under the Silver Book this is subject to the Employer’s claims procedure in 2.5.
• Failure to remedy (11.4). After a notified date, the Employer may carry out the work itself or through others at the Contractor’s cost, agree or determine a reasonable price reduction, or, where the defect deprives the Employer of substantially the whole benefit of the Works or a major part, terminate and recover sums paid plus financing costs and dismantling costs.
• Tests and search (11.6, 11.8). The Employer may require repeat tests within 28 days after a defect is remedied, and the Contractor must search for the cause of a defect on request, at its own cost if the defect is the Contractor’s responsibility.
• Performance Certificate (11.9). The Employer issues it within 28 days after the latest DNP expiry or, if later, when Contractor’s Documents and tests are complete and defects remedied. If the Employer fails to do so, it is deemed issued 28 days later. Only the Performance Certificate constitutes acceptance of the Works.
• Unfulfilled obligations (11.10). After the certificate, each party remains liable for obligations unperformed at that date.

Comparing FIDIC defects liability with Vietnamese warranty

Issue	FIDIC 1999 (Silver Book wording)	Vietnamese law
Duration	DNP stated in Particular Conditions; one year if silent; extension up to two years (11.3)	Warranty period depends on type and grade of works, manufacturer rules or contract (Luật XD Art 64(2)); check Decree 207/2026
Scope of duty	Remedy defects or damage notified in the DNP (11.1)	Remedy, repair or replace defective works or equipment (Art 64(1))
Who pays	Contractor, if attributable to its design, workmanship, operation or other breach (11.2)	Party at fault bears remedy, replacement, testing and programme costs (Decree 210 Art 9)
If the Contractor does not act	Employer may self-perform at Contractor’s cost, reduce price or terminate (11.4)	Employer may use warranty security to hire another or self-perform (Decree 210 Art 20(2))
Security	Performance Security valid until defects remedied (4.2); retention (14.9)	Warranty security; mandatory type for public and PPP (Decree 210 Art 13), private by agreement
Close-out	Performance Certificate (11.9)	Security released after warranty period ends and is confirmed (public and PPP, Art 13)

Closing the gap: drafting construction warranty defects liability Vietnam clauses

The table shows that FIDIC and Vietnamese law are broadly compatible but not aligned in duration and security. A well-drafted construction warranty defects liability Vietnam clause fills the gap in the Particular Conditions.

Construction warranty defects liability Vietnam: set the DNP against the statutory period

State the DNP as a number of days so that the Employer and the Contractor can calculate it. Make sure the period is no shorter than the statutory or manufacturer warranty that applies to the works and equipment. If the statutory warranty runs longer than the DNP, say expressly whether the Contractor’s remedy duty for the balance continues under the contract or only under the law. Leaving the point silent invites a dispute over who must act in months 13 to 24.

Align security: retention, performance security and warranty security

Retention money under FIDIC is paid in two halves: the first half on issue of the Taking-Over Certificate, once tests are passed, and the balance promptly after the latest DNP expiry (14.9), with the Employer entitled to withhold the estimated cost of any outstanding Clause 11 work. Luật XD Art 87(2)(b) recognises that payment is made after deducting agreed retentions. On public investment and PPP contracts Decree 210 adds warranty security as a separate type, with the performance security returned only once warranty security is in place.

A common structure is to reduce the performance security on the Taking-Over Certificate and replace it by a warranty security (or by retention) that runs to the end of the DNP and the statutory warranty period. The documents should state the amount, issuer, expiry and release trigger for each.

Allocate responsibility for subcontractors and equipment

Decree 210 Art 19 makes the main contractor responsible to the Employer for the quality of its own and its subcontractors’ work. Equipment suppliers warrant their equipment directly under Art 64. The main contract should therefore be back-to-back with subcontract and supply warranties, and should require assignment of manufacturer warranties to the Employer on completion where appropriate. Under the FIDIC Silver Book, sub-clause 1.7 restricts assignment without agreement, so permission must be built into the contract.

A hypothetical defects timeline

The following example is hypothetical and uses assumed figures for illustration only; it is not a statement of any statutory minimum. Assume a plant building is taken over on 1 March 2027, the DNP is 365 days, and the warranty applicable to the roof system is 24 months.

• March 2027 to February 2028. The Employer notifies defects under sub-clause 11.1; the Contractor remedies at its cost where Sub-Clause 11.2 applies. Half of the retention was released at taking-over; the balance is held.
• Late February 2028. A joint inspection takes place before the DNP expires, so that every defect is notified in time. The Contractor completes remedial work and any repeat tests under 11.6.
• March 2028. The Employer issues the Performance Certificate and the balance of the retention is released. The performance security is returned within 21 days.
• March 2028 to February 2029. If the roof system fails, the Employer’s right now rests on the statutory warranty and any warranty security or manufacturer warranty, not on the DNP. Unless the contract says so, the FIDIC machinery for notices and cost allocation no longer applies in the same way.

The lesson for any construction warranty defects liability Vietnam package is to document, in one table, which instrument protects the Employer in each month, and who must act.

Claims, time bars and delay arising from defects

Defects disputes often turn on procedure rather than engineering. If the Contractor says a defect was caused by the Employer or by an Employer’s risk, the Contractor must give notice of any claim for time or money as soon as practicable and no later than 28 days after it became aware of the event (sub-clause 20.1), failing which the claim is lost. Our article on time bar claims in Vietnamese construction contracts explains how to manage this.

Defects also affect time. If remedial work delays the Works, or the DNP is extended and the Employer cannot use the facility, there may be time and cost consequences for both sides. For the cost heads that arise from extended periods on site, see our analysis of prolongation costs in construction contracts.

Finally, consider the dispute forum. Warranty disputes involve technical evidence, so an expert-based process is useful. On private projects, arbitration under VIAC or another institution is commonly selected; for public investment and PPP contracts Luật XD Art 86(5) gives priority to domestic arbitration institutions. Decree 210 Art 17 deals with dispute boards that can decide technical defects questions quickly. Both are described in more detail in the official summary of Decree 210/2026.

Practical checklist for investors, lenders and contractors

1. Record the warranty period required by statute and by manufacturers for each component before fixing the DNP.
2. Specify the notification route for defects, including written notice and the response times.
3. Decide who owns and controls the warranty security, and when it is released.
4. Require a defects log, joint inspection before expiry of the DNP and a final walk-through before the Performance Certificate.
5. Keep the as-built documentation and maintenance manuals within the contractor’s obligations.
6. Confirm insurance cover for the defects period.

Construction Warranty Defects Liability Vietnam: Applying It to Infrastructure, Industry, Energy and Real Estate

Defects look very different on a runway apron, a cement kiln, a wind farm and a hotel. The right warranty design depends on the asset, its owner and its funding. These are general observations, not rules.

Infrastructure and transport

Expressways, metro, high-speed rail and airport terminals involve systems whose defects emerge only under operation. The North–South high-speed railway (about 1,541 km, 350 km/h design speed per press reports of October 2026) and the Long Thành terminal (phase 1 operation expected from late December 2026) show why operating-phase defects across many packages need a clear allocation of who repairs what. Where the project is public investment or PPP, Decree 210 rules on warranty may apply; confirm by funding source.

Heavy industry and factories

For steel, petrochemical, cement and FDI factories, the commercial concern is production downtime. Warranty clauses typically address performance guarantees, spare parts and the right to repair quickly, and lenders will want warranty security tied to the Defects Notification Period.

Renewable energy and power

Solar, wind, grid and LNG-to-power plants have equipment with manufacturer warranties that may differ from the construction warranty period. Align them, and reconcile with power-sector rules and offtake terms.

Hotels, resorts and urban areas

In a hypothetical resort, finishes, waterproofing and mechanical systems fail at different rates; a longer defects period for building envelope may be justified. In urban areas and housing, owners and operators will want clear handover records, and consumer-facing rules on housing and real estate may also matter.

Project type	Typical contract or risk feature	What to check
Expressway, rail, airport terminal	Many packages; defects appear in operation	Who repairs interface defects; Decree 210 scope
Factory or heavy-industry plant	Downtime is the main loss	Performance guarantees; rapid repair right
Solar, wind, grid, LNG-to-power	Manufacturer warranties differ in length	Align equipment and works warranty
Hotel, resort, housing, mixed-use	Finishes and envelope defects	Defects periods by element; handover records

Conclusion

Under construction warranty defects liability Vietnam rules, the statutory warranty and the FIDIC DNP must be read together rather than as alternatives. Set the DNP at least as long as the legal warranty, replace performance security by warranty security in a controlled way, and make remedy, cost and release steps explicit. A practical next step is a one-page defects timeline for your project, showing the taking-over date, DNP, warranty period, security expiries and notice deadlines.

Frequently Asked Questions

How long is the construction warranty in Vietnam?

Luật XD Art 64(2) bases it on the type and grade of the works and the manufacturer’s rules or the contract. Statutory minimums are in the decree on quality and maintenance; check the current text.

Is the FIDIC Defects Notification Period the same as the warranty?

No. The DNP is a contractual period for notifying defects. The statutory warranty is separate, and the contract should state how the two interact.

Who pays to fix a defect after handover?

The party at fault. Under FIDIC 11.2 the Contractor pays for defects from its design, workmanship or breach; Decree 210 Art 9 allocates costs to the party causing the error.

Can the Employer use warranty security if the Contractor fails to act?

Yes. Decree 210 Art 20(2) permits the Employer to use the warranty security to engage others or to carry out the work itself if it has capacity.

Does the Performance Certificate end all liability?

No. FIDIC 11.10 preserves unperformed obligations, and statutory warranty and latent defect rules may continue to apply.

Disclaimer: this article provides general information only and is not legal advice for any specific matter. The law is stated as of 22 October 2026 and may change.