Joint Venture Contractors Bidding Vietnam: Liability and Structure

Updated: 22 October 2026 · IVLF Advisors

A consortium that wins on price but has never agreed who pays for a defective foundation, who holds the performance guarantee or who may leave can lose more in the dispute between its members than it earned in the bid. Joint venture contractors bidding Vietnam projects take on joint exposure to the employer and an internal contract that the employer never sees; the quality of that internal contract decides whether the structure protects the members or exposes them.

This article is written for foreign contractors, local partners, sponsors and lenders. It explains why bidders form joint ventures, how the 2026 construction rules treat them, what the employer can demand, and which terms belong in the joint venture agreement. The detailed bidding procedure sits in the 2023 Law on Bidding, which we name here but do not analyse. The point matters most on large infrastructure, industrial, energy and real-estate packages, where consortia are the norm rather than the exception.

Why joint venture contractors bidding Vietnam packages team up

There are three common reasons. The first is capacity: a large package may require design, procurement and construction skills, or financial strength, that no single bidder holds. The second is regulatory: a foreign contractor that wants to work in Vietnam must, as a general rule, either form a joint venture with a Vietnamese contractor or use a Vietnamese subcontractor. The third is risk: members can share the cost of bid security, performance security and working capital.

The regulatory reason deserves emphasis. Under Article 43 of Decree 212/2026/NĐ-CP, a foreign contractor seeking a construction activity licence must form a joint venture with a Vietnamese contractor or use a Vietnamese subcontractor, unless no domestic contractor can perform any part of the package. The application must state the scope, quantity and value of the work given to the Vietnamese contractor. Our guide to the construction licence for foreign contractors in Vietnam covers the licensing process in full.

Not every consortium is an incorporated company. Contractors typically sign a contractual joint venture agreement under which they bid and perform together without creating a new legal entity; some structures use a special-purpose company. This article concentrates on the contractual consortium, because it is the form that Decree 210 and the licensing rules address most directly.

Joint venture contractors bidding Vietnam: contractual consortium or new company?

Factor	Contractual consortium	Special-purpose company
Legal personality	None; members contract jointly	Separate Vietnamese legal entity
Liability to employer	Members answer to the employer under the contract and joint venture terms	The company; members’ exposure depends on guarantees given
Speed	Fast; agreement only	Slower; incorporation and registration
Foreign contractor licensing	Joint venture agreement is the typical annex	Depends on whether the entity is treated as a domestic contractor
Best suited to	Single project bid and delivery	Long-term or multi-package presence

What the employer gets: joint and several liability under FIDIC and Vietnamese law

An employer’s central protection is that it is not asked to chase individual members for their share. In the FIDIC 1999 edition (Silver Book), sub-clause 1.14 provides that, where the contractor is a joint venture, consortium or other unincorporated grouping, its members are deemed to be jointly and severally liable to the employer for performance of the contract. The members must also notify the employer of their leader, who has authority to bind the contractor and each member.

The same sub-clause prohibits the contractor from altering its composition or legal status without the employer’s prior consent. This matters: a joint venture member cannot simply withdraw or be replaced during performance. A related provision, sub-clause 1.7, prevents assignment of the contract or any part of it without the other party’s agreement.

Under Vietnamese law, the Law on Construction provides that a party in breach remains liable to its counterparty even where a third party caused the breach. We have not analysed how the Civil Code’s rules on joint obligations apply to a consortium in a specific case, so the precise extent of joint liability should, in any event, be written into the contract. Do not rely on an implied position.

The practical consequence for each member is simple. Every member is exposed to the full contract risk, not only to its own scope. An insolvent partner’s share can fall on the survivors. The joint venture agreement must therefore deal with indemnities, security and step-in rights between members, because the employer’s contract will not.

Decree 210/2026: how the joint venture appears in the construction contract

Decree 210/2026/NĐ-CP, guiding construction contracts under the Law on Construction No. 135/2025/QH15, refers to joint ventures in several places. It does not create a separate regime; it leaves the key points to the contract or to the joint venture agreement.

• Advance payment: the amount, number of instalments, timing, guarantee and recovery are for the parties to agree, expressly including where the contractor is a joint venture.
• Payment: how payment is made to a joint venture is set in the contract or the joint venture agreement.
• Performance and other security: each member provides security in proportion to its share of the contract value, or the lead member provides it if the parties so agree.
• Adjustment of quantities: on public investment and PPP projects, a reallocation of work between joint venture members that does not change the contract price is decided by the employer.
• Final account: arrangements for a joint venture’s final account are for the parties to agree.

The scope point is important. The decree’s detailed provisions on advances, price adjustment and payment periods apply to public investment and PPP projects. On private projects the joint venture agreement and the construction contract govern, subject to general legal limits. If you are bidding for a public package, the bidding documents will also impose their own requirements.

Security: who posts what

The rule that each member posts security for its own share, or that the lead member posts for all if agreed, has a commercial consequence. A guarantee issued to the lead member alone concentrates the banking relationship on one balance sheet. A guarantee issued per member preserves each member’s credit lines but increases the number of instruments the employer must monitor.

For public investment and PPP projects, the decree sets the performance security at between 2% and 10% of the contract price, with a higher figure possible under the bidding law, and sets rules on when security is forfeited. Those figures are not a default for private projects. The joint venture agreement should say how the members fund and reimburse each other for security calls.

The joint venture agreement: terms that decide who bears the loss

The agreement between the members is the document that allocates risk among themselves. Market practice, rather than any statutory template, suggests the following terms.

• Scope split: a precise division of work, value and responsibilities, which in a foreign-contractor bid must match what the licence application declares for the Vietnamese partner.
• Lead member: authority to sign, to give and receive notices, and to receive payment, with limits on what the lead member can agree without the others.
• Liability between members: each member bears the consequences of its own scope, with indemnities and contribution rights if the employer enforces joint liability against one member.
• Cash and security: bid security, performance security, advance payment security, and who funds them.
• Governance: a management committee, voting thresholds and a deadlock procedure.
• Exclusivity and non-compete: for the bid period, with a clear answer if the bid fails.
• Change of control and exit: consistent with the employer’s consent right to any change in the contractor’s composition.
• Insolvency of a member: step-in or takeover of that member’s scope by the others, with a pre-agreed price mechanism.
• Dispute resolution: a forum and seat for disputes between members, ideally aligned with the construction contract to avoid conflicting outcomes.

For disputes among international members, arbitration under rules such as those of the International Chamber of Commerce is common in cross-border practice. For public investment and PPP projects, the Law on Construction expresses a preference for domestic arbitration institutions, and international models need the investment decision-maker’s permission. Check the forum clause against the project’s funding.

Bidding stage risks for joint venture contractors bidding Vietnam projects

A consortium’s exposure starts before the contract. Several issues arise in the bid period.

First, the bid must be consistent with the joint venture agreement. If the bid names a lead member and a scope split, those facts will be relied on by the employer and, for a foreign contractor, by the licensing authority. Second, the members must agree how the bid security is posted and how it is replaced if one member withdraws. Third, a withdrawal after submission can forfeit the bid security under the bidding documents, which are governed by the 2023 Law on Bidding.

Fourth, the employer is responsible for its own selection of contractors under the Law on Construction, and the contractor’s capacity information is self-published on the national construction database. A consortium should expect the employer to test that information and should keep evidence of each member’s experience and financial standing ready. The database is the national construction-activity database at csdlhdxd.gov.vn.

Changing the composition after award

After award, the contract and FIDIC-style terms give the employer a veto on any change of the consortium’s composition. For a foreign contractor, a change of the joint venture member or Vietnamese subcontractor also requires an amendment of the construction activity licence under Decree 212, so there is a regulatory step as well as a contractual one. A hypothetical example: a Vietnamese partner becomes insolvent in the second year of an EPC project. The survivors need the employer’s consent to a replacement, a licence amendment, and a joint venture agreement that already says who takes over the insolvent member’s scope.

Lenders should require that the joint venture agreement and any replacement mechanism be delivered as conditions precedent, and that the lead member’s authority be reflected in the finance documents.

Partner due diligence before you sign

Because members stand behind each other, partner selection is a credit and compliance decision, not only a technical one. Before committing, the members of any group of joint venture contractors bidding Vietnam packages should test the following.

• Capacity and personnel: whether the partner’s key individuals hold the professional certificates the Law on Construction requires for the roles they will perform, such as design lead, supervision and site management.
• Financial standing: audited accounts, existing guarantee limits with banks and any litigation that could affect bid or performance security.
• Project track record: evidence of comparable delivery, which an employer will usually ask for and which, for a foreign contractor, also supports the licence dossier.
• Conflicts and exclusivity: whether the partner is already committed to a competing consortium for the same tender.

A short, documented diligence file also helps if the relationship later fails, because it shows what each member represented at the outset.

How disputes between members typically arise

In practice, internal disputes concentrate on a handful of triggers: one member’s scope runs late and delays the others; the lead member agrees a variation without proper authority; a guarantee is called and the cost is not shared as expected; or a member’s financial difficulty forces the others to fund its share. A joint venture agreement that anticipates these four events, with defined notice, cure and contribution mechanics, avoids most of the litigation that would otherwise follow. We describe these as common patterns in market practice rather than as statistics.

Joint venture or subcontract: which structure for a Vietnamese bid?

A joint venture is not always the better route. Where the Vietnamese element is clearly separable, such as site works or local procurement, a subcontract may give the foreign contractor more control and a single point of contact for the employer. Where the employer wants the Vietnamese contractor to share design or delivery risk, or where the bid is scored on combined experience, a joint venture is more natural.

Our article on PPP and BOT construction contracts in Vietnam shows how these choices play out on concession-style projects, where the contractor group often sits behind a project company and lenders look through to the members’ undertakings.

In every case, the same principle applies: whatever the label, the employer will look to the party whose name is on the contract, and the contractor group must settle its internal allocation in writing before the bid is filed.

How Joint Venture Contractors Bidding Vietnam Rules Apply Across Project Types: Infrastructure, Industry, Energy and Real Estate

The same consortium mechanics (joint liability, a lead member, shared security) appear in every sector, but the pressure points differ. The right joint venture agreement is written for the asset, not copied from the last bid.

Infrastructure and transport

Expressway, port, metro, high-speed rail station and airport terminal packages are often State or State-owned employer projects, with public procurement rules (the Law on Bidding 2023, not analysed here) and, where public investment or PPP applies, the hard rules of Decree 210/2026. The North-South high-speed railway is reported at about 1,541 km through 15 provinces, designed for 350 km/h (VietNamNet, 9 October 2026); a project of that kind would plausibly be split into many packages, and consortia would bid for civil, systems and station works.

The airport at Long Thanh is reported as expected to start phase 1 commercial operation from 24 December 2026. On packages like these the key points are the joint bid security, who signs the performance security and how a member’s insolvency is handled. Funding source decides whether Decree 210’s figures apply; this is decided project by project.

Heavy industry and factories

Steel, petrochemical, cement and industrial-park factory works are usually private or foreign-invested, so the contract follows party agreement. Consortia are driven by technology: a foreign licensor supplies process equipment while a Vietnamese contractor builds foundations and structures. The agreement should split interface risk precisely, because the employer will hold both members jointly liable for a plant that does not reach performance tests.

Renewable energy and power

Solar farms, onshore wind, grid connections and LNG or gas-to-power plants combine equipment, civil and grid work. A typical consortium pairs an equipment supplier with a local civil and electrical contractor. Lenders will look for a lead member with the balance sheet to carry the performance security; whether the PPP or public-investment rules apply depends on ownership and the PPA structure, and is fact-specific.

Real estate and mixed-use

For resorts, hotels, urban areas and mixed-use complexes, private developers contract on commercial terms. Joint ventures here are often a local main contractor plus a foreign specialist, and the key terms are delay damages, defects liability and who carries the fit-out interface. The developer’s land and real-estate obligations sit outside the construction contract.

Sector	Typical consortium feature	What to check in the joint venture agreement
Transport infrastructure	Large civil plus systems split, State employer	Joint bid security, lead member authority, insolvency of a member
Heavy industry	Foreign process technology, local civil	Interface risk, performance-test liability
Energy and power	Equipment supplier plus civil/electrical	Security provider, grid and permit interface
Real estate	Local main contractor plus foreign specialist	Delay damages, defects, fit-out interface

Conclusion

For joint venture contractors bidding Vietnam packages, the bid is only the beginning: the structure must satisfy the employer’s joint liability expectation, the licensing authority’s Vietnamese partner rule and the members’ own need for protection against each other. A practical next step is to prepare a term sheet for the joint venture agreement, covering lead member authority, security, insolvency and exit, before bid documents are finalised, and to test it against the construction contract draft. The Decree 210 summary on the official policy portal is a useful starting reference.

Frequently Asked Questions

Are joint venture members liable for each other’s work?

Under FIDIC 1999 sub-clause 1.14, members are deemed jointly and severally liable to the employer. Under Vietnamese law, confirm the extent of joint liability and write it expressly into the contract.

Must a foreign contractor form a joint venture with a Vietnamese company?

It must either form a joint venture with a Vietnamese contractor or use a Vietnamese subcontractor, unless no domestic contractor can perform any part of the package, under Decree 212/2026.

Who provides the performance guarantee for a consortium?

Under Decree 210, each member provides security for its share of the contract value, or the lead member provides it if the members agree. Public investment and PPP percentages do not automatically apply to private projects.

Can a member leave after the contract is signed?

Not freely. FIDIC 1999 requires the employer’s prior consent to changes in the contractor’s composition, and a foreign contractor’s licence must be amended when a member changes.

Is a joint venture agreement enough, or do we need a new company?

A contractual joint venture is common for a single project. A special-purpose company suits long-term operations; check licensing consequences and the employer’s requirements before choosing.

Disclaimer: this article provides general information and is not legal advice for a specific matter. The law is stated as at 22 October 2026. Please obtain advice on your own facts before acting.