Offshore Energy Construction in Vietnam: Contract and Legal Risks

Updated: 22 October 2026 · IVLF Advisors

Most offshore energy construction Vietnam contracts are written on international offshore templates, yet they are performed through Vietnamese fabrication yards, ports, subcontractors, payment channels and licensing authorities. The gap between the two is where schedule, security and liability assumptions quietly fail. This article sets out where those gaps open for owners, lenders and contractors, and how to close them in the contract before signature.

Scope note: the Vietnamese law cited below is the general construction framework (the Construction Law 135/2025/QH15, Decree 210/2026/ND-CP on construction contracts and Decree 212/2026/ND-CP on capacity and foreign contractors, all in force from 1 July 2026). Whether a particular offshore petroleum, wind or power asset falls under that framework, or under a sector law or licence, must be confirmed for each project. Offshore-specific points come from published offshore construction practice and are labelled as market practice. The same issues arise across offshore wind, gas-to-power and LNG packages as well as the onshore yards and ports that support them.

How offshore energy construction Vietnam projects are layered legally

A single project usually sits under four layers at once. Treating them as one “contract question” is the most common structuring error.

• The commercial contract between the owner (often called the “Company” in offshore forms) and the main contractor, frequently governed by English or another foreign law with arbitration abroad (market practice).
• Vietnamese construction law for the parts of the works performed in Vietnam, including contract content, modification, suspension, termination and payment rules.
• Sector and maritime rules for the asset itself (petroleum, power, ports, vessels, environment). We have not analysed these here.
• Licensing of foreign contractors performing construction activity in Vietnam, discussed below.

Even where a foreign law governs an offshore energy construction Vietnam contract, Vietnamese mandatory rules, foreign-exchange controls and local permits still apply to what happens on Vietnamese soil. Draft with that in mind from the first term sheet.

Choosing the contract model: EPC, EPCI or split packages

In offshore practice an EPC contractor takes full responsibility for designing and completing the unit unless the contract moves some of that responsibility back to the owner. Where the owner supplies the front-end engineering design (FEED) and the contractor’s duty ends at delivery at the yard, the label “EPC” works. Where the unit is installed before handover, the contract is normally called an EPIC or EPCI contract, and the key legal question is at what point in installation and commissioning the contractor’s obligations are discharged.

In offshore energy construction Vietnam deals, the choice drives who carries interface risk between hull, topsides, subsea and installation. It also drives what a Vietnamese court or arbitrator will treat as the contractor’s “scope”.

Model	Typical handover	Principal risk for the owner	Principal risk for the contractor
EPC (yard delivery)	At the yard, after completion and tests	Transport, installation and hook-up fall outside the price	Full design responsibility and delay damages
EPIC / EPCI	After installation (and possibly commissioning)	Dispute over when obligations are discharged	Weather, vessel availability and installation window
Split packages	Package by package	Interface and coordination gaps between contractors	Dependence on others’ progress; mismatch of remedies

The FIDIC 1999 edition Silver Book is built for EPC and turnkey projects, largely onshore. It places design and most risk on the contractor and is sometimes used by analogy in Vietnam. Treat it as a reference point rather than a drop-in offshore form; offshore projects normally rely on bespoke or industry-specific forms (market practice).

Compliance duties and permits: who obtains what

Under Sub-Clause 1.13 of the FIDIC 1999 Silver Book, the contractor must comply with applicable laws and, unless the Particular Conditions say otherwise, obtain the permits, licences and approvals required for design, execution and completion. The employer obtains planning and similar permissions for the permanent works and indemnifies the contractor if it fails to do so. In an offshore setting that default allocation is rarely suitable, because many permissions belong to the field operator or the asset owner.

Under Vietnamese law the position is similar in principle: the parties allocate responsibilities by contract. The practical point is to list each Vietnamese approval (construction, environmental, port and navigation, customs, labour and foreign contractor licence), name the responsible party and the effect of delay. A late permit should be a defined delay event, not an argument.

Knock-for-knock indemnities and insurance

How the allocation works in offshore practice

The knock-for-knock indemnity is the signature risk allocation in offshore contracts. Each side, together with its own contractors, bears the loss of its own people and property, whoever was at fault (market practice). The structure only works if the definitions are tight. Published offshore guidance notes that bundling “vendors” (suppliers of goods) into the definition of subcontractor can serve the indemnity but blur the allocation of delay and non-performance risk.

Where title and risk pass during construction, the owner’s interest in the construction all-risks policy is typically assigned to financiers, with the lender as joint assured (market practice). Check that the Vietnam leg of the programme, including fabrication and load-out, is within the insured territory and period.

Where Vietnamese law meets the indemnity

Article 86(4) of the Construction Law provides that where a breach is caused by a third party, the breaching party remains liable to its counterparty. That fits the knock-for-knock logic of responsibility for one’s own subcontractors, but it does not by itself confirm that a no-fault, cross-waiver indemnity will be enforced in full under Vietnamese law. Enforceability of broad indemnities and waivers under the Civil Code 2015 should be tested before relying on them.

Mandatory construction insurance is addressed by Article 10 of the Construction Law and a separate implementing decree (Decree 220/2026/ND-CP, which we name only; the detailed requirements should be checked). Decree 210 Article 20 leaves the allocation of insurance purchasing duties between the parties to the contract.

Delay damages, caps and subcontractor interface

Liquidated damages for delay are the conventional way a contractor limits exposure to late delivery, even though technically they are compensation rather than a cap. Offshore guidance observes that daily rates are often negotiated as a percentage of contract value, usually rising the longer the delay lasts, and that the rate generally becomes the sole remedy for the delay itself. The drafting should therefore answer three questions:

• What is the daily rate, and does it escalate?
• Is there an overall liquidated damages for delay cap, and does reaching it trigger termination rights?
• Does the contractor receive an extension of time for owner-side and legal-change events?

Under Vietnamese law, bonus, penalty and compensation terms must be agreed in the contract (Article 86(1) of the Construction Law), and compensation is either actual loss or a pre-agreed amount of damage (Article 86(2)). For public-investment and PPP contracts only, the contractual penalty may not exceed 12% of the value of the breached portion of the contract (Article 86(3)). Private contracts follow the parties’ agreement, subject to general commercial and civil law limits on penalties, which should be checked for the governing law chosen.

The subcontractor mismatch deserves attention. A package supplier, such as a drilling or topsides vendor, may be late for its own reasons, while the main contractor remains exposed to the owner for the whole schedule. Align back-to-back remedies, or the contractor holds the gap. Decree 210 Article 19 confirms that the main contractor remains responsible to the investor for the progress, quality and defects of its subcontractors, including nominated ones.

Advance payments, refund guarantees and the lender’s view

Offshore contracts modelled on shipbuilding practice require the contractor to provide a bank-issued refund guarantee securing repayment of instalments if the contract ends early. Because the bank often issues it only after signature, the contract may be signed but not effective until the guarantee is delivered. That is a conditional agreement and, in published offshore guidance, generally enforceable; the contractor is then expected to use reasonable efforts to procure it.

Lenders normally seek assignments of the construction contract, the refund guarantees, key equipment supply contracts and the insurances, and will test whether the hull or equipment can be charged (mortgage availability depends on the jurisdiction and registration). Title passing during construction is helpful but can be defeated in practice by the contractor’s insolvency and by the difficulty of removing a part-built hull.

Question	Private project	Public investment or PPP project
Advance payment size and recovery	As agreed (Decree 210 Article 12(2))	Statutory ceilings and minimums apply, for example 30% of the contract price at signing without special approval (Article 12(3))
Advance payment guarantee	As agreed	Required for advances above VND 1 billion (Article 12(3))
Performance security	As agreed	Between 2% and 10% of contract price for PPP and public-investment contracts, higher only as the procurement law allows (Article 13)
Contractor’s right to payment security from the employer	May require proof of financial capacity or security (Construction Law Article 83(3))	Not available for public-investment contracts (Article 83(3))

The figures in the right-hand column apply only to public-investment and PPP projects. Most privately financed offshore energy projects will not fall in that column, so the commercial terms and the lender’s requirements control.

Foreign contractors: the licence and local-content rules

A foreign contractor may carry out construction activity in Vietnam only after the provincial authority issues a construction activity licence (Construction Law Article 88(3); Decree 212 Articles 42 to 46). The main conditions are:

• A winning-bid decision or selection by the investor or main contractor.
• A joint venture with a Vietnamese contractor, or use of Vietnamese subcontractors, unless no domestic contractor can perform any part of the package; the share of Vietnamese work must be specified.
• A filing in Vietnamese with legalised and translated foreign documents, normally decided within six working days of a valid file.

Decree 212 Article 49 adds a duty for the investor or main contractor: sign the contract only once the licence exists, and review domestic availability of equipment and labour before agreeing temporary import lists and foreign personnel schedules. Make licence issue a condition precedent, with a long-stop date and a pricing consequence if it slips. Our guide to the foreign contractor construction licence in Vietnam sets out the filing in detail.

Whether offshore marine spreads working outside territorial waters or on seabed installations require that licence is a scope question for the competent authority. Do not assume exemption.

Disputes, governing law and enforcement

Disputes on offshore energy construction Vietnam projects tend to arise from delay, variation and payment, rarely from technical failure alone, so the dispute clause deserves the same care as the price.

Offshore contracts normally use international arbitration, often in Singapore or London (market practice). The FIDIC 1999 Silver Book default is ICC arbitration with three arbitrators, after a dispute avoidance step where a board is used. Decree 210 Article 17 also recognises dispute boards “in line with international practice” for Vietnamese construction contracts.

For public-investment and PPP projects, the Construction Law (Article 86(5)) gives priority to domestic arbitration; international-practice models are available where a treaty requires them, or the investment decision-maker permits and the contract provides. Private projects have wider freedom. Check enforceability of the award in Vietnam early; the Singapore International Arbitration Centre is one commonly used seat and institution for energy disputes in the region.

Offshore energy construction Vietnam: a pre-signing checklist

Offshore energy construction Vietnam: contract and security terms

• Fix the contract model and the exact handover event; align the definition of completion with installation and commissioning.
• Define vendors and subcontractors separately for indemnity and for delay purposes.
• Make the refund guarantee and the foreign contractor licence conditions to effectiveness, with long-stop dates.
• Choose a change-in-law mechanism. The Silver Book Sub-Clause 13.7 adjusts the price and time for changes in laws after the Base Date; Vietnamese law lets the parties modify a contract where the State changes policy or law that directly affects it (Construction Law Article 84(2)).

Money, currency and tax

• Plan the currency of payment against Vietnamese rules: the Construction Law says payment is in Vietnamese dong, with foreign currency permitted only in compliance with foreign-exchange law (Article 87(2)(c)). The FIDIC form chosen for a Vietnamese project must be read with that rule.
• Check withholding and import duty treatment separately; we have not analysed tax here.

For any offshore energy construction Vietnam project, the right sequence is to settle model, security and permits first, then price. Teams that price first usually renegotiate in the middle of fabrication.

How Offshore Energy Construction Vietnam Contracts Compare Across Project Types: Infrastructure, Industry, Energy and Real Estate

Offshore work does not exist in isolation. It depends on ports, fabrication yards, grid connections and sometimes onshore terminals, and each of those falls into a different legal category. Mapping the whole chain avoids surprises.

Infrastructure and transport

Marine support depends on ports, quays and access roads, which are often State or State-owned assets, and public-investment or PPP rules may apply to the port package even where the offshore package is private. Large public programmes elsewhere in the country, such as the North-South high-speed railway of roughly 1,541 km through 15 provinces (VietNamNet, 9 October 2026), compete for contractors, vessels and labour, which affects market pricing and schedule risk, not the legal rules.

Heavy industry and fabrication

Steel fabrication yards, petrochemical complexes and cement plants are onshore industrial assets, normally private or foreign-invested and governed by party agreement. For offshore energy, the yard is where schedule is won or lost: check delay damages, load-out and sail-away, and whether the licence for foreign contractors covers yard work.

Renewable and offshore energy

Offshore wind, solar, grid and LNG or gas-to-power projects raise the classification question: whether the work is a construction contract under the Law on Construction or falls under oil and gas or electricity-law regimes depends on the facts and ownership structure. Offshore wind typically uses split packages (foundation, turbine, cable, installation) and knock-for-knock allocation as market practice.

Real estate and onshore works

Onshore terminals, support bases and staff accommodation may involve hotels or mixed-use development by a private developer, where the contract follows party agreement. Land-use and real-estate rules for the site fall under the land and real-estate law and are not analysed here.

Sector	Typical contract feature	What to check for offshore energy
Transport and ports	State-owned quays, public rules possible	Which regime governs port access works
Heavy industry	Private fabrication yard	Delay damages, load-out, yard licence
Energy and power	Split packages, knock-for-knock	Regime classification, refund guarantees, insurance
Real estate	Onshore bases and accommodation	Interfaces with developer, site rights

Conclusion

Offshore energy projects in Vietnam succeed when the international contract and the Vietnamese legal layer are drafted together. The decisions that matter most are the handover event, the indemnity definitions, delay remedies and caps, financing security, and the licence and permit timetable. Your next step: map each Vietnamese approval and payment flow against your draft contract, then close the gaps before the final negotiation round.

Frequently Asked Questions

Can an offshore construction contract be governed by foreign law in Vietnam?

Often yes for private projects, but Vietnamese mandatory rules, foreign-exchange controls and licensing still apply to work in Vietnam. Public-investment and PPP projects face additional restrictions on foreign arbitration. Confirm the position for your project.

Is the FIDIC Silver Book suitable for offshore energy projects?

The 1999 Silver Book suits EPC and turnkey work, mainly onshore. Offshore projects usually need bespoke terms for vessels, installation windows and indemnities, so use FIDIC as a reference rather than a template.

Does a foreign contractor need a licence for offshore work?

A foreign contractor performing construction activity in Vietnam needs a licence under Decree 212. Whether a specific offshore scope falls within it should be confirmed with the authority before mobilisation.

Are Vietnamese contractual penalty caps relevant to my contract?

The 12% cap on contractual penalties applies to public-investment and PPP contracts. Private contracts follow party agreement, subject to general law limits that should be checked.

What security should a lender require?

Typically assignment of the construction contract, refund and performance guarantees and insurances, plus charges over equipment and the hull where available. Enforceability depends on the jurisdiction and registration.

Disclaimer: this article is general information, not legal advice for a specific matter. It reflects the law as of 22 October 2026. Please obtain advice on your own facts before acting.