Tiếng Việt📌Commercial Dispute – Late Payment Interest in Construction Contracts: Trade Law or Construction Law?
💡 Should late payment interest in construction contracts be governed by the Commercial Law or Construction Law? How should courts handle disputes over unpaid amounts and overdue interest? 🤔
📖 In Case No. 50/2024/KDTM-PT, the subcontractor (Company G VN) filed a lawsuit against the main contractor (Company V) for:
🔹 Unpaid construction work: VND 15,405,003,000
🔹 Late payment interest: VND 6,239,825,000
⚖ Court’s Key Rulings:
✅ Trial Court Decision:
Applied Article 306 of the Commercial Law 2005, setting a late payment interest rate of 11.9% per year (based on an average of three commercial banks’ overdue rates).
Ruled that the main contractor must pay the outstanding amount and interest for late payment.
✅ Appeal Court Decision:
– The main contractor argued that the contract falls under the Construction Law, not the Commercial Law, and that there was no agreed-upon interest rate in the contract.
– The court adjusted the late payment interest rate based on the bank lending rate (10.7% per year) and overdue interest (16.05% per year).
– The ruling reinforced that the contractor was liable for delayed payments and corresponding interest, even without an explicit agreement on late payment terms.
🔎 Key Takeaways from the Case:
* Clearly define late payment interest in contracts to avoid ambiguity and legal disputes.
* Failure to specify interest terms may lead courts to apply different legal frameworks (Commercial Law vs. Civil Code), affecting the final interest calculation.
* Timely payment processing by main contractors is crucial to avoid financial liabilities and potential litigation.
💬 Have you encountered similar disputes? In construction contracts, should courts apply the Commercial Law (which provides explicit interest rules) or rely on the Civil Code/Construction Law? Pls share your thoughts! 👇
THE LAM LAW LLC
🏢Indochina Park Tower, # 4 Nguyen Dinh Chieu Str, Dakao Ward, Dist 1, Ho Chi Minh City.
📞Tel: +84 (0)28 710 58 222 – 6288 3798 – Hotline: +84 (0) 97 309 77 77
✉ Email: info@thelamlawllc.com
Related Posts
Welcoming Dr. Louay Alyaqoubi to THE LAM LAW LLC
We are delighted to welcome Dr. Louay Alyaqoubi to THE LAM LAW LLC – Your
Jun
Application of Equity in Civil Dispute Resolution in Vietnam
THE LAM is pleased to introduce the article on the topic “Application of Equity in
Jun
Decoding Property Insurance Contracts: Essential Clauses You Need To Know
Presented by: Tran Thi Kieu TranJunior Associate – THE LAM LAW LLC Introduction Property insurance
Jun
Vietnam’s Civil Judgment Enforcement Law – Major Reform Ahead
Expected to be submitted to the National Assembly in October 2025Drafted by the Ministry of
Jun
Can parties proceed directly to arbitration when pre-arbitration procedures under FIDIC are waived?
📌 Let’s have a look on the Decision No. 09/2019/QĐ-PQTT, the Hanoi People’s Court declined
Jun
Strengthening Defense in Economic Criminal Cases
Within the framework of the Workshop on Enhancing Lawyers’ Skills in Handling Criminal Cases on
Jun