VietNamNet Bridge – Vinalines is facing the fine decided by the Vietnam International Arbitration Center (VIAC) for its violation of contract terms for a pier at Van Phong international transshipment port project in the south-central province of Khanh Hoa.

The legal action against Vinalines was filed by South Korean contractor SK E&C who executed a package of the project.

In 2009, Vinalines and a consortium consisting of SK E&C and the Vietnam Waterway Construction Corporation (Vinawaco) signed a contract for pier construction at Van Phong international transshipment port. The contract got underway soon afterwards and was slated for completion within 20 months.

However, the Government issued an official announcement in September 2012 on suspension of the project.

The South Korean contractor claimed it incurred heavy losses after Vinalines unilaterally terminated the contract though it was valid in the development stage.

The case was brought to the Vietnam International Arbitration Center (VIAC). By January, VIAC judged that Vinalines would have to pay VND47.9 billion in compensation for the South Korean firm.

On February 26, VIAC made a second decision requiring Vinalines to pay over VND65 billion in compensation plus interest for the South Korean firm.

Vinalines filed a petition to the Hanoi City People’s Court requesting cancellation of the VIAC verdict in accordance with the commercial arbitration law.

For the volume of construction that the Korean contractor had carried out, Vinalines argued that it had given an advance of over VND87 billion to the contractor, which surpassed the value of the completed work.

As VIAC’s verdict became effective immediately while Vinalines had yet to settle the fine, the Korean firm requested law enforcement agencies in that country to detain Vinalines’ vessels. From March till June, Vinalines Sky and Vinalines Trader ships were detained, forcing Vinalines to place a total deposit of VND72.4 billion (some US$3.4 million) to have these ships released.

The Ministry of Transport has also urged the Hanoi People’s Court to handle the case soon. In case VIAC’s verdict was cancelled, VIAC would start over the case again with another arbitration council.

SGT/VNN