LBN ON CIRCULAR 02/2023/ TT-BXD
On March 3, 2023, the Ministry of Construction (MOC) issued Circular No. 02/2023/TT-BXD, providing guidance on specific aspects of construction contracts (Circular 02-BXD), which became effective on April 20, 2023.
Circular 02-BXD clarifies certain provisions of Decree 37/2015/ ND-CP (updated by Decree 50/2021/ND-CP) related to construction contracts, and replaces several previous circulars, including Circular No. 07/2016/TT-BXD on Guidelines for Price Adjustments in Construction Contracts, Circular No. 08/2016/TT-BXD on Guidelines on Certain Contents of Construction Consultancy Contracts, Circular No. 09/2016/TT-BXD on Guidelines for Construction Contracts, and Circular No. 30/2016/TT-BXD on Guidelines for Engineering, Procurement, and Construction Contracts.
Circular 02-BXD is mandatory for organizations and individuals involved in preparing and managing construction contracts in three situations: construction investment projects with public investment funds, construction investment projects with state funds (excluding public investment funds), and public-private partnership (PPP) project packages. However, it is recommended that other organizations and individuals also refer to Circular 02-BXD when preparing and entering into construction contracts.
Regarding interim payments, Circular 02-BXD provides detailed guidance, particularly for adjustable unit price contracts, which allows the use of the unit price specified in the contract for interim payments in the absence of data necessary to adjust the unit price.
Circular 02-BXD also provides guidance on price adjustments, requiring the signing of annexes in case of additions to the contract resulting from such adjustments. For construction consultancy contracts where payment is made in instalments, Circular 02-BXD provides for salary adjustments calculated using a formula set out in the annex to the circular.
Circular 02-BXD generally removes detailed guidelines for construction contracts, allowing the parties to negotiate more freely. However, the absence of such guidelines could become an obstacle if mutual agreement is not reached, particularly in cases involving risks and force majeure.
In the transitional provisions, Circular 02-BXD requires adjusting the content of the construction contract in approved but unpublished tender documents and requests for proposal to be consistent with Circular 02-BXD. Contractors subscribed to tender documents must be informed of any adjustments made to the content of the contract.
Our firm, VCI LEGAL, is available to provide advice on construction contracts and assist in ensuring compliance with Circular 02-BXD.