VCI Legal – 30 October, 2025

Recently, the Singapore Court of Appeal issued its judgment in Vietnam Oil and Gas Group with Power Machines [2025] – SGCA 50, concluding the dispute between Vietnam Oil and Gas Group (Petrovietnam – PVN) and Joint Stock Company Power Machines – ZTL, LMZ, Electrosila Energomachexport (PM). This marks one of the disputes involving a Vietnamese element concerning an EPC (Engineering, Procurement, and Construction) contract that has been adjudicated within the Singapore judicial system. 

1. Dispute overview

The parties involved in the dispute:  

• The Appellant/Respondent: Vietnam Oil and Gas Group – the Project Owner (“PVN”) 

• The Respondent/Claimant: Joint Stock Company (Power Machines – ZTL, LMZ, Electrosila Energomash Export) – the Project Contractor (“PM”) 

The subject matter of the dispute originates from an Engineering, Procurement, and Construction (“EPC”) Contract for the construction of a thermal power plant in Vietnam. The Contract is governed by Vietnamese Law and stipulates arbitration in Singapore under the rules of the Singapore International Arbitration Centre (“SIAC”). 

2. Substance of the Dispute and Legal Events

In or around 2013, PVN entered into a contract with the Consortium in relation to the Project (the “EPC Contract”). Some prominent clauses of the Contract”: 

• Clause 1.4: the EPC Contract was governed by Vietnamese law; 

• Clause 20.3: any dispute arising out of or in connection with the EPC Contract was to be referred to arbitration in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC”); 

• Clause 16.2(b): permitted PM to terminate the EPC Contract if payments due were not received within 150 days of the time for payment specified in the EPC Contract; 

• Clause 19.6: permitted any party to the EPC Contract to terminate the contract if any party faced force majeure for period of 84 days. 

30/11/2025: The Project commenced 

26/01/2018: PM was designated on the list of Specially Designated Nationals and Blocked Persons by the US. The US released “the US sanction” that prohibited all US persons from engaging in transactions involving PM. Many of PM’s subcontractors suspended the performance of their obligations under their subcontracts with PM. 

05/02/2018: PM issued a notice to PVN asserting that the imposition of the US Sanctions constituted a force majeure event as defined in clause 19.1. 

From 01/2018 to 07/2018: PM made several applications for payments due under the EPC Contract 

From 03/2018 to 01/2019: PM and PVN engaged in negotiations on the possibility of arranging direct payment between PVN and PM’s subcontractors without breaching the US Sanctions. 

Eventually, on 28/01/2019: PM issued a notice of termination of the EPC Contract pursuant to clause 19.6 and mentioned that the US sanction constituted a force majeure. The EPC Contract would terminate on 18/02/2019. 

On 08/02/2019: PM issued a second notice of termination on the ground that various payments had been outstanding for more than 150 days. the EPC Contract would terminate on 22/02/2019. 

On 30/11/2023: the arbitral tribunal (“Tribunal”) issued the Final Award as summarised as follows: 

• PM had failed to establish that the US Sanctions constituted a force majeure so the EPC Contract, by way of the First Notice. was without basis; 

• As a matter of Vietnamese law, a notice of termination issued without basis was sufficient; 

• The Tribunal held, at paras 548 and 549 of the Final Award, that:  

• (i) a valid Second Notice issued while the contract remains on foot overrides and supersedes the ineffective First Notice. By issuing a Second Notice prior to the First Notice taking effect, [PM] must be taken to have intended the Second Notice to replace or, at the very least, supplement the First Notice;  

• (ii) the Tribunal notes that the Vietnamese law experts did not specifically deal with the present scenario involving an unlawful First Notice and a lawful Second Notice; 

• PM had validly terminated the EPC Contract on 22/02/2019 by way of the Second Notice and awarded damages accordingly, a sum of approximately USD 300 million. 

In 07/2024: PVN sought the annulment of the award on the grounds of a breach of natural justice. The Judge of the High Court sitting in the General Division recognised the infringement but then decided to refer the matter back to the same arbitration panel for review: 

• PVN contested, asserting that the panel had forfeited its objectivity and impartiality, so PVN appealed.  

• PM also filed an appeal due to concerns that the Judge’s decision might potentially lead to the setting aside of the Arbitral Tribunal’s Final Award. PM asserted that the Judge erred in finding that the Tribunal had breached the rules of natural justice and/or exceeded its jurisdiction in coming to its finding at para 548 of the Final Award 

The Appellate court decision (SGCA 50): 

• The Court of Appeal found that the Arbitral Tribunal’s conduct constituted a serious breach of natural justice, to the extent that it raised a reasonable basis for the apprehension of bias. Consequently, the Court held that this Tribunal could not be trusted to reconsider its own previous decision, and the award in favour of PM had to be set aside on the grounds of a violation of fairness. 

• The Court of Appeal articulated that the Arbitral Tribunal had reached its conclusion despite being aware that neither party’s expert witnesses had provided evidence on the specific issue. In the Court’s assessment, this truly raised concerns regarding the Tribunal’s predisposition should the matter be remitted to it for further consideration. 

The Appellate court dismissed PM’s appeal in CA 49, allowed PVNs’ appeal in CA 48; set aside para 548 of the Final Award as well as any other parts of the Final Award consequential to para 548; concurrently rejected the Singapore High Court’s prior ruling on remitting the matter to the Arbitral Tribunal for reconsideration.  

According to experts, this victory not only helps PVN resolve a protracted multi-year lawsuit but also establishes a positive precedent for Vietnamese enterprises engaging in EPC contracts with foreign elements, affirming Vietnam’s legal competence and increasingly prominent position on the international stage 

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