On June 15, 2026, the Government issued Decree No. 210/2026/ND-CP (“Decree 210”) providing detailed regulations on construction contracts. The Decree took effect on July 1, 2026, replacing Decree No. 37/2015/ND-CP and Decree No. 50/2021/ND-CP (hereinafter collectively referred to as “Decree 37”). In addition to inheriting current regulations, Decree 210 supplements and clarifies various contents regarding payment, contract performance management, electronic transaction contracts, and the mechanism for establishing and operating the Dispute Review Board.
These new points directly affect the rights, obligations, and responsibilities of investors, contractors, and related parties that businesses need to note. In particular, enterprises must clearly distinguish: certain new regulations are mandatory for public investment projects and PPP projects, but are encouraged for application in private-funded projects.
1. Expanding the Governing Scope and Supplementing New Types of Construction Contracts (“CC”)
1.1. Expanding the Governing Scope to All CCs
Compared to the old regulations which were only mandatory for contracts under public investment projects and PPP projects while being voluntary for other entities, Article 2 of Decree 210 has expanded its governing scope. Accordingly, the applicable entities are comprehensively extended to employers, contractors, as well as organizations and individuals involved in the execution and performance management of construction contracts in general.
1.2. Supplementing New Types of CCs
Clause 2, Article 6 of Decree 210 supplements 03 new types of contracts based on the form of contract price:
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Performance-based contract: The contract price and payment value are determined based on the actual acceptance results of the output products' quantity and quality as agreed.
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Percentage-based contract: The contract price is determined by a fixed percentage of the cost or value of the work performed.
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Mixed contract: Allows the flexible combination of available contract price forms (such as lump-sum, unit price, performance-based, percentage-based, etc.) for different parts of the work.
This addition is a breakthrough step to diversify commercial procurement methods in the construction sector, aligning more closely with international practices. In particular, the legalization of performance-based and mixed contracts helps optimize cost management efficiency for projects with complex or long-term components, while minimizing disputes arising during the acceptance and capital finalization process.
1.3. Official Recognition of Electronic Transaction Contracts in Construction
Clause 8, Article 4 of Decree 210 stipulates that for electronic transaction contracts in construction, the execution and performance management of construction contracts must comply with the laws on electronic transactions.
Instead of taking weeks to route paper documents for physical signing and stamping between parties (which is particularly difficult for foreign contractors or joint venture projects), businesses can now execute contracts online. This not only saves printing and storage costs but also optimizes the transparency and security of project data. This is one of the notable new contents of Decree 210, as it recognizes electronic transaction contracts in the construction sector for the first time. This regulation synchronizes specialized laws with the Law on Electronic Transactions 2023, creating a clearer legal framework for applying electronic methods in the process of executing, managing, and performing construction contracts, in line with the digital transformation trend in investment and construction activities.
2. Safeguarding the Financial Rights of Contractors in Performance Security
2.1. Clarifying the Right to Earn Interest on the Contractor's Performance Security Amount
According to Clause 2, Article 13 of Decree 210, the forms of performance security for obligations in a construction contract may include bank guarantees, deposits, and other security measures in accordance with the law. In case an escrow deposit method is used or the employer retains money from interim payments to secure the contractor's performance obligations, the providing party is entitled to receive the interest generated from such escrow deposit.
This is a new and significant regulation that protects the legitimate financial rights of contractors, minimizes financial risks in case investors intentionally retain capital indefinitely, and provides contractors with an additional source to offset financial costs throughout the implementation stage of the construction contract.
2.2. Adjusting Entities Exempted from Performance Security in Alignment with the Bidding Law
Clause 2, Article 68 of the Bidding Law 2023 stipulates cases where performance security is not required, including:
a) Contractors providing consulting services; b) Contractors selected under the form of self-performance or community participation; c) Contractors executing packages with a value within the threshold for direct appointment.
Previously, Decree 37 excluded the responsibility for performance security for construction consulting contracts, internal contracting contracts, construction contracts under target programs performed by households, and construction contracts under the self-performance form. This content was insufficient to cover all entities exempted from this obligation under the aforementioned Bidding Law.
Therefore, Decree 210 simplifies this by directly cross-referencing Clause 2, Article 68 of the Bidding Law. This ensures consistency and facilitation in applying legal regulations.
However, this new regulation seems suitable for projects applying bidding procedures. In cases where a project is not subject to the mandatory application of the Bidding Law and does not follow bidding procedures, whether the construction contract of that project can be considered for performance security exemption remains a question. This issue will certainly encounter bottlenecks and needs to be supplemented/clarified by law-making bodies or specialized management authorities in the near future.
3. Enhancing Efficiency in Handling Complaints, Denunciations, and Disputes During CC Performance
Bouncing the Response Deadline for Recommendations and Proposals in Public Investment and PPP Construction Contracts
Point b, Clause 4, Article 4 of Decree 210 stipulates that for public investment and PPP projects, the party receiving recommendations, proposals, or requests must respond in writing (either approving or clearly stating the reasons for refusal) within a maximum of 07 working days from the date of receipt.
In reality, delays in responding to technical submittals and site queries are common causes that stall the overall progress of projects. Fixing a specific response deadline helps clarify the responsibility for coordination between parties during contract performance, while creating a basis for resolving issues arising during project implementation.
Elevating the Role of the Dispute Review Board (DRB) Mechanism
Decree 37 recognized the dispute resolution mechanism via a Dispute Review Board, but it was viewed as a form of mediation, meaning that if one party disagreed, they naturally retained the right to bring the dispute to Arbitration or Court.
However, Article 17 of Decree 210 has supplemented and clarified the legal framework for the Dispute Review Board, creating maximum flexibility for parties to choose a management and dispute resolution mechanism suitable for each project, specifically:
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DRB decisions can be "final and binding" if agreed upon in the Contract: Decree 210 allows contract parties to agree on all necessary details to apply the DRB mechanism right at the time of contract execution—when disputes have not yet arisen and the parties are highly cooperative. This helps parties jointly establish the most appropriate and effective dispute resolution mechanism, avoiding the loss of time, costs, and effort in prolonged legal battles.
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The DRB can be established and maintained throughout the CC performance duration: Parties have the freedom to agree on the timing of establishment and operation of the DRB, specifically: (i) permanent operation: established immediately after signing the contract to accompany and monitor the entire project implementation process; and (ii) ad-hoc establishment: formed only after a specific dispute has arisen.
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Strict standards on independence: To ensure convincing rulings, DRB members must meet rigorous standards regarding professional qualifications and practical experience, ensuring absolute objectivity, independence, and no conflict of interest with any party.
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Fair cost-allocation mechanism: The remuneration for members and related operational costs will be shared equally (50/50) by each party, unless otherwise agreed. This regulation ensures a balance of financial responsibility and maximum rights between the investor and the contractor.
Confirming the Principle of Non-Interruption of the Contract During Dispute Resolution
To ensure the continuity of construction work and protect the rights of the parties, Decree 210 clearly stipulates the principle of the Contract during dispute resolution: "During the process of dispute resolution, the parties are responsible for continuing to perform their contractual obligations for works unaffected by the dispute content; they must not disrupt contract performance, except in cases of force majeure, or upon request of a competent authority, or under regulated cases of construction contract suspension." For a long time, the non-interruption principle has been common in international standard forms of contract like FIDIC, many EPC contracts, and ICC conditions. This regulation demonstrates the trend of current legal regulations approaching international practices.
In our view, this new regulation could become an important basis for evaluating the conduct and liability of the parties during contract performance and may significantly affect the review and handling of arising disputes.
Decree 210 not only inherits old regulations but also reshapes the principles of construction contract management towards being more transparent, faster, and fairer. Investors, contractors, and related parties should soon review their contract templates, internal approval workflows, and cash flow mechanisms to ensure full compliance with the new regulations. In addition to traditional methods, businesses should consider reviewing current contract templates to assess the possibility of applying the DRB mechanism for appropriate projects, especially large-scale or highly complex ones.
Decree 210 took effect on July 1, 2026.
For CCs under public investment and PPP projects that were executed and are being performed before the effective date of this Decree, the old regulations shall apply. For CCs under other projects, the parties are permitted to agree on applying the regulations of this Decree; if no agreement can be reached, the old regulations shall continue to apply.
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