Scenario: an 80MW solar plant faces 6 months of late EVN payments while bank interest accrues daily. The sponsor wants to sue — but the PPA requires negotiation first, then arbitration. PPA disputes: winning needs not just the right arguments but the right dispute-resolution “staircase”.
The dispute “staircase” in PPAs
The model PPA (Circular 57/2020/TT-BCT) sets a stepped dispute process: direct negotiation → mediation → arbitration or courts. Skipping to litigation can be deemed non-compliant — claims returned, time lost.
Common PPA dispute types
- Late payment: the most common — anchored on payment duties and late-payment interest in the model PPA.
- Price and output disputes: tariff calculation, output recording, metering.
- Curtailment: dispatch reduction orders — rights and compensation contested.
- Force majeure: risk allocation for prolonged events.
- Early termination: termination conditions and compensation on unilateral termination.
Arbitration: investors’ choice
Arbitration (e.g., VIAC — the Vietnam International Arbitration Centre) appeals to investors for confidentiality, flexibility and enforceability (awards widely recognized and enforced). Foreign-element projects may agree on international arbitration — weighing costs, time and enforceability in Vietnam.
Prevention: dispute clauses written on day one
PPA disputes are won at drafting: clear steps, timelines per step, arbitral institution, governing law, language. And during performance: complete records of correspondence, minutes, metering data — PPA disputes are document wars; the better-documented side usually wins.
Frequently asked questions
1. What is the PPA dispute sequence?
Under the model PPA (Circular 57/2020): negotiation → mediation → arbitration or courts — in order.
2. Where to sue over EVN’s late payment?
Per the PPA mechanism: after failed negotiation and mediation, arbitration (e.g., VIAC) or courts as agreed.
3. What are VIAC’s advantages?
Confidentiality, flexibility, widely recognized and enforced awards — favored by investors in energy disputes.
4. How do foreign-element disputes differ?
Parties may agree on international arbitration; but weigh costs, time and enforceability in Vietnam.
5. How to prevent PPA disputes?
Draft dispute clauses carefully from day one; keep complete correspondence, minutes and metering records during performance.
This article has been quality-reviewed by the FLAW AI Legal Council.