An FDI enterprise leased land for a factory but left implementation idle for two years while waiting for imported equipment. In the meantime, households around the site built temporary houses, planted trees and grazed cattle on the handed-over land; one household even fenced off the access road and claimed the family had reclaimed this land long ago. When the company finally brought machinery in, it met fierce obstruction. This is the kind of on-the-ground dispute that leaves many foreign investors unsure whether to call the authorities, sue, or negotiate on their own.
The legal framework: a lawful State lease creates protected land use rights
The Land Law No. 31/2024/QH15, effective from 1 August 2024, starts from the premise that land belongs to the entire people with the State as representative owner, and that a person lawfully allocated or leased land by the State holds rights protected by law, including compensation upon lawful recovery and the right to complain, denounce and sue over violations of land legislation. Encroaching upon or occupying land is a prohibited act in land management and use; the encroacher may face administrative penalties and be compelled to restore the land to its original state and return the encroached land under the sanctioning and remedial rules of the land sector. Power to fine and to enforce sits with chairpersons of people committees at the relevant levels depending on area and gravity, never with the enterprise itself.
In parallel with the administrative channel, the Civil Code No. 91/2015/QH13 gives owners and holders of other rights over property the tools of self-protection and court protection: demanding an end to the infringing act, requiring a possessor or user without legal basis to return the property, and claiming compensation for damage caused by the infringement. A civil case over land use right disputes must pass through mediation at the commune-level people committee where the land sits, following the Land Law sequence, before the court accepts it in statutory cases; where obstruction shows criminal signs or threatens public order, the enterprise should report to the local police immediately rather than confronting anyone itself.
Applying the rules: does long-term encroachment make the enterprise lose the land
The question that worries investors most is whether a long-standing encroacher can somehow legitimise the occupied portion. The answer lies in the legal origin of the site: once the State has leased the land to the enterprise under a lease decision and contract with on-site handover completed, the enterprise land use right is an existing lawful right; another person moving in without permission creates no new right for them, and the passage of time does not by itself convert project land into the encroacher land. The real risk is evidentiary: if the enterprise leaves the land empty for years with no fence, no inspection and no record when encroachment begins, proving boundaries and the start date of occupation becomes far harder, and some households may invoke use predating the project land allocation to demand that their historical interests be considered.
An effective response usually runs in two beats. Beat one is administrative: the enterprise files a written request with its project legal dossier to the commune people committee and the authority competent to sanction, asking for inspection, a record of the encroachment, a penalty and an order to restore the land and hand it back. Beat two is judicial where the conduct continues: a civil lawsuit demanding an end to the infringement, return of the land and damages under the Civil Code, together with a request for interim emergency measures freezing any change to the plot status quo. Throughout, the enterprise must never demolish the encroacher structures itself or deploy security staff in confrontation, because self-help of that kind can flip the enterprise from victim to violator and destroy the legal file it has built.
Checklist for protecting project land from the first sign of encroachment
As soon as signs of encroachment appear on project land, the enterprise should take the following steps in this order:
- Record the status quo with time-stamped, geo-tagged photos and video; invite the commune people committee or the industrial park management company to witness a re-measurement of boundaries against the land handover record.
- Serve a formal written notice on the encroacher demanding an end to the act and removal of encroaching structures within a reasonable period, sent by guaranteed delivery so notification can be proven.
- Report and request administrative sanctioning of the land encroachment from the competent authority, attaching the full dossier: lease decision, land lease contract, certificate and on-site handover minutes.
- Complete fencing and land-right signage around the still-vacant areas right after each handover, and keep a patrol log proving continuous management of the land by the enterprise.
- If encroachment continues after sanctioning, prepare a civil lawsuit under the Civil Procedure Code No. 92/2015/QH13 claiming return of the land, cessation of infringement and documented damages.
Frequently Asked Questions
How do we protect land use rights when project land is encroached upon?
The enterprise protects its rights through three layers: lawful self-protection such as fencing, signage and a written demand to stop; the administrative channel, asking competent authorities to inspect, sanction and compel the encroacher to restore and return the land under the 2024 Land Law; and the court channel, a civil lawsuit demanding cessation of the infringement, return of the land and damages under the Civil Code. The constant is that every step needs records and evidence, and direct confrontation on site must be avoided.
Who handles land encroachment?
Handling authority sits with the State: the commune people committee where the land is located inspects, records and mediates land disputes; chairpersons of people committees at the various levels impose administrative penalties and organise enforcement to restore the original state depending on area and gravity. Local police handle conduct that disturbs public order or shows criminal signs. The enterprise is only the requesting party supplying evidence; it has no power to enforce or demolish the encroacher property itself.
Can long-term encroachment cause us to lose the land?
Not automatically. Where the State has lawfully leased the land and the enterprise lease term is still running, encroachment, however long it lasts, creates no land use right for the encroacher over that land. However, leaving encroachment unanswered for years erodes boundary and timeline evidence and may lead the resolving authority to examine the households historical land use as well. Enterprises should therefore react early and in writing as soon as encroachment is detected.
Can we sue the encroacher in court?
Yes. The enterprise files a civil lawsuit asking the court to compel the encroacher to end the infringement, return the land and compensate damage under the Civil Code and the Civil Procedure Code No. 92/2015/QH13. Note that land use right disputes fall into the category requiring mediation at the commune people committee before suit under the Land Law sequence; the record of unsuccessful mediation is a required document in the filing dossier in statutory cases.
This article has been quality-reviewed by the FLAW AI Legal Council
