Disputes Over Construction Permits in Industrial Parks in Vietnam

Construction in industrial parks (IPs) is a key sector attracting investment, but it also entails significant legal risks—particularly disputes related to construction permits. This article compiles the most updated sources to explore the causes, consequences, and solutions for resolving construction permit disputes in industrial zones across Vietnam.

1. Understanding Construction Permits in Industrial Parks

1.1. Legal Basis & Licensing Authority

The primary legal framework governing construction permits is the Law on Construction 2014, amended in 2020. According to the law, the Provincial People’s Committee (PPC) issues construction permits for projects within its jurisdiction, except in certain special cases.

The PPC can delegate or authorize the Department of Construction or Management Boards of Industrial Parks, Export Processing Zones, High-Tech Zones, or Economic Zones to issue permits within their management scope.

In some cases within industrial clusters, if a 1/500-scale detailed plan has been approved and the design has been appraised, construction permits may be waived. The investor only needs to submit a construction commencement notice and design documents to the District People’s Committee for record-keeping.

1.2. Licensing Procedure & Common Points of Dispute

Required documents include: application form for the construction permit; land use rights certificate or land lease agreement in the IP; construction design (basic and technical, if applicable); Environmental Impact Assessment (EIA) if required; and fire prevention design if necessary.

Receiving & Reviewing: The Industrial Park Management Board typically conducts an initial check and transfers the file to the competent authority (Department of Construction or PPC) if it lacks delegation. Site inspection may be conducted, and missing documents will be requested.

Processing Time: Normally, construction permits are issued within 30 working days from the date of receiving a complete and valid application for large-scale projects. For smaller projects or factory buildings within IPs, the timeframe may be shorter.

Key Dispute Triggers:

• Unclear delegation or authorization leads to confusion about the competent licensing authority (PPC, IP management board, district...).

• The 1/500-scale plan is not yet approved or approved but not reflected in submitted documents, resulting in permit rejection or inconsistency with planning.

• Technical indicators such as construction density, height, safety distance, building lines—if unclear or changed—may create legal conflict between planning and permitted design.

• Disputes over land use rights: if the land is under dispute or the right of use hasn’t been definitively established, the permit may be denied.

2. Common Disputes & Solutions

2.1. Types of Common Disputes

• Construction Without a Permit
  Example: an investor starts infrastructure works in an IP without a valid permit or without completing the necessary planning adjustments.

• Permits Issued by Unauthorized Entities or Inconsistent with Planning
  Cases where large-scale projects in IPs were licensed by entities without the required authority (e.g., IP board or district), or where permits deviate from approved 1/500-scale plans.

• Permit Waivers Ignored Administrative Notification Requirements
  Projects that meet conditions for permit exemption (approved 1/500 planning + appraised design) must still notify the district government. Failure to do so may result in administrative sanctions.

• Land Disputes Combined with Permit Disputes
  When the land is under dispute, the user rights are unclear, leading to permit denials or lawsuits against authorities issuing permits to unauthorized individuals.

2.2. Consequences & Costs of Disputes

• Delays in project timelines, construction, and profitability; increases in interest, labor, and material costs.

• Administrative penalties: particularly high for projects requiring feasibility studies or economic-technical reports but lacking a permit.

• Mandatory demolition of unauthorized or misaligned structures; suspension of construction.

• Impacts on creditworthiness, investor confidence, partner relations, and company reputation.

3. Effective Dispute Resolution Strategies

3.1. Legal Steps to Resolve Disputes

• Document Review & Violation Assessment
  Review the construction permit (if any): issuing authority, content, validity, and approved design. Cross-check with the 1/500-scale plan, technical and basic designs. Verify land use or lease rights: is the land disputed? Is there a valid land use certificate or lease contract?

• Administrative Complaint & Correction Request
  If a permit is issued by the wrong authority, violates planning, or involves disputed land: submit a formal complaint to the competent PPC or the IP Management Board (if authorized). The Law on Complaints and Administrative Procedures outlines rights and timelines for this.

• Filing Administrative Lawsuits
  When permit decisions or actions are deemed administrative decisions that violate a business’s rights, the affected party may file an administrative lawsuit in People’s Court. This legally binding process can lead to cancellation, amendment, or compensation mandates.

• Seeking Compensation (If Legally Justified)
  If damages result from wrongful licensing, construction suspension, or forced demolition, businesses can claim compensation under the Law on State Compensation Liability. Proof of damage and fault by the licensing authority is required.

3.2. Prevention & Risk Management Before Investing

• For construction in IPs, start by applying for a 1/500-scale plan approval (if unavailable) and ensure clarity between approved planning and design documents.

• Work closely with the IP Management Board early to confirm the proper licensing authority and avoid rejections due to jurisdictional issues.

• Prepare a full application including design files, EIA, fire prevention design, and technical drawings, ensuring compliance with national standards and detailed plans.

• Track permit expiration dates and ensure commencement occurs within the valid period, or apply for renewal if needed.

4. Conclusion

Disputes over construction permits in industrial parks are a common issue among investors and enterprises in Vietnam. The main causes include wrongful licensing, inconsistency with the approved 1/500-scale plan, incomplete design approvals, or unclear land rights. Resolving such disputes requires proactive legal understanding, comprehensive documentation, and, where necessary, administrative complaints or lawsuits.

If you’re facing a dispute over construction permitting in an industrial park, reach out to legal professionals for strategic guidance to protect your legitimate rights and investment outcomes.

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