FORCE MAJEURE OR CHANGE OF CIRCUMSTANCES?

Recently, the authorities in key manufacturing hubs in the South of Vietnam, including Ho Chi Minh City, Binh Duong, Long An, and Dong Nai have issued orders requiring manufacturers to either create a production bubble or stop production until further notice. These orders were issued in response to a surge of COVID-19 cases in Vietnam since 27 April 2021, also known as the fourth wave.

For the production bubble, companies need to arrange that their employees eat, work and sleep at the manufacturing premises. Alternatively, the companies can arrange a one-stop accommodation for all employees and a vehicle to transit the employees from the accommodation place to the plants daily.

However, business owners were only given about 48-hours to make the necessary arrangements. Numerous companies could not meet the requirements and had to stop operations. These orders put many manufacturers at financial risk because they had to stop production, and also at legal risk as customers might start a lawsuit as delivery deadlines were not met.

The question is now if these administrative orders from the local authorities should be considered as a force majeure event or a basic change of circumstances under Vietnamese law.

If you would like to know the answer to the aforesaid question as well as learn about any alternative solution to deal with the issue at hand, please contact our Head of Dispute Resolution Practice – Ms Minh Nguyen at minh.nguyen@acsvlegal.com.