Contract Law · 08.11.2024

ENVIRONMENT LAW FIRM IN VIETNAM – UNILAW

ENVIRONMENT LAW FIRM IN VIETNAM – UNILAW The intersection of commercial development and ecological preservation has become a defining battlefield for modern corporations. In the rapidly evolving legal landscape of Southeast Asia, finding a specialized ENVIRONMENT LAW FIRM IN VIET…

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By Lawyer Le Phuong Thanh – UniLaw LLC

ENVIRONMENT LAW FIRM IN VIETNAM – UNILAW

The intersection of commercial development and ecological preservation has become a defining battlefield for modern corporations. In the rapidly evolving legal landscape of Southeast Asia, finding a specialized ENVIRONMENT LAW FIRM IN VIETNAM – UNILAW is no longer a luxury but a strategic necessity. As an international law firm in Vietnam, UNILAW has observed that environmental compliance is the pivot upon which billion-dollar projects either succeed or collapse. The complexity of these issues is best illustrated by a landmark case involving the construction of a wastewater treatment system in a major textile industrial zone.

The High Stakes of Environmental Infrastructure: A Case Analysis of Industrial Wastewater Disputes

To understand the gravity of environmental law in the commercial sector, one must examine a real-world dispute concerning the construction and transfer of critical green infrastructure. In 2016, a specialized environmental consultancy and waste treatment firm (hereinafter “the Contractor”) entered into an economic contract with a major development company (hereinafter “the Client”) to implement the “Supply and Installation of a Water Supply and Wastewater Treatment System” for a textile and dyeing industrial park. The contract, valued at over 331 billion VND, encompassed the construction of a water intake facility, a water supply plant with a capacity of 19,000 m3/day, and a wastewater treatment plant with a capacity of 20,000 m3/day.

Between January 2016 and March 2018, the Contractor performed the construction and installation. However, a dispute erupted when the Client refused to pay the final 5% of the contract value, which amounted to approximately 16 billion VND. The Client’s refusal was grounded in environmental compliance: they argued that the Contractor had not provided a bank guarantee and, more critically, that the wastewater treatment system had not been officially certified by competent authorities to meet the specific environmental standards required by Vietnamese law for textile discharge.

The first-instance court in Tây Ninh originally ruled on the matter. However, the High People’s Court in Ho Chi Minh City, acting as the appellate body, recognized a fundamental flaw in the initial judgment. The High Court determined that the lower court had failed to collect sufficient evidence to verify if the environmental system was 100% complete and, crucially, if it had passed the rigorous inspections required for an operational “Environmental Permit”. The court noted that without verification of meeting legal standards, the handover of such sensitive infrastructure remains legally incomplete. Consequently, the appellate court emphasized that environmental performance isn’t just a technical detail—it is a condition precedent for the legal validity of the contractual handover. This case serves as a warning for every law firm in Vietnam: environmental metrics are now core components of commercial litigation.

Strategic Market Access for Environmental Service Providers under WTO Commitments

For foreign investors looking to enter the environmental sector, the roadmap is governed by Vietnam’s international treaties. As a leading international law firm in Vietnam, UNILAW frequently advises clients on navigating these access restrictions. The General Agreement on Trade in Services (GATS) defines the boundaries of what a law firm in Ho Chi Minh City or a law firm in Hanoi must check when structuring a commercial presence.

According to Vietnam’s WTO Schedule of Specific Commitments, “Sewage Services” (CPC 9401), “Refuse Disposal Services” (CPC 9402), and “Cleaning Services of Exhaust Gases” (CPC 94040) have specific limitations. Initially, Vietnam allowed joint ventures where foreign capital did not exceed 51%. However, after a four-year transitional period from the date of accession, these ownership limitations were abolished, allowing for 100% foreign-invested enterprises in most environmental sub-sectors.

However, important restrictions remain to protect public welfare and national security. For example, regarding “Refuse Disposal Services” (CPC 9402): “For the purpose of ensuring public welfare, foreign-invested enterprises are not allowed to collect refuse directly from households. They are only permitted to provide services at refuse collection points designated by local provincial and municipal authorities”. This means that while a foreign firm can build and operate a waste-to-energy plant, the “last-mile” collection from private homes remains a domestic prerogative. Furthermore, the import of refuse into Vietnam is strictly forbidden by law.

When providing “Environmental Impact Assessment Services” (CPC 94090*), the commitments generally show “None” for limitations on market access and national treatment under Mode 1, 2, and 3, which implies a relatively open environment for international consultancies. However, the state reserves the right to grant monopolies or exclusive rights to certain public entities for services provided in the exercise of governmental authority.

Environmental Compliance as a Barrier to Entry: The Case of Industrial Over-Saturation

Even if an industry is not explicitly prohibited, environmental capacity can act as a de facto barrier to investment. A notable case handled by the Vietnamese courts involved a textile project in the Xuyên Á Industrial Park. A foreign investor sought to rent land to build a dyeing and fabric finishing factory—a high-pollution industry.

The People’s Court of Long An and the High Court examined a critical document: Official Dispatch No. 2479/UBND-CN from the Provincial People’s Committee, which stated that the province would not accept any further high-pollution projects (specifically textile/dyeing) into that specific industrial park. The reason was strictly environmental: the existing projects already accounted for nearly 20% of the total wastewater capacity of the park, which was the maximum threshold set in the approved Environmental Impact Assessment (EIA) for the park.

Because the investor could not obtain an EIA approval for the project, they were unable to proceed, leading to a massive dispute over land rental payments and contract termination. The court ruled that since the project could not meet the environmental prerequisites, the purpose of the land lease could not be achieved. This highlights why investors must engage an ENVIRONMENT LAW FIRM IN VIETNAM – UNILAW to conduct “environmental due diligence” before signing any lease or investment agreements. In Vietnam, being “eligible” under the Investment Law does not guarantee that your specific site has the “environmental room” to accommodate your discharge.

The Legal Framework of Environmental Impact Assessments (EIA) and Investment Licensing

Under Vietnamese law, the environmental check begins long before a shovel hits the ground. The Investment Law and the Law on Environmental Protection (LEP) are deeply integrated. An experienced law firm in Hanoi will point out that the preliminary EIA is now a mandatory step for several categories of projects.

Article 6 of the Law on Investment (as amended) specifies that for projects subject to certain environmental risks, the competent authority will base its “Investment Policy Approval” on a Preliminary Environmental Impact Assessment. The law states: “The investor may only perform the project after the environmental impact assessment report is approved”.

This means that environmental viability is a prerequisite for the legal existence of the investment project. If a project is found to use “obsolete technology, with potential risks of causing environmental pollution or intensive use of resources,” it will not be granted an extension of its operation term. This is a critical risk for M&A activities; as an international law firm in Vietnam, UNILAW warns clients that buying an old factory might mean buying a liability that cannot be legally extended beyond its current term due to tightened green standards.

The Rise of the “Social Enterprise” and its Environmental Obligations

Vietnam’s corporate laws have introduced specific vehicles for environmental protection. Social Enterprises are a unique category under the Law on Enterprises that must prioritize social and environmental goals over pure profit maximization. According to Article 10 of the Law on Enterprises 2020:

“A social enterprise must satisfy the following criteria: … b) Its operation goal is to resolve social and environmental issues for the community’s interest; c) Use at least 51% of the enterprise’s total annual after-tax profit for re-investment in order to realize the registered goal”.

This provision creates a legally binding commitment. If a social enterprise fails to maintain its environmental objective or does not reinvest the required profits, it must “return all incentives, grants, and sponsorships that it has received to implement the registered social and environmental goal”. Furthermore, the owners and managers of such companies are held jointly liable for any damages arising from a breach of these commitments. Any law firm in Vietnam advising on CSR or ESG (Environmental, Social, and Governance) strategies must be well-versed in these specific corporate forms.

Administrative Sanctions: The Financial Penalty for Environmental Neglect

Compliance is enforced through a rigorous system of administrative penalties. Decree No. 122/2021/NĐ-CP provides the teeth for investment regulators to punish companies that play fast and loose with their environmental promises. According to Article 15 of this Decree (as referenced in the sources), investors face significant fines if they do not comply with the information and reporting regimes for investment activities in Vietnam.

Furthermore, under the general principles of investment monitoring, “The investor is responsible for implementing the project according to the provisions in the Investment Registration Certificate, and commitments on construction, environmental protection, fire prevention, and fighting… In case the project does not meet the conditions, standards, or technical regulations as committed, the competent state agency shall consider administrative sanctions, suspension, termination, or other handling measures”.

This means a commitment made in a “Preliminary EIA” isn’t just paperwork; it is a regulatory obligation. For example, in the field of construction, “The construction contractor must implement environmental protection measures for workers on the construction site and protect the surrounding environment, including measures for dust control, noise control, and site cleanup; wastewater, solid waste, and other types of waste must be collected and treated to meet environmental standards and technical regulations”. Failure to comply allows the owner or the state environmental agency to “temporarily suspend construction”.

The Shadow of the Penal Code: Criminal Liability for Environmental Crimes

When environmental negligence crosses the line into willful or severe harm, the Penal Code of Vietnam intervenes with heavy fines and imprisonment. As an international law firm in Vietnam, UNILAW provides rigorous compliance training to prevent corporate officers from facing criminal charges. The Penal Code 2015 (amended in 2017 and 2025) outlines several “Environmental Crimes” in Chapter XIX.

Article 235: Crime of Causing Environmental Pollution states that individuals who illegally bury, dump, or discharge hazardous waste into the environment exceeding certain thresholds (e.g., 1,000kg to 3,000kg of hazardous waste or discharging 500m3 to 5,000m3 of wastewater with hazardous parameters 5 to 10 times above standards) can be fined between 50 million to 500 million VND or face imprisonment from 3 months to 2 years. For commercial legal entities, the penalties are even more severe, including fines up to 20 billion VND and permanent termination of activities.

The law also targets the “Crime of violating regulations on hazardous waste management” under Article 236. Competent persons who allow the illegal burial or dumping of hazardous waste ranging from 3,000kg to 5,000kg can be imprisoned for up to 3 years. If the waste exceeds 10,000kg, the prison term can reach 10 years. This underscores the personal liability faced by managers in the environmental sector.

Beyond waste, the law protects biodiversity and natural resources. Article 243 (Crime of destroying forests) imposes penalties for burning or clearing forests illegally, with prison terms reaching 15 years for the destruction of over 50,000 m2 of production forest. Similarly, Article 244 (Crime of violating regulations on the protection of endangered, precious, and rare animals) punishes the illegal hunting, killing, or trading of protected species with fines up to 2 billion VND or 5 years in prison for individuals. Commercial legal entities can be fined up to 15 billion VND for these biodiversity crimes.

This means that for any project involving land clearing or proximity to nature reserves, an ENVIRONMENT LAW FIRM IN VIETNAM – UNILAW must be consulted to ensure that the project’s development path does not inadvertently trigger a criminal investigation under these stringent articles.

Maritime Environmental Protection and Oil Pollution Liability

Vietnam’s extensive coastline makes maritime environmental law a critical area for law firms in Ho Chi Minh City and other port cities. Vietnam is a member of the International Convention for the Prevention of Pollution from Ships (MARPOL) and the 1992 Civil Liability Convention for Oil Pollution Damage.

For port operators and shipyards, the requirements are precise: “Ensure there are sufficient means to receive and recover wastes from ships when operating at the seaport for treatment according to the provisions of the International Convention for the Prevention of Pollution from Ships… (MARPOL Convention) and other conditions on environmental protection according to the provisions of law”. Shipyards must establish environmental management systems according to ISO 14001 or equivalent standards within 12 months of operation.

In the event of an oil spill, the 1992 Liability Convention provides a regime for compensation. The “Owner” of a ship is held liable for “Pollution Damage” resulting from the escape or discharge of oil. This liability is often limited by “units of account,” but the financial burden on shipowners and the supplementary International Compensation Fund is designed to ensure that victims (such as coastal fishermen or tourism operators) are compensated for economic losses. UNILAW’s maritime specialists are adept at handling these international claims, which often involve cross-border litigation and complex insurance assessments.

Natural Resource Management and Environmental Restoration

Mining and resource extraction are among the most regulated activities in Vietnam due to their high environmental footprint. In land-related projects, “Economic organizations, individuals, and foreign-invested economic organizations… must have an environmental impact assessment according to the provisions of the law on environmental protection” before they can reclaim land or create water spaces like lakes or ponds.

Activities such as “Sea encroachment” must follow principles of “sustainable development, biodiversity, and assessment of impacts from natural disasters, climate change, and sea-level rise”. In mining, specifically, Article 227 of the Penal Code punishes those who illegally explore or extract water, oil, or minerals. If an environmental incident is caused during illegal mining, the penalty can include up to 7 years of imprisonment.

The Law on Environmental Protection 2020 (which took effect on January 1, 2022) also introduced important transitional provisions for existing projects. For example, decisions approving EIA reports issued before the new law are considered equivalent to the new “approval of the EIA appraisal result”. Furthermore, projects involving mineral extraction that have an approved “environmental restoration and improvement scheme” must maintain these documents as part of their current environmental permit. This ensures that there is no “legal vacuum” during the shift to more modern environmental standards.

The Crucial Role of UNILAW: Your Partner for Sustainable Success

Navigating the labyrinth of Vietnamese environmental regulations requires a law firm in Vietnam that combines local mastery with international standards. Whether you are a law firm in Hanoi looking for a collaborator or a global corporation needing a law firm in Ho Chi Minh City, UNILAW offers unparalleled expertise.

Our environmental services include:

Environmental Due Diligence: Identifying latent environmental risks in M&A and land acquisition projects.
EIA and Permit Advisory: Guiding clients through the complex approvals of the Ministry of Natural Resources and Environment (MONRE) and provincial authorities.
Waste and Wastewater Strategy: Structuring contracts for environmental infrastructure that ensure technical metrics translate into legal protections.
Environmental Litigation and Crisis Management: Defending clients in administrative sanction proceedings and criminal investigations, and representing victims or defendants in pollution compensation claims.
ESG and Social Enterprise Structuring: Aligning corporate governance with the environmental goals required by the Law on Enterprises.

In a world where “green-washing” is increasingly penalized and environmental regulations are used as tools for sustainable development, UNILAW stands as the premier ENVIRONMENT LAW FIRM IN VIETNAM. We don’t just help you comply with the law; we help you turn environmental excellence into a competitive advantage.

Vietnam’s commitment to “Net Zero” and international treaties like the CPTPP and EU-Vietnam FTA means that environmental standards will only become stricter. The cost of non-compliance—ranging from 20 billion VND fines to 15-year prison sentences—far outweighs the cost of expert legal counsel. Partner with UNILAW – International Law Firm in Vietnam to secure your project’s future in the Green Era.