Keppel Initiates Arbitration Against Partners Over Vietnam JV Land Use Fee Liability
TL;DR
- Keppel's subsidiary Corredance has started arbitration against three joint venture partners.
- The dispute concerns liability for an additional land use fee of 6.9 trillion dong (about S$330 million) imposed on the Empire City project in Ho Chi Minh City.
- Corredance seeks a declaration that it is not responsible for these fees and an indemnity for any losses.
- The arbitration is filed with the Singapore International Arbitration Centre.
Overview
Keppel Corporation, through its subsidiary Corredance, has commenced arbitration proceedings against three co-investors in a Vietnam residential and mixed-use development joint venture. The dispute centers on responsibility for substantial additional land use fees recently imposed by local authorities on the Empire City project.
What Happened
In March 2016, Corredance entered into an investment agreement with Denver Power, Tien Phuoc Real Estate Joint Stock Company, Tran Thai Lands Company, and the Empire City joint venture in Ho Chi Minh City.
Around the end of 2025, Vietnamese authorities imposed approximately 6.9 trillion dong in additional land use fees on the Empire City JV.
Corredance, holding a 40% stake in Empire City, asserts that the other three entities should bear full responsibility for the imposed fees, referencing warranties and representations in the original investment agreement regarding land plot approvals and associated charges.
Corredance has filed a notice of arbitration with the Singapore International Arbitration Centre, seeking declarations of non-liability and indemnity from its JV partners. The Empire City JV has meanwhile requested Vietnamese authorities to reconsider their fee decision, a process that remains pending.
Context
Empire City was established in 2016 to develop residential and mixed-use properties in Ho Chi Minh City's Thu Thiem New Area. Significant land use fees are a risk factor for large property projects in Vietnam.
Keppel states that while the investment is currently expected to remain profitable, its profitability may decrease if these newly imposed fees are not covered by its partners as argued in the arbitration.
Why It Matters
- The outcome of the arbitration may determine which JV party is ultimately liable for high-value development costs in Vietnam's property sector.
- The case highlights the potential impact of retrospective government fees on foreign investments and joint ventures in emerging markets.