Keppel Subsidiary Initiates Singapore Arbitration Over US$261 Million Land Fee Dispute in Vietnam JV
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TL;DR
- Keppel's subsidiary Corredance Pte. Ltd. has initiated arbitration at the Singapore International Arbitration Centre.
- The dispute involves liability for VND6.877 trillion (approx. US$261 million) in land use fees on the Empire City project in Ho Chi Minh City.
- Corredance seeks declarations that joint venture partners, not Keppel, must bear the fees and indemnify any losses.
- Keppel warns that if partners do not shoulder the fees, project profitability would be reduced.
Overview
Keppel Corporation Limited, through its subsidiary Corredance Pte. Ltd., has launched arbitration proceedings at the Singapore International Arbitration Centre against its joint venture partners Denver Power, Tien Phuoc Real Estate, and Tran Thai Lands. The case concerns disagreements over responsibility for approximately US$261 million in additional land use fees imposed on land plots involved in the Empire City urban development project in Ho Chi Minh City, Vietnam.
What Happened
Corredance Pte. Ltd., a subsidiary of Singapore-based Keppel Corporation, initiated arbitration at the Singapore International Arbitration Centre (SIAC).
The action is directed against Denver Power, Tien Phuoc Real Estate, and Tran Thai Lands-Keppel's joint venture partners in the Empire City project.
The core issue is the liability for about VND6.877 trillion (US$261 million) in additional land use fees levied on the Thu Thiem New Area plots.
Corredance claims that the 2016 investment agreement's warranties and representations mean the partners must bear these fees and cover any related losses, not Keppel.
The company seeks formal declarations and indemnification via arbitration.
Keppel maintains that the investment in the project is still profitable at current land carrying costs, but notes profitability would decline if the fees are not covered by its joint venture partners.
Context
The Empire City joint venture is a flagship real estate development in Ho Chi Minh City's Thu Thiem New Area, involving Keppel and various Vietnamese partners.
The 2016 investment agreement governs the relationship among the partners and their respective liabilities for project costs and obligations.
Recent additional land use fees imposed on the project's land have intensified financial and legal uncertainties for the participating entities.
Why It Matters
- The arbitration addresses the allocation of a substantial financial burden for a major urban development project in Vietnam.
- A finding against Keppel's partners could clarify contractual risk allocation in large, cross-border real estate projects involving Vietnamese land use fees.
- The outcome may affect the profitability of the Empire City project and set a precedent for handling similar investment disputes in the region.