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LAWYER IN VIETNAM DR. OLIVER MASSMANN - EU-VIETNAM INVESTMENT PROTECTION AGREEMENT (‘EVIPA’) – A NEW APPROACH
The document outlines the EU-Vietnam Investment Protection Agreement (EVIPA) which aims to enhance investment protection and create a framework for investor-state dispute settlement. It replaces existing bilateral investment treaties and establishes specific protections for EU investors in Vietnam, emphasizing transparency and fairness in proceedings. The agreement also addresses issues related to government procurement and aims to enhance efficiency and impartiality compared to traditional dispute resolution mechanisms.
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LAWYER IN VIETNAM DR. OLIVER MASSMANN - EU-VIETNAM INVESTMENT PROTECTION AGREEMENT (‘EVIPA’) – A NEW APPROACH
- 1. www.duanemorris.com ©2010 Duane MorrisLLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris – Firm and Affiliate Offices | New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Washington, D.C. Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton | Wilmington | Cherry Hill | Princeton | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership DR. OLIVER MASSMANN - Partner, General Director DUANE MORRIS VIETNAM LLC EU-VIETNAM INVESTMENT PROTECTION AGREEMENT (‘EVIPA’) – A NEW APPROACH 1
- 2. www.duanemorris.com AGENDA • EVIPA CONTENT •INVESTMENT PROTECTION UNDER EVIPA • DIRECT INVESTMENT PROTECTION UNDER PUBLIC INTERNATIONAL LAW • INVESTOR-STATE DISPUTE SETTLEMENT (‘ISDS’) • GERMANY AND ISDS • EVIPA – A NEW APPROACH • EVIPA AND GOVERNMENT PROCUREMENT 2
- 3. www.duanemorris.com EVIPA contents EVIPA (approx.200 pages) Preamble Chapter 1: Objectives and General Definitions Chapter 2: Investment Protection Chapter 3: Dispute Settlement Chapter 4: Instutional, general and final Provisions 3
- 4. www.duanemorris.com EVIPA 4 • EVIPA requiresthe ratification of all EU member to entry into force. • EVIPA that once comes in force will replace the 21 bilateral investment treaties (BITs) in force between Vietnam and EU Member States • The agreement contains guarantees that EU investors will enjoy the best available treatment when investing in Vietnam
- 5. www.duanemorris.com Investment protection underIPA 5 PRECISE STANDARDS ON INVESTMENT PROTECTION Non-discrimination No expropriation without prompt and adequate compensation Possibility to transfer and repatriate funds relating to an investment A general guarantee of fair and equitable treatment and physical security A commitment that governments will respect their own written and legally binding contractual obligations towards an investor A commitment to compensate for losses in certain circumstances linked to war or armed conflict
- 6. www.duanemorris.com Direct investment protectionunder public international law • 2,750 bilateral investment treaties (BITs), Multilateral Investment Treaties, most notably the Energy Charter Treaty and number of Free Trade Agreements such as NAFTA. • Legal protection includes: the right to "fair and equitable treatment", "full protection and security", "free transfer of means" and the right not to be directly or indirectly expropriated without full compensation) and access to ISDS for redress against host states for breaches of such protection. • Some of these standards are framed in vague terms, given extensive discretion to arbitrators in their interpretation and application. 6
- 7. www.duanemorris.com Investor-state dispute settlement(ISDS) 7 Investor State Sue before an arbitral tribunal if: the State breaches its undertakings under the treaties which causes loss or damage to the Investor
- 8. www.duanemorris.com Investor-state dispute settlement(ISDS) - cont 8 Since only States are the parties of the treaty, not the Investors: Only foreign investors can sue states under investment treaties. States have no corresponding right to bring an original claim against a foreign investor under the treaties
- 9. www.duanemorris.com Investor-state dispute settlement(ISDS) - cont A decision in favour of the state means that the state has not been ordered to pay compensation, not that it received any compensation from the investor (although costs can be awarded against the investor). A state cannot "win" in ISDS in the manner of a foreign investor - a state which wishes to sue a foreign investor does so through its own domestic courts, without the need for a treaty. 9
- 10. www.duanemorris.com Investor-state dispute settlement(ISDS) - cont 10
- 11. www.duanemorris.com Germany and ISDS •Germany refused ISDS in several EU Trade agreements: Transatlantic Trade and Investment Partnership (TTIP) between EU and US Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada • If an EU member refuses to ratify IPA, it will not be enforced in any EU member states. • High possibility that Germany would approve IPA, because it is in benefit of Germany investors in Vietnam.11
- 12. www.duanemorris.com EVIPA – AppealTribunal 12 PERMANENT TRIBUNAL 3 members from EU 3 members from Vietnam 3 members from a third country TRIBUNAL FOR THE FIRST TRIAL President: 1 member from the third party 1 member from Vietnam 1 member from EU Appoint on a rotation basis 4 years term
- 13. www.duanemorris.com EVIPA – Tribunalof first instance 13 PERMANENT APPEAL TRIBUNAL 2 members from EU 2 members from Vietnam 2 members from a third country APPEAL TRIBUNAL President: 1 member from the third party 1 member from Vietnam 1 member from EU Appoint on a rotation basis 4 years term
- 14. www.duanemorris.com EVIPA – Tribunalsystem • Members of the tribunals are appointed by a committee which are formed by representatives from Vietnam and EU. • The EU and Vietnam have committed themselves to only appoint Tribunal Members whose independence is beyond doubt, who are not affiliated with any government and who do not take instructions from any government and must have demonstrated expertise in public international law and must possess the qualifications required in their respective countries for appointment to judicial offices or be jurists of recognised competence. • All tribunal members must comply with a binding code of conduct annexed to the agreement => ensure the ethics of the tribunal members. 14
- 15. www.duanemorris.com Tribunal system inEVIPA and CPTPP 15 EVIPA CPTPP Two-stage arbitration (Tribunal and Appeal Tribunal), similar to WTO dispute settlement system One-stage arbitration Arbitrators are chosen from the permanent tribunal, which includes independent, neutral, and expert members. Arbitrators are chosen by the disputing parties (tribunal includes 3 arbitrators, in which 2 are decided by each disputing parties, and 1 is chosen by the agreement of both parties).
- 16. www.duanemorris.com EVIPA - Procedure 16 •Parties can choose the jurisdiction under the four proceedings to apply: International Centre for Settlement of Investment Disputes Convention (ICSID Convention) International Centre for Settlement of Investment Disputes Additional Facility Rules (ICSID Additional Facility Rules); The United Nations Commission on International Trade Law arbitration rules (The UNCITRAL arbitration rules); Any other rules by agreement of the disputing parties. • EVIPA provides for the attending of one or more experts to report any factual issue of environmental, health, safety, or other matters raised by a disputing party if requested by the parties or tribunal necessary.
- 17. www.duanemorris.com EVIPA - Transparency EVIPAapplies the UNCITRAL Transparency Rules: 1. Upon a receipt of the notice of arbitration from the respondent, the repository shall promptly make available to the public information regarding the name of the disputing parties, the economic sector involved and the treaty under which the claim is being made. 2. Allow public access to documents during the proceedings. 3. Open hearing 4. Allow non-parties to act as amicus curiae and submit information relevant to the dispute to the tribunal 5. Publicize the final award 6. Both parties are comfortable that confidential information can still be shielded from disclosure.17
- 18. www.duanemorris.com EVIPA - Enforcement •The recognition of the award is automatic, without the need to go through the process by the authority of the State => pave the way for offshore enforcement of arbitration awards. • A delay of 05 years for Vietnam to automatically recognize the award because Vietnam needs time to change its domestic laws.18
- 19. www.duanemorris.com EVIPA – anew approach • CP-TPP still has the appearance of the traditional ISDS mechanism, while EVIPA has taken a new approach on many different aspects. • EVIPA tries to overcome the weakness of the traditional ISDS mechanism which has regulated for 60 years: Growing time and cost for arbitration proceedings => detrimental to small and medium enterprises or developing countries, as well as small value in dispute cases; The doubt about the independence and impartiality of arbitrators or adjudicators; The lack of transparency; Concerns about the consistency, coherence, predictability, and correctness of arbitral decisions.19
- 20. www.duanemorris.com EVIPA and GovernmentProcurement • Average government procurement in the EU is about 16% • Vietnam has one of the highest government procurement rates of all countries worldwide (wiis not a member of the Government Procurement Agreement of the WTO • th about 39%) • Vietnam Vietnam undertakes to transparency and procedural fairness regulations • Investors will get access to a huge market of government procurement • EVIPA is a great tool to protect foreign investors in case any dispute arises20
- 21. www.duanemorris.com Opportunities and challengesin some specific sectors 21
- 22. www.duanemorris.com CONNECTIONS ARE BUSINESS PLEASECONNECT WITH ME ON LINKEDIN: OLIVER MASSMANN 22
- 23. www.duanemorris.com WHEREVER YOU ARE- BE ALL THERE Jim Elliot 23
- 24. www.duanemorris.com DUANE MORRIS VIETNAMLLC Thank you very much! HANOI OFFICE HO CHI MINH CITY OFFICE Pacific Place, Unit V1307/08, 13th Floor, Suite 1503/04, Saigon Tower 83B Ly Thuong Kiet, Hoan Kiem District 29 Le Duan Street, District 1 Hanoi, Vietnam Ho Chi Minh City, Vietnam Tel.: +84 4 39462200 Tel.: +84 8 3824 0240 Fax: +84 4 3946 1311 Fax: +84 8 3824 0241 Contact email: [email protected] 24