Lý luận và thực tiễn giải quyết tranh chấp giữa nhà đầu tư nước ngoài và quốc gia tiếp nhận đầu tư tt tiếng anh

MINISTRY EDUCAITION AND TRAINING

MINISTRY OF JUSTICE

HANOI LAW UNIVERSITY

TRAN THI HONG NHUNG

THEORY AND PRACTICE OF INVESTOR - STATE
DISPUTE SETTLEMENT: APPLYING TO VIETNAM IN
THE CURRENT CONTEXT OF INTERNATIONAL
ECONOMIC INTEGRATION

SUMMARY OF DOCTORAL THESIS IN LAW

HANOI, 2019


The thesis is completed at
HANOI LAW UNIVERSITY

Science suppervisor: Assos.Prof. Dr. NGUYEN VU HOANG

Referee 1: Assos.Prof. Dr. Le Mai Thanh

Referee 2: Assos.Prof. Dr. Tang Van Nghia

Referee 3: Dr. Nguyen Thai Mai

The thesis will be examined by Examination Board of
Hanoi Law University

at:……………………………………………………………………

The thesis can be found at:
1. National Library
2. Library of Hanoi Law University


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INTRODUCTION
1. Necessity of research theme
Globalization, regionalization of the economy is an inevitable trend,
which has a strong impact on subjecs in international economic relations. In
fact, this trend not only creates a deeper and broader link between the subjects
but also forms a strongly competitive environment at the international level,
creating a significant challenges for the subjects. In this context, international
investment, one of the key economic activities, playing an important role in the
economic development of countries in the world is also strongly influenced by
the conditions of economic integration, global economic competion and crisis.
Since the late 1990s, there have been many disputes between entities involved
in international investment activities, especially investor - state disputes, a
particular type of dispute compared to other disputes arising in this field,
because one party to the dispute is a state, called respondents which have
special legal status. Therefore, resolving this dispute becomes one of the
problems for the host state in condition of formulating and perfecting
international investment policies and laws.
Along with the development of economy, international investment
relations, the investor - state dispute has become more and more complicated in
recent years. In the face of this situation, the host state has recognized the need
to reconsider the international investment policy system on resolving disputes
between foreign investors and the host countries. Ensuring effective prevention

and settlement of disputes will both have implications for market opening
policies, attracting investment, economic development, building prestige and
national image in relations. International investment has both ensured the
interests of people and nations.
Basing on the nature of international investment, this type of dispute is
common among investors in developed countries and the host states are
developing countries. Therefore, Vietnam as well as other developing countries
will have to ensure a favorable investment and business environment for foreign
investors and appropriate adjustments and solutions in the tournament.
resolving issues related to this type of dispute. In particular, in current
conditions, Vietnam not only has to implement its commitments in the system


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of previous investment agreements but also has to implement agreements in a
number of new generation of free trade agreements. Specifically, our country
has participated in negotiating and signing the Trans-Pacific Economic
Partnership Agreement (TPP), the Free Trade Agreement between Vietnam and
the European Union (EVFTA) and recently the Agreement Comprehensive and
trans-Pacific Partnership (CPTPP), which has very strict commitments on
liberalization and protection of investment in general and resolving disputes
between foreign and national investors. receive investment in particular.In the
above situation, the study of the topic "Theory and Practice of Investor – State
Disputes Settlement: Applying to Vietnam in the current context of
international economic integration”, has both theoretical and practical
significance, and this is really a necessary issue for Vietnam in the current
conditions.
2. Research aims and obligations
● Research Aims
Purpose of the study is to build a system of solutions to the improvement

effectiveness of preventing and resolving Investor and host state from Vietnam
in the context of international economic integration today.
● Research Obligations
To implement the above mentioned purpose, the thesis sets out the
following research aims:
- Analyzing theoretical issues on investor - state dispute settlement such
as the concept and characteristics of investor - state dispute, the cause of the
dispute. In addition, the thesis will focus on clarifying the concept and
characteristics of investor - state dispute settlement, generalizing the content
law as well as the investor -state dispute settlement mechanism. Presenting
models of investor - state dispute settlement reforms.
- Studying the practice of ISDS in India through analysis of the situation
of dispute settlement between foreign investors and India in the recent time .
This shows the adjustment of ISDS policy to be consistent with the ISDS reality
of this state. Besides, the thesis will make predictions about the difficulties that
India faces when implementing the ISDS reform policy. Moreover, the thesis
also reviews the India's ISDS reform policy. Finally, giving meaningfull lessons


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needed for Vietnam.- Doing research the content of investment liberalization and protection
standards, the ISDS mechanisms under the current two new generation FTAs of
Vietnam such as CPTPP and EVFTA. From that points out the differences
compared with the commitments on liberalization of investment protection
regulated by other agreements; And make a comparison ISDSM of these two
agreements with other legal dispute settelemt mechanisms in general, the ISDS
mechanisms under other Vietnamese IIAs in particular.
- Researching practice of dispute settlement between foreign investors
and Vietnam in current conditions.- Building the system of solutions to improve effectiveness of preventing
and resolving investor -state disputes of Vietnam in the implementation period

of ISDS commitments under the new generation FTAs.
3. Research Object and Scope
● Research Object
Investor – State dispute settlement
● Research Scope
Stemming from the practical requirements of ISDS in the current
condition of international economic integration in Vietnam, the thesis will focus
on researching theory and practice on ISDS to apply for Vietnam. In particular,
in the context that Vietnam has participated in negotiating and signing new
FTAs including ISDS commitments, as follows:
About content:
- Researching the theoretical issues of investor - state disputes, ISDS,
substantive law and ISDSM so that it can be applied to resolve this type of
dispute in Vietnam's current conditions.
- Researching on practice of ISDS from some states in the world.
- Studying the status of the ISDS law and ISDS of Vietnam in the current
conditions.
- Studying solutions to improve effectiveness of prevention and
settlement for Vietnam when resolving disputes between foreign investors and
Vietnam in the context of enforcing both ISDS commitments under new


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generation of FTAs like as CPTPP and EVFTA.
The above contents are studied within the scope of international
investment relations between foreign investors and the host states rather than
other administrative, commercial or non-commercial relations.
In terms of space: The thesis has general researches on ISDS in a
number of states around the world in general, which aim to states with
favorable development conditions, international investment system are similar

to Vietnam, especially India. Moreover, the above theoretical and practical
studies will be applied to solve this type of dispute in Vietnam.
About time: The thesis is studied to build solutions for Vietnam in
the current period, at the present time when Vietnam has negotiated and signed
new generation free trade agreements such as CPTPP, EVFTA
4. Theoretical basis, research questions, research hypotheses and
approaches to research issues
● Theoretical basis
- Theory of Investor - State Dispute
- Theory of Investor - State Dispute Settlement
● Research questions
- What is the comprehensive theoritical basis to be applied to resolve
disputes between foreign investors and the host country?
- How is the practice of ISDS in states which are similar to Vietnam?
- What are differences of the ISDS commitments under new generation
FTAs which Vietnam is a member of
- How does the current practice of ISDS of Vietnam take place?
- Are there any solutions to improve the effectiveness of preventing and
resolving investor - state disputes during the implementation of ISDS
commitments under the new generation FTAs that Vietnam is a member of?
● Research Hypotheses
The thesis topic is based on the research hypotheses:
- The theoretical system of ISDS has existed and has been increasingly
improved to be more suitable for the development of international investment
relations, ensuring legitimate rights and interests for both foreign investors and


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the host state. There includes a range of issues related to investor -state disputes,
ISDS and ISDS mechanism. The practice of ISDS is very diverse and has occurred in

some countries with similar conditions with Vietnam. In particular, the most notable
case is India, the country in the top 10 most sued states, has accepted the ISDS policy
but also had radical reforms to prevent and resolve this type of dispute is more
effective. Vietnam can get many lessons learned from this example.
- Vietnam has been sued by foreign investors on the basis of commitments to ISDS.

- Regulations on ISDS in the new generation FTAs of Vietnam have many
differences compared with the previous regulations in both content and form.
- There are many different solutions in both preventing and solving this
type of dispute in Vietnam's current conditions.
● Approaches to research issues
The research is based on the following approach:
- Approaching from theoretical issues in ISDS
- Approaching from the practice of ISDS of the states with similar
conditions on economic and investment to Vietnam.
- Approaching from ISDS commitments under the new generation FTAs
of Vietnam and the current status of ISDS of Viet Nam.
5. Methodology
Based on the methodology of Lenin Marxism, Ho Chi Minh's thought, the
views and guidelines of the Party and State of Vietnam in the innovation
process, to realize the research objectives and tasks in the thesis, the thesis has
used a number of main methodologies including: analysis, synthesis,
comparison, in which there are methodologis of comparing laws and of case
studies. These methodologis are used independently or in combination.
Methods of analysis and synthesis are applied in approaching problems in
all chapters of the thesis. Summarizing, analyzing and assessing the theoretical
issues of disputes between foreign investors and host states, ISDS, ISDS
mechanis. In addition, these two methods are also used to study practices
related to ISDS, a model of ISDS, practice of ISDS in India. Especially the
ISDS mechanisms in CPTPP and EVFTA, as well as the situation of resolving

this type of dispute in Viet Nam. The integrated method is also used to collect
information from secondary data sources such as online databases, UNCTAD,


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OECD, ICSID ... and Vietnamese authorities. The legal comparative method is
used to make new assessment of ISDS mechanism in CPTPP and EVFTA and
present some contents of ISDS mechanism in Chapter 3. Especially in Chapter
4, the method is used to anticipate the problems that Vietnam faces to in the
integration conditions when implementing ISDS mechanisms of new generation
FTAs and to develop appropriate solutions for Vietnam.
The case study method is used to study the investor – state disputes of
some countries in general, India in particular. Specially, it is applied to research
ISDS cases of Vietnam.
6. The scientific and practical significance of the thesis topic
- Completing the theory of investor - state dispute settlement by building
up the concept of investor - state dispute, ISDS and ISDSM, characteristics of
the dispute, ISDS and ISDSM. Moreover, analyzing the general content and
characteristics of ISDS substantive law; studying the development process of
the ISDSM until the time of having the ISDS commitments under new
generation FTAs. Analyzing the models of ISDS reform in order to effective
improvement of ISDS in the world.
- Generalizing the practice of ISDS in India and thereby providing
necessary lessons for Vietnam in the context of implementation of the ISDS
commitments under the new generation FTAs.
- Comprehensive analysis of the content and different characteractics of
investment liberlization and protection commitments as well as ISDSMs under
CPTTP and EVFTA, the two new generation FTAs of Vietnam. Moreover,
analyzing the differences of these mechanisms in comparision to the ISDSM
under previous IIAs. Pointing out issues when resolving disputes between

foreign investors and Vietnamese State in the implementation of ISDS
commitments under those FTAs.
- Analyzing the reality of ISDS in Vietnam up to now.
- Proposing a system of solutions to improve the effectiveness of
preventing and resolving this type of dispute in the context of implementation
of the ISDSMs under Vietnam's new generation FTAs.
7. Structure of the thesis
With the research purpose and obligations, the object and scope of the


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above research, the thesis is structured into four chapters excluding indexes,
preface, list of abbreviations, conclusions, references list and appendices.
Chapter 1. Literature Review of Investor – State Dispute Settlement
Chương 2. Theory Background of Investor – State Dispute Settlement

Chương 3. Practice of Investor – State Dispute Settlement in Viet Nam
Chapter 4. Solutions to improvement on effectiveness of Investor –
State
dispute prevention and settlement for Viet Nam in the today condition of
international economic integration
CHAPTER 1
LITERATURE REVIEW OF INVESTOR – STATE
DISPUTE SETTLEMENT
With the constant increase in ISDS in international economic life, the
settlement of disputes between foreign investors and the host country is no
longer a problem. New topics in legal science. Receiving the attention of many
generations of scholars around the world, the theoretical and practical issues of
solving this type of dispute have been studied in many ways and presented in
many other forms. each other such as monographs, newspapers, specialized

journals, seminars... To see the research situation of scholars, the dissertation
will consider separately the research projects abroad with research works in
Vietnam and at the same time, the projects are approached based on the
research content.
1.1. International scholar’s studies
1.1.1. The group of works relates to general issues of ISDS
1.1.2. The group of works relates to ISDS methods
1.1.3. The group of works relates to the content of ISDS commitments under
international treaties
1.1.4. The group of works relates to ISDS cases in the practice of
international investment activities
1.2. Vietnamese scholar’s studies
1.2.1. The group of works relates to general issues of ISDS
1.2.2. The group of works relates to ISDS methods


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1.2.3. The group of works relates to ISDS cases in the practice of
international investment activities
1.3. Assessing the literature review of the thesis topic and issues that need
further research
On the basis of reviewing domestic and foreign research works with
contents related to the topic of the thesis, the thesis has the following basic
assessments. The content of the evaluation is structured according to the issue
in order to achieve the purpose of proving the necessity when studying the topic
of the thesis in the current context of Vietnam and identifying the issues that
need further research to ensure new of the thesis.
1.3.1. Definition,characteristics of Investor – State dispute
1.3.2 Investor – State dispute Settlement and Investor – State dispute
Settlement Mechanism

1.3.3. International experience in Investor – State disputes Settlement
1.3.4. Practice of ISDS in Viet Nam
1.3.5. Issues need further research
The first is in theory
- Supplementing and perfecting the system of arguments about the
concept and characteristics of investor - state disputes.
- Develop a system of theory about resolving disputes between foreign
investors and the host country. Clarify the characteristics of the substantive law
of ISDS, ISDS mechanisms. Development trend of ISDS mechanism
- Overview of reform models to improve the efficiency of ISDS
The second is about practice
- Analyzing the practice of ISDS in India, developing countries have
many similarities in the development of international investment and ISDS.
Thereby pointing out the necessary references for ISDS of Vietnam.
- Analyzing the legal practice of ISDS through analyzing the differences
of commitments on liberalization and investment protection, the content of
ISDS mechanisms in CPTPP and EVFTA, specify the differences of these two
mechanisms compared to the ISDS mechanism in the previous IIAs system.
- Analyzing the situation of ISDS in Vietnam in recent years. Provide


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assessments on the situation of ISDS in Vietnam
- Thirdly, to develop solutions to improve efficiency in preventing and
settling disputes between foreign investors and countries receiving investment
for Vietnam.
- Evaluate the issues raised for resolving disputes between foreign and national
investors receiving investment under IIAs in the current period of Vietnam.
- Develop solutions to improve the effectiveness of preventing and resolving
ISDS for Vietnam in the context of implementing mechanisms for settling

disputes between foreing investors and Vietnamese under CPTPP and EVFTA.
CONCLUSION OF CHAPTER 1
It can be seen that ISDS been mentioned in many different studies with
diverse research results. Based on the classification of research works according
to the presentation content, this chapter has shown the research results of those
works both in theory and practice. Theoretical issues have been presented such
as the concept and characteristics of disputes between investors and countries
receiving investment, the nature of the subject in dispute, the content law in
ISDS, and the mechanism of dispute resolution mortgage, the development
process of dispute resolution, the impact of dispute resolution ... On domestic
and foreign practices, there have been many studies of typical disputes in
practice to provide lessons experience for countries in resolving disputes
between foreign investors and the host country. Especially scholars combine
international experience with domestic lessons to build solutions for Vietnam to
improve the effectiveness of this type of dispute resolution. With such an
approach, Chapter 1 has identified gaps in research and issues that need further
study of the Comment
CHAPTER 2
THEORY BACKGROUND OF INVESTOR - STATE DISPUTE
SETTLEMENT
2.1. Definition, characteristics of Investor - State Dispute
2.1.1. Definition of Investor – State Dispute
In order to create a concept that is accurate, clear, concise and be able to
generalize some of the key characteristics of this type of dispute compared to


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other types of disputes in international investment in particular, in civil, trade ...
in general.
The thesis presents the concept of investor - state dispute settlement as

follows: A dispute between a foreign investor and the host state is construed
as disagreements and conflicts of legal rights and obligations in the process
of implementing international investment activities.
2.1.2. Characteristics of Investor - State Dispute
In addition to the general characteristics like other legal disputes, investor
- state disputes have some derivative characteristics such as the nature of the
investment the host state and the dispute related to long-term commitments...
2.1.2.1. The disputing party is a host state- a subject of national sovereignty
2.1.2.2. Content of disputes related to international investment
2.1.2.3. Nature of the host state's measures
2.1.2.4. Nature of investment commitments
2.1.3. Cause of ISDS
2.1.3.1. Differences in benefits between foreign investors and the host state
2.1.3.2. Change of international investment protection
2.2. Investor - State dispute Settlement
2.2.1. Definition of Investor - State dispute Settlement
From the arguments in a broad sense, narrow meaning, the subject of
dispute settlement as well as from the perspective of a legal regime, the thesis
introduces the concept of ISDS as follows:
ISDS is an overall set of activities aimed at resolving disagreements
and conflicts of legal rights and obligations in the process of implementing
international investment activities between foreign investors and host states
under ISDS mechanisms.
2.2.2. Characteristics of Investor - State Dispute Settlement
2.2.2.1. Legal resources of the Investor - State Dispute Settlement
Legal basis for ISDS includes substantive law and procedures. Unlike
solving other types of disputes, the substantive law and procedure to deal with
this type of dispute have separate points. Specifically, the content law expresses
the obligation of the host state in international investment to be regulated in the

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following forms: One is the investment agreement. The second is investment
contracts. The third is the national or other investment law.
2.2.2.2. Subjects of the Investor - State Dispute Settlement
Participating in the dispute settlement include three main subjects: foreign
investors, the host states and institutions.
2.2.2.3 Scope of the Investor - State Dispute Settlement
From a general perspective, the scope of dispute settlement between
foreign investors and the host country is determined by various factors such as
the subject and content of the dispute. But more specifically, the dispute is
resolved by the ISDS mechanism, depending on the provisions of IIAs,
investment contracts or national laws.
2.3. Overview of the substantive law in ISDS
2.3.1. Principle System of investment liberalization and protection in
international investment law
2.3.2. Characteristics of the substantive law in ISDS
From the perspective of being the legal basis for foreign investors to sue
the host state, provisions of the substantive law in ISDS are significant for the
two parties to the dispute and bring their own characteristics.
2.3.2.1. The purpose is to protect interests of the foreign investors
2.3.2.2. Diverse forms and contents
2.3.2.3. Abstraction
2.4. Definition, characteristics of Investor - State dispute Settlement Mehanism

2.4.1. Definition of Investor – State dispute Settlement Mehanism
The concept of ISDSM should be understood as follows:
ISDS mechanism is a way of settling disputes between foreign investors
and states in reaccording to the rules of procedures, methods, institutions and
enforcement in international investment under international investment law

2.4.2. Characteristics of Investor – State dispute Settlement Mehanism
First, Claimants are foreign inestors
Second, Legal forms of ISDSM are very diverse


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2.4.3. Classification of ISDSM
Based on certain criteria, ISDSM can be classified into the following
groups: Based on the structure of content of the legal basis in the dispute
settlement, the mechanism is divided into two categories, including a separate
mechanism and combination mechanism. Based on the number of subjects
divided into bilateral mechanism and multilateral mechanism; Based on the
method of dispute resolution: Mechanism to resolve disputes by Court, by
Arbitration, by means of mediation; Based on the trial regime: the one-level
trial mechanism; Two-level mechanism for trial
2.4.4. The development process of the investor – state dispute settlement
mechanism
The development of ISDS mechanism in the international investment law
is divided into two phases, the first stage is marked by the regulation of ISDSM
in investment protection and liberalization agreements (BITs), the second phase
is from ISDS mechanism in free trade agreements (FTAs) up to now.
2.4.4.1. From Diplomatic Protection to BITs
2.4.4.2. From BITs to new generation FTAs
2.5. Models of reform to improving the efficiency of ISDS
The following will analyze the practice of selecting the reforming model
of ISDS in the world by approaching from the stage of prevention to the
dispute. Such reforms will help improve the effectiveness of preventing and
resolving investor – state disputes. In other words, improving the effectiveness
of dispute resolution is the purpose of reform. There are four base groups to
determine the effectiveness of ISDS: one is the settlement time, the other is the

number of cases that arise, three is the economic factor, four is the quality of the
judgment. The first three factors are quantitative, but the fourth factor is
qualitative and the degree is assessed through the degree of influence on the
psychology of foreign investors, the degree to which the public and the
potential benefits affect. practical performance.
2.5.1. In dispute prevention
• Restricting foreign investors to access ISDS
• Exclude the settlement of disputes between foreign investors and the
host country.


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2.5.2. In dispute resolution
• Develop an appellate mechanism for IS dispute resolution
• Encourage and enforce alternative dispute resolution (ADR)
• Establishing a permanent international investment court to replace
investment arbitration:
CONCLUSION OF CHAPTER 2
In the context of the significant increase in ISDS, the general theoretical issues of
ISDS will continue to be researched by studies at many different levels. Inheriting the
results of previous studies and e developing on the basis of changes in international
investment law life practices and settlement of the disputes, this chapter has
developed a separate theory system for Investor - state disputes, ISDS, ISDSM.

In particular, besides the content of the concept, characteristics, causes of the
dispute in general, this chapter of the thesis analyzed and clarified the concept,
basic characteristics of ISDS. General analysis of substantive law and
characteristics of substantive law of ISDS. Moreover, the concept, characteristics,
classification, process of formation and development of the ISDS mechanism are
also improved. Since then, it helps to distinguish ISDS with resolving other types

of disputes in international investment and trade ..., especially the substantive law
of ISDS and distinguish ISDS mechanisms from other dispute settlement
mechanisms in trade and international investment. The final section of the chapter
outlines the models of reforms to improve the prevention and resolution of ISDS
disputes used by countries. The contents of Chapter 2 form the theoretical basis for
practical research and develop solutions to improve the effectiveness of preventing
and resolving disputes between foreign investors and the host country receiving
investment in Vietnam. The next chapters of the thesis.

CHAPTER 3
PRACTICE OF INVESTOR – STATE DISPUTE SETTLEMENT
IN VIET NAM
3.1. Investor – State Dispute Settlement - Practice in India and some
references for Vietnam


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3.1.1. Overview of the practice of resolving disputes between foreign investors
and receiving countries today
The practice of ISDS is reflected through various contents such as name
of lawsuit, number of cases over years, plaintiff and defendant of the lawsuit,
applicable laws, institution... The thesis is generalized by data and assessments
of the number of cases of the years, settlement status, infringement content,
plaintiffs and defendants of the lawsuit, applicable laws, institution, procedural
rules, damages and arbitration costs.
Settling disputes with foreign investors is a common problem for many
countries in the context of globalization and regionalization of the current
economy. Therefore, there are many contradictory assessments about the policy
of resolving disputes between foreign investors and the host country, India's
policy is special one of them. Therefore, the practice of ISDS as well as its

adjustmentsto ISDS will contain many useful references for Vietnam in the
current period.
3.1.2. The practice of resolving disputes between foreign investor and Indian
over the past time
According to the statistics by the end of 2018 from UNCTAD, India is
one of the 10 most sued countries with 24 cases. In the group of BRICs, the
number cases of India is the same as Russia. For the first time foreign investors
sued India in 2003, then in the next year, the state faced 08 cases, it is the
highest up to now. And it must be 6 years later, in 2010, India was sued again,
but from 2010 to 2015, there will be only one to two lawsuits per year. In 2016,
India continued to be sued with 6 cases. Of these 24 cases, 10 have been
resolved, 14 have been pending. Main information of the cases summarized by
UNCTAD, see Appendix 2 of the thesis.
Studying India's cases shows issues of legal aspects of substantive law,
procedures for the dispute resolution and dispute settlement methods.
Among the ISDS cases of India, the case between White Industries
Australia Limited (hereinafter referred to as White Company) and India is the
most typical case. Although, now and before, India has always been classified
as the country that has been the most sued by foreign investors, but this
situation is only really noticeable after the end of this lawsuit. The


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specialization is not only expressed by this is a award against India and in
favourable of foreign investors, but after the end of the lawsuit there were a
series of lawsuits filed by foreign investors sueing India based on BITs .
Specifically:
First, the lawsuit is a prerequisite for the wave of lawsuits against India to
invest in arbitration under BITs of foreign investors in the country. Secondly,
the arbitration award on the lawsuit caused India to set up a previous BITs

reform program. Third, after the ruling, India has just had to change its
adjustment policy to attract FDI, and to start a program to review the
regulations in BITs so that the country does not face disputes like case of White
Company. New points of the BIT 2015 model are built on the basis of the main
content in the dispute between the White Company and India. One is to change
the concept of investment; The second is to eliminate the principle of mostfavored-nation treatment (MFN); Three is limiting the scope of national
treatment principles (NT); Four is the limit of full protection and security
principles (FPS); Five is to eliminate the principle of fair and equitable
treatment (FET); Six is a clearer regulation of deprivation of ownership; Seven
is a regulation of transparency; Eight is to adjust authority and apply domestic
dispute resolution methods.
3.1.3. Indian difficulties during the implementation of policy changes on ISDS

* Must continue to perform obligations from signed agreements
* Must continue to follow lawsuits on the basis of previous commitments
* Negotiate multiple BITs negotiation at the same time
* There is no precedent for India
3.1.4. Evaluation of adjustments to India's ISDS policy
3.1.4.1. Adjust the content of investment liberalization
3.1.4.2. Create a uniform ISDS policy
3.1.5. Lessons learned for Vietnam
3.1.5.1. Focus on ISDS content adjustment law
3.1.5.2. Develop uniform ISDS policies
3.1.5.3. Study different models of ISDS reforms.
3.2. The practice of ISDS commitments of Việt Nam


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3.2.1. The development process of ISDS commitments of Viet Nam
As of the end of 2017, Vietnam has signed a total of 65 BITs, of which 47

have already come into effect, in addition to BITs, 23 other agreements contain
investment regulations and only 13 agreements of which has legal effect. The
first BITs Vietnam signed with Italy on this May 18, 1990, The most recently
BIT signed with Turkey on January 15, 2014. Although, by this time Vietnam
has not yet joined the ICSID Convention but Vietnam had agreements on ICSID
Convention and ICSID Rules of Arbitration; ICSID additional Facilities in BITs
that Vietnam signed in the early period.
Regarding FTAs, Vietnam has signed 12 FTAs, 4 negotiations and no
FTAs (RCEP, Vietnam - EU (EVFTA), Vietnam - EFTA, Vietnam - Isael,
however, not all FTAs. There are only 11 FTAs containing regulations on ISDS,
four agreements are not included, CPTPP and EVFTA are two of the FTAs
containing ISDSM. These are the first new generation FTAs of Vietnam having
commitments on ISDS, therefore, in the scope of the thesis, the following
section will focus on analyzing the basic ISDS commitments under the CPTPP
and EVFTA.
3.2.2. Differences in standards of investment liberalization and protection
under the CPTPP and EVFTA agreements
Similar to previous IIAs, CPTPP and EVFTA also set standards for
investment liberalization such as MFN, NT or investment protection standards
such as FET, FPS, Expropriatio, compension and transfer. ... However, the
content of each standard has many new points compared to previous
commitments. From the perspective of being the substantive law in ISDS, those
differences have a decisive meaning to the arising situation and settlement
results the dispute. Here are some new main points of these standards under
CPTTP and EVFTA.
3.2.2.1. Expanding scope of adjustment of the principle of most favored
national treatment (MFN), the principle of national treatment (NT)
3.2.2.2. Adjusting principles of fair and equitable treatment (FET) and full
security protection (FPS)
3.2.2.3. Specifying expropriation and compensation for damages

3.2.3. Contents of ISDS mechanisms in Vietnam's new generation of FTAs


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3.2.3.1. The ISDS Mechanism under CPTPP Agreement
CPTPP is an agreement that has been evaluated with many significant
impressive factors in the current context of global international economic
integration. This is a regional agreement with a wide range of impacts. Among
the numerous specials of this CPTPP Agreement, the investment chapter is
considered as special and even controversial chapter for its members.
The content of investment is stipulated in Chapter 9 of the Agreement, the
chapter includes two sections A and B with 30 Articles and 12 Annexes from A to
L (Appendix L is suspended). Section A contains 17 Terms to explain the terms,
scope of application, basic principles of investment ... Section B contains 13
Articles, which directly stipulate ISDS. Some of the provisions in Section A and
all of the provisions in Section B constitute the latest version of ISDS specified in
international economic agreements in recent decades. The basic content of this
mechanism includes provisions on the subjects of dispute; methods, procedures
for each dispute resolution method is used.

3.2.3.2. Mechanism for foreign investor and Viet Nam Dispute Settlement under
the EVFTA Agreement
The content of the ISDS mechanism under EVFTA includes a number of
regulations on the subjects of dispute; methods, procedures are based on the
ISDS regulations and the scope of application of this mechanism. The scope of
ISDSM under EVFTA depends on the scope of investors and investment
concept specified in the agreement. In particular, the concept of investment is a
fundamental influential concept, EVFTA investment means all types of assets
owned or managed directly or indirectly by investors of a contracting party in
the territory of the other contracting party of the Agreement.

Dispute subjects
It is the same as other disputes, the Agreement must determine the status
of plaintiffs and defendant of the disputes. The plaintiff defined in Paragraph 3,
Article 2 of Section 3.1 is an investor of a Member State that may be a natural
or juridical person who has, or will, conduct investment activities within its
territory of other contracting members of the Agreement. The defendant is
either a member of the Vietnam, EU or EU member states.
Dispute settlement methods


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VFTA is one of the FTAs that offers the most dispute resolution methods:
negotiation, mediation, consultation, and the system of permanent investment
courts (Investment Tribunal System).
Procedures
To ensure the maintenance of relationships between the disputing parties,
minimize time and costs. The Agreement provides for the priority of using
alternative dispute resolution methods (ADR) including negotiation and
mediation. Mandatory nature, application procedure of each method in relation
to other methods is not the same. Negotiation and mediation procedures are not
required and are entirely dependent on the choice of the parties in the dispute.
In contrast, consultations and courts require mandatory procedures, in which
the consultations must be applied before approaching to a tribunal method is a
permanent investment court.
Enforcement
This is the final procedure in dispute settlement which is of interest to the
parties. Regulations on enforcement of award will ensure actual effectiveness of
the ISDS mechanism under the Agreement.
3.2.3.3 Differences of the ISDS mechanisms under EVFTA and CPTPP
*Detailed and strict regulations

First, about the level of detail
Second, about the tightness

* Scope
* Transparency
3.3. Practice and general assessment of the situation of resolving
disputes between foreign investors and Vietnam
According to statistics of UNCTAD, Vietnam is in the group of foreign
investors who sued the least. Currently, Argentina is the most heavily sued with
60 cases, followed by Venezuela with 44 cases. In Southeast Asia, in 2017
Indonesia was the most sued country with 7 cases, Vietnam and the Philippines
ranked second with 5 cases, but in 2018 our country became the most sued
country in the region with 8 cases. Foreign investors in Vietnamese lawsuits
come from developed economies like the Netherlands, France and the United


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States. However, according to information collected from a number of
documents, Vietnam now faces 16 petitions of foreign investors. With the
mechanism of not disclosing case information in previous IIAs, access to
official information is very difficult. Below are the most basic summaries from
foreign investors suing Vietnam that UNCTAD collected, which partly reflects
the practice of resolving disputes between foreign and Vietnamese investors in
the period. current paragraph.
3.3.1. Number of disputes
3.3.2. Applicable law and violation
3.3.3. Institutions and arbitration rules of arbitration
CONCLUTION OF CHAPTER 3
Chapter 3 of the thesis is built on the basis of analyzing the reality of
ISDS in general, then focusing on in-depth analysis of the case of India, the

state that has similarities with Vietnam, to give lessons for Viet Nam. Besides
the international practical analysis of ISDS, the remaining content of Chapter
focuses on clarifying the practice of dispute resolution, analyzing the legal and
practical foundation for resolving the disputes in current stage. Like many other
developed countries, in order to encourage and attract foreign investment,
Vietnam soon accepted the ISDS mechanism in the early 1990s through
negotiating and signing BITs with many developed countries. Therefore, mainly
ISDS mechanisms are expressed through BITs, later developed in FTAs and
especially Vietnam has accepted in new generation FTAs, such as CPTPP,
EVFTA. Due to differences with previous ISDSM systems, this Chapter chose
to analyze the content and differences of ISDS commitments in the two new
generation agreements to study.
Vietnam 's ISDS practice has been stated to demonstrate legal
assessments of the ISDS practice in Vietnam in the current period. Given the
current situation of both dispute settlement law and practice, Vietnam will face
many challenges in resolving the disputes. Although, the ISDS commitments
under CPTPP and EVFTA have many new points to balance the interests
between foreign investors and the host states, overcome some disadvantages of
previously existing ISDS commitments. But these commitments will still have


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potential challenges for Vietnam, at least from the perspective of foreign
investors always have the right to sue Vietnam to international jurisdiction
agencies if they assume that Vietnam violated the commitments under new
generation FTAs. Specially, more complicated because Vietnam still have to be
implementing ISDS commitments under previous IIAs. Therefore, Vietnam
needs to identify the issues set out and build a solution system in both
preventing and resolving the disputes in accordance with the period of
international economic integration.

CHAPTER 4
SOLUTIONS TO IMPROVEMENT ON EFFECTIVENESS OF
INVESTOR – STATE DISPUTE PREVENTION AND SETTLEMENT
FOR VIET NAM IN THE CONDITION OF INTERNATIONAL
ECONOMIC INTEGRATION
4.1. Issues raised from the ISDS practice of Vietnam
Besides the different positive impacts, ISDS also has potential legal riks
for the host states like as Vietnam. It includes common issues which other
countries have been dealt with, and specific issues arising only in the economic,
social and legal conditions of Vietnam.
4.1.1. Common issues are raised in ISDS
Here are problems arising from the common ISDS practices of states
around the world and cannot be an exception for Vietnam.
Although, investment arbitration is considered as a method of domestic
business dispute resolution as well as disputes in international business have many
advantages due to ensuring objective factors through selection of arbitration
centers, arbitrators and selection of arbitration procedure rules. But these are not
promoted in ISDS, the weaknesses analyzed below have significant impacts on the
host state when this method is applied to ISDS. First: Transparency; Second:
Arbitration decision is not consistent; Third: High arbitration costs
4.1.1.1. Risk of economic damage to the investment recipient country
According to UNCTAD statistics, the number of disputes between foreign
investors and developing or underdeveloped countries accounts for 60%, while
developed countries account for only 40%. This means that in countries with
developing and underdeveloped economies, there will be more problems with
disputes from foreign investors of developed economies. When participating in


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the above disputes, the host states may be subject to two types of damages:

First: The cost of dispute resolution.
Second: Compensation for foreign investors is huge
4.1.1.3. Control common issues of investment receiving countries
The notable question surrounding the application of ISDS commitments
is whether or not this mechanism ensures elements of environmental protection,
public interests, social ethics ....
4.1.2. Parallel Implementation of various ISDS mechanisms
In the coming time, when CPTPP takes effect, IPA will be completed
negotiation and arising effectively, Vietnam will be one of the few countries to
implement parallel models of different typical ISDS mechanisms, with
especially points in the above-mentioned FTAs. It is not necessary to specify
new legal issues in the process of implementing ISDS mechanism of new
generation FTAs, there will still be pressures on Vietnam in ISDS
4.1.3. Difficulties in implementing ISDS under CPTPP, EVFTA
Although there are new and progressive points compared to the previous
ISDS commitments, the content of some new regulations in the ISDS
commitments of CPTPP, EVFTA will still have many difficulties for Vietnam in
the implementation process such as : Scope of ISDS is large. Obligations on
MFN, NT, minimum treatment standards (FET, FPS), expropriation and
compensation... are maintained in investment liberalization and protection.
Content adjustments to those principles are not really strong enough to reduce
the risk of foreign investors suing Vietnam. In addition, some new additions to
the principle of applying customary international law and requirements for
transparency, new permanent investment court model or enforcement ... will be
requirements that Vietnam is not easy to when implementation.
4.2. Solutions in preventing and resolving disputes between foreign
investors and Vietnam
4.2.1. In preventing disputes arising
Preventing disputes arising is one of the solutions that are highly
appreciated by many countries in implementing the dispute settlement between

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foreign investors and the host state. The effectiveness of prevention will bring
many different positive effects to the economy and society of the host states.
Therefore, in the current context, this is the first solution that Vietnam will have
to study and apply. Based on international experience, background of Vietnam's
ISDS laws and practices, here are some basic preventive measures as follows:
4.2.2.1. Improving domestic laws to ensure compliance with international
investment commitments
4.2.1.2. Propagate, disseminate, explain the differences of the new mechanism
4.2.1.3. Training human resources for resolving disputes
4.2.1.4. Developing mechanisms to receive and handle problems of foreign
investors
4.2.2. In dispute resolution
4.2.2.1. Maximizing the effectiveness of negotiation, mediation and consultation
4.2.2.2. Completing the Regulation on coordination of investment dispute
settlement
4.2.2.3. Focusing on authority of international tribunal in ISDS
4.2.2.4. Enforcing awards of ISDS institution.
4.2.2.5. In-depth research is needed on new issues in ISDS
CONCLUSION OF CHAPTER 4
On the basis of the theoretical and practical basis of Chapter 2 and
Chapter 3, Chapter 4 analyzed all the issues raised for Vietnam when resolving
the disputes in the current conditions. With the position of a capital importer,
Vietnam will encounter common difficulties in ISDS at the current stage as the
limitations of investment arbitration, the risk of economic losses due to the
compensation and the cost of participating in lawsuits, difficulties to control
environmental issues, ensuring public benefits ... In addition, in the current
context, Vietnam will have its own difficulties such as implementing many

kinds of Different ISDS commitments, dealing with new issues in EVFTA,
CPTPP ISDS commitments.


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In the above conditions, in order to improve the effectiveness of
prevention and settlement of the disputes, Vietnam should implement a system
of solutions. Therefore, the following section of this Chapter focuses on
presenting the proposed solution system. The solutions are divided into two
groups: solutions in prevention and solutions in dispute resolution. These
solutions aim to reduce the legal risks for Vietnam when implementing ISDS
commitments in the current conditions.