Group 12 IIAs PROMINENT TRENDS

IIAs
PROMINENT TRENDS


GROUP 12
Trần Thiên Long (Leader)

Mai Hữu Lộc

Nguyễn Hữu Lợi

Hạ Thiên Long

Hoàng Minh Long

Huỳnh Thị Vân Long

Nguyễn Vũ Long


INTRODUCTION


Volume trend of IIAs

Source: UNCTAD World Investment Report 2020


2019 IIAs

3 284

+34

>

+22
New treaty conclusions

Effective treaty terminations

TOTAL IIAS


Evolution of
the IIA
regime

Source: UNCTAD’s REFORM PACKAGE FOR THE INVESTMENT REGIME INTERNATIONAL


IIAs in a changing context

A new sustainable development paradigm
IIAs can no longer be designed in isolation, but need to be harmonized
with, and made conducive to, the broader goal of sustainable
development

A new investor landscape
Emerging economies are increasingly large sources of
investment themselves

The greater role of governments in the economy
Stronger role for State regulation manifests itself with regard to
sustainable development


UNCTAD’s Road Map for IIA Reform:
Five priority areas of reform

Source: UNCTAD’s REFORM PACKAGE FOR THE INVESTMENT REGIME INTERNATIONAL


OUTLINE
PRESERVATION OF
01.

STATES’ REGULATORY

03.

DISPUTE SETTLEMENT

SPACE

02.

SUSTAINABLE
DEVELOPMENT TRENDS

INVESTOR-STATE

INVESTMENT
04.

PROMOTION AND/OR
FACILITATION


IIAs concluded in

2018

2019

General exceptions, e.g. for the protection of human, animal or plant life or health

66.67%

60%

Refined definition of investment

93.33%

80%

100%

93.33%

80%

93.33%

100%

100%

Omission of the so-called “umbrella” clause

96.67%

86.67%

References to the protection of health and safety, labour rights, environment or sustainable development in

86.67%

73.33%

56.67%

26.67%

46.67%

53.33%

Limiting access to ISDS

80%

93.33%

Specific proactive provisions on investment promotion and/or facilitation

90%

80%

Circumscribed FET, or FET omitted

1

Clarification of indirect expropriation, or indirect expropriation omitted

Detailed exceptions from the free-transfer-of-funds obligation

the treaty preamble

2

Explicit recognition that parties should not relax health, safety or environmental standards to attract
investment
Promotion of corporate and social responsibility standards

3
4

UNCTAD World Investment Report

IIAs concluded in

Reform-oriented provisions


PRESERVATION OF STATES’
REGULATORY SPACE


General exception included in
IIAs


According to Article 4.6 of EVIPA: General Exception

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like
conditions prevail, or a disguised restriction on covered investment, nothing in Articles 2.3 (NT) and 2.4 (MFNT) shall be construed as preventing the adoption or enforcement by
any Party of measures:
(a) necessary to protect public security or public morals or to maintain public order;
(b) necessary to protect human, animal or plant life or health;
(c)

relating to the conservation of exhaustible natural resources if such measures are applied in conjunction with restrictions on domestic investors or on the domestic supply or

consumption of services;
(d) necessary for the protection of national treasures of artistic, historic or archaeological value;

(e) necessary to secure compliance with laws or regulations which are not inconsistent with Articles 2.3 (National Treatment) and 2.4 (Most-Favoured-Nation Treatment) including those
relating to:

(•) (i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on contracts;
(•) (ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; or
(•) (iii) safety;
f)

inconsistent with paragraph 1 of Article 2.3 (National Treatment) provided that the difference in treatment is aimed at ensuring the effective or equitable imposition or collection of direct

taxes in respect of economic activities or investors of the other Party .


The impact
●

Provide a balance between the claim of foreign investment
protection and the protection of other values or objectives

=> the basis for the countries concerned to proceed actions
towards investors


LIMITATIONS TO THE TREATY
SCOPE


Limitations to the treaty scope
According to Article 2.1(2) of EVIPA: Scope
Articles 2.3 (National Treatment) and 2.4 (Most-Favoured-Nation Treatment) do not apply to:

a) audio-visual services;
b) mining, manufacturing and processing of nuclear materials;

c) production of or trade in arms, munitions and war material;
d) national maritime cabotage;
e) domestic and international air transport services, whether scheduled or non-scheduled, and services directly related to the exercise of traffic rights,
other than:
(i) aircraft repair and maintenance services during which an aircraft is withdrawn from service;
(ii) the selling and marketing of air transport services;
(iii) computer reservation system services;
(iv) ground handling services; and
(v) airport operation services;

g) services supplied and activities performed in the exercise of governmental authority.


The impact
●

Clarify the obligations of each party

●

Leave more space for host country to regulate their own policies in some
important sectors


CIRCUMSCRIBED FET


CIRCUMSCRIBING THE FET OBLIGATION
According to Article 2.5(2) of EVIPA:
“A Party breaches the obligation of fair and equitable treatment referred to in paragraph 1 where a measure or series of

measures constitutes:

●
●
●
●
●
●

(a) A denial of justice in criminal, civil, or administrative proceedings;
(b) A fundamental breach of due process in judicial and administrative proceedings;
(c) manifest arbitrariness;
(d) targeted discrimination or manifestly wrongful grounds, such as gender, race, or religious belief;
(e) abusive treatment such as coercion, abuse of power, or similar bad faith conduct;
(f) a breach of any further elements of the fair and equitable treatment obligation adopted by Parties in accordance with paragraph
3.”


THE IMPACTS

Preserving “the right to regulate of the host
country”

Reducing the risk of misinterpretation


CLARIFYING AND OMITTING INDIRECT EXPROPRIATION

According to Article 2.7 of EVIPA:
“A party shall not nationalize or expropriate the covered investments of investors of the other Party either directly, or

indirectly through measures having an effect equivalent to nationalization or expropriation (hereinafter referred to as
“expropriation”), except:

●
●
●
●

(a) for a public purpose;
(b) under due process of law;
(c) on a non-discriminatory basis;
(d) against payment of prompt, adequate, and effective compensation.”


“

“ Indirect expropriation occurs if a measure or series of measures by a
Party has an effect equivalent to direct expropriation in that it
substantially deprives the investor of the fundamental attributes of
property in its investment including the right to use, enjoy and dispose of
its investment, without formal transfer of title or outright seizure.”

According to Annex 4.1 (b) of EVIPA


THE IMPACTS

Protection for investors against

Creating more safer environment for

repurcurssion

investors


DETAILED EXCEPTIONS FROM THE
FREE-TRANSFER-OF-FUNDS OBLIGATION


“

“ In exceptional circumstances of serious difficulties for the operation of the Union’s
economic and monetary union, or, in the case of Viet Nam, for the operation of monetary
and exchange rate policy, or a threat thereof, the Party concerned may take safeguard
measure that is strictly necessary with regard to transfer for a period not exceeding one
year..”

According to Article 4.10 of EVIPA