Investor State Dispute Settlement between Foreign Investor and Host State under CPTPP Agreement and EVIPA Agreement

New-generation FTAs not only limit the field of goods and services but also expand regulation of scope of invesment. The majority of these FTAs include liberalization principles of investment and protection of investor through regulation on dispute settlement mechanism between investor and state (ISDS). The two agreements that have recently been paid attention to are the Comprehensive and Progressive Agreementfor Trans-Pacific Partnership (CPTPP) with Chapter 9 of Investment takingeffect from January 14th, 2019 in Vietnam and EU – VietnamInvestment Protection Agreement (EVIPA) (from EU-Vietnam Free Trade Agreement – EVFTA) whose all member states are going to ratify before taking effect.

Firstly, in regard to transparency rule of the dispute settlement, both of CPTPP and EVIPA have provision improving the transparency of the proceedings. Accordingly, all documents (submitted by parties, decision of arbitral tribunal) except for protected information shall be made available to the public. Hearings shall be conducted open to the public for relevant parties to attend. EVIPA has applied the UNCITRAL Transparency Rules while CPTPP does not apply this Rules but only some regulation specified in Article 9.24 (Article 9.24 of CPTPP and Article 3.46 of EVIPA).

Secondly, EVIPA has established a permanent tribunal being different with the ad-hoc tribunal in CPTPP. In EVIPA, investment tribunal system includes two tribunals: Tribunal and Appeal Tribunal. This is the first time there is permanent tribunal in a Investment Protection Agreement of Vietnam.

Thirdly, award of tribunal. In EVIPA, final award shall be obeyed by the parties without appeal, review, set aside, annulment or any other remedy. Vietnam is extended for a period of 5 years following the date of entry into force of this Agreement, or a longer period determined by the Committee. In that time, if Vietnam is the respondent, recognition and enforcement of a final award shall be conducted pursuant to the New York Convention of 1958 (Article 3.57). When 5-year period is expired, recognition and enforcement shall be conducted pursuant to ICSID Convention (without domestic procedures of recognition and enforcement). Diplomatic protection shall not be applied unless one party has failed to abide by and comply with the award (Article 3.58). Meanwhile, according to Article 9.29, CPTPP still allow revision or annulment of award. CPTPP has more enforcement mechanism than EVIPA, including ICSID Convention (without domestic procedures of recognition and enforcement), the New York Convention or the Inter-American Convention (with domestic procedures of recognition and enforcement).

Finally, both EVIPA and CPTPP improve the independence, impartiality and quality of arbitrators or members of the tribunal while issuing a code of conduct them. In EVIPA, this code of conduct is specified in Annex 11, while in CPTPP, this code is not specified but shall be provided later by contracting parties on the basis of Code of Conduct for Dispute Settlement Proceedings under Chapter 28 (Dispute Settlement) (Paragraph 6, Article 9.22 of CPTPP).

At ANT Lawyers - Law firm in Vietnam, our trial lawyers with accreditation in national and international arbitration practice could help providing legal advice in disputed matters, and guide the clients through out the process.  The lawyers could also advise the clients on various matters from choice of arbitrator, choice of arbitration rules, ad-hoc or institutional arbitration, place of arbitration, enforcement of arbitral award.