INTERNATIONAL INVESTMENT ARBITRATION AND DISPUTE RESOLUTION IN SOUTHEAST

INTERNATIONAL INVESTMENT ARBITRATION AND DISPUTE RESOLUTION IN SOUTHEAST ASIA ISDS IN VIETNAM OPPORTUNITIES AND CHALLENGES Nguyen Manh Dzung, MCIArb Dzungsrt & Associates LLC Bangkok, 18 th July 2016

FDI INFLOW IN VIETNAM FROM 1988 TO 2015 TOTAL: 314, 728. 3 MILLION USD (1) 80 000, 0 71 726, 8 70 000, 0 60 000, 0 50 000, 0 40 000, 0 30 000, 0 19 886, 8 20 000, 0 1 603, 5 7 925, 2 2 762, 8 24 115, 0 6 840, 0 1988 -1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0, 0 (1) General Statistics Office of Vietnam; Foreign Investment Agency – Ministry of Planning and Investment

BITS, FTAS SIGNED BY VIETNAM (2) 70 64 60 50 40 30 19 20 10 0 5 BITs (2) United Bilateral FTAs Regional/Multilateral FTAs (TPP, RCEP, AANZFTA…) Nations Conference on Trade and Development

NO ISDS PROVISION No ISDS under BIT 1992 between Vietnam and Thailand Dispute resolution under Contract ASEAN Comprehensive Investment Agreement

ISDS UNDER VIETNAMESE LAW Dispute Settlement Mechanism under contract(s) or IIA(s) Negotiation and conciliation Vietnamese court No IIA provision Vietnamese arbitration

ISDS UNDER VIETNAMESE LAW § Alternative Dispute Resolution (ADR): Chapter XXXIII of CPC 2015 on recognition of out-of-court settlement § National Court: CPC 2015 § Arbitration: LCA; Resolution 01/2014/NQTANDTC

ISDS IN PRACTICE Contract-Based Investor-State Disputes § East-West Highway Construction Project [2013 - amicable settled] § Phap Van- Cau Gie Ring Road 2 Project [Japanese investor relied on BIT to warn to file a treaty based claim if the settlement result is not justifiable]

ISDS IN PRACTICE - BACKED INVESTMENT TREATY ARBITRATION Escalation from contractual disputes § Trinh Vinh Binh (the Netherlands) vs. Vietnam [2003]; § Dial. Asie (French) [2011]; § SK E&C (Korea) [settled] § Metropolitan (The US) [pending] Purely Disputes related to IIAs § Mc. Kenzie (USA) vs. Vietnam [2010 jurisdiction declined]; § Recofi (French) vs. Vietnam [2013 pending]; Source: MOJ report

COMMON ISSUES § Reasons: Disappointment with the judiciary of host state or licensing state authorities; § Alleged breaches: expropriation; Fair and equitable treatment; Full protection and security or similar § Arbitration Rules: UNCITRAL Arbitration Rules § Administering institutions: • PCA (Dial. Asie; Recofi; Mc. Kenzie) • SCC (Trinh Vinh Binh) • ICC (East-West Highway Construction Project) § Positive outcome!

THE ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN VIETNAM [TÊN THÊ LOA I] [PHẦN TRĂM] Rejected 46. 2% Recognize d 44% *Source: The report of the Supreme People’ Court

CHALLENGES § Lack of coordination mechanisms; § Lack of a permanent lead agency; § Lack of experience for ISDS; § Systemic consistency of the IIA regime with domestic policy § New challenges from TPP and EVFTA

THE GOVERNMENT’S REACTIONS § Directive No. 01/CT-TTg dated 09/01/2012; § The Legislative Changes • Civil Code • Civil Procedure Code • Investment Law § Human Resources Capacity Buildings • State/ Provincial/Regional Officials • Judges/ Arbitrators • Practitioners

CONCLUSIONS § Improvement of investment climate: predictability, stability and transparency § Justice reform: to be more consistent with international standards § Arbitration friendly jurisdiction

Thank you for your kind attention! Q&A Dzungsrt & Associates LLC A Boutique Shipping and ADR Law Firm Hanoi Office Unit 6, 11 th floor, HAREC Building, No. 4 A Lang Ha Street, Ba Đinh District, Ha Noi city. Tel. (84 -4) 3772 6970 / Fax. (84 -4) 3772 6971 Saigon office 7 th Floor, 162 Pasteur’s Office Building Ben Nghe Ward, District 1, Ho Chi Minh city Tel. (84 -8) 3822 0076/ Fax. (84 -4) 3772 6971 Email. dzung. nguyen@dzungsrt. com Web. www. dzungsrt. com