Summary of Doctoral thesis in Law: Theory and practice of investor state dispute settlement - Applying to vietnam in the current context of international economic integration

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.

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

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

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

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

- 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

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

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

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

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,

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

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

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

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

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

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

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