On 8 April 2020, the Prime Minister issued Decision No. 14/2020/QD-TTG promulgating the Regulations on the Coordination and Settlement of International Investment Disputes (the Regulations). Entering into force on 1 June 2010, the Regulations will replace an older version of regulations that were in force since 2014 (Decision No. 04/2014/QD-TTG). This update provides an overview of the contents of the Regulations and the key changes contained therein.
Overview of the Regulations
The Regulations cover investment disputes between foreign investors and (i) the Government of Vietnam, (ii) the State of Vietnam, or (iii) state agencies.1 These disputes may arise out of the protections granted to foreign investors under international investment agreements (IIAs) to which Vietnam is a Party or the provisions of a contract between a state agency and a foreign investor.
These disputes are handled by the Ministry of Justice (MoJ), which acts as legal representative of the Government, and a ‘Lead Agency’, which is generally the ministry or agency that took the measure which allegedly violates the investor’s rights under an IIA or contract.2 In case the dispute arises out of an investment contract, the ministry or agency which is a party to the contract will be the Lead Agency.3 Otherwise, the Ministry of Finance will be the Lead Agency in cases concerning Government debts and loans or the application of finance and tax legislation. 4
The Lead Agency is responsible for taking for handling all matters regarding a dispute, including with regards to the reception of documents, the conduct of negotiations, the coordination with external lawyers, the coordination with other involved agencies and individuals, the attendance of hearings, the execution of awards, the reporting to the Prime Minister and Government, etc.5
The MoJ acts as a liaison between the Lead Agency and the Government and Prime Minister. It’s responsible to (i) maintain a roster of potential arbitrators; (ii) provide training and capacity building regarding international investment disputes for other ministries and agencies; and (iii) coordinate and support Lead Agencies in investment disputes.6
The Regulations take a preventive approach and prioritizing the resolution of potential disputes immediately upon the reception of complaints or denunciations from foreign investors. The Ministry of justice is tasked, together with Government, to attempt to resolve investment disputes before they escalate to the level of arbitration or court proceedings.7 The Regulations further set out the procedure to be followed upon the filing of a notice of intent to start legal proceedings by a foreign investor. The Lead Agency is responsible to shortly debrief the MoJ and the Government regarding the circumstances of the dispute and begin the collection of information and evidence in relation thereto.8
At this point, the Lead Agency may also decide to establish an inter-sectoral Working Group (the WG) if warranted by the circumstances of a case. This group is composed of representatives from other ministries or state agencies involved in the dispute. It is tasked to support and advise the Lead Agency in relation to the settlement of a dispute, the implementation of a strategy in this regard, and the provision of comments and opinions.9
The Lead Agency, together with the Working Group (if established), are responsible to “urgently” develop an ‘initial assessment’ of a case upon the filing of a notice of intent and, within 10 days thereof, establish a confidential ‘overall settlement strategy’ based on the facts of the cases and its relative strengths and weaknesses.10
If a case goes to arbitration, the Lead Agency, together with the Working Group, will be responsible for the (i) collection of documents, (ii) preparation and submission of pleadings and evidence and (iii) participation in hearings, (iv) participation of witnesses, (v) appointment of experts, (vi) retainer of external lawyers and (vii) coordination with other agencies responsible for the execution and enforcement of arbitral awards.11 In the course of settling investment disputes, the Lead Agency and Working Group will also be required to consider the possibility of mediation and prepare a mediation plan that is suitable to defend the rights and interests of Vietnam.12
Amendments implemented in the Regulations
In their substance, the Regulations are generally in line with the previous version that was in force since 2014. While they do not contain fundamental changes, a number of small but significant amendments have been implemented. In general, these modifications underline the proactive approach of Vietnam towards a prompt and amicable resolution of investment disputes.
These include the development of an initial assessment of the case (mentioned above), which will help to establish a better understanding of a dispute from the get-go. Furthermore, in general, the Regulation reduces all delays related to the handling of investment disputes, including the time allowed to report on the dispute, establish a settlement strategy, provide comments on arbitration documents and pleadings, approve the funding to support the settlement of the dispute, etc.
It also clarifies the responsibility of the Lead Agency and Working Group with regards to a number of salient issues faced in the context of the settlement of international investment disputes. Such matters include the collection and disclosure of evidence or the execution and enforcement of awards. In this regard, notably provide for innovations regarding (i) the establishment of a payment plan to comply with arbitral awards, if required; (ii) the recognition and enforcement of awards that are beneficial to Vietnam and (iii) the preparation of a report following the settlement of a dispute on the lessons therefrom.
The Regulations are a testimony of the strong commitment of Vietnam and the Vietnamese government towards the prompt and effective resolution of international investment disputes. By providing a clear framework for the handling of disputes from their early stages, the Regulations send a positive statement to foreign investors that the government will hear and attempt to resolve the issues they face. If a dispute must go to arbitration to be resolved, then the Regulations also clearly outline the role of all entities involved from the Government’s side in relation to the conduct of the arbitral proceedings.
1 Art. 2(1) of the Regulations
2 Art. 5(1) of the Regulations
3 Art. 5(2) of the Regulations
4 Art. 5(3) of the Regulations
5 Art. 6 of the Regulations
6 Art. 7 of the Regulations
7 Arts. 9 and 10 of the Regulations
8 Arts. 12 and 13 of the Regulations
9 Arts. 15, 16 and 17 of the Regulations
10 Art. 14 of the Regulations
11 Arts. 18, 19, 20, 25 and 26 of the Regulations
12 Art. 27 of the Regulations