Việt Nam courts should be more prepared to handle foreign investor v. State investment disputes

Việt Nam should not be too “scared or concerned” of legal disputes between the State and foreign investors, but the judicial system should be prepared to deal with such situations.

The remark was made by Vũ Thị Châu Quỳnh, deputy director general of the Department of Legislation, under the Ministry of Planning and Investment (MPI) at a workshop on dispute settlement between foreign investors and recipient countries held on Friday.

Amongst the concluded cases during 1987-2017, 37 per cent of cases were ruled in favour of the State and only 28 per cent in favour of the investor, she said, with the remaining either undecided or discontinued, citing the statistics by the United Nations Conference on Trade and Development (UNCTAD) and the Investor-State Dispute Settlement Navigator (ISDS), noting the figures represent the fact that the State has fared better in tribunals.

As Việt Nam becomes increasingly integrated into the global economy, risks of friction would increase along with the benefits the country could reap from foreign investment, said Caitlin Wiesen, Country Director of the United Nations Development Programme (UNDP) in Việt Nam.

She noted that bringing a dispute to court is usually the “last resort” of enterprises to ensure their rights and benefits.

“Therefore, the court plays a very important role in ensuring a fair business environment. The court’s adjudication must be fair, prompt and accurate,” she said.

Việt Nam has signed 66 bilateral investment treaties since 1990 and 12 free trade agreements, with one entering the final phase, and negotiations for three more are underway.

Nguyễn Thị Hoàng Anh, a Supreme Court judge, said all judicial agencies were told to review and amend the domestic legal system in line with provisions in the 11-country Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) that Việt Nam’s National Assembly ratified in November.

Previously, in 2014, the Government issued a decision on international dispute settlement mechanism, which set out tasks and collaboration processes between State agencies in handling these issues. The mechanism is applied when foreign investors file legal complaints against the Vietnamese Government at international tribunals, according to an international investment protection agreement Việt Nam has signed or the contract between the investor and the Vietnamese Government.

Việt Nam also amended its denunciation and complaint laws to facilitate the settlement of disputes, including ones with foreign entities, the judge said.

Also noting that to avoid costly and time-consuming disputes, Quỳnh of the planning ministry is reviewing bilateral investment treaties Việt Nam has signed with other countries, to eliminate outdated ones, better clarify the responsibilities of the State, include more exceptions to protect State’s rights and benefits and set out more detailed procedures on many matters.

However, she noted that whether foreign partners would concur with all the conditions Việt Nam set out would rely on the nature of bilateral relations, on a case-by-case basis.

The legal official said the most frequently occurring disputes have to do with land property, State-owned enterprises violating the contracts with private enterprises prompting the latter to file complaints against the State, the State revoking or refusing to grant investment licences, or legislation changes resulting in supposed damage to the enterprises.

Quỳnh also urged local courts to be prepared for common claims against the judicial process in disputes, including that fair and equal treatment has not been exercised, the court’s decisions are arbitrary and lacking sufficient legal basis and problems in procedures or issuance of the verdict.

Currently, foreign direct investment in Việt Nam accounts for 55 per cent of the country’s industrial input, 70 per cent of imports’ revenue and 18 per cent of tax collected. This sector also provides jobs for 3.7 million Vietnamese.

The workshop, aimed at judges of the province-level courts and Superior Courts – who handle the dispute verdicts – with updates on international experience in state-investor disputes, recommended practices in the legal procedures as well as Việt Nam’s obligations in following through on the various trade pacts it is a party to in handling these disputes.

The workshop is part of UNDP’s regional project ‘Promoting a fair business environment in ASEAN’, which targets Indonesia, Malaysia, Myanmar, the Philippines, Thailand and Việt Nam.

Source: Viet nam News