Legal development of the investment dispute settlement system in vietnam issues on the investor state dispute settlement

LEGAL DEVELO PM ENT OF THE IN V ESTM EN T DISPUTE SETTLEM ENT SYSTEM IN VIETNAM : ISSUES ON THE INV ESTO R -STA TE DISPUTE SETTLEM ENT IWASE Maomi* Introduction At the end o f 2010 the international investm ent agreem ents (IIA s) universe contained 6,092 agreem ents, including 2,807 bilateral investm ent treaties (B IT s), 2,976 double taxation treaties (DTTs) and 309 IIAs other than BITs and D T T s (other IIA s)1 D isputes arising out o f IIAs betw een foreign investors and host States have substantially increased within the last ten to fifteen years, as has th e num ber o f investor-State dispute settlem ent (ISD S) cases This explosion runs in parallel with an increase in the num ber o f IIAs being negotiated w orldw ide2 T he disputes betw een them raise difficult issues on international law, such as sovereign immunity, diplom atic protection, and so on The ISDS based on IIA s is im portant for foreign investors, because the ISDS m echanism perm its the direct invocation o f arbitration claims by foreign investors them selves against the host State3 In case o f Vietnam, the Bilateral Trade Agreement (BTA) with the U.S w as signed in 2000 and became effective in 2001, which included a set o f rules to facilitate cross-border investment between the two countries In addition, Vietnam has concluded 58 BITs, and 42 o f them have entry into force by 1st June 201 24 These BTA and BITs provide a dispute settlement clause stipulating ISDS, and by * Associate Professor, University o f Hyogo, Japan UNCTAD (201 lb), pp 100-101 UNCTAD (201 la), xvii Campbell M cLachlan QC (2007), p.5 UNCTAD, Bilateral Investment Treaties signed by Viet Nam 522 LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT the end o f 2011 Vietnam has been sued for arbitration in cases based on IIA s1 The Investment Law o f 2005, legal framework for foreign investment in Vietnam, also p ro v id e s IS D S U n d er this Law , foreign investors w ill b e a b le to su e "V ietn am ese State M an ag em en t A g en cies'' for arbitration or litigation o th e r th a n in V ietn am based on treat 'S co n clu d ed by V ietnam as w ell as co n tracts w ith rep resen tativ es o f A u thorized S tate A g en cies F urtherm ore, in d rafting the C o m m e rc ia l A rb itra tio n L a w o f 2010, it was considered that the right o f foreign investors to resolve disputes by a rb itra tio n w o u ld e x ten d to co n tra ctu al d isp u te s b e tw e e n fo re ig n in v e sto rs an d V ie tn a m e s e S tate a g e n c ie s rela tin g to in v e stm e n t a c tiv itie s b a s e d o n th e In v e s tm e n t Law o f 20052 Here considering economic system in many Asian countries including Vietnam, "‘state-owned entities’ and/or ‘state-owned enterprises’ (SOEs)" represent both a m ajor part o f the economy and a not in sig n ific a n t pari o f fiscal revenues The SOEs have specific legal forms and are different from the other companies There ev en still a r c so m e d ep artm en tal an d /o r m in iste ria l e n titie s w h ic h a rc c o n s id e re d as SOEs Foreign investors frequently enter agreements with the SOEs When a SOE b r e a c h e s t h e a g r e e m e n t , f o r e ig n i n v e s t o r s o f te n s e e k t o a d d r e s s t h e i r c l a i m d i r e c t ly against the host State under the application of bilateral or multilateral IIAs In Vietnam SOEs have been used as a tool for the government to regulate the national economy, and such role has aroused controversy at present This article analyzes development o f legal systems on ISDS in Vietnam, focusing on both the IIAs concludcd by Vietnam with the Netherlands, France and the U.S respectively, and Vietnam’s municipal laws dealing with foreign investment dispute settlement, such as laws on investment, BOT and commercial arbitration Through this analysis, I examine issues on settlement o f disputes between foreign investors and the Vietnamese government and/or SOEs UNCTAD (2012), p i There is no government’s official opinions on the cases in Vietnam, but according to various unofficial source, websites, papers and so on, they are as follows: (1) "Dialasie SAS V, Vietnam (UNCITRAL arbitration rules, adm inistered by the PCA)" which w as initiated in 2011, home country o f Dialasie SAS is France (UNCTAD (2012), pi 5) (2) "Trinh Vinh Binh and Binh Chau Joint stock Company V Socialist Republic o f Viet Nam UNCITRAL, administered at SCC)" which was initiated in 2004, and was settled on confidential terms following an award rendered in 2007 Home country o f the investors is the Netherlands (UNCTAD, UNCTAD DATABASE OF TREA TY -BA SED INVESTORSTATE DISPUTE SETTLEMENT CASES.) (3)"South Fork Company V People’s Committee o f Bình Thuận Province, home country o f the investor is the United State o f America (PHƯƠNG NAM (2011).) 2.Vilaf I long Due (2008) 523 VIỆT NAM HỌC - KỶ YẾU HỘI THẢO QUỐC TẾ LÀN THỨ TƯ Investor-State dispute settlement under legal system in Vietnam: Status and the concept of "a State" 2.1 Bilateral Investment Treaties Concerning BITs that Vietnam has signed, all negotiated recently and concuưently BITs tend to follow a reasonably standard pattern, and typically provide for "recourse to international arbitration." With regard to "recourse to international arbitration," it is available at the initiative o f either party to the dispute after a period o f usually three to six months, during which an amicable settlement must be sought The outcome o f the arbitration procedure is final and binding Vietnam is not currently a member o f the International Centre for Settlement of Investment Disputes (ICSID), although it has applied for membership Short of Vietnam being a m em ber o f the ICSID Convention, most BITs provide for international arbitration to take place under the United Nations Commission on International Trade Law (ƯNCITRAL), or under the ICSID once Vietnam becomes a m em ber1 BITs concluded with the Netherlands2, France3 and a BTA with the u s4 also provide the dispute settlement clause, which covers the disputes between investors and the State 2.1.1 Definition o f "Disputingparties" Both BITs with the Netherlands and France stipulate the provisions on disputes between investor and a host State The BIT with the Netherlands provides disputes between "a Contracting Party" and "a national o f the other Contracting Party" (Art.9(l)) With regard to these disputing parties, A rt.l defines "nationals." The BIT with the Netherlands, however, does not define "a Contracting Party." It is only noted "The Government o f the Kingdom o f the Netherlands and the Government o f the Socialist Republic o f Vietnam (hereinafter referred to as "the Contracting Parties")" in the Preamble, and there is no definition on "the Contracting Parties." The BIT with France also provides investment dispute between "a Contracting Party" and "a national or company o f the other Contracting Party" (A rt.8(l)) With UNCTAD (2008), p.41 Agreement on Encouragem ent and Reciprocal Protection o f Investm ents between the Kingdom o f the Netherlands and the Socialist Republic o f Vietnam, dated 10 March 1994 Agreement between the Government o f the Socialist Republic o f Vietnam and the Government o f the French Republic for the Promotion and Protection o f Investment, concludcd on 26 May 1992 in Paris Agreement between the United States o f America and the Socialist Republic o f Vietnam on Trade Relations, concluded on 13 July 2000 524 LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT reg ard to th e se d isp u tirm parties, A rt.l d efin e s "n a tio n a l" and "com pany" respectively The BIT with France also does not define "a Contracting Party," and ju s t d e sc rib e s th a t "th e G o v e m m c n t o f th e S o cia list R e p u b lic o f V ie tn a m an d th e G o v e rn m e n t o f th e R e p u b lic o f F rench, refe rre d to as ‘th e C o n tra c tin g P a rtie s ’" in the Preamble In b o th B IT s w ith th e N eth erlan d s and F ran ce, th e re w a s n o s p e c ific p ro v is io n on the concept o f "a Contracting Party" as a disputing parties o f ISDS As to SOEs, b a se d on th e d e fin itio n c la u se s on "legal p e rso n s (th e N e th e rla n d s )" o r "c o m p a n y (F n c e )," it m ig h t b e c o n s tru e d that a S O E esta b lish e d in a Contracting State (home State) would be treated as "a investor" when it invests in the other Contracting State (host State) A SOE corresponds to neither "a Contracting Party" nor "a investor o f the other Contracting Party" under the BITs Similar to the BITs with Netherlands and France, "Chapter IV Development o f Investment Relations" o f a BTA with the U.S provides disputes between investors and a host State (Art.4) In Chapter IV, "an investment dispute" is defined as a dispute between "a Party" and "a national or company o f the other Party" arising out o f or relating to "an investment authorization," "an investment agreement" or an alleged breach o f any right conferred, creatcd or recognized by Chapter IV ( ) with respcct to a covered investment (Art 1(10)) In addition, "an investment authorization" is an authorization granted by "the foreign investment authority o f a Party" to a covered investment or a national or company o f the other Party (Art 1(6)), and "an investment agreement" is a written agreement between "the national authorities o f a Party" and "a covered investment or a national or company of the other Party" (Art 1(7)) In the BTA, therefore, disputing parties are "a Party," which includes "the foreign investment authority" and "the national authority," and "a national or company o f the other Party." As these disputing parties, Article defines "company," "company of a Party" and "national" o f a Party With regard to "a Parly," the Preamble in the BTA states that "The Government o f the United States o f America and the Government o f the Socialist Republic o f Vietnam (hereinafter referred to collectively as "Parties" and individually as "Party")." In contrast to the BITs with the Netherlands and France, the BTA, furthermore, stipulates "a state enterprise" with respect to a covcred investment (Art 1(5)), and a P a rty ’s o b lig a tio n s sh all ap p ly to a state e n te rp rise in th e e x e rc is e o f a n y re g u la to ry , administrative or other governmental authority delegated to it by that Party (Art 12) As to these provisions o f Chapter IV, it is reported that "Chapter IV establishes detailed obligations regarding ISDS and provides the consent o f both Parties to reso lv e su ch d is p u te s th ro u g h arb itratio n C h a p te r IV a p p lie s to a sta te e n te rp rise to the ex te n t th a t th e e n te rp ris e ex ercises any reg u la to ry , a d m in is tra tiv e o r o th e r 525 VIỆT NAM HỌC - KỶ YẾU HỘI THẢO QUỐC TẾ LÀN THỨ T Governmental authority delegated to it by the Governm ent"1 Therefore, "state-own enterprises" which have regulatory functions are treated as "a State" when the enterprise exercises its power In this case, investors could file directly for irbitration against "state-owned enterprises" based on ISDS provision 2.1.2 The scope o f "a Contracting Party" in Investor-State Dispute Settlement In BITs with the N etherlands and France and a BTA with the U.S., the disputes ịgainst "a Contracting Party" and/or "a Party" need at first be settled amicably iĩĩiong the parties involved I f the disputes cannot be settled by this mean, the lisputes will be subm itted to the procedure provided by the respective BITs and iTA, such as national courts in a host State, arbitration and/or conciliation based on he agreement, UNCITRAL rules or ICSID In the field o f foreign investment, SOEs have been established for the purpose )f dealing with foreign investors in the host State This has raised issues o f ittribution o f acts o f SOEs to the States In principle, SOEs are separate status and heir acts will not be attributed to the state However, several exceptions qualify this principle: the separation w ill not be respected if the corporate veil has been created IS a means for fraud and evasion Conduct w ill be attributed to the state in cases ■vhere the corporation exercises public power Another exception concerns a ỉituation o f ownership by the State where control is exercised in order to achieve a ^articular result2 Concerning this issue, investment treaties on the whole generally jo not contain special rules o f attribution, so they are to be read in the lights o f general international law in that respect3 As mentioned above, the BITs with the Netherlands and France have also no definite provision on attribution o f acts by SOEs, and have no provisions on the scope o f "a Contracting Party." On the other hand, the France model BIT o f 2006 has a special provision on "attribution" in Article 2, dealing with federated states o f federal unions, regions, local authorities or any other entities for whose international relations a Contracting Party is responsible4 Comparing this provision in the France m odel,B IT with the BITs, especially with France, it might be difficult to construed that the ISDS provision will apply to SOEs established in a Contracting State (host State) when the disputes with investors have occurred in the host State under the BITs themselves In contrast to th e m , a B T A w ith th e U S s p e c ifie s " a ttrib u tio n " in A rtic le 12 and 1.The U.S - Vietnam Trade Council Education Forum (2004), p 38 Rudolf Dozer & Christoph Schreuer (2008), pp 198-199, 3.Georgios 4.Georgios 526 Petrochilos (2010), p.288 Petrochilos (2010), p.288, note LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT C la u s e o f A rtic le U n d er th e B TA , acts by "state e n te rp rise s" o f a h o st S ta te would be attributed to the host State when investment disputes arise between the s ta te e n te rp ris e s an d in v esto rs S O E s, esp ecially sp ecific " s ta te -o w n e d e n te rp ris e s " would be treated as "a Contracting Party" under a BTA with U.S In addition, under the ICSID, a constituent subdivision or agency o f a state m a y b e c o m e a p a rty to arb itratio n p ro c e e d in g s p ro v id e d it h as b e e n d e s ig n a te d to th e IC S ID an d i f th e co n sen t o f th at en tity h a s b een a p p ro v e d b y th e sta te s ( A r t.2 ( l) an d (3 )) A rtic le 25 d o es not set forth an y p rin c ip le o f a ttrib u tio n to th e State, but merely opens the possibility for the host State to delegate party status to its teưitorial subdivision or entity for jurisdictional and procedural purposes Under the ICSID, the question whether a particular constituent subdivision or entity is eligible for this purpose is left to the relevant domestic law 2.2 Investment Law Until 2005, foreign investors were subject to a specific foreign investment law in 19872 and 19993 respectively In 2005 Vietnam promulgated the Law on Investment, which provides a unified operational framework for foreign and domestic investors as well as for private and public enterprises The Law on Investment o f 2005 unifies the legal and regulatory framework for investment and corporate structure for all types o f investors4 2.2.1 D efinition o f "Disputing p a rties” The Law on Foreign Investment in Vietnam o f 1987 provided disputes between (1) "the two parties" o f a business co-operation contract or a joint venture contract, (2) "a joint venture or an enterprise with 100% foreign capital" and "Vietnamese economic organisations" and (3) "foreign invested enterprises" themselves (Art.25) With regard to these disputing parties, Art.2 defined "a V ie tn a m e s e p a rly ," "th e tw o p a rtie s," " B u sin e ss c o -o p e tio n c o n tra c t," "Jo in t venture contract" and "Joint venture" respectively Based on the definition, a d isp u tin g p a rty is a V ie tn a m e se p arty an d a fo reig n p arty A s to "a V ie tn a m e se " p arly , it c o n s titu te s o f o n e or m o re "V ietn am ese eco n o m ic o rg a n is a tio n s ," en jo y in g the status o f legal person Therefore, a SOE, especially "state-owned enterprise." m ig h t b e c o n s tru e d to b e in c lu d ed in "a V ie tn a m e se p arty " b e c a u se "a sta te -o w n e d Rudolf Dozer & Christoph Schreuer (2008), pp 198-199 See also, Christoph H Schreutr (2009), pp 149-160, paras.230-267, pp.338-341, paras.903-920 Law on Foreign Investment in Vietnam dated 29 December 1987 Law on Foreign Investment in Vietnam dated 12 November 1996 UNCTAD (2008), p See also, ISHIDA (2006) 527 VIỆT NAM HỌC - KỶ YÉU HỘI THẢO QUỐC TẾ LÀN THỨ T enterprise" w as defined as "a business organization established, invested and managed by the State as a owner," and "an econ om ic legal person" w hich "operates under the law and is equal before the law" in D ecree N o 8 /H D B T o f 9 With regard to a party o f "a jo in t venture," the case "a jo in t venture" is established based on an agreem ent betw een V ietnam ese and foreign governm ents, the governm ents might be construed as a "in-direct" party o f "the join t venture" contract On the other hand, disputes arising betw een contracting parties o f a jo in t venture, it m ight be im possible that the governm ent is treated as one o f parties o f the join t venture In addition, there w as no definite provision on a SOE, so the L aw o f 1987 might be construed to have no clear ISD S provision2 The Law on Foreign Investm ent in V ietnam o f 1996 provided alm ost identical but more detailed dispute settlem ent clause as the L aw o f 1987 The L aw o f 1996 provided disputes betw een (1 ) "parties" o f a business co-operation contract or a joint venture contract, (2 ) "‘foreign invested enterprises’ and/or ‘the parties o f a business co-operation contract’" and "Vietnamese enterprises" (A rt.24) With regard to these disputing parties, Art.2 defined "a Foreign investor," "a Foreign party," "a V i e t n a m e s e party," "‘the tw o parties’ and ‘a M ulti-party’,'' "a Foreign invested enterprises," "a join t venture enterprise," "an Enterprises w ith 100% foreign invested capital," "a B u sin ess cooperation contract" and "a jo in t venture contract" respectively Based on the definition, "a party" o f a business co-operation contract is both "a V ietnam ese party (on e or more V ietnam ese enterprises from all econom ic sectors)" and "a foreign party (one or m ore foreign investors)." W ith regard to "a party" o f a joint venture contract, they are "a foreign invested enterprise" and a different "joint venture" as w ell as "the V ietnam ese party" and "the foreign party." V ie tn a m e s e d i s p u t in g p a r t i e s s p e c i f ie d in t h e Law o f 1996 m i g h t b e c o n s t r u e d to include SOEs, esp ecially "state-owned enterprises," because a state-owned Regulation on Establishment and Dissolution o f State Enterprises (Issued together with Decree No 388/HDBT dated 20 November 1991 o f the Council o f Ministers) See also, Viện Khoa họg Pháp lý - Bộ Tư pháp (2006), pp.219-220 On the other hand, Decree N I 8-CP dated 16 April o f the G overnm ent Detailing the Implementation o f the Law on Foreign Investment in Vietnam stipulated that "Disputes between foreign-invested Enterprises, foreign parties to business cooperation contracts with Vietnamese State Agencies shall be resolved through the m eans o f conciliation When there is no conciliation with each other, the parties to the dispute shall subm it the dispute to the Slate competent agency for settlement." in Article 102 W ith the com ing into effect o f this decree, ISDI was specified in legal document in Vietnam With regard to the concept o f ’Vietnamese State Agencies," there also had no provision See, Đỗ Văn Đại, Mai n n g Quỳ 2006) pp.447-448 LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT enterprise is one o f the constituent o f "Vietnam ese enterprises"1 As to "a State" or "a State entity," the Law of 1996 had also no definite provision In contrast to the Laws o f 1987 and 1996, the Law on Investm ent o f 2005 clearly stipulates a provision on disputes between investor and a host State It p ro v id e s d is p u te s beween (1) "domestic in v e sto rs" themselves, (2) "a dom estic investor" an d "V ietn am ese State M an ag em en t A g en cies", (3 ) " ‘a fo reig n in v e s to r’ an d /o r ‘a foreign in vested en terp rise’" and others, (4) "foreign in v e sto rs" themselves and (5) "a foreign investor" and "Vietnamese State M anagement Agencies" (Art 12) With regard to these disputing parties, Article defines "Investor," "Foreign investor" and "Enterprises with foreign owned capital" respectively Based on the definition "a state-ow ned enterprise" o f Vietnam might becom e a disputing party as "a dom estic in v e sto r" w h e n th e en te rp rise carries o u t in v e stm e n t a c tiv itie s in a c c o rd a n c e w ith the law o f V ietnam (Art.3(4)(e))2 On the other hand, as to "V ietnam ese State Management Agencies," there is no definite provision In addition there is also no specific provision on "a state-owned enterprise" such as Article 12 o f a BTA w ith the U.S in the Law o f 2005 Disputes between foreign investors and "state-owned enterprises" shall, therefore, fall under ones between (3) "‘a foreign investor’ and/or ‘a foreign in v e ste d enterprise’" and others, not under ones betw een (5) "a foreign investor" and "Vietnamese State Management Agencies." According to the Law on State-owned Enterprise o f 1995, which was valid at that time, a state-owned enterprise was defined as "an economic organization which is capitalized, established, organized and managed by the State, and carries out business or public utility operations aimed at achieving the socio-economic objectives assigned by the State." (Art.l) The Law on State-owned Enterprises (NO.14/2003/QH11 dated 26 November 2003), which replaced the I-aw o f 1995, also defined a state-owned enterprise as "economic organizations where the State owns the entire charter capital or holds dominant shares or contributed capital, which are organized in the form o f State companies, joint-stock companies or limited liability companies." (A rt.l) In addition, the Law on Enterprises (NO.13/1999/QH10 dated 12 June 1999), which replaced the Law on Companies, the 1XỈW on Private Enterprises dated 12 December 1990, the Law on Amendments and Supplements to a Number o f Articles o f the Law on Companies and the Law on Amendments and Supplements to a Number of Articles o f the I^ w on Private Enterprises dated 22 June 1994, was applied to "state-owned enterprises and enterprises of political organizations or socio-political organizations which converted in to limited liability companies or joint-stock companies" (A rt.2(l)), and defined "enterprises" as "an economic organization having its own name, assets and a fixed transaction office, and having business registration as prescribed by law in order to conduct business operations." (Art.3( 1)) Sec also, Phạm Duy Nghĩa (2002), pp.79-124 As noted above, according to the Law on State-owned Enterprise o f 2003, state-owned enterprises are "economic organizations, organized in the form o f State companies, jointstock companies or limited liability companies (A rt.l) 529 VIỆT NAM HỌC - KỶ YẾU HỘI THẢO QUỐC TỂ LÀN THỨ TƯ 2.2.2 The scope o f "a State" in ISID under the Investment Laws As mentioned above, unlike the Law on Foreign Investment in Vietnam, the Law on Investment o f 2005 clearly stipulates ISDS In the process o f drafting laws both on investment and enterprises o f 2005, the draft laws were circulated for comments from domestic and foreign entrepreneurs as well as from members o f the international donor community After that, the draft laws were submitted to the National Assembly for review and approval in October 2005 In the meantime, the G o v e rn m e n t h a d s t u d i e d p o l i c i e s t o a t t r a c t p r i v a t e i n v e s t m e n t in in fra s tru c tu re development in order to respond to the needs for economic development, cutting business costs and raising competitiveness1 In the drafting process, the Vietnam Business Forum (V BF)2 had presented the various comm ents and issues on the laws, and one o f them was about the updating o f the dispute resolution m echanism W ith regard to disputing settlement, the VBF expressed concerns on the dispute resolution mechanism in Article 12 Being undergoing consideration in the N ational Assem bly, the unclear term "foreign elements" has been removed from Article 124 and disputes between foreign investors and state authorities could be resolved by international arbitration provided such rights are agreed "in a relevant contract"5 as well as "in an international treaty o f which Vietnam is a member" in the final draft6 D eputy Prim e M inister V u K h o an ’s Speech, at the V ietnam B usiness Forum H o Chi M inh City, June 2005, in V B F (2005b); V BF (2005a) The V BF is an on-going structured dialogue betw een the V ietnam ese G overnm ent and the business com m unity T he V B F aim s to develop o f a favorable business environm ent that attracts foreign investm ent and stim ulates dom estic econom ic grow th See also, V B F w ebsite M inutes o f the Pre-m eeting on C onversion o f FD I, in V B F (2005a) In the 8th draft o f the Law on Investment, the dispute resolution provisions were moved from Article 127 (the 7th draft) to Article 12 The VBF considered that the new Article 12 was more com prehensive than the old Article 127 However, use o f term "foreign elements" could lead to confusion or misinterpretation Ideally, the article should make clear that disputes with "foreign elements" included disputes where at least one party to the dispute was a foreign-invested enterprise or a foreign investor or foreign organization See, Comments on the Draft Common Investment Law (cil) and the Draft Unified Enterprise Law (UEL), in VBF (2005b) Comments on the Common Investment Law, in VBF (2005a) The first draft presented to the National Assembly stated that disputes with the Government had to be resolved in Vietnamese courts or arbitration, absent a treaty See, Private Sector Participation in Power, in VBF (2005a) 530 LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT C o n c e rn in g th e fin al d ft, th e S tan d in g C o m m itte e o f th e N a tio n a l A s s e m b ly re p o rte d th a t th e m a jo rity o f th e N atio n al A sse m b ly a g re e d w ith th e p ro v is io n s o f the draft, w hile there w ere opinions to propose to transfer A rticle 12 in C hapter II into "C hapter IX State m anagement o f investm ent," s e ttle m e n t is th e c o n te n ts o f state m a n a g e m e n t b y because the dispute la w s to e n s u r e th a t th e enterprises and investors exercise their rights under the law o f Vietnam on the te rrito ry o f V ie tn a m O n th is o p in io n , th e S ta n d in g C o m m itte e c o n s id e re d th a t "Chapter II Investm ent Guarantees" prescribed the contents to guarantee in v e stm e n t, an d " S e ttle m e n t o f in v e stm e n t d isp u te s" w a s o n e m e a n s o f in v e stm e n t guarantee There w ere many discussion on Article 12 on investm ent dispute settlem ent, and the opinions o f the VBF on disputes between investors and V ietnam ese State M anagem ent A gencies, that is a State, w ere adopted into the Law On the other hand, there seemed to pay no attention to the scope o f "a Vietnamese State Management Agency" itself Under the Law on Investment o f 2005, the p r o v i s i o n on ISDS might not apply to SOEs in principle The disputes between investors and SOEs would be treated ones stipulated in Article 12(3) 2.3 BOT Law During the early 1990s, it was impossible to implement build operate transfer projects (BO T Project) in Vietnam because the governm ent preferred to avoid foreign control and private influence o f the infrastructure H ow ever, the "Doi M oi" (renew al), the poor state o f infrastructure in Vietnam and the realization that it was beyond the m eans o f the government to build all the necessary infrastructure based on state financing, led to amendments to the Foreign Investment Law in late 1992, which reversed the form er policy2 In 1993 the government promulgated Decree N o.87/C P 3, the first BOT re g u la tio n s in V ie tn a m In 1998 th e g o v e rn m e n t released D e c re e N /1 9 /N D - CP4, which reworked Decrec No.87/CP, and amended Decree No.62/1998/ND-CP ủ y ban Thường vụ Quốc hội (2005a) Sara Lindgren & H elena Varga (2005), p.31 Decree No.87/CP dated 23 November 1993 o f the Government providing investmeni regulations on BOT contracts Decree N0.62/1998/ND-CP dated 15 August 1998 of the (k n e rn m e n t on promulgating investment regulations under BOX, BTO, BT contracts applied for foreign investment in Vietnam 531 VIỆT NAM HỌC - KỶ YÉU HỘI THẢO QUỐC TẾ LẦN THỬ T since trade partners o f Vietnam at that tim e were mainly from the former socialist countries Therefore disputes were not so serious and often resolved through mutual negotiation for SOEs or the majority o f disputes were resolved via the respective government arrangements as the countries rendering and receiving aids These Councils were then not treated as a full legal person, and were put under the management o f the Ministry o f Foreign Trade and the M inistry o f Transportation1 The period from 1994 to 2003, with regard to disputing parties, Decree No 116/CP provided that Economic arbitration settled disputes between (1) "the company" and "its members," and (2) com pany’s m em bers themselves (A rt.l) Circular NO.02/PL-DSKT2, the guiding regulation o f Decree No 116/CP, provided in detailed that Economic Arbitration has jurisdiction, regardless o f the nationality o f the disputing parties, to settle three kinds o f dispute (A rt.I(l) a, b and c) Therefore, although both Decree No 116/CP and Circular N O2 /PL-DSKT had no definition clause, considering economic system o f Vietnam at that time, it might be construed that "a state-owned enterprise" is one side o f disputing parties against foreign parties As to "a State" or "a state entity," they could not be treated as disputing parties under Economic Arbitration Decision No.204/TTg provided that the VIAC had jurisdiction over disputes arising from international economic relations, and one or all o f the disputing parties were foreign "natural and/or legal person" (Art.2 and Art.3(2)) With regard to disputes where one o f the disputing parties was foreign, the other party would be Vietnamese In this case, as there was also no definition clause in Decision No.204/TTg, it was not clear which kind o f Vietnamese entity was included in Vietnamese parties Considering the situation up to that time, "a state-owned enterprise" might be construed to be identical to the case in Economic Arbitration As to "a State" or "a state entity," although there was an uncertainty in Decision No.204/TTg, they could not be also treated as disputing parties under Economic Arbitration Ordinance NO.08/2003/PL-ƯBTVQH provided the arbitration organization and procedures for settling disputes arising from comm ercial activity, according to agreement by "parties" (A rt.l) Ordinance NO.08/2003/PL-UBTVQH also had no definition clause on "parties." Instead, Article defined "commercial activities" and Institute o f State and Law, National Centre for Social Sciences and Humanities Vietnam (2002), pp.33-34; Le Hong Hanh (2009), pp 1-2; Nguyen Van Hai (2011), pp.21-25 Circular N 0.O2/PL-DSKT dated January 1995 o f the M inistry o f Justice guiding the implementation o f a num ber o f articles o f Decree No 116/CP dated September 1994 o f the Government on the Organization and activities o f Economic Arbitration 538 LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT "d isp u te s in v o lv in g fo reig n elem en ts" re sp e c tiv e ly A c c o rd in g to th e s e d e fin itio n , it m ig h t be c o n s tru e d th a t "parties" arc bo th V ie tn a m e se a n d fo re ig n , e ith e r n atu l o r legal person as sam e as Decree N o.l 16/CP and C ircular N O2 /PL-D SK T , so "stateo w n e d e n te rp ris e s " w o u ld b e in clu d ed in V ie tn a m e s e p a rtie s T h e y , h o w e v e r, should get involved in "commercial activity" (Clause and C lause 4, A rt.l), so they would be so-called "merchant." Only disputes which arose in foreign countries did not need arising from "commercial activity" (Clause 4) As to "a State" or "a state entity," O rdinance N 0.O8/ OO3/PL-UBTVQH had no provision T h e L a w o n C o m m ercia l A rb itratio n re g u la te s c o m m e rc ia l a rb itra tio n ( A r t.l) , which covers disputes between (1) parties engaging in com m ercial activities them selves, (2) parties at least one of whom engaging in com m ercial activities and (3) parties which the other law stipulates (Art.2) The Law on Com m ercial A rbitration defines term "disputing party" and "disputes with foreign elem ents" in A rticle respectively According to these definition, as contrasted w ith O rdinance No 08/2003/PL-UBTVQH, both Vietnamese and foreign, regardless o f types o f entity, are treated as "parties", and in addition "all parties" not need to be socallcd "m erchant." The Law on Commercial A rbitration expands its jurisdiction comparing with Ordinance No 08/2003/PL-UBTVQH, it could be construed that Law on Com m ercial Arbitration covers disputes relating to "a state-ow ned enterprise." Even the disputes only related to V ietnam ese not need to be arised from "commercial activity," and the Law on Commercial Arbitration is applied to the disputes other than "commercial activity" provided that other laws provide dispute settlem ent by arbitration (A rt.2(3))' Although the Law on Com m ercial A rbitration had no clear provision on disputes with "a State" or "a state entity," the Law on Investment in 2005, as mention above, provides that "investor-State dispute" could be settled by arbitration (Art 12(4)) It m ight be construed that Law on Com m ercial Arbitration would be able to be applied to ISD S, and the concept o f "a State" could be confirm ed based on related law, including the Law on Investm ent in 2005 A t early staee o f the drafting, however, it had been considered that the right o f foreign investors to resolve disputes by arbitration w ould extend to c o n tra c tu a l d is p u te s b etw een fo reig n in v e sto rs an d V ie tn a m e s e S ta te a g e n c ie s relating to investm ent activities, in accordancc with the Investm ent Law o f 20052 The Law on Commercial Arbitration which approved bv the National Assembly has 1.W ith regard to "commercial activity" in Ordinance No.08/2003'PL-UBTVQH, there has raised issues, especially on enforcement o f arbitration awards See, Le Hong Hanh (2008), pp.39-41; Nguyen Van Mai (2010), pp.21-25 V ilaf Hong Due (2008) 539 VIỆT NAM HỌC - KỶ YÉU HỘI THẢO QUÓC TÉ LÀN THỨ T removed provisions on ISDS Here, it need considering drafting process o f the Law on Commercial Arbitration1 2.4.2 Arbitration The scope o f disputes related "a State" under the Law on Commercial The Law on Commercial Arbitration was prepared by the Vietnam Lawyers’ Association (VLA), and a series o f the drafts had been published for comments on Website o f the VCCI2 The draft No.O dated 29 June 2008 and the draft No.2 dated November 2008 had referred to "the disputes between investors and a State Management Agency o f Vietnam under the Investment Law" in the definition clauses in Article and Article respectively The draft No.2 dated 18 November 2008, however, had just referred "an Authorized State Agency" as one o f disputing parties (Art.3), and on the other hand, provided an exem ption clause, where disputes related to natural resources development were exempted from application, and be commented that disputes stipulated in the Investment Law should not be exempted (Art 18) This style was adopted in the following drafts both dated 25 November 2008 and dated 12 January 2009 The draft dated 30 April 2009, which were brought before the 12th National Assembly in its 5th session, provided kinds o f disputes exempted from application, and one would be decided by related laws (Art.2(2)) With regard to "disputing parties," this draft defined "any natural person, legal entity, organization and/or State agency with the right to agree upon arbitration" (Art.3(3)) Considering that the draft dated 30 April 2009 had no referred to the Investment Law, although "a State agency" was included within "disputing parties," the law might not cover "investor-State dispute settlement" because relationship between the draft and the Investment Law became unclear as compared with the draft No.2 dated 18 Novem ber 2008 and the draft dated 12 January 2009 After submitting the draft to the 12th National Assembly, the VLA had examined the draft further3, and submitted the 20th draft for opinions to the 6th As to the process o f drafting from the 1St to the 6th, see IW ASE (2010) With regard to each draft laws, see VIBOnline website Prior to submitting the draft for opinions in the National Assembly, the VLA had had submitted the prepared draft to the Standing Committee o f the National Assembly This draft had almost identical provisions on both exemption and definition clauses with the draft dated 30 April 2009 Furthermore, the VLA had also submitted a report "Statement No.lO/TTr-HLGVN on the Bill on Arbitration dated August 2009" to the Standing Committee In this report, the VLA stated that in the process o f drafting the Arbitration Law, there were two opposite opinions on the scope o f the arbitration jurisdiction After the discussion by the National Assembly, the amended draft had been submitted again In this draft dated 28 August 2009, with regard to the scope o f the jurisdiction, two opposite opinions mentioned in "Statement No.lO/TTr-HLGVN" were written down as options 540 LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT sessio n o f th e 12th N atio n al A ssem bly T h e 20th d ft h ad id e n tic a l p ro v is io n s on both exemption and definition clauses as well as definition clause with the draft dated 28 August 2009, and stated the opinions o f both sides concerning the issue on the scope o f the arbitration jurisdiction in Article In Option 1, the 20th draft had applied to disputes (1) within scopc of "commercial activities" under the Law on Commerce o f 2005, (2) one of the disputing parties is engaged in "commercial activities" and (3) without scope of "commercial activities" but stipulated by other laws In Option 2, the 20th draft provided kinds o f disputes, one is disputes to which the draft was applied, and another is disputes to which the draft was not applied The former is ones related to parties’ rights and interests, which arose from obligations o f a contract or non-contract The latter is types o f disputes listed in the clauses from (a) to (dd), where (d) is "disputes between the government, except where international treaties of which Vietnam is a m em ber have different provisions" and (dd) is "disputes under jurisdiction o f other agencies in accordance with the law." In the 6th session of the 12th National Assembly, deputies had presented different opinions on this issue, and most o f them agreed with Option The Committee on Justice o f the National Assembly also, based on the majority o f the deputies, agreed with Option The Committee on Justice prescribed laws which provided the settlement of disputes not arising commercial activities but settled by arbitration, such as Article 12 o f the Law on Investment o f 2005 Based on those opinions, in case that the disputes arise from the legal relations but not from a commercial activity, and that other laws provide to settle the disputes by arbitration, then the disputes shall be resolved by arbitration if the parties so agree1 Furthermore, the VLA had also agreed with Option 1, though the VLA had originally expressed an opinion in support o f Option in the draft dated 25 July 20092 As to "disputing parties," the 20th draft defined "a disputing party" and "disputes with foreign elements" in Article respectively In the 6th session o f the 12th National Assembly, there was no controversy on qualification o f "disputing parties" among the deputies In response to those discussion, the draft dated March 2010 accepted the opinion based on Option and provided jurisdiction o f arbitration over disputes b etw ee n ( ] ) th e p a rlie s arisin g from co m m ercial a c tiv itie s , ( ) p a rtie s a t le a st o n e o f w h o m is e n g a g e d in co m m ercial activ ities and (3 ) p a rtie s in c a s e th e la w s tip u la te s resolution by arbitration (Art.2) The wording o f Article o f the draft dated M arch w as as alm o st sam e as th e 20th d ft T h is p ro v is io n has b een ủ y ban Tư pháp, Quốc hội khóa XII (2010), pp 1-2 As to further opinions o f the deputies, see, Doàn thư ký kỳ họp, Kỳ họp thứ Quốc hội khoá XII (2009V For details, see, Hội Luật gia Việt Nam (2009), pp.5-7 541 VIỆT NAM HỌC - KỶ YẾU HỘI THẢO QUỐC TẾ LÀN THỨ T completely carried to the content o f Article in the approved Law on Commercial Arbitration In contrast, the term "disputing parties" was deleted from the definition clause in Article o f the draft dated 3rd March 2010 The draft dated 3rd March 2010 has kept the definition on "disputes with foreign elements" with completely same contents o f the the 20st draft After the draft dated 3rd March 2010, the standpoint o f this drafting has been kept other than the definition clause on "disputing party"1 and the draft dated 17 June 2010 was passed and enacted as the Law on Commercial Arbitration in 7th session o f the 12th National Assembly There were many changes before the Law on Commercial Arbitration present was enacted Here, I consider again that disputes other than commercial shall be settled by arbitration where the other law stipulates so (Art 2(3)), and the meaning o f definition "disputing party" and "disputes with foreign elements"(Art.3(3) and (4)) If literally construed, the Law on Commercial Arbitration m ight be applied to ISDS according to Clause o f Article 12 o f the Law on Investment o f 2005 In case, foreign investors could sue the Vietnamese governm ent into arbitration other than Vietnam Furthermore, as compared with Ordinance NO.08/2003/PL-UBTVQH, the scope o f "disputes with foreign elements" under the Law on Commercial Arbitration also expands (Art.3(4)) The Law on Commercial Arbitration would be applied to disputes with foreign elements which arise from both "commercial relationship" and "other legal relationship," where "foreign elements" is limited within the scope o f the Civil Code A "investor-State dispute" is a dispute with "foreign elements" and arises from legal relationship other than "commercial one." Therefore, based on this provision, it might be also construed that the Law on Commercial Arbifration would be applied to ISDS The current Civil Code2 prescribes "civil relations with foreign elements" in Part (Art.758-Art.777), and the government legislates Decree In this period, drafts were published In the draft dated 24 May 2010, with regard to the definition clause o f Article 3, there were reported some opinions o f deputies that it needed add the definition clause such as "commercial activity," "commercial arbitration," "Arbitration center" and so on See, ủ y ban Thường vụ Quốc hội (2010), p.3 In the draft dated June 2010, the term "disputing party" was re-provided in definition clauses, and in comparing with the 20th draft, the words "State" and "legal person" were deleted, and instead, the wording "Vietnam" and "foreign" were added This definition was introduced into the final draft In addition, the term "disputes with foreign elem ents" was also amended from "civil relations stipulated in Civil Code" into "commercial relations and/or other legal relations stipulated in Civil Code." This definition was also alm ost com pletely adopted in the final draft To date, I could have confirmed the reason o f these changes Code No 33/2005/Q H 11 on Civil date 14 June 2005 542 LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT NO.138/2006/ND-CP1, which details the implementation o f the Civil Code’s provisions on civil relations with foreign elements Decree NO.138/2006/ND-CP, however, has no provision on "civil relations with foreign elements" involving with "a State" or "a state entity" (Art.3( 1)) Issues on investor-State dispute settlem ent in V ietnam 3.1 Ratification o f the ICSID Convention by Vietnam As mentioned 2-1, the BITs with the Netherlands and France provide arbitration in the ICSID In addition, under the investment chapter o f a BTA with U.S., both governments permit foreign investors to sue themselves into "international arbitration" each other This means that Vietnam gives the U.S investors the right to choose a variety of third-party dispute settlem ent mechanisms in the event o f an investment dispute with the Government o f Vietnam Vietnam has not yet acceded to the ICSID Convention, but has asked the U.S to provide advice in this area as part o f the U.S technical assistance program designed to assist Vietnam to implement the BTA In addition, the Prime M inister o f Vietnam directed the Ministry of Planning and Investment (M PI) to preside over, in coordination with the Ministry o f Justice, submitting to the Prime Minister within the second quarter o f 2005 the option for signing on the ICSID Convention2 Based on this direction, the Ministry of Planning and In v e s tm e n t had submitted a proposal to the Government to join the ICSID, although the proposal has been still under consideration3 And furthermore, the Law on Investment o f 2005 clearly specifies the ICSID Arbitration as one of the dispute settlement procedures In fact, the report submitted to the 8th session of the 11 th National Assembly, which discussed and approved the Law on Investment, by the Standing Committee, also states that disputes between foreign investors and the Vietnamese State M anagement Agencies should be resolved by arbitration or the courts o f Vietnam in principle At present most o f the countries investing in Vietnam have signed a BIT with Vietnam In v e s to rs h a v e th e rig h t to reso rt to arb itra tio n b y th e V ie tn a m e s e o r fo reig n A rb itra tio n In s titu tio n s for reso lv in g th e d isp u tes In a d d itio n , w h e n Vietnam joins the 1CSIDI Convention, other countries, which have not concluded such a BIT but a m e m b e r o f th e IC S ID C o n v en tio n , disputes b e tw e e n th e in v e s to rs o f su c h c o u n trie s Decree NO.138/2006/ND-CP dated 15 November 2006 o f the G overnm ent detailing the implementation o f the provisions of the Civil Code on civil relations with foreign elements Directive No.] 3/2005/CT-TTg dated April 8, 2005 o f the Prime M inister on measures to create new development in foreign direct investment attra ctio n in Vietnam, reprinted in VBF (2005b) The U.S & Foreign Commercial Serv ice and U.S Department o f State (2012), p 123 543 yỊỆr NAM HỌC - KỶ YẾU HỘI THẢO QUỐC TÉ LẰN THỨ T and the Vietnamese State M anagement Agencies shall be resolved under the ICSID Copvention1 based on the provision o f the Law on Investment o f 2005 On the other hand, disputes with "a State" seem to continue to seriously issues in Vietnam As to the ICSID Convention, Vietnam seems to become cautious in joining b ru is e o f sovereignty The ICSID Convention stipulates that "Each Contracting State shaJi recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a judgment o f a court in that State." (A rt.54(l))2 Issues on sovereignty were id eated in BOT projects3 and investment projects in Vietnam In case o f investment p.0ects, the discussion on the draft o f the Law on Investment, one o f the National Assembly deputies commented that Vietnam should have its own sovereignty in saving its cases and should not order foreign arbitration to arbitrate Vietnamese State jyjgiagement Agencies based on foreign regulation The same deputy, however, cordrtued to comment that Vietnam would join the W TO in the near future, and then V j(tn am s h a ll o b e y t h e g e n e r a l r u l e o f m a r k e t e c o n o m y T h e r e f o r e , t h e d e p u t y s t a t e d , j yould be better to provide that "The disputes between foreign investors and the yj(tnamese State M anagement Agencies could be settled in the courts o f Vietnam, ty u-bitration in V ietnam , or by international arbitration" in the L aw 3.2 The Concept o f "a State" Under the current BOT Law o f Vietnam, with regard to definite disputes with Authorized State Agencies, the disputing parties are not required "negotiation m, conciliation" as a first step for resolution The disputes shall be settled by •apitration or courts in Vietnam" or "ad hoc arbitration agreed by the disputing iy ban Thường vụ Quốc hội (2005b), pp.4-5 ato (2 0 ),p m ị vnJrew B W yatt (2002), p.129 Concerning BOT project, difficulty has arisen to implement ie project apd disputes between foreign investor and "a State" has occuưed In this itiation, concerning to Decree N0.62/1998/ND-CP, there was indication that Vietnam ^trained unwilling to be a subject disputes between investors and its agencies to a foreign rbtration court For Vietnam, the issues was politically sensitive since international rbtration was viewed as an infringement o f sovereignty But theoretically, an investor hculd require a dispute resolution clause in the contract stating that potential disputes hculd be solved by international arbitration under the U NCITRAL or ICSID Rules, lowever, in the case o f Vietnamese counter-parties, empirical experience shows that there is fundamental discrepancy between the theoretical way o f doing business and the way it really works out there." See also, VNS (2012); Sara Lindgren & H elena Varga (2005), 1.50, note 105 /ă i phòng Quốc hội (2005), pp.8-9 LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMEN r p a rtie s." (A rt.4 (2 )) W ithout ag reem en t by the A u th o riz e d S ta te A g e n c ie s "investors" or "project enterprises" arc required to settle their dispute in Vietnam Jf they want to settle their disputes with Authorized State Agencies in other thyj Vietnam, they have to agree ad hoc arbitration with Authorized State Agencies jn advance or after arising dispute1, ỉn manv eases of a BOT project, therefore, tqe disputes seems to be settled mainly under the d o m estic procedures in Vietiia.^ Although this circumstance might arise difficulties for foreign investors, tie disputes itself could be settled under domestic system in Vietnam As oppose to BOT cases, under which violation of domestic law would be muirjy at issue, B IT s a n d th e Investm ent Law have p rovided international arbitration Jg procedures o f ISDS According to the Law on Investment o f 2005, the dispiỊg involves foreign investors and a State would be referred by default to a Vietnamese court, unless provided otherwise in a contract between the investors and the Stale ,r in an international treaty to which Vietnam and the investor’s home State a-e parties This dispute-related contract is separate from the investment certifka^ which does not include provisions on dispute resolution Foreign investors located in countries that not have a BIT with Vietnam thus also have the possibility Q obtain guaranteed access to international arbitration based on the contract in case dispute with the State2 In many international arbitration, the question at issued s usually acts in violation of international law, and the acts would be attributed to tle central governments even if they were committed by a sub-entity o f the host Stat Under the international law o f state responsibility, the state is responsible for all >s organs including those of a territorial unit as well as for state entities exercisiig elements o f governmental authority3 While a classification o f a person or entity ,s "organ" in domestic law and practice may often lead the same conclusion undr [.O n 27 January 2011 the Ministry of Planning and Investment promulgated C irtu |r N o.03/2011/TT-BKHDT, guiding Government Decree NO.I08/2009/ND-CP on Investing in the forms o f Build - Operate - Transfer, Build - Transfer - O perate And Build - Traristj Contracts This Circular provides that ministries, sectors and provincial-level Pe 0Dlts Committee arc responsible for formulating or revising lists o f BOT, BTO and BT projects Ị, their localities in the course o f formulating annual socio-economic developm ent plans Bt there is no provision on dispute settlement between investors and these ministries See Agencies/VNA/VLLF, (2011), p.32 UNCTAD (2008), p.4I Rudolf Dozer & Christoph Schreuer (2008), p.234, note 90 in investm ent arbitration tas~ o f ISDS, tribunals have decided based on "the Articles on Responsibility o f StatCi L Intemationally Wrongful Acts" adopted by the International Law Commission (ILC) Ss also, R udolf Dozer & Christoph Schreuer (2008), pp 195-206 VIỆT NAM HỌC - KỶ YẾU HỘI THẢO QUỐC TỂ LẦN THỨ TƯ international law, this will not always be the case, that is, "organ" is not a classification that all domestic legal systems have, and where it exists, it may serve domestic law purpose unrelated to those if international law Furthermore, existence o f separate personality and liability in domestic law is never dispositive o f the status o f the entity as an organ in international law State-owned enterprises with a commercial purpose would not in principle be regard as State organs, but that presumption could be overturned on showing that, in fact or law, the relevant entity1 Conclusion When we consider ISDS, the concept o f "a State" is one o f the most important issue Foreign investors will able to use the ISDS mechanism in case only disputes against "a State." The host Sate may deal with foreign investors either through a central state organ or through a separate entity It may also be a specialized government agency such as an investment board or a privatization agency Vietnam has very complicated political system, which structured to comprise the Communist Party, the S ate and Social Organizations2 In "Chapter I: The Socialist Republic o f Vietnam The Political Regime" o f the Constitution o f 1992 specifies the Communist Party (Art.4), the Vietnam Fatherland Front and its m em ber organizations (Art.9) and the Trade U nion (Art 10) as w ell as the State Under these circum stances there seem s to hive no the definite concept o f a State as a subject o f sovereign immunity in the field o f international law in Vietnam This has brought the situation that not only a dispute between the Vietnam Airlines (VNA), a state-owned enterprise, and a foreigner, but also a dispute between the Vietnam Football Federation (FVF), a social organization, and a foreigner are described as exam ples o f sovereign immunity4 As discussed in this article, Vietnam seems has not established the legal famework on the ISDS in domestic law as well as international law In addition, it siems that few research on sovereign immunity as well as ISDS has being actively pursue in Vietnam I could not have confirmed litigations and/or opinions for the cJncept o f "a State" by the National Assembly and the governm ent so far In addition, there seem no official and/or unofficial opinions by the Communist Party jself Even in the academic society o f Vietnam, there are few research on sovereign ] Georgios Petrochilos (2010), p.321 Pham Diem (2011) In Vietnam, a case o f Can Gio Ship is known as sovereign immunity, in which the Government o f Vietnam was sued in Tanzania court See, Đỗ Văn Đại, Mai Hồng Quỳ (2010), pp 150-152 Fùi Thị Thu (2010), pp.96-97 >4o LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT immunity as well as ISDS1 Textbooks in university briefly have just described oil sovereign immunity2 and ISDS3 respectively In general, it is considered that Vietnamese law and the Vietnamese judicial system are not as developed as in other countries, so most lenders regard it as vital th a t p ro je c t c o n tra c ts a re g o v ern ed by fo reig n law an d th a t d is p u te re s o lu tio n c a n occur outside Vietnam with some realistic prospects o f enforcem ent4 With regard to the Law on Investment of 2005, the VBF further comm ented that there are still concerns about disputes between investors and the state stipulated in Article 12(4) because in practice there will be no contracts between investors and the state providing international arbitration in many cases, which m eans that many disputes; cannot be resolved by international arbitration5 As Vietnam has continued to integrate, into international economic legal system, such as BITs, Free Trade Agreements, thfc Trans-Pacific Partnership (TPP) agreement and so on, which provide the ISDS, thfc issues "attribution" o f SOEs have become more important for Vietnam as the host State Although Vietnam has not become a member o f the ICSID Convention, it is better to specify the scope o f "a Contracting Party," especially the legal status of SOEs in ISDS because especially "state-owned enterprises" have a favorable legal status in comparison to private enterprises In Vietnam their monopoly in many industries is still protected, prefeưed conditions to financial resources, favorable access to land, infrastructure, labor and other important assets6 Vietnam has continued to reform state-owned enterprises, and this process would need to specif) the legal status o f them When Vietnam would establish the legal system on ISDS, it needs to specify the concept o f "a State" in ISDS if SOEs continue to play an important role in investment activities in Vietnam, although it is a complicated and difficult issue to be settled Đỗ Hoàng Tùng (2008); Lanh Hai Thanh (2008) For exam ple, one textbook explains the competence o f a "foreign" State, but does noi describe on the concept o f a Vietnamese State itself (Đỗ Vàn Dại, M Hồng Quỳ (2010) pp 162-163) See also, Khoa Luật - Đại học Quốc gia Hà Nội (1997), p p 117-120; Trường Đại học Luật Hà Nội (201 lb), pp 113-118 Trường Đại học Luật Hà Nội (201 la), pp.390-391 Private Sector Participation in Power, in VBF (2005a) Position Paper on the Changes From Draft 16 to Draft 18 o f the Investm ent Law, in VBF (2005a) Phạm, Duy Nghĩa (2002), p.89 VIỆT NAM HỌC - KỶ YẾU HỘI THẢO QUỐC TẾ LẰN THỬ T References Agencies/VNA/VLLF, 2011, "Provincial administrations to draw up BOT, BTO, BT project lists," Vietnam Law & Legal Forum, Vol.17, No.198, Februaiy 2011, p.32 Andrew B Wyatt, 2002, "The privatisation of public infrastructure in transitional Southeast Asian economies: the case of build own operate transfer projects in Vietnam and Laos," in Sally Sargeson ed., Collective Goods, Collective Futures in Asia, Routledge, London, New York, pp 121-146 Bùi Thị Thu, 2010, Giáo trình tư pháp quốc tế, Nxb Giáo dục, Hà Nội Campbell McLachlan QC, etc, 2007, International Investment Arbitration: Substantive Principles, Oxford University Press, Oxford Christoph H Schreuer, 2009, The ICSID Convention: A Commentary (Second Edition with Loretta Malintoppi, August Reinisch and Anthony Sinclair), Cambridge University Press, Cambridge Đoàn Thư ký kỳ họp, Kỳ họp thứ Quốc hội khoá XII, 2009, "Báo cáo tổng hợp ý kiến Đại biểu Quốc hội thảo luận tổ hội trường Dự án Luật Trọng tài thương mại," Hà Nội, ngày 08 tháng 01 năm 2009, VIBOnline website, available at Đỗ Hoàng Tùng, 2008, "Cơ chế thực tiễn giải trang chấp đầu tư Trung tâm giải tranh chấp đầu tư quốc tế (ICSID)," Tạp chí Nhà nước pháp luật, Viện Nhà nước Pháp luật, số 4/2008, pp 70-79 Đỗ Văn Đại, Mai Hồng Quỳ, 2010, Tư pháp quổc tể Việt Nam - Quan hệ dân sự, lao động, thương mại cỏ yếu tổ nước (Sách tham khảo), Nxb Chính trị quốc gia, TP HỒ Chí Minh FINNROAD in association with HADECON, 2007, Technical Assistance Consultant’s Report-Viet Nam: Expressway Network Development Plan, ADB TA No.4695-VIE: Expressway Network Development Plan Project, Hanoi, April 2007, available at 10 Georgios Petrochilos, 2010, "Chapter 13 Attribution," in Katia Yannaca-Small ed., Arbitration under international investment agreements: a guide to the key issues, Oxford University Press, pp.287-322 11 H a Thi M H ien, 2010, "Legal system developm ents in 2004-09," V ietnam Law & Legal Forum, Vol 16, No 187, March 2010, pp.4-6 12 Hội Luật gia Việt Nam, 2009, Tờ trình Số:10/TTr-HLGVN v ề Dự án Luật Trọng tài, Hà Nội, ngày 04 tháng 08 năm 2009, VIBOnline website, available at 548 LEGAL DEVELOPMENT OF THE INVESTMENT DISPUTE SETTLEMENT 13 H uynh Tuong Long & Jesse Lieberman, "Settling disp u tes through arbitration," V ietnam Law & Legal Forum, Vol.16, N o 189, M ay 2010, p p 16-18 14 Institute o f State and Law, National Centre for Social S ciences and H um anities V ietnam , 2002, "The Alternative D ispute R esolution in V ietnam (A sian Law Series(20)", Institute o f Developing Econom ies (ID E -JE T R O ), Japan, M arch 2002, available at 15 ISHIDA Akie, 2006, "WTO Kamei nimuketa Kigyou Housei Seibi -Toushihou, K igyouhou no Kaisei- [Development o f Legal System for E nterprises tow ard W TO accession: A m endm ent o f the Investment Law and E nterprises Law ]," in SAK A TA Shozo, 2010-nen nimuketa Vietnam no Hatten Senryaku [Vietnam's Development Strategy for 2010: New Challenges in a W TO era, ID E -JE T R O ], pp.99-132 (Japanese) 16 IWASE Maomi, 2010, "Vietnam niokeru Toushihunsou Syoriseido no Kaikaku Chuusai Housei wo Chuusin tosuru Toushika tai Kokkakan Hunsou no Syori[R eform o f Investm ent Dispute Settlement System in V ietnam : Focus on Investor- State Dispute Settlement under Arbiưation Law]," Kobe Shouka Daigaku Souritsu 80shuunen Kinen Ronshuu [A Special Publication of the Kobe University of C om m erce on the 80th Anniversary o f its Foundation], U niversity o f Hyogo, K obe U niversity o f Com m erce, Japan, March 2010, pp.61-79 (Japanese) 17 Khoa Luật - Đại học Quốc gia Hà Nội, 1997, Giáo trình tu pháp quốc tế, Nxb Đại học quốc gia, Hà Nội 18 Lanh Hai Thanh, 2008, Dispute Settlement in Commercial Relations Between Vietnam and Foreign Entities: Problems and Solutions, Graduation Thesis, Faculty o f International la w , Diplomatic Academy o f V ietnam , M in istry o f Foreign A ffairs, Hanoi !9 Le Hong Hanh, 2009, "How international arbitration should be understood in V ietnam ese law?" 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