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2 TABLE OF CONTENTS PREAMBLE Investor- State dispute settlement (ISDS) system varies through times Indeed, there have been different ways for a dispute to be settled, however, the most effective, or proper way to that is a fundamental question in recent practice of the offices or parties that own the right to settle the dispute Furthermore, although have been used from times to times until now, the executing of ad hoc tribunals have delivered many setbacks and disadvantages to the parties, especially to investors against States1 In its recent treaties with Vietnam, the European Union (EU) has established a new model of investor-State dispute settlement system 2- a court-like system in many viewpoints3 For the above reasons, in this research paper, I will address and analyse the main features of the Investment Tribunal System under the EU- Vietnam Investment Protection Agreement (EVIPA) These features will be served for the purpose of identify the differences in investment Dang-Khoa Le (2020), An overview of the dispute settlement mechanism in the European Union - Vietnam Investment Protection Agreement: What is a Court-like system?, < https://www.linkedin.com/pulse/overviewdispute-settlement-mechanism-european-union-dang-khoa-le/?articleId=6638618158515216385 > (Accessed: 10 Sept 2020) N Jansen Calamita (2017), The Challenge of Establishing a Multilateral Investment Tribunal at ICSID, < https://academic.oup.com/icsidreview/article/32/3/611/4718100 > (Accessed: 10 Sept 2020) Dang-Khoa Le (2020); Id 4 dispute settlement system of the ICSID Convention and the EU initiative model of system CONTENTS I The EU-Vietnam IPA: An overview The EVIPA, the agreement between Vietnam and the European Union on Investment Protection, is a significant one to Vietnam in part and to the change of the ISDS reform in general In February 2020, the European Parliament gave consent to the EVIPA and the EVFTA (the Free Trade Agreement between EU and Vietnam) In March 2020 and June 2020, respectively, the EU Council and Vietnamese National Assembly approved the agreements On 30 June 2020, these agreements were noticed to enter into force on August 2020 Through times, Vietnam, a developing country with a population of 95 million, is a significant trading partner of the EU The EU- Vietnam IPA establishes specific protections for investors and creates, inter alia, dispute Hende, Cannon, White and Jennifer (2020), European Parliament approves EU-Vietnam trade and investment agreements: EU-Vietnam Free Trade Agreement to enter into force on August 2020, < https://hsfnotes.com/crt/2020/02/26/european-parliament-approves-eu-vietnam-trade-and-investment-agreements/ > (Accessed: 10 Sept 2020) resolution system that allows private parties to bring actions against measures that impact upon their investments In detail, the IPA provides for investor- state dispute settlement claims to be resolved through and “Investment Tribunal System” composed of permanent first instance and appeal tribunals The specific and important features of that System will be clarified below II The main features of the Investment Tribunal System under the EUVietnam IPA There shall be three main features that I aim to address here Including: (i) The establishment of a two-tiered system of tribunals; (ii) Standing, treaty-based investment tribunals with judges appointed by the State parties; (iii) Allowing for appellate review as of right on issues of law and fact; and (iv) Setting up an enforcement mechanism for its own5 Besides that, the definitions, interpretation and the impacts stem from that features shall be mentioned At some points, there shall be some comparison to other system, especially to the ICSID system, to N Jansen Calamita (2017), Id 6 further show the effectiveness as well as the prospects of this initiative EU model system to investor- state dispute settlement in regulatory area and in practice The establishment of a two-tiered system of tribunals, comprising first instance and appellate bodies The Investment Tribunal System under the EVIPA has two level of tribunals, the first instance (Tribunal) and the appellate body (Appeal Tribunal) This is very different from the ICSID Convention system in ISDS By its terms, the ICSID Convention neither permits appeals, nor does it permit individual States or disputing parties to agree to appellate processed among themselves This new EU model entails a root-and-branch revision of investor-State arbitration, establishing not only an appellate mechanism but also a standing two-tiered tribunal… These permanent tribunals will be formed of nine and six members respectively and of nationals of Vietnam, EU Member States and third party states who fulfill certain N Jansen Calamita (2017), Id ICSID Convention (n 7) art 53(1): ‘The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention.’ See also ICSID Convention (n 7) art 26: ‘Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy.’ See Calamita (n 9) 604–13 Compare ICSID Convention (n 7) art 37–40 and Transatlantic Trade and Investment Partnership (draft dated 12 November 2015) (TTIP) art 9; EU–Vietnam FTA (n 3) art 12; CETA (n 2) art 8.27 expertise requirements and are subject to a code of conduct Therefore, this makes the arbitration system of EVIPA become a hybrid system, in which the half of the system is like arbitration and the other like the domestic Court system The new two-tiered system is a breakthrough in ISDS, with the purpose of improve the unfavorable situation to the parties in a dispute under the previous ICSID system that cannot brings the awards further to appellate procedure Standing, treaty-based investment tribunals, staffed with judges appointed by the State parties If the arbitral system organization is a new approach in EVIPA and the older one – ACIA regarding dispute mechanism, the way of naming arbitrators and the matters regarding them in EVIPA are unprecedented The selection arbitrator system in EVIPA is totally different 10 Hende, Cannon, White and Jennifer (2020), Id Dang-Khoa Le (2020), Id 10 Dang-Khoa Le (2020), Id 8 Firstly, the number of arbitrators shall not set at three but being flexible Accordingly, the number of arbitrators could be decreased or increased by multiples of three11 in complying with the decision of the EVIPA’s Committee12.This gives the Committee a right of decision to react with particular circumstances It means the change of the number of the case which the tribunal (appeal tribunal) must settle If the number is low, it is unnecessary to remain nine members of the tribunal and vice versa in case of the tribunal at the first stage Secondly, the tribunal (appeal tribunal) is not an ad hoc system Therefore, it has a fixed quantity of arbitrator at the beginning13: Pursuant to subparagraph 5(a) of Article 4.1 (Committee), the Committee shall, upon the entry into force of this Agreement, appoint nine Members of the Tribunal Three of the Members shall be nationals of a Member State of the Union, three shall be nationals of Viet Nam and three shall be nationals of third countries 11 EVIPA, Chapter 3, Section B, Article 3.38(3) and Article 3.39(4) 12 The Committee according to EVIPA is an agency having the mission of reviewing, observing and implementing EVIPA It is structured with the Minister of Planning and Investment of Vietnam and the Member of the European Commission responsible for trade (or their respective delegates) as co-chaired (see EVIPA, Chapter 4, Article 4.1) 13 The ISDS mechanism in EVIPA shall be established at the time EVIPA come into force and prevailed like a Court system to resolve any disputes arising from EVIPA (see EVIPA, Chapter 3, Section B, Article 3.38(1) and Article 3.39(3)) Pursuant to subparagraph 5(a) of Article 4.1 (Committee), the Committee shall, upon entry into force of this Agreement, appoint the six Members of the Appeal Tribunal Thirdly, the member of the tribunal (appeal tribunal) shall not be ad hoc arbitrators but being term-member with a four-year term and they are renewable only once14 It means that the member of the tribunal (appeal tribunal) shall be elected like a full-time “judge” And for serving that purpose, the number four, arbitrators are paid an amount monthly as salary for their efforts 15.The amount shall be decided by the Committee with the budget contributed and maintained by Vietnam and the EU16 Last but not least, the arbitrators of the tribunal (appeal tribunal) are prohibited to act “double-hatting” It means that the members of the arbitration are not allowed to be counsel or expert or witness during the time they are appointed as arbitrators17 This idea is based on the critics from opponents of traditional ISDS 14 EVIPA, Chapter 3, Section B, Article 3.38(5) and Article 3.39(5) 15 EVIPA, Chapter 3, Section B, Article 3.38(14) and Article 3.39(14) 16 EVIPA, Chapter 3, Section B, Article 3.38(15) and Article 3.39(15) 17 EVIPA, Chapter 3, Section B, Article 3.40 10 mechanism, in which opponents argue that “double-hatting” arbitrators might not be independent to act as the arbitrators if their roles are both decision-maker and advocator at the same time.18 As of above, the structure of the Tribunal and Appeal Tribunal is unprecedented and has a wide scope of change in comparison to other Vietnam v other parties agreements or treaties such as ICSID, ACIA and CPTPP, and so on Allowing for appellate review as of right on issues of law and fact The EVIPA provides that a decision of the Tribunal may be appealed within 90 days of its issuance to an ‘Appeal Tribunal’19 In particular, the Appeal Tribunal has the power to modify or reverse first instance awards, as opposed to simply annulling an award in whole or in part The scope of remedial power accorded to the Appeal Tribunal is also much expanded, allowing the Appeal Tribunal to intervene on issues of merit In contrast to the limited grounds for annulment specified in the ICSID Convention, the Appellate Tribunal may uphold, modify, or 18 Dang-Khoa Le (2020), Id 19 EVIPA, Chapter 3, Section B, Article 3.54(1) 11 reverse an award based on: ‘(a) errors in application or interpretation of the applicable law; (b) manifest errors in appreciation of the facts, including the appreciation of relevant domestic law; (c) the grounds set out in Article 52(1)(a) through (e) of the ICSID Convention, in so far as they are not covered by paragraphs (a) and (b).’20 Combining the possible grounds of appeal in this way helps to relieve the Appeal Tribunal from having to address potentially redundant arguments, as certain grounds for annulment (e.g manifest excess of power) might be subsumed in the review for legal or jurisdictional error.21 Setting up an enforcement mechanism for its own Accordingly, the decision awarded under EVIPA shall bind the assigned party as if the decision was a final judgment of its domestic Court 22 Unfortunately, this enforcement mechanism shall not be in force until the next five years after EVIPA 20 EVIPA, Chapter 3, Section B, Article 3.54(1) 21 Elsa Sardinha (2017), The New EU-Led Approach to Investor-State Arbitration: The Investment Tribunal System in the Comprehensive Economic Trade Agreement (CETA) and the EU–Vietnam Free Trade Agreement, < https://academic.oup.com/icsidreview/article/32/3/625/4718104 > (Accessed: 12 Sept 2020) 22 EVIPA, Chapter 3, Section B, Article 3.57(2) 12 was ratified.23 Therefore, in the first five years, the enforcement shall have complied with the regulations under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) It means that judgment in EVIPA in the first five years shall be considered as foreign arbitration’s decisions and it will be treated like other foreign arbitration’s decisions During this transition period, Vietnam’s consent to engage in the dispute as the respondent shall not be considered However, Vietnam still has the right to seek any solution to appeal, review, set aside, annulment or any other remedy for protecting themselves24 Frankly speaking, there is nothing sure to say that Vietnam shall comply with arbitral awards against them or their state-owned entities in this first five-year period It shall be a story of time, indeed.25 CONCLUSION 23 EVIPA, Chapter 3, Section B, Article 3.57(3)(4) 24 EVIPA, Chapter 3, Section B, Article 3.57(1)(b) and Article 3.57(4)y 25 Dang-Khoa Le (2020),Id 13 By the characteristics have been analyzed above, the new Investment Tribunal System has many prospects and advantages Notwithstanding, we have to wait for it to be enforced in the ISDS in real life to evaluate the pros and cons and its impacts on solving the disputes The fact that the EU has included this in EVIPA and some other agreements shall be the very first steps of initiative a new multilateral investment tribunal system in ISDS, which has such identical features as of the Tribunal system under EU- Vietnam IPA./ 14 REFERENCES ICSID Convention, Regulations and Rules of the International Centre for Settlement of Investment Disputes (entered into force on October 14, 1966) (ICSID Convention); Convention on Recognition and Enforcement of Foreign Arbitral Awards (opened for signature 10 June 1958, entered into force June 1959) (New York Convention); EU- Vietnam Investment Protection Agreement (EVIPA); N Jansen Calamita (2017), The Challenge of Establishing a Multilateral Investment Tribunal at ICSID, < https://academic.oup.com/icsidreview/article/32/3/611/4718100 > (Accessed: 10 Sept 2020) Elsa Sardinha (2017), The New EU-Led Approach to Investor-State Arbitration: The Investment Tribunal System in the Comprehensive Economic 15 Trade Agreement (CETA) and the EU–Vietnam Free Trade Agreement, < https://academic.oup.com/icsidreview/article/32/3/625/4718104 > Dang-Khoa Le (2020), An overview of the dispute settlement mechanism in the European Union - Vietnam Investment Protection Agreement: What is a Courtlike system?, < https://www.linkedin.com/pulse/overview-dispute-settlementmechanism-european-union-dang-khoa-le/?articleId=6638618158515216385 > Hende, Cannon, White and Jennifer (2020), European Parliament approves EU-Vietnam trade and investment agreements: EU-Vietnam Free Trade Agreement to enter into force on August 2020, < https://hsfnotes.com/crt/2020/02/26/european-parliament-approves-eu-vietnamtrade-and-investment-agreements/ > 16 ... system of the ICSID Convention and the EU initiative model of system CONTENTS I The EU- Vietnam IPA: An overview The EVIPA, the agreement between Vietnam and the European Union on Investment Protection, ... specific and important features of that System will be clarified below II The main features of the Investment Tribunal System under the EUVietnam IPA There shall be three main features that I aim... court-like system in many viewpoints3 For the above reasons, in this research paper, I will address and analyse the main features of the Investment Tribunal System under the EU- Vietnam Investment Protection
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