International investment has become an integral part of the global economy, with trillions of dollars flowing across borders each year. International investment disputes involve conflicts between foreign investors and host governments, typically arising from disagreements over regulatory changes, contractual obligations, or alleged breaches of international agreements. Please feel free to contact Apolo Lawyers Law Firm via email contact@apolo.com.vn or hotline - 0903.419.479 for legal advice and support.

1. What is an international investment dispute?

International investment disputes are conflicts or disagreements about the rights and obligations between parties in international investment relations, arising from agreements related to international investment, investment protection agreements or investment contract or agreement.

The disputing parties may be member countries that have signed relevant international treaties/regulations on investment; or disputes between parties in a contract or agreement signed between a foreign investor and the Government of the host country; or disputes between foreign investors and the Government of the host country under the Agreement signed between the host country and the Government of the host country, and disputes related to investment relations other.

The International Investment Dispute

2. What is the new generation free trade agreement?

A free trade agreement (FTA) is an international agreement in which tariffs and non-tariff barriers between member countries are gradually eliminated but do not apply a common tariff policy with countries outside the region. area. This is the traditional FTA approach.

The term new generation free agreement is a commonly used term today. Unlike traditional free trade agreements that only focus on reducing tariffs and non-tariff barriers in trade in goods, new generation free trade agreements also have the following characteristics:

• New generation FTAs ​​are not only limited to the field of goods and services but also expand the scope of regulation for: investment, competition, public procurement, and e-commerce.
• Some new generation FTAs ​​also include content that is considered non-commercial, such as labor, environment, sustainable development and good governance.
• The contents inherent in previous FTAs ​​are regulated in detail and expanded to more regulated measures such as trade in goods, human and animal health protection.

3. What is the mechanism for resolving state investment disputes?

State Investment Dispute Settlement (ISDS) is a provision in international trade agreements and international investment treaties that gives investors the right to sue a foreign government to resolve a dispute. within their rights under international law. For example, if an investor invests in country "A", which is a member of a trade agreement, but then country A violates the treaty, then the investor can sue country A government for violations.

4. Types of international investment disputes

4.1. International investment disputes

Resolving international investment disputes between countries and countries was established before the mechanism for resolving investment disputes between foreign investors and the government of the host country by arbitration, which is a norm in international law. However, in reality, the number of country-to-country investment disputes is quite limited, but this mechanism continues to be maintained in many free trade agreements and economic partnership agreements.

4.2. Disputes between foreign investors and the Government of the host country

The ISDS mechanism in thousands of IIAs and other international legal documents has three basic characteristics as follows:

• The legal basis of ISDS is complex and diverse, while other dispute resolution mechanisms are based on certain treaty models. The legal basis of ISDS is in the dispute resolution provisions in 3,000 investment treaties, in international conventions and arbitration rules.
• ISDS allows private parties to sue the government (who usually enjoys judicial immunity) and can claim large sums of money.
• The procedures applied in ISDS arbitration proceedings are often based on the commercial arbitration mechanism.

4.3. Disputes between traders and traders in international trade are the origin of international investment disputes

Disputes between traders and traders in international trade relations can give rise to disputes of other groups. For example, a foreign investor files a lawsuit because the Government of the host country makes decisions, or the judgment of a judicial agency is disadvantageous to the investor.

5. Mechanism for resolving international investment disputes between country and country

The provisions on State-State investment dispute settlement in investment-related treaties govern disputes relating to the interpretation and application of treaties. This provision can exist independently or in conjunction with provisions on investment dispute resolution between investors and the government of the host country. Country-to-country investment disputes may be resolved by arbitration, judicial, or judicial-like mechanisms.

In general, in the new generation FTAs ​​that Vietnam is a member of, the dispute resolution mechanism between government and government is hardly specifically stipulated, if any, it is only mentioned in one provision of the agreement.

The International Investment Dispute

6. Dispute resolution mechanism between foreign investors and the Government of the host country

6.1. Through consultation and negotiation methods

This method of dispute resolution is often stipulated in new generation Free Trade Agreements of which Vietnam is a member. Although few disputes are resolved during this period, this also gives the host country time to prepare for legal proceedings in the following period.

6.2. Through the court or competent authority of the investment receiving country

The problem of abuse of diplomatic protection and military pressure from investor countries has led to host countries expressing the view that foreigners do not have higher rights than others. Some current agreements still maintain provisions on this method. Some other agreements allow that after initiating a lawsuit in a competent domestic court, an investor can still file a lawsuit under the international dispute resolution mechanism as long as the investor has withdrawn the lawsuit. in domestic courts before a final judgment is issued.

6.3. Through international arbitration

Vietnam proactively participates in FTA negotiations with strategic partners around the world with the expectation of playing an important role in promoting international trade activities as well as developing domestic trade rules. The dispute resolution mechanism is also a core issue of concern when Vietnam participates in negotiating these agreements.The new generation FTAs ​​that Vietnam is a member of all stipulate provisions on the ISDS arbitration mechanism. Arbitration institutions in international investment treaties are different from permanent international judicial bodies. Most FTAs ​​to which Vietnam is a member provide for specialized jurisdiction for dispute resolution bodies to handle conflict of laws issues.

International investment disputes are an inevitable consequence of the interconnected global economy. Through bilateral and multilateral agreements, investor-state dispute settlement mechanisms, and alternative dispute resolution methods, countries and investors can navigate the complexities of international investment and work towards mutually beneficial solutions. If you still have questions, are unclear or need other legal assistance, please contact Apolo Lawyers Law Firm via email contact@apolo.com.vn or hotline - 0903.419.479 for legal advice and support.

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