EVIPA: Investment Protection for EU, Vietnam Businesses
The European Parliament on February 12 ratified the EU-Vietnam Free Trade Agreement (EVFTA). On the same day, the EU-Vietnam Investment Protection Agreement (EVIPA) was also approved marking a historic step in Vietnam-EU trade relations.
The EVIPA will still require EU member ratification procedures and will likely enter force after the EVFTA comes into effect.
Protecting investors
An Investment Protection Agreement (IPA), part of a free trade agreement (FTA), is an agreement between two or more countries, which aims to protect investors and investments in a host country. It ensures that they will be accorded fair treatment and will not be discriminated against.
Usually, when there is a dispute between an investor and a host country, investors can reach out to the World Banks’s International Centre for Settlement of Investment Disputes (ICSID) or other similar tribunals permitted under their respective FTA for resolution.
In the case of EVFTA, both parties have agreed to set up a permanent court, referred to as the “Tribunal” to handle such issues. This will not only protect investors and their investments but also protect a country’s right to oversee the implementation of public policies. In addition, the court system will be an independent dispute resolution system.
EU Vietnam tribunal system
Under the EVFTA, a permanent dispute resolution system will be set up that will handle disputes related to the investment protection provisions in the FTA, such as protection against expropriation without compensation.
Domestic courts will not be allowed to intervene or question the decision of the tribunals to ensure transparency and fair treatment.
Members
According to the EVFTA, the tribunal will comprise of nine members. The EU and Vietnam will each appoint three members, while the remaining three members will be appointed from a third country.
Court hearing process
All cases will be heard by a three-member team from the tribunal, with the EU, Vietnam, and a third country represented equally. The three members will be selected by the President of the Tribunal, with one condition that the chair of the group belongs to the third country, and not the EU or Vietnam.
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This article is produced by Vietnam Briefing, a premium source of information for investors looking to set up and conduct business in Vietnam. The site is a publishing arm of Dezan Shira & Associates, a leading foreign investment consultancy in Asia with over 27 years of experience assisting businesses with market entry, site selection, legal, tax, accounting, HR and payroll services throughout the region.