MINISTRY OF JUSTICE MINISTRY OF EDUCATIONAND TRAINNG HANOILAW UNIVERSITY HA NOI -2024 NGUYEN VAN ANH STUDENT CODE: 452613 HA NOI — 2024 STATEMENT OF AUTHORSHIP I hereby declare that this is my own research work and that the conclusions and data in the graduation thesis are truthfid and ensure reliability./ Confirmation by Instructor Author of graduation thesis (Sign and full name) INDEX OF ABBREVIATION ADR Alternative Dispute Resolution BIT Bilateral Investment Treaty CPTPP Comprehensive and Progressive Agreement for Trans-Pacific Partnership FDI Foreign Direct Investment FTA Free Trade Agreement Icc Intemational Chamber of Commerce ICSID International C entre for Settlement of Investment Disputes HA Intemational Investment Agreement ISDS Investor-State Dispute Settlement MIT Multilateral Investment Treaty PCA Permanent C ourt of Arbitration scc Stockholm Chamber ofCommerce TIP Treaty with Investment Provisions UNCITRAL United Nations Commission on International Trade Law UNICTAD United Nations Conference on Trade and Development VCLT Vienna Convention on the Law of Treaties WB World Bank TABLE OF CONTENT eed INDEX OF ABBREVIATION. TABLE OF CONTENT. Rationale of the researc! Summary of ofthesis research results Research scientific and practicalvalues Object and range of thesis Research methods. CHAPTER I: GENERAL LEGAL ISSUES oN SECURITY FOR costs 1.
General understandings of Security for Costs. Origin of Security for Costs. Definition of Security for Costs. Definition of Investment Treaties 13.
Definition of Investor-State Arbitratio: 1⁄4. The role of Security for Costs in investor-state arbitration CONCLUSION OF CHAPTER 1 CHAPTER 2: PRACTICES OF SECURITY FOR COSTS UNDER INVESTMENT TREATIES AND INVESTOR-STATE ARBITRATION. Analysis of the Security for Cost Under Investment Treaties. Legal frameworks for the Security for Costs 20 2.
The intemational investment treaties. The arbitration mules 23 2. Entitlement for Security of Cos! 28 2. Conditions for Security for Costs order 28 2.
Investor's obligations for cost wamanty within and without the involvement of third-party funding. Authority to approve Security for Cos 34 2.14, Procedures and timing for granting the Security for Costs inISDS. Consequences of non-compliance with Security for Costs. Assessment of Security for Costs application in investor-state a 38 CONCLUSION OF CHAPTER 2 isssiisisissiscossssssssssssscassscesssesteveecsivicunstesnvnsitisensesste AL iv CHAPTER 3: PROPOSALS FOR AMENDMENTS OF SECURITY FOR COSTS AND RECOMMENDATIONS FOR VIETNAM 2 3.
Observation and proposals fora regime of Security for Costs a2 3. Treaty hnguage on Security for Costs. Arbitration rulesamendments on Security: fez Costs 44 3. Recommendations for Vietnam on Seay for Costsin its engagement in Treaties and Investor-State Arbitration.
Theee Ret carey: of pelts regulations on ead for Costsin Vietnam 41 3. Recommendations for Vietnam xuithe provision of SH, for 48 CONCLUSION OF CHAPTER3. =— =e 51 IS CONGEUISION G53 iste Seria teiteee ce astae oi Leena rg ea nn Ne ae 52 REFERENCES. Rationale of the research Investment arbitration proceedings typically involve significant costs for both parties, approximate millions of US dollars.
F oreign investors are frequently holding companies operating through local subsidiaries with few assets of their own, which raises concerns about respondent states’ ability to recover their costs. In many cases, the claimant may be in the process of business bankruptcy, and unable to pay for their own legal fees in the dispute. This posed an inquiry to provide a security to cover the estimated costs that the other party will incur in the proceeding including arbitration costs and legal fees. Security for C ostsis anissue attracting more and more attention in investor-state dispute settlement (ISDS), as states, if awarded in their favor, expect to recover their high costs.
Security for Costs is increasingly in the spotlight, in part because tribunals have moved away from the traditional default approach of “pay your own way’. This is when both parties bear their own costs of the proceedings, regardless of the outcome. The more common approach now is that the losing party is ordered to pay the costs of the winning party. More recently, states have been concluding BITs and FTAs with investment chapters that explicitly affirm the power of the tribunal to order Security for Costs.
Some of this treaty language guides the tribunal on grounds for granting a request for Security for Costs, but some remain silent. Due to this lack of guidance, both from the arbitral rules and the treaties, arbitral tribunals have been largely free to develop their own tests for determining the circumstances in which Security for Costs should be ordered. Another reason for the increasing attention given to the issue of Security for Costs is the growing use of third-party funding in ISDS. Third-party funder will bear investor's legal fees and costs in a respective case, that has a stake in the final award.
Because a third-party funder is not a party to the arbitration, they cannot be ordered to pay the state’s costs. Summary of ofthesis research results ‘ Metal Tech Led. Republic of Uzbekistan (ICSID Case No. ARB/10/3), Final Avvard (4 October 2013),p.
17; see also Valeri Belokon v. Kyrgyz Republic (UNCITRAL), Asvard (24 October 2014),para. 139 In terms of the international researches, the International Institute for Sustainable Development has officially published the “JISD Best Practices Series: Security for Costs”? by Sarah Brewin, Nathalie Bernasconi-Osterwalder in 2018 to explores challenges for states in obtaining orders for security of costs and provides model treaty language designed to help overcome those challenges. Prior to the ICSID Arbitration Rules 2022 has been released a variety of research has been conducted based on the Draft Rules 51 of ICSID rules regarding the Security for Costs measure, specifically “Observations on the Proposed new ICSID Regime for Security for Costs”? authored by Dr.
Sam Luttrell to bring an effective proposal for the rules to be applied After the ICSID Arbitration Rules 2022 came into effect, the International Center for Settlement of Investment Disputes published the general guidance as “Secuaity for Costs - ICSID Convention Arbitration (2022 Rules)”* in application of this measure in resolving the dispute. Furthermore, many authors pay attention to the applicability of the involvement of the third-party funding in many cases, particularly “Security for Costs under the ICSID Regime: Does it Prevent ‘Arbitral Hit-and-Rums* or Does it Unddly Stifle Third-Party Fimded Investors’ Due Process Rights?’ by Y oung Hye (Martina) Chun, or “Security for Costs applications in investment arbitrations involving insolvent investors” by Lars Markert. In terms of Vietnamese researches, the Security for Costs research paper has not been conducted by many authors yet, but briefly mentioned in documents with other related matters, for example “the Third Party Fioding in Arbitration and Litigation associated with Commercial Disputes’? by D1. Chau Huy Quang, 2 Sarah Brewin, Nathalie Bemasconi-Ostervralder (2018), “IISD Best Practices Seris: Security for Costs”, available at https:/ivrvnw iisd org publications /guide fiisd-best-practices-series-security-costs ` Dr Sam Luttrell (2019), Observations on the Proposed new ICSID Regime for Sectatty for Costs available at https:/Acsid worldbank orgisites /defaultifiles amwencnunts public- input/Luttre_Sam_Comments_? 25.19 pdf *ICSID, “Security for Costs - ICSID Convention Arbitration 2022 Rules”, hitps /Acsid worldbank org/proce cure s/arbitration/convention/se curty-for- costs/2022H:~ text= Security % 20for% 20 Costs% 20- % 20IC SID % 20 Convention% 20 Arbitration % 20% 282022 ‡o% 20provide % 20se curity % 20for% 20costs% 20m '%20certam20cTrcvmnstances.
Makert (2018), Security for Costs applications mn nvestment arbitrations involving msolvent investors, available at https:/fpapers sm com/sol3 papers finn Mabstract_id=3295803 ’ Dr. Chau Huy Quang (2022), ‘the Third Party Fimding in Arbitration and Litigation associated with Conmercia] Disputes”, available at https:/Arvrvs viac vavthu-tuc-trang-teitaitro-cus-ben-tlur-ba-trang-to- tumg-trong-tai-va-to-hmg.toa-an-trong-tranh-chap-thnong-mai-phan-ii-a15¢ hil 3 published by the Vietnam International Arbitration Center Thus, this topic in Vietnam remains vague despite Vietnam having recently accessed to many investment treaties. Research scientific and practical values The research of the concept of Security for Costs has both scientific and practical value in investor-state arbitration, as outlined below: When it comes to scientific values, the value of research on Security for Costs lies inits contribution to the understanding and development of this legal mechanism in the context of investor-state disputes. By examining the application, effectiveness, and challenges associated with Security for Costs, researchers can provide insights into its impact on access to justice, fairness, and predictability in arbitration proceedings.
Through empirical analysis and case studies, researchers can identify patterns, trends, and inconsistencies in tribunals’ decisions regarding Security for Costs. This research can shed light on the factors influencing these decisions, such as the availability and sufficiency of evidence, the interpretation of legal principles, and the exercise of tribunal discretion. By exploring these aspects, scholars can contribute to the development of clear guidelines, uniform standards, and best practices for the application of Security for Costs. Furthermore, research on Security for Costs can explore the implications of this mechanism on the rights and interests of both investors and states.
It can assess the potential impact on access to justice for impecunious claimants and the protection of states’ financial interests. Jn terms of the practical values, the value of research on Security for Costs lies inits ability to provide guidance and insights to stakeholders involved in investor- state disputes, including investors, states, legal practitioners, and policymakers. Accordingly, it helps claimants and respondents understand the criteria and factors that tribunals consider when deciding on Security for Costs applications by identifying patterns and trends in tribunal decisions, provide insights into the timing, form, and amount of security that are most practical and efficient, reducing administrative burdens and potential delays. Especially, the research puts the high threshold of informing policy discussions and reforms aimed at enhancing the faimess, efficiency, and effectiveness of investor-state dispute resolution processes 3 not only for the international scope but also for Vietnam in executing and drafting the Treaties process.
Aims of the study This research paper aims to define the Security for C osts in ITAs, including the BITs and TIPs. In line with the new ICSID provision, Security for Costs is implied under the arbitral rules applicable to ISDS, including under the ICSID, UNCITRAL and ICC Arbitration Rules, which must be explicitly clarified. Based on these basis, the jurisdiction of the Arbitral Tribunal, the rights and obligations of Parties shall be established, thus, this thesis additionally includes the applicability and the effectiveness of the Security for C osts provision in investor-state arbitration disputes. The settlement of this kind of dispute is occasionally related to the third-party funding, thus, this thesis seeks the existence of a third-party funder is whether or not relevant in hearing an application for Security for Costs.
Last but not least, the research would endeavor to fill the gap of the Security for Costs provision, and propose practical solutions for Vietnam in negotiating any investment treaties. 5: Object and range of study The researching object is the provision of security for cost in investment treaties in applying to resolve the arbitral disputes, the investor-state arbitration disputes in which the parties request for the application of Security for Costs. While the primary focus of this thesis is on examining the concept of Security for Costs within the context of international investment treaties, it is important to acknowledge that these treaties also make reference to the application of international arbitration rules. Recognizing the intersection between investment treaties and arbitration rules, this thesis undertakes additional research to explore the issue of Security for Costs under international procedural rules.
With a view to cover these matters, this thesis sets the wide range of researching scope from the worldwide investment treaties, arbitration rules including ICSID, UNCITRAL and ICC Arbitration Rules, and practical investment arbitration cases settled by ICSID, ICC, UNCITRAL tribunals, opinions in the Security for C osts of the arbitral tribunal, scholars in researching this measure. Research methods The studyis structured to begin with the overview ofthe theoretical framework of Security for Costs, investment treaties, and investor-state arbitration, then synthesizing the relevant provisions of this measure in investment treaties, and arbitration rules, which is in support for the analysis of the jurisdiction, applicability of the Security for Costs, to finally conclude the effectiveness of the Security for Costs in the practical arbitration disputes.