MINISTRY OF JUSTICE MINISTRY OF EDUCATION AND TRAINING DUONG HOAI NAM PHUONG 452958 INDIRECT EXPROPRIATION IN RENEWABLE ENERGY INVESTMENT — FOREIGN EXPERIENCE AND LESSONS FOR VIETNAM GRADUATION THESIS Hanoi - 2024 MINISTRY OF JUSTICE MINISTRY OF EDUCATION AND TRAINING DUONG HOAI NAM PHUONG 452958 INDIRECT EXPROPRIATION IN RENEWABLE ENERGY INVESTMENT - FOREIGN EXPERIENCE AND LESSONS FOR VIETNAM (Major: International Trade and Business Law) GRADUATION THESIS SCIENTIFIC INSTRUCTOR PROFESSOR NGUYEN THI ANH THO Hanoi- 2024 i STATEMENT OF AUTHORSHIP I hereby declare that this is my own research work and that the conclusions and data in the graduation thesis are truthful and ensure reliability./ Confirmation by Instructor Author of graduation thesis (Sign andfull name) Duong Hoai Nam Phuong LIST OF ABBREVIATIONS z Abbreviation Definition OGœ0w9e ASEAN Association of South East Asian Nations BITs Bilateral Investment Treaties ECT Energy Charter Treaty EU European Union FiT Feedin Tariff FTA Free trade Agreement HAs International Investment Agreements. IME International Monetary Fund NAFTA North American Free Trade Agreement OAnNfkwoWL OECD Organization for Economic C ooperatiơn and Development ppp. page/pages para paragraph paras. paragraphs UNCTAD United Nations C onference on Trade and Development versus World Trade Organization TABLE OF CONTENTS AGM ONAT GDÙET:snnigg14ctpÐtisg0iciis482sgs3nsss20itestssos0osasadasosE ShiiRTgni:0Ì2NHOTSHEDS,s.sstsux6nbtsaulfSiodbsBesueflushtbesosntelilosudReitfuadootiÐL List Of AVbTàVIRHOI-Lciisci i0 ctasiiocigabGi0Nhgiocg 3b caa etm dàaggpss;áoa,MÑE ĐỀU DỊ Of nu cv, E2 T90 12101210-220272772 00009.
T13 20207 V9 at See eae INTRODUCTION. Rationale of the research topic 2. Literature Review of the research topic 3. Research Scientific and Practical Values.
Research Scope and Fecus 6. Research Structure CHAPTER 1: GENERAL THEORETICAL ISSUES OF INDIRECT EXPROPRIATION IN RENEWABLE ENERGY INVESTMENT. Overview of Indirect Exp rop ratio: ot 1. Historical Developm ent of Indirect Expropriation.
Decisions taken by international tribunals. Early attempts to codify Tang gi c. us cates 10 ERichard Epstesi ® Work vics. Concept of Indirect Expropriation.
The economic impact ofthe m easufe. Interference with distinct and reasonable investment-backed expectations ofthe investor. The nature and character of the measue. Subcategories of Indirect Expropriation.
iÄštxctk6ctg6cttroggsgb:sstcartrt ST) 1. Requirements for a lawful Indirect Exproprietion 18 a. For a public purp0Se. In anon-discriminatory manner.
In accordance with the due process of law. Followed by the payment of prompt, adequate —— ¿esitriacore S49 1. Overview of Renewable Energy Investment 1. Concept of Renewable Energy Investment.
Concept of Renewable Energy. Concept of Renewable Energy Investment. Characteristics of Renewable Energy Investment Serre 23 1. Impact and Importance of Renewable Energy Investment.
Concept of Indirect Expropriation in Renewable Energy Investment. Support systems of States inRenewable Energy Investment. Establishm ent of Indirect Expropriation in Renewable Energy Investment 25 CONCLUSION OF CHAPTER 1 CHAPTER 2: LEGISLATIVE AND PRACTICAL ISSUES OF INDIRECT EXPROPRIATION IN RENEWABLE ENERGY INVESTMENT IN FOREIGN COUNTRIES AND IN VIETNAM. Review of National Laws Rehting to Renewable Energy Investment.
Review of National Laws Relating to Renewable Energy Investment in Foreign Count eS 0 150520050E200NHGGGERGEISEIGHEGRHUGiAA-nlbBqbsetsadsuis `. Review of National Lave Relating to Renewable Energy Tinvestin entin Vietnam TT meat _ sưng e a. General Laws ee Siem SS b. Specific Renewable-!le-Energy-l-Investm ent-Relating Laws.
Review of Indirect Expropriation Provisions in Treaties Relating to Renewable Energy Investment. Possible conflicts between National Laws on Renewable Energy and Investment Treaties. Indirect Expropriation in Renewable Energy Arbitral Awards. Intensity of Interference with Property Rights.
Protection of Legitimate Investor Eãpietatigis. The Character of Government Measures: NanCuutannsskle Lesitin ate Regulation or Indirect Expropriation Requiring C ompensation? .44 'HlUiIbiV- TRAY) COB oi cssicccsnsssnsrnenctenrcconsmacsuanncconcineniiennnct acters ES CONCLUSION OF CHAPTER 2 CHAPTER 3: LESSONS FOR VIETNAM TO ENHANCE THE CURRENT LEGISLATION AND PREVENT INDIRECT EXPROPRIATION CLAIMS IN RENEWABLE ENERGY INVESTMENT. Enhancing Vietnamese current legislation relating to renewable energy investment 47 3. Promulgate a fundamental legal document to regulate renewable energy 312 Chitng a structured and transparent3188086081framework to regulate specific investment issues in renewable energy field.
Consult with investors and experts in đaloStog lawsrelat to XETIEWSDÍGEDETEY G.cu205010600 G14 /WA0eclte8longbxliiilieoiGGlsndssvseaL 3. Preventing indirect expropriation claims in renewable energy investment against Vietnam. Mitigation of unpredictability and economic impact of the state’s investment regulatory reforms towards foreign inivestofs. Review and systematizing Vietnam’s investment agreements involving renewable energy investm entt.
Caution when promulgating renewable energy investmentsion dũng policy RRA RRS RS : Mae 3. Establishm ent of investor grievance mechanisms specifically for renewable b. Improvement of awareness and experience of personnel in competent authorities regarding indirect expropriation in renewable energy investment ST CONCLUSION OF CHAPTER 3 CONCLUSION - RECOMMENDATIONS BIBLIOGRAPHY. Rationale of the research topic Along with socio-economic development, energy demand around the world has increased rapidly in recent years.
In the context that domestic fossil energy sources have been exploited to the maximum and many traditional power projects are behind schedule, developing renewable energy sources is considered one of the important solutions. The development of renewable energy shows many potential positive impacts: ensuring energy security, reducing dependence onfossil energy sources and imported energy, responding to climate change, limiting the negative impact of fossil energy sources on the environment, socio-economic development of the country, creating jobs, improving qualifications for workers and so on. Realizing the importance of gradually replacing fossil energy sources and the potential for developing renewable energy sources, many states have established regulatory frameworks to provide tax deductions, FiT, and other subsidies to investments in renewable energy. For instance, the United States spent US$11 billion on subsidizing renewable energy in 2016 at the federal level) while its most progressive state — California —implem ented legislation to require 50 per cent of the state’s electricity to come from renewable energy by 2030.? The European Union (“EU”) issued the Renewable Energy Directive in 2009, requiring the EU to fulfil at least 20 per cent of its total energy needs with renewables by 2020? This directive was recently amended, changing that requirement, to achieve at least 32 per cent of its total energy needs via renewables by 2030.
The EU has recently decided to gradually phase out FiT subsidies and substitute it with tax reductions and other means that will assist the renewable energy sector to adjust to market-based mechanism.’ In Vietnam, the Government also established policies to promote renewable energy such as the “Renewable Energy Development Strategy of Vietnam 2030, vision to 2050” or “National electricity development plan for the period 2011 - 2020 with a view to 2030”. However, state subsidies for renewable energy have proven to be susceptible to changes. In some cases, the government chooses to withdraw subsidies or alter its incentive framework when the state’s economy has weakened and cannot meet the ‘ University of Huston Energy Fellows, ‘Renewable Energy Subsidies — Yes or No?’ Forbes,23 March 2018), wwyw forbes < ommsites Adhenergy/20 18/03/23 kenewrable-energy-subsitlies -yes-or-no/H28Se7a3b6e23, accessed 30 November 2023. * Renewable Energy Programs of Califomia Energy Conmuission, ynw energy ca govireneivablesirenevtable_links html, accessed 30 November 2023.
* Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy fromrenewable sources and amending and subse- quently repealing Directives 2001/77/EC and 2003/30/EC, [2009] OJ L140/16 + Baropean Union Comission (2019), “Factsheet: The Revised Renewable Energy Directive”. * Guidelines on State Aid for Exvirormental Protection and Energy 2014-2020 of the Evropean Union Commmssion [2004] 0J C200/23. 1 planned subsidies, for instance: Spain or Italy. In the scenario where the host state withdraws or substantially alters its incentive framework for renewable energy, the arguments most often invoked are the breach of non-expropriation._If changes in the incentive framework deplete the investment of its substantive value, the investor could argue that the host state had breached non — non-expropriation obligation.‘ Countries around the world, notably European countries, have had to deal with several indirect expropriation claims from foreign investors when the state altered its incentive framework or withdrew subsidies.
Moreover, how the investor-state arbitration tribunals are dealing with renewable energy investment cases can influence the future growth of the renewable energy sector. If they ruled that the substantial changes or revocation of the incentives as a breach of anIIA’s obligations, this would encourage the states to uphold their commitments to the investors and create a favourable environment for renewable energy, thus motivating the private sector to participate in eliminating greenhouse emissions and help reduce climate change. On the other hand if the tribunals conclude that the states’ changes of incentive frameworks were breaches of obligations under the ILAs, other states may be discouraged from implementing similar incentive frameworks, due to the fear that those incentives could not be retracted without a large amount of compensation” Therefore, this has become one of the major concerns for states wishing to develop foreign investment in the renewable energy sector, including Vietnam. As a result, it is crucial to conduct research on the matter of indirect expropriation in renewable energy investment, which will analyse the concept of this topic and draw lessons for Vietnam from countries that are familiar and experienced with this issue.
This is also the reason why the author chose this research topic, “Indirect Expropriation in Renewable Energy Investment — Foreign experience and Lessons Sor Vietnam”. Literature Review of the research topic Internationally, research projects on renewable energy investment in general and indirect expropriation in renewable energy investment in specific are generally quite diverse and approachable from many angles and many different specialities. Thisis a valuable source of documents for analyzing the concept of renewable energy investment and indirect expropriation in this field Some notable works and articles include: First, Ghaziam, Moosa Akefi and Ghaziani, Mohammad Akefi (2022), “The Role Of Expropriation Clauses Iu Protection And Promotion Of Foreign ° Pang, H. (2020) “Smestor- State Disprte Settlement in Renewable Snergy: Friend or Foe to Climate Chvnge?” xì Lin,J and Kysar,D_A.
(eds) Climate Change Litigation inthe Asia Pacific. Cambridge Cambridge University Press ,p. tk Investments In Renewable Energy: An Essential But Overlooked Legal Cousideration,” Indonesia Law Review: Vol. In this article, the author analytically described the legal aspects of indirect expropriation Specifically, the author gave out definition of indirect expropriation in renewable energy investment and pointed out expropriation clauses in international investment agreements, which are the legal basis for this concept.
Finally, the author proposed the trends that can better protect the foreign investments in this sector, a factor without which the foreign investors would normally be reluctant to invest. (2020), “Investor-State Dispute Settlement in Renewable Energy: Friend or Foe to Climate Change?,” in Lin, J. (eds) Climate Change Litigation in the Asia Pacific. Cambridge: Cambridge University Press, pp.
In this article, the author analyzed whether the change in the incentive framework for renewable energy investment constituted a breach of indirect expropriation obligation under international investment agreements. The author also stated cases which included the tribunal’s opinion regarding this matter. From there, the author concluded criteria which are widely used to determine whether an action of the state constituted an indirect expropriation in renewable energy investment. Finally, the author concluded the impact of Investor-State Dispute Settlement on the renewable energy sector in specific and climate change in general.
In Vietnam, associated with the recent development of the renewable energy field the topic of renewable energy and renewable energy investment has been receiving attention and research under many different disciplines. However, most articles and research papers approached this topic from the perspective of renewable energy and renewable energy investment in general. International obligations and principles towards foreign investors such as fair and equitable treatment or expropriation are not mentioned nor analysed. Nevertheless, these articles and research provided general views about the concept of renewable energy and the renewable energy investment situation in Vietnam, which is the foundation for this thesis to further analyse the topic.
Some notable works include First, Do Viet Hai (2018), “Developing laws on clean energy and renewable energy development in Vietnam’, Industry and Trade Magezine No. In this article, the author analysed the necessity as well as issues in the implementation of laws on clean and renewable energy.