HO CHI MINH CITY UNIVERSITY OF LAW THE MANAGING BOARD OF ADVANCED PROGRAMS ---- TRAN MINH THAO STUDENT ID: 1753801012182 ENVIRONMENTAL PROTECTION RIGHT TOWARD FAIR AND EQUITABLE TREATMENT AND INDIRECT EXPROPRIATION REGULATIONS IN EVIPA AND RECOMMENDATIONS FOR VIETNAM BACHELOR’S THESIS ACADEMIC YEAR: 2017 - 2021 MAJOR: INTERNATIONAL LAW HO CHI MINH CITY - 2021 Acknowledgement I want to express my sincere thanks to Ms. Nguyen Thi Lan Huong from Ho Chi Minh City University of Law for her guidance on outline of this essay. Thanks to her I am able to visualize the purpose and method to research on this interesting topic. Besides, I also extend my thanks to Mr.
Ngo Hoang Kim Nguyen, my academic advisor, who was always concerned and helpful to me during my four years at university. Last but not least, I would like to thank my family and all of my friends for their spiritual support and encouragement as I strive towards my goal. Commitment I hereby declare that this thesis “Environmental Protection Right toward Fair and Equitable Treatment and Indirect Expropriation regulations in EVIPA and Recommendations for Vietnam” is wholly my own work, unless otherwise referenced or acknowledged. I will bear complete responsibility for my commitment.
Tran Minh Thao rd July 3 , 2021 Table of Contents PREAMBLE. JUSTIFICATION OF THESIS:. Materials in Vietnamese. Materials in foreign languages.
PURPOSE OF THESIS. STRUCTURE OF THESIS. 6 CHAPTER 1: OVERVIEW ON ENVIRONMENTAL PROTECTION RIGHT TOWARD FAIR AND EQUITABLE TREATMENT AND INDIRECT EXPROPRIATION REGULATIONS IN INTERNATIONAL INVESTMENT LAW. OVERVIEW ON FAIR AND EQUITABLE TREATMENT STANDARD IN INTERNATIONAL INVESTMENT LAW.
The historical origin of Fair and Equitable Treatment standard. Definition and content of Fair and Equitable Treatment standard. Requirements of Fair and Equitable Treatment .The obligation of vigilance and protection .Due process including non-denial of justice .Lack of arbitraness and non-discrimination .Transparency and stability of legal and business framework and the protection of investors’ legitimate expectations. OVERVIEW ON INDIRECT EXPROPRIATION IN INTERNATIONAL INVESTMENT LAW.
Definition of indirect expropriation. Requirements for a lawful Indirect Expropriation .Due process of law. Payment of compensation .Additional requirements under IIAs. ENVIRONMENTAL PROTECTION RIGHT IN INTERNATIONAL INVESTMENT LAW.
Conflict of interest between the foreign investors’ right and the Environmental Protection right in International Investment Law. Police powers doctrine. Environmental Protection right in New Generation Internation Investment law.39 CHAPTER 2: ENVIRONMENTAL PROTECTION RIGHT TOWARD FAIR AND EQUITABLE TREATMENT AND INDIRECT EXPROPRIATION REGULATIONS IN EVIPA AND RECOMMENDATIONS FOR VIETNAM. ENVIRONMENTAL PROTECTION RIGHT TOWARD FAIR AND EQUITABLE TREATMENT AND INDIRECT EXPROPRIATION REGULATIONS IN EVIPA.
Preamble of EVIPA. Provisions affirming the State’s right to enact policies and implement measures for environmental protection. Provisions on Fair and Equitable Treatment. Provisions on Indirect Expropriation.
Evaluating Environmental Protection Right on Fair and Treatment and Indirect Expropriation regulations in EVIPA. RECOMMENDATIONS FOR VIETNAM ON THE APPLICATION THE FAIR AND EQUITABLE TREATMENT AND INDIRECT EXPROPRIATION REGULATIONS IN EVIPA TOWARDS ENVIRONMENTAL PROTECTION GOAL. Maintaining the legal framework's stability and uniformity. Ensuring the suitability of environmental protection measures.
Strengthening the capacity of the competent authorities.49 Lists of abbreviations ASEAN Association of South East Asian Nations BIT Bilateral Investment Treaty COMESA Investment Agreement for the Common Investment Area of the Common Market for Eastern and Southern Africa CPTPP The Comprehensive and Progressive Agreement for Trans-Pacific Partnership EU European Union EU – CADANA CETA EU – Canada Comprehansive Economic and Trade Agreement EVFTA EU – Vietnam Free Trade Agreement EVIPA EU – Vietnam Investment Protection Agreement FCN United States treaties on Friendship, Commerce and Navigation FDI Foreign direct investment FET Fair and Equitable Treatment FTA Free Trade Agreement GATS General Agreement on Trade in Services GATT General Agreement on Tariffs and Trade 1994 GSO General Statistics Office ICJ International Court of Justice ISDS Investor – State dispute settlement NAFTA North American Free Trade Agreement OECD The Organisation for Economic Co- operation and Development UNCTAD United Nations Conference on Trade and Development WTO World Trade Organization PREAMBLE 1. Justification of thesis: Despite the negative effects of COVID-19, Vietnam is one of the few 1 countries that recorded positive growth in foreign direct investment in early 2021. As per the statistics of General Statistics Office (GSO), The total investment capital in the first quarter of 2021, estimated at US$ 10.13 billion, increased by 18.5% over 2 the same period last year. As pointed out, foreign investment, especially foreign direct investment (FDI), plays a significant role in Vietnam’s economy in the current period.
To enhance the international trade and foreign investment in Vietnam between Vietnam and the EU, in July 2015, Vietnam had successfully negotiated the EU – Vietnam Free Trade Agreement (EVFTA) to the intensive economic corporation. However, in 2017, to ensure investment protection and investment dispute settlement issues, EU and Vietnam considered separating the original EVFTA to EVFTA and EU – Vietnam Investment Protection Agreement (EVIPA). Although in August 2020, EVFTA officially entered into force, EVIPA has not had EU members’ ratification yet. However, the EVIPA is expected to attract investment and modern technology from Europe into Vietnam and protect investors and investments in EU and Vietnam.
1The COVID-19 crisis caused a dramatic fall in FDI. The Global FDI flows decreased by up to 40% in 2020 and are projected to decrease by 5 to 10 % in 2021. For more details, see: UNCTAD, “World Investment Report 2020, International production beyond the pandemic”, UNCTAD (2020), “World Investment Report 2020, International Production beyond the Pandemic”, United Nations Publications, New York, available at: https://unctad.org/system/files/official-document/wir2020_en.pdf (last accessed on: April 13, 2021) 2 Statistic on Foreign Indirect Investment in the first quarter (from 01/01/2021 to 20/3/2021) by General Statistics Office of Vietnam (GSO), available at https://www.vn/du-lieu-va-so-lieu- thong-ke/2021/04/dau-tu-truc-tiep-nuoc-ngoai-quy-i-nam-2021 (last accessed on: April 10, 2021). 1 The regulatory regime of foreign investments in the modern international investment agreement (IIAs) should generally respond to two different objectives.
On the one hand, the attraction of foreign investments is a crucial element to promote the economic and social development of the host countries. On the other hand, policy and lawmakers should ensure that the economic and social development is sustainable, not detrimental to some fundamental values such as the consumers' health, the environment, the workers' rights or any other domestic objective considered essential for the community established in the investment-host 3 states. Therefore, in addition to the broader scope and more profound level of commitments regarding investment issues, sustainable development is one main characteristic of modern IIAs in general, as well as EVIPA in particular. While, the primary purpose of the IIAs that is predominately protecting and enhancing the investment considered to contrast with the environmental protection and social development issues by the host states, which is inherent in the sovereignty of the State.
The dispute practice has indicated that the regulation of the environmental policies can be challenged by claiming for breach of the investment principles. Therefore, that makes the host states should take into consideration when implementing the foreign investment protection commitments and pursuing the goal of sustainable development and environmental protection simultaneously. Vietnam is the potential investment market with foreign investors, however, the majority of investment sections in Vietnam are concentrated in heavy industries with a high ability to cause environmental pollution. In fact, by 2013, only 5% of FDI investing enterprises in Vietnam had high technology, 80% had medium technology, and the rest 14% were using low technology.
This statistic reflects completely 3 Hanoi Law University (2017), Textbook on International Investment Law, Youth Publishing House, Preface 2 contradicts expectations as well as claims to bring advanced technologies and 4 applications into production in Vietnam of the foreign investors. Therefore, the number of foreign investors who do not comply with environmental laws in Vietnam and cause severe environmental consequences during the investment process is highly alarming. To restrict this problem, the government has conducted many different solutions affecting foreign investors' investment and claimed those were the most effective measures to environmental protection. However, those measures can be brought lawsuits because violating the fair and equitable treatment obligation (FET) or creating unlawful indirect expropriation conduct in the BIT or FTA that Vietnam was the member.
Therefore, the research on the relationship between FET and indirect expropriation regulations and environment protection rights of the host State in provisions of EVIPA to find out effective precaution measures against the dispute between EU investors and Vietnam’s government in the future is extremely necessary. For these reasons, the author decided to study the topic: “Environmental Protection Right toward Fair and Equitable Treatment and Indirect Expropriation regulations in EVIPA and Recommendations for Vietnam” as the bachelor’s thesis. 4 Nguyễn Tuyền, (30/3/2016), “Ngày càng nhiều doanh nghiệp FDI gây ô nhiễm ở Việt Nam”, Dân Trí news, available at https://dantri.vn/kinh-doanh/ngay-cang-nhieu-doanh-nghiep-fdi-gay-o-nhiem-o-viet- nam- Literature review There is no bachelor’s thesis about the issue the author studying, however, the number of articles with related issues quite varies, which can be mentioned as follows: 2. Materials in Vietnamese In the article "Liên hệ tiêu chuẩn “đối xử công bằng và thỏa đáng” với mục tiêu bảo vệ môi trường trong CPTPP – Một số đề xuất cho Việt Nam” (The relationship between “Fair and Equitable” and environmental purpose in CPTPP – Recommendations for Vietnam) of Nguyen Thi Lan Huong in Legal Science Journal, Volume 06, 2019, the author focus on studying the theory of the FET standard in international investment law, the practice on the interpretation of the FET and investment dispute settlement related to FET standard.
Thereby, the author analyzes the relationship between "Fair and Equitable" and environmental purpose in CPTPP and assesses those regulations to come up with some recommendations for Vietnam. However, in terms of theoretical issue, the author only focuses on FET standard regulations and not the indirect expropriation regulations with the majority proportion in the investment dispute. Besides, regarding practical issues, this article essentially studies environmental protection and proposes the recommendations for Vietnam under CPTPP, without mentioning the provision of EVIPA that is the subject of this thesis. In addition, in the article "Áp dụng quy định trường hợp ngoại lệ về môi trường trong pháp luật đầu tư quốc tế và một số so sánh với thực tế Việt Nam " (Applying environmental exception to in international investment law and some comparisons with the reality in Vietnam) of Tran Thang Long in Nghiên cứu lập pháp Journal, Volume 04, 2019, the Author gives a general overview of international investment exception and the practice of applying the exception in international 4 investment disputes.
Nevertheless, the author focuses only on analyzing environmental exception in international investment law in general based on general exceptions of GATT and GATS and fails to analyze in-depth environmental exception in the new-generation IIAs. Materials in foreign languages Many foreign materials provide general knowledge regarding FET standards, indirect expropriation, or environmental protection right, which are the primary concepts in international investment law used in this thesis, such as “Standards of Investment Protection” of August Reinisch or “Principles of International Investment Law”, of Rudolf Dolzer and Christoph Schreuer and many UNCTAD and OECD documents. However, the number of studies on the relationship between those issues and the Vietnamese context, particularly in the provisions of EVIPA, is still limited. Since EVIPA is entirely new and lacks actual cases, that leads to the lack of detailed research and only stops at embrace.
In conclusion, there are no materials in Vietnamese or foreign languages mentioning the environmental protection right in EVIPA in detail. Purpose of thesis This thesis will provide an overall perspective on the relationship between the right to be ensured FET standards and lawful indirect expropriation of the investors and the right to environmental protection of the host state in IIAs in general and EVIPA in particular. As a result, the author will make comments and assessments on environmental protection rights in EVIPA before recommending Vietnam on how to apply EVIPA provisions to ensure the right to environmental protection.