EU-Vietnam Free Trade Agreement: Blue Print for a Permanent Investment Dispute Resolution System?

european commissionWhile everyone is busy discussing TTIP and the pro’s and con’s of Investment Arbitration as we know it, EU Trade Commissioner Cecilia Malmström announced on December 2, 2015 that European Union and Vietnam have concluded the negotiations of a free trade agreement: “The EU and Vietnam finalise landmark trade deal.”

As part of the EU-Vietnam Free Trade Agreement, Commissioner Malmström’s statement goes on to say,  “Vietnam has (…) agreed to accept the EU’s new approach on investment protection – in particular a permanent investment dispute resolution system with an appeal mechanism.” The European Union is expected to publish the free trade agreement in full over the next couple of weeks. The arbitration community will then be able to see how exactly the mechanism has been designed. So while you wait for the EU-Vietnam treaty to become public, there are two documents that I know of that might provide some insight into what you can expect.

On the one hand, the German Ministry for Economic Affairs has commissioned Professor Krajewski, Friedrich-Alexander-Universität Erlangen-Nürnberg, to draft  a model investment protection treaty that provided for disputes between the investor and the host state to be heard exclusively by a public international court with judges appointed by the contracting parties. The text with explanations can be found here. The dispute resolution mechanism is contained in Articles 16 to 33. It provides for a Permanent International Investment Tribunal and an Appellate Review Panel. (On the topic of conflicts, by the way, the draft borrows from international arbitration: the IBA Guidelines on Conflict of Interest in International Arbitration are expressly included by way of reference in Art. 22.)

On the other hand, on November 12, 2015, the European Commission has published ist proposal for Investment Protection and Resolution of Investment Disputes. This proposal was tabled for discussion with the United States as part of the on-going TTIP negotiations. The paper contains a section headed “Resolution of Investment Disputes and Investment Court System”. Articles 9 and 10 deal with the establishment of a Tribunal of First Instance and an Appeal Tribunal, comprising of permanent judges from the Euopean Union, the United States and third country nationals, sitting in divisions of three judges, one from the EU, one from the US and chaired by the third country national.

We will see how much of these concepts we re-discover in the EU-Vietnam treaty.

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