The Comprehensive and Progressive Agreement for Trans-Pacific Partnership is an important and influential new generation free trade agreement in the world. In terms of investment, CPTPP is an agreement signed by Vietnam recently with very high commitments compared to other signed agreements. The dispute settlement mechanism between foreign investors and the host state (ISDS) is a matter of great interest when considering foreign investment in the CPTPP.

Conditions of Submission of a Claim

Investors have the right to sue the host country for arbitration if the following six conditions are met:

Firstly, the dispute is not successfully resolved by consultation within 6 months from the date on which the respondent receives the written request for consultation as provided for in Article 9.18.2 of the CPTPP. According to the provisions of Article 9.19.1 Chapter 9 CPTPP:

“If an investment dispute has not been resolved within six months of the receipt by the respondent of a written request for consultations pursuant to Article 9.18.2 (Consultation and Negotiation):

(a) the claimant, on its own behalf, may submit to arbitration under this Section a claim:

(i) that the respondent has breached: (A) an obligation under Section A; (B) an investment authorisation;or (C) an investment agreement; and

(ii) that the claimant has incurred loss or damage by reason of, or arising out of, that breach; and

(b) the claimant, on behalf of an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, may submit to arbitration under this Section a claim:

(i) that the respondent has breached: (A) an obligation under Section A; (B) an investment authorisation; or (C) an investment agreement; and

(ii) that the enterprise has incurred loss or damage by reason of, or arising out of, that breach”. 

Second, the dispute remains within 3 years and 6 months from the date the plaintiff knew or needed to know about the defendant’s violation (Article 9.21, Clause 1 of the CPTPP):

“No claim shall be submitted to arbitration under this Section if more than three years and six months have elapsed from the date on which the claimant first acquired, or should have first acquired, knowledge of the breach alleged under Article 9.19.1 (Submission of a Claim to Arbitration) and knowledge that the claimant (for claims brought under Article 9.19.1(a)) or the enterprise (for claims brought under Article 9.19.1(b)) has incurred loss or damage”. 

Third, the Plaintiff has sent the defendant a written notice of intent to initiate a lawsuit at least 90 days before the date of lawsuit (Article 9.19.3 CPTPP), which must clearly state:
“(a) the name and address of the claimant and, if a claim is submitted on behalf of an enterprise, the name, address and place of incorporation of the enterprise;
(b) for each claim, the provision of this Agreement, investment authorisation or investment agreement alleged to have been breached and any other relevant provisions;
(c) the legal and factual basis for each claim; and
(d) the relief sought and the approximate amount of damages claimed.”

Fourth, the Respondent violated obligations under Section A Chapter 9 CPTPP (Article 9.19, Clause 1 of CPTPP and Article 2 of CPTPP).

Fifth, the Plaintiff suffers loss or damage due to or arising from the defendant’s breach of obligations under Section A Chapter 9 of the CPTPP (Article 9.19, Clause 1 and Article 2 of the CPTPP);

Sixth, the Plaintiff sends to the arbitration council a written agreement to submit the dispute to arbitration according to the procedures specified in the CPTPP, enclosed with a written waiver of the right to initiate or continue the lawsuit at a court or institution. other jurisdiction under the law of a Party or any other dispute settlement procedure (Article 9.21, Clause 2, Chapter 9 of the CPTPP).

Selection of arbitration procedure

The CPTPP does not have a permanent arbitral tribunal model. The CPTPP does not introduce a separate arbitration procedure to settle disputes between investors and the government of the host country, but uses popular and reputable arbitration procedures in dispute settlement. international investment or other proceedings as agreed by the parties. Specifically, according to the provisions of Clause 4, Article 9.19, Chapter 9 of the CPTPP, the CPTPP allows disputing parties to choose to settle their dispute by arbitration according to one of four arbitration procedures which are:

• the ICSID Convention and the ICSID Rules of Procedure for Arbitration Proceedings, provided that both the respondent and the Party of the claimant are parties to the ICSID Convention;
• the ICSID Additional Facility Rules, provided that either the respondent or the Party of the claimant is a party to the ICSID Convention;
• the UNCITRAL Arbitration Rules; or
• if the claimant and respondent agree, any other arbitral institution or any other arbitration rules.

Steps to settle disputes between foreign investors and host countries through arbitration

Step 1: Notice of intent

At least 90 days before submitting any claim to arbitration under this Section, the claimant shall deliver to the respondent a written notice of its intention to submit a claim to arbitration (notice of intent). The notice shall specify:

• the name and address of the claimant and, if a claim is submitted on behalf of an enterprise, the name, address and place of incorporation of the enterprise;
• for each claim, the provision of this Agreement, investment authorisation or investment agreement alleged to have been breached and any other relevant provisions;
• the legal and factual basis for each claim; and
• the relief sought and the approximate amount of damages claimed.

Step 2: Submission of a Claim to Arbitration

A claim shall be deemed submitted to arbitration under this Section when the claimant’s notice of or request for arbitration (notice of arbiration):

• referred to in the ICSID Convention is received by the Secretary- General;
• referred to in the ICSID Additional Facility Rules is received by the Secretary-General; 
• referred to in the UNCITRAL Arbitration Rules, together with the statement of claim referred to therein, are received by the respondent; or
• referred to under any arbitral institution or arbitration rules selected under paragraph 4(d) is received by the respondent.

A claim first brought by the claimant after the delivery of notice of arbitration is deemed to have been submitted to arbitration under this Section on the date of receipt by arbitration under the applicable arbitration rules.

The claimant must provide with the notice of arbitration:

• The name of the arbitrator appointed by the claimant; or
• The claimant’s written consent to the appointment of the arbitrator by the Secretary-General.

Step 3: Respondent’s counterclaim

When the claimant submits a claim to arbitration, the responding party may bring a counterclaim (counterclaim) to the plaintiff regarding the legal and factual basis of the lawsuit or rely on the claim itself to reduce obligations to the plaintiff (According to Article 9.19.2)

Step 4: Consent of each party to arbitration (Article 9.20)

Each Party agrees to submit a claim to arbitration under this Section in accordance with this Agreement.

The acceptance of paragraph 1 and the submission of a claim to arbitration under this Section shall be deemed to have met the requirements of:

• Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the ICSID Additional Facility Rules for written consent of the parties to the dispute;
• Article II of the New York Convention for an “agreement in writing”; and
• Article I of the Inter-American Convention for an “agreement”.

In addition, Article 9.21 provides for some conditions and limitations on consent of each party (Conditions and limitations on consent of each party) as follows:

• First, No claim shall be submitted to arbitration under this Section if more than three years and six months have elapsed from the date on which the claimant first acquired, or should have first acquired, knowledge of the breach alleged under Article 9.19.1 (Submission of a Claim to Arbitration).
• Second, No claim shall be submitted to arbitration under this Section unless: 

• the claimant consents in writing to arbitration in accordance with the procedures set out in this Agreement; and 
• The notice of arbitration must be accompanied by certain written waivers of the claimant’s written waivers using another State’s dispute settlement mechanism as provided for in Article 9.12.2(b) of the agreement.

Step 5: Selection of Arbitrators

Unless otherwise agreed by the disputing parties, the arbitral tribunal shall consist of three arbitrators, each appointed by the disputing parties and the third, the presiding arbitrator, to be agreed upon by the disputing parties. specified.

If an arbitrator is not constituted within 75 days after the date a claim is submitted to arbitration under this Section, the Secretary-General, at the request of a disputing party, shall appoint, at his option, an arbitrator or arbitrators. assets have not been assigned. The Secretary-General shall not appoint a national of the respondent or the State of the claimant as the presiding arbitrator unless the disputing parties agree otherwise.

Step 6: Dispute resolution

The arbitrator consults the parties, considers reports of organizations and individuals that are not disputing parties. The arbitration in the ISDS mechanism of the CPTPP will apply the provisions of the CPTPP and the principles of international law to decide on the dispute (Article 9.25 Chapter 9 CPTPP).

With regard to the determination of the place of arbitration (Article 9.23.1), the disputing parties may agree on the place of arbitration in accordance with the arbitration rules applicable in Article 9.19.4 (Submission of a Claim to Arbitration. talent). If the parties to the dispute fail to reach an agreement, the arbitrator shall determine the place in accordance with the applicable arbitration rules, provided that such place shall be in the territory of a State party to the New York Convention. .

The arbitral tribunal may accept and consider written submissions relating to a matter of fact or law in dispute that may assist the arbitrator in assessing the statements and arguments of the disputing parties. from organizations and individuals that are not disputing parties but have significant interests in this arbitration procedure after consulting the disputing parties (Article 9.23.3 Chapter 9 CPTPP).

In addition, during this stage, the respondent may object that the dispute is not within the jurisdiction of the arbitration. The arbitral tribunal may consider and resolve this matter if there is a legal basis that (i) the case is not a lawsuit in which the claimant can obtain a decision in its favor from the arbitration tribunal under the Award referee; or (ii) The lawsuit has no legal value. In this case, the arbitral tribunal’s consideration shall not prejudice the jurisdiction of the arbitral tribunal (Article 9.23.4).

Step 7: Award

Subject to the provisions of Article 9.29.1, when making a final award, the arbitrator may award independently or in conjunction with:

• monetary damages and applicable interest and
• restitution of property, in which case the award may provide that the respondent may pay the damages and the applicable interest in lieu of restitution.

An award only determines a claim for damage or loss incurred to a party’s investor.

Step 8: Enforcement of judgment

According to Article 9.29 of the agreement, the enforcement of an arbitral award should pay attention to the following issues:

First, an arbitral award is binding only on the disputing parties and on specific cases (Article 9.29.7).

Second, a disputing party does not request enforcement of the arbitral award until (Article 9.29.9):

• For the final award under the ICSID convention:

(i) after 120 days from the date of the award and no disputing party has requested an amendment or annulment of the award; or

(ii) the amendment or cancellation procedure has been completed;

• For arbitration awards under the ICSID Ancillary Mechanism, the UNCITRAL Arbitration Rules, or other rules selected under Article 9.19.4(d):

(i) after 90 days from the date of the award and no disputing party has initiated proceedings to amend, suspend or annul the award; or

(ii) the court has dismissed or allowed the application to amend, suspend or annul the award and there is no request for reconsideration.

Third, each Party shall organize the enforcement of the award in its territory (Article 9.29.10).

Fourth, if the respondent fails to comply or abide by the final award, upon receipt of the request of the party which is the country of the claimant, an arbitral tribunal shall be established in accordance with Article 28.7 (Establishment of the Arbitral Tribunal). . The requesting party may seek in that proceeding:

• Deciding not to comply or comply with the final award is contrary to the obligations of this Agreement; and
• Consistent with Article 28.17 (Initial Report), a recommendation as to whether the respondent should comply or abide by the final judgment (Article 9.29.11)

Fifth, a disputing party may request security of enforcement of an arbitral award under the ICSID Convention, the New York Convention, or the Inter-American Convention whether or not proceedings under paragraph 11 (State establish an arbitral tribunal if a party fails to comply with or abide by the award) (Article 9.29.12).

Above is our consultancy about this issue. If you need more detailed advice and answers as well as how to access this service, please contact directly the Deputy Director of Sales: Lawyer Nhat Nam via hotline: 0912.35.65.75, 0912.35.53.53 or call the free legal consultation hotline 1900.6575 or send a service request via email: lienheluathongbang@gmail.com

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