The Trans-Pacific Partnership (TPP) has been characterized as “state-of-the-art” and expected to enhance the investment benefits for the investors of the contracting parties by eliminating the investment barriers. Given the high expectation to the advantages of TPP in comparison to other international treaties, Vietnam was said to be poised as TPP’s biggest winner when officially signing the TPP on 4 February 2016.
Among the others, the foreign investors draw the most attention to TPP Investment Chapter as it directly affects and influents the investment environment in Vietnam to them. Setting aside the actual benefits and advantages that the TPP Investment Chapter will bring to the foreign investors as it will be subject to the approval of the National Assembly to be officially effective and enforceable in Vietnam, it is worth to highlight briefly the provisions of TPP Investment Chapter. Below are the notable treatments provided in the TPP Investment Chapter.
The TPP Investment Chapter
It can be seen in the TPP Investment Chapter that it provides similar investment protection measures with most bilateral and multilateral international investment agreements, although the scope is narrower at some points.
• National treatment: the host state must not discriminate against the foreign investors in favor of domestic competitors in like circumstances. The protection is limited to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
• Most-Favored Nation (MFN): the host state must not treat foreign investors any less favourably than it treats competitors from another contracting state or any third-party state. As similar with national treatment, the protection is limited to certain circumstances.
• Fair and equitable treatment (FET): the host state must maintain fair and equitable treatment and full protection and security of investment environment.
• Prohibition of expropriation: it is well established in the TPP Investment Chapter that expropriation or nationalization shall not be allowed, except for a public purpose; in a non-discriminatory manner; on payment of prompt; and in accordance with due process of law.
• Free transfer of funds related to an investment: in principle, the transfer of funds related to capital contribution, profits from capital contribution, payment under a contract, payments arising out of a dispute, shall be allowed to make freely and without delay into and out of the territory of the host state.
• Prohibition on “performance requirements”: certain performances are prohibited during the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment of an investor, such as local content or technology localization requirements.
Investor-State Dispute Settlement
The TPP Investment Chapter includes detailed Investor-State Dispute Settlement (ISDS) provisions. Under the ISDS provisions, the investors who are nationals of other contracting states shall have the right to bring claims against the host state through international arbitration, in case of investment dispute. The ISDS is said as the strong safeguards to the foreign investors because:
• The tribunal has the right to award “attorney’s fees” to the prevailing party in the case;
• The tribunal shall “conduct hearings open to the public” and to “make public all notices of arbitration, pleadings, submissions and awards”, as a sign of transparency procedure;
• There is room to allow the intervention of third parties (such as non-government organizations);
• The award shall only be limited to monetary damages and restitution of property in principle;
• The award can be reviewed either by domestic courts or international review panels”;
• The arbitral tribunal is allowed to consolidate different arbitration proceedings that involve claims arising under “the same events or circumstances”, with the purpose of avoiding the risks of parallel proceedings.
In a study of Peterson Institute in 2012, it was estimated that Vietnam’s income gains in 2025 with a comprehensive TPP would be over 13 percent higher, while its exports in 2025 would be over 37 percent greater, due to the advantages of TPP. Although the TPP may not become enforceable in Vietnam until 2018, but with the benefits from the TPP Investment Chapter, the expectations of a transparent and favorable investment environment will soon become true.