ICSID Additional Facility Rules means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes;
ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington, March 18, 1965;
investment means every kind of asset, made in accordance with the legislation of the Party in whose territory the investment is made, that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, such as the
commitment of capital or other resources, the expectation of gain or profit, and the assumption of risk. Forms that an investment may take include (1):
(a) an enterprise;
(b) shares, stock and other forms of equity participation in an enterprise;
(c) bonds, debentures and other forms of debt of an enterprise;
(d) a loan to an enterprise;
(e) futures, options and other derivatives;
(f) rights under contract, including turnkey, construction, management, production, or revenue-sharing contracts;
(g) claims to money and to any performance under contract having a financial value;
(h) intellectual property rights and goodwill;
(i) concessions and similar rights conferred by law or by contract, including concessions to search for, extract or exploit natural resources; and
(j) any other movable and immovable property, and any related property rights, such as leases, mortgages, liens and pledges;
For greater certainty, investment shall not include:
(a) public debt;
(b) claims to money that arise solely from commercial contracts for the sale of goods or services by a natural person or enterprise in the territory of a Party to a natural person or enterprise in the territory of the other Party;
(c) the extension of credit, including bank loans, in connection with a commercial transaction, such as trade financing; or
(d) an order or judgment entered in a judicial or administrative action, or an arbitral award;
investor of a Party means:
(a) with respect to the Socialist Republic of Viet Nam:
i. an enterprise of the Socialist Republic of Viet Nam; or
ii. a natural person who is a national of the Socialist Republic of Viet Nam but not a national or a permanent resident of the State of Israel; and
(b) with respect to the State of Israel:
i. an enterprise of the state of Israel; or
ii. a natural person who is a national or permanent resident of the State of Israel but not a national of the Socialist Republic of Viet Nam;
that has made, is making or seeks to make an investment in the territory of the other Party;
legislation with respect to a Party means the laws, regulations and administrative orders of that Party;
New York Convention means the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, 10 June 1958;
respondent means the Party that is a party to an investment dispute;
Secretary-General means the Secretary-General of ICSID;
TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreement;
UNCITRAL Arbitration Rules means the Arbitration Rules of the United Nations Commission on International Trade Law, as revised in 2010.
Article 9.2. Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party relating to:
(a) investors of the other Party;
(b) covered investments.
2. This Chapter shall not apply to measures adopted or maintained by a Party with regard to financial services.
3. For greater certainty, this Chapter shall not bind either Party in relation to an act or fact that took place or a situation that ceased to exist before the date of entry into force of this Agreement.
4. In the event of any inconsistency between this Chapter and another Chapter, the other Chapter shall prevail to the extent of the inconsistency, except with regard to Article 9.16 (Taxation Measures).
5. This Chapter shall not apply to any measure relating to the conduct of tenders or bidding processes of government procurement.
6. For greater certainty, the mere fact that a subsidy (2) or grant has not been issued, renewed or maintained, or has been modified or reduced, by a Party, does not constitute a breach of this Chapter, even if there is loss or damage to the covered investment as a result.
Article 9.3. Right to Regulate
1. For the purposes of this Agreement, the Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity, through the good faith application of their laws and regulations.
2. For greater certainty, the mere fact that a Party regulates, including through a modification to its laws, in a manner which negatively affects an investment or interferes with an investor’s expectations, including its expectations of profits, does not amount to a breach of an obligation under this Agreement.
Section B. Non-Discrimination and Liberalisation of Investment
Article 9.4. National Treatment
1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, maintenance, use, enjoyment or disposal of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the establishment, acquisition, expansion, management, maintenance, use, enjoyment or disposal of investments in its territory.
Article 9.5 . Most-Favoured Nation Treatment
1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investors of any non-Party with respect to the establishment, acquisition, expansion, management, maintenance, use, enjoyment or disposal of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments in its territory of investors of any non-Party with respect to the establishment, acquisition, expansion, management, maintenance, use, enjoyment or disposal of investments in its territory.
3. For greater certainty, the treatment referred to in this Article does not encompass definitions or any investor-state dispute settlement procedures or mechanism, including mechanisms and procedures similar to those set out in Section D (Investor – State Dispute Settlement).
4. For greater certainty, substantive provisions in other international investment treaties and other trade agreements where not accompanied by measures that are adopted or maintained by a Party pursuant to those provisions, do not, by themselves constitute “treatment”, and thus cannot give rise to a breach of this Article. (3)
Article 9.6. Performance Requirements
1. Neither Party may, in connection with the establishment, acquisition, expansion, management, maintenance, use, enjoyment or disposal of an investment in its territory of an investor of the other Party, impose or enforce any requirement or enforce any commitment or undertaking:
(a) to export a given level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use, or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from a natural person or an enterprise in its territory;
(d) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment;
(e) to restrict sales of goods or services in its territory that such investment produces or supplies by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
(f) to transfer technology, a production process or other proprietary knowledge to a natural person or an enterprise in its territory, except those undertaken in a manner not inconsistent with the TRIPS Agreement.
2. The provisions of paragraph 1 do not preclude either Party from conditioning the receipt or continued receipt of an advantage, in connection with establishment, acquisition, expansion, management, maintenance, use, enjoyment or disposal of an investment in its territory of an investor of the other Party, on compliance with:
(a) any requirement other than the requirements set forth in subparagraphs 1(b), 1(c), 1(d), and 1(e);
(b) a requirement to locate production, supply or acquire a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory;
(c) the requirements set forth in subparagraphs 1(b) and 1(c), when the requirements relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas are imposed by an importing Party; and
3. Subparagraphs 1(a), 1(b) and 1(c) do not apply to qualification requirements for goods or services with respect to export promotion.
4. Subparagraph 1(f) shall not apply when a requirement is imposed or the commitment or undertaking is enforced by a court of justice, administrative tribunal or competition authority to remedy a determined violation of competition laws.
5. This Article does not preclude enforcement of any commitment, undertaking, or requirement between private parties, where a Party did not impose or require the commitment, undertaking, or requirement.
6. For greater certainty, paragraph 1 does not apply to any requirement other than the requirements set out in that paragraph.
Article 9.7. Senior Management and Board of Directors
1. No Party may require that an enterprise of that Party, that is a covered investment, appoint to senior management positions a natural person of any particular nationality.
2. Notwithstanding paragraph 1, a Party may require that a majority or less of the board of directors, or any committee thereof, of an enterprise of that Party that is a covered investment, be a national of that Party or resident in the territory of that Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.
Article 9.8. Non-Conforming Measures
1. Article 9.4 (National Treatment), Article 9.5 (Most-Favoured Nation Treatment), Article 9.6 (Performance Requirements) and Article 9.7 (Senior Management and Boards of Directors) shall not apply to:
(a) any existing non-conforming measure that is maintained by a Party at:
(i) the central level of government, as set out by that Party in its Schedule to Annex I;
(ii) a local level of government;
(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
(c) an amendment or modification to any non-conforming measure referred to in subparagraph (a), provided that the amendment or modification does not decrease the conformity of the measure, as it existed immediately before the date of entry into force of this Agreement, with Articles 9.4 (National Treatment), 9.5 (Most-Favoured National Treatment), 9.6 (Performance Requirement) and 9.7 (Senior Management and Boards of Directors).
2. Articles 9.4 (National Treatment), 9.5 (Most-Favoured Nation Treatment), 9.6 (Performance Requirements) and 9.7 (Senior Management and Board of Directors) shall not apply to any measure that a Party adopts or maintains with respect to sectors,sub-sectors or activities set out in its Schedule in Annex II.
3. Neither Party shall, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule in Annex II, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment that exists at the time the measure becomes effective.
4. The Parties confirm their understanding that, when a new sector, which does not exist at the time of the entry into force of this Agreement, emerges in a Party after the date of entry into force of this Agreement and that Party, therefore, wishes to amend the Annexes to this Chapter, the Parties shall, upon request by that Party, enter immediately into discussion with a view to amending the Annexes.
5. Articles 9.4 (National Treatment) and 9.5 (Most-Favoured Nation Treatment) shall not apply to any measure covered by the exceptions to, or derogations from, obligations under the TRIPS Agreement.
6. Articles 9.4 (National Treatment), 9.5 (Most-Favoured Nation Treatment), 9.6 (Performance Requirements) and 9.7 (Senior Management and Board of Directors) shall not apply to:
(a) any measure that a Party adopts or maintains with respect to governmentprocurement;
(b) Subsidies or grants provided by a Party, including government-supported loans, guarantees, and insurance
Article 9.9. Special Formalities and Information Requirements
1. Nothing in Article 9.4 (National Treatment) shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with covered investments, such as a requirement that covered investments be legally constituted or registered under the requirements of its legislation, provided that such formalities do not materially impair the protections afforded by the Party to investors of the other Party and to covered investments pursuant to this Chapter and are not used as means of avoiding the Party’s commitments or obligations under this Chapter.
2. Notwithstanding Article 9.4 (National Treatment) and Article 9.5 (Most- Favoured Nation Treatment), a Party may require an investor of the other Party or its covered investment to provide information concerning that investment solely for informational or statistical purposes. The Party shall protect such information that is confidential from any disclosure that would prejudice the competitive position of the investor or its covered investment.
Section C. Investment Promotion and Protection
Article 9.10. Scope of Investment Protection
This Section applies to investors of a Party who had made covered investment in the territory of the other Party, and their covered investments.
Article 9.11. Treatment of Investments
1. Covered investments shall be accorded fair and equitable treatment and shall enjoy full protection and security in the territory of the other Party in accordance with applicable customary international law.
2. For greater certainty, "full protection and security" refers to the Party’s obligations to act as may be reasonably necessary to protect the physical security of investors and covered investments.
3. For greater certainty, the “full protection and security” does not imply, in any case, better police protection than that accorded to nationals of the Party where the investment has been made.
4. For greater certainty, a determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article.
Article 9.12. Losses and Compensation
1. Notwithstanding paragraph 9.8(6)(b), each Party shall accord to investors of the other Party that have suffered a loss or damage relating to their investments in the territory of the former Party due to war or other armed conflict, revolution, a state of national emergency, revolt, insurrection, riot or other such similar activity in the territory of that former Party, treatment, as regards restitution, indemnification, compensation or any other settlement, that is no less favourable than that which it accords to its own investors or investors of a non- Party.
2. Without prejudice to paragraph 1, if an investor, suffers a loss in the territory of the other Party resulting from:
(a) requisitioning of its property by the Party's forces or authorities; or
(b) destruction of its property by the Party's forces or authorities, which was not caused in combat action or was not required by the necessity of the situation,
the Party shall provide the investor with restitution or adequate compensation for such loss.
3. Any payment under this Article shall be effectively realisable, freely transferable and freely convertible at the market exchange rate into freely usable currencies.
Article 9.13. Expropriation and Compensation (4)
1. A Party shall not expropriate or nationalise a covered investment either directly, or indirectly through measures having an effect equivalent to expropriation or nationalisation (“expropriation”), except:
(a) for a public purpose;
(b) when made in accordance with the legislation of the Party;
(c) in a non-discriminatory manner; and
(d) when accompanied by compensation, in accordance with paragraph 2.
2. The compensation shall:
(a) be paid without delay and in a freely usable currency;
(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place;
(c) not reflect any change in value occurring because the intended expropriation had become known earlier;
(d) be fully realisable and freely transferable; and
(e) include interest, at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
3. Notwithstanding paragraphs 1 and 2, where Viet Nam is the expropriating Party, any measure of direct expropriation relating to land shall be:
(a) for a purpose in accordance with the applicable domestic legislation (5); and
(b) upon payment of compensation that follow the general trends in the market value of the land use right, while recognising the applicable domestic legislation which will be implemented in good faith in a non-discriminatory, and equitable manner.
4. Without prejudice to Section D (Investor – State Dispute Settlement), the investors affected shall have a right, under the legislation of the Party making the expropriation, to prompt review, by a judicial or other independent authority of that Party, of the legality of the expropriation and of the valuation of their investment, in accordance with the principles set out in this Article.
5. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights in accordance with the TRIPS Agreement, or to the revocation, limitation, or creation of intellectual property rights, to the extent that such issuance, revocation, limitation, or creation is consistent with the TRIPS Agreement.
Article 9.14. Transfers (6)
1. Each Party shall permit all transfers relating to a covered investment to be made freely and without delay into and out of its territory. Such transfers include:
(a) contributions to capital, including the initial contribution and additional amounts to maintain, or increase the investment;
(b) profits, dividends, interest, capital gains, royalties, management fees, technical assistance fees and other fees, or other current incomes accruing from the covered investment;
(c) proceeds from the sale or liquidation of all or any part of the covered investment;
(d) payments made under a contract entered into by the investor or the covered investment, including payments made pursuant to a loan agreement;
(e) payments made in accordance with Articles 9.12 (Losses and Compensation) and 9.13 (Expropriation and Compensation); and
(f) payments arising out of a dispute referred to in Section D (Investor – State Dispute Settlement).
2. Each Party shall allow such transfers to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may prevent or delay a transfer through the equitable, non-discriminatory and good faith application of its legislation relating to:
(a) the payment of taxes and dues;
(b) bankruptcy, insolvency or the protection of the rights of a creditor;
(c) issuing, trading or dealing in securities futures, options or derivatives;
(d) criminal or penal offences;
(e) financial reporting or record keeping of transfers when necessary to assist law enforcement, taxation authorities or financial regulatory authorities;
(f) ensuring compliance with an order or judgment in judicial or administrative proceedings; or
(g) social security, public retirement, or compulsory savings schemes.
Article 9.15. Subrogation
1. If a Party or its designated agency makes a payment to one of its investors under a guarantee, a contract of insurance or other form of indemnity it has entered into in respect of an investment in the territory of the other Party, the other Party shall recognise:
(a) the assignment, to the former Party or its designated agency, of any right or claim of the investor in respect of such investment, that formed the basis of such payment; and
(b) the right of the former Party or its designated agency to exercise by virtue of subrogation such right or claim to the same extent as the original right or claim of the investor.
2. For greater certainty, the Party or its designated agency shall be entitled in all circumstances to: