Title
INVESTMENT PROTECTION AGREEMENT BETWEEN THE EUROPEAN UNION AND ITS MEMBER STATES, OF THE ONE PART, AND THE SOCIALIST REPUBLIC OF VIET NAM, OF THE OTHER PART
Preamble
THE EUROPEAN UNION,
hereinafter referred to as the "Union"
THE KINGDOM OF BELGIUM,
THE REPUBLIC OF BULGARIA,
THE CZECH REPUBLIC,
THE KINGDOM OF DENMARK,
THE FEDERAL REPUBLIC OF GERMANY,
THE REPUBLIC OF ESTONIA,
IRELAND,
THE REPUBLIC OF CROATIA
THE HELLENIC REPUBLIC,
THE KINGDOM OF SPAIN,
THE FRENCH REPUBLIC,
THE ITALIAN REPUBLIC,
THE REPUBLIC OF CYPRUS,
THE REPUBLIC OF LATVIA,
THE REPUBLIC OF LITHUANIA,
THE GRAND DUCHY OF LUXEMBURG,
HUNGARY,
THE REPUBLIC OF MALTA,
THE KINGDOM OF THE NETHERLANDS,
THE REPUBLIC OF AUSTRIA,
THE REPUBLIC OF POLAND,
THE PORTUGUESE REPUBLIC,
ROMANIA,
THE REPUBLIC OF SLOVENIA,
THE SLOVAK REPUBLIC,
THE REPUBLIC OF FINLAND,
THE KINGDOM OF SWEDEN, and
THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,
of the one part, hereinafter jointly referred to as the "EU Party", and
THE SOCIALIST REPUBLIC OF VIET NAM
of the other part, hereinafter referred to as "Viet Nam",
hereinafter jointly referred to as the "Parties",
RECOGNISING their longstanding and strong partnership based on the common principles and values reflected in the Framework Agreement on Comprehensive Partnership and Cooperation between the European Union and its Member States, of the one part, and the Socialist Republic of Viet Nam, of the other part, signed in Brussels on 27 June 2012 (hereinafter referred to as the "Partnership and Cooperation Agreement"), and their important economic, trade and investment relationship, including as reflected in the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam, signed in Brussels on 30/06/2019 hereinafter referred to as the "Free Trade Agreement");
DESIRING to further strengthen their economic relationship as part of, and in a manner coherent with, their overall relations, and convinced that this Agreement will create a new climate for the development of investment between the Parties;
RECOGNISING that this Agreement will complement and promote regional economic integration efforts;
DETERMINED to strengthen their economic, trade and investment relationship in accordance with the objective of sustainable development, in its economic, social and environmental dimensions, and to promote investment under this Agreement in a manner mindful of high levels of environmental and labour protection and relevant internationally recognised standards and agreements;
DESIRING to raise living standards, promote economic growth and stability, create new employment opportunities and improve the general welfare and, to this end, reaffirming their commitment to promoting investment;
REAFFIRMING their commitments to the principles of sustainable development in the Free Trade Agreement;
RECOGNISING the importance of transparency as reflected in their commitments in the Free Trade Agreement;
REAFFIRMING their commitment to the Charter of the United Nations, done at San Francisco on 26 June 1945, and having regard to the principles articulated in The Universal Declaration of Human Rights, adopted by the General Assembly of the United Nations on 10 December 1948;
BUILDING on their respective rights and obligations under the Marrakesh Agreement establishing the World Trade Organization, done at Marrakesh on 15 April 1994 (hereinafter referred to as the "WTO Agreement") and other multilateral, regional and bilateral agreements and arrangements to which they are party, in particular, the Free Trade Agreement;
DESIRING to promote the competitiveness of their companies by providing them with a predictable legal framework for their investment relations,
HAVE AGREED AS FOLLOWS:
Body
Chapter 1. OBJECTIVES AND GENERAL DEFINITIONS
Article 1.1. Objective
The objective of this Agreement is to enhance the investment relations between the Parties in accordance with the provisions of this Agreement.
Article 1.2. Definitions
For the purposes of this Agreement:
(a) "natural person of a Party" means, in the case of the EU Party, a national of one of the Member States of the Union in accordance with its domestic laws (1) and regulations and, in the case of Viet Nam, a national of Viet Nam in accordance with its domestic laws and regulations;
(b) "juridical person" means any legal entity duly constituted or otherwise organised under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association;
(c) "juridical person of a Party" means a juridical person of the EU Party or a juridical person of Viet Nam, set up in accordance with the domestic laws and regulations of a Member State of the Union, or of Viet Nam, respectively, and engaged in substantive business operations (1) in the territory of the Union or of Viet Nam, respectively;
a juridical person is:
(i) "owned" by natural or juridical persons of one of the Parties if more than 50 per cent of the equity interest in it is beneficially owned by persons of the EU Party, or of Viet Nam, respectively; or
(ii) "controlled" by natural or juridical persons of one of the Parties if persons of the EU Party, or of Viet Nam, respectively, have the power to name a majority of its directors or otherwise to legally direct its actions;
(d) "services supplied and activities performed in the exercise of governmental authority" means services supplied or activities performed neither on a commercial basis nor in competition with one or more economic operators;
(e) "economic activities" includes activities of an industrial, commercial and professional character and activities of craftsmen, but do not include services supplied or activities performed in the exercise of governmental authority;
(f) "operation" means, with respect to an investment, the conduct, management, maintenance, use, enjoyment, sale or other forms of disposal of the investment; (1)
(g) "measures adopted or maintained by a Party" means measures taken by:
(i) central, regional or local governments and authorities; and
(ii) non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities;
(h) "investment" means every kind of asset which is owned or controlled, directly or indirectly, by an investor of a Party in the territory (1) of the other Party, which has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, the assumption of risk and a certain duration; forms that an investment may take include:
(i) tangible or intangible, movable or immovable property, as well as any other property rights, such as leases, mortgages, liens and pledges;
(ii) an enterprise (2) as well as shares, stocks and other forms of equity participation in an enterprise, including rights derived therefrom;
(ii) bonds, debentures, and loans and other debt instruments, including rights derived therefrom;
(iv) turnkey, construction, management, production, concession, revenue-sharing and other similar contracts;
(v) claims to money or to other assets or any contractual performance having an economic value; (1) and
(vi) intellectual property rights (2) and goodwill;
returns that are invested shall be treated as investments provided that they have the characteristics of an investment and any alteration of the form in which assets are invested or reinvested shall not affect their qualification as investments as long as they maintain the characteristics of an investment;
(i) "investor of a Party" means a natural person of a Party or a juridical person of a Party who has made an investment in the territory of the other Party;
(j) "returns" means all amounts yielded by or derived from an investment or reinvestment, including profits, dividends, capital gains, royalties, interest, payments in connection with intellectual property rights, payments in kind and all other lawful income;
(k) "measure" means any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action or any other form;
(l) "person" means a natural person or a legal person;
(m) "third country" means a country or territory outside the scope of territorial application of this Agreement as defined in Article 4.22 (Territorial Application);
(n) "EU Party" means the Union or its Member States or the Union and its Member States within their respective areas of competence as derived from the Treaty on the European Union and the Treaty on the Functioning of the European Union;
(o) "Party" means the EU Party or Viet Nam;
(p) "domestic" means with regard to legislation, law or laws and regulations for the Union and its Member States (1) and for Viet Nam, respectively, legislation, law or laws and regulations at central, regional or local level; and
(q) "covered investment" means an investment by investor of a Party in the territory of the other Party, in existence as of the date of entry into force of this Agreement or made or acquired thereafter, that has been made in accordance with the other Party's applicable law and regulations.
Chapter 2. INVESTMENT PROTECTION
Article 2.1. Scope
1. This Chapter applies to:
(a) covered investment, and
(b) investors of a Party with respect to the operation of their covered investment.
2. Articles 2.3 (National Treatment) and 2.4 (Most-Favoured-Nation Treatment) do not apply to:
(a) audio-visual services;
(b) mining, manufacturing and processing (1) of nuclear materials;
(c) production of or trade in arms, munitions and war material;
(d) national maritime cabotage; (2)
(e) domestic and international air transport services, whether scheduled or non-scheduled, and services directly related to the exercise of traffic rights, other than:
(i) aircraft repair and maintenance services during which an aircraft is withdrawn from service;
(ii) the selling and marketing of air transport services;
(iii) computer reservation system services;
(iv) ground handling services; and
(v) airport operation services; and
(f) services supplied and activities performed in the exercise of governmental authority.
3. Articles 2.3 (National Treatment) and 2.4 (Most-Favoured-Nation Treatment) do not apply to subsidies granted by the Parties. (1)
4. This Chapter does not apply to the Parties' respective social security systems or to activities in the territory of each Party, which are connected, even occasionally, with the exercise of official authority.
5. This Chapter does not apply to measures affecting natural persons seeking access to the employment market of a Party, nor does it apply to measures regarding citizenship, residence or employment on a permanent basis.
6. With the exception of Articles 2.1 (Scope), 2.2 (Investment and Regulatory Measures and Objectives) and 2.5 (Treatment of Investment) to 2.9 (Subrogation), nothing in this Agreement shall be construed as limiting the obligations of the Parties under Chapter 9 (Government Procurement) of the Free Trade Agreement or to impose any additional obligation with respect to government procurement. For greater certainty, measures with respect to government procurement that are in compliance with Chapter 9 (Government Procurement) of the Free Trade Agreement shall not be considered a breach of Articles 2.1 (Scope), 2.2 (Investment and Regulatory Measures and Objectives) and 2.5 (Treatment of Investment) to 2.9 (Subrogation).
Article 2.2. Investment and Regulatory Measures and Objectives
1. The Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, environment or public morals, social or consumer protection, or promotion and protection of cultural diversity. consumer protection, or promotion and protection of cultural diversity.
2. For greater certainty, this Chapter shall not be interpreted as a commitment from a Party that it will not change its legal and regulatory framework, including in a manner that may negatively affect the operation of investments or the investor's expectations of profits.
3. For greater certainty and subject to paragraph 4, a Party's decision not to issue, renew or maintain a subsidy or a grant shall not constitute a breach of this Chapter in the following circumstances:
(a) in the absence of any specific commitment to an investor of the other Party or to a covered investment under law or contract to issue, renew, or maintain that subsidy or grant; or
(b) in accordance with any terms or conditions attached to the issuance, renewal or maintenance of the subsidy or grant.
4. For greater certainty, nothing in this Chapter shall be construed as preventing a Party from discontinuing the granting of a subsidy (1) or requesting its reimbursement, or as requiring that Party to compensate the investor therefor, where such action has been ordered by one of its competent authorities listed in Annex 1 (Competent Authorities).
Article 2.3. National Treatment
1. Each Party shall accord to investors of the other Party and to covered investments, with respect to the operation of the covered investments, treatment no less favourable than that it accords, in like situations, to its own investors and to their investments.
2. Notwithstanding paragraph 1 and, in the case of Viet Nam subject to Annex 2 (Exemption for Viet Nam on National Treatment), a Party may adopt or maintain any measure with respect to the operation of a covered investment provided that such measure is not inconsistent with the commitments set out in Annex 8-A (The Union's Schedule of Specific Commitments) or Annex 8-B (Viet Nam's Schedule of Specific Commitments) of the Free Trade Agreement, respectively, where such measure is:
(a) a measure that is adopted on or before the date of entry into force of this Agreement;
(b) a measure referred to in subparagraph (a) that is being continued, replaced or amended after the date of entry into force of this Agreement, provided the measure is no less consistent with paragraph 1 after it is continued, replaced or amended than the measure as it existed prior to its continuation, replacement or amendment; or
(c) a measure not falling within subparagraph (a) or (b), provided it is not applied in respect of, or in a way that causes loss or damage (1) to, investments made in the territory of the Party before the date of entry into force of such measure.
Article 2.4. Most-Favoured-Nation Treatment
1. Each Party shall accord to investors of the other Party and to covered investments, with respect to the operation of the covered investments, treatment no less favourable than the treatment it accords, in like situations, to investors of a third country and their investments.
2. Paragraph 1 does not apply to the following sectors:
(a) communication services, except for postal services and telecommunication services;
(b) recreational, cultural and sporting services;
(c) fishery and aquaculture;
(d) forestry and hunting; and
(e) mining, including oil and gas.
3. Paragraph 1 shall not be construed as obliging a Party to extend to investors of the other Party or covered investments the benefit of any treatment granted pursuant to any bilateral, regional or international agreement that entered into force before the date of entry into force of this Agreement.
4. Paragraph 1 shall not be construed as obliging a Party to extend to investors of the other Party or covered investments the benefit of:
(a) any treatment granted pursuant to any bilateral, regional or multilateral agreement which includes commitments to abolish substantially all barriers to investment among the parties or requires the approximation of legislation of the parties in one or more economic sectors; (1)
(b) any treatment resulting from any international agreement for the avoidance of double taxation or other international agreement or arrangement relating wholly or mainly to taxation; or
(c) any treatment resulting from measures providing for the recognition of qualifications, licences or prudential measures in accordance with Article VII of the General Agreement on Trade in Services (1) or its Annex on Financial Services.
5. For greater certainty, the term "treatment" referred to in paragraph 1 does not include dispute resolution procedures or mechanisms, such as those included in Section B (Resolution of Disputes between Investors and Parties) of Chapter 3 (Dispute Resolution), provided for in any other bilateral, regional or international agreements. Substantive obligations in such agreements do not in themselves constitute "treatment" and thus cannot be taken into account when assessing a breach of this Article. Measures by a Party pursuant to those substantive obligations shall be considered "treatment".
6. This Article shall be interpreted in accordance with the principle of ejusdem generis (2).