Month: March 2022

Vietnam has a favourable geological and geographical position for the formation and development of minerals; some types of minerals have significant reserves. According to statistics of the Ministry of Natural Resources and Environment, Vietnam’s mineral resources are quite diverse and rich with over 5,000 mines and ore points of about 60 different types of minerals. Some localities have mineral reserves of various types that are licensed to exploit such as: Thai Nguyen (with 19 types of solid minerals), Son La (14 types), Quang Binh, Quang Tri, Gia Lai, Hai Phong , Yen Bai… In addition, there are 18 areas with scattered minerals on a total area of 182.7 ha distributed in the provinces of Lao Cai, Cao Bang, Bac Kan, Lang Son, Phu Tho, Hai Duong, Nghe An, Quang Nam. However, only a fraction of Vietnam’s rich mineral resources has been discovered to date, due to the country having never been systematically explored using updated technologies and methods.

Investors eyeing the mining sphere in Vietnam must make use of its entitled benefits under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). The CPTPP came into force on 14 January 2019 for Vietnam, and as of March 2022, the UK has submitted its application to join this agreement. The EVFTA came into force on 1 August 2020 and its sister – the EU-Vietnam Investment Protection Agreement is expected to come into force in 2023.

CPTPP, Chapter 9 – Investment:

1. Vietnam’s requirements on mining:

Foreign investment in exploitation of minerals shall not be accepted unless the Vietnamese competent authorities advise the applicant that the investment is likely to be of net benefit to Viet Nam. In making this determination, the competent authority may consider the following factors:
(a) the effect of the investment on the level and nature of economic activity in Viet Nam, including the effect on employment, on the use of parts, components and services produced in Viet Nam and on exports from Viet Nam;
(b) the degree and significance of participation by Vietnamese in the investment;
(c) the effect of the investment on productivity, industrial efficiency, technological development and product innovation in Viet Nam;
(d) the effect of the investment on competition within an industry or industries in Viet Nam;
(e) the compatibility of the investment with national industrial, economic and cultural policies, taking into consideration industrial, economic and cultural policy objectives enunciated by the government or legislature of any province likely to be significantly affected by the investment; and
(f) the contribution of the investment to Viet Nam’s ability to compete in world markets.
Foreign investors do not have to comply with all the above criteria to obtain the mining licence.

2. Eligibility:

CPTPP investor is understood as an investor (State, enterprise or citizen) of another CPTPP country that is or has made an investment in the territory of Vietnam. However, CPTPP investors who fall into the following cases will be excluded from enjoying the rights under CPTPP:
+ is owned or controlled by a State, organization or individual of a country that is not a member of the CPTPP
+ owned or controlled by Vietnamese organizations or individuals
+ has no significant business activity in any of the CPTPP countries except Vietnam

Investment of a CPTPP investor is understood as any asset that a CPTPP investor owns or controls, directly or indirectly, of an investment nature (including characteristics such as a commitment to a capital, for the purpose of profit and presumption of risk) in Vietnam.

3. Forms of investment:

• an enterprise;
• shares, stock and other forms of equity participation in an enterprise;
• bonds, debentures, other debt instruments and loans;
• futures, options and other derivatives;
• turnkey, construction, management, production, concession, revenue-sharing and other similar contracts;
• intellectual property rights;
• licenses, authorizations, permits and similar rights conferred pursuant to the Party’s law; and
• other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages, liens and pledges.

4. Market access principles
1. National Treatment: trading partners shall not discriminate against each other’s investors to favor their own investors.
2. Most-Favored-Nation Treatment: trading partners should not discriminate against each other’s investors to favor investors from any other country.
3. Performance Requirements: Vietnam must not promulgate requirements on the establishment, acquisition, expansion, management, operation of the investment (e.g. requirement to ensure a specific rario between export value and transferred foreign currency) or use it to decide to grant licenses to foreign investors. Vietnam has the right to promulgate requirement on the use of domestic labor.
4. Senior Management and Boards of Directors: Foreign investors have the freedom to appoint senior management positions regardless of nationality and prevent a party from a requirement of the same which might materially impair the ability of the investor to exercise control over its investment.

EVFTA – Chapter 8: Liberation of Investment and Trade

1. The principle of Most-Favoured-Nation Treatment does not apply to mining
2. For EU investors: Unbound (no requirements) for juridical persons controlled by natural or juridical persons of a non-Union country which accounts for more than 5 % of the Union’s oil or natural gas imports. Unbound for direct branching (incorporation is required). Unbound for extraction of crude petroleum and natural gas.

Investor-State Dispute Settlement (ISDS)

To protect interests of foreign investors, CPTPP allows foreign investors to initiate a lawsuit in International Arbitration centre in case interests of foreign investors are infringed by one member country (for example, expropriation, nationalization, minimum standard of treatment…), except in case disputes arising from the implementation of commitments or obligations of investment agreements and investment authorization.

This is also covered in the EU-Vietnam Investment Protection Agreement. The EVIPA is pending ratification by EU member states before it can come to force, expectedly by 2023. In disputes regarding investment (for example, expropriation without compensation or discrimination of investment), an investor is allowed to bring the dispute to the Investment Tribunal for settlement. To ensure the fairness and independence of the dispute settlement, a permanent Tribunal will be comprised of nine members: three nationals each appointed from the EU and Vietnam, together with three nationals appointed from third countries. Cases will be heard by a three-member Tribunal selected by the Chairman of the Tribunal in a random manner. This is also to ensure consistent rulings in similar cases, thus making the dispute settlement more predictable. The EVIPA also allows a sole Tribunal member where the claimant is a small or medium-sized enterprise, or the compensation of damaged claims is relatively low. This is a flexible approach considering that Vietnam is still a developing country.

In case either of the disputing parties disagrees with the decision of the Tribunal, it can appeal to the Appeal Tribunal. While this is different from the common arbitration proceeding, it is quite similar to the two-level dispute settlement mechanism in the WTO (Panel and Appellate Body). We believe that this mechanism could save time and costs for the whole proceedings.

The final settlement is binding and enforceable from the local courts regarding its validity, except for a five-year period following the entry into force of the EVIPA.

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Das Freihandelsabkommen der EU und Vietnam (EVFTA) und das umfassende und fortschrittliche Abkommen für transpazifische Partnerschaft (CPTPP) bieten enorme Vorteile für ausländische Investoren, die in oder mit Vietnam handeln. Diese reichen von den Marktzugangsvoraussetzungen bis zur Möglichkeit der Vollstreckung ausländischer Urteile in Vietnam .

Die Vorschriften für Investitionen und Handel sind im Kapitel 9 und 10 des CPTPP und Kapitel 8 des EVTFA normiert. Beide Abkommen stellen die Prinzipien der Inländerbehandlung (ausländische Investoren sollen wie Einheimische behandelt werden), des Marktzugangs (Beseitigung spezifischer Beschränkungen für ausländische Unternehmen), der Lokalen Präsenz (ausländische Unternehmen müssen keine lokale Präsenz aufbauen, um grenzüberschreitende Dienstleistungen erbringen zu können), usw. in den Fokus.

Wir fassen die wichtigsten Aspekte für ausländische Investoren zusammen, die in Vietnam handeln möchten:

Verkehrsreduzierung:

Beide Abkommen sehen vor, dass die meisten Zolltarifstellen nach Inkrafttreten und nach einem vereinbarten Zeitplan abgeschafft werden sollen. Zum Beispiel werden Einfuhrzölle im Rahmen des CPTPP für sehr empfindliche Waren wie Bier, Wein, Hähnchen, Metall, Stahl und Autos mit einer Größe unter 3.000 Cc ab 2029 beseitigt. Vietnam hat bereits zu bevorzugende Ausfuhrzolltarife und besondere zu bevorzugende Einfuhrzolltarife für Produkte im Rahmen der EVFTA (Erlass Nr. 111/2020/ND-CP) und im Rahmen des CPTPP (Erlass Nr. 21/2022/ND-CP und Erlass 57/2019/ND-CP) veröffentlicht. Bitte beachten Sie, dass die genannten Dekrete nach 2022 nicht mehr gelten. Wir erwarten, dass die Tarifpläne für den Zeitraum 2023 – 2025 bis Ende dieses Jahres vorliegen werden.

EVFTA:

Bankdienstleistungen:

Vietnam verpflichtet sich europäischen Kreditinstituten zu erlauben, sich bis zu 49 % des Grundkapitals an zwei vietnamesischen Geschäftsbanken auf Aktienbasis anzueignen. Allerdings ist diese Übereinkunft auf 5 Jahre beschränkt (nach diesen 5 Jahren ist Vietnam nicht länger an die Übereinkunft gebunden) und sie ist nicht auf die vier Geschäftsbanken auf Aktienbasis anwendbar, bei denen die Regierung die Hauptanteile innehat, namentlich BIVD, Vietinbank, Vietcombank und Agribank. Darüber hinaus werden bei der Umsetzung dieser Verpflichtung alle Vorschriften über Fusions- und Übernahmeverfahren sowie sichere und wettbewerbsfähige Bedingungen eingehalten, einschließlich der Begrenzung des Anteilsbesitzverhältnisses für jeden Investor, der als Einzelperson oder Organisation auf der Grundlage der Inländerbehandlung gemäß den Bestimmungen des vietnamesischen Rechts auftritt.

Versicherungsdienstleistungen:

Vietnam verpflichtet sich, die grenzüberschreitende Abtretung von Rückversicherungsleistungen und freiwilligen Krankenversicherungsleistungen nach innerstaatlichem Recht zuzulassen. Bezüglich der Verpflichtung, die Gründung einer Zweigniederlassung einer Rückversicherungsgesellschaft zuzulassen, so erlaubt Vietnam dies erst nach einer Übergangszeit.

Telekommunikationsdienstleistungen:

Vietnam ist verpflichtet sich in gleicher Weise wie beim CPTPP Abkommen. Insbesondere für Telekommunikationsdienstleistungen ohne Netzwerkstruktur, erlaubt Vietnam europäischen Investoren nach einer Übergangszeit vollständig im ausländischen Eigentum stehende Unternehmen zu gründen.

Transportdienstleistungen:

Direkt nach Inkrafttreten des Abkommens erlaubt Vietnam europäischen Schiffereien für leere Konsolidierungen und Containertransporte die Quy Nhon-Cai Mep Route zu benutzen; nach fünf Jahren wird Vietnam alle Routen für leere Containertransporte bereitstellen. Bezüglich Baggerdienstleistungen erlaubt Vietnam EU-Unternehmen die Gründung von Joint Ventures mit ausländischem Kapitalanteil von bis zu 51 %, um Dienstleistungen in Vietnam zu erbringen. Für Dienstleistungen am Boden bei Flughäfen erlaubt das Ministerium für Transport, dass europäische Unternehmen fünf Jahre nach der Erschließung des Privatsektors Joint Ventures mit vietnamesischen Partnern gründen dürfen, um sich für die Umsetzung des Projekts zu bewerben, soweit das ausländische Kapital nicht 49 % übersteigt. Nach drei Jahren wird das ausländische Kapital auf 51 % limitiert.

Verteilungsdienstleistungen:

Vietnam stimmt der Abschaffung des Erfordernisses der wirtschaftlichen Bedarfsprüfung fünf Jahre nach Inkrafttreten des Abkommens zu. Vietnam behält sich jedoch das Recht vor, die Planung des Verteilernetzes auf nichtdiskriminierender Basis durchzuführen. Vietnam stimmte auch einer diskriminierungsfreien Behandlung für die Herstellung, die Einfuhr und den Vertrieb von alkoholischen Getränken zu, so dass EU-Unternehmen ihre Betriebsbedingungen im Rahmen der geltenden Lizenzen beibehalten können und nur eine Lizenz für die Einfuhr, den Vertrieb, den Groß- und Einzelhandel benötigen.

CPTPP

Das Kapitel für Handel mit Dienstleistungen und das Kapitel für Investitionen nach dem CPTPP enthält folgende Hauptverpflichtungen:
– Mindeststandard der Behandlung: Jede Vertragspartei sollte bezüglich der erfassten Investitionen die geltenden Grundsätzen des Völkergewohnheitsrechts, einschließlich einer fairen und gerechten Behandlung und eines umfassenden Schutzes und einer umfassenden Sicherheit, wahren.
– Enteignung: Soweit es beispielsweise für öffentliche Zwecke notwendig ist, hat die Regierung eines Landes die Möglichkeit ausländische Investoren zu enteignen. Nichtsdestotrotz muss ein solches Recht auf diskriminierungsfreien Gründen beruhen und einen sofortigen, adäquaten und effektiven Ausgleich im Einklang mit einem ordnungsgemäßen Rechtsverfahren und den Vorschriften des CPTPP nach sich ziehen.
– Transfer: Ausländische Investoren haben das Recht frei über ihre Kapitalanlagen und ihre Gewinne zu verfügen. Nichtsdestotrotz können die Mitgliedsregierungen des CPTPP in manchen Fällen Transfers von ausländischen Investoren verhindern oder verzögern, soweit sie der Kapitalkontrolle im Falle einer Zahlungsbilanz- oder Wirtschaftskrise dienen.
– Keine Leistungsanforderungen (PR) auferlegen: Ein Land darf keine Leistungsanforderungen als Bedingung für Investitionen aufrechterhalten, um Investitionslizenzen oder andere bevorzugte Investitionsbehandlungen zu erhalten.
– Keine Anforderungen an die Besetzung von Führungspositionen (SMB) stellen: Ein Land darf von einem Unternehmen nicht verlangen, dass es eine natürliche Person mit einer bestimmten Staatsangehörigkeit in eine Position der oberen Führungsebene beruft.

Streitbeilegung zwischen Investor und Staat (ISDS)

Zum Schutz der Interessen ausländischer Investoren erlaubt CPTPP diesen einen Rechtsstreit in einer internationalen Schlichtungsstelle anzustreben soweit die Interessen ausländischer Investoren von einem Mitgliedsstaat (beispielsweise Enteignung, Nationalismus, Mindeststandard der Behandlung) verletzt wurden. Eine Ausnahme gilt für solche Streitigkeiten, die sich aus der Umsetzung von Zusagen oder Verpflichtungen aus Investitionsabkommen und Investitionsgenehmigungen ergeben.

Dies ist zusätzlich im europäisch-vietnamesischen Investitionsschutzabkommen abgesichert. Das Inkrafttreten des EVIPA hängt von der Ratifizierung der europäischen Mitgliedstaaten ab und wird 2023 erwartet. Bei Streitigkeiten im Zusammenhang mit Investitionen (z. B. entschädigungslose Enteignung oder Diskriminierung von Investoren) kann ein Investor den Streitfall zur Beilegung vor das Investitionstribunal bringen. Um die Gleichberechtigung und Unabhängigkeit der Streitbeilegung zu gewährleisten, wird ein ständiges Gericht aus neun Mitgliedern bestehen: je drei Staatsangehörige aus der EU und Vietnam und drei Staatsangehörige aus Drittländern. Die Fälle werden von einem dreiköpfigen Gericht, welches zufällig durch den Vorsitzenden des Gerichts ausgewählt wird, gehört. So wird gewährleistet, dass in ähnlichen Fällen eine gleiche Entscheidung ergeht, was die Streitschlichtung vorhersehbarer macht. Das EVIPA gesteht auch eine Entscheidung durch nur ein Gerichtsmitglied zu, soweit der Antragsteller nur eine kleines oder mittleres Unternehmen oder die Entschädigung für die streitgegenständliche Forderung verhältnismäßig gering ist. Angesichts dessen, dass Vietnam noch immer ein Entwicklungsland ist, ist dies ein flexibler Ansatz.

Für den Fall, dass beide Parteien der Gerichtsentscheidung nicht zustimmen, kann Beschwerde bei einem Beschwerdegericht eingelegt werden. Dies unterscheidet sich zwar von dem üblichen Schiedsverfahren, ist aber mit dem zweistufigen Streitbeilegungsverfahren der WTO vergleichbar. Wir glauben, dieser Mechanismus könnte für das gesamte Verfahren zeit- und kostensparend sein.

Die endgültige Beilegung ist bindend und kann von den örtlichen Gerichten vollstreckt werden. Dies gilt mit Ausnahme eines Zeitraums von fünf Jahren nach Inkrafttreten des EVIPA (siehe weitere Anmerkungen im Kapital des Ausschusses für den Rechtssektor über gerichtliche und schiedsgerichtliche Rechtsmittel).

Vietnam’s participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) has expanded international destinations for Vietnam’s strategic produces while creating leverage in such markets due to reduced tariff duties. During 2020-2021 period, when the global economy was suffering financial consequences from the Covid-19 pandemic, Vietnam ranked number 1 in GDP in Southeast Asia due to increase in export of agricultural products.

On a more micro level, the domestic consumers have benefited from an increase in product quality. This is because farmers now have access to foreign advanced technology and farming procedures must dramatically change for the better to satisfy SPS and TBT requirements under the Free Trade Agreements.

Most exported products include aquatic products, vegetables and fruits, rice, and tea. Official data showed that the agriculture sector expanded by 2.74% during the January-September period and contributed significantly to Vietnam’s overall economic growth, affirming its role as a supporting pillar of the Vietnamese economy. To further its competitiveness on the global market, the Vietnam government has issued many measures to promote digital transformation in the agriculture sector, making it one of the priorities for the period 2021-2030.

A comparison between EVFTA and CPTPP commitments

As of March 2022, the UK has submitted its application to join the CPTPP.

EVFTA:

_ Under Chapter 2 (National Treatment and Market Access for Goods), each Party is required to reduce tariffs for goods originating from the other Party. Vietnam complied to this commitment by issuing Decree 111/2020/ND-CP of 18.09.2020 on Preferential export tariff schedule, special preferential import tariff schedule of Vietnam to implement the Free Trade Agreement between the Socialist Republic of Vietnam and the European Union in the 2020 – 2022 period.

_ The EU’s preferential tax rate under the EVFTA shall in no case be higher than the normal EU tax rate applicable to goods originating from Vietnam on the day before the effective date of the EVFTA. This obligation applies from that date to the 7th year after the entry into force of this Agreement.

CPTPP:

_ Rule of Origin: Apply “De Minimis” (Latin term) principle: the insignificant proportion of raw materials that have not undergone the process of code conversion but are still considered to be originating. This regulation was introduced by the negotiating countries with the aim of reducing difficulties in meeting the CTC origin criteria and diversifying to enjoy preferential tariffs in FTAs.

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

The EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) provide numerous benefits for foreign investors doing business with Vietnam or are in Vietnam, from better market access conditions to the ability to enforce foreign courts’ judgment in Vietnam.

Provisions on investment and trading are provided under Chapter 9 and 10 of the CPTPP and Chapter 8 under the EVFTA. Both Agreements highlight the principles of National Treatment (foreign investors are treated alike to domestic ones), Market Access (remove specific limitations to foreign enterprises), Local Presence (foreign enterprises do not need to establish local presence to supply cross-border service), etc.

We summarize key points that foreign investors are interested in when doing business in Vietnam:

Tariff reductions:

Both agreements apply the elimination of the majority of tariff lines once become effective and after an agreed schedule. For example, under the CPTPP, very sensitive goods such as beer, wine, chicken, iron and steel, cars under 3000 Cc will only be eliminated import duties starting from 2029. Vietnam already published preferential export tariff and special preferential import tariff schedules for products under EVFTA (Decree No. 111/2020/ND-CP) and under CPTPP (Decree 21/2022/ND-CP and Decree 57/2019/ND-CP). Do note that the named Decrees do not apply after 2022. We expect to see the tariff schedules for the period 2023-2025 by the end of this year.

EVFTA:

Banking services:

Vietnam commits to favorably allow EU credit institutions to raise foreign ownership to 49% of charter capital in two Vietnamese joint stock commercial banks. However, this commitment is only valid for 5 years (after the expiry of 05 years Vietnam will not be bound by this commitment), and not applicable to the four joint stock commercial banks in which the government is holding the dominant stocks, namely BIDV, Vietinbank, Vietcombank and Agribank. In addition, the implementation of this commitment will comply with all regulations on merger and acquisition procedures as well as safe and competitive conditions, including the limitation on the share ownership ratio applied for each investor presents as an individual or organization on the basis of national treatment, according to the provisions of Vietnamese law

Insurance services:

Vietnam commits to allowing cross-border cession of reinsurance and voluntary health insurance services according to domestic law. Regarding the commitment to allow the establishment of a branch of reinsurance company, Vietnam allows only after a transition period.

Telecommunication services:

Vietnam is committed to the same level as in the CPTPP Agreement. Especially for value-added telecommunications services without network infrastructure, Vietnam allows EU investors to set up a wholly foreign-owned enterprise after a transition period.

Services of transportation:

For empty consolidation and container transport services, immediately after the Agreement enters into force, Vietnam allows EU shipping lines to perform these services on Quy Nhon-Cai Mep route; after 05 years, Vietnam will allow the provision of empty container transportation services on all routes. With the dredging service, Vietnam allows EU businesses to set up joint ventures with foreign equity up to 51% to provide services in Vietnam. For ground services at the airport, the Ministry of Transport also agrees that after 05 years since Vietnam is open to the private sector, EU businesses will be allowed to enter joint ventures with Vietnamese partners in which foreign capital does not exceed 49% to bid to provide this service. 03 years later, the limit of foreign capital will be 51%

Distribution service:

Vietnam agrees to abolish the requirement of economic needs test five years from the date of entry in force of this Agreement. However, Vietnam reserved the right to implement distribution system planning on a non-discriminatory basis. Vietnam also agreed to non-discriminatory treatment for alcoholic beverage production, import and distribution, allowing EU enterprises to reserve their operating conditions under current licenses and to be required only one license to perform import, distribution, wholesale and retail activities.

CPTPP

The Chapter on Trade in Services, Chapter on Investment of CPTPP provide the following major obligations:
– Minimum standard of treatment: Each Party shall accord to covered investments treatment in accordance with applicable customary international law principles, including fair and equitable treatment and full protection and security.
– Expropriation: When necessary, for example, for a public purpose, government of one country has the right to expropriate foreign investors. Nonetheless, such right must be applied on a non-discriminatory manner and on payment of prompt, adequate and effective compensation in accordance with due process of law and provisions of CPTPP.
– Transfer: Foreign investors have the rights to freely transfer their capital contributions or profit of investment. Nonetheless, in some cases, governments of CPTPP member countries can prevent or delay such transfers of foreign investors for the purpose of control capital in case of balance of payment crisis or economic crisis.
– Not impose “performance requirement” (PR): One country shall not maintain performance requirements as a condition for investors to gain investment licenses or other preferential investment treatment.
– Not impose requirement on appointing senior management position (SMB): One country shall not require an enterprise to appoint to a senior management position a natural person of any particular nationality.

Investor-State Dispute Settlement (ISDS)

To protect interests of foreign investors, CPTPP allows foreign investors to initiate a lawsuit in International Arbitration center in case interests of foreign investors are infringed by one member country (for example, expropriation, nationalization, minimum standard of treatment…), except in case disputes arising from the implementation of commitments or obligations of investment agreements and investment authorization.

This is also covered in the EU-Vietnam Investment Protection Agreement. The EVIPA is pending ratification by EU member states before it can come to force, expectedly by 2023. In disputes regarding investment (for example, expropriation without compensation or discrimination of investment), an investor is allowed to bring the dispute to the Investment Tribunal for settlement. To ensure the fairness and independence of the dispute settlement, a permanent Tribunal will be comprised of nine members: three nationals each appointed from the EU and Vietnam, together with three nationals appointed from third countries. Cases will be heard by a three-member Tribunal selected by the Chairman of the Tribunal in a random manner. This is also to ensure consistent rulings in similar cases, thus making the dispute settlement more predictable. The EVIPA also allows a sole Tribunal member where the claimant is a small or medium-sized enterprise, or the compensation of damaged claims is relatively low. This is a flexible approach considering that Vietnam is still a developing country.

In case either of the disputing parties disagrees with the decision of the Tribunal, it can appeal to the Appeal Tribunal. While this is different from the common arbitration proceeding, it is quite similar to the two-level dispute settlement mechanism in the WTO (Panel and Appellate Body). We believe that this mechanism could save time and costs for the whole proceedings.

The final settlement is binding and enforceable from the local courts regarding its validity, except for a five-year period following the entry into force of the EVIPA (please refer to further comments in the Legal Sector Committee’s chapter on Judicial and Arbitral Recourse).

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

The Government Inspectorate will conduct a comprehensive inspection of power projects and projects developed in the past 10 years (2011-2021). These are projects included under the national electricity development planning phase in the period 2011-2020, with a view to 2030 (power planning VII) and the adjusted electricity planning VII.

The inspection will take place in 85 working days, focusing on the observance of policies and laws in the management, implementation of planning and construction investment of these power projects and works. When necessary, the relevant contents can be inspected before or after the inspection period.

In addition to members of the Government Inspectorate, the Decision for inspection clearly states that the Minister of Industry and Trade, the Chairman of the Members’ Council, the General Directors of: Electricity Vietnam, Vietnam Oil and Gas, Coal – Mineral Industry Vietnam; Chairmen of People’s Committees of provinces, relevant agencies, units, organizations, and individuals are responsible for the implementation of this Decision.

Attached to this decision is a list of 6 provinces with the most solar and wind power projects: Ninh Thuan, Binh Thuan, Dak Lak, Dak Nong, Binh Phuoc, and Bac Lieu provinces.

Following this Decision, the Ministry of Industry and Trade sent instructions to the People’s Committees of various provinces and cities on reviewing the list of wind power, solar power and hydropower projects already included in the national planning.

Recently, the explosion of solar and wind power projects has added a large amount of renewable electricity to the national planning, far exceeding the capacity under the Power Plan 7 and the revised Power 7 by dozens of years. In addition, solar power and wind power have been rapidly added to the planning, causing some provinces such as Ninh Thuan, Binh Thuan… to overload the power grid, causing many projects to produce electricity that cannot be sold or reduce power generation amount.

Result from the investigation will be considered in the finalization of the Power Development Plan VIII. Although there have been about 20 meetings between the Deputy Prime Minister and the Ministry of Industry and Trade in 2021 to review, adjust and supplement, but so far there is no final draft of Power Planning Project VIII.

It is proposed that projects deemed as failing the investigation may face a hefty fine and/or a possible removal from the national electricity planning. To avoid any unwanted consequences, Duane Morris will assist you from the beginning by keeping you in the loop of every single regulatory news and carry out comprehensive due diligence on projects of your interest. Do not purchase or get involved in any projects without prior legal consultation.

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.