To sign or not to sign? A conundrum of Vietnam’s accession to the ICSID

Vietnam has pursued a policy to impose a single national dispute settlement mechanism for investment disputes. However, as the Vietnamese economy has liberalised and integrating internationally, this approach is no longer suitable for Vietnam’s present needs. Indeed this is one of the primary reasons why Vietnam has faced difficulty in fostering the confidence in its investment environment for foreign investors. Thus, consistency, transparency and predictability (including recognising foreign awards) have been challenging issues for Vietnam. Most foreign direct investment in Vietnam comes from developed countries, and most of the 167 states and territories that have adopted ISDS-style mechanisms are developed nations. As such, the ICSID Convention ought to be seen as a necessity, taking into account the particular context of Vietnam’s legal, economic and political realities. In this context, the article provides a critical analysis of the legal developments pertaining to investment disputes in Vietnam, and evaluates the comparative merits of the arguments for and against Vietnam’s accession to the ICSID. In doing so, it concludes that Vietnam ought to accede to the ICSID immediately, albeit with a number of reservation as permitted under the ICSID Convention.
This article addresses the pending issues weighing on Vietnam as to its accession to the ICSID Convention, and whether there is a sufficient case for the state to proceed with ratification.