EVIPA and the Investment Court System: What Happens to the 21 Vietnam–EU BITs

The direct answer: the EU–Vietnam Investment Protection Agreement (EVIPA) — signed in 2019 alongside the EVFTA — is still NOT in force, as it requires ratification by both the EU and each member state. Yet its provisions already reshape the entire investment-protection “map” between Vietnam and Europe: once EVIPA takes effect, its two-tier Investment Court System (ICS) will REPLACE the 21 bilateral investment treaties (BITs) between Vietnam and EU member states. In the meantime, EU investors in Vietnam — and Vietnamese investors in the EU — rely on the existing bilateral BITs plus the EVFTA’s investment chapter (which covers only investment liberalisation, with no investor–state dispute mechanism). Understanding the ICS helps businesses anticipate the legal “playing field” of the next 10–20 years.

What the ICS is: a standing court replacing case-by-case arbitration

EVIPA’s revolution lies in investor–state dispute settlement (ISDS). Instead of traditional arbitration — each dispute constituting its own ad hoc tribunal, parties appointing their arbitrators — the ICS creates a standing TWO-TIER COURT: a first-instance Tribunal and an Appeal Tribunal, with “judges” pre-appointed by both sides (Vietnam and the EU) for fixed terms under strict ethics and independence standards (no parallel counsel work in investment matters). The model copies CETA (the EU–Canada deal) and answers the backlash against traditional investment arbitration: inconsistency, opacity, arbitrator “revolving doors”. Transparency is secured through the UNCITRAL Transparency Rules: public hearings, published documents, amicus curiae submissions allowed. For investors, the ICS promises consistent, appealable rulings — which traditional arbitration never offered.

The 21 Vietnam–EU BITs: their fate once EVIPA takes effect

Vietnam currently holds bilateral investment promotion and protection treaties with most EU member states — 21 BITs in total (with Germany, France, the Netherlands, Luxembourg, Belgium, Italy, Spain, Sweden, Finland, Denmark, Austria and others). These 1990s-era BITs all use traditional ISDS arbitration (typically ICSID or UNCITRAL). EVIPA is explicit: upon entry into force, the BITs between Vietnam and EU member states are REPLACED — new disputes go to the ICS, not to ad hoc tribunals. Three practical consequences follow. One: EU investors cannot “pick” an older BIT with friendlier terms — the ICS is the only forum. Two: substantive protection standards (fair and equitable treatment, full protection and security, no uncompensated expropriation) are defined more tightly in EVIPA than in the old BITs — narrowing “creative” jurisdictional readings. Three, transition: cases already launched under old BITs before replacement continue under the old mechanism; investors should watch the effective date when timing new claims.

While waiting for EVIPA: what investors rely on and how to prepare

Until EVIPA takes effect, EU investors’ “safety net” in Vietnam has two layers. Layer one: the existing bilateral BITs — German, French, Dutch and other investors may still bring Vietnam before ICSID/UNCITRAL tribunals under the relevant BIT if they allege treaty breaches. Layer two: the EVFTA’s investment chapter — but remember, the EVFTA commits only to liberalisation (market access, post-establishment national treatment) with NO ISDS mechanism; investor–state disputes cannot go to arbitration under the EVFTA. Preparing for the ICS era, businesses should do three things. First, review investment structures: the ICS protects only “investors” and “investments” meeting EVIPA’s definitions — investments via “mailbox” companies without real economic activity may be denied protection. Second, keep full Vietnamese-law compliance files — like modern BITs, EVIPA typically excludes protection for investments obtained through fraud or corruption. Third, in contracts with Vietnamese state counterparties, consider combining commercial arbitration clauses (SIAC/VIAC) for contract disputes with the (future) ICS for treaty-breach disputes — the two “forums” complement rather than replace each other.

This article has been quality-reviewed by the FLAW AI Legal Council