Investment guarantees, dispute routes with the State and treaty protection: what the law promises, what the treaties add, and how to structure for both

The guarantees in Chapter II of the law

Chapter II of Law No. 143/2025/QH15 sets out guarantees that apply to every investor, domestic or foreign. Article 9 guarantees ownership of assets: lawful assets are not nationalised or confiscated by administrative measures, and where the State compulsorily acquires property for reasons of national defence and security or the national interest in a state of emergency or natural disaster, it pays compensation at market value in accordance with the law. Article 10 guarantees business investment activity: the State does not require an investor to give priority to domestic goods or services, to meet export ratios, to balance imports against exports, to source locally, to locate its head office in a particular place or to transfer technology as a condition of investing. Article 11 guarantees the transfer of a foreign investor's assets abroad: invested capital and the proceeds of liquidation, income from business investment, and other money and assets lawfully owned, once financial obligations to the State have been met. Article 12 guarantees investment against changes in the law: where a new instrument gives better incentives the investor may take them, and where it gives worse ones the investor keeps the incentives it was granted for their remaining period, or, where the change is made for reasons of defence, security, public order, social ethics, public health or environmental protection, is compensated by deductions from taxable income, by a change of objectives or by other means.

What the guarantees are worth in practice

The guarantees are statutory promises enforceable in Vietnamese courts and arbitration, and they are reinforced by Vietnam's treaties. Their limits should be understood. Article 9 is a guarantee against expropriation without compensation, not against regulation: a change in zoning, a new environmental standard or a licence condition is not nationalisation. Article 11 is conditional on compliance: a company that has not audited its accounts, finalised its tax, registered its capital account or paid its land rent cannot invoke the transfer guarantee when it needs it (Chapter 6). Article 12 protects incentives that were lawfully granted and recorded; it does not protect an incentive the investor assumed, nor one lost because the project failed to meet its conditions (Investment incentives). The investors who have found the guarantees useful are those whose documents were in order.

Dispute routes under Article 13

Article 13 requires disputes relating to business investment to be settled first by negotiation and mediation, and then by arbitration or the courts. For disputes between investors, where at least one party is a foreign investor or a company more than 50% foreign-owned, the parties may choose Vietnamese courts, Vietnamese arbitration, foreign arbitration, international arbitration or ad hoc arbitration; disputes among domestic investors, and companies at or below the threshold, stay with Vietnamese arbitration or the Vietnamese courts, and a dispute with no foreign element is decided under Vietnamese law. For disputes between an investor and a State authority, a foreign investor's dispute goes to Vietnamese arbitration or the Vietnamese courts unless the contract between the investor and the State, or a treaty to which Vietnam is party, provides otherwise; a domestic investor's dispute with the State goes to Vietnamese arbitration or courts. The practical consequence is that the dispute clause in any contract with a State body, a land lease, a PPP contract or a petroleum contract included, and the investor's treaty position must be settled before the investment is made. Arbitration institutions, the courts and enforcement are covered in Chapter 9.

Investor-State treaty claims are coordinated on the Government side under Decision No. 14/2020/QD-TTg: the ministry or province whose measure is challenged leads the defence, the Ministry of Justice advises and represents, and the Ministry of Finance deals with any award. Treaty claims against Vietnam have been few but not unknown; several have settled after the notice of dispute and the cooling-off period, which is where most leverage lies.

Treaty protection

According to UNCTAD's Investment Policy Hub, Vietnam has signed 66 bilateral investment treaties, of which 45 are in force, and around 20 further treaties with investment provisions. Most BITs in force protect against expropriation without prompt, adequate and effective compensation, guarantee fair and equitable treatment and full protection and security, require national and most-favoured-nation treatment, guarantee the free transfer of funds, and provide for investor-State arbitration, usually under UNCITRAL rules or ad hoc. Older treaties (many date from the 1990s) contain broad clauses; newer ones and the regional agreements carve out regulatory measures and tax. The CPTPP (Chapter 9) allows investor-State arbitration for breaches of its protection standards, although Vietnam's side letters with several parties suspend claims under investment authorisations and investment agreements. The ASEAN Comprehensive Investment Agreement gives ASEAN investors investor-State arbitration. RCEP, in force since 1 January 2022, has market-access and treatment commitments but no investor-State mechanism. The EU-Vietnam Investment Protection Agreement, signed in June 2019, replaces the member-state BITs with an investment court system but is not yet in force because ratification by all EU member states is incomplete; until then EU investors rely on their own member state's BIT with Vietnam where one exists. The UK-Vietnam Free Trade Agreement carries trade terms; investment protection for UK investors rests on the UK-Vietnam BIT of 2002. Vietnam is not a party to the ICSID Convention, so claims proceed under UNCITRAL or institutional rules and awards are enforced as foreign arbitral awards under the New York Convention, to which Vietnam acceded in 1995.

Qualifying as a protected investor

Treaty protection is a matter of nationality and, increasingly, of substance. An individual investor is protected by the treaties of his or her state of nationality; a company by the treaties of the state under whose law it is incorporated, and under most modern treaties only if it has real business activities there (a 'denial of benefits' clause lets Vietnam refuse protection to a shell owned by nationals of a third state). Groups therefore commonly hold Vietnamese investments through a jurisdiction that combines a strong BIT with Vietnam, a favourable double taxation agreement and the substance the group already has, Singapore, the Netherlands, Japan and Korea being the usual examples. Two cautions. Vietnam's tax authority applies a substance test to treaty relief as well (Chapter 3), so a holding company must be more than a mailbox for both purposes. And restructuring an investment after a dispute has arisen, or is foreseeable, to bring it under a better treaty is treated by tribunals as an abuse of process; the structure must be in place at the time of the measure complained of. The holding company should be named as the investor in the IRC from the outset, because changing the investor later means adjusting the IRC and may trigger Article 21 registration and the 2% transfer tax.