Parliament considers new framework for international investment dispute prevention and resolution

Parliament is debating a draft resolution aimed at moving beyond handling international investment disputes after they arise, toward proactively identifying risks and safeguarding national interests early. On April 11, delegates agreed that establishing a dedicated mechanism is necessary and urgent as Vietnam deepens integration and signs multiple investment and trade agreements, which increases the likelihood of disputes involving foreign investors.

Shift toward early prevention and a coherent response system

The resolution is designed not only to manage disputes, but also to create a more coherent framework for state agencies to identify risks early, issue warnings, and respond promptly. The approach seeks to ensure compliance with international commitments while protecting national interests and maintaining a stable investment environment.

Debate highlights: scope, proactivity, and coordination

In feedback on the draft, Delegate Mai Thi Phuong Hoa (Ninh Binh) said the current scope is too narrow. She noted that disputes may emerge not only when a foreign investor holds more than 50% of capital, but also in cases with lower ownership that still carry significant risks affecting the economy, security, or the investment climate. Excluding such scenarios, she argued, would reduce the proactivity and effectiveness of responses.

Delegate Trinh Xuan An (Dong Nai) said the draft still takes a defensive stance. In the new context, he proposed that the state be allowed not only to respond when sued, but also to sue or counter-sue foreign investors when necessary. He also called for support mechanisms for Vietnamese enterprises indirectly affected by disputes, and for consideration of post-dispute handling, particularly when asset liabilities arise.

He further argued that the resolution should prioritize coordination and clearly designate a lead agency, rather than prescribing overly detailed procedures. Technical matters, he said, could be guided by the Government to preserve flexibility.

Deputy Trinh Xuan An speaking – Photo: VGP/Nhật Bắc.

Risk levels and the need for experienced leadership

Emphasizing risk levels, Delegate Bui Xuan Hai (Hai Phong) said Vietnam has signed dozens of agreements that allow foreign investors to sue the State. He warned that if Vietnam loses such cases, damages could reach billions of USD and seriously affect national credibility. In his view, a structured mechanism is therefore essential.

However, he cautioned against assigning a single ministry/agency or localities to handle all disputes, noting that these units may lack experience and resources for complex international cases. He said the Ministry of Justice has advantages in expertise and staffing and should be considered to lead or to establish a dedicated coordinating body with sufficient capacity.

Justice Minister: from reactive handling to preventive tools

Explaining the draft, Justice Minister Hoang Thanh Tung said the resolution aims to shift from a reactive approach to a proactive one in preventing and handling international investment disputes. He contrasted the draft with the current mechanism under Decision 14/2020, which mainly addresses disputes after they arise.

The draft, he said, adds early preventive tools including risk warnings, investor feedback, and legal improvements. A key new proposal is the establishment of a Center for Prevention and Resolution of International Investment Disputes. The center would provide legal support, develop case-handling strategies, and reduce reliance on foreign lawyers.

The draft also calls for reforms to procedures for hiring lawyers and for incentives to attract experts.

Scope remains focused on investment disputes

Some proposals suggested expanding the resolution to cover other types of international disputes beyond investment. The minister cautioned that each dispute type has distinct characteristics, making it difficult to design a single mechanism. As a result, the draft remains focused on investment disputes, while allowing application in special cases with proper authorization.

Next steps

At the end of the discussion, Vice President of the National Assembly Nguyen Hong Diem urged relevant agencies to continue consolidating opinions and finalize the draft resolution for the National Assembly’s consideration and approval by the end of the session.