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Detailed Outline

I. Story/ Facts:
- On November 4 2004, an American businessman Michael McKenzie, who owns South
Fork Co, received an investment certificate from the Vietnamese Ministry of Planning and
Investment. According to this certificate, Binh Thuan authorities would allocate the 600-hecta
plot to his company for building a tourism complex in Bac Binh District.
- In November 2009, Binh Thuan issued a land granting decision. Besides that
determination, there was a commitment between South Fork and the Peoples Committee of Binh
Thuan Province. Regard of that commitment, after 3 months from the day of issuing land
granting decision, South Fork has to complete investment capital, whereas, the authorities will
revoke this project; after 5 months from that day, if South Fork does not start working on this
project, the Provinces authorities will reclaim the investment license, even if it has completed
the investment capital.
- On March 30 2010, Binh Thuan authorities and South Fork supervised the progress of
investment project. After that, on May 13 2010, once again, Binh Thuan authorities invited South
Fork to supervise the progress of project and this time, South Fork failed to implement the
project in accordance with committed progress
- In 2010, US investor Michael McKenzie filed the case, accusing the government of
violating the term of the US Vietnam Bilateral Trade Agreement (BTA) signed on July 13,
2000, after the Peoples Committee of Binh Thuan Province licensed a Vietnamese business
(Duong Lam Co) to start mining inside a land plot initially reserved for his $50 million resort in
Bac Binh District without his awareness.
- Moreover, in June 2005, South Fork applied for permit to exploit minerals on part of the
land, but, Binh Thuan Province did not agree because they have not been licensed in this field. In
August, September and October 2008, South Fork had 3 trade agreements with Duong Lam. In
those agreements, Duong Lam is allowed to exploit minerals (titan) on 120 hectare of the land.
To respect agreements of them, Binh Thuan Province licensed Duong Lam to exploit. However,
the land which Duong Lam can exploit is outside 300 hectare of the land which is given to South
Fork.
+ In 2008, when South Fork did not have the right to use the land and register for renting
the land, they allowed Duong Lam to exploit titan on the investment land with the price of 20
USD/ton. In fact, they had received approximately 4 billions VND from that company.
* In term of BTA, it also follows the rules of ICSID Convention, which allows foreign investors
to sue Government in an international arbitrator.
II. Analyzing:
1. Issues:
- The plaintiff, US investor Michael McKenzie, sued the Vietnamese Government for
violating the Viet Nam US BTA. He argued that this was against the principles of equal
treatment (chapter IV, article 2, 3) and transparency (chapter IV, article 5) as stated in the BTA.
And he asked for compensation amounting to $ 3.7 billion
- The Government argued that McKenzie was dishonest in the investment process, so he
was not protected by the bilateral trade agreement, while Vietnamese authorities strictly
conformed to international law The international arbitrator has no jurisdiction.
Issue: - Is that Michael McKenzie is protected by that bilateral trade agreement.
2. Rules:
- Chapter IV: Development of investment relations, article 1: Definition
3. Application:
- In fact, Michael McKenzie failed to prove that he is foreign investor following the
definition in the BTA and the investment capital is really investment capital in term of
definition in the BTA.
- Moreover, he made trade agreements with Vietnamese company (Duong Lam) and
allowed they to exploit minerals when he did not have the right to use.
- The requirement for suing of South Fork is no evidence when in fact, they did not
complete the requirement of the commitment between the authorities of Viet Nam and South
Fork.
- Besides, in the progress of dispute settlement, many times Vietnamese authorities invited
Michael McKenzie to meet and explain about the rights and responsibilities of him and his
company but he all rejected.
4. Conclusion:
- The international arbitrator rejected the investors claim in Hong Kong in December,
2013. After 5 months settling disputes. McKenzie was asked to pay all costs Viet Nam incurred
during the proceedings, which is $ 3.7 billion
III. Opinions:
1. Expert:
- According to lawyer Le Hong Phong: In this case, Michael McKenzie sued in the wrong
place. Actually, he is a foreign entity, which does business and invests in Vietnam in the form of
a company, operating follows the rules of Viet Nam, he can sue the Peoples Committee of Binh
Thuan Province in the court of Vietnam as a suitcase of procedure instead of international
arbitrator. Besides, basically, this is a procedure relationship, not a trading relationship, it
should not sue in the international arbitrator, where just received the case involving with trading
and commerce.
2, Group Opinion: This can be a lesson for Viet Nam regarding of letting foreign investors to
invest in Viet Nam