Binh Thuan loses case against foreign-owned firm

Earlier this month the People’s Court of central Binh Thuan province ruled that Binh Thuan People’s Committee had to hand over an amended investment certificate to Swiss Village Company, the owner of the Swiss Village 4-star resort in the coastal resort of Mui Ne, without any further delay.

Swiss Village, a joint venture between two Cyprus-headquartered companies Homerinos Management and Invest Port East,  was established in 2009 with a total investment of more than $2 billion.

On October 15, 2012 the company filed with the province’s Department of Planning and Investment to change the legal representation on the investment certificate. This required the provincial authority to issue an amendment to the investors’ investment certificate.

However, the department refused to amend the investment certificate for Swiss Village Company, forcing the company to take legal proceedings.

Binh Thuan Department of Planning and Investment explained to the court it refused to hand over an amended investment certificate because of a conflict between company shareholders. The department claimed the manner of application for the investment certificate was unlawful.

However, the court said the application was legal and the dispute between shareholders did not affect the issuance of an amended investment certificate.

This is the first reported instance in which a foreign investor was successful in a legal dispute with a provincial authority. Swiss Village’s success in seeking assistance from the court to complete an administrative procedure could set a precedent for other foreign investors confronting lengthy licensing applications or unfair treatment. “Investors can also sue executive bodies to international arbitrators in accordance with investment protection agreements,” said Le Net, a partner at law firm LNT & Partners.

Although the Vietnamese government is trying to improve the investment climate to attract foreign investment, many foreign companies still face burdensome administrative procedures when applying for an investment certificate.

EuroCham, which represents more than 700 European companies in Vietnam, has repeatedly complained about foreign investors experiencing long approval times and numerous delays surrounding investment licensing. Excessively complicated procedures requiring lengthy discussions with local authorities were also criticised.

According to EuroCham, the percentage of firms waiting for more than three months to complete all required steps to start a business or license a project has risen significantly. This long approval period has negatively impacted on the country’s investment climate.