In an award issued on 22 May 2015, an international Arbitral Tribunal constituted under the Arbitration Rules of the International Chamber of Commerce (ICC) and comprised of leading international arbitrators Gary Born (Chairman), David A. R. Williams QC and Yves Derains has unanimously agreed with PetroVietnam’s position in a major tax incentive dispute under a production sharing contract for a Vietnamese offshore oil concession. All claims against PetroVietnam were rejected and the claimants were ordered to reimburse PetroVietnam’s costs of arbitration in full.
The dispute concerned the claimants’ assertion that they were impliedly entitled to benefit from certain tax incentives, which had not been the subject of negotiations and were not stated in the relevant PSC or investment licence. In reaching its decision, the Tribunal upheld PetroVietnam’s position that Vietnamese law provided for a “flexible and nuanced approach consistent with the Vietnamese Government’s, and international oil companies’ reasonable commercial interests”. The Tribunal found that, in the present case, the claimants could not benefit from the tax incentives since they had not been negotiated for and had not been specifically approved by the competent Vietnamese authorities. The Tribunal expressly noted that the contractor had been “treated consistently throughout the relevant time period” and in a manner that reflected the expectations of the original contracting parties.
