1. A Party may modify its coverage under this chapter only in exceptional circumstances.
2. Where a Party modifies its coverage under this chapter:
a) The amendment shall be notified to the Secretariat and the other party;
b) Incorporate a change to the relevant annex; and
c) It shall propose to the other party appropriate compensatory adjustments to its coverage in order to maintain a level comparable to that coverage of existing prior to the modification.
3. Notwithstanding paragraphs 1 and 2, a Party may make rectifications of a purely formal or minor amendments to annexes to its schedules 1 to 6 and 9 of Article 15-02 provided that it notifies such rectifications to the other party and to the Secretariat and the other party does not show its objection to the proposed rectification within a period of 30 days. in such cases, compensation need not be proposed.
4. Notwithstanding other provisions of this chapter, a Party may undertake reorganizations of its public sector entities covered by this chapter, including programmes for decentralization of the procurement of such entities or the corresponding government functions cease to be performed by any public sector entity, whether or not covered by this chapter. in such cases, compensation need not be proposed. no party may undertake such reorganizations or programs to avoid the obligations of this chapter.
5. A Party may have recourse to the procedures set out in chapter XX (dispute settlement) if it considers that:
a) The adjustment proposed under subparagraph (c) of paragraph 2 is not adequate to maintain a comparable level of coverage or mutually agreed;
b) Rectification or a minor amendment pursuant to paragraph 3 or a reorganization under paragraph 4 does not comply with the requirements set out in those paragraphs and as a result, require compensation.
Article 15-23. Disposal of Entities
1. Nothing in this chapter shall be construed as preventing a party from an entity dispose covered by this chapter.
2. If, by the public offering of shares of an entity contained in annex 2 of Article 1502, or other methods, the entity is no longer subject to federal or central government control, the parties shall eliminate such entity of that Annex and withdraw the coverage of this chapter, upon notification to the other party and to its secretariat.
3. When a Party objects to the withdrawal on the grounds that the entity remains subject to federal or central government control, that Party may have recourse to the procedures set out in chapter XX (dispute settlement).
Article 15-24. Future Negotiations
1. With a view to achieving further liberalization of their respective public procurement markets, the parties shall commence negotiations as determined by the Commission.
2. In such negotiations, the Parties shall review all aspects of their government procurement for purposes of:
a) Assess the operation of their government procurement systems;
b) Seek to extend the coverage of this chapter through:
i) Other Governmental Corporations, autonomous entities, decentralized bodies or other public enterprises; and
ii) Purchases subject to exceptions legislative or administrative; and
c) Revise the value of the thresholds.
3. Before doing so, the parties may consult with their State or regional and municipal governments with a view to achieving commitments, on a voluntary and reciprocal basis for incorporation into this chapter purchases of entities and companies of State or regional and municipal governments.
Chapter XVI. Investment
Section A. Investment
Article 16-01. Definitions
For purposes of this chapter:
ICSID means the International Centre for Settlement of Investment Disputes;
ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States done at Washington on 18 March 1965;
Inter-American Convention: the Inter-American Convention on International Commercial Arbitration, held in Panama; 30 January 1975
New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards done at New York on 10 June 1958;
Application: the claim by the investor litigants against a party, is an alleged violation of the provisions contained in this chapter;
Enterprise of a Party means an enterprise of a Party and a branch located in the territory of the party who carry out business activities in the same;
Investment, inter alia:
a) An enterprise;
b) Shares of an enterprise;
c) Debt instruments of an enterprise:
i) Where the enterprise is an affiliate of the investor; or
ii) Where the original maturity of the debt instrument is at least three years, but does not include a debt instrument of a State enterprise, regardless of original maturity date;
d) A loan to an enterprise:
i) Where the enterprise is an affiliate of the investor; or
ii) Where the original maturity of the loan is at least three years, but does not include a loan to a state enterprise, regardless of original maturity date;
e) An interest in an enterprise that allow the owner to participate in its income or profits of the enterprise;
f) An interest in an enterprise that grants to the owner the right to participate in the assets of that enterprise in liquidation, provided that it does not result in a duty or a loan excluded under subparagraphs (c) and (d);
g) Real property;
h) Other tangible or intangible property acquired or used for the purpose of obtaining an economic benefit or other business purposes;
i) Benefits arising out of capital or other resources to the developing of an economic activity in the territory of the other party, inter alia, under:
i) Contracts involving the presence of an investor property in the territory of the other party, including concessions, leave, construction and turnkey contracts; or
ii) Contracts where remuneration depends substantially on the production, income or profits of an enterprise; and
j) A loan to a financial institution or a value of debt issued by a financial institution is treated as regulatory capital by the Party in whose territory the financial institution is located;
No investment means:
k) Monetary claims that do not involve the kinds of rights in subparagraphs from the definition of investment under exclusively to:
i) Commercial contracts for the sale of goods or services by a national or enterprise in the territory of a party to an enterprise in the territory of the other party; or
ii) The granting of credit in connection with a commercial transaction, such as trade financing, except a loan covered by the provisions of subparagraph (d);
l) Any other monetary claim that does not involve the kinds of rights in subparagraphs from the definition of investment;
Investment of an investor Party a means of an investment owned by an investor of a party or under the direct or indirect control;
An investor of a Party means a Party or a company of the same or a national of that Party or an enterprise that seeks to perform or performs or has made an investment;
Investor combatant: an investor that makes a claim under section B;
Opposing side: the party against whom the award is made a claim to arbitration under section B;
The opposing side: investor combatant or the opposing side; contending parties: the investor combatant and the opposing side;
UNCITRAL Arbitration Rules means the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) adopted by the United Nations General Assembly on 15 December 1976;
Secretary-General means the Secretary-General of ICSID;
Transfers means transfers and international payments;
A tribunal means an arbitration tribunal established under article 16-21; and
Court of cumulation: an arbitral tribunal established under article 16-27.
Article 16-02. Scope
1. This chapter applies to measures adopted or maintained by a Party relating to:
a) Investors of the other party, in connection with his investment;
b) Investments of investors of the other party in the territory of the Party; and
c) With respect to Article 16-05, all investments in the territory of the party.
2. This chapter does not apply to:
a) Economic activities reserved for each Party in accordance with its legislation in force at the date of signature of this Treaty, which are listarán in the annex to this article within a period not exceeding one year after the Entry into Force of this Treaty;
b) Measures adopted or maintained by a Party relating to Financial Services under chapter XII (Financial Services), to the extent that they are subject to this chapter; or
c) The measures taken by a party to restrict the participation of investments of investors of the other party in its territory for reasons of public order or national security.
Article 16-03. National Treatment
1. Each Party shall provide to the investors of the other party and to investments of investors of the other party treatment no less favourable than that accorded in like circumstances to its own to investors and investments of such investors.
2. Each Party shall accord to investors of the other party, in respect of investments in its territory who suffer losses due to armed conflict or civil strife, to force majeure or unforeseeable circumstances, non-discriminatory treatment with respect to any measure that it adopts or maintains in relation to such losses.
Article 16-04. Most-favoured-nation Treatment
1. Each Party shall provide to the investors of the other party and to investments of investors of the other party treatment no less favourable than that accorded in like circumstances to investors and to investments of investors of the other party or of a country that is not a party, except as provided in paragraph 2.
2. If a party has granted special treatment to investors or investments of such, from a country that is not a Party under agreements to establish a free trade area, customs union, common market, economic or monetary unions or similar institutions and provisions for the avoidance of double taxation, that Party shall not be obliged to accord special treatment to investors or to investments of investors of the other party.
Article 16-05. Performance Requirements
1. Neither party may impose or enforce compliance with the following requirements or commitments with respect to any investment in its territory:
a) Export a given level or percentage of goods or services;
b) To achieve a given level or percentage of domestic content;
c) Purchase or use a or accord preference to produced goods or services provided in its territory or to purchase goods producers or from providers of services in its territory;
d) In any way relate to the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment;
e) In its territory to restrict sales of goods or services that such investment produces or provides such sales by relating in any way to the volume or value of its exports or to generate foreign exchange earnings;
f) Transfer to a person in its territory, technology, knowledge production process or other reserved except when the requirement is imposed by a judicial or administrative tribunal or competent authority to remedy an alleged violation of competition laws or to act in a manner not inconsistent with other provisions of this treaty; or
g) To act as the exclusive supplier of the goods it produces or services it provides to a specific region or world market.
This paragraph does not apply to any requirement other than those specified therein.
2. No party may condition the receipt of an incentive or which shall continue to receive the same, to compliance with the following requirements in connection with any investment in its territory:
a) Purchase or use a or accord preference to goods produced in its territory or to purchase goods from producers in its territory;
b) To achieve a given level or percentage of domestic content;
c) In any way relate to the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment; or
d) In its territory to restrict sales of goods or services that such investment produces or provides such sales by relating in any way to the volume or value of its exports or foreign exchange earnings.
This paragraph does not apply to any requirement other than those specified therein.
3. Nothing in this article shall be construed as preventing a Party from imposing, in relation to any investment in its territory, requirements of geographical location of production units, employment or training of labour or activities in the area of research and development.
Article 16-06. Employment and Business Management.
Limitations on the number or the proportion of foreigners who work in an undertaking or function or administration in accordance with the legislation of each Party shall not prevent or hinder the exercise by an investor of control of their investment.
Article 16-07. Reservations and Exceptions
1. The articles 16-03 16-06 do not apply to any measure contrary to maintain or adopt a party, regardless of the level of government. not later than one year from the entry of this treaty in force of the Parties included those measures in the schedules of the annex to this article. any measure contrary to adopt a party after the Entry into Force of this Treaty shall not be more restrictive than those existing at the time the measure is made.
2. Articles, 16-03 16-04 16-06, and do not apply to:
a) Procurement by a party or a state enterprise; or
b) Subsidies or inputs, including government loans and insurance guarantees granted by a party or a state enterprise, except as provided in paragraph 2 of article 16-03.
3. The provisions of:
a) Subparagraphs (a), (b) and (c) and of paragraph 1 (a) and (b) of paragraph 2 of Article 16-05 do not apply to qualification requirements for goods or services with respect to export promotion programmes;
b) Subparagraphs (b), (c), (f) and (g) and of paragraph 1 (a) and (b) of paragraph 2 of Article 16-05 do not apply to procurement by a party or a state enterprise; and
c) Subparagraphs (a) and (b) of paragraph 2 of Article 16-05 do not apply to requirements imposed by an importing party content to goods to qualify for preferential tariffs or fees.
Article 16-08. Transfers
1. Each Party shall permit all transfers relating to an investment of an investor of the other party in the territory of the Party to be made freely and without delay. such transfers include:
a) Profits, dividends, interests, capital gains, royalties, fees payments for administration, technical assistance and other fees; returns and other amounts in kind derived from the investment;
b) Products derived from the sale or the total or partial liquidation of the investment;
c) Payments made under a contract of which is a party to an investor or its investment;
d) Resulting payments of compensation for expropriation, in accordance with article 16-09; or
e) Payments arising out of a dispute settlement procedure under section B.
2. Each Party shall permit transfers to be made in a freely convertible currency at the market rate of exchange prevailing on the date of transfer to spot transactions in the currency to be transferred without prejudice to article 13-18.
3. No party may require its investors to transfers carried out their profits or income, profits or other amounts derived from investments carried out in the territory of another party, or attributable to them.
4. Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer through the equitable and non-discriminatory application of its laws in the following cases:
a) Bankruptcy or insolvency or the protection of the rights of creditors;
b) Issuance of securities, and trade operations;
c) Criminal or administrative offences;
d) Reports of transfers of currency or other monetary instruments;
e) Ensuring compliance with orders or awards in adjudicatory proceedings; or
f) Establishment of instruments and mechanisms to ensure the payment of taxes on income through such means as the retention of the amount on dividends or other items.
Article 16-09. Expropriation and Compensation
1. No party may expropriate or nationalize directly or indirectly an investment of an investor of the other party in its territory or take any measure equivalent to expropriation or nationalization of such investment (expropriation), except:
a) For a public purpose;
b) On a non-discriminatory basis;
c) In accordance with due process of law; and
d) On payment of compensation in accordance with paragraphs 2 to 4.
2. Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (date of expropriation), and shall not reflect any change in value occurring because the intended expropriation had been known prior to the date of expropriation. valuation criteria shall include tax declared going concern value of tangible property as well as other criteria that are relevant to determine fair market value.
3. The compensation shall be paid without delay and shall be fully realized.
4. The amount paid shall be no less than the amount of compensation to be paid in a freely convertible currency at the international financial market, on the date of expropriation and this had been converted at the currency market rate of exchange prevailing on the date of valuation, plus interest at a commercially reasonable rate established for that currency selected by the Party in accordance with international standards until the date of payment.
Article 16-10. Special Formalities and Information Requirements
1. Nothing in Article 16-03 shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities connected with the establishment of investments by investors of the other party, such as that investments be constituted in accordance with the laws and regulations of the Party provided that such formalities do not materially impair the protections afforded by a Party pursuant to this chapter.
2. Notwithstanding articles 16-03 16-04, and the parties may require an investor of the other party or its investment in its territory to provide routine information concerning that investment or informational solely for statistical purposes. the such Party shall protect any confidential information that is from that disclosure would prejudice the competitive position of the investor or the investment.
Article 16-11. Relationship to other Chapters
In the event of incompatibility between any provision of this chapter and a provision of another, the latter shall prevail to the extent of the inconsistency.
Article 16-12. Denial of Benefits
A Party, subject to prior notification and consultation with the other party, partial or total may deny the benefits of this chapter to an investor of the other party of such an enterprise that is party to such investments and of where the investor Party determines that investors of a non-party own or control the enterprise and that has no substantial business activities in the territory of the party under whose law it is constituted or organized.
Article 16-13. Extraterritorial Application of the Legislation of a Party
1. The parties, in relation to investments of its investors constituted or organized under the laws and regulations of the other party may not exercise jurisdiction, or take any measure which would cause the extraterritorial application of its laws or blocking of trade between the parties, or between a party and a non- party.
2. If any of the Parties to fulfil the provisions of paragraph 1, the Party where the investment is incorporated may, at its discretion, take the measures and bring an action that it considers necessary for the purpose of invalidating the legislation or measure concerned and barriers to trade resulting therefrom.
Article 16-14. Measures Related to the Environment
1. Nothing in this chapter shall be construed as preventing a party from maintaining or implement any measure consistent with this chapter that it considers appropriate to ensure that investment activity in its territory observe environmental laws.
2. The Parties recognize that it is inappropriate to encourage domestic investment by relaxing measures applicable to the health, safety or relating to the environment. accordingly, no party shall commit to eliminate or exempt from the application of such measures of an investor to investment, as a means to induce the establishment, acquisition, expansion or retention of an investment in its territory. if a Party considers that the other party has encouraged an investment in such a manner, it may request consultations with the other party.
Article 16-15. Investment Promotion and Exchange of Information
1. With the intention to significantly increase the participation of reciprocal investment, the Parties shall develop documents for the promotion of investment opportunities and designed for dissemination mechanisms; the parties shall maintain and refined financial mechanisms for investments of a Party in the territory of the other party.
2. The Parties shall make available detailed information on:
a) Investment opportunities in its territory, which may be developed by investors of the other party;