Article 22.5. Alternative Means of Dispute Resolution
1. The Parties may, at any time, agree to use alternative means of dispute resolution, such as good offices, conciliation or mediation.
2. Alternative means of dispute settlement shall be conducted in accordance with procedures agreed upon by the Parties.
3. Either Party may at any time initiate, suspend or terminate the procedures established under this Article.
4. Alternative means of dispute resolution are confidential and without prejudice to the rights of the Parties in any other proceedings.
Article 22.6. Establishment of an Arbitral Tribunal
1. If a mutually satisfactory solution has not been reached within the time period set out in Article 22.4.8, the complaining Party may request the establishment of an arbitral tribunal.
2. The request for the establishment of an arbitral tribunal shall be made in writing, stating the reasons for the request and identifying therein:
(a) the specific measure or other matter at issue, in accordance with Article 22.2;
(b) the legal basis of the complaint, including the provisions of this Agreement that may be violated and any other relevant provisions, and
(c) the factual basis of the claim;
3. Unless the Parties agree otherwise, the arbitral tribunal shall be constituted and perform its functions in accordance with the provisions of this Chapter and the Rules of Procedure referred to in Article 22.10.
4. No Party may request the establishment of an arbitral tribunal to examine a proposed measure.
Article 22.7. Composition of the Arbitral Tribunal
1. The arbitral tribunal shall consist of three (3) arbitrators.
2. Each Party shall designate, within twenty (20) days from the date of receipt of the request for the establishment of the arbitral tribunal, a sole arbitrator and an alternate arbitrator, who may be of its own nationality, and shall propose up to three (3) candidates to act as chairman of the arbitral tribunal, from among whom one sole arbitrator and one alternate shall be designated.
3. If a Party fails to appoint its arbitrator within the period of time provided for in paragraph 2, the arbitrator shall be appointed by the other Party in accordance with the Rules of Procedure.
4. The Parties shall make every effort to appoint by mutual agreement the chairman of the arbitral tribunal, from among the candidates proposed by the Parties, within twenty (20) days following the expiration of the period provided for in paragraph 2. If the Parties fail to reach an agreement on the chairman of the arbitral tribunal within the above-mentioned period, the chairman and his alternate shall be appointed by lot by the Parties in accordance with the Rules of Procedure.
5. The president of the arbitral tribunal may not be a national of any Party, nor have his or her permanent residence in the territory of any Party, nor be or have been employed by any Party.
6. All arbitrators shall:
(a) have expertise or experience in law, international trade, other matters covered by this Agreement, or the settlement of disputes arising under international trade agreements;
(b) be chosen on the basis of their objectivity, reliability and sound judgment;
(c) be independent of, and not be affiliated with, and not receive instructions from, the Parties; and
(d) comply with the Code of Conduct set forth in Annex 22.2 of the Rules of Conduct for the Implementation of the Understanding on Rules and Procedures Governing the Settlement of Disputes under the WTO Agreement (document WT/DSB/RC/1).
7. The chairman of the arbitral tribunal, in addition to meeting the requirements of paragraph 6, shall be a jurist.
8. Individuals who have participated in the proceedings referred to in Article 22.5 may not be arbitrators in the same dispute.
9. In the event of death, challenge, inability or resignation of any of the arbitrators appointed pursuant to this Article, his or her alternate shall take over. If the alternate is unable to act for the same reasons, a successor shall be selected in accordance with the appointment procedure provided for in paragraphs 2, 3 and 4, which shall apply mutatis mutandis. The successor shall have all the authority and the same duties as the original arbitrator. The work of the arbitral tribunal shall be suspended as from the date of death, challenge, incapacity or resignation of the arbitrator or his or her alternate, and shall resume on the date on which the successor is appointed.
10. Any Party may challenge an arbitrator or a candidate in accordance with the provisions of the Rules of Procedure.
11. The members of the arbitral tribunal, by accepting appointment, shall undertake in writing to act in accordance with the provisions of this Chapter, the Rules of Procedure and this Agreement.
11. The date of establishment of the arbitral tribunal shall be the date on which its chairman is appointed.
Article 22.8. Role of the Arbitral Tribunal
1. The function of the arbitral tribunal is to make an objective assessment of the dispute submitted to it, including an objective assessment of the facts of the case, the applicability of and compliance with this Agreement. It shall also make findings, determinations and recommendations for the resolution of the dispute submitted to it.
2. The arbitral tribunal shall regularly consult with the Parties and afford them adequate opportunity to reach a mutually satisfactory solution.
3. The tribunal shall make its findings, determinations and recommendations on the basis of the provisions of this Agreement, its analysis of the facts of the case, the arguments and evidence presented by the Parties, the provisions of international law applicable in the matter, and in accordance with the rules of treaty interpretation as reflected in Articles 31 and 32 of the Vienna Convention on the Law of Treaties 1969. With respect to any provision of the WTO Agreement that has been incorporated into this Agreement, the arbitral tribunal shall also consider the relevant interpretations contained in the reports the WTO Dispute Settlement Body has adopted the WTO Panel and Appellate Body rules, adopted by the WTO Dispute Settlement Body.
Article 22.9. Terms of Reference of the Arbitral Tribunal
1. The terms of reference of the arbitral tribunal shall be as follows, unless, within fifteen (15) days from the date of dispatch of the request for the establishment of an arbitral tribunal, the Parties agree otherwise:
"Examine, in an objective manner and in the light of the relevant provisions of this Agreement, the matter set out in the request for the establishment of the arbitral tribunal and make findings, determinations and recommendations as provided in Articles 22.12 and 22.13.â
2. If the complaining Party contends in its request for the establishment of an arbitral tribunal that a measure has caused nullification or impairment of benefits within the meaning of Article 22.2(d), the terms of reference shall so state.
3. Where a Party requests that the arbitral tribunal make findings as to the extent of the adverse trade effects that the non-conformity has generated or caused nullification or impairment within the meaning of Article 22.2(d), the terms of reference shall so state.
Article 22.10. Rules of Procedure of the Arbitral Tribunal
1. Unless the Parties agree otherwise, the proceedings of the arbitral tribunal shall be governed by the Rules of Procedure for Arbitral Tribunals contained in Annex 22.1. The arbitral tribunal may, in consultation with the Parties, establish supplementary rules of procedure that do not conflict with the provisions of this Agreement.
2. Unless otherwise agreed by the Parties, the hearings of the arbitral tribunal shall be held in the capital city of the Party complained against.
3. The Rules of Procedure shall guarantee each Party:
(a) the opportunity to submit at least initial and rebuttal written submissions;
(b) the right to at least one hearing before the arbitral tribunal; and
(c) the right to present oral arguments.
(d) The confidential treatment of information established as such by the Parties.
4. The deliberations of the arbitral tribunal shall be confidential, as shall any documents designated as confidential or privileged by a Party. Hearings before the arbitral tribunal shall be closed to the public, unless the Parties agree otherwise.
5. Notwithstanding paragraph 4, a Party may make public statements of its views on the dispute, but shall treat as confidential or privileged information and documents provided by the other Party to the arbitral tribunal that the latter has designated as confidential or privileged.
6. Where a Party has provided documents designated by the other Party as confidential or restricted, that Party shall, within thirty (30) days of the other Party's request, provide a non- confidential or non-restricted summary, which may be made public.
7. At the request of a Party or on its own initiative, and provided that both Parties agree, the arbitral tribunal may obtain information and technical advice from such experts as it deems appropriate. The information or advice obtained shall not bind the arbitral tribunal. The arbitral tribunal shall provide the Parties with a copy of any opinion or advice obtained and an opportunity to comment.
8. After consulting with the Parties, and unless they agree otherwise, the arbitral tribunal shall, within 10 days after its establishment, fix the timetable for its work, taking into account the provisions of Article 22.13.
9. The arbitral tribunal shall seek to reach its decisions by consensus, including its report. If this is not possible, it may adopt them by majority vote.
10. Written submissions, oral arguments or presentations at the hearing, the report of the arbitral tribunal, as well as other written or oral communications between the Parties and the arbitral tribunal relating to the arbitral tribunal proceedings, shall be conducted in Spanish, unless the Parties agree otherwise.
11. The expenses associated with the proceedings shall be borne equally by the Parties, unless the arbitral tribunal determines otherwise in view of the particular circumstances of the case.
12. Each Party shall bear the expenses and remuneration of the arbitrator appointed by it in accordance with Article 22.7. The expenses and remuneration of the presiding arbitrator shall be borne in equal shares.
Article 22.11. Suspension or Termination of the Proceeding
1. The Parties may agree that the arbitral tribunal may suspend its work at any time by a joint communication addressed to the chairman of the arbitral tribunal for a period not exceeding twelve (12) months from the date of such communication.
2. The arbitral tribunal shall resume its work if the Parties so agree within the twelve (12) month period referred to in paragraph 1.
3. If the work of the arbitral tribunal is suspended for more than twelve (12) months, the terms of reference of the arbitral tribunal shall lapse, unless the Parties agree otherwise. If the terms of reference of the arbitral tribunal lapse and the Parties have not reached an agreement on the settlement of the dispute, nothing in this Article shall prevent a Party from initiating new proceedings concerning the same subject matter.
4. At any stage of the proceedings, prior to the notification of the report, the Parties may agree to terminate the proceedings as a result of a mutually satisfactory resolution of the dispute. To this effect, the Parties shall send a joint communication addressed to the president of the arbitral tribunal.
Article 22.12. Preliminary Report
1. The report of the arbitral tribunal shall be drawn up in the absence of the Parties and shall be based on the relevant provisions of this Agreement, the submissions and arguments of the Parties, and any information and technical advice that the arbitral tribunal has obtained pursuant to Article 22.10.7.
2. Unless the Parties agree otherwise, within ninety (90) days of its establishment, or sixty (60) days in cases of urgency, the arbitral tribunal shall submit a preliminary report to the Parties.
3. In exceptional cases, where the arbitral tribunal considers that it cannot issue its preliminary report within ninety (90) days, or within sixty (60) days in cases of urgency, it shall inform the Parties in writing of the reasons for the delay and include an estimate of the period of time within which it will issue its report. In no case shall the period of delay exceed an additional thirty (30) days, unless otherwise agreed by the Parties.
4. The preliminary report shall contain: (a) a summary of the submissions and oral arguments of the Parties (b) the findings of fact and law; (c) a determination on the merits as to whether or not a Party is in breach of its obligations under this Agreement, or whether that Party's measure causes nullification or impairment within the meaning of Article 22.2(d), or any other determination requested in the terms of reference, and
(d) its recommendations, where applicable, that the Party complained against take action in accordance with this Agreement.
5. A Party may submit written observations on the preliminary report to the arbitral tribunal within fifteen (15) days after the notification of the preliminary report or any other time limit set by the arbitral tribunal.
6. After considering the written observations on the preliminary report, the arbitral tribunal may reconsider its report and conduct any further examination it deems appropriate.
Article 22.13. Final Report
1. The final report of the arbitral tribunal shall be final, unappealable and binding on the Parties upon receipt of the respective notification. It shall be made in accordance with Article 22.10.9, shall be reasoned, and shall be signed by the chairman of the arbitral tribunal and by the other arbitrators.
2. The arbitral tribunal shall notify the Parties of the final report within thirty (30) days of the date of the arbitration. (30) days after notification of the preliminary report, unless the Parties agree otherwise.
3. Unless otherwise agreed by the Parties, either Party may release the final report after thirty (30) days of being notified, subject to the protection of confidential information.
4. The findings, determinations and recommendations of the arbitral tribunal may not add to or diminish the rights and obligations of the Parties under this Agreement.
5. No arbitral tribunal may, either in its preliminary report or in its final report, disclose the identity of the arbitrators who are associated with the majority or minority vote.
Article 22.14. Implementation of the Final Report
1. Upon notification of the final report of the arbitral tribunal, the Parties shall agree on the implementation of the final report, in accordance with the findings, conclusions and recommendations of the arbitral tribunal.
2. Either Party may, within fifteen (15) days from the date of notification of the final report, request clarification of the final report. The arbitral tribunal shall rule on the request within fifteen (15) days of its submission. The period of time from the request to the decision of the arbitral tribunal shall not be counted for the purposes of the time limit referred to in Article 22.15.
3. If in its final report the arbitral tribunal determines that the measure at issue is inconsistent with the obligations of this Agreement, or that the measure causes nullification or impairment under Article 22.2(d), the Party complained against shall eliminate the non- conformity or the nullification or impairment, wherever possible.
4. Unless the Parties agree otherwise, the Party complained against shall have a reasonable period of time to remove the non-conformity or nullification or impairment if it is not practicable to do so immediately.
5. The Parties shall endeavour to agree on the reasonable period of time. If the Parties are unable to agree within forty-five (45) days after the notification of the final report, any Party may, no later than sixty (60) days after the notification of the final report, refer the request to the presiding arbitrator to determine the reasonable period of time.
6. The chairman of the arbitral tribunal shall take into consideration that the reasonable period of time shall not exceed six (6) months from the notification of the final report pursuant to Article 22.13. However, this period may be shorter or longer, depending on the particular circumstances of the dispute.
7. The presiding arbitrator shall determine the reasonable period of time not later than ninety (90) days after the date of receipt of the request pursuant to paragraph 5.
Article 22.15. Compensation and Suspension of Benefits
1. If:
(a) the Party complained against has notified the complaining Party that it does not intend to eliminate the nonconformity or the nullification or impairment, or
(b) after the expiration of the reasonable period of time established pursuant to Article 22.14.4, there is disagreement as to whether the Party complained against has eliminated the non-conformity or the nullification or impairment,
the Parties shall, at the request of the complaining Party, enter into negotiations with a view to establishing mutually acceptable compensation.
2. The compensation shall be temporary and in no case preferable to the implementation of the arbitral tribunal's decision to bring the measure into conformity with this Agreement. The compensation shall only apply until the measure found to be inconsistent with this Agreement has been removed, or the Parties have reached a mutually satisfactory solution.
3. If the Parties:
(a) do not agree to compensation in accordance with paragraph 1, within thirty (30) days after the filing of the request for compensation by the complaining Party, or
(b) have reached an agreement on compensation pursuant to this Article and the complaining Party considers that the Party complained against has failed to comply with the terms of the agreement reached,
the complaining Party may communicate to the Party complained against, in writing, its decision to suspend temporarily benefits and other equivalent obligations under this Agreement in order to obtain compliance with the report.
4. The communication shall specify:
(a) the date on which the suspension is to commence, in accordance with paragraph 6 .
(b) the level of benefits or other equivalent obligations it proposes to suspend, and
(c) the limits within which the suspension will apply including which benefits or obligations under this Agreement will be suspended.
5. Suspension of benefits and other obligations shall be temporary, and may be applied only until such time as the nonconformity or nullification or impairment has been eliminated. The level of suspension shall be equivalent to the level of nullification or impairment.
6. The claiming Party may initiate the suspension of benefits thirty (30) days after the later of the date on which:
(a) make the communication in accordance with paragraph 3, or
(b) the arbitral tribunal notifies the final report pursuant to Article 22.16.
7. In considering which benefits to suspend pursuant to this Article, the complaining Party shall apply the following principles and procedures:
(a) shall first seek to suspend benefits or other obligations in the same sector or sectors affected by the measure found by the arbitral tribunal to be inconsistent with this Agreement or to cause nullification or impairment under Article 22.2(d), and
(b) if it considers that it is not practicable or effective to suspend benefits or other obligations in the same sector or sectors, it may suspend benefits or other obligations in other sectors. The communication announcing such a decision shall state the reasons on which the decision is based.
Article 22.16. Review of Compliance and Suspension of Benefits
1. If the Party complained against:
(a) considers that it has eliminated the non-conformity or nullification or impairment found by the arbitral tribunal, or
(b) considers that the level of benefits or other obligations that the complaining Party proposes to suspend is excessive, or the complaining Party has failed to observe the principles and procedures of Article 22.15.7,
may, within thirty (30) days after the date of the communication by the complaining Party under Article 22.15.4, request that the arbitral tribunal established under Article 22.6 be reconvened to determine either (a) or (b).
2. The requesting Party shall indicate the specific measures or issues in dispute and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly.
3. The arbitral tribunal shall be reconstituted within thirty (30) days of receipt of the request and shall notify the Parties of its preliminary report within thirty (30) days thereafter:
(a) forty-five (45) days after its reconstitution to consider the application under paragraph 1(a) or 1(b), or
(b) 60 days after its reconstitution to consider the application under paragraphs 1(a) and 1(b).
4. The Parties may submit observations on the preliminary report pursuant to Article 22.12.7. The arbitral tribunal may reconsider the preliminary report pursuant to Article 22.12.8.
5. The arbitral tribunal shall notify its final report to the Parties within:
(a) within fifteen (15) days after the filing of the preliminary report, in cases where it considers the request under paragraph 1(a) or 1(b), or
(b) within twenty (20) days of the submission of the preliminary report, in cases where it considers the request under paragraphs 1(a) and 1(b).
6. If any of the original arbitrators is unable to be a member of the arbitral tribunal, the provisions of Article 22.7 shall apply.
7. If the arbitral tribunal determines that the level of benefits or other obligations proposed to be suspended is excessive, or that the complaining Party has failed to observe the principles and procedures of Article 22.15.7, it shall establish the manner in which the complaining Party may suspend benefits or other obligations. The complaining Party may only suspend benefits or other obligations in a manner consistent with the arbitral tribunal's determination.
8. If the arbitral tribunal determines that the Party complained against has eliminated the non-conformity or the nullification or impairment, the complaining Party may not suspend benefits or other obligations.
Article 22.17. Emergency Cases
1. In cases of urgency, the time limits set out in this Chapter shall be reduced by half, unless otherwise provided.
2. For the purposes of this Chapter, cases of urgency shall be understood to include those involving perishable goods.
Annex 22.1. Rules of Procedure of Arbitral Tribunals
Application
1. These Rules of Procedure for Arbitral Tribunals (hereinafter referred to as the "Rules") are established pursuant to Article 22.10.
2. Unless the Parties agree otherwise, these Rules shall apply to the arbitration proceedings referred to in this Chapter.
Definitions
3. For the purposes of these Rules:
non-business day means any Saturday, Sunday, public holiday or any other day established by a Party as a non-business day and notified as such under Rule 14;
document means any submission or writing, in paper or electronic form, filed or delivered in the course of arbitral proceedings;
Contact Unit means the office that each Party designates pursuant to Rule 62 to provide administrative support to an arbitral tribunal;
Administrative Unit means the designated Unit of the responding party charged with performing the functions referred to in Rule 63;
Party complained against means the Party against which a claim is made and requests the establishment of an arbitral tribunal under Article 22.6;
Claimant Party means a Party that makes a claim and files a request for the establishment of an arbitral tribunal under Article 22.6;
representative of a Party means the person appointed by that Party to act on its behalf in the arbitration proceeding;
arbitral tribunal means an arbitral tribunal established in accordance with Article 22.6.
Terms of Reference
4. Within fifteen (15) days from the date of delivery of the request for the establishment of the arbitral tribunal, the Parties may agree on terms of reference other than those set forth in Article 22.9, which shall be communicated to the Administrative Unit within that period.
5. The Administrative Unit shall inform the arbitral tribunal and the Parties of the agreed terms of reference within two (2) days of the date of acceptance of the last arbitrator appointed.
Submission and delivery of documents
6. The Parties, through their Contact Units, or the arbitral tribunal, shall deliver any documents to the Administrative Unit, which shall forward them to the arbitral tribunal and the Parties' Contact Units.
7. No document shall be deemed to be delivered to the arbitral tribunal or to the Parties unless it is delivered in accordance with the foregoing Rule.
8. Any document shall be delivered to the Administrative Unit by any physical or electronic means of transmission that provides a record of the sending or receipt of the document. In the case of delivery of a physical document, an original and copies for each arbitrator and for the other Party shall be submitted to the Administrative Unit. The Administrative Unit shall acknowledge receipt and deliver such document, by the most expeditious means possible, to the arbitral tribunal and to the Contact Unit of the other Party.
9. Minor errors of form contained in any document may only be corrected by the Parties by delivery of a document clearly indicating such errors and the corresponding rectification, within seven (7) days from the date of delivery of the document containing such errors. Such corrections shall not affect the time limits set forth in the timetable for the arbitration proceedings referred to in Rule 10.
10. No later than ten (10) days after the date of acceptance of the last arbitrator appointed, the arbitral tribunal, in consultation with the Parties, shall establish a schedule of work containing the maximum time limits and dates by which submissions of documents and hearings shall be made. The timetable shall allow sufficient time for the Parties to complete all stages of the proceedings. The arbitral tribunal may modify the timetable, after consultation with the Parties, and shall notify the Parties, by the most expeditious means possible, of any such modification.
11. For the purpose of drawing up the timetable referred to in Rule 10, the arbitral tribunal shall take into account the following minimum periods of time:
(a) two (2) days after the establishment of the schedule of work, for the complaining Party to deliver its initial written submission;
(b) twenty-eight (28) days from the date of delivery of the initial written submission for the Party complained against to deliver its response.
12. Any delivery of documents to a Contact Unit under these Rules shall be made during its normal business hours.