(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 14.5 (Market Access) to Article 14.9 (Senior Management and Board of Directors).
2. Articles 14.5 (Market Access) to Article 14.9 (Senior Management and Boards of Directors) shall not apply to any measure that a Party adopts or maintains with respect to sectors, sub-sectors, or activities, as set out by that Party in its Schedule to Annex II (Cross-Border Trade in Services and Investment Non-Conforming Measures)
3. Neither Party shall, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule to Annex II (Cross- Border Trade in Services and Investment Non-Conforming Measures), require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of a covered investment existing at the time the measure becomes effective.
4. (a) Article 14.6 (National Treatment) shall not apply to any measure that falls within an exception to, or derogation from, the obligations which are imposed by:
(i) Article 17.7 (National Treatment - Intellectual Property); or
(ii) Article 3 of the TRIPS Agreement, if the exception or derogation relates to matters not addressed by Chapter 17 (Intellectual Property).
(b) Article 14.7 (Most-Favoured-Nation Treatment) shall not apply to any measure that falls within Article 5 of the TRIPS Agreement, or an exception to, or derogation from, the obligations which are imposed by:
(i) Article 17.7 (National Treatment -Intellectual Property); or
(ii) Article 4 of the TRIPS Agreement.
5. Articles 14.5 (Market Access) to Article 14.9 (Senior Management and Boards of Directors) shall not apply to any measure with respect to government procurement.
6. Articles 14.5 (Market Access) to Article 14.9 (Senior Management and Boards of Directors) shall not apply to a subsidy or grant provided by a Party, including a government supported loan, guarantee, or insurance.
7. Each Party shall endeavour to progressively remove the non-conforming measures.
Article 14.11. Minimum Standard of Treatment (14)
1. Each Party shall accord to covered investments treatment in accordance with applicable customary international law principles, including fair and equitable treatment and full protection and security.
2. For greater certainty, paragraph 1 prescribes the customary international law minimum standard of treatment of aliens as the standard of treatment to be afforded to covered investments. The concepts of "fair and equitable treatment" and "full protection and security" do not require treatment in addition to or beyond that which is required by that standard, and do not create additional substantive rights. The obligations in paragraph 1 provide that:
(a) "fair and equitable treatment" includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world; and
(b) "full protection and security" requires each Party to provide the level of police protection required under customary international law.
3. A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article.
4. For greater certainty, the mere fact that a Party takes or fails to take an action that may be inconsistent with an investor's expectations does not constitute a breach of this Article, even if there is loss or damage to the covered investment as a result.
5. For greater certainty, the mere fact that a subsidy or grant has not been issued, renewed or maintained, or has been modified or reduced, by a Party, does not constitute a breach of this Article, even if there is loss or damage to the covered investment as a result.
Article 14.12. Treatment In Case of Armed Conflict or Civil Strife
2. Notwithstanding paragraph 1, if an investor of a Party, in a situation referred to in paragraph 1, suffers a loss in the territory of the other Party resulting from:
(a) requisitioning of its covered investment or part thereof by the latter's forces or authorities; or
(b) destruction of its covered investment or part thereof by the latter's forces or authorities, which was not required by the necessity of the situation,
the latter Party shall provide the investor restitution, compensation, or both, as appropriate, for that loss.
3. Paragraph 1 shall not apply to existing measures relating to subsidies or grants that would be inconsistent with Article 14.6 (National Treatment) but for Article 14.10 (Non-Conforming Measures).
Article 14.13. Transfers
1. Each Party shall permit all transfers relating to a covered investment to be made freely and without delay into and out of its territory. Those transfers include:
(a) contributions to capital, including the initial contribution;
(b) returns;
(c) proceeds from the sale of all or any part of the covered investment or from the partial or complete liquidation of the covered investment;
(d) payments made under a contract, including a loan agreement;
(e) payments made pursuant to Article 14.12 (Treatment in Case of Armed Conflict or Civil Strife) and Article 14.14 (Expropriation and Compensation);
(f) payments arising out of a dispute; and
(g) earnings and other remuneration of foreign personnel in connection with the covered investment.
2. Each Party shall permit transfers relating to a covered investment to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.
3. Neither Party shall require its investors to transfer, or penalise its investors for failing to transfer, the income, earnings, profits, or other amounts derived from, or attributable to, investments in the territory of the other Party.
4. Notwithstanding paragraphs 1 and 2, each Party may prevent or delay a transfer through the equitable, non-discriminatory, and good faith application of its law relating to:
(a) bankruptcy, insolvency, or the protection of the rights of creditors;
(b) issuing, trading, or dealing in securities, futures, options, or derivatives;
(c) criminal or penal offences;
(d) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
(e) ensuring compliance with orders or judgments in judicial or administrative proceedings; or
(f) social security, public retirement, or compulsory savings schemes.
5. For greater certainty, nothing in this Article shall be construed to prevent a Party from applying its law relating to the imposition of economic sanctions provided that doing so does not constitute a disguised restriction on transfers.
Article 14.14. Expropriation and Compensation (15)
1. Neither Party shall expropriate or nationalise a covered investment either directly or indirectly through measures equivalent to expropriation or nationalisation (expropriation), except:
(a) for a public purpose;
(b) in a non-discriminatory manner;
(c) on payment of prompt, adequate, and effective compensation in accordance with paragraphs 2, 3, and 4; and
(d) in accordance with due process of law.
2. Compensation shall:
(a) be paid without delay;
(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (the date of expropriation);
(c) not reflect any change in value occurring because the intended expropriation had become known earlier; and
(d) be fully realisable and freely transferable.
3. If the fair market value is denominated in a freely usable currency, the compensation paid shall be no less than the fair market value on the date of expropriation, plus interest at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
4. If the fair market value is denominated in a currency that is not freely usable, the compensation paid, converted into the currency of payment at the market rate of exchange prevailing on the date of payment, shall be no less than:
(a) the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date; plus
(b) interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.
5. This Article shall not apply to the issuance of compulsory licences granted in relation to intellectual property rights in accordance with the TRIPS Agreement, or to the revocation, limitation, or creation of intellectual property rights, to the extent that the issuance, revocation, limitation, or creation is consistent with Chapter 17 (Intellectual Property) and the TRIPS Agreement. (16)
6. For greater certainty, a Party's decision not to issue, renew, or maintain a subsidy or grant, or decision to modify or reduce a subsidy or grant:
(a) in the absence of any specific commitment under law or contract to issue, renew, or maintain that subsidy or grant; or
(b) in accordance with any terms or conditions attached to the issuance, renewal, modification, reduction, and maintenance of that subsidy or grant,
standing alone, does not constitute an expropriation.
Article 14.15. Subrogation
If a Party, or any agency, institution, statutory body, or corporation designated by a Party, makes a payment to an investor of the Party under a guarantee, a contract of insurance, or other form of indemnity that it has entered into with respect to a covered investment, the other Party in whose territory the covered investment was made shall recognise the subrogation or transfer of any rights the investor would have possessed under this Chapter with respect to the covered investment but for the subrogation, and the investor shall be precluded from pursuing these rights to the extent of the subrogation.
Article 14.16. Special Formalities and Disclosure of Information
1. Nothing in Article 14.6 (National Treatment) shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with covered investments, such as a requirement that covered investments be legally constituted under the law of a Party, provided that those formalities do not materially impair the protections afforded by a Party to investors of the other Party and covered investments pursuant to this Chapter.
2. Notwithstanding Article 14.6 (National Treatment) and Article 14.7 (Most- Favoured-Nation Treatment), a Party may require an investor of the other Party, or a covered investment, to provide information concerning an investment solely for informational or statistical purposes. Each Party shall protect that information that is confidential from any disclosure that would prejudice the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in comnection with the equitable and good faith application of its law.
Article 14.17. Denial of Benefits
Each Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of that Party and to covered investments of that investor if:
(a) a non-party or a person of a non-party owns or controls the enterprise; and
(b) the denying Party adopts or maintains a measure with respect to the non-party or the person of the non-party which prohibits transactions with the enterprise or which would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to the investments of that enterprise.
Article 14.18. Investment and Environmental, Health, and other Regulatory Objectives
1. Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining, or enforcing, in a manner consistent with this Chapter, any measure that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health, or other regulatory objectives.
2. The Parties recognise the importance of environmental protection, including with respect to climate change mitigation and adaptation, and recall each Party's rights and obligations relating to the protection of the environment provided for in this Agreement.
Article 14.19. Corporate Social Responsibility
The Parties reaffirm the importance of each Party encouraging enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate into their internal policies those internationally recognised standards, guidelines, and principles of corporate social responsibility that have been endorsed or are supported by that Party, such as the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.
Annex 14A. CUSTOMARY INTERNATIONAL LAW
The Parties confirm their shared understanding that “customary international law” generally and as specifically referenced in Article 14.11 (Minimum Standard of Treatment) results from a general and consistent practice of States that they follow from a sense of legal obligation. The customary international law minimum standard of treatment of aliens refers to all customary international law principles that protect the investments of aliens.
Annex 14 B. EXPROPRIATION
The Parties confirm their shared understanding that:
1. An action or a series of actions by a Party cannot constitute an expropriation unless it interferes with a tangible or intangible property right or property interest in an investment.
2. Article 14.14 (Expropriation and Compensation) addresses two situations. The first is direct expropriation, in which an investment is nationalised or otherwise directly expropriated through formal transfer of title or outright seizure.
3. The second situation addressed by Article 14.14 (Expropriation and Compensation) is indirect expropriation, in which an action or series of actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure.
(a) The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by-case, fact-based inquiry that considers, among other factors:
(i) the economic impact of the government action, although the fact that an action or series of actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred;
(ii) the extent to which the government action interferes with distinct, reasonable investment-backed expectations; (17) and
(iii) the character of the government action.
(b) Non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations, except in rare circumstances.
Chapter 15. DIGITAL TRADE
Article 15.1. Definitions
For the Purposes of this Chapter:
“cipher” or “cryptographic algorithm” means a mathematical procedure or formula for combining a key with plaintext to create a ciphertext;
“ciphertext” means data in a form that cannot be easily understood without subsequent decryption;
“commercial information and communication technology product” or “commercial ICT product” means a product that is designed for commercial applications and whose intended function is information processing and communication by electronic means, including transmission and display, or electronic processing applied to determine or record physical phenomena, or to control physical processes;
“computing facilities” means a computer server or storage device for processing or storing information for commercial use;
“covered person” means:
(a) a covered investment as defined in Article 14.2 (Definitions – Investment);
(b) an investor of a Party as defined in Article 14.2 (Definitions – Investment); or
(c) a service supplier of a Party as defined in Article 9.1 (Definitions – Cross-Border Trade in Services),
but does not include a financial service supplier as defined in Article 11.1 (Definitions – Financial Services);
“cryptography” means the principles, means, or methods for the transformation of data in order to conceal or disguise its content, prevent its undetected modification, or prevent its unauthorised use, and is limited to the transformation of information using one or more secret parameters, for example, crypto variables or associated key management;
“digital innovation” means the development, implementation, or adoption of new or improved digital technologies, digital processes, or digital organisational methods;
“electronic authentication” or “e-authentication” means an electronic process or act of verifying that enables the confirmation of:
(a) the electronic identification of a person; or
(b) the origin and integrity of data in electronic form;
“electronic invoicing” or “e-invoicing” means the automated creation, exchange, and processing of requests for payments between suppliers and buyers using a structured digital format;
“electronic seal” means data in electronic form used by an enterprise which is attached to or logically associated with other data in electronic form to ensure the latter’s origin and integrity;
“electronic signature” means data in electronic form which is attached to or logically associated with other data in electronic form that is:
(a) used to identify the signatory in relation to the data in electronic form; and
(b) used by a signatory to agree on the data in electronic form to which it relates; (1)
“electronic transmission” or “transmitted electronically” means a transmission made using an electromagnetic means, including by photonic means;
“emerging technology” means an enabling and innovative technology that has potentially significant application across a wide range of existing and future sectors, including artificial intelligence, distributed ledger technologies, quantum technologies, immersive technologies, sensing technologies, and the Internet of Things;
“encryption” means the conversion of data (plaintext) through the use of a cryptographic algorithm into a ciphertext using the appropriate key;
“key” means a parameter used in conjunction with a cryptographic algorithm that determines its operation in such a way that a person with knowledge of the key can reproduce or reverse the operation, but a person without knowledge of the key cannot;
“personal information” means information, including data, about an identified or identifiable natural person;
“trade administration documents” means the forms and documents that must be completed by or for an importer or exporter in connection with the import or export of goods; and
“unsolicited commercial electronic message” means an electronic message which is sent for commercial or marketing purposes, without the consent of the recipient or despite the explicit rejection of the recipient, directly to a natural person, or enterprise if provided for in a Party’s laws and regulations, via a public telecommunications service. For the purposes of this Agreement, this covers electronic mail, text and multimedia messages (SMS and MMS), and other forms of electronic messages governed by a Party’s laws and regulations. (2)
Article 15.2. Objectives
The Parties recognise the economic growth and opportunities provided by digital trade and the importance of:
(a) adopting frameworks that promote consumer confidence in digital trade;
(b) promoting interoperability of regulatory frameworks to facilitate digital trade;
(c) avoiding unnecessary barriers to the use and development of digital trade; and
(d) digital inclusion, including participation of Maori, women, persons with disabilities, rural populations, low socio-economic groups as well as enterprises, individuals, and other groups that disproportionately face barriers to digital trade.
Article 15.3. Scope and General Provisions
1. This Chapter shall apply to measures adopted or maintained by a Party affecting trade enabled by electronic means.
2. This Chapter shall not apply to:
(a) audio-visual services; or
(b) government procurement, except for Article 15.5 (Conclusion of Contracts by Electronic Means), Article 15.7 (Electronic Authentication), and Article 15.9 (Electronic Invoicing).
3. Article 15.12 (Commercial Information and Communication Technology Products that Use Cryptography), Article 15.14 (Cross-Border Transfer of Information by Electronic Means), and Article 15.15 (Location of Computing Facilities) shall not apply to information held or processed by or on behalf of a Party, or measures related to such information, including measures related to its collection.
4. Article 15.14 (Cross-Border Transfer of Information by Electronic Means) and Article 15.15 (Location of Computing Facilities) shall not apply to aspects of a Party’s measures that do not conform with an obligation in Chapter 9 (Cross-Border Trade in Services) or Chapter 14 (Investment), to the extent that such measures are adopted or maintained in accordance with:
(a) Article 9.8 (Non-Conforming Measures - Cross-Border Trade in Services) or Article 14.10 (Non-Conforming Measures - Investment); or
(b) any exception that is applicable to the obligations in Chapter 9 (Cross- Border Trade in Services) and Chapter 14 (Investment).
Article 15.4. Customs Duties
1. Neither Party shall impose customs duties on electronic transmissions, including content transmitted electronically, between a person of a Party and a person of the other Party.
2. For greater certainty, paragraph 1 shall not preclude a Party from imposing internal taxes, fees, or other charges on electronic transmissions, including content transmitted electronically, provided that those taxes, fees, or charges are imposed in a manner consistent with this Agreement.
3. The Parties shall cooperate in relevant international fora to promote the adoption of commitments by non-parties not to impose customs duties on electronic transmissions.
Article 15.5. Conclusion of Contracts by Electronic Means
1. Except in circumstances otherwise provided for in its law, a Party shall not adopt or maintain measures that:
(a) deprive an electronic contract of legal effect, enforceability, or validity, solely on the ground that the contract has been made by electronic means; or
(b) otherwise create obstacles for the use of electronic contracts.