Title

AGREEMENT BETWEEN THE GOVERNMENT OF THE KINGDOM OF BAHRAlN AND THE GOVERNMENT OF HUNGARY FOR THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS

Preamble

The Government of the Kingdom of Bahrain and the Government of Hungary (hereinafter individually referred to as "Contracting Party" and together as "Contracting Parties"),

Desiring to intensify economic cooperation to the mutual benefit of both Contracting Parties,

Intending to create and maintain favourable conditions for investments of investors of one Contracting Party in the territory of the other Contracting Party, and

Seeking to ensure that investments are consistent with the protection of health, safety and the environment, labour rights, and corporate social responsibility;

Desiring to promote investments that contribute to the sustainable development of the Contracting Patiies;

Aiming to secure an overall balance of rights and obligations between investors and the host state;

Being conscious that the promotion and reciprocal protection of investments, according to the present Agreement, stimulates the business environment of the Contracting Parties,

Have agreed as follows:

Body

Article 1. Definitions

For the purposes of this Agreement:

1. The term "investment" means every kind of asset owned or controlled, directly or indirectly, by an investor of a Contracting Party, that is made in the territory of the other Contracting Party in accordance with the applicable laws and regulations of the other Contracting Party, and that has the characteristics of an investment including such characteristics as a certain duration, the commitment of capital or other resources, the assumption of risk or the expectation of gain or profit. Forms that an investment may take include:

a. an enterprise;

b. shares, stocks and other forms of equity participation in an enterprise;

c. bonds, debentures, loans and other financial instruments of an enterprise;

d. claims to money or to any performance under contract having an economic value associated with an investment;

e. rights under contracts, including turnkey, construction, management, production or revenue-sharing contracts;

f. intellectual property rights, as referred to in the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex IC to the Marrakesh Agreement establishing the World Trade Organisation ("TRIPS Agreement") and similar international agreements to which both Contracting Parties are parties, as well as intellectual and industrial property rights, including copyrights, trademarks, patents, designs, rights of breeders, technical processes, know-how, trade secrets, geographical indications, trade names and goodwill associated with an investment;

g. any right conferred by law or under contract and any licenses and permits pursuant to law, including the concessions to search for, extract, cultivate or exploit natural resources;

h. reinvested returns;

i. any other movable and immovable, tangible or intangible property, as well as any other rights in rem such as mortgages, liens, pledges and similar rights.

Any alteration of the form in which assets are invested or reinvested shall not affect their qualification as investments, provided that the form taken by the investment or reinvestment maintains its compliance with the definition of investment.

2. For greater certainty:

a. "claims to money" does not include claims to money that arise solely from commercial transactions for the sale of goods or services by a natural person or an enterprise in the territory of a Contracting Party to a natural person or an enterprise in the territory of the other Contracting Party, or the extension of credit in relation to such transactions; and 

b. an order or judgment entered in a judicial or administrative action or an arbitral award shall not in itself constitute an investment.

3. The term "enterprise" shall include a branch of an enterprise, which is a branch located in the territory of either Contracting Party and carrying out business activities therein. A branch of an enterprise of a non-Contracting Party, which is located in the territory of either Contracting Party, shall not be deemed an investment of that Contracting Party.

4. The term "investor" shall mean any natural or legal person of a Contracting Party that has made an investment in the territory of the other Contracting Party.

a. The term "natural person" shall mean any individual having the citizenship of either Contracting Party in accordance with its laws.

b. The term "legal person" shall mean with respect to either Contracting Party, any legal entity incorporated or constituted in accordance with its laws, having its central administration or principal place of business in the territory of a Contracting Party, that has made an investment in the territory of the other Contracting Party.

5. The term "returns" shall mean any amounts yielded by or derived from an investment or reinvestment, including profits, dividends, capital gains, royalties, income from debt claims. revenues from intellectual property rights, returns in kind and other lawful income.

6. The term "territory" shall mean:

a. in the case of Bahrain, the territory, as well as the maritime areas, seabed, subsoil and airspace over which the Kingdom of Bahrain exercises, in conformity with international law, sovereign rights and jurisdiction;

b. in the case of Hungary, the territory over which Hungary exercises, in conformity with international law, sovereignty, sovereign rights or jurisdiction.

7. The term "freely convertible currency" means a currency that can be freely exchanged against currencies that are widely traded in international foreign exchange markets and widely used in international transactions.

Article 2. Treatment of Investors and Investments

1. Each Contracting Party shall accord in its territory to investments and to investors of the other Contracting Party with respect to their investments fair and equitable treatment and full protection and security in accordance with paragraphs 2 to 6.

2. A Contracting Party breaches the obligation of fair and equitable treatment referenced in paragraph 1 through a measure or a series of measures which constitute:

a. denial of justice in criminal, civil or administrative proceedings; or

b. fundamental breach of due process, including a fundamental breach of transparency in judicial and administrative proceedings; or

c. manifest arbitrariness; or

d. targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief; or

e. harassment, coercion, abuse of power or similar bad faith conduct.

3. When determining a breach of paragraph 2 of this Article, a tribunal may take into account whether a Contracting Party made a specific representation to an investor to induce an investment, that created a legitimate expectation, upon which the investor relied in deciding to make or maintain the investment, but that the Contracting Party subsequently frustrated.

4. For greater certainty, "full protection and security" refers to the Contracting Party's obligations to ensure the physical security of investors and investments.

5. For greater certainty, breach of another provision of this Agreement or of any other international agreement does not establish a breach of this Article.

6. The fact that a measure breaches domestic law does not, in and of itself, establish a breach of this Article; a Tribunal must consider whether a Contracting Party has acted inconsistently with the obligations in paragraph 2.

Article 3. Investment and Regulatory Measures

1. The Contracting Parties reaffirm their right to regulate with in their respective territories to achieve legitimate policy objectives, such as the protection of public health, social services, public education, safety, environment including climate change, public morals, social or consumer protection, privacy and data protection, or promotion and protection of cultural diversity.

2. For greater certainty, the provisions of this Agreement shall not be interpreted as a commitment from a Contracting Party that it will not change the legal and regulatory framework, including in a manner that may negatively affect the operation of investments or the investor's expectations of profits.

3. For greater certainty and subject to paragraph 4 of this Article, a Contracting Party's decision not to issue, renew or maintain a subsidy a. in the absence of any specific commitment under law or contract to issue, renew or maintain that subsidy; or b. in accordance with terms or conditions attached to the issuance, renewal or maintenance of the subsidy, shall not constitute a breach of the provisions of this Agreement.

4. For greater certainty, nothing in this Agreement shall be construed as preventing a Contracting Party from discontinuing the granting of a subsidy or requesting its reimbursement, where such action has been ordered by the competent authorities, or as requiring that Contracting Party to compensate the investor therefor.

Article 4. National and Most-Favoured-Nation Treatment

1. Each Contracting Party shall in its territory accord to investors of the other Contracting Party and their investments treatment no less favourable than that it accords, in like situations to its own investors and their investments with respect to the conduct, operation, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

2. Each Contracting Party shall in its territory accord to investors of the other Contracting Party and their investments treatment no less favourable than that it accords, in like situations, to investors of a third country and to their investments with respect to the operation, conduct, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

3. For greater certainty, the "treatment" referred to in paragraph 2 does not include procedures for the resolution of investment disputes between investors and states provided for in other international agreements.

4. For greater certainty, substantive obligations in other international agreements concluded by a Contracting Party with a third country do not in themselves constitute "treatment", and thus cannot give rise to a breach of this Article, absent measures adopted or maintained by a Contracting Party pursuant to those obligations.

5. The National Treatment and Most-Favoured-Nation Treatment provisions of this Agreement shall not apply to advantages accorded by a Contracting Party pursuant to its obligations as a member of a customs, economic, or monetary union, a common market or a free trade area.

6. The Contracting Parties understand the obligations of a Contracting Party as a member of a customs, economic, or monetary union, a common market or a free trade area to include obligations arising out of an international agreement concluded by or reciprocity anangement of that customs, economic, or monetary union, common market or free trade area.

7. The provisions of this Article shall not be construed so as to oblige a Contracting Party to extend to the investors of the other Contracting Patty, or to the investments or returns of investments of such investors the benefit of any treatment, preference or privilege, which may be extended by the former Contracting Party by virtue of:

a. any forms of multilateral agreements on investments to which either of the Contracting Parties is or may become a party;

b. any international agreement or arrangement for the avoidance of double taxation or other international agreement relating wholly or mainly to taxation.

Article 5. Compensation for Losses

1. Investors of a Contracting Party whose investments suffer losses owing to war or other armed conflict, revolution, a state of national emergency, revolt, insurrection or riot in the territory of the other Contracting Party shall be accorded by that Contracting Party, with respect to restitution, indemnification, compensation or other form of settlement, treatment no less favourable than that accorded by that Contracting Party to its own investors or to the investors of any non-Contracting Party, whichever is more favourable to the investor.

2. Without prejudice to paragraph l of this Article, investors of a Contracting Party who, in any of the situations referred to in that paragraph, suffer losses in the territory of the other Contracting Party shall be accorded prompt, adequate and effective restitution or compensation by the other Contracting Party, if these losses result from: a. requisitioning of their investment or a part thereof by the latter's armed forces or authorities; or b. destruction of their investment or a part thereof by the latter's armed forces or authorities, which was not required by the necessity of the situation.

3. The amount of such compensation shall be determined in accordance with the provisions of paragraph 2 of Article 6 of this Agreement, from the date of requisitioning or destruction unti I the date of actual payment.

Article 6. Expropriation

1. Neither Contracting Party shall nationalise or expropriate an investment either directly or indirectly through measures having an effect equivalent to nationalisation or expropriation (hereinafter refetTed to as "expropriation") except:

a. for a public purpose;

b. under due process of law;

c. in a non-discriminatory manner; and d. against payment of prompt, adequate and effective compensation.

2. The compensation referred to in paragraph 1 of this Article shall amount to the fair market value of the investment expropriated at the time immediately before the expropriation or impending expropriation became publicly known in such a way as to affect the value of the investment or when the expropriation took place, whichever is earlier (hereinafter referred to as the "valuation date"). Valuation criteria shall be based on internationally recognised principles and norms to determine fair market value. Such fair market value shall at the request of the investor be expressed in a freely convertible currency on the basis of the market rate of exchange existing for that currency on the valuation date.

3. The compensation shall include a daily rate of compensation at a commercially reasonable rate from the date of expropriation to the date of actual payment and shall be made without delay, be effectively realizable and be freely transferable in a freely convertible currency.

4. The investor affected shall have a right, under the law of the expropriating Contracting Party, to prompt review of its claim and of the valuation of its investment, by a judicial or other independent authority of that Contracting Party, in accordance with the principles set out in this Article.

5. Expropriation may be either direct or indirect:

a. direct expropriation occurs when an investment is nationalised or otherwise directly expropriated through formal transfer of title or outright seizure.

b. indirect expropriation results from a measure or series of measures of a Contracting Party having an equivalent effect to direct expropriation, in that it substantially deprives the investor of the fundamental attributes of property in its investment, including the right to use, enjoy and dispose of its investment, without formal transfer of title or outright seizure.

6. The determination of whether a measure or series of measures by a Contracting Party, in a given specific situation, constitutes an indirect expropriation requires a case-by-case, fact-based inquiry that considers, among other factors:

a. the economic impact of the measure or series of measures, although the sole fact that a measure or series of a measure of a Contracting Party has an adverse effect on the economic value of an investment does not establish that an indirect expropriation has occurred,

b. the duration of the measure or series of measures by a Contracting Party,

c. the character of the measure or series of measures, notably their object and content.

7. For greater certainty, except in the circumstance when the impact of a measure or series of measures is so severe in light of its purpose that it appears manifestly excessive, non-discriminatory measures by a Contracting Party that are designed and applied to protect legitimate policy objectives, such as the protection of public health, social services, public education, safety, environment including climate change, public morals, social or consumer protection, privacy and data protection, or the promotion and protection of cultural diversity do not constitute indirect expropriations.

8. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, to the extent that such issuance is consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1 C to the TRIPS Agreement.

Article 7. Transfers

1. The Contracting Parties shall permit all transfers related to investments covered by this Agreement. The transfers shall be made in a freely convertible currency at the market rate of exchange prevailing on the date of transfer without any restriction and undue delay. Such transfers shall include in particular, though not exclusively:

a. contributions to capital to maintain, develop or increase the investment;

b. profits, dividends, capital gains, income from debt-claims, royalty payments, management fees, technical assistance and other fees or returns derived from the investment;

c. proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;

d. payments made under a contract entered into by the investor, or its investment, including payments made pursuant to a loan agreement;

e. earnings and other remuneration of personnel engaged from abroad and working in connection with an investment;

f. payments made pursuant to Articles 5 and 6 of this Agreement;

g. payments of damages pursuant to an award issued by a tribunal under Article 12 of this Agreement.

2. Neither Contracting Party may 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, their covered investments in the territory of the other Contracting Party.

3. Nothing in this Article shall be construed to prevent a Contracting Party from applying in an equitable and non-discriminatory manner and not in a way that would constitute a disguised restriction on trade and investment, its laws and regulations relating to:

a. bankruptcy, insolvency, bank recovery and resolution, or the protection of the rights of creditors;

b. issuing, trading, or dealing in financial instruments;

c. financial reporting or record keeping of transfers where necessary to assist law enforcement or financial regulatory authorities;

d. criminal or penal offenses, deceptive or fraudulent practices;

e. ensuring compliance with orders or judgments in judicial or administrative proceedings; and

f. social security, public retirement or compulsory savings schemes.

4. For the purpose of this Agreement, exchange rates shall be the rate published (in accordance with the laws and regulations of the Contracting Party, which has admitted the investment) by the financial institution effecting the transfer unless otherwise agreed. Should such rate not exist, the official rate has to be applied unless otherwise agreed.

Article 8. Subrogation

1. If a Contracting Party or its designated agency makes a payment to its own investors under a guarantee or insurance it has accorded in respect of an investment in the territory of the other Contracting Patty, the latter Contracting Party shall recognise: a. the assignment, whether under the law or pursuant to a legal transaction in that country, of any right or claim by the investor to the former Contracting Party or its designated agency, as well as, b. that the former Contracting Party or its designated agency is entitled by virtue of subrogation to exercise the rights and enforce the claims of that investor and shall assume the obligations related to the investment.

2. Such rights may be exercised by the Contracting Party or an agency thereof, or by the investor if the Contracting Party or an agency thereof so authorises. The investor may not pursue these rights to the extent of the subrogation.

3. The subrogated rights or claims shall not exceed the original rights or claims of the investor.

Article 9. Corporate Social Responsibility

1. The Contracting Parties recognise the important contribution of Corporate Social Responsibility to strengthening the positive role of investment in sustainable growth, and in this way contributing to the objectives of this Agreement.

2. The Contracting Parties shall encourage the uptake ofresponsible business conduct by companies and investors in line with internationally recognised principles and guidelines of Corporate Social Responsibility.

3. The Contracting Parties shall endeavour to exchange information, as appropriate, regarding cooperation on promoting responsible business practices.

Article 10. Investment and Environment

1. The Contracting Parties recognise the right of each Contracting Party to determine its sustainable development policies and priorities, to establish its own standards of environmental protection, and to accordingly adopt or modify its environmental laws and policies, consistently with its national priorities and internationally recognised standards, and agreements on environmental protection. Such levels, laws and policies shall be consistent with each Party's commitments to internationally recognised standards and agreements on environmental protection. 

2. The Contracting Parties shall not weaken or reduce the levels of protection afforded in their domestic environmental laws in order to encourage investment. A Contracting Party shall not waive or otherwise derogate from, or offer to waive or derogate from, such laws in a manner that weakens or reduces the protection afforded in these laws as an encouragement for an investment in its territory.

3. The Contracting Parties shall: a. effectively implement the United Nations Framework Convention on Climate Change and the Paris Agreement adopted thereunder;

b. promote investment of relevance for climate change mitigation and adaptation; including but not limited to investment concerning climate friendly goods and services, such as renewable energy, low-carbon technologies and energy efficient products and services, and by adopting policy frameworks conducive to deployment of climate-friendly technologies; and

c. cooperate with each other on investment-related aspects of climate change policies and measures bilaterally and in international fora, to the extent possible. while recognising the importance of enhancing the contribution of investment to climate change mitigation and adaptation.

Article 11. Investment and Labour

1. The Contracting Parties recognise the right of each Contracting Party to determine its sustainable development policies and priorities, to establish its own labour standards, and to adopt or modify its labour laws and policies. Such levels, laws and policies shall be consistent with each Party's commitments to internationally recognised labour standards and agreements.

2. The Contracting Parties shall not weaken or reduce the levels of protection afforded in their domestic labour legislation in order to encourage investment.

3. A Contracting Party shall not waive or otherwise derogate from. or offer to waive or derogate from, such legislation in a manner that weakens or reduces the protection afforded in this legislation as an encouragement for an investment in its territory.

4. Each Contracting Party is committed to effectively implement the conventions it has ratified in the field of labour protection. 

Article 12. Settlement of Investment Disputes between a Contracting Party and an Investor of the other Contracting Party

1. Any dispute which may arise under this agreement between an investor of one Contracting Party and the other Contracting Party in connection with an investment in the territory of that other Contracting Party shall, if possible be settled amicably and be subject to negotiations between the parties in dispute.

2. The negotiations start on the date when the disputing investor of one Contracting Party requests negotiations in written notification from the other Contracting Party. In order to facilitate the amicable settlement of the dispute the written notice shall specify the issues, the factual basis of the dispute, the observations of the disputing investor (including any supporting documents) and their presumed legal basis. Unless otherwise agreed, at least one consultation shall be held within 90 days from the date on which the disputing investor of one Contracting Party has requested negotiations from the other Contracting Party in written notification.

3. If any dispute bet\Yeen an investor of one Contracting Party and the other Contracting Party cannot be thus settled within a period of six months following the date on which such negotiations were requested in written notification, the investor shall be entitled to submit a claim:

a. to the competent court of the Contracting Party in the territory of which the investment has been made; or

b. to the International Centre for Settlement of Investment Disputes (ICSID) pursuant to the applicable provisions of the Convention on the Settlement of Investment Disputes between States and Nationals of other States opened for signature at Washington D.C. on 18 March 1965, in the event that both Contracting Patties are parties to this convention; or

c. without prejudice to paragraph 1 of Article 15 of this Agreement, to an ad hoc arbitral tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL). The parties to the dispute may agree in writing to deviate from these arbitration Rules; or

d. under the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of [nvestment Disputes ("Additional Facility Rules ofTCSID"), provided that either the disputing Contracting Party or the Contracting Party of the investor, but not both, is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of other States, opened for signature at Washington D.C. on March 18, 1965; or

e. to any other form of dispute settlement agreed upon by the parties to the dispute.

4. Once a claim has been submitted to one of the tribunals mentioned in sub-paragraphs (a) to ( e) of paragraph 3 of this Article the investor shall have no recourse to the other dispute settlement fora listed in sub-paragraphs (a) to (e) of paragraph 3 of this Article.

5. If any dispute between an investor of one Contracting Party and the other Contracting Party cannot be thus settled within a period of six months following the date on which such negotiations were requested in written notification as mentioned in paragraph 2 of this Article, and the disputing investor intends to submit a claim to one of the fora listed under sub-paragraphs (a) to (e) of paragraph 3 of this Article, the disputing investor shall at the very latest simultaneously to submitting a claim to one of the tribunals, notify the other Contracting Party in a written notice of its intention.

6. An investor may submit a claim as referred to in paragraph 1 and 2 of this Article to arbitration in accordance with paragraph 3 of this Article only if not more than three years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage. Neither a continuing breach nor the occurrence of substantially the same or related acts or omissions may renew or interrupt the period set out under this paragraph.

7. When rendering its decision, the tribunal shall apply this Agreement as interpreted in accordance with customary international law relating to the interpretation of treaties, and other rules of international law applicable between the Contracting Parties, as well as the general principals of public international law. For greater certainty, the domestic law of the Contracting Parties shall not constitute part of the applicable law. In case of Hungary the term "domestic law" comprises the law of the European Union.

8. The tribunal referred to in sub-paragraphs (a) to (e) of paragraph 3 of this Article shall not have competence to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of a Contracting Party. For greater certainty, in determining the consistency of a measure with this Agreement, the tribunal may consider, as appropriate, the domestic law of a Contracting Party as a matter of fact. In doing so, the tribunal shall follow the prevailing interpretation given to the domestic law by the courts or authorities of that Contracting Party and any meaning given to domestic law by the tribunal shall not be binding upon the courts or the authorities of that Contracting Party.

9. The respondent may, no later than forty-five (45) days after the creation of the tribunal, or forty-five (45) days after it became aware of the facts on which the objection is based, file an objection that a claim is manifestly without legal merit. The respondent shall specify as precisely as possible the basis for the objection. The tribunal, after giving the parties to the dispute an opportunity to present their observations on the objection, shall, at its first session or promptly thereafter, issue a decision or award on the objection, stating the grounds thereof. In the event that the objection is received after the first session of the tribunal, the tribunal shall issue such decision as soon as possible, and no later than one hundred twenty (120) days after the objection was filed. When deciding such an objection, the tribunal shall assume the alleged facts to be true, and may also consider any relevant facts not in dispute. The decision of the tribunal shall be without prejudice to the right of a party to object, pursuant to paragraph 10 of this Article or in the course of the proceeding, to the legal merits of a claim and without prejudice to the tribunal's authority to address other objections as a preliminary question. On receipt of an objection under this paragraph, and unless it considers the objection manifestly unfounded, the tribunal shall suspend any proceedings on the merits, establish a schedule for considering the objection consistent with any schedule it has established for considering any other preliminary question, and issue a decision on the objection, stating the grounds thereof.

10. Without prejudice to the tribunal's authority to address other objections as a preliminary question or to the right of a respondent to raise any such objections at any appropriate time, the tribunal shall address and decide as a preliminary question any objection by the respondent that, as a matter of law, a claim, or any part thereof, is not a claim for which an award in favour of the investor may be made. When deciding such an objection, the tribunal shall assume the alleged facts to be true, and may also consider any relevant facts not in dispute. Such an objection shall be submitted to the tribunal as early as possible, and in any event not later than the expiration of the time limit fixed for the filing of the counter-memorial or statement of defence, unless the facts on which the objection is based are unknown to the party at that time. On receipt of an objection under this paragraph, and unless it considers the objection manifestly unfounded, the tribunal shall suspend any proceedings on the merits, establish a schedule for considering the objection consistent with any schedule it has established for considering any other preliminary question, and issue a decision on the objection, stating the grounds thereof.

11. The award shall be final and binding on the parties to the dispute and shall be executed in accordance with the law of the Contracting Party in the territory of which the investment has been made and the award is relied upon, by the date indicated in the award.

12. Upon entry into force between the Contracting Parties of an international agreement providing for the establishment of a permanent multilateral investment court, which may include an appellate mechanism for the resolution of investment disputes, the relevant parts of this Agreement, which deal with disputes shall cease to apply.

13. The award shall be executed in accordance with the applicable laws and regulations, as well as relevant international law including the ICSID Convention and the New York Convention, concerning the execution of award in force in the country where such execution is sought.

14. Nothing in paragraph 13 shalI be construed as derogating from the law in force in any Contracting Party relating to state immunity.

15. The provisions of Articles 9, 10 and 11 shall not be subject to dispute settlement under this Article.

Article 13. Impartiality and Independence of Arbitrators

1. Arbitrators shall be independent of and not be affiliated with or take instructions from a disputing party or any government with regard to trade and investment matters. Arbitrators shall not take instructions from any organisation, government or disputing party with regard to matters related to the dispute. They shall not participate in the consideration of any disputes that would create a direct or indirect conflict of interest. ln addition, upon appointment and for the duration of the proceedings, they shall refrain from acting as counsel or as party-appointed expert or witness in any pending or new investment protection dispute under this or any other international agreement. Arbitrators shall comply with the Code of Conduct as set out in Annex I to this Agreement ("Code of Conduct") in disputes arising out of Article 12 of this Agreement.

2. lf a disputing party considers that an arbitrator does not meet the requirements set out in paragraph 1 of this Article or in the Annex I Code of Conduct, it may invite the Secretary General of the ICSID to issue a decision on the challenge to disqualify such arbitrator. Any notice of a challenge shall be submitted to the Secretary General of the ICSID within 15 days after the constitution of the tribunal was communicated to the disputing party, or within 15 days of the date on which the relevant facts came to the knowledge of the disputing party that proposed the challenge, if the relevant facts could not have reasonably been known at the time of the appointment of the challenged arbitrator.

3. The notice of challenge shall state the grounds on which the challenge is based. Any arbitrator may be challenged in any event before the proceeding is declared closed, if circumstances exist that give rise to justifiable doubts as to the arbitrator's impartiality or independence on the basis of the Annex l Code of Conduct. The challenge shall be notified to alI other parties, to the arbitrator who is challenged and to the other arbitrators.

4. When an arbitrator has been challenged by a disputing party, all disputing parties may agree to the challenge. The arbitrator may also, after the challenge, withdraw from his or her office. In neither case does this imply acceptance of the validity of the grounds for the challenge. The other disputing parties and the challenged arbitrator shall file their statement presenting their position and supporting documents within 15 days after the notice of the challenge.

5. If the other disputing parties have not expressed their consent to the challenge or the challenged arbitrator fails to resign within 15 days from the date of the notice of the challenge, the disputing party initiating the challenge may request the Secretary General of the ICSID to issue a founded decision on the challenge.

6. The Secretary General of the ICSID shall issue the decision within thirty (30) days after receiving submissions from the disputing parties and the challenged arbitrator. If the Secretary General of the ICSID admits the challenge, a new arbitrator shall be appointed.