This Section establishes a mechanism for the settlement of disputes arising between a Party and an investor of the other Party arising out of an alleged breach of an obligation set forth in Section B.
Article 11.19. Consultation and Negotiation
In the event of an investment dispute, the claimant and respondent should first seek to resolve the dispute through consultation and negotiation, which may include the use of non-binding third-party procedures such as conciliation and mediation.
Article 11.20. Submission of a Claim to Arbitration
1. In the event that a disputing party considers that an investment dispute cannot be resolved through consultation and negotiation: (6)
(a) the claimant, at its own expense, may submit to arbitration a claim, in accordance with this Section, alleging that the defendant has breached an obligation under Section B and that the plaintiff has suffered loss or damage by reason of or as a result of such breach; and
(b) the claimant, on behalf of an enterprise organized under the national law of the respondent that is a legal person owned or controlled directly or indirectly by the claimant, may, in accordance with this Section, submit to arbitration a claim alleging that the respondent has breached an obligation under Section B and that the enterprise has suffered loss or damage by reason of, or as a result of, such breach.
2. At least 90 days before a claim is submitted to arbitration under this Section, the claimant shall deliver to the respondent a written notice of its intent to submit the claim to arbitration ("notice of intent"). The notice shall specify:
(a) the name and address of the claimant and, if the claim is submitted on behalf of a company, the name, address and place of incorporation of the company;
(b) for each claim, the provision of this Agreement alleged to have been breached and any other applicable provision;
(c) the issues of fact and law on which each claim is based; and
(d) the relief sought and the approximate amount of damages claimed.
3. Provided that 6 months have elapsed since the events giving rise to the claim took place, the claimant may submit the claim referred to in paragraph 1 in accordance with:
(a) the ICSID Convention and the ICSID Rules of Procedure for Arbitral Proceedings, provided that both the respondent and the Party of the claimant are parties to the ICSID Convention;
(b) the ICSID Additional Facility Rules, provided that either the respondent or the Party of the claimant, but not both, is a party to the ICSID Convention; or
(c) the UNCITRAL Arbitration Rules.
4. If a disputing investor elects to submit a dispute of the type described in this Article to the courts or judicial or administrative tribunals of the disputing Party or to any other domestic or international dispute settlement procedures, that election shall be final, and the disputing investor may not thereafter submit the dispute to conciliation or arbitration under this Article.
5. A claim shall be deemed submitted to arbitration pursuant to this Section when the claimant's notice or request for arbitration ("notice of arbitration"):
(a) referred to in Article 36(1) of the ICSID Convention is received by the Secretary-General;
(b) referred to in Article 2 of Annex C of the ICSID Additional Facility Rules is received by the Secretary-General; or
(c) The statement of claim referred to in Article 3 of the UNCITRAL Arbitration Rules, together with the statement of claim referred to in Article 18 of the UNCITRAL Arbitration Rules, is received by the respondent. A claim first raised after such notice of arbitration has been submitted shall be deemed submitted to arbitration under this Section on the date of its receipt under the applicable arbitration rules.
6. The arbitration rules applicable pursuant to paragraph 3, and in effect on the date of the claim or claims submitted to arbitration pursuant to this Section, shall govern the arbitration except to the extent modified by this Agreement.
7. The claimant shall deliver together with the notice of arbitration:
(a) the name of the arbitrator appointed by the claimant; or
(b) the written consent of the claimant to the appointment of such arbitrator by the Secretary General.
Article 11.21. Consent of Each Party to Arbitration
1. Each Party consents to submit a claim to arbitration in accordance with the procedures set forth in this Agreement.
2. The consent referred to in paragraph 1 and the submission of the claim to arbitration under this Section shall comply with the requirements set forth in:
(a) Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the ICSID Additional Facility Rules requiring the written consent of the parties to the dispute;
(b) Article Il of the New York Convention requiring a "written agreement"; and
(c) Article I of the Inter-American Convention which requires an "agreement".
Article 11.22. Conditions and Limitations on the Consent of the Parties
1. No claim may be submitted to arbitration under this Section if more than 3 years have elapsed from the date on which the claimant first had or should have had knowledge of the alleged breach under Article 11.20.1 and knowledge that the claimant (for claims brought under Article 11.20.1(a)) or the enterprise (for claims brought under Article 11.20.1(b)) suffered loss or damage.
2. No claim may be submitted to arbitration pursuant to this Section unless:
(a) the claimant consents in writing to arbitration in accordance with the procedures provided for in this Agreement; and
(b) the notice of arbitration shall be accompanied:
(i) of the claimant's written waiver of claims submitted to arbitration under Article 11.20.1(a); and
(ii) of the claimant's and the enterprise's written waivers of claims submitted to arbitration under Article 11.20.1(b);
of any right to initiate before any judicial or administrative tribunal in accordance with the domestic law of any Party, or other dispute settlement procedures, national and international, any action with respect to any measure alleged to constitute a breach referred to in Article 11.20.
3. Notwithstanding paragraph 2(b), the claimant (for claims brought under Article 11.20.1(a)) and the claimant or the enterprise (for claims brought under Article 11.20.1(b)) may initiate or continue an action requesting the application of precautionary measures of a suspensive, declaratory or extraordinary nature, and which does not involve the payment of monetary damages before a judicial or administrative court of the respondent, provided that the action is brought for the sole purpose of preserving the rights and interests of the claimant or the company during the pendency of the arbitration.
Article 11.23. Selection of Arbitrators
1. Unless otherwise agreed by the disputing parties, the tribunal shall be composed of 3 arbitrators, one arbitrator appointed by each of the disputing parties and the third, who shall be the presiding arbitrator, shall be appointed by agreement of the said parties.
2. The Secretary General shall appoint arbitrators in arbitration proceedings in accordance with this Section.
3. Where a tribunal is not constituted within 90 days from the date on which the claim is submitted to arbitration pursuant to this Section, the Secretary General shall, at the request of a disputing party, appoint, in his discretion, the arbitrator or arbitrators not yet appointed.
4. For the purposes of Article 39 of the ICSID Convention and Article 7 of Part C of the ICSID Additional Facility Rules, and without prejudice to objecting to an arbitrator on grounds other than nationality:
(a) the respondent accepts the appointment of each of the members of the tribunal established in accordance with the ICSID Convention or the ICSID Additional Facility Rules;
(b) the claimant referred to in Article 11.20.1(a) may submit a claim to arbitration under this Section, or continue a claim under the ICSID Convention or the ICSID Additional Facility Rules, only on condition that the claimant consents in writing to the appointment of each member of the tribunal; and
(c) the claimant referred to in Article 11.20.1(b) may submit a claim to arbitration under this Section, or pursue a claim under the ICSID Convention or the ICSID Additional Facility Rules, only on condition that the claimant and the enterprise consent in writing to the appointment of each of the members of the tribunal.
Article 11.24. Conduct of Arbitration
1. The disputing parties may agree on the legal place where any arbitration is to be held in accordance with the applicable arbitral rules pursuant to Article 11.20.3. In the absence of agreement between the disputing parties, the tribunal shall determine such place in accordance with the applicable arbitral rules, provided that the place is in the territory of a State that is a party to the New York Convention.
2. A non-disputing Party may make oral or written submissions to the tribunal regarding the interpretation of this Agreement. For this purpose, the disputing parties and the tribunal may include in the procedural calendar a time limit for the submission of such submissions.
3. The tribunal shall have the authority to accept and consider amicus curiae briefs from a person or entity that is not a disputing party.
4. Without prejudice to the tribunal's power to hear other objections as preliminary questions, a tribunal shall hear and decide as a preliminary question any objection by the respondent that, as a matter of law, the claim submitted is not a claim in respect of which an award in favor of the claimant may be made under Article 11.30.
(a) Such objection shall be submitted to the tribunal as soon as possible after the constitution of the tribunal and in no event later than the date the tribunal fixes for the respondent to file its statement of defense (or in the case of an amendment to the notice of arbitration, the date the tribunal fixes for the respondent to file its answer to the amendment).
(b) Upon receipt of an objection under this paragraph, the tribunal shall suspend any action on the merits of the dispute, establish a timetable for consideration of the objection that is consistent with any timetable that has been established for consideration of any other preliminary issue, and issue a decision or award on the objection, setting forth the grounds therefor.
(c) In deciding an objection under this paragraph, the tribunal shall take as true the factual allegations submitted by the claimant in support of any claim contained in the notice of arbitration (or any amendment thereto) and, in disputes brought under the UNCITRAL Arbitration Rules, the statement of claim referred to in Article 18 of the UNCITRAL Arbitration Rules. The tribunal may also consider any other relevant facts that are not in dispute.
(d) The respondent does not waive any objection with respect to jurisdiction or any substantive argument, merely because it has or has not made an objection under this paragraph, or avails itself of the expedited procedure set forth in paragraph 5.
5. If the respondent so requests, the tribunal shall, within 45 days after the constitution of the tribunal, decide, in an expeditious manner, an objection under paragraph 4 and any other objection that the dispute is not within the tribunal's jurisdiction. The tribunal shall suspend any action on the merits of the dispute and shall, not later than 150 days after the date of the request, issue a decision or award on such objection, stating the basis therefor. However, if a disputing party requests a hearing, the tribunal may take an additional 30 days to issue the decision or award. Regardless of whether a hearing has been requested, the tribunal may, upon a showing of extraordinary cause, delay rendering its decision or award for an additional brief period, which may not exceed 30 days.
6. When the tribunal decides a respondent's objection under paragraph 4 or 5, it may, if warranted, award to the prevailing disputing party reasonable costs and attorney's fees incurred in raising or opposing the objection. In determining whether such an award is warranted, the tribunal shall consider whether the claimant's claim or the respondent's objection was frivolous, and shall give the disputing parties a reasonable opportunity to comment.
7. The tribunal may order an interim measure of protection to preserve the rights of a disputing party, or for the purpose of ensuring the full exercise of the tribunal's jurisdiction, including an order to preserve evidence in the possession or under the control of a disputing party or to protect the tribunal's jurisdiction. The tribunal may not order the attachment or prevent the enforcement of a measure that is considered a violation referred to in Article 11.20. For the purposes of this paragraph, an order includes a recommendation.
Article 11.25. Transparency of Arbitral Proceedings
1. Subject to paragraphs 2 and 4, the Respondent shall, after receiving the following documents, deliver them as soon as possible to the non-disputing Parties and make them available to the public:
(a) the notice of intent;
(b) the notice of arbitration;
(c) pleadings, statements of claim and explanatory notes submitted to the tribunal by a disputing party and any written communications submitted pursuant to articles 11.24.2, 11.24.3 and 11.29;
(d) minutes or transcripts of court hearings, when available; and (e) orders, awards and decisions of the court.
2. The tribunal shall conduct hearings open to the public and shall determine, in consultation with the disputing parties, the appropriate logistical arrangements. However, any disputing party that intends to use information classified as protected information in a hearing shall so inform the tribunal. The tribunal shall make appropriate arrangements to protect the information from disclosure.
3. Nothing in this Section requires the Respondent to make available protected information or to provide or permit access to information that it may withhold pursuant to Article 20.3 (National Security) or Article 20.4 (Disclosure of Information).
4. Any protected information that is submitted to the court shall be protected from disclosure in accordance with the following procedures:
(a) subject to subparagraph (d), neither the disputing parties nor the tribunal shall disclose to any non-disputing Party or to the public any protected information when the disputing party providing the information clearly designates it as such in accordance with subparagraph (b);
(b) any disputing party claiming that certain information constitutes protected information shall clearly designate it at the time it is submitted to the tribunal;
(c) a disputing party shall, at the same time that it submits a document containing information claimed to be protected information, submit a redacted version of the document that does not contain the information. Only the redacted version shall be provided to the non- disputing Parties and shall be made public in accordance with paragraph 1; and
(d) the tribunal shall decide any objection to the designation of information claimed to be protected information. If the tribunal determines that such information was not properly designated, the disputing party that submitted the information may:
(i) remove all or part of the presentation containing such information; or
(ii) agree to resubmit complete and redacted documents with corrected designations in accordance with the court's determination and with subsection (c).
In any case, the other disputing party shall, when necessary, resubmit complete and redacted documents, which omit the information withdrawn pursuant to subparagraph (i) by the disputing party that first submitted the information or to redesignate the information in a manner consistent with the designation made pursuant to subparagraph (ii) of the disputing party that first submitted the information.
5. Nothing in this Section requires a respondent to deny the public access to information that, in accordance with its national law, must be disclosed.
Article 11.26. Applicable Law
1. Subject to paragraph 2, a tribunal established under this Section shall decide disputes submitted to it in accordance with this Agreement and applicable provisions of international law.
2. A decision of the Administrative Commission declaring the interpretation of a provision of this Agreement in accordance with Article 19.1.3(c) (Administrative Commission) shall be binding on a tribunal established under this Section, and any decision or award rendered by the tribunal shall be consistent with that decision.
Article 11.27. Interpretation of Annexes
1. Where the respondent raises as a defense that the measure alleged to be in breach is within the scope of Annex | or Annex Il, the tribunal shall, at the request of the respondent, request the Administrative Commission for an interpretation of the matter. Within 60 days after delivery of the request, the Administrative Commission shall submit in writing to the court any decision stating its interpretation in accordance with Article 19.1.3(c) (Administrative Commission).
2. The decision rendered by the Administrative Commission pursuant to paragraph 1 shall be binding on the court and any decision or award rendered by the Administrative Commission pursuant to paragraph 1 shall be binding on the court.
the court shall be consistent with that decision. If the Administrative Commission does not issue such a decision within 60 days, the court shall decide on the matter.
Article 11.28. Expert Reports
Without prejudice to the appointment of other types of experts where authorized by the applicable arbitration rules, the tribunal, at the request of a disputing party or on its own initiative unless the disputing parties do not agree, may appoint one or more experts to report in writing on any factual issue concerning environmental, health, safety or other scientific matters raised by a disputing party in a proceeding, in accordance with such terms and conditions as the disputing parties may agree.
Article 11.29. Accumulation of Proceedings
1. In cases where 2 or more separate claims have been submitted to arbitration pursuant to Article 11.20.1, and the claims contain a common question of law or fact and arise out of the same facts or circumstances, any disputing party may seek a consolidation order pursuant to the agreement of all disputing parties in respect of which the consolidation order is sought or pursuant to the terms of paragraphs 2 through 10.
2. A disputing party seeking a joinder order pursuant to this Article shall deliver, in writing, a request to the Secretary-General and to all disputing parties in respect of which the joinder order is sought and shall specify in the request the following:
(a) the name and address of all disputing parties in respect of whom the joinder order is sought;
(b) the nature of the requested consolidation order; and
(c) the basis on which the request is supported. 3. Unless the Secretary-General determines, within 45 days after receipt of an application under paragraph 2, that the application is manifestly unfounded, a tribunal shall be established under this Article. 4. Unless otherwise agreed by all the disputing parties in respect of which the consolidation order is sought, the tribunal to be established pursuant to this Article shall consist of 3 arbitrators:
(a) an arbitrator appointed by agreement of the claimants;
(b) an arbitrator appointed by the respondent; and
(c) the presiding arbitrator appointed by the Secretary General, who shall not be a national of either Party.
5. If, within 60 days after receipt by the Secretary-General of the request made pursuant to paragraph 2, the respondent or the claimants fail to appoint an arbitrator in accordance with paragraph 4, the Secretary-General shall, upon the request of any disputing party in respect of which the order for consolidation is sought, appoint the arbitrator or arbitrators not yet appointed. If the respondent fails to appoint an arbitrator, the Secretary-General shall appoint a national of the disputing Party and, if the claimants fail to appoint an arbitrator, the Secretary-General shall appoint a national of a Party of the claimants.
6. In the event that the tribunal established under this Article has found that 2 or more claims have been submitted to arbitration pursuant to Article 11.20.1, raising a common question of law or fact, and arising out of the same facts or circumstances, the tribunal may, in the interest of reaching a fair and efficient resolution of the claims and after hearing the disputing parties, by order:
(a) assume jurisdiction, hear and determine jointly all or part of the claims;
(b) assume jurisdiction over, hear and determine one or more claims, the determination of which it believes would contribute to the resolution of the other claims; or
(c) instruct a court previously established pursuant to Article 11.23 to assume jurisdiction over, hear and determine jointly, all or part of the claims, provided that:
(i) that tribunal, at the request of any claimant who was not previously a disputing party before that tribunal, be reinstated with its original members, except that the arbitrator for the claimant parties shall be appointed in accordance with paragraphs 4(a) and 5; and
(ii) that court decides whether to repeat any previous hearing.
7. Where a tribunal has been established under this Article, a claimant who has submitted a claim to arbitration under Article 11.20.1, and whose name is not mentioned in a request made under paragraph 2, may make a written request to the tribunal to the effect that such claimant be included in any order made under paragraph 6, and shall specify in the request:
(a) the name and address of the plaintiff;
(b) the nature of the requested consolidation order; and
(c) the grounds on which the request is based.
8. The claimant shall deliver a copy of its application to the Secretary General.
9. A court established under Article 11.23 shall not have jurisdiction to decide a claim, or any part of a claim, over which a court established or instructed under this Article has assumed jurisdiction.
10. On the request of a disputing party, a tribunal established under this Article may, pending its decision under paragraph 6, order that the proceedings of a tribunal established under Article 11.23 be adjourned, unless the latter tribunal has suspended its proceedings.
11. A tribunal established under this Article shall conduct the proceedings in accordance with the UNCITRAL Arbitration Rules, except as modified by this Section.
Article 11.30. Awards
1. Where a court makes a final award against the respondent, the court may award, separately or in combination, only:
(a) pecuniary damages and interest;
(b) restitution of the property, in which case the award shall provide that the respondent may pay monetary damages, plus interest in lieu of restitution.
A tribunal may also award costs and attorney's fees in accordance with this Section and the applicable arbitration rules.
2. Subject to paragraph 1, where a claim is submitted to arbitration under Article 11.20.1(b):
(a) the award providing for restitution of the property shall provide that restitution shall be granted to the enterprise;
(b) the award of monetary damages and interest shall provide that the sum of money shall be paid to the company; and
(c) the award shall provide that the award is without prejudice to any right of any person to relief under applicable national law.
3. A court is not authorized to order the payment of punitive damages.
4. The award rendered by a tribunal shall be binding only on the disputing parties and only in respect of the particular case.
5. Subject to paragraph 6 and the review procedure applicable to an interim award, the disputing party shall comply with and carry out the award without delay.
6. A disputing party may not request enforcement of the final award until:
(a) in the case ofa final award rendered under the ICSID Convention:
(i) 120 days have elapsed from the date on which the award was rendered and no disputing party has requested revision or annulment of the award; or
(ii) the review or annulment proceedings have been concluded; and
(b) in the case of a final award rendered under the ICSID Additional Facility Rules or the UNCITRAL Arbitration Rules:
(i) 90 days have elapsed since the date on which the award was rendered and no proceeding to revise, set aside or annul the award has been instituted by any disputing party; or
(ii) a court has dismissed or allowed an application for revision, setting aside or annulment of the award and this decision cannot be appealed.
7. Each Party shall provide for the proper enforcement of an award in its territory.
8. Where the respondent fails to comply with or comply with a final award, upon delivery of a request by the Party of the claimant, the establishment of an Arbitral Panel shall be requested in accordance with Article 17.8 (Request for Establishment of Arbitral Panel).
9. The requesting Party may invoke such procedures for a determination that non-compliance or disregard of the terms of the final award is contrary to the obligations of this Agreement and a recommendation in accordance with the procedures set out in Article 17.15 (Preliminary Report), to the effect that the Party shall comply with and abide by the final award.
10. Adisputing party may seek enforcement of an arbitral award under the ICSID Convention, the New York Convention or the Inter-American Convention, whether or not the mechanism referred to in paragraphs 8 and 9 has been applied.
11. For the purposes of Article | of the New York Convention and Article | of the Inter-American Convention, a claim submitted to arbitration under this Section shall be deemed to arise out of a commercial relationship or transaction.
Article 11.31. Delivery of Documents
Delivery of the notification and other documents to a Party shall be made at the place designated by it in Annex 11.31.
Annex 11.11. Expropriation and Compensation
For the purposes of Article 11.11.1(a), the following shall be understood to be included in the term "public purpose term "public purpose" means:
(a) for the case of Costa Rica: public utility or public interest;
(b) in the case of El Salvador: public utility or social interest;
(c) for the case of Guatemala: collective utility, social benefit or public interest; and public interest;
(d) for the case of Honduras: necessity or public interest;
(e) for the case of Mexico: public utility; and
(f) for the case of Nicaragua: public utility or social interest.
2. The term "public purpose" refers to a concept of customary international law. international law concept.
3. For the purposes of Article 11.11, the Parties confirm their common understanding that:
(a) Article 11.11.1 is intended to reflect customary international law concerning the obligation of States with respect to expropriation;
(b) an act or series of acts of a Party cannot constitute an expropriation unless it interferes with a tangible or intangible property right or with the essential attributes or powers of ownership of an investment;
(c) Article 11.11.1 addresses 2 situations. The first is direct expropriation, where an investment is nationalized or otherwise directly expropriated through the formal transfer of title or right of ownership. The second situation addressed by Article 11.11.1 is indirect expropriation, where an act or series of acts by a Party has an effect equivalent to that of a direct expropriation without the formal transfer of title or right of ownership;