Title
AGREEMENT BETWEEN THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE'S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE UNITED MEXICAN STATES FOR THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS
Preamble
The Government of the Hong Kong Special Administrative Region of the People's Republic of China ("the HKSAR"), having been duly authorised to conclude this Agreement by the Central People's Government of the People's Republic of China, and the Government of the United Mexican States ("Mexico"), hereinafter referred to as "the Contracting Parties",
Desiring to intensify the economic cooperation for their mutual benefit;
Intending to create and maintain favourable conditions for investments by investors of a Contracting Party in the area of the other Contracting Party;
Recognising the need to promote and protect foreign investments with the aim of fostering the flow of capital, stimulating individual business initiative and increasing economic prosperity in both areas;
Have agreed as follows:
Body
Chapter I. GENERAL PROVISIONS
Article 1. Definitions
For the purposes of this Agreement, the term:
“area”:
(a) in respect of the HKSAR includes Hong Kong Island, Kowloon and the New Territories; and
(b) in respect of Mexico includes:
(i) the States of the Federation and Mexico City;
(ii) the islands, including the reefs and keys, in adjacent seas;
(iii) the islands of Guadalupe and Revillagigedo situated in the Pacific Ocean;
(iv) the continental shelf and the submarine shelf of such islands, keys and reefs;
(v) the waters of the territorial seas, in accordance with international law, and its interior maritime waters;
(vi) the space located above the national territory, in accordance with international law; and
(vii) any areas beyond the territorial seas of Mexico within which, in accordance with international law, including the United Nations Convention on the Law of the Sea done at Montego Bay on 10 December 1982, and its domestic law, Mexico may exercise sovereign rights or jurisdiction;
“enterprise” means any entity constituted or organised under applicable laws and regulations, whether or not for profit, and whether privately or governmentally owned, including any corporation, trust, partnership, sole proprietorship, joint venture or other association; and a branch of any such entity;
“forces” means:
(a) in respect of the HKSAR, the armed forces of the People’s Republic of China; and
(b) in respect of Mexico, the armed forces integrated by the National Army, the National Navy and the National Air Force;
“freely usable currency” means freely usable currency as defined under the Articles of Agreement of the International Monetary Fund;
“Government enterprise” means an enterprise that is owned, or controlled through ownership interests, by a Contracting Party;
“intellectual property rights” means copyright and related rights, trademark rights, rights in geographical indications, rights in industrial designs, rights in patents, rights in layout-designs (topographies) of integrated circuits, rights in plant varieties, and rights in undisclosed information, as defined and described in the TRIPS Agreement;
“investment” means the following assets owned or controlled by investors of a Contracting Party and established or acquired in accordance with the laws and regulations of the other Contracting Party in whose area the investment is made:
(a) an enterprise;
(b) shares, stocks and other forms of equity participation in an enterprise;
(c) a debt security of an enterprise
(i) where the enterprise is a subsidiary or affiliate of the investor, or
(ii) where the original maturity of the debt security is at least three years;
(d) a loan to an enterprise
(i) where the enterprise is a subsidiary or affiliate of the investor, or
(ii) where the original maturity of the loan is at least three years;
(e) real estate or other property, tangible or intangible, acquired in the expectation or used for the purpose of economic benefit or other business purposes;
(f) interests arising from the commitment of capital or other resources in the area of a Contracting Party to economic activity in such area, under
(i) contracts involving the presence of an investor’s property in the area of the other Contracting Party, including turnkey or construction contracts, or concessions, or
(ii) contracts where remuneration depends substantially on the production, revenues or profits of an enterprise;
(g) claims to money involving the kind of interests set out in (a) to (f) above, but no claims to money that arise solely from
(i) commercial contracts for the sale of goods or services by a natural person or enterprise in the area of a Contracting Party to an enterprise in the area of the other Contracting Party, or
(ii) the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by subparagraph (d) above;
but investment does not include:
(a) a debt security, regardless of original maturity, of a Contracting Party (including its Central Bank or monetary authority) or of a Government enterprise; or
(b) a loan, regardless of original maturity, to a Contracting Party (including its Central Bank or monetary authority) or to a Government enterprise;
“investor” means:
(a) in respect of the HKSAR:
(i) a natural person of the HKSAR; or
(ii) an enterprise constituted or organised under the laws and regulations of the HKSAR and engaged in substantive business operations in the area of the HKSAR;
having made an investment in the area of Mexico; and
(b) in respect of Mexico:
(i) a natural person of Mexico; or
(ii) an enterprise constituted or organised under the laws and regulations of Mexico and engaged in substantive business operations in the area of Mexico;
having made an investment in the area of the HKSAR;
“measure” includes a law, regulation, procedure, requirement or practice;
“natural person” means:
(a) in respect of the HKSAR, a permanent resident of the HKSAR; and
(b) in respect of Mexico, a national of Mexico;
“New York Convention” means the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, adopted at the United Nations in New York on 10 June 1958;
“Secretary-General” means the Secretary-General of the Permanent Court of Arbitration established by the Conventions for the Pacific Settlement of International Disputes, done at The Hague on 29 July 1899 and 18 October 1907;
“TRIPS Agreement” means the Agreement on Trade-Related Aspects of Intellectual Property Rights, contained in Annex 1C to the WTO Agreement, as revised or amended from time to time by a revision or amendment that applies to the Contracting Parties and including any waiver of any provision thereof granted by Members of the World Trade Organization;
“UNCITRAL Arbitration Rules” means the arbitration rules of the United Nations Commission on International Trade Law as revised in 2010; and
“WTO Agreement” means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994.
Article 2. Promotion of Investments
Each Contracting Party shall encourage and create favourable conditions for investors of the other Contracting Party to make investments in its area.
Article 3. Admission of Investments
Each Contracting Party shall admit investments made by investors of the other Contracting Party subject to its applicable laws and regulations.
Chapter II. TREATMENT AND PROTECTION OF INVESTMENTS
Article 4. Non-discriminatory Treatment
1. Each Contracting Party shall accord to investors of the other Contracting Party and their investments treatment no less favourable than that it accords, in like circumstances, to its own investors and to investments of its own investors with respect to the management, maintenance, use, enjoyment or disposition of investments.
2. Each Contracting Party shall accord to investors of the other Contracting Party and their investments treatment no less favourable than that it accords, in like circumstances, to investors of any non-Contracting Party and to investments of investors of any non-Contracting Party with respect to the management, maintenance, use, enjoyment or disposition of investments.
3. This Article shall not be construed so as to oblige a Contracting Party to extend to the investors of the other Contracting Party and their investments the benefits of any treatment, preference or privilege which may be granted by the former Contracting Party by virtue of:
(a) any bilateral or multilateral agreement or arrangement establishing, strengthening, expanding or varying a free trade area, a customs union, a common market, an economic organisation or a similar institution;
(b) any other agreement or arrangement for promotion and protection of investments; or
(c) any bilateral or multilateral agreement or arrangement relating wholly or mainly to taxation, or any domestic legislation relating wholly or mainly to taxation. In the event of any inconsistency between this Agreement and any tax-related bilateral or multilateral agreement or arrangement between the Contracting Parties, such agreement or arrangement shall prevail to the extent of such inconsistency.
4. For greater certainty, in respect of intellectual property rights, a Contracting Party may derogate from this Article in a manner that is consistent with the TRIPS Agreement.
5. For greater certainty, the obligation in this Article does not encompass a requirement to extend to investors of the other Contracting Party dispute resolution procedures other than those set out in Chapter III.
Article 5. Minimum Standard of Treatment
1. Each Contracting Party shall accord to 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 (1) (as evidenced by general and consistent State practice and opinio juris) as the standard of treatment to be afforded to 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 to provide:
(a) “fair and equitable treatment” include the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process; and
(b) “full protection and security” require each Contracting 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 agreement, does not establish that there has been a breach of this Article.
4. 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 Contracting Party, even if there is loss or damage to the investment as a result, does not constitute a breach of this Article.
Article 6. Compensation for Losses
1. Investors of a Contracting Party whose investments in the area of the other Contracting Party suffer losses owing to war, armed conflict, revolution, a state of national emergency, insurrection, riot or any other similar event, shall be accorded, as regards the restitution, indemnification, compensation or other settlements, treatment no less favourable than the treatment the other Contracting Party accords to its own investors or investors of any nonContracting Party.
2. Without prejudice to paragraph 1, investors of a Contracting Party who in any of the situations referred to in that paragraph suffer losses in the area of the other Contracting Party resulting from:
(a) requisitioning of their property by the latter Contracting Party’s forces or authorities; or
(b) destruction of their property by the latter Contracting Party’s forces or authorities which was not caused in combat action or was not required by the necessity of the situation shall be accorded restitution or compensation. Resulting payments shall be made in a freely usable currency.
Article 7. Expropriation and Compensation
1. Neither Contracting Party may expropriate an investment either directly or indirectly through measures tantamount to expropriation, except:
(a) for a public purpose;
(b) on a non-discriminatory basis;
(c) in accordance with due process of law; and
(d) on payment of compensation in accordance with paragraph 2.
2. Compensation shall:
(a) be equivalent to
(i) the fair market value (if the expropriating Contracting Party is Mexico); or
(ii) the real value (if the expropriating Contracting Party is the HKSAR)
of the expropriated investment immediately before the expropriation occurred or before the impending expropriation became public knowledge whichever is the earlier. The compensation shall not reflect any change in value occurring because the intended expropriation had become publicly known earlier. Valuation criteria shall include the going concern value, asset value including declared tax value of tangible property, and other criteria, as appropriate, to determine the compensation;
(b) be paid in a freely usable currency without delay;
(c) include interest at a commercially reasonable rate for that currency, from the date of expropriation until the date of actual payment; and
(d) be fully realisable and freely transferable.
3. The investor affected shall have a right, under the laws and regulations of the expropriating Contracting Party, to prompt review by a judicial or other independent authority of that Contracting Party, of the investor’s case and of the valuation of the investment in accordance with the principles set out in paragraphs 1 and 2.
4. For greater certainty, this Article does not apply to the issuance of a compulsory licence granted in relation to intellectual property rights, or to the revocation, limitation or creation of an intellectual property right, to the extent that the issuance, revocation, limitation or creation is consistent with the TRIPS Agreement.
Article 8. Transfers
1. Each Contracting Party shall permit all transfers related to an investment (2) to be made freely and without delay. Monetary transfers shall be made in a freely usable currency unless otherwise agreed by the investor, at the market rate of exchange prevailing on the date of transfer. Such transfers shall include:
(a) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees and amounts derived from the investment;
(b) proceeds from the sale of all or any part of the investment, or from the partial or complete liquidation of the investment;
(c) payments made under a contract entered into by the investor or its investment, including payments made pursuant to a loan agreement;
(d) payments arising from the compensation for losses or expropriation; and
(e) payments pursuant to Section One of Chapter III.
2. Notwithstanding paragraph 1, a Contracting Party may prevent a transfer through the equitable, non-discriminatory and good faith application of its laws and regulations in the following cases:
(a) bankruptcy, insolvency or the protection of the rights of creditors;
(b) issuing, trading, or dealing in securities;
(c) criminal or administrative violations;
(d) reports of transfers of currency or other monetary instruments;
(e) ensuring the satisfaction of judgments in adjudicatory proceedings; or
(f) imposing income taxes by such means as a withholding tax.
3. In case of a serious balance of payments difficulty or of a threat thereof, a Contracting Party may temporarily restrict transfers provided that such a Contracting Party implements measures or a programme in accordance with the Articles of Agreement of the International Monetary Fund and that do not exceed those necessary to deal with the circumstances described in this paragraph. These restrictions should be imposed on an equitable, nondiscriminatory and in a good faith basis, and be notified once applied to the other Contracting Party.
Article 9. Subrogation
If a Contracting Party, or any agency, institution, statutory body or corporation designated by the Contracting Party, makes a payment to an investor of the Contracting Party under a guarantee, a contract of insurance or other form of indemnity that it has entered into with respect to an investment, the other Contracting Party in whose area the investment was made shall recognise the subrogation or transfer of any rights the investor would have possessed under this Agreement with respect to the investment but for the subrogation, and the investor shall be precluded from pursuing these rights to the extent of the subrogation.
Article 10. Denial of Benefits
A Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is an enterprise of that other Contracting Party and to investments of that investor if the enterprise:
(a) is owned or controlled by a person of a non-Contracting Party or of the denying Contracting Party; and
(b) has no substantive business operations in the area of the other Contracting Party.
Article 11. Transparency (3)
1. Each Contracting Party shall promptly publish, make publicly available or provide upon the request of the other Contracting Party, its laws, regulations, procedures and administrative rulings and judicial decisions of general application as well as bilateral and multilateral agreements, which may affect the investments of investors of a Contracting Party in the area of the other Contracting Party.
2. Nothing in this Agreement shall require a Contracting Party to furnish or allow access to any confidential or proprietary information, including information concerning particular investors or investments, the disclosure of which would impede law enforcement or be contrary to its laws or regulations protecting confidentiality or prejudice legitimate commercial interests of particular investors.
Article 12. Investment and Environmental, Health or other Regulatory Objectives (4)
1. Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting, maintaining, or enforcing any measure consistent with this Agreement that it considers appropriate to ensure that investment activity in its area is undertaken in a manner sensitive to environmental, health or other regulatory objectives.
2. The Contracting Parties recognise that it is inappropriate to encourage investment by relaxing their measures related to environmental, health or other regulatory objectives. Accordingly, a Contracting Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, those measures to encourage the establishment, acquisition, expansion or retention in its area of an investment of an investor of the other Contracting Party.
Article 13. Corporate Social Responsibility (5)
Each Contracting Party may encourage enterprises operating within its area or subject to its jurisdiction to voluntarily incorporate into their internal policies internationally recognised standards, guidelines and principles of corporate social responsibility that are supported by that Contracting Party.
Chapter III. DISPUTE SETTLEMENT
Section One. SETTLEMENT OF DISPUTES BETWEEN A CONTRACTING PARTY AND AN INVESTOR OF THE OTHER CONTRACTING PARTY
Article 14. Purpose
This Section shall apply to settle disputes between a Contracting Party and an investor of the other Contracting Party arising from an alleged breach of an obligation under Chapter II entailing loss or damage.
Article 15. Notice of Intent and Consultations
1. The disputing parties should first attempt to settle a claim through consultations.
2. With a view to settling the claim amicably, the disputing investor shall deliver to the disputing Contracting Party a written notice of its intention to submit a claim to arbitration at least six months before the claim is submitted. Such notice of intent shall specify:
(a) the name and address of the disputing investor and, where a claim is made by an investor on behalf of an enterprise according to Article 16 (Submission of a Claim), the name and address of the enterprise;