Article 15.1. Definitions
For the purpose of this Chapter:
claimant means an investor of a Party that makes a claim under Article 15.23;
covered investment means, with respect to a Party, an investment:
(a) in its territory;
(b) made in accordance with the applicable domestic law of the Party at the time the investment is made;
(c) directly or indirectly owned or controlled by an investor of the other Party; and
(d) existing on the date of entry into force of this Agreement, or made or acquired thereafter;
designated appointing authority means the Secretary-General of the Permanent Court of Arbitration (1) established by the Conventions for the Pacific Settlement of International Disputes, done at The Hague, 29 July 1899 and 18 October 1907;
disputing parties means the claimant and the respondent Party;
disputing party means either the claimant or the respondent Party;
enterprise means an enterprise as defined in Article 1.7 (Initial Provisions and General Definitions – General Definitions) and a branch of an enterprise;
intellectual property rights means copyright and related rights, trademark rights, rights in geographical indications, rights in industrial designs, patent rights, rights in layout designs of integrated circuits, rights in relation to protection of undisclosed information, and plant breeders’ rights;
investment means every kind of asset that an investor owns or controls, and that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk.
Forms that an investment may take include:
(a) an enterprise;
(b) a share, stock and other form of equity participation in an enterprise;
(c) a bond, debenture or other debt instrument of an enterprise, and a loan to an enterprise; (2)
(d) a turnkey, construction, management, production, concession, revenue-sharing or other similar contract;
(e) intellectual property rights; and
(f) any other tangible or intangible, moveable or immovable, property and related property rights acquired in the expectation of or used for the purpose of economic benefit or other business purpose;
but investment does not mean:
(g) a claim to money that arises solely from:
(i) a commercial contract for the sale of a good or service by a national or enterprise in the territory of a Party to an enterprise in the territory of the other Party; or
(ii) the extension of credit in connection with a commercial transaction, such as trade financing;
(h) an order or judgment in a judicial or administrative action; or
(i) any other claim to money that does not involve the kinds of interests set out in subparagraphs (a) to (f);
investor of a Party means a Party, or a national or an enterprise of a Party, that seeks to make, (3) is making or has made an investment. For the purpose of this definition, enterprise of a Party means:
(a) an enterprise that is constituted or organized under the law of that Party and that has substantial business activities in the territory of that Party. A determination of whether an enterprise has substantial business activities in the territory of a Party requires a case-by-case, fact-based inquiry; or
(b) an enterprise that is constituted or organized under the law of that Party, and is directly or indirectly owned or controlled by a national of that Party or by an enterprise mentioned under subparagraph (a);
national means a national as defined in Article 1.8 (Initial Provisions and General Definitions – Country-Specific Definitions), except that:
(a) a natural person who is a dual citizen of Canada and Ecuador shall be deemed to be exclusively a national of the Party of their dominant and effective nationality; and
(b) a natural person who is a citizen of one Party and a permanent resident of the other Party shall be deemed to be exclusively a national of the Party of their citizenship;
New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, 10 June 1958;
non-disputing Party means a Party that is not a disputing party to an investment dispute;
respondent Party means a Party against which a claim is made under Article15.23;
third-party funding means any funding or other equivalent support provided by a person who is not a disputing party in order to finance part or all of the cost of the proceedings including through a donation or grant, or in return for remuneration dependent on the outcome of the dispute;
Tribunal means an arbitration tribunal established under Section D or Section E;
UNCITRAL Transparency Rules means the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration.
Section B. Investment Protections
Article 15.2. Scope
1. This Chapter applies to a measure adopted or maintained by a Party relating to:
(a) an investor of the other Party;
(b) a covered investment; and
(c) with respect to Article 15.5, Article 15.12, and Article 15.15, an investment in its territory.
2. A Party’s obligations under this Chapter apply to measures adopted or maintained by:
(a) the central level of government, the regional level of government or other governments of that Party; and
(b) any person, including a state enterprise or any other body, when it exercises any governmental authority delegated to it by the central level of government, the regional level of government or other governments of that Party.
3. This Chapter does not bind a Party in relation to an act or fact that took place or a situation that ceased to exist before the date of entry into force of this Agreement.
Article 15.3. Relation to other Chapters
1. In the event of any inconsistency between this Chapter and another Chapter of this Agreement, the other Chapter prevails to the extent of the inconsistency.
2. A requirement of a Party that a service supplier of the other Party post a bond or other form of financial security as a condition for the cross-border supply of a service does not of itself make this Chapter applicable to measures adopted or maintained by the Party relating to the cross-border supply of the service. This Chapter applies to measures adopted or maintained by the Party relating to the posted bond or financial security, to the extent that the bond or financial security is a covered investment.
3. This Chapter does not apply to a measure adopted or maintained by a Party to the extent that it is covered by Chapter 18 (Financial Services).
4. Article 16.5 (Cross-Border Trade in Services – Market Access) (4) is incorporated into and made part of this Chapter and applies to measures adopted or maintained by a Party relating to the supply of a service in its territory by a covered investment.
Article 15.4. Right to Regulate
The Parties reaffirm the right of each Party to regulate within its territory to achieve legitimate policy objectives, such as with respect to: the protection of the environment and addressing climate change; social or consumer protection; or the promotion and protection of health, safety, rights of Indigenous Peoples, gender equality, and cultural diversity.
Article 15.5. Non-Derogation
The Parties recognize that it is not appropriate to encourage investment by relaxing domestic measures relating to health, safety, the environment, other regulatory objectives, or the rights of Indigenous Peoples. Accordingly, a Party shall not relax, waive or otherwise derogate from, or offer to relax, waive or otherwise derogate from, these measures in order to encourage the establishment, acquisition, expansion or retention of an investment in its territory. If a Party considers that the other Party has offered such an encouragement, it may request consultations with the other Party and the two Parties shall consult with a view to avoiding the encouragement.
Article 15.6. National Treatment
1. Each Party shall accord to an investor of the other Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
2. Each Party shall accord to a covered investment treatment no less favourable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
3. The treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a government other than at the central level, treatment accorded, in like circumstances, by that government to investors, and to investments of investors, of the Party of which it forms a part.
4. Whether treatment is accorded in like circumstances depends on the totality of the circumstances, including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate policy objectives.
5. Paragraphs 1 and 2 prohibit discrimination based on nationality. A difference in treatment accorded to an investor or covered investment and a Party’s own investors or investments of its own investors does not, in and of itself, establish discrimination based on nationality.
Article 15.7. Most-Favoured-Nation Treatment
1. Each Party shall accord to an investor of the other Party treatment no less favourable than that it accords, in like circumstances, to investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
2. Each Party shall accord to a covered investment treatment no less favourable than that it accords, in like circumstances, to investments of investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
3. The treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a government other than at the central level, treatment accorded, in like circumstances, by that government to investors, and to investments of investors, of a non-party.
4. Whether treatment is accorded in like circumstances depends on the totality of the circumstances, including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate policy objectives.
5. Paragraphs 1 and 2 prohibit discrimination based on nationality. A difference in treatment accorded to an investor or covered investment and a non-party’s investors or investments of a non-Party’s investors does not, in and of itself, establish discrimination based on nationality.
6. The treatment referred to in paragraphs 1 and 2 does not include procedures for the resolution of investment disputes between investors and states provided for in other international investment treaties and other trade agreements.
7. Substantive obligations in other international investment treaties and other trade agreements do not in themselves constitute treatment, and thus cannot give rise to a breach of this Article, absent measures adopted or maintained by a Party pursuant to those obligations.
Article 15.8. Treatment In Case of Armed Conflict, Civil Strife or Natural Disaster
1. Notwithstanding Article 15.18.5(b), each Party shall accord to an investor of the other Party and to a covered investment treatment no less favourable than it accords to its own investors or their investments, or to the investors or the investments of investors of a non-party, whichever is more favourable to the investors or investments concerned, with respect to measures it adopts or maintains relating to restitution, indemnification, compensation or other settlement for losses incurred by investments in its territory as a result of armed conflict, civil strife or a natural disaster.
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 does not apply to an existing subsidy or grant provided by a Party, including a government-supported loan, guarantee or insurance that would be inconsistent with Article 15.6 but for Article 15.18.5(b).
Article 15.9. Minimum Standard of Treatment
1. Each Party shall accord in its territory to a covered investment and to an investor with respect to their covered investment treatment in accordance with the customary international law minimum standard of treatment of aliens. A Party breaches this obligation only if a measure constitutes:
(a) denial of justice in criminal, civil or administrative proceedings;
(b) fundamental breach of due process in judicial and administrative proceedings;
(c) manifest arbitrariness; (5)
(d) targeted discrimination on manifestly wrongful grounds such as gender, race or religious beliefs;
(e) abusive treatment of investors, such as physical coercion, duress and harassment; or
(f) a failure to provide full protection and security. (6)
2. 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.
3. The fact that a measure breaches domestic law does not establish a breach of this Article.
Article 15.10. Expropriation
1. A Party shall not expropriate a covered investment either directly or indirectly, except:
(a) for a public purpose; (7)
(b) in accordance with due process of law;
(c) in a non-discriminatory manner; and
(d) on payment of compensation in accordance with paragraph 5.
2. A direct expropriation under paragraph 1 occurs only when a covered investment is taken by a Party through formal transfer of title or outright seizure.
3. An indirect expropriation under paragraph 1 may occur when a measure or a series of measures of a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure. A non-discriminatory measure of a Party that is adopted and maintained in good faith to protect legitimate public welfare objectives, such as health, safety and the environment, does not constitute an expropriation. The determination of whether a measure or a series of measures of a Party has an effect equivalent to direct expropriation requires a case-by-case, fact-based inquiry that shall consider:
(a) the economic impact of the measure or the series of measures, although the sole fact that a measure or a series of measures of a Party has an adverse effect on the economic value of a covered investment does not establish that an indirect expropriation has occurred;
(b) the duration of the measure or series of measures of a Party;
(c) the extent to which the measure or the series of measures interferes with distinct, reasonable investment-backed expectations; and
(d) the character of the measure or the series of measures.
4. A measure of a Party cannot violate this Article unless it expropriates a covered investment that is a tangible or intangible property right under the domestic law of the Party in which the investment was made. This determination requires the consideration of relevant factors, such as the nature and scope of the tangible or intangible property right under the applicable domestic law of the Party in which the investment was made.
5. The compensation referred to in paragraph 1 shall:
(a) be paid without delay in a freely convertible currency;
(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (date of expropriation). Appropriate valuation criteria include going concern value, asset value including the declared tax value of tangible property, and other criteria, which may be appropriate or relevant under the circumstances, to determine fair market value;
(c) not reflect any change in value occurring because the intended expropriation had become known earlier;
(d) include interest at a commercially reasonable rate for that currency from the date of the expropriation until the date of payment; and
(e) be freely transferable.
6. A measure of a Party that would otherwise constitute an expropriation of an intellectual property right under this Article does not constitute a breach of this Article if it is consistent with the TRIPS Agreement and any waiver or amendment of the TRIPS Agreement accepted by both Parties.
Article 15.11. Transfer of Funds
1. Each Party shall permit all transfers of funds 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;
(b) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees;
(c) proceeds from the sale or liquidation of the whole or part of the covered investment;
(d) payments made under a contract entered into by the investor or the covered investment, including payments made pursuant to a loan agreement;
(e) payments made under Article 15.8 and Article 15.10;
(f) earnings and other remuneration of foreign personnel working in connection with the covered investment; and
(g) payments arising out of a dispute.
2. Each Party shall permit transfers of funds relating to a covered investment to be made in a freely convertible currency at the market rate of exchange in effect at the time of transfer.
3. Each Party shall permit transfers of returns in kind relating to a covered investment to be made as authorized or specified in a written agreement between the Party and an investor of the other Party or a covered investment.
4. A Party shall not require its investors to transfer, or penalize one of its investors for failing to transfer the income, earnings, profits or other amounts derived from, or attributable to, an investment in the territory of the other Party.
5. Notwithstanding paragraphs 1, 2, 3 and 4, a Party may prevent or limit a transfer through the equitable, non-discriminatory and good faith application of its domestic law relating to:
(a) bankruptcy, insolvency or the protection of the rights of a creditor;
(b) issuing, trading or dealing in securities, including futures, options or derivatives;
(c) criminal or penal offences;
(d) financial reporting or record keeping of transfers, if necessary to assist law enforcement or financial regulatory authorities;
(e) ensuring compliance with an order or judgment in judicial or administrative proceedings; or
(f) social security, public retirement or compulsory savings programmes.
6. Notwithstanding paragraph 3, a Party may restrict transfers of returns in kind in circumstances in which it could otherwise restrict those transfers under the WTO Agreement and as set out in paragraph 5.
Article 15.12. Performance Requirements
1. A Party shall not, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment in its territory, impose or enforce a requirement, or enforce a commitment or undertaking:
(a) to export a given level or percentage of a good or service;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use, or accord a preference to a good produced or service provided in its territory, or to purchase a good or service from a person in its territory;
(d) to relate the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with that investment;
(e) to restrict sales of a good or service in its territory that the investment produces or provides by relating those sales to the volume or value of its exports or foreign exchange earnings;
(f) to transfer technology, a production process, source code of software, or other proprietary knowledge to a person in its territory;
(g) (i) to purchase, use, or accord a preference to, in its territory, technology of the Party or of a person of the Party, (8) or
(ii) that prevents the purchase or use of, or the according of a preference to, in its territory, a technology; or
(h) to supply exclusively from the territory of the Party a good that the investment produces or a service it provides to a specific regional market or to the world market.
2. A Party shall not condition the receipt or continued receipt of an advantage, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment in its territory, on compliance with a requirement:
(a) to achieve a given level or percentage of domestic content;