(b) to purchase, use, or accord a preference to a good produced in its territory, or to purchase a good from a producer in its territory;
(c) 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; or
(d) 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.
3. The provisions of:
(a) paragraph 2 do not prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with any investments, on compliance with a requirement to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development in its territory;
(b) paragraphs 1(a), 1(b) 1(c), 2(a) and 2(b) do not apply to a qualification requirement for a good or service with respect to export promotion and foreign aid programs;
(c) paragraphs 1(b), 1(c), 1(f), 1(g), 1(h), 2(a) and 2(b) do not apply to procurement by a Party;
(d) paragraphs 2(a) and 2(b) do not apply to a requirement imposed by an importing Party relating to the content of a good necessary to qualify for a preferential tariff or preferential quota;
(e) paragraphs 1(f) and 1(g) do not apply:
(i) if a Party authorizes use of an intellectual property right in accordance with Article 31 (9) of the TRIPS Agreement, or to a measure requiring the disclosure of proprietary information that falls within the scope of, and is consistent with, Article 39 of the TRIPS Agreement, or
(ii) if the requirement is imposed or the requirement, commitment, or undertaking is enforced by a court, administrative tribunal or competition authority to remedy an alleged violation of domestic competition law;
(f) paragraphs 1(b), 1(c), 1(f), 1(g), 2(a) and 2(b) shall not prevent a Party from adopting or maintaining a measure to achieve a legitimate policy objective, provided that the measure:
(i) is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade, and
(ii) does not impose restrictions greater than are required to achieve the objective;
(g) paragraph 1(f) do not preclude a regulatory body or judicial authority of a Party from requiring a person of the other Party to preserve and make available the source code of software, or an algorithm expressed in that source code, to the regulatory body for a specific investigation, inspection, examination, enforcement action, or judicial proceeding (10), subject to safeguards against unauthorized disclosure.
Article 15.13. Senior Management and Boards of Directors
1. A Party shall not require that an enterprise of that Party that is a covered investment appoint to a senior management position an individual of any particular nationality.
2. A Party may require that up to a majority of the board of directors, or a committee thereof, of an enterprise of that Party that is a covered investment be of a particular nationality or resident in the territory of the Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.
3. A Party should encourage enterprises to consider greater diversity in senior management positions or on boards of directors, which may include a requirement to nominate women.
Article 15.14. Subrogation
If a Party or an agency of a Party makes a payment to one of its investors under a guarantee or a contract of insurance, or other form of indemnity it has entered into in respect of a covered investment:
(a) the other Party in whose territory the covered investment was made shall recognize the validity of the subrogation or transfer of any rights the investor would have possessed with respect to the covered investment but for the subrogation or transfer. The subrogated or transferred right or claim shall not be greater than the investor's original right or claim; and
(b) the investor shall be precluded from pursuing these rights to the extent of the subrogation or transfer, unless a Party or an agency of a Party authorizes the investor to act on its behalf.
Article 15.15. Responsible Business Conduct
1. The Parties reaffirm that investors and their investments shall comply with domestic laws and regulations of the host state, including laws and regulations on human rights, the rights of Indigenous Peoples, gender equality, environmental protection and labour.
2. Each Party reaffirms the importance of internationally recognized standards, guidelines and principles of responsible business conduct that have been endorsed or are supported by that Party, including the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and the United Nations Guiding Principles on Business and Human Rights, and shall encourage investors and enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate these standards, guidelines and principles into their business practices and internal policies. These standards, guidelines and principles address areas such as labour, environment, gender equality, human rights, community relations and anti-corruption.
3. Each Party should encourage investors and enterprises operating within its territory to undertake and maintain meaningful engagement and dialogue, in accordance with international responsible business conduct standards, guidelines and principles that have been endorsed or are supported by that Party, with Indigenous Peoples and local communities.
Article 15.16. Denial of Benefits
A Party may, within a reasonable time and no later than its counter-memorial in an arbitration under this Chapter, deny the benefits of this Chapter to an investor of the other Party that is an enterprise of that Party and to an investment of that investor if:
(a) an investor of a non-party owns or controls the enterprise; and
(b) the denying Party adopts or maintains a measure with respect to the non-party or investors of the non-party that prohibits transactions with the enterprise or would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to its investment.
Article 15.17. Special Formalities and Information Requirements
1. Article 15.6 does not prevent a Party from adopting or maintaining any measure that prescribes special formalities in connection with covered investments, such as a requirement that investors be residents of the Party, that an investor register or otherwise notify the appropriate authorities of its covered investment, or that covered investments be legally constituted under the laws or regulations of the Party, provided that these formalities do not materially impair the protection afforded by a Party to investors of the other Party and covered investments pursuant to this Chapter.
2. Notwithstanding Articles 15.6 and 15.7, a Party may require an investor of the other Party or a covered investment to provide information concerning that investment solely for informational or statistical purposes. The Party shall protect such information that is confidential from any disclosure that would prejudice the competitive position of the investor or the covered investment. This paragraph does not prevent a Party from obtaining or disclosing information in connection with the equitable and good faith application of its law.
Section C. Reservations, Exceptions, Exclusions
Article 15.18. Non-Conforming Measures
1. Article 15.6, Article 15.7, Article 15.12 and Article 15.13 do not apply to:
(a) any existing non-conforming measure maintained in the territory of a Party:
(i) at the central level of government, as set out by that Party in its Schedule to Annex I;
(ii) at the regional level of government, as set out by that Party in its Schedule to Annex I; or
(iii) by a government other than the central or regional levels;
(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Article 15.6, Article 15.7, Article 15.12 and Article 15.13.
2. Article 15.6, Article 15.7, Article 15.12 and Article 15.13 do not apply to a measure that a Party adopts or maintains with respect to sectors, subsectors or activities, as set out in its schedule to Annex II.
3. A Party shall not, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule to Annex II, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.
4. Article 15.6 and Article 15.7 do not apply to a measure that relates to the protection of intellectual property rights (11) that is consistent with:
(a) the TRIPS Agreement, and any amendment thereto that is in force for both Parties; or
(b) any waiver to the TRIPS Agreement that is in force pursuant to the WTO Agreement.
5. Article 15.6, Article 15.7 and Article 15.13 do not apply to:
(a) procurement by a Party; or
(b) a subsidy or grant provided by a Party, including a government-supported loan, guarantee or insurance.
Article 15.19. Article 15.19: Exclusions
1. Section D and Section E do not apply to the matters set out in Annex 15-A.
2. A Party shall not have recourse to dispute settlement under Chapter 27 (Dispute Settlement) for a matter arising under Annex 15-A.
Section D. Investor-State Dispute Settlement
Article 15.20. Scope and Purpose
1. Without prejudice to the rights and obligations of the Parties under Chapter 27 (Dispute Settlement), the Parties establish in this Section a mechanism for the settlement of investment disputes.
2. Under this Section, an investor of a Party may submit a claim that the other Party has breached an obligation under Section B, other than Article 15.3.4, Article 15.5, Article 15.12, Article 15.13.3 or Article 15.15.
Article 15.21. Request for Consultations
1. In the event of an investment dispute under this Agreement, an investor of a Party shall seek to resolve the dispute through consultations, which may include the use of non-binding, third-party procedures, such as good offices, conciliation or mediation.
2. An investor of a Party shall deliver to the other Party a written request for consultations, which shall specify:
(a) whether the investor intends to claim under Article 15.23.1 or 15.23.2;
(b) the name and address of the investor and evidence to establish that the investor is an investor of the other Party;
(c) the investment at issue and evidence to establish that the investor owns or controls the investment, including, if the investment is an enterprise, the name, address, and place of incorporation of the enterprise;
(d) for each claim:
(i) the provision of this Agreement alleged to have been breached, and
(ii) the factual basis for the alleged breach, including the measure at issue; and
(e) the relief sought and the approximate amount of damages claimed.
3. An investor of a Party may, when submitting a request for consultations, propose to hold the consultations by videoconference, telephone or similar means of communication as appropriate. The other Party should give sympathetic consideration to that request, in particular if the investor is a micro, small, or medium-sized enterprise.
4. The request for consultations shall be submitted to the other Party under this Article no later than:
(a) three years from the date on which the investor or, as applicable, the enterprise referred to in Article 15.23.2, first acquired or should have first acquired knowledge of the alleged breach and knowledge that the investor or, as applicable, the enterprise, has incurred loss or damage by reason of, or arising out of, that breach; or
(b) if the investor or, as applicable, the enterprise, has initiated a claim or proceeding before an administrative tribunal or court under the law of a Party with respect to the measure at issue in the investor’s request for consultations delivered pursuant to paragraph 2, two years after:
(i) the investor or, as applicable, the enterprise, ceases to pursue that claim; or
(ii) when that proceeding has otherwise ended;
provided that it is no later than seven years after the date on which the investor or, as applicable, the enterprise, first acquired or should have first acquired knowledge of the alleged breach and knowledge that the investor or, as applicable, the enterprise, has incurred loss or damage by reason of, or arising out of, that breach.
5. Neither a continuing breach nor the occurrence of similar or related acts or omissions may renew or interrupt the periods set out in paragraphs 4(a) and 4(b).
6. Unless otherwise agreed, consultations shall be held within 90 days of the delivery of the request for consultations pursuant to paragraph 2.
7. Unless otherwise agreed, the place of consultations shall be the capital city of the respondent Party.
8. If the investor has not submitted a claim under Article 15.23 within one year of the delivery of the request for consultations, the investor is deemed to have withdrawn its request for consultations and shall not submit a claim under this Section with respect to the same measure. This period may be extended by agreement between the investor of a Party and the other Party.
Article 15.22. Mediation
The disputing parties may at any time agree to have recourse to mediation. A respondent Party shall give sympathetic consideration to a request for mediation made by a micro, small, or medium-sized enterprise. Recourse to mediation is without prejudice to the legal position or rights of the disputing parties under this Section and is governed by the rules agreed to by the disputing parties, including any applicable rules for mediation adopted by the Joint Committee. If the disputing parties agree to have recourse to mediation, Article 15.21.4 and 15.21.7 and all timelines pursuant to an arbitration under this section are suspended from the date on which the disputing parties agreed to have recourse to mediation, and shall resume on the date on which either disputing party decides to terminate the mediation. A decision by a disputing party to terminate the mediation shall be transmitted by way of letter to the mediator and the other disputing party.
Article 15.23. Submission of a Claim to Arbitration
1. An investor of a Party may make a claim that the other Party has breached an obligation in accordance with Article 15.20 (12), and that the investor has incurred loss or damage by reason of, or arising out of, that breach, only if:
(a) the investor has fulfilled the requirements of Article 15.21;
(b) 180 days have elapsed since the receipt by the other Party of a request for consultations under Article 15.21;
(c) the claim relates to measures identified in the investor’s request for consultations under Article 15.21;
(d) the investor consents to dispute settlement in accordance with the procedures set out in this Agreement; and
(e) the investor and, if the claim is for loss or damage to an interest in an enterprise of the other Party that is a juridical person that the investor owns or controls directly or indirectly, the enterprise, waives its right to initiate or continue before any administrative tribunal or court under the law of any Party, or other dispute settlement procedure, any proceeding with respect to the measure of the other Party that is alleged to be a breach referred to in Article 15.21.2, except for a proceeding for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the law of the other Party.
2. An investor of a Party, on behalf of an enterprise of the other Party that is a juridical person that the investor owns or controls directly or indirectly, may make a claim that the other Party has breached an obligation in accordance with Article 15.20, and that the enterprise has incurred loss or damage by reason of, or arising out of, that breach, only if:
(a) the investor has fulfilled the requirements of Article 15.21;
(b) 180 days have elapsed since the receipt by the other Party of a request for consultations under Article 15.21;
(c) the claim relates to measures identified in the investor’s request for consultations under Article 15.21;
(d) the investor consents to dispute settlement in accordance with the procedures set out in this Agreement; and
(e) both the investor and the enterprise waive their right to initiate or continue before an administrative tribunal or court under the law of any Party, or other dispute settlement procedure, any proceeding with respect to the measure of the other Party that is alleged to be a breach referred to in Article 15.21.2, except for a proceeding for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the law of the other Party.
3. A consent and waiver required by this Article shall be in writing, shall be delivered to the respondent Party, and shall be included in the submission of a claim to arbitration.
4. Notwithstanding paragraph 3, a waiver from the enterprise under paragraph 1(e) or 2(e) is not required if the other Party has deprived the investor of control of the enterprise.
5. If an investor of a Party makes a claim under paragraph 2 and the investor or a non-controlling investor in the enterprise makes a claim under paragraph 1 arising out of the same events or circumstances, and two or more of the claims are submitted to dispute settlement under this Article, the claims should be heard together by a Tribunal constituted under Article 15.29, unless the Tribunal finds that the interests of a disputing party would be prejudiced thereby.
6. A claim submitted to arbitration under this Article shall be governed by the provisions of this Chapter, including the procedures set out in Annex 15-B.
7. An investor of a Party may, when submitting a claim under this Article, propose that a sole member of a Tribunal should hear the claim. The respondent Party may give sympathetic consideration to that request, in particular if the investor is a micro, small, or medium-sized enterprise or the compensation or damages claimed are relatively low.
8. A claim is submitted to arbitration under this Article when the notice of arbitration is received by the respondent Party.
Article 15.24. Consent to Arbitration
1. Each Party consents to the submission of a claim to arbitration under this Section in accordance with the provisions of this Agreement, including the requirements of Article 15.21 and Article 15.23.
2. The consent under paragraph 1 and the submission of a claim to arbitration under Article 15.23 shall satisfy the requirement of Article II of the New York Convention for an “agreement in writing”.
Article 15.25. Discontinuance
If the claimant fails to take a step in the proceeding within 180 days of the submission of a claim to arbitration under Article 15.23, or any other time period as agreed to by the disputing parties, the claimant is deemed to have withdrawn its claim and to have discontinued the proceeding. The Tribunal, if constituted, shall, at the request of the respondent Party, and after notice to the disputing parties, in an order take note of the discontinuance. After the order has been rendered, the authority of the Tribunal shall cease.
Article 15.26. Arbitrators
1. Except in respect of a Tribunal established under Article 15.29, and unless the disputing parties agree otherwise, the Tribunal shall be composed of three arbitrators. Each disputing party shall appoint one arbitrator, and the third arbitrator, who will be the presiding arbitrator, shall be appointed by agreement of, or pursuant to an appointment process agreed to by, the disputing parties. The disputing parties are encouraged to consider greater diversity in arbitrator appointments, including through the appointment of women.
2. A national of a Party shall not be appointed as an arbitrator in proceedings arising under this Chapter.
3. Arbitrators should have expertise or experience in public international law, international investment law or international trade law, or dispute resolution arising under international investment or international trade agreements.
4. Arbitrators shall be independent of, and not be affiliated with or take instructions from, a Party or the disputing investor.
5. If the disputing parties do not agree on the remuneration of the arbitrators before the Tribunal is constituted, the rate shall be set by the designated appointing authority.
6. If a Tribunal, other than a Tribunal established under Article 15.29, has not been constituted within 90 days of the submission of a claim to arbitration, a disputing party may ask the designated appointing authority to appoint the arbitrator or arbitrators not yet appointed. In accordance with this Article, the designated appointing authority shall make the appointment at their own discretion and, to the extent practicable, shall make this appointment in consultation with the disputing parties.
7. Arbitrators shall abide by Annex 15-C.
Article 15.27. Applicable Law and Interpretation
1. A Tribunal constituted under this Section shall apply this Agreement as interpreted in accordance with the Vienna Convention on the Law of Treaties, done at Vienna, 23 May 1969, and other rules and principles of international law applicable between the Parties.
2. If serious concerns arise as regards matters of interpretation, the Joint Committee may adopt an interpretation of this Agreement. An interpretation adopted by the Joint Committee shall be binding on a Tribunal.
3. A Tribunal has no jurisdiction to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of a Party. In determining the consistency of a measure with this Agreement, the Tribunal may consider, as appropriate, the domestic law of a 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 Party. Any meaning given to domestic law by the Tribunal is not binding on the courts or authorities of that Party.
4. If an investor of a Party submits a claim to arbitration under Article 15.23, including a claim that a Party breached Article 15.9, the investor has the burden of proving all elements of its claim, consistent with the general principles of international law applicable to international arbitration.
Article 15.28. Preliminary Objections
1. Without prejudice to a Tribunal’s authority to address other questions as a preliminary objection, a Tribunal shall address and decide as a preliminary question an objection by the respondent Party that, as a matter of law, a claim submitted is not a claim for which an award in favour of the investor may be made under this Agreement, including that a dispute is not within the competence of the Tribunal, or that a claim is manifestly without legal merit.
2. An objection under paragraph 1 shall be submitted to the Tribunal within 60 days of constitution of the Tribunal. The Tribunal shall suspend any proceeding on the merits and issue a decision or award on the objection, stating the grounds therefore, within
180 days of the objection. 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 disputing party requests a hearing, a Tribunal may, on a showing of extraordinary cause, delay issuing its decision or award by an additional brief period, which may not exceed 30 days.
3. When deciding an objection under paragraph 1, the Tribunal shall assume to be true the factual allegations in the claim to arbitration under Article 15.23, or any amendment to that claim. The Tribunal may also consider relevant facts not in dispute.
4. Whether or not the respondent Party raises an objection under paragraph 1 concerning the competence of the Tribunal, the respondent Party shall have the right to raise, and the Tribunal the authority to address and decide, a question pertaining to its competence in the course of the proceedings.
5. The provisions on costs in Article 15.35 apply to decisions or awards issued under this Article.
Article 15.29. Consolidation
1. If two or more claims have been submitted separately to arbitration under Article 15.23 and the claims have a question of law or fact in common and arise out of the same events or circumstances, a disputing party may seek a consolidation order in accordance with the agreement of all the disputing parties sought to be covered by the order or in accordance with the terms of paragraphs 2 through 10.
2. A disputing party that seeks a consolidation order under this Article shall deliver, in writing, a request to the designated appointing authority to establish a Tribunal and shall specify in the request:
(a) the name of the respondent Party, or the investors, against which the order is sought;
(b) the nature of the order sought; and
(c) the grounds for the order sought.
3. The disputing party shall deliver a copy of the request to the respondent Party, or the investors, against which the order is sought.
4. Unless the disputing parties sought to be covered by the order agree to a different appointment process, the designated appointing authority shall, within 60 days of receiving the request, establish a Tribunal composed of three arbitrators in accordance with the qualifications under Article 15.26.
5. A Tribunal established under this Article shall conduct its proceedings in accordance with the provisions of this Agreement, including the procedures set out in Annex 15-B.
6. If a Tribunal established under this Article is satisfied that the claims submitted to arbitration under Article 15.23 have a question of law or fact in common, the Tribunal may, in the interest of fair and efficient resolution of the claims and after hearing the disputing parties, by order:
(a) assume jurisdiction over, and hear and determine together, all or part of the claims; or
(b) assume jurisdiction over, and hear and determine one or more of the claims, the determination of which it believes would assist in resolving the other claims.
7. If a Tribunal has been established under this Article, an investor that has submitted a claim to arbitration under Article 15.23 and that has not been named in a request made under paragraph 2 may make a written request to the Tribunal that it be included in an order made under paragraph 6. The request shall specify:
(a) the name and address of the investor;
(b) the nature of the order sought; and
(c) the grounds on which the order is sought.
8. An investor referred to in paragraph 7 shall deliver a copy of its request to the disputing parties named in a request under paragraph 1.
9. A Tribunal established under Article 15.23 does not have jurisdiction to decide a claim, or a part of a claim, over which a Tribunal established under this Article has assumed jurisdiction.
10. On application of a disputing party, a Tribunal established under this Article, pending its decision under paragraph 6, may order that the proceedings of a Tribunal established under Article 15.23 be stayed unless the latter Tribunal has already adjourned its proceedings.
Article 15.30. Seat of Arbitration
The disputing parties may agree on the seat of arbitration under the arbitration rules applicable under Article 15.23 or Article 15.29. If the disputing parties fail to agree, the Tribunal shall determine the seat of arbitration, provided that the legal seat of arbitration shall be in the territory of a State that is a party to the New York Convention. (13)