The Contracting Parties confirm their common understanding that:
1. An action or series of actions of a Contracting Party cannot constitute an expropriation unless it interferes with tangible or intangible property rights or a property interest on an investment.
2. Article 6, paragraph 1 addresses two situations:
(a) the first is direct expropriation, where an investment is nationalized or otherwise directly expropriated through the formal transfer of title or direct confiscation;
(b) the second situation is indirect expropriation, when an act or series of acts of a Contracting Party have an effect equivalent to the direct expropriation without formal transfer of title or direct confiscation.
3. The determination of whether an act or series of acts of a Contracting Party, in a specific fact situation, constitue an indirect expropriation requires an examen of every case, taking in consideration, between other factors:
(a) the economic impact of the governmental action, although the fact of an action or series of actions of one contracting party has an adverse effect over the economic value of an investment, by itself, does not mean an indirect expropriation has been produced;
(b) the degree in which the governmental action intervenes with unequivocal and reasonable investment expectations ; and
(c) the character of the governmental action.