Title

AGREEMENT BETWEEN THE KINGDOM OF SPAIN AND THE REPUBLIC OF COLOMBIA FOR THE RECIPROCAL PROMOTION AND PROTECTION OF INVESTMENTS

Preamble

I. Preamble and Scope of Application

Preamble

The Kingdom of Spain and the Republic of Colombia, hereinafter referred to as "the Contracting Parties".

Desiring to promote economic co-operation for the mutual benefit of the Contracting Parties.

Convinced that investment has the potential to contribute to sustainable development and increase prosperity in both countries.

Seeking to promote and protect the Investment of one Contracting Party in the Territory of the other Contracting Party by means of favorable conditions for its realization and maintenance.

Reaffirming the right of each Contracting Party to regulate investments made in its Territory to meet legitimate public welfare objectives, which can be achieved without diminishing its generally applicable standards of health, public order and safety, labour rights and the environment.

Recognizing the importance of international security, democracy, human rights and the rule of law for the development of international trade and economic cooperation.

Have agreed as follows:

Body

Article 1. Scope of Application

1. This Agreement shall apply to Investments existing at the time of its entry into force, as well as to subsequent Investments made by Investors of a Contracting Party in the territory of the other Contracting Party under the legal system of the latter.

2. This Agreement shall not apply to disputes notified prior to its entry into force.

3. Nothing in this Agreement shall obligate the Contracting Parties to protect investments made with illicit capital or which are contrary to the laws and regulations of the Contracting Party in whose Territory the investment is made.

4. This Agreement shall not apply to tax provisions and proceedings.

5. This Agreement shall not apply to measures adopted by any Contracting Party, in accordance with its domestic law, relating to the financial sector for prudential reasons, including measures to protect investors, depositors, policy holders, persons to whom a financial service supplier owes a fiduciary duty, or financial consumers generally, or to safeguard the integrity, stability of the financial system or the safety, soundness, integrity or financial responsibility of a financial institution.

Nothing in this Agreement shall be construed to require any Contracting Party to disclose information about the activities and accounts of individual consumers or any confidential or proprietary information held by public bodies.

6. This Agreement shall not prevent the exercise or performance of any right or obligation of any Contracting Party under the Articles of Agreement of the International Monetary Fund (IMF).

7. The provisions of this Agreement shall not apply to subsidies or aids granted by a Contracting Party, including government guaranteed loans, guarantees and insurance. In particular, a decision by a Contracting Party in accordance with its national law not to grant, not to renew, not to maintain or reduce or to recover or to modify the conditions for the grant of an aid or subsidy shall not constitute an expropriation of the Investment under Article 11 (Expropriation) of this Agreement, nor a breach of the obligations assumed under Articles 4 (National Treatment), 5 (Most Favoured Nation) and 7 (Fair and Equitable Treatment of Investors and Investments) of this Agreement.

8. The provisions of the preceding paragraphs of this Article shall not conflict with the exercise in good faith of international obligations or of rights and obligations which a Contracting Party has entered into by virtue of its participation or association in a free trade area, customs union, common market, economic and monetary union or any other form of regional integration or cooperation, such as the European Union.

Article 2. Definitions

For the purposes of this Agreement:

Enterprise means any legal person or any other entity, whether for profit or not, private or public, incorporated or organized under the national law of a Contracting Party and having its registered office and carrying on substantial business activities in the Territory of that Contracting Party.

The existence of substantial business activities shall be understood to mean the production of goods and/or the rendering of services on a continuous and significant basis in the Territory of the other Contracting Party, and shall be determined on a case-by-case analysis of the nature and extent of the activities carried out.

Investment means any type of asset invested in the territory of a Contracting Party in accordance with the laws of the latter Contracting Party, owned or controlled directly or indirectly by an Investor of the other Contracting Party or by an Investor of the other Contracting Party.

1. Control of an asset shall mean effective control as assessed on the basis of an examination of all the circumstances of each case, including, but not limited to, the following:

a. the shareholding in the capital of the entity that owns the asset;

b. the ability to make decisions in relation to the management and administration of the asset or the entity that owns the asset; and

c. the ability, if any, to elect the members of the administrative body of the entity holding the asset.

In case of doubt, it is up to the Investor claiming direct or indirect control of an Investment to prove this circumstance.

2. All Investments will demand as essential requirements the cumulative concurrence of the following elements:

a. the commitment of capital or other resources;

b. the vocation of maintenance over time, understood as a duration of at least one year; and

c. the assumption of risk for the Investor.

3. The forms that an Inversion can take are, among others:

a. a Company;

b. shares and other forms of partnership interests in a Company;

c. bonds and other debt instruments of a Company;

d. a loan to a company;

e. any other type of interest or asset in a Company;

f. capital or any other resource committed for the development of an economic activity, such as those derived from:

i. a contract in the Territory of the other Contracting Party, including a turnkey or construction contract, or concession; or

ii. a contract in which the remuneration is substantially dependent on the output or remuneration of an enterprise;

g. intellectual property rights protected by the law of the receiving Contracting Party;

h. rights over movable and immovable property, including ownership and other real rights such as mortgages, pledges, usufructs and similar rights.

4. The definition of Investment does not include:

a. public debt operations. However, they shall be subject to Articles 4 (National Treatment) and 5 (Most Favoured Nation) of this Agreement;

b. monetary claims that derive solely from:

i. commercial transactions for the sale of goods or services by natural persons or enterprises in the Territory of one Contracting Party to natural persons or enterprises in the Territory of the other Contracting Party; or

ii. loans or credits granted in connection with a commercial transaction; or any judgment or arbitration award.

5. Retained earnings that are reinvested will be treated as Investments. Any alteration in the manner in which the assets are invested or reinvested does not affect their qualification as an Investment as long as those assets meet the characteristics set forth in the definition of Investment.

Investor means a National or an Enterprise of a Contracting Party that owns or has effective control of an Investment in the Territory of the other Contracting Party.

The concept of Investor excludes companies that merely hold financial holdings.

Measure means any law, regulation, procedure, requirement, act or omission attributable to a Contracting Party under international law, but does not include draft versions of laws, regulations, procedures or requirements.

National means a natural person who, under the national law of a Contracting Party, is considered to be its national.

In the event that the Investor is a natural person holding the nationality of both Contracting Parties, this Agreement shall only apply in respect of those Investments which are located in the territory of the State in respect of which the Investor is not effectively exercising the nationality.

State of effective nationality means the State with which the Investor maintains full political ties and has established its habitual domicile therein pursuant to the provisions of the Nationality Agreement between Spain and Colombia of June 27, 1979 and its Additional Protocol of September 14, 1998.

Returns means the sums obtained from an Investment or reinvestment, in particular but not exclusively: profits, dividends, royalties, interest, capital gains, royalties and fees.

Territory means:

In respect of the Kingdom of Spain, its territory, including also internal waters, airspace, the territorial sea and areas outside the territorial sea in which, in accordance with international law and by virtue of its internal legislation, it exercises or may in the future exercise jurisdiction or sovereign rights over the seabed, its subsoil and overlying waters, and its natural resources.

With respect to the Republic of Colombia, its continental and insular territory, including the archipelago of San Andres, Providencia and Santa Catalina, Malpelo Island, and all other islands, islets, keys, capes, and banks that belong to it, and the territorial sea and airspace, which are under its sovereignty, as well as any marine or submarine area outside its territorial waters, including its waters, sea floor, subsoil or any other elements over which it exercises sovereign or jurisdictional rights, in accordance with its Political Constitution, as well as any marine or submarine area outside the territorial waters, including its waters, seafloor, subsoil or any other elements over which it exercises sovereign or jurisdictional rights, in accordance with its Constitution, national law and applicable international law.

Article 3. Promotion and Admission of Investments

1. Each Contracting Party shall promote and admit, in its Territory, Investments made by Investors of the other Contracting Party in accordance with its legal system.

2. Each Contracting Party shall, in accordance with its legal system, grant to Investments made in its territory the permits necessary for the realization and maintenance of such Investment.

3. Each Contracting Party shall endeavor to grant, subject to its national law, the authorizations required by the Investor to permit the activities of consultants or qualified personnel, whatever their nationality, necessary for the implementation and maintenance of the Investment.

II.. Standards of Treatment

Article 4. National Treatment

1. Each Contracting Party shall grant to the Investors of the other Contracting Party and its Investments, treatment no less favourable than that accorded, in like circumstances, to its own Investors and Investments, in connection with the expansion of productive capacity, management and direction, operation, use, enjoyment, sale and any other manner in which the Investments in its Territory may be disposed of.

2. Treatment accorded by a Contracting Party under paragraph 1 means, in relation to a sub-national government, treatment no less favourable than the most favourable treatment accorded, in like circumstances, by that sub-national government to Investors and Investor Investments of Investors of the Contracting Party to which it belongs.

Article 5. Most Favoured Nation

1. Each Contracting Party shall accord to Investors of the other Contracting Party and to their Investments, treatment no less favourable than that accorded, in like circumstances, to Investors of a third State and to their Investments, in connection with the expansion of productive capacity, management and direction, operation, use, enjoyment and sale and any other manner in which Investments in its Territory may be disposed of.

2. Treatment accorded by a Contracting Party under paragraph 1 means, in relation to a sub-national government, treatment no less favourable than the most favourable treatment accorded, in like circumstances, by that sub-national government to Investors of a third State and their Investments in its territory.

3. For greater certainty, substantive obligations under other international investment treaties and other trade agreements do not in themselves constitute "treatment" and therefore cannot give rise to a breach of this Article in the absence of measures adopted or maintained by a Contracting Party pursuant to such obligations.

4. The treatment set forth in the preceding paragraphs of this Article does not involve the definitions in Article 2 (Definitions), the denial of benefits in Article 18 (Denial of Benefits), or the procedures for investor-State dispute settlement set forth in Section IV (Investor-State Dispute Settlement) of this Agreement.

Article 6. General Provision on National Treatment and Most Favoured Nation

1. The provisions of this Section entitled National Treatment and Most-Favored Nation shall not be construed to require a Contracting Party to extend to Investors and Investments any benefit, treatment, preference or privilege resulting from any of the following, whether existing or future:

a. free trade zone;

b. customs union;

c. common market;

d. economic or monetary union;

e. any other type of economic organization, regional or similar integration arrangements, to which a Contracting Party is or becomes a party; or

f. any international agreement or convention relating wholly or partly to taxation or any national provision or legislation relating wholly or partly to taxation or taxation measures.

2. The provisions of this Article shall be without prejudice to the right of Contracting Parties to apply different tax treatment to different taxpayers on the basis of their residence for tax purposes.

Article 7. Fair and Equitable Treatment of Investors and Investments

1. Each Contracting Party shall accord, in its Territory, to Investments of the other Contracting Party and to Investors, with respect to their Investments, fair and equitable treatment in accordance with paragraphs 2 to 5.

2. A Contracting Party shall be in breach of the obligation of fair and equitable treatment referred to in paragraph 1 where a measure or series of measures constitutes:

a. a denial of justice in criminal, civil or administrative proceedings;

b. a fundamental breach of due process, including a fundamental breach of the principle of transparency in judicial and administrative proceedings;

c. manifest arbitrariness;

d. specific discrimination on clearly unfair grounds, such as race, sex or religious belief; or

e. abusive treatment (including but not limited to coercion, intimidation or harassment) of Investors.

3. When applying the above obligation of fair and equitable treatment, the arbitral tribunal may take into account the reasonable and objective expectations of a diligent Investor, as well as the substantial obligations owed to the Investor, given the legal system of the Contracting Party.

4. For greater certainty, a breach of another provision of this Agreement or of another international agreement does not imply that there has been a breach of this Article.

5. For greater certainty, the fact that a measure violates national law does not, of itself, imply that there has been a violation of this Article.

Article 8. Full Protection and Physical Security

1. Each Contracting Party shall afford to Investors and Investments of the other Contracting Party full protection and physical security.

2. Full protection and physical security does not involve, in any case, greater police efforts than those granted to the inhabitants of the Contracting Party receiving the Investment or to Investors and Investments of third countries in similar situations.

Article 9. Compensation for Losses

1. Investors of a Contracting Party whose Investments in the Territory of the other Contracting Party suffer losses due to war or other armed conflict, revolution, state of national emergency, insurrection, riot, natural disaster or any other similar occurrence shall be accorded, by way of restitution, indemnity, compensation or other arrangement, treatment no less favorable than that accorded to its own Investors or to Investors of the other Contracting Party, the receiving Contracting Party shall accord them, by way of restitution, indemnification, compensation or other arrangement, treatment no less favorable than that which it accords to its own Investors or to Investors of any third State, whichever is more favorable to the Investor affected. The resulting payments shall be freely transferable.

2. Without prejudice to the provisions of paragraph 1 of this Article, Investors of a Contracting Party who suffer loss in any of the situations referred to in that paragraph in the Territory of the other Contracting Party as a result of the requisition or destruction of their Investments or part thereof by the forces or authorities of the latter Contracting Party shall be granted, by the latter Contracting Party, restitution or compensation in terms of Article 11 (Expropriation) of this Agreement, not required by the necessity of the situation, restitution or compensation shall be granted by the latter Contracting Party in accordance with the terms of Article 11 (Expropriation) of this Agreement.

Article 10. Transfers

1. Each Contracting Party shall guarantee to the Investors of the other Contracting Party that all transfers relating to their Investments shall be made freely, without delay, in freely convertible currency at the market rate of exchange applicable on the day of transfer. In particular, but not exclusively, the following:

a. the principal amount and additional sums necessary to maintain, increase and develop your Investment;

b. the returns on the Investment, as defined in Article 2 (Definitions) of this Agreement;

c. payments on foreign indebtedness;

d. salaries and remuneration received by employees hired abroad in connection with the Investment;

e. the proceeds from the sale of all or part of the Investment, or from the total or partial liquidation of the Investment;

f. the indemnities and compensations provided for in . Articles 9 (Compensation for Losses) and 11 (Expropriation) of this Agreement;

g. payments resulting from the settlement of disputes; or

h. the funds necessary for the repayment of loans linked to an investment.

2. A Contracting Party may make the execution of a transfer subject to conditions or prohibit the execution of a transfer by applying its law relating to:

a. bankruptcy, pre-insolvency, insolvency or protection of creditors' rights;

b. issuing, trading or dealing in securities;

c. criminal or penal offences;

d. financial reporting or accounting for transfers, where necessary to assist law enforcement or financial regulatory authorities; and

e. compliance with judicial or administrative decisions, in particular, but not exclusively, those related to:

i. insolvency, reorganization and similar proceedings; or

ii. compliance with labor, environmental, human rights and tax obligations.

3. Notwithstanding paragraphs 1 and 2 of this Article, in circumstances of macroeconomic imbalances seriously affecting or threatening to affect the balance of payments, a Contracting Party may temporarily restrict transfers, provided that such restrictions are consistent with or in conformity with the arrangements of the IMF, or are applied at the request of the IMF and are established in a fair, non-discriminatory and bona fide manner.

Article 11. Expropriation

1. Investments shall not be subject to nationalization or expropriation, either directly or indirectly, through measures having an effect equivalent to nationalization or expropriation (hereinafter "expropriation"), except where such expropriation is:

a. adopted for reasons of public utility or general interest;

b. conducted in accordance with due process of law;

c. carried out in a non-discriminatory manner; and

d. by payment of timely, adequate, prompt and effective compensation in accordance with this Agreement.

2. Expropriation may be direct or indirect:

a. direct expropriation occurs when an Investment is nationalized or directly expropriated through a formal transfer of ownership or a formal transfer of ownership, or a de facto taking of possession; and

b. indirect expropriation occurs when a Measure or a set of Measures of a Contracting Party has an effect equivalent to direct expropriation in the sense that it substantially deprives the Investor of the fundamental attributes of ownership in its Investment, including the right to use, enjoy or dispose of its Investment, without there having been a formal transfer of ownership or a de facto taking of possession.

3. The determination of whether a Measure or a set of Measures of a Contracting Party in a particular factual situation constitutes indirect expropriation requires a case-by-case investigation.

4. The mere fact that a Measure or series of Measures has adverse economic effects on the value of an Investment does not imply that indirect expropriation has occurred.

5. For greater certainty, except in the exceptional circumstance where the impact of a Measure or set of Measures is so severe in relation to its purpose as to be manifestly excessive, non-discriminatory Measures adopted by a Contracting Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, competition and the environment, do not constitute indirect expropriation.

6. The Contracting Parties confirm that the issuance of compulsory licenses under the provisions of the WTO TRIPS Agreement cannot be challenged under the provisions of this Article.

Article 12. Valuation of Economic Damage

1. When the breach of this Agreement has caused economic damages to the investor, and the reparation of such damages shall consist of compensation, the amount of such compensation shall follow the principle of full reparation, in accordance with the following paragraphs. In any case, the damages must be proven, effective and a consequence of the Measure.

2. Compensation shall be equivalent to the reduction experienced in the fair market value of the Investment as a result of the Measure that violates this Agreement. Various valuation methods shall be used to estimate fair market value, including, to the extent possible, information on recent market transactions involving comparable assets and business and/or management representations relating to the value of the Investment.

3. In any event, the valuation date shall be that of the time immediately before the Measures were adopted, or immediately before the imminent adoption of those Measures became public knowledge, whichever occurs first.

4. The fair market value will be calculated in a freely convertible currency, at the prevailing market rate of exchange for that currency at the valuation date.

5. The compensation will include simple interest from the valuation date to the payment date. The interest rate will correspond to the rate of the sovereign debt of the country receiving the Investment, at the corresponding term.

6. The compensation shall be paid promptly, effectively realizable and freely transferable, to the country designated by the Investor and in any freely convertible currency accepted by the Investor. In no case shall any taxes that may be levied by countries other than the country receiving the Investment be included in the compensation.

7. The compensation shall take into account any financial compensation made by the Contracting Party for the same cause.

8. When in relation to the same Investment there are several Investors entitled to file a claim under this or other international investment agreements, it should be taken into account whether there has already been compensation for damages to the same Investment caused by the same Measures, in order to avoid duplication of compensation.

9. Where an Investor suffers a loss through an Enterprise incorporated under the national law of the respondent Contracting Party, and has ownership and control over such Enterprise, the Investor may submit a claim on behalf of such Enterprise for the full amount of the loss suffered by the Enterprise, provided that it provides a waiver by the other shareholders and the Enterprise of the same loss. Article 10 (Transfers) of this Agreement shall apply to such payment.

10. Except as provided in paragraph 9, any compensation granted in favour of the Investor shall take into account its shareholding in the Investment.

Article 13. Subrogation

1. If a Contracting Party or the agency designated by it makes a payment by way of indemnity or pursuant to a contract of insurance or guarantee provided against non-commercial risks in connection with an Investment of any of its Investors in the territory of the other Contracting Party, the latter Contracting Party shall recognize:

a. the subrogation of any right or title of such Investor in favor of the first Contracting Party or its designated agency, and

b. the right of the first Contracting Party or its designated agency to exercise, by virtue of subrogation, any right or title to the same extent as its former holder.