Title
AGREEMENT BETWEEN JAPAN AND THE SULTANATE OF OMAN FOR THE RECIPROCAL PROMOTION AND PROTECTION OF INVESTMENT
Preamble
Japan and the Sultanate of Oman (hereinafter referred to as "the Contracting Parties"),
Desiring to further promote investment in order to strengthen the economic relationship between the Contracting Parties;
Intending to further create stable, equitable, favourable and transparent conditions for greater investment by investors of a Contracting Party in the Area of the other Contracting Party;
Recognising that these objectives can be achieved without relaxing health, safety and environmental measures of general application;
Recognising the importance of the cooperative relationship between labour and management in promoting investment between the Contracting Parties in line with internationally accepted labour standards; and
Convinced that this Agreement will contribute to the further development of the overall relationship between the Contracting Parties;
Have agreed as follows:
Body
Article 1. Definitions
For the purposes of this Agreement,
(a) the term "investment" means every kind of asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, such as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk, including:
(i) an enterprise and a branch of an enterprise;
(ii) shares, stocks or other forms of equity participation in an enterprise, including rights derived therefrom;
(iii) Bonds, debentures, loans and other forms of debt, including rights derived therefrom;
(iv) Rights under contracts, including turnkey, construction, management, production or revenue-sharing contracts;
(v) Claims to money and to any performance under contract having a financial value;
(iv) Intellectual property rights, including copyrights and related rights, patent rights and rights relating to utility models, trademarks, industrial designs, layout-designs of integrated circuits, new varieties of plants, trade names, indications of source or geographical indications and undisclosed information;
(vii) Rights conferred pursuant to laws and regulations or contracts such as concessions, licenses, authorisations and permits, including those for the exploration, prospect, exploitation and extraction of natural resources; and
(viii) Any other movable and immovable property, and any related property rights, such as leases, mortgages, liens and pledges;
Investments include return. The term "return" means the amounts yielded by investments, in particular, profit, interest, capital gains, dividends, royalties and fees.
A change in the form in which assets are invested or reinvested does not affect their character as investments, provided that the change is not inconsistent with the laws and regulations of the Contracting Party where the assets are invested or reinvested.
(b) the term "investor of a Contracting Party" means:
(i) A natural person having the nationality of that Contracting Party in accordance with its applicable laws and regulations; or
(ii) An enterprise of that Contracting Party, that is making or has made an investment in the Area of the other Contracting Party;
(c) the term "enterprise of a Contracting Party" means any legal person or any other entity duly constituted or organised under the applicable laws and regulations of that Contracting Party, whether or not for profit, and whether private or government owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association, organisation or company;
d) an enterprise is:
(i) "owned" by an investor if more than fifty percent of the equity interest in it is owned by the investor; and
(ii) "controlled" by an investor if the investor has the power to name a majority of its directors or otherwise to legally direct its actions;
e) the term "investment activities" means operation, management, maintenance, use, enjoyment and sale or other disposal of investments;
f) the term "Area" means:
(i) with respect to Japan: its territory, and the exclusive economic zone and the continental shelf with respect to which Japan exercises sovereign rights or jurisdiction in accordance with international law; and
(ii) with respect to the Sultanate of Oman: the land, internal waters, territorial waters, air space under its sovereignty, and maritime areas, namely, the exclusive economic zone and the continental shelf where the Sultanate of Oman exercises sovereign rights or jurisdiction in accordance with its domestic laws and the provisions of international law; and
g) the term "freely usable currency" means freely usable currency as defined under the Articles of Agreement of the International Monetary Fund.
Article 2. Promotion and Admission of Investment
1. Each Contracting Party shall encourage and create favourable conditions for investors of the other Contracting Party to make investments in its Area.
2. Each Contracting Party shall, subject to its rights to exercise powers in accordance with its applicable laws and regulations, including those with regard to foreign ownership and control, admit investment of investors of the other Contracting Party.
Note: For greater certainty, this paragraph shall not be construed to oblige one Contracting Party to accord investors of the other Contracting Party and to their investments the same treatment it accords to its own investors and to their investments, with respect to the acquisition or lease of real estate.
Article 3. National Treatment
1. Each Contracting Party shall in its Area accord to investors of the other Contracting Party and to their investments treatment no less favourable than the treatment it accords in like circumstances to its own investors and to their investments with respect to investment activities.
2. The provision of paragraph 1 shall not apply to subsidies including grants, government supported loans, guarantees and insurance.
3. Paragraph 1 shall not be construed to prevent a Contracting Party from adopting or maintaining a measure that prescribes special formalities in connection with investment activities of investors of the other Contracting Party in its Area, provided that such special formalities do not impair the substance of the rights of such investors under this Agreement.
Article 4. Most-favoured-nation Treatment
1. Each Contracting Party shall in its Area accord to investors of the other Contracting Party and to their investments treatment no less favourable than the treatment it accords in like circumstances to investors of a nonContracting Party and to their investments with respect to investment activities.
Note: It is understood that the treatment referred to in
Paragraph 1 does not include treatment accorded to investors of a non-Contracting Party by provisions concerning the settlement of investment disputes, such as the mechanism set out in Article 15, that is provided for in other international agreements between a Contracting Party and a non-Contracting Party.
2. The provisions of paragraph 1 shall not be construed so as to oblige one Contracting Party to extend to the investors of the other Contracting Party the benefit of any treatment, preference or privilege resulting from any existing or future free trade area, customs union, economic union, or other form of regional agreement, to which either of the Contracting Party is a party.
Article 5. General Treatment and Improvement of Investment Environment
1. Each Contracting Party shall in its Area accord to investments of investors of the other Contracting Party treatment in accordance with international law, including fair and equitable treatment and full protection and security.
2. Neither Contracting Party shall, within its Area, in any way impair investment activities of investors of the other Contracting Party by arbitrary measures.
3. Each Contracting Party shall observe any obligation it may have entered into with regard to investments and investment activities of investors of the other Contracting Party.
Article 6. Access to the Courts of Justice
Each Contracting Party shall in its Area accord to investors of the other Contracting Party treatment no less favourable than the treatment which it accords in like circumstances to its own investors or to investors of a non-Contracting Party with respect to access to the courts of justice and administrative tribunals and agencies in all degrees of jurisdiction, both in pursuit and in defence of such investors' rights.
Article 7. Transparency
1. Each Contracting Party shall promptly publish, or otherwise make publicly available, its laws, regulations, administrative procedures and administrative rulings and judicial decisions of general application as well as international agreements which pertain to any matters covered by this Agreement.
2. Each Contracting Party shall make publicly available the names and addresses of the competent authorities responsible for laws, regulations, administrative procedures and administrative rulings, referred to in paragraph 1.
3. Each Contracting Party shall, upon request by the other Contracting Party, promptly respond to specific questions and provide that other Contracting Party with information on matters set out in paragraph 1.
4. Paragraphs 1 and 3 shall not be construed so as to oblige either Contracting Party to disclose confidential information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest, or which would prejudice privacy or legitimate commercial interests.
Article 8. Measures Against Corruption
Each Contracting Party shall ensure that measures and efforts are undertaken to prevent and combat corruption regarding matters covered by this Agreement in accordance with its laws and regulations.
Article 9. Entry, Sojourn and Residence of Investors
Each Contracting Party shall, subject to its applicable laws and regulations relating to the entry, sojourn and residence, permit a natural person having the nationality of the other Contracting Party and a personnel employed by, an executive, a manager and a member of the board of directors of, an enterprise of the other Contracting Party to enter the Area of the former Contracting Party and remain therein for the purpose of investment activities.
Article 10. Expropriation and Compensation
1. Neither Contracting Party shall expropriate or nationalise investments in its Area of investors of the other Contracting Party or take any measure equivalent to expropriation or nationalisation (hereinafter referred to as "expropriation") except:
(a) for a public purpose;
(b) in a non-discriminatory manner;
(c) upon payment of prompt, adequate and effective compensation pursuant to paragraphs 2, 3 and 4; and
(d) in accordance with due process of law and Article 5
2. The compensation shall be equivalent to the fair market value of the expropriated investments at the time when the expropriation was publicly announced or when the expropriation occurred, whichever is the earlier. The fair market value shall not reflect any change in value occurring because the expropriation had become publicly known earlier.
3. The compensation shall be paid without delay and shall include interest at a commercially reasonable rate, taking into account the length of time until the time of payment. It shall be effectively realisable and freely transferable and shall be freely convertible into the currency of the Contracting Party of the investors concerned, and into freely usable currencies, at the market exchange rate prevailing on the date of expropriation.
4. Without prejudice to the provisions of Article 15, the investors affected by expropriation shall have a right of access to the courts of justice or administrative tribunals or agencies of the Contracting Party making the expropriation to seek a prompt review of the execution and the amount of compensation in accordance with the principles set out in this Article.
Article 11. Protection from Strife
1. Each Contracting Party shall accord to investors of the other Contracting Party that have suffered loss or damage relating to their investments in the Area of the former Contracting Party due to armed conflict or a state of emergency such as revolution, insurrection, civil disturbance or any other similar event in the Area of that former Contracting Party, treatment, as regards restitution, indemnification, compensation or any other settlement, that is no less favourable than that which it accords to its own investors or to investors of a nonContracting Party, whichever is more favourable to the investors of the other Contracting Party.
2. Any payment as a means of settlement referred to in paragraph 1 shall be effectively realisable, freely transferable and freely convertible at the market exchange rate prevailing on the date of payment into the currency of the Contracting Party of the investors concerned or into freely usable currencies.
Article 12. Subrogation
If a Contracting Party or its designated agency makes a payment to any investor of that Contracting Party under an indemnity, guarantee or insurance contract, pertaining to an investment of such investor in the Area of the other Contracting Party, the latter Contracting Party shall recognise the assignment to the former Contracting Party or its designated agency of any right or claim of such investor on account of which such payment is made and shall recognise the right of the former Contracting Party or its designated agency to exercise by virtue of subrogation any such right or claim to the same extent as the original right or claim of the investor. As regards payment to be made to that former Contracting Party or its designated agency by virtue of such assignment of right or claim and the transfer of such payment, the provisions of Articles 10, 11 and 13 shall apply mutatis mutandis.
Article 13. Transfers
1. Each Contracting Party shall allow all transfers relating to investments in its Area of an investor of the other Contracting Party to be made freely into and out of its Area without delay. Such transfers shall include, in particular, though not exclusively:
(a) the initial capital and additional amounts to maintain or increase investments;
(b) profits, interest, capital gains, dividends, royalties, fees and other current incomes accruing from investments;
(c) payments made under a contract including loan payments in connection with investments;
(d) proceeds of the total or partial sale or liquidation of investments;
(e) earnings and remuneration of personnel from abroad engaged in activities in connection with investments in the Area of the former Contracting Party;
(f) payments made in accordance with Articles 10 and 11; and
(g) payments arising out of the settlement of a dispute under Article 15.
2. Each Contracting Party shall allow transfers referred to in paragraph 1 to be made without delay in freely usable currencies at the market exchange rate prevailing on the date of the transfer.
3. Notwithstanding paragraphs 1 and 2, a Contracting Party may delay or prevent a transfer through the equitable, non-discriminatory and good-faith application of its laws and regulations relating to:
(a) bankruptcy, insolvency or the protection of the rights of creditors;
(b) issuing, trading or dealing in securities;
(c) criminal or penal offences; or
(d) ensuring compliance with orders or judgments in judicial or administrative proceedings.
Article 14. Settlement of Disputes between the Contracting Parties
1. Each Contracting Party shall accord sympathetic consideration to, and shall afford adequate opportunity for consultation regarding, such representations as the other Contracting Party may make with respect to any matter affecting the implementation of this Agreement.
2. Any dispute between the Contracting Parties as to the interpretation and application of this Agreement, not satisfactorily adjusted by diplomacy within 6 months after the request for consultation referred to in paragraph 1, shall be referred for decision to an arbitration board.
Such arbitration board shall be composed of three arbitrators, with each Contracting Party appointing one arbitrator within a period of thirty days from the date of receipt by either Contracting Party from the other Contracting Party of a note requesting arbitration of the dispute, and the third arbitrator to be agreed upon as President by the two arbitrators so chosen within a further period of thirty days, provided that the third arbitrator shall not be a national of either Contracting Party.
3. If the third arbitrator is not agreed upon between the arbitrators appointed by each Contracting Party within the further period of thirty days referred to in paragraph 2, the Contracting Parties shall request the President of the International Court of Justice to appoint the third arbitrator who shall not be a national of either Contracting Party. If the President of the International Court of Justice is a national of either Contracting Party or if he is otherwise prevented from discharging the said function, the Vice-President of the court shall be invited to make the necessary appointments. If the Vice-President of the court is a national of either Contracting Party or if he, too, is prevented from discharging the said function, the member of the court next in seniority who is not a national of either Contracting Party shall be invited to make the necessary appointments.
4. The arbitration board shall within a reasonable period of time reach its decision by a majority of votes. Such decision shall be final and binding.
5. Each Contracting Party shall bear the cost of the arbitrator of its choice and its representation in the arbitral proceedings. The cost of the President of the arbitration board in discharging his or her duties and the remaining costs of the arbitration board shall be borne equally by the Contracting Parties. However, the arbitral board may, at its discretion, direct that a higher proportion or all of such remaining costs of the arbitration board be paid by one of the Contracting Parties.
Article 15. Settlement of Investment Disputes between a Contracting Party and an Investor of the other Contracting Party
1. For the purposes of this Article, "investment dispute" is a dispute between a Contracting Party and an investor of the other Contracting Party that has incurred loss or damage by reason of, or arising out of, an alleged breach of any obligation of the former Contracting Party under this Agreement with respect to the investor of that other Contracting Party or its investments in the Area of the former Contracting Party.
2. Subject to subparagraph 7(b), nothing in this Article shall be construed so as to prevent an investor who is a party to an investment dispute (hereinafter referred to in this Article as "disputing investor") from seeking administrative or judicial settlement within the Area of the Contracting Party that is a party to the investment dispute (hereinafter referred to in this Article as "disputing Party").
3. Any investment dispute shall, as far as possible, be settled amicably through consultations between the disputing investor and the disputing Party (hereinafter referred to in this Article as "the disputing parties").
4. If the investment dispute cannot be settled through such consultations within six months from the date on which the disputing investor requested in writing the disputing Party for consultations, the disputing investor may, subject to subparagraph 7(a), submit the investment dispute to one of the following international arbitrations:
a) arbitration in accordance with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington, March 18, 1965 (hereinafter referred to in this Article as "the ICSID Convention"), so long as the ICSID Convention is in force between the Contracting Parties;
b) arbitration under the Additional Facility Rules of the International Centre for Settlement of Investment Disputes, provided that either Contracting Party, but not both, is a party to the ICSID Convention;
c) arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law; and
d) if agreed with the disputing Party, any arbitration in accordance with other arbitration rules.
5. (a) Except for investment disputes regarding the obligation of the disputing Party under paragraph 3 of Article 5, each Contracting Party hereby consents to the submission of an investment dispute by a disputing investor to arbitration set forth in paragraph 4 chosen by the disputing investor.
(b) For investment disputes regarding the obligation of the disputing Party under paragraph 3 of Article 5, the disputing Party may give necessary consent for the submission to the arbitration on a case-by-case basis.
6. Notwithstanding paragraph 5, no investment disputes may be submitted to arbitration set forth in paragraph 4, if more than three years have elapsed since the date on which the disputing investor acquired or should have first acquired, whichever is the earlier, the knowledge that the disputing investor had incurred loss or damage referred to in paragraph 1.
7. (a) In the event that an investment dispute has been submitted to courts of justice, administrative tribunals or agencies or any other binding dispute settlement mechanism established under the laws and regulations of the disputing Party, any arbitration set forth in paragraph 4 can be sought only if the disputing investor withdraws, in accordance with the laws and regulations of the disputing Party, its claim from such domestic remedies before the final decisions are made therein.
(b) In the event that an investment dispute has been submitted for resolution under one of the arbitrations set forth in paragraph 4, the same investment dispute shall not be submitted for resolution under courts of justice, administrative tribunals or agencies or any other binding dispute settlement mechanism established under the laws and regulations of the disputing Party.
8. An arbitral tribunal established under paragraph 4 shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law.
9. The disputing Party shall deliver to the other Contracting Party:
(a) written notice of the investment dispute submitted to the arbitration no later than thirty days after the date on which the investment dispute was submitted; and
(b) copies of all pleadings filed in the arbitration.
10. The Contracting Party which is not the disputing Party may, upon written notice to the disputing parties, make submissions to the arbitral tribunal on a question of interpretation of this Agreement.
11. The award rendered by the arbitral tribunal shall include:
(a) a judgment whether or not there has been a breach by the disputing Party of any obligation under this Agreement with respect to the disputing investor and its investments; and
(b) one or both of the following remedies, only if there has been such a breach:
(i) monetary damages and applicable interest; and
(ii) restitution of property, in which case the award shall provide that the disputing Party may pay monetary damages and any applicable interest, in lieu of restitution.
12. The disputing Party may make available to the public in a timely manner all documents, including an award, submitted to, or issued by, an arbitral tribunal established under paragraph 4, subject to redaction of:
(a) confidential business information;
(b) information which is privileged or otherwise protected from disclosure under the applicable laws and regulations of either Contracting Party; and
(c) information which shall be withheld pursuant to the relevant arbitration rules.
13. Unless the disputing parties agree otherwise, the arbitration shall be held in a country that is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958 (hereinafter referred to in this Article as "the New York Convention").
14. The award rendered by the arbitral tribunal shall be final and binding upon the disputing parties. This award shall be executed in accordance with the applicable laws and regulations, as well as relevant international law including the ICSID Convention and the New York Convention, concerning the execution of award in force in the country where such execution is sought.
Article 16. Security Exceptions
1. Notwithstanding any other provisions in this Agreement other than the provisions of Article 11, each Contracting Party may take any measure:
(a) which it considers necessary for the protection of its essential security interests;
(i) taken in time of war, or armed conflict, or other emergency in that Contracting Party or in international relations; or
(ii) relating to the implementation of national policies or international agreements respecting the non-proliferation of weapons;
(b) in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
2. In cases where a Contracting Party takes any measure, pursuant to paragraph 1, that does not conform with the obligations of the provisions of this Agreement other than the provisions of Article 11, that Contracting Party shall not use such measure as a means of avoiding its obligations.
Article 17. Temporary Safeguard Measures
1. A Contracting Party may adopt or maintain measures not conforming with its obligations under Article 3 relating to cross-border capital transactions and Article 13:
(a) in the event of serious balance-of-payments and external financial difficulties or threat thereof; or
(b) in cases where, in exceptional circumstances, movements of capital cause or threaten to cause serious difficulties for macroeconomic management, in particular, monetary and exchange rate policies.
2. Measures referred to in paragraph 1:
(a) shall be consistent with the Articles of Agreement of the International Monetary Fund, so long as the Contracting Party taking the measures is a party to the said Articles;
(b) shall not exceed those necessary to deal with the circumstances set out in paragraph 1 above;
(c) shall be temporary and shall be eliminated as soon as conditions permit;
(d) shall be promptly notified to the other Contracting Party; and
(e) shall avoid unnecessary damages to the commercial, economic and financial interests of the other Contracting Party.
3. Nothing in this Agreement shall be regarded as altering the rights enjoyed and obligations undertaken by a Contracting Party as a party to the Articles of Agreement of the International Monetary Fund.
Article 18. Prudential Measures
1. Notwithstanding any other provisions of this Agreement, a Contracting Party shall not be prevented from taking measures relating to financial services for prudential reasons, including measures for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by an enterprise supplying financial services, or to ensure the integrity and stability of its financial system.