Title

AGREEMENT BETWEEN THE SLOVAK REPUBLIC AND THE ISLAMIC REPUBLIC OF IRAN FOR THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS

Preamble

THE SLOVAK REPUBLIC and THE ISLAMIC REPUBLIC OF IRAN

(hereinafter referred to as the "Contracting Parties");

RECOGNIZING that investment is critical for sustainable development, and understanding that the promotion of investment requires co-operative efforts by investors and both Contracting Parties, whether the Host State to investments or the Home State of investors;

SEEKING to ensure that investment is consistent with and facilitative of the protection of health, safety and the environment, the promotion and protection of internationally and domestically recognized labor rights;

RECOGNIZING that the promotion and reciprocal protection of investments shall be conducive to the stimulation of economic prosperity in both Contracting Parties;

SEEKING to promote investment that contributes to the sustainable development of the Contracting Parties;

DESIRING to create favorable conditions for greater investment by investors of either Contracting Party in the territory of the other Contracting Party;

AIMING to secure an overall balance of rights and obligations between investors and the Host State;

ACKNOWLEDGING the rights and responsibilities of the Contracting Parties to regulate investment within their territories in order to meet own policy objectives;

DETERMINED to prevent and combat corruption, including bribery, in international cooperation and investment and to promote corporate social accountability;

HAVE AGREED as follows:

Body

Section A. Definitions and Scope

Article 1. Definitions

For the purposes of this Agreement:

1. The term "enterprise" means any for profit entity constituted or organized under applicable law of the Contracting Parties, whether privately or governmentally owned or controlled, including a corporation, partnership, sole proprietorship, association, company including joint venture, or similar organization; and a branch or representative office of any such entity.

2. The term " investment " means:

a) shares, stock and other forms of equity participation in an enterprise;

b) bonds, debentures, loans and other forms of debt instruments in an enterprise;

c) tangible property, including real property; and intangible property, including rights, such as leases, mortgages, liens and pledges on real property;

d) rights conferred pursuant to law, such as licenses and permits;

e) intellectual property rights; and

f) research and development non-profit organization;

Provided that

a) the investment is made and maintained in accordance with the laws of the Host State and in good faith;

b) the investment is directly owned or directly controlled by an investor;

c) the investment has the following characteristics (not applicable in the case of research and development non-profit organizations):

i. the commitment of capital or other resources;

ii. the expectation of regularity of profit;

iii. the assumption of risk;

iv. A reasonable duration; and

v. an effective contribution to the Host State's economy;

d) in case of enterprise and research and development non-profit organizations there is a significant physical presence of the investment in the territory of Host State; and

e) the investor performs via its investment substantial business activities in the Host State or in the case of research and development non-profit organizations, substantial research and development activity.

A "significant physical presence" does not include, for example, sales offices without other operational facilities, post office box-based businesses, internet-based business or other types of business with no or limited physical presence in the Host State.

Notwithstanding the above, for the avoidance of any doubt, "investment" shall not include:

a) goodwill or market share;

b) portfolio investment, which is 10% or less shareholding;

c) claims to money deriving solely from commercial contracts for the sale of goods or services to or from the territory of a Contracting Party to the territory of another country, or to a State enterprise;

d) futures, swaps, forwards, options, and other derivatives;

e) assets used for non-business purposes, other than assets of research and development non-profit organizations;

f) funds;

g) the following loans and debt securities:

i. debt securities and loans with the original maturity of less than three years;

ii. a loan to or debt security issued by a financial institution, which is not treated as regulatory capital by the Contracting Party in whose territory the financial institution is located;

iii. the extension of credit in connection with a commercial transaction, such as trade financing.

Further, the term "investment" means also reinvestment (investment of the proceeds of the initial investment) and change in the form of investment (alteration of the form in which assets are invested), provided that the new investment meets the above criteria and has been approved by the responsible authority of the Host State, if applicable.

3. The term " investor " means the following natural persons or entities that have made across border investment in the territory of the Host State and that, on the date on which the alleged breach of this agreement occurred as well as on the date on which the claim was submitted to arbitration are:

a) natural persons who, as determined under the domestic law of the Home State, are nationals of the Home State or permanent residents of the Home State and that have not the nationality of the Host State;

b) enterprises (other than branches and representative offices), sovereign wealth funds and non-profit organizations focused on research and development provided that they:

i. are either incorporated or constituted, as well as maintained, in accordance with the laws and regulations of the Home State;

ii. have their registered office, central administration or principal place of business in the territory of the Home State; and

iii. maintain substantial business activities in the territory of the Home State.

Notwithstanding the above, the term "investor" does not include:

a) entities without legal capacity under the law of the Home State; and

b) funds other than sovereign wealth funds.

A natural person that is a dual national of either Contracting Party and any nonContracting Party, shall be deemed to be exclusively a national of the State of his

Or her dominant and effective nationality. Nevertheless, an investor does not

Include any person who also has or had the nationality of the Host State.

4. The term " territory " means:

a) In respect of the Slovak Republic: the land territory, internal waters and the airspace above them over which it exercises sovereignty, sovereign rights and jurisdiction in accordance with international law.

b) In respect of the Islamic Republic of Iran it refers to the areas under the sovereignty or jurisdiction, as the case may be, of the Islamic Republic of Iran and includes its respective maritime areas.

5. The term returns " means all amounts yielded by or derived from an investment or reinvestment, including profits, dividends, capital gains, royalties, interest, payments in connection with intellectual property rights, payments in kind and all other lawful income.

6. The term " Host State " means the Contracting Party in which the investment is located.

7. The term „ Home State " means the Contracting Party which is the State of origin of the investor.

8. The term " taxation measures " refers to any tax measure under applicable law of the Host State.

9. The term " prudential reasons " includes the maintenance of the safety, soundness, integrity, or financial responsibility of individual financial institutions, as well as the maintenance of the safety and financial and operational integrity of payment and clearing systems.

10. The term " freely convertible currency " means " freely usable currency " as determined by the International Monetary Fund under its Articles of Agreement.

11. The term " Disputing Parties " means the claimant and the respondent.

12. The term " claimant " means investor or alleged investor seeking a remedy for the alleged breach of the Agreement by the Host State under Section C of this Agreement.

13. The term " respondent " means the Contracting Party that is a party to proceedings under Section C of this Agreement.

Article 2. Scope

1. This Agreement applies to measures adopted or maintained by the Contracting Party relating to:

a) investors, as defined in Article 1; and

b) investments, as defined in Article 1.

2. Regarding the application of this Agreement to investments, this Agreement applies to investments that are made and maintained in accordance with Host State laws and regulations, whether investments were made before or after entry into force of this Agreement.

3. This Agreement does not bind either Contracting Party in relation to any act or fact that took place or any situation that ceased to exist before the date of entry into force of this Agreement.

4. This Agreement shall apply without prejudice to the obligations of the Contracting Parties deriving from their membership or participation in any existing or future customs unions, economic union, regional economic integration agreement or similar international agreement such as the European Union. Consequently the provisions of this Agreement may not be invoked or interpreted, neither in whole nor in part, in such a way as to invalidate, amend or otherwise affect the obligations of the Parties from such membership or participation.

5. For greater certainty, this Agreement provides only post establishment protection and does not cover the pre-establishment phase or matters of market access.

6. This Agreement shall apply to investments approved by the competent authority of the Host State, if so required by its laws and regulations, and made prior to or after the entry into force of this Agreement. In the case of the Islamic Republic of Iran, this Agreement only applies to the Investments approved by the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) or the agency which may succeed it.

Section B. Promotion and Protection of Investments

Article 3. Standard of Treatment

1. Each Contracting Party shall accord to investments of investors of the other Contracting Party, and to investors with respect to their investments, fair treatment and full protection and security in accordance with paragraphs 2 to 4.

2. A breach of the obligation of fair treatment referenced in paragraph 1 may be found only where a measure or series of measures constitutes:

a) Denial of justice in criminal, civil or administrative proceedings;

b) Fundamental breach of due process, including a fundamental breach of transparency, in judicial and administrative proceedings;

c) Manifest arbitrariness; or

d) Targeted discrimination on the grounds of nationality.

3. For greater certainty, ‘full protection and security' refers to the Contracting Party's obligations relating to physical security of investors and investments.

4. 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.

Article 4. National Treatment and Most Favored Nation Treatment

1. Each Contracting Party shall accord to investors of the other Contracting Party and their investments treatment no less favorable than that it accords, in comparable situations, to its own investors and their investments with respect to the management, conduct, operation, maintenance, use, enjoyment and sale or other disposition of investments in its territory.

2. Each Contracting Party shall accord to investors of the other Contracting Party and their investments treatment no less favorable than that it accords, in comparable situations, to investors of any third State or to their investments with respect to the management, conduct, operation, maintenance, use, enjoyment and sale or other disposition of investments in its territory.

3. For greater certainty, a determination of whether an investment or an investor is in comparable situations for the purposes of paragraphs 1. and 2. of this

Article shall be made based on an assessment of the totality of circumstances related to the investor or the investment, including:

a) the effect of the investment on

i. the local community where investment is located;

ii. the environment, including effects that relate to the cumulative impact of all investments within a jurisdiction;

b) the character of the measure, including its nature, purpose, duration and rationale; and

c) the regulations that apply to investments or investors.

4. A measure of the Contracting Party that treats investors of the other Contracting Party or their investments less favorably than:

a) its own investors or their investments is not inconsistent with paragraph 1 of this Article; or

b) investors of another State or their investments is not inconsistent with paragraph 2 of this Article;

If it is adopted and applied by the Contracting Party in pursuit of a legitimate public purpose that is not based on the nationality of the investor or of nationality of the owner of an investment, either explicitly or factually, including the protection of health, safety, the environment, and internationally and domestically recognized labor rights, or the elimination of bribery and corruption, and it bears a reasonable connection to the stated purpose.

5. Paragraph 2. of this Article shall not apply to:

a) treatment by the Contracting Party under any bilateral or multilateral international agreement in force or signed by the Contracting Party prior to the date of entry into force of this Agreement;

b) treatment by the Contracting Party pursuant to:

i. bilateral or multilateral agreement establishing, strengthening or expanding a free trade area, customs union, common market, labor market integration commitment or similar international agreement; or

ii. investment contract concluded between Host State and investor promoting investment of such investor; or

c) for the avoidance of any doubt, any provisions of Section C of this Agreement.

6. The provisions of paragraphs 1. and 2. of this Article shall not apply to:

a) government procurement; and

b) subsidies or grants provided by the Contracting Party, including government-supported loans, guarantees and insurance.

Article 5. Compensation for Losses

1. Each Contracting Party shall accord to investors of the other Contracting Party, and to investments, non-discriminatory treatment with respect to measures it adopts or maintains relating to losses suffered by investments in its territory owing to armed conflict or civil strife.

2. Notwithstanding paragraph 1 above, if an investor of the Contracting Party, in the situations referred to in paragraph 1, suffers a loss in the territory of the other Contracting Party resulting from:

a) requisitioning of its investment or part thereof by the latter's forces or authorities; or

b) destruction of its investment or part thereof by the latter's forces or authorities, which was not required by the necessity of the situation,

The latter Contracting Party shall provide the investor restitution or compensation which in either case shall be prompt, appropriate and effective and paid without undue delay.

Article 6. Expropriation

1. Neither Contracting Party may nationalize or expropriate or subject to measures having equivalent effect(hereinafter referred to as "expropriation") an investment, except:

a) in the public purpose;

b) in a non-discriminatory manner;

c) under due process of law; and

d) against payment of prompt, effective and appropriate compensation. The term appropriate compensation shall neither include losses which are not actually incurred nor probable or unreal profits.

2. The expropriating Contracting Party will be under a commitment to pay compensation without undue delay. In case of undue delay the financial costs related to the delayed payment shall be borne by the expropriating Contracting Party from the day on which the payment becomes due till the date of actual payment. Such financial costs shall be calculated in accordance with international banking practice.

3. Compensation shall be deemed effective if paid in a freely convertible currency. The decisive moment for investment valuation is immediately before the expropriation took place or before the impending expropriation became public knowledge, whichever is earlier.

4. The determination of whether a measure or series of measures of the Contracting Party constitute measures having equivalent effect to expropriation or nationalization requires a case-by-case, fact-based inquiry that considers:

a) the economic impact of the measure or series of measures, although the sole fact that a measure or series of measures of the Contracting Party has an adverse effect on the economic value of an investment does not establish that such measure or series of measures constitutes measures having equivalent effect to expropriation or nationalization;

b) the extent to which the measure or series of measures interfere with distinct, reasonable investment-backed expectations arising out of the Contracting Party's prior binding explicit written commitment directly and specifically to the investor; and

c) the character of the measure or series of measures, including their nature, purpose, duration and rationale.

5. Except in rare circumstances, such as when a measure or series of measures are so severe in the light of their purpose that they cannot be reasonably viewed as having been adopted and applied in good faith, non-discriminatory measures of the Contracting Party that are designed and applied to protect legitimate public welfare objectives, such as health, safety and the environment, do not constitute measures having equivalent effect to expropriation or nationalization.

6. The provisions of this Article shall not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights to the extent that such issuance, revocation, limitation or creation is consistent: (i) in respect of the Slovak Republic with the applicable international agreements on intellectual property and (ii) in respect of the Islamic Republic of Iran with its applicable national law.

7. A measure of general application shall not be considered an expropriation of a debt security or loan covered by this Agreement solely on the ground that the measure imposes costs on the debtor that cause it to default on the debt.

Article 7. Transfers

1. Each Contracting Party shall guarantee, in accordance with its laws and regulations, to investors of the other Contracting Party the free transfer of their payments related to investments Such transfers shall include in particular, though not exclusively:

a) returns;

b) fees and any other current income accruing from investments;

c) proceeds obtained from the total or partial sale or disposal of an investment, including the sale of shares;

d) amounts required for the payment of expenses, which arise from the operation of the investment, such as loan repayments, payments of import letter of credit, advance payment or other similar expenses;

e) compensation payable pursuant to Article 5 and Article 6;

f) unspent earnings and other remuneration of personnel engaged from abroad and working in connection with an investment, in respect of the Islamic Republic of Iran to those who have obtained in the territory of the Host State the corresponding work permits related to that investments; and

g) the initial capital and additional funds to establish, maintain, develop or increase the investment.

2. Each Contracting Party shall further ensure that the transfers referred to in paragraph 1. of this Article shall be made without any restriction in a freely convertible currency and at the prevailing market rate of exchange applicable on the date of transfer to the currency to be transferred and shall be immediately transferable.

3. In the absence of a market for foreign exchange, the rate to be used shall be the exchange rate for the conversions of currencies into Special Drawing Rights valid one day before the date of transfer.

4. In case of a delay in transfer caused by the Host State, the transfer shall also include financial costs calculated in accordance with international banking

Practice for the currency in question from the date on which the transfer was requested until the date of actual transfer and shall be borne by the Host State.