Minister of International Trade
FOR THE GOVERNMENT OF COSTA RICA
José Manuel Salazar
Minister of International Trade
Attachments
Annex I
General and Specific Exceptions
Special Provisions
I. Mfn Exceptions
1. Articles III(1)(a) and IV(a) shall not apply to treatment by a Contracting Party pursuant to any existing or future bilateral or multilateral agreement:
(a) Establishing, strengthening or expanding a free trade area, customs union, common market or economic union;
(b) Negotiated within the framework of the World Trade Organization, or any successor organization (including in particular the GATT and the General Agreement on Trade in Services (GATS)), and containing obligations and rights relating to trade in services; orGATT and the General Agreement on Trade in Services (GATS)), and containing obligations and rights relating to trade in services; or
(c) Relating to:
(i) Aviation;
(ii) Telecommunications transport networks and telecommunications transport services;
(iii) Fisheries;
(iv) Maritime matters, including salvage; or
(v) Financial services.
2. Article III (1)(a) does not apply in respect of financial services.
3. Articles III (1)(a) and IV(a) do not apply in respect of customs brokerage.
II. National Treatment Exceptions
1. Articles III (1)(b), IV(b), V(1), V(2) and VI do not apply to:
(a) Any measure maintained or adopted after the date of entry into force of this Agreement that, at the time of sale or other disposition of a government's equity interests in, or the assets of, an existing state enterprise or an existing governmental entity, prohibits or imposes limitations on the ownership of equity interests or assets or imposes nationality requirements relating to senior management or members of the board of directors;
(b) Any existing non-conforming measures maintained within the territory of a Contracting Party; the continuation or prompt renewal of any such non-conforming measure or any measure referred to in paragraph (a) above; any amendment to such non-conforming measure or any measure referred to in paragraph (a) above, to the extent that such amendment does not decrease the conformity of the measure as it existed immediately before the amendment with those obligations;
(c) The right of each Contracting Party to make or maintain exceptions within the following sectors or matters:
Canada:
Social services (i.e. public law enforcement; correctional services; income security or insurance; social security or insurance; social welfare; public education; public training; health and child care);
Services in any other sector;
Residency requirements for ownership of oceanfront land;
Measures implementing the Northwest Territories Oil and Gas Accords;
Government securities — acquisition, sale or other disposition by nationals of the other Contracting Party of bonds, treasury bills or other kinds of debt securities issued by the Government of Canada, a province or local government.
Costa Rica:
Government or social services (i.e. public law enforcement; correctional services; income security or insurance; social security or insurance; social welfare; public education; public training; health and child care);
Services in any other sector;
Concessions in the maritime land zone, as defined by Costa Rican law;
Export promotion programs.
2. The Contracting Parties shall, within a two year period after the entry into force of this Agreement, exchange letters listing, to the extent possible, any existing measures that it may rely on to limit national treatment obligations in accordance with paragraph (1)(b) hereof.
3. Nothing in this Agreement shall prevent either Contracting Party from maintaining its state monopolies existing on the date of entry into force of this Agreement. The Contracting Parties shall, within a two year period after the entry into force of this Agreement, exchange letters listing their existing state monopolies.
III. General Exceptions and Exemptions
1. Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting, maintaining or enforcing any measure otherwise consistent with this Agreement that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns.
2. Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on investment, nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining measures:
(a) Necessary to ensure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;
(b) Necessary to protect human, animal or plant life or health; or
(c) Relating to the conservation of living or non-living exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.
3. Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining reasonable measures for prudential reasons, such as:
(a) The protection of investors, depositors, financial market participants, policy holders, policy claimants, or persons to whom a fiduciary duty is owed by a financial institution;
(b) The maintenance of the safety, soundness, integrity or financial responsibility of financial institutions; and
(c) Ensuring the integrity and stability of a Contracting Party's financial system.
4. Investments in cultural industries are exempt from the provisions of this Agreement.
5. The provisions of Articles II, III, IV, V and VI of this Agreement do not apply to:
(a) Procurement by a government or state enterprise;
(b) Subsidies or grants provided by a government or a state enterprise, including government-supported loans, guarantees and insurance;
(c) Any measure denying investors of the other Contracting Party and their investments any rights or preferences provided to the aboriginal peoples of a Contracting Party; or
(d) Any current or future foreign aid program to promote economic development, whether under a bilateral agreement, or pursuant to a multilateral arrangement or agreement, such as the OECD Agreement on Export Credits.
6. Subject to the provisions contained in the Agreements concluded under the World Trade Organization, including, in particular, Article XIII of the GATT 1994, nothing in this Agreement shall affect the authority of one Contracting Party to decide whether or not to negotiate with the other Contracting Party, or with any third State, quantitative export restrictions, nor its authority to allocate them.
7. A Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is an enterprise of the latter Contracting Party, and to investments of its investors, if investors of a third State own or control the enterprise and the enterprise has no substantial business activities in the territory of the Party under whose law it is constituted or organized.
IV. Exceptions to Specific Obligations
1. In respect of intellectual property rights, a Contracting Party may derogate from Article IV in a manner that is consistent with the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at Marrakesh, April 15, 1994.
2. The provisions of Article VIII do 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 with the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at Marrakesh, April 15, 1994.
V. Special Provisions Relating to Transfers
1. Notwithstanding the provisions of Article IX, a Contracting Party may prevent a transfer through the equitable, non-discriminatory and good faith application of its laws relating to:
(a) Bankruptcy, insolvency or the protection of the rights of creditors;
(b) Issuing, trading or dealing in securities;
(c) Criminal or penal offenses;
(d) Reports of transfers of currency or other monetary instruments;
(e) Ensuring the satisfaction of judgments in adjudicatory proceedings; or
(f) Ensuring the payment of income tax obligations.
2. Neither Contracting Party may require its investors to transfer, or penalize its investors that fail to transfer, the returns attributable to investments in the territory of the other Contracting Party.
3. Paragraph (2) shall not be construed to prevent a Contracting Party from imposing any measure through the equitable, non-discriminatory and good faith application of its laws relating to the matters set out in paragraph (1).
4. Notwithstanding the provisions of Article IX, and without limiting the applicability of paragraph (1) above, a Contracting Party may prevent or limit transfers by a financial institution to, or for the benefit of, an affiliate of or person related to such institution, through the equitable, non-discriminatory and good faith application of measures relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions.
VI. Exclusions from Dispute Settlement (establishment)
1. Decisions of a Contracting Party as to whether or not to permit establishment of a new business enterprise, or acquisition of an existing business enterprise or a share of such enterprise, by investors or prospective investors of the other Contracting Party shall not be subject to dispute settlement under Article XII of this Agreement.Article XII of this Agreement.
2. Further to paragraph (1), decisions by a Contracting Party pursuant to a pre-existing non-conforming measure described in Article II(1)(b) of this Annex as to whether or not to permit an acquisition shall, in addition, not be subject to dispute settlement under Article XIII of this Agreement.
Attachments
Annex II
Specific Rules re Article XII
Settlement of Disputes between an Investor and the Host Contracting Party
I. Prudential Measures
1. Where an investor submits a claim to arbitration under Article XII, and the disputing Contracting Party invokes Article III(3) or V(4) of Annex I, the tribunal established pursuant to Article XII shall, at the request of that Contracting Party, seek a report in writing from the Contracting Parties on the issue of whether and to what extent the said paragraphs are a valid defence to the claim of the investor. The tribunal may not proceed pending receipt of a report under this Article.
2. Pursuant to a request received in accordance with paragraph (1), the Contracting Parties shall proceed in accordance with Article XIII to prepare a written report, either on the basis of agreement following consultations, or by means of an arbitral panel. The consultations shall be between the financial services authorities of the Contracting Parties. The report shall be transmitted to the tribunal, and shall be binding on the tribunal.
3. Where, within seventy (70) days of the referral by the tribunal to the Contracting Parties, no request for the establishment of a panel pursuant to paragraph (2) has been made and no report has been received by the tribunal, the tribunal may proceed to decide the matter.
4. Panels for disputes on prudential issues and other financial matters shall have the necessary expertise relevant to the specific financial service in dispute.
II. Damage Incurred by a Controlled Enterprise
1. A claim that a Contracting Party is in breach of this Agreement, and that an enterprise that is a juridical person incorporated or duly constituted in accordance with applicable laws of that Contracting Party has incurred loss or damage by reason of, or arising out of, that breach, may be brought by an investor of the other Contracting Party acting on behalf of an enterprise which the investor owns or controls directly or indirectly. In such a case:
(a) Any award shall be made to the affected enterprise;
(b) The consent to arbitration of both the investor and the enterprise shall be required;
(c) Both the investor and enterprise must waive any right to initiate or continue any other proceedings in relation to the measure that is alleged to be in breach of this Agreement before the courts or tribunals of the Contracting Party concerned or in a dispute settlement procedure of any kind; and
(d) The investor may not make a claim if more than three years have elapsed from the date on which the enterprise first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that it has incurred loss or damage.
2. Notwithstanding paragraph (1)(a) above, where a disputing Contracting Party has deprived a disputing investor of control of an enterprise, the following shall not be required:
(a) A consent to arbitration by the enterprise under paragraph (1)(b) above; and
(b) A waiver from the enterprise under paragraph (1)(c) above.