2. The Parties recognise that it is inappropriate to encourage investment by weakening or reducing the levels of protection afforded in domestic labour laws.
3. A Party shall not waive or derogate from, or offer to waive or derogate from, its labour laws as an encouragement for the establishment, acquisition, expansion or retention of an investment or an investor in its territory.
4. A Party shall not, through a sustained or recurring course of action or inaction, fail to effectively enforce its labour laws, as an encouragement for investment.
5. The Parties recognize that with respect to the enforcement of labour laws, a Party is in compliance with paragraph 4 if a course of action or inaction results from a good faith decision regarding the allocation of resources in accordance with its priorities for enforcement of its labour laws.
6. The Parties recognise that the violation of fundamental principles and rights at work cannot be invoked or otherwise used as a legitimate comparative advantage and that labour standards cannot be used for protectionist purposes. A Party shall not apply domestic labour laws in a manner that would constitute a disguised restriction of investment or an unjustified discrimination between investors and investments of the Parties.
Article 3. Dialogue and Cooperation on Investment-related Labour Issues
The Parties agree to dialogue and cooperate as appropriate on investment-related labour issues of mutual interest arising under this Section in a manner complementary to the efforts under existing bilateral and multilateral mechanisms.
Article 4.
1. Each Party, in accordance with its obligations assumed as a member of the International Labor Organization ("ILO"), and its commitments under the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up, shall respect, promote and realize, in good faith and in accordance with the ILO Constitution, the principles concerning the fundamental rights which are the subject of the fundamental ILO Conventions.
2. Each Party is, in accordance with the commitments of the members of the ILO and the 2019 ILO Centenary Declaration for the Future of Work, committed to effectively implement the ILO Conventions it has ratified and work towards the ratification of the ILO fundamental Conventions. In particular, in this regard, each Party shall make continued and sustained efforts on its own initiative to pursue ratification of the fundamental ILO Conventions No 29 and 105, if it has not yet ratified them. The Parties will also consider the ratification of the other Conventions that are classified as "up to date" by the ILO.
Article 5. Investment Favouring Decent Work
In accordance with their commitment to enhance the contribution of investment to the goal of sustainable development, including its labour aspects, the Parties agree to promote investment policies which further the objectives of the Decent Work Agenda, in accordance with the 2008 ILO Declaration on Social Justice for a Fair Globalisation, and the 2019 ILO Centenary Declaration for the Future of Work, including a human-centred approach to the future of work, adequate minimum wages, social protection and safety and health at work.
Subsection 4. Mechanism to Address Differences
Article 1. Consultations
1. In the event of disagreement on any matter covered under this Section, the Parties shall only have recourse to the procedures established under this Sub-section. Section X (State to State Dispute Settlement) does not apply to this Section.
2. In case of any disagreement referred to in paragraph 1, a Party may request consultations with the other Party by delivering a written request to the other Party.
3. The request for consultations shall set out the reasons for the request, including information that is specific and sufficient for consideration and response, the identification of the matter, and an indication of the legal basis of the request.
4. The Party to which the request for consultations is made shall enter into consultations with the requesting Party within 30 days after receipt of the request, or any longer period agreed by both Parties.
5. During consultations each Party shall provide sufficient factual information related to the matter, with a view to arriving at a mutually satisfactory resolution of the matter.
6. The Parties, by mutual agreement, may seek information from international organizations, such as the ILO or relevant multilateral environmental organizations in which both Parties participate.
7. The consultations, including the information disclosed and positions taken by the Parties during the consultations shall be confidential and are without prejudice to the rights of either Party in any further proceedings.
Article 2. Mutually Agreed Solution
The Parties may reach a mutually agreed solution to a disagreement at any time. The Parties shall comply with a mutually agreed solution, and take the measures necessary to implement it.
Article 3. Panel of Experts
1. If the disagreement has not been satisfactorily resolved through consultations within 120 days, or a longer period agreed by both Parties, after the delivery of the request for consultations, a Party may request, by delivering a written request to the other Party, the establishment of a Panel of Experts to examine the matter.
2. The request shall indicate whether consultations were held, identify the specific measure at issue and briefly explain how that measure affects the application of the relevant provisions in the Sustainable Development Chapter and investment between the Parties in a manner sufficient to present the legal basis clearly. The Panel of Experts is deemed established when the request is delivered to the other Party.
3. The Panel of Experts shall be composed of three members. The Parties shall consult in order to reach an agreement on its composition.
4. If the Parties fail to reach an agreement on the composition of the Panel of Experts within 30 days of the delivery of the request for the establishment of a Panel of Experts, the chairperson shall be selected by lot from the sub-list of chairpersons established under paragraph 7 and each Party shall designate one expert from the sub-list of that Party established under paragraph 7 within 10 days. If a Party fails to designate an expert within that time period, the expert shall be selected by lot from the sub-list of that Party within 5 days.
5. Should any of the lists provided for in paragraph 7 not be established, the expert shall be selected by lot from the individuals formally proposed for that list, within the same time- period.
6. The date of composition of the Panel of Experts shall be the date on which all three selected experts have accepted their appointment. The date of composition of the Panel of Experts shall be made publicly available without delay.
7. At the latest within one year of entry into force of this agreement, the Investment Committee shall establish a list of individuals who are willing and able to serve as experts. The list shall be composed of three sub-lists. Each Party shall propose a sub-list and the third sub-list shall consist of individuals that are not nationals of either Party and who shall serve as chairperson to the Panel of Experts. Each sub-list shall include at least four individuals. Every three years, the list shall be reviewed if a Party so requests. The list may also be reviewed at any moment upon a duly justified request of a Party.
8. The list shall comprise individuals who shall have specialised knowledge of, or expertise in, international labour law or international environmental law, or relevant aspects of international trade or investment agreements. They shall be independent, serve in their individual capacities and not take instructions from any organisation or government with regard to issues related to the matter at stake, or be affiliated with the government of any Party. They shall comply with the Code of Conduct, as set out in Annex X.
9. The Panel of Experts shall make an objective assessment of the matter before it, including an objective assessment of the facts of the case.
10. Unless the Parties agree otherwise within 10 days from the date of the establishment of the Panel of Experts, the terms of reference of the Panel of Experts shall be: "To examine, in the light of the relevant provisions in the Sustainable Development Chapter, the matter referred to in the request for the establishment of the Panel of Experts, and to issue reports, in accordance with Article 4, making recommendations for the solution of the matter."
11. The Panel of Experts shall examine the matter in accordance with the Sustainable Development Chapter and interpret the provisions therein in accordance with customary rules on interpretation of public international law, as codified in the Vienna Convention of the Law of Treaties.(2)
12. The Panel of Experts, after consulting with the Parties, may decide any procedural question not covered by this sub-section in a way that is compatible with the provisions in this sub-section, including by considering similar questions in other parts of the Agreement.
13. At the request of the complaining Party or both Parties, the Panel of Experts may, after giving the Parties an opportunity to comment, suspend its work at any time for a period not to exceed 12 months. If a Party does not request the resumption of the Panel of Expert's work at the expiry of the suspension period, the authority of the Panel of Experts shall lapse.
14. On request of a Party, or at its own initiative, the Panel of Experts may seek any information, technical advice, or expert opinion it deems appropriate®. Any such information, technical advice or expert opinion shall be disclosed to the Parties and the Parties may provide comments on it.
Article 4. Reports and Follow-up Consultations
1. The Panel of Experts shall deliver an interim report to the Parties within 150 days after the date of composition of the panel.
2. Each Party may comment the interim report within 10 days of its delivery. A Party may comment on the other Party's comments within 10 days of the delivery of such comments.
3. The Panel of Experts shall issue the final report to the Parties no later than 180 days from the date of its composition. The final report shall set out the findings of facts, the applicability of the relevant provisions and the basic rationale behind any findings and recommendations.
4. The Panel of Experts shall make every effort to make its recommendations by consensus. If the Panel of Experts is unable to reach consensus, it shall decide by majority vote.
5. The deliberations of the Panel of Experts shall be confidential.
6. The final report of the Panel of Experts shall be made publicly available no later than 15 days after the issuance to the Parties, subject to the protection of confidential information.
7. The Parties shall consult within 30 days after the issuance of the final report of the Panel of Experts, and discuss measures to address the matter, based on the report. The agreed outcome shall be made publicly available, unless otherwise mutually decided. The Parties may receive views on the implementation of the measures through the mechanism referred to under [Article 3, Sub-section 1, Section IV].
Article 5. Transparency of the Proceedings
1. A party making a request for consultations or a request for the establishment of a Panel of Experts shall make that request publicly available without delay, subject to the protection of confidential information.
2. Each Party may make its submissions or statements to the Panel of Experts publicly available, subject to the protection of confidential information.
3. Any hearing of the Panel of Experts shall be open to the public unless otherwise provided, and subject to the conditions set out below.
4. Based upon the timetable determined by the Panel of Experts, after consulting with the Parties and the other members of the Panel of Experts, the chairperson of the Panel of Experts shall notify the Parties of the date, time and venue of the hearing. This information shall be made publicly available by the Party in which the hearing takes place, unless the hearing is closed to the public. Unless a Party disagrees, the Panel of Experts may decide not to convene a hearing.
5. The hearing shall be open to the public, unless the Parties decide that the hearing shall be partially or completely closed to the public. If the hearing is open to the public, the following conditions apply, unless the Parties agree otherwise:
(a) public viewing shall take place via simultaneous or delayed closed circuit television broadcasting in a separate viewing room at the venue of the hearing;
(b) registration for public viewing of the hearing shall be required and the Panel of Experts may decide on further logistical arrangements, in particular by limiting the number of places and allocating them on a first-come first-served basis; and
(c) no audio or video recording, photography, or webstreaming shall be permitted in the viewing room.
6. The openness of a hearing shall not affect the work of the Panel of Experts.
7. Notwithstanding paragraph 3, the Panel of Experts shall meet in closed session when the submission and arguments of a Party contain confidential information. The Parties shall maintain the confidentiality of the hearings where the hearings are held in closed session.
Article 6. Amicus Curiae Submissions
1. Unless the Parties agree otherwise within five days of the date of the establishment of the Panel of Experts, natural persons of a Party or legal persons established in the territory of a Party, who are independent from the governments of the Parties, may deliver unsolicited written submissions to the Panel of Experts, provided that they:
(a) are received by the Panel of Experts within 10 days after the panel was composed;
(b) are concise and in no case longer than 20 pages, including any annexes typed at double space;
(c) are directly relevant to a factual or a legal issue under consideration by the Panel of Experts;
(d) contain a description of the person making the submission, including for a natural person his or her nationality and for a legal person its place of establishment, the nature of its activities, its legal status, general objectives, the source of its financing, and any controlling entity;
(e) disclose any connection with a Party;
(f) specify the nature of the interest that the person has in the proceedings; and
(g) are drafted in the working language[s] chosen by the Parties.
2. The submissions shall be delivered to the Parties, who are allowed but not required to make comments.
3. The Panel of Experts shall annex to its report a list of all the persons having made an amicus curiae submissions that complied with the conditions set out in paragraph 1. The Panel of Experts shall not be obliged to address in its report the arguments made in such submissions.
4. The Panel of Experts shall ensure that the amicus curiae submissions do not disrupt the proceedings or unduly burden or unfairly prejudice either Party.
Section V. Dispute Settlement
Article 1. Objective
The objective of this Section is to establish an effective and efficient mechanism for avoiding and settling any disputes between the Parties within the scope of application of this Section with a view to arriving at, where possible, a mutually agreed solution.
Article 2. Scope of Application
This Section shall apply with respect to any dispute concerning the interpretation and application of the provisions of this Agreement (hereinafter referred to as "covered provisions"), except as otherwise provided.
Article 3. Consultations
1. The Parties shall endeavour to resolve any dispute referred to in Article 2 by entering into consultations in good faith with the aim of reaching a mutually agreed solution.
2. A Party shall seek consultations by means of a written request delivered to the other Party. The request for consultations shall set out the reasons for the request, including the identification of the measure at issue and an indication of the legal basis for the complaint, specifying the provisions referred to in Article 2 considered applicable.
3. The Party to which the request for consultations is made shall reply to the request within 10 days after the date of its receipt. Consultations shall be held within 30 days after the date of receipt of the request, unless otherwise mutually agreed. Consultations shall be deemed concluded within 30 days after the date of receipt of the request, unless both Parties agree to continue consultations.
4. If the Party to which the request is made does not respond to the request for consultations within 10 days after its receipt, or if consultations are not held within the timeframes specified in paragraph 3, or if consultations have been concluded and no mutually agreed solution has been reached, the Party that requested the consultations may proceed directly to request the establishment of an arbitration panel.
5. Consultations shall take place in the territory of the Party to which the request is made, unless the Parties agree otherwise.
6. During consultations each Party shall provide sufficient factual information, so as to allow a full examination of how the measure at issue could affect the operation and application of this Agreement.
7. The consultations, and in particular all information disclosed and positions taken by the Parties during consultations, shall be confidential, and without prejudice to the rights of either Party in any further proceedings.
Article 4. Mediation
1. The Parties may at any time voluntarily agree to mediation with the aim to reach a mutually agreed solution regarding a measure alleged to adversely affect investment between the Parties. The mediation procedure may only be initiated by mutual agreement.
2. Upon initiation of the mediation procedure the Parties shall agree on the selection, tasks and powers of the mediator and on the rules governing the mediation procedure, including time-frame, termination and costs.
3. Unless the Parties agree otherwise, mediation proceedings shall be confidential. This concerns in particular positions taken and evidence obtained by the Parties during those proceedings and advice or proposed solutions by the mediator. However, any Party may disclose to the public that mediation is taking place. Mediation proceedings shall be without prejudice to the rights of either Party in any further or other proceedings.
4. The [Joint Committee] may at any time adopt rules on the initiation, conduct and termination of mediation and shall endeavour to adopt such rules within three years after the entry into force of this Agreement.
Article 5. Mutually Agreed Solution
1. The Parties may reach a mutually agreed solution to a dispute under this Section, or to certain claims thereof, at any time.
2. If a mutually agreed solution is reached during consultations, claims relating to the matters covered by the mutually agreed solution may not be submitted to arbitration under this Section.
3. If a mutually agreed solution is reached during the arbitration panel procedure or the mediation procedure, the Parties shall jointly notify that solution to the chairperson of the arbitration panel or the mediator. Upon such notification, the arbitration panel procedure or the mediation procedure, or where applicable the part of the procedure with respect to the claims covered by the mutually agreed solution, shall be terminated.
4. The disputing Parties shall abide by and comply with a mutually agreed solution reached under this Article without delay and in good faith. They shall take the measures necessary, if applicable, to implement the mutually agreed solution within the agreed time period.
5. Any measure taken to implement the mutually agreed solution shall be notified to the other Party, no later than at the expiry of the agreed time period.
Article 6. Establishment of an Arbitration Panel
1. If the Parties fail to resolve a dispute through consultations as provided for in Article 3(4), the Party that sought consultations may request in writing the establishment of an arbitration panel.
2. The complaining Party shall deliver the request to the other Party. The request shall indicate whether consultations were held, identify the specific measure at issue and briefly explain how that measure constitutes a breach of the covered provisions in a manner sufficient to present the legal basis for the complaint clearly. The arbitration panel is deemed established when the request is delivered to the other Party.
Article 7. Composition of an Arbitration Panel
1. An arbitration panel shall be composed of three panellists.
2. Within 10 days of the delivery of the written request for the establishment of an arbitration panel, the Parties shall consult in order to reach an agreement on the composition of the arbitration panel.
3. If the Parties are unable to agree on the composition of the arbitration panel within the time period set out in paragraph 2, each Party may appoint a panellist from the sub-list of that Party established under Article 8 within 5 days from the expiry of the time period set out in paragraph 2. If a Party fails to appoint a panellist from its sub-list within that time period, the complaining Party shall, within five days from the expiry of that time period, select by lot the panellist from the sub-list of that Party.
4. If the Parties are unable to agree on the chairperson of the arbitration panel within the time period set out in paragraph 2, the complaining Party shall, within five days of the expiry of that time period select by lot the chairperson of the arbitration panel from the sub-list of chairpersons established under Article 8.
5. The date of composition of the arbitration panel shall be the date on which all three selected panellists have accepted their appointment according to the Rules of Procedure. Each Party shall make the date of composition of the arbitration panel publicly available without delay.
6. Should any of the lists provided for in Article 8 (Lists of Panellists) not be established or not contain sufficient names at the time a panellist or chairperson is to be selected by lot pursuant to paragraphs 3 or 4, the selection by lot shall be done in accordance with Rule 9 of the Rules of Procedure within the same time period of five days.
Article 8. Lists of Panellists
1. The Investment Committee shall, no later than six months after the entry into force of this Agreement, establish a list of at least 12 individuals who are willing and able to serve as panellists. The list shall be composed of three sub-lists:
(a) one sub-list of individuals established on the basis of proposals by the European Union;
(b) one sub-list of individuals established on the basis of proposals by China;
(c) one sub-list of individuals that are not nationals of either Party and who shall serve as chairperson to the arbitration panel.
2. Each sub-list shall include at least four individuals. The Investment Committee shall ensure that the list is always maintained at this level.
3. Panellists shall have specialised knowledge and expertise in law and international trade or investment. They shall be independent, serve in their individual capacities and not take instructions from any organisation or government, or be affiliated with the government of any of the Parties, and shall comply with the Code of Conduct annexed to this Agreement.
4. The Investment Committee may establish additional lists of individuals with knowledge and experience in specific sectors covered by this Agreement. Subject to the agreement of the Parties, such additional lists shall be used to compose the panel in accordance with the procedure set out in Article 7 of this Section.
Article 9. Functions of the Arbitration Panel and Terms of Reference
1. The arbitration panel:
(a) shall make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the covered provisions;
(b) should consult regularly with the Parties and provide adequate opportunities for the development of a mutually agreed solution.
2. Unless the Parties otherwise agree within 10 days from the date of the establishment of the arbitration panel, the terms of reference shall be:
"To examine, in the light of the relevant provisions of the Agreement invoked by the Parties, the matter referred to in the request for the establishment of an arbitration panel pursuant to Article 6, to make findings of facts and on the conformity of the measure(s) at issue with the covered provisions and to deliver a report in accordance with Article 12 [Decisions and Reports of the Arbitration Panel], including a recommendation, if relevant, to bring the measure into conformity with the Agreement."
3. If the Parties agree on other terms of reference, they shall notify the agreed terms of reference to the arbitration panel as soon as it is composed.
Article 10. Suspension or Termination of Proceedings
1. At the request of the complaining party, the arbitration panel may, after giving the Parties an opportunity to comment, suspend its work at any time for a period not to exceed 12 months. At the request of both Parties, the panel shall suspend its work at any time for a period not to exceed 12 months.
2. The arbitration panel shall resume its work before the end of the suspension period at the written request of both Parties. The arbitration panel shall resume its work at the end of the suspension period at the request of the complaining Party if the suspension was requested by the complaining Party, or at the request of either Party if the suspension was requested by both Parties. The requesting Party shall deliver a notification to the other Party accordingly. If a Party does not request the resumption of the arbitration panelâs work at the expiry of the suspension period, the authority of the arbitration panel shall lapse and the dispute settlement procedure shall be terminated. If the work of the arbitration panel is suspended, the relevant time periods under this Section shall be extended by the same period of time for which the work of the arbitration panel was suspended.
3. The Parties may agree to terminate the proceedings of an arbitration panel by notification to the arbitration panel.
Article 11. Applicable Law and Rules of Interpretation
1. The arbitration panel shall decide the issues in dispute in accordance with this Agreement and interpret the provision of this Agreement in accordance with customary tules on interpretation of public international law, as codified in the Vienna Convention of the Law of Treaties. (1)
2. For greater certainty, paragraph 1 is without prejudice to any consideration of the domestic law of the Party complained against where it is relevant to the claim as a matter of fact.
3. The panel reports cannot add to or diminish the rights and obligations of the Parties under this Agreement.
Article 12. Decisions and Reports of the Arbitration Panel
1. The arbitration panel shall deliver an interim report to the Parties within 120 days after the date of composition of the panel. If the arbitration panel considers that this deadline cannot be met, the chairperson of the arbitration panel shall notify the Parties in writing, stating the reasons for the delay and the date on which the arbitration panel plans to deliver its interim report. The arbitration panel shall, under no circumstances, deliver its interim report later than 150 days after the date of composition of the panel.
2. Each Party may deliver to the arbitration panel a written request to review precise aspects of the interim report within 10 days of its delivery. A Party may comment on the other Party's request within six days of the delivery of the request.
3. The arbitration panel shall deliver its final report to the Parties within 150 days of the date of composition of the arbitration panel. If the arbitration panel considers that this deadline cannot be met, the chairperson of the arbitration panel shall notify the Parties in writing, stating the reasons for the delay and the date on which the arbitration panel plans to deliver its final report. The arbitration panel shall, under no circumstances, deliver its final report later than 180 days after the date of composition of the arbitration panel.
4. The final report shall include a discussion of any written request by the Parties on the interim report and clearly address the comments of the Parties. It shall set out the findings of facts, the applicability of the covered provisions and the basic rationale behind any findings and conclusions.
5. The arbitration panel shall make every effort to make its decisions by consensus. If the arbitration panel is unable to reach consensus, it shall decide by majority vote. In no case shall separate opinions of panellists be disclosed.
6. The report of the arbitration panel is final and has no binding force except between the Parties and in respect of the matter to which the report refers. Where an arbitration panel concludes that the Party complained against has acted inconsistently with the obligations of this Agreement, it shall recommend that the Party complained against bring the inconsistency into conformity with this Agreement. The decisions and reports of the arbitration panel shall be unconditionally accepted by the Parties. They shall not create any rights or obligations with respect to natural or legal persons.
7. Each Party shall make the final report and decisions of the arbitration panel pursuant to this Section publicly available no later than 15 days after their issuance to the Parties, subject to the protection of confidential information.
Article 13. Implementation of the Arbitration Panel's Report
1. Where the arbitration panel concludes that a Party has not complied with its obligations under this Agreement, the Party complained against shall take any measure necessary to promptly comply with the findings and conclusions in the final report in order to bring itself into compliance with the covered provisions.
2. The Party complained against shall, no later than 30 days after receipt of the final report, deliver a notification to the complaining Party of its intentions in respect of compliance, unless the Parties reach agreement on compensation or other mutually satisfactory solution.
Article 14. Reasonable Period of Time
1. If immediate compliance is not possible, the Party complained against shall, in the notification referred to in Article 13(2), set out the length of the reasonable period of time it will require for compliance, and the reasons for it. The Parties shall endeavour to agree on the reasonable period of time.
2. Where the Parties fail to agree on the reasonable period of time, either Party may, at the earliest 20 days after the receipt of the notification referred to in paragraph 1, request the original arbitration panel to determine the reasonable period of time.
3. The arbitration panel shall deliver its determination to the Parties within 30 days after the date of the receipt of the request.
. The Party complained against shall deliver a written notification of its progress in
complying with the final report to the complaining Party at least one month before the expiry of the reasonable period of time.
. The reasonable period of time normally should not exceed 15 months from the date of
issuance of the arbitration panelâs final report. The Parties may agree to extend the reasonable period of time.
4. The Party complained against shall deliver a written notification of its progress in complying with the final report to the complaining Party at least one month before the expiry of the reasonable period of time.
5. The reasonable period of time normally should not exceed 15 months from the date of issuance of the arbitration panel's final report. The Parties may agree to extend the reasonable period of time.