Title
AGREEMENT BETWEEN AUSTRALIA AND THE UNITED ARAB EMIRATES ON THE PROMOTION AND PROTECTION OF INVESTMENTS
Preamble
The Government of the United Arab Emirates (“the UAE”) and the Government of Australia (“Australia”), hereinafter referred to individually as a “Party” and collectively as “the Parties”, resolving to:
RECOGNISING the importance of foreign investments in creating, maintaining, and enhancing sustainable economic growth and prosperity for both Parties;
ACKNOWLEDGING each Party's right to protect its security, safety, and environment within its territory; and
RECOGNISING their inherent right to regulate and resolving to preserve the flexibility of the Parties to set legislative and regulatory priorities, safeguard public welfare, and protect legitimate public welfare objectives, such as public health, safety, the environment, the conservation of living or non-living exhaustible natural resources, the integrity and stability of the financial system and public morals;
HAVE AGREED as follows:
Body
Section A. Terms Used In this Agreement
Article 1. Definitions
For the purposes of this Agreement:
Agreement means the Agreement between the United Arab Emirates and Australia on the Promotion and Protection of Investments;
covered investment means, with respect to a Party, an investment:
(a) in its territory of an investor of the other Party;
(b) existing on the date of entry into force of this Agreement, or established, acquired, or expanded thereafter, and which, where applicable, has been admitted, by the host Party, subject to its relevant laws, regulations, and policies; (1)
enterprise means any entity duly constituted or organised under the applicable law, whether or not for profit, and whether private or government-owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association, company or similar organisation;
enterprise of a Party means an enterprise that is constituted or organised under the law of that Party and carrying out substantial business activities in the territory of that Party;
existing measures means measures that are in effect on the date of the entry into force of this Agreement;
freely usable currency means "freely usable currency" as defined under the Articles of Agreement of the International Monetary Fund;
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. Forms that an investment may take include:
(a) an enterprise;
(b) shares, stocks and other forms of equity participation in an enterprise;
(c) bonds, debentures, and other forms of debt of an enterprise;
(d) a loan to a State enterprise;
(e) futures, options, and other derivatives;
(f) public debt;
(g) rights under a contract, including turnkey, construction, management, production, or revenue-sharing contracts;
(h) claims to money or to any contractual performance related to a business and having a financial value;
(i) intellectual property rights and goodwill, which are recognised pursuant to the laws and regulations of the host Party;
(j) rights conferred pursuant to the laws and regulations of the host Party or contracts, such as concessions, licenses, authorisations or permits, excluding those for the exploration and exploitation of ‘Natural Resources’. Natural Resources means all hydrocarbons such as oil, gas, and condensates, derivates and primary by-products thereof but does not include renewable energy resources;
(k) movable and immovable property and any related property rights, such as leases, mortgages, liens, or pledges;
(l) For greater certainty, investment shall not include the following:
(a) claims to money that arise solely from:
(i) commercial contracts for the sale of goods or services; and
(ii) the extension of credit in connection with a commercial transaction, such as trade financing;
(b) an order or judgment entered in a judicial or administrative action or an arbitral proceeding;
For the purposes of the definition of investment in subparagraph (l), returns that are invested shall be treated as an investment and any alteration of the form in which assets are invested or reinvested shall not affect their character as an investment;
investor of a Party means a natural person of a Party or an enterprise of a Party that has made an investment in the territory of the other Party;
measures include any law, regulation, rules, procedure, decisions, administrative actions or practice;
natural person of a Party means a natural person who under the law of the Party:
(a) for Australia, is an Australian citizen or a permanent resident of Australia; and
(b) for the United Arab Emirates, has the nationality of the United Arab Emirates;
territory means:
(a) with respect to Australia, the territory of Australia:
(i) excluding all external territories other than the Territory of Norfolk Island, the Territory of Christmas Island, the Territory of Cocos (Keeling) Islands, the Territory of Ashmore and Cartier Islands, the Territory of Heard Island and McDonald Islands, and the Coral Sea Islands Territory; and
(ii) including Australia’s air space, territorial sea, contiguous zone, exclusive economic zone and continental shelf over which Australia exercises sovereignty, sovereign rights or jurisdiction in accordance with international law particularly the United Nations Convention on the Law of the Sea, done at Montego Bay on 10 December 1982;
(b) with respect to the United Arab Emirates, the term "United Arab Emirates" when used in a geographical sense, means the territory of the United Arab Emirates which is under its sovereignty as well as the area outside the territorial water, airspace, and submarine areas over which the United Arab Emirates exercises, in accordance of its international law and the law of United Arab Emirates, sovereign and jurisdictional rights including the Exclusive Economic Zone and the mainland under its jurisdiction in respect of any activity carried on in its water, sea bed, subsoil, in connection with the exploration for or the exploitation of natural resources by virtue of its law and international law;
WTO Agreement means the Marrakesh Agreement establishing the World Trade Organization, done at Marrakesh on 15 April 1994.
Section B. Investment Promotion and Protection
Article 2. Scope and Coverage
1. This Agreement shall apply to measures adopted or maintained by a Party relating to:
(a) investors of the other Party; and
(b) covered investments.
2. For greater certainty, this Agreement does not bind a Party in relation to an act or fact that took place or a situation that ceased to exist before the date of entry into force of this Agreement.
3. Nothing in this Agreement shall apply to:
(a) government procurement;
(b) subsidies or grants provided by a Party including government supported loans, guarantees, and insurance;
(c) services supplied in the exercise of governmental authority within the respective territories of the Parties;
(d) any measure to the extent it affects the supply of service by a service supplier of a Party, through commercial presence in the territory of the other Party; or
(e) any measure regarding taxation, including measures taken to enforce taxation obligations.
Article 3. Treatment of Investment (2)
1. Each Party shall accord to covered investments of investors of the other Party treatment in accordance with customary international law (3).
2. A Party breaches this obligation only if a measure 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;
(d) targeted discrimination on manifestly wrongful grounds, such as gender, race, or religious belief;
(e) abusive treatment, such as coercion, duress and harassment; or
(f) a failure to provide full protection and security.
3. 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.
4. For greater certainty, the mere fact that a Party takes or fails to take an action that may be inconsistent with an investor's expectations does not constitute a breach of this Article, even if there is loss or damage to the covered investment as a result.
Article 4. National Treatment (4)
1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the management, conduct, operation and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to management, conduct, operation and sale or other disposition of investments.
3. For greater certainty, the treatment to be accorded by a Party under paragraphs 1 and 2 means, with respect to a regional level of government, treatment no less favourable than the most favourable treatment accorded in like circumstances by that regional level of government to investors, and to investments of investors, of the Party of which it forms a part.
Article 5. Most-Favoured-Nation Treatment
1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investors of a non-party with respect to the management, conduct, operation and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments in its territory of investors of a non-party with respect to the management, conduct, operation and sale or other disposition of investments.
3. For greater certainty, the treatment referred to in this Article does not encompass international dispute resolution procedures or mechanisms.
4. Substantive obligations in other international investment treaties and other trade agreements shall not in themselves constitute "treatment" and thus shall not give rise to a breach of this Article, absent measures adopted or maintained by a Party pursuant to those obligations.
5. Nothing in this Agreement shall be construed so as to oblige a Party to extend to investors of the other Party and to their covered investments the benefits of any treatment resulting from:
(a) any bilateral or multilateral international agreement for the promotion and protection of investments which was signed prior to the date of entry into force of this Agreement; and
(b) for the UAE, treatment granted to the Gulf Cooperation Council (GCC) Member States, and by the UAE to Arab League Members (5).
6. Subject to paragraph 5, if, after the date of entry into force of this Agreement, a Party subsequently enters into any agreement with a non-party in which it provides treatment to investors of that non-party more favourable than it accords to investors of the other Party in like circumstances, the other Party may request consultations with a view to implementing that more favourable treatment in accordance with paragraphs 1 and 2.
7. Upon receiving such a request, the Parties shall conduct friendly consultations in good faith with a view to reaching agreement within 60 days to implement the more favourable treatment. Subject to the agreement between the Parties, the more favourable treatment shall take effect automatically six months from the date of completion of the consultations. If the Parties do not reach an agreement, the provisions of this article shall not apply.
Article 6. Treatment In Case of Armed Conflict or Civil Strife
1. Each Party shall accord to investors of the other Party and to covered 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 (6).
2. Notwithstanding paragraph 1, if an investor in a situation referred to in paragraph 1, suffers a loss in the territory of the other Party resulting from:
(a) requisitioning of its covered investment or part thereof by the latter’s forces or authorities; or
(b) destruction of its covered investment or part thereof by the latter’s forces or authorities, which was not required by the necessity of the situation,
the latter Party shall provide the investor with restitution or adequate compensation for such loss.
Article 7. Expropriation and Compensation (7)
1. Neither party shall expropriate or nationalise a covered investment, either directly or indirectly, through measures equivalent to expropriation or nationalisation ("expropriation"), except:
(a) for a public purpose (8);
(b) in accordance with due process of law;
(c) in a non-discriminatory manner; and
(d) on payment of prompt, adequate and effective compensation, in accordance with paragraphs 2 through 4.
2. Compensation shall:
(a) be paid without delay;
(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (the date of expropriation);
(c) not reflect any change in value occurring because the intended expropriation had become known earlier; and
(d) be fully realisable and freely transferable.
3. If the fair market value is denominated in a freely usable currency, the compensation paid shall be no less than the fair market value on the date of expropriation, plus interest at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
4. If the fair market value is denominated in a currency that is not freely usable, the compensation paid, converted into the currency of payment at the market rate of exchange prevailing on the date of payment, shall be no less than:
(a) the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date; plus
(b) interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.
5. This Article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreement (“TRIPS Agreement”), or to the revocation, limitation, or creation of intellectual property rights, to the extent that the issuance, revocation, limitation, or creation is consistent with the TRIPS Agreement (9).
6. Subject to and in accordance with the law of the Party making the expropriation, the affected investor shall have a right to review, by an independent judicial authority of that Party, of the legality of the expropriation and of the valuation of their investment.
Article 8. Transfers
1. Each Party shall permit all transfers relating to a covered investment to be made freely and without delay into and out of its territory. Such transfers include:
(a) contributions to capital, including the initial contribution and additional amounts to maintain or increase the investment;
(b) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance fees, and other fees;
(c) proceeds from the sale of all or any part of the covered investment or from the partial or complete liquidation of the covered investment;
(d) payments made under a contract including a loan agreement;
(e) payments made in accordance with Articles 6 (Treatment in Case of Armed Conflict or Civil Strife) and 7 (Expropriation and Compensation); and
(f) payments arising out of a dispute.
2. Each Party shall permit transfers relating to a covered investment to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.
3. Each Party shall permit returns in kind relating to a covered investment to be made as authorised or specified in a written agreement between the Party and a covered investment or an investor of the other Party.
4. Notwithstanding paragraphs 1 through 3, a Party may prevent or delay a transfer through the equitable, non-discriminatory, and good faith application of its law relating to:
(a) the payment of taxes;
(b) bankruptcy, insolvency, or the protection of the rights of creditors;
(c) issuing, trading, or dealing in securities, futures, options, or derivatives;
(d) criminal or penal offences;
(e) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
(f) ensuring compliance with an order or judgment in judicial or administrative proceedings;
(g) social security, public retirement, superannuation, compulsory savings schemes, or other arrangements to provide pension, end of service scheme or similar retirement benefits; or
(h) severance entitlements of employees.
(h) severance entitlements of employees.
5. Notwithstanding paragraph 3, a Party may restrict transfers of returns in kind in circumstances where it could otherwise restrict such transfers under this Article, including as set out in paragraph 4.
Article 9. Performance Requirements
1. Neither Party may impose or enforce any requirement, or enforce any commitment or undertaking in connection with the management, conduct, operation, sale or other disposition of an investor of a Party or of a non-party in its territory:
(a) to export a given level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord a preference to goods produced in its territory or to purchase goods from persons in its territory; or
(d) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with the investment.
2. For greater certainty, paragraph 1 shall not apply to any commitment, undertaking, or requirement other than those set out in those paragraphs.
Article 10. Senior Management and Board of Directors
1. No Party shall require that an enterprise of that Party that is a covered investment appoint to a senior management or board of director positions natural persons of a particular nationality.
2. A Party may require that a majority of the board of directors, or any committee thereof, of an enterprise of that Party that is a covered investment, be of a particular nationality or resident in the territory of the Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.