Title

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF KOREA AND THE GOVERNMENT OF THE REPUBLIC OF ARMENIA FOR THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS

Preamble

The Government of the Republic of Korea and the Government of the Republic of Armenia (hereinafter referred to as the "Contracting Parties"),

Desiring to create favorable conditions for greater investments by investors of one Contracting Party in the territory of the other Contracting Party, based on the principles of equality and mutual benefit,

Recognizing that the promotion and protection of investments on the basis of this Agreement will be conducive to the stimulation of individual business initiatives and will increase prosperity in both States, and

Desiring to achieve these objectives in a manner consistent with the protection of health, safety, and the environment and the promotion of consumer protection and internationally recognized labor rights, taking note of the need to ensure the attainment of legitimate governmental objectives to foster sustainable development,

Have agreed as follows:

Body

Article 1. Definitions

For the purposes of this Agreement:

(a) "investment" means every kind of asset in the territory of one Contracting Party, owned or controlled directly or indirectly by an investor of the other Contracting Party, provided that the investment has been made in accordance with the laws and regulations of the former Contracting Party, including, though not exclusively:

(i) An enterprise (being a juridical person or any other entity constituted or organized under the applicable law of the host Contracting Party, whether or not for profit, and whether private or government-owned or controlled, and includes a corporation, trust, partnership, sole proprietorship, branch, joint venture, association or organization);

(ii) Shares, stock, and other forms of equity participation in an enterprise;

(iii) Bonds, debentures, other debt instruments, and loans; (1)

(iv) Futures, options, and other derivatives;

(v) Turnkey, construction, management, production, concession, revenue-sharing, and other similar contracts;

(vi) Intellectual property rights;

(vii) Licenses, authorizations, permits, and similar rights conferred pursuant to domestic law; (2)(3) and

(viii) Other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages, liens, and pledges. (4)

For the purposes of this Agreement, a claim to payment that arises solely from the commercial sale of goods and services is not an investment, unless it is a loan that has the characteristics of an investment. In order to qualify as an investment, an asset must have 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.

(b) "investor" means any natural or juridical persons of one Contracting Party who invest in the territory of the other Contracting Party:

(i) "natural persons" means natural persons having the nationality of the former Contracting Party in accordance with its laws, provided, however, that a natural person who is a dual national shall be deemed to be exclusively a national of the State of his or her dominant and effective nationality; and

(ii) "juridical persons" means any entities, whether or not for profit, such as companies, public institutions, authorities, foundations, partnerships, firms, establishments, organisations, corporations or associations incorporated or constituted in accordance with the laws and regulations of the former Contracting Party.

(c) "territory" means the territory of the Republic of Korea or the territory of the Republic of Armenia, respectively, as well as those maritime areas, including the seabed and subsoil adjacent to the outer limit of the territorial sea over which the State concerned exercises, in accordance with international law, sovereign rights or jurisdiction for the purpose of the exploration and exploitation of the natural resources of such areas.

(d) "freely usable currency" means currencies that the International Monetary Fund determines, from time to time, as freely usable currencies in accordance with the Articles of Agreement of the International Monetary Fund and any amendments thereafter.

(e) "financial service" means any service of a financial nature. Financial services include all insurance and insurance-related services, and all banking and other financial services (excluding insurance), as well as services incidental or auxiliary to a service of a financial nature.

(1) Some forms of debt, such as bonds, debentures, and long-term notes, are more likely to have the characteristics of an investment, while other forms of debt are less likely to have such characteristics.

(2) Whether a particular type of license, authorization, permit, or similar instrument (including a concession, to the extent that it has the nature of such an instrument) has the characteristics of an investment depends on such factors as the nature and extent of the rights that the holder has under the law of the Contracting Party. Among the licenses, authorizations, permits, and similar instruments that do not have the characteristics of an investment are those that do not create any rights protected under domestic law. For greater certainty, the foregoing is without prejudice to whether any asset associated with the license, authorization, permit, or similar instrument has the characteristics of an investment.

(3) The term "investment" does not include an order or judgment entered in a judicial or administrative action.

(4) For greater certainty, market share, market access, expected gains, and opportunities for profit-making are not, by themselves, investments.

Article 2. Promotion and Protection of Investments

1. Each Contracting Party shall encourage and create favorable conditions for investors of the other Contracting Party to make investments in its territory and shall admit such investments in accordance with its laws and regulations.

2. Each Contracting Party shall accord to investments of an investor of the other Contracting Party treatment in accordance with customary international law, including fair and equitable treatment and full protection and security.

3. For greater certainty, paragraph 2 of this Article prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to investments of an investor of the other Contracting Party. The concepts of "fair and equitable treatment" and "full protection and security" do not require treatment in addition to or beyond that which is required by that standard, and do not create additional substantive rights. The obligations in paragraph 2 to provide:

(a) "fair and equitable treatment" includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings, in accordance with the principle of due process embodied in the principal legal systems of the world; and

(b) "full protection and security" requires each Contracting Party to provide the level of police protection required under customary international law.

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.

5. Neither Contracting Party shall take any unreasonable or discriminatory measures against the management, maintenance, use, enjoyment, and disposal of investments by the investors of the other Contracting Party, nor impose unreasonable or discriminatory measures on investments by investors of the other Contracting Party concerning local content, technology transfer or export performance requirements.

Article 3. Treatment of Investments

1. Each Contracting Party shall accord in its territory to investors of the other Contracting Party, as regards the management, maintenance, use, enjoyment, or disposal of their investments, treatment no less favorable than that which it accords in like circumstances to its own investors (hereinafter referred to as "national treatment") or to investors of any third State (hereinafter referred to as "most-favored-nation treatment"), whichever is more favorable.

2. Each Contracting Party shall accord in its territory to investments made in accordance with its laws and regulations by investors of the other Contracting Party, as regards the management, maintenance, use, enjoyment or disposal of their investments, treatment no less favorable than that which it accords in like circumstances to investments of its own investors ("national treatment") or to investments of investors of any third State ("most-favored-nation treatment"), whichever is more favorable.

3. The standard of national treatment as provided for in paragraphs 1 and 2 of this Article means, with respect to a sub-national government, treatment no less favorable than the most favorable treatment accorded in like circumstances by that sub-national government to investors, and to investments of investors, of the Contracting Party of which it forms a part.

4. The national treatment and most-favored-nation treatment as provided for in paragraphs 1 and 2 of this Article do not apply to:

(a) Government procurement; or

(b) Subsidies or grants provided by a Contracting Party, including government -supported loans, guarantees, and insurance.

5. The most-favored-nation treatment as provided for in paragraphs 1 and 2 of this Article shall not relate to privileges which either Contracting Party accords to investors of third States on account of its present or future membership of, or association with, a customs or economic union, a common market or a free trade area or a similar international agreement.

6. For greater certainty, the most-favored-nation treatment as provided for in paragraphs 1 and 2 of this Article shall not apply to Article 11 (Settlement of Investment Disputes between a Contracting Party and an Investor of the other Contracting Party) of this Agreement.

Article 4. Compensation for Losses

1. Investors of one Contracting Party, whose investments suffer losses owing to war or other armed conflict, a state of national emergency, revolt, insurrection, riot or other similar situation in the territory of the other Contracting Party, shall be accorded by the latter Contracting Party, as regards restitution, indemnification, compensation or other forms of settlement, treatment no less favorable than that which the latter Contracting Party accords to its own investors or to investors of any third State.

2. Without prejudice to paragraph 1 of this Article, investors of one Contracting Party who, in any situation referred to in that paragraph, suffer losses in the territory of the other Contracting Party resulting from:

(a) Requisitioning of their property by the latter Contracting Party's forces or authorities; or

(b) Destruction of their property by the latter Contracting Party's forces or authorities which was not caused in combat action or was not required by the necessity of the situation,

Shall be accorded restitution, compensation, or both, as appropriate, for such losses. Any compensation shall be prompt, adequate, and effective in accordance with Article 5 (Expropriation and Compensation), mutatis mutandis.

Article 5. Expropriation and Compensation

1. Neither Contracting Party may expropriate or nationalize an investment either directly or indirectly through measures equivalent to expropriation, or nationalization (hereinafter referred to as "expropriation"), except:

(a) (a) For a public purpose;

(b) In a non-discriminatory manner;

(c) On payment of prompt, adequate, and effective compensation when the expropriation or nationalization is carried out in the territory of the Republic of Korea and on prior, adequate and effective compensation when the expropriation or nationalization is carried out in the territory of the Republic of Armenia; and

(d) In accordance with due process of law and Article 2 (Promotion and Protection of Investments) as they are understood under customary international law.

2. The compensation referred to in paragraph 1(c) 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 realizable and freely transferable.

3. If the fair market value is denominated in a freely usable currency, the compensation referred to in paragraph 1(c) 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 referred to in paragraph 1(c) – 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. Investors of one Contracting Party affected by expropriation shall have a right to prompt review by a judicial or other independent authority of the other Contracting Party of their case and of the valuation of their investments in accordance with the principles set out in this Article.

6. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (the "TRIPS Agreement").

Footnote (5) Article 5 (Expropriation and Compensation) shall be interpreted in accordance with the Annexes.

Article 6. Transfers

1. Each Contracting Party shall guarantee to an investor of the other Contracting Party the free transfer of all payments relating to an investment into and out of its territory. Such transfers shall include, in particular, though not exclusively:

(a) The initial capital and additional amounts to maintain or increase an investment;

(b) The amounts yielded by investments and, in particular, though not exclusively, includes profits, interest, capital gains, dividends, royalties, and all kinds of fees;

(c) Payments made under a contract, including a loan agreement;

(d) Proceeds from the sale or liquidation of all or any part of an investment;

(e) Payments made pursuant to Articles 4 (Compensation for Losses) and 5 (Expropriation and Compensation);

(f) Payments arising out of the settlement of a dispute under this Agreement; and

(g) Earnings and other remuneration of personnel engaged from abroad in connection with an investment.

2. All transfers under this Agreement shall be made in a freely usable currency, without undue restriction or delay, at the market exchange rate prevailing on the date of the transfer.

3. Notwithstanding paragraphs 1 and 2 of this Article, a Contracting Party may delay or prevent a transfer, through the equitable, non-discriminatory, and good faith application of its measures and 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) Financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities; or

(e) Ensuring compliance with orders or judgments in judicial or administrative proceedings.

4. A Contracting Party may adopt or maintain measures inconsistent with paragraphs 1 and 2 of this Article:

(a) In the event of serious balance-of-payments and external financial difficulties or the 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.

5. The measures referred to in paragraph 4 of this Article shall:

(a) Not exceed a period of one year, however, if extremely exceptional circumstances arise such that a Contracting Party seeks to extend such measures, that Contracting Party shall coordinate in advance with the other Contracting Party concerning the implementation of any proposed extension;

(b) Be consistent with the Articles of Agreement of the International Monetary Fund;

(c) Be non-discriminatory;

(d) Not exceed those necessary to deal with the circumstances set out in paragraph 4 of this Article;

(e) Be temporary and be eliminated as soon as conditions permit;

(f) Not be confiscatory;

(g) Promptly be notified to the other Contracting Party;

(h) Not constitute a dual or multiple exchange rate practice;

(i) Not restrict payments or transfers for current transactions, unless the imposition of such measures complies with the procedures stipulated in the Articles of Agreement of the International Monetary Fund; and

(j) Not restrict payments or transfers associated with foreign direct investment.

Article 7. Subrogation

1. If a Contracting Party or its designated agency makes a payment under an indemnity, guarantee, or contract of insurance given in respect of an investment of an investor of that Contracting Party in the territory of the other Contracting Party, the other Contracting Party shall recognize:

(a) The assignment of any right or claim of such investor to the former Contracting Party or its designated agency; and

(b) The right of the former Contracting Party or its designated agency to exercise by virtue of subrogation any such right and claim to the same extent as its predecessor in title.

2. The investor referred to in paragraph 1 of this Article shall be precluded from pursuing such rights and claims arising therefrom to the extent of the subrogation.

Article 8. Transparency

1. Each Contracting Party shall promptly publish, or otherwise make publicly available, its laws, regulations, procedures, and administrative rulings and judicial decisions of general application, as well as international agreements which may affect the operation of this Agreement. Where a Contracting Party establishes a policy which is not expressed in laws or regulations or by any other means listed in this paragraph but which may affect the operation of this Agreement, that Contracting Party shall promptly publish them or otherwise make them publicly available.

2. Each Contracting Party shall promptly respond to specific questions and provide, upon request, information to the other Contracting Party on matters referred to in paragraph 1 of this Article.

3. Nothing in this Agreement shall prevent one Contracting Party from requiring an investor of the other Contracting Party, or its investment, to provide routine information concerning that investment solely for informative or statistical purposes. Nothing in this Agreement requires a Contracting Party to furnish or allow access to:

(a) Information relating to the financial affairs and accounts of individual customers of particular investors or investments; or

(b) Any confidential or proprietary information, including information concerning particular investors or investments, the disclosure of which would impede law enforcement or be contrary to its laws and regulations protecting confidentiality or prejudice the legitimate commercial interests of a particular enterprise or individual.

Article 9. Entry and Sojourn of Personnel

Subject to its laws and regulations regarding the entry and sojourn of aliens, a Contracting Party shall permit natural persons who are investors of the other Contracting Party and personnel employed by investors of that other Contracting Party to enter and remain in its territory for the purpose of engaging in activities connected with investments.

Article 10. Settlement of Disputes between Contracting Parties

1. Disputes between the Contracting Parties concerning the interpretation or application of this Agreement shall, if possible, be settled through consultations or diplomatic channels.

2. If any dispute cannot be settled within one hundred and eighty (180) days from the date of request for settlement, it shall, at the request of either Contracting Party, be submitted to an ad hoc Arbitral Tribunal in accordance with the provisions of this Article.

3. Such an ad hoc Arbitral Tribunal shall be constituted for each individual case in the following way: Within sixty (60) days from the date of receipt of the request for arbitration, each Contracting Party shall appoint one member of the ad hoc Arbitral Tribunal. These two members shall then select a national of a third State, who on approval of the two Contracting Parties shall be appointed Chairperson of the ad hoc Arbitral Tribunal. The Chairperson shall be appointed within sixty (60) days from the date of the appointment of the other two members.

4. If the necessary appointments have not been made within the periods specified in paragraph 3 of this Article, a request may be made by either Contracting Party to the President of the International Court of Justice to make such appointments. If the President is a national of either Contracting Party or otherwise prevented from discharging the said function, the Vice-President shall be invited to make the appointments. If the Vice-President is also a national of either Contracting Party or prevented from discharging the said function, the member, next in seniority, of the International Court of Justice who is not a national of either Contracting Party or is not otherwise prevented from discharging the said function shall be invited to make the appointments.

5. The ad hoc Arbitral Tribunal shall reach its decision by a majority of votes. Such decision shall be binding on the Contracting Parties.

6. The ad hoc Arbitral Tribunal shall determine its own procedure.

7. Each Contracting Party shall bear the costs of its own arbitrator and its representation in the arbitral proceedings. The costs of the Chairperson and any remaining costs shall be borne in equal parts by the Contracting Parties. The ad hoc Arbitral Tribunal may, however, in its decision direct that a higher proportion of costs shall be borne by one of the Contracting Parties.

Article 11. Settlement of Investment Disputes between a Contracting Party and an Investor of the other Contracting Party

1. This Article applies to disputes between a Contracting Party and an investor of the other Contracting Party concerning an alleged breach of an obligation of the former Contracting Party under this Agreement which causes loss or damage to the investor or its investment.

2. Such a dispute should, if possible, be settled by negotiations or consultations. If it is not so settled within one hundred and eighty (180) days from the date on which the dispute has been raised with written request by either party, the investor may choose to submit it for resolution, subject to paragraph 6 of this Article:

(a) To any competent court or administrative tribunal of the Contracting Party which is party to the dispute;

(b) By arbitration in accordance with this Article under:

(i) The Convention on the Settlement of Investment Disputes between States and Nationals of other States (the "ICSID Convention"), if the ICSID Convention is available;

(ii) The Additional Facility Rules of the Centre for Settlement of Investment Disputes (the "ICSID Additional Facility Rules"), if the ICSID Additional Facility Rules are available;

(iii) The Arbitration Rules of the United Nations Commission on International Trade Law (the "UNCITRAL Arbitration Rules")(6);or

(iv) If agreed by both parties to the dispute, any other arbitration institution or any other arbitration rules.

3. Each Contracting Party hereby consents to the submission of a dispute to arbitration in accordance with the procedures set out in this Agreement. The consent and the submission of a claim to arbitration under this Article shall satisfy the requirements of:

(a) Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the ICSID Additional Facility Rules with regard to the written consent of the parties to the dispute; and

(b) Article II of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ( the "New York Convention") for an "agreement in writing."

4. Once the investor has submitted the dispute to either a court or administrative tribunals of the disputing Contracting Party or any of the arbitration mechanisms provided for in paragraph 2, the choice of the procedure shall be final.

5. The seeking of interim relief not involving the payment of damages, from judicial or administrative tribunals, by a party to a dispute submitted to arbitration under this Article, for the preservation of its rights and interests pending resolution of the dispute, is not deemed a submission of the dispute for resolution for purposes of a Contracting Party's limitation of consent under paragraph 4 of this Article, and is permissible in arbitration under any of the provisions of paragraph 2(b) of this Article.

6. A dispute may be submitted to arbitration ninety (90) days after the date on which notice of intent to do so was received by the Contracting Party which is party to the dispute. The notice of intent shall specify:

(a) The name and address of the claimant and, where a claim is submitted on behalf of an enterprise, the name, address, and place of incorporation of the enterprise;

(b) For each claim, the provisions of this Agreement alleged to have been breached and any other related provisions;

(c) The legal and factual basis for each claim; and

(d) The relief sought, including the approximate amount of any damages claimed.

7. A dispute shall be submitted to arbitration no later than three (3) years from the date the investor first acquired or should have acquired knowledge of the events which gave rise to the dispute.

8. The provisions of the second sentence of paragraph 2 of this Article shall not apply to a measure of a Contracting Party that falls within the scope of Article 16 (Exceptions on Financial Services). Where an investor of a Contracting Party submits a claim to arbitration under paragraph 2 of this Article, and the respondent invokes Article 16 as a defense, the following provisions shall apply:

(a) The respondent shall, within one hundred and twenty (120) days of the date the claim is submitted to arbitration under this Article, submit in writing to the ad hoc Joint Committee(7) established by the two Contracting Parties, a request for a joint determination on the issue of whether and to what extent Article 16 is a valid defense to the claim. The respondent shall promptly provide the tribunal, if constituted, a copy of such request. The arbitration may proceed with respect to the claim only as provided in subparagraph(d);

(b) The ad hoc Joint Committee shall attempt in good faith to make a determination as described in subparagraph (a). Any such determination shall be transmitted promptly to the disputing parties and, if constituted, to the tribunal. The determination shall be binding on the tribunal;

(c) If the ad hoc Joint Committee, within ninety (90) days of the date on which it received the respondent's written request for a determination under subparagraph (a), has not made a determination as described in that subparagraph, the tribunal shall decide the issue left unresolved by the ad hoc Joint Committee;

(d) The arbitration referred to in subparagraph (a) shall be suspended during the pendency of the deliberation by the ad hoc Joint Committee and may proceed with respect to the claim:

(i) Ten (10) days after the date the determination of the ad hoc Joint Committee has been received by the disputing parties and, if constituted, the tribunal; or

(ii) Ten (10) days after the expiration of the ninety day period extended to the ad hoc Joint Committee in subparagraph (c).