3. Upon receipt of a recommendation referred to in paragraph 1, the Commission shall review it within a reasonable time to decide whether it is consistent with the provisions of this Agreement. On the basis of the Commission's review, each Party shall encourage its respective competent authorities to implement that recommendation in appropriate cases within a mutually agreed period of time.
Granting of Temporary Licenses
4. Where agreed by the Parties, each Party shall encourage the relevant agencies in their respective territories to develop procedures for the issuance of temporary licenses to professional service suppliers of another Party.
Temporary Licensing of Engineers and Architects
5. The Parties agree to use their best efforts to establish a work program jointly with the relevant professional bodies in their territories to develop procedures for the issuance of temporary licenses by the competent authorities of one Party to Engineers and Architects of the other Party.
6. To this end, each Party shall consult with relevant professional bodies in its territory to obtain their recommendations on:
(a) the development of procedures for granting temporary licenses to Engineers and Architects of the other Party to practice their engineering and architectural specialties in the territory of the consulting Party;
(b) the development of model procedures for its competent authorities to adopt throughout its territory to facilitate the granting of temporary licenses to engineers and architects of the other Party; and
(c) other matters of mutual interest to the Parties relating to the temporary licensing of engineers and architects identified by the consulting Party in such consultations.
7. The Commission shall promptly review any recommendation pursuant to paragraph 6 to ensure its compatibility with this Agreement. Based on that review, each Party shall encourage its respective competent authorities, as appropriate, to implement the recommendation within a mutually agreed timeframe.
8. In the case of Mexico, the Secretaría de Educación Pública shall be the competent authority and shall define the professional body for the purposes of this Annex.
9. In the case of Panama, the professional body shall be the Panamanian Society of Engineers and Architects, and the competent authority shall be the Technical Board of Engineering and Architecture.
Revision
10. The Parties shall periodically review, at least once every 3 years, the implementation of the provisions of this Annex.
Chapter 10. INVESTMENT
Section A. General Provisions
Article 10.1. Definitions
For the purposes of this Chapter, the following definitions shall apply:
designated appointing authority: the authority which, in accordance with the applicable arbitration rules or otherwise designated by the disputing parties, shall appoint the arbitrator or arbitrators necessary for the constitution of the arbitral tribunal;
ICSID: the International Centre for Settlement of Investment Disputes;
UNCITRAL: the United Nations Commission on International Trade Law;
New York Convention: the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, concluded in New York on June 10, 1958;
Inter-American Convention: the Inter-American Convention on International Commercial Arbitration, done at Panama on January 30, 1975;
ICSID Convention: the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington on March 18, 1965;
respondent: the respondent Party that is a party to an investment dispute;
claimant: the investor of a Party that is a party to an investment dispute with the other Party;
protected information:
(a) confidential business information, or
(b) information that is privileged or otherwise protected from disclosure under the Party's domestic law;
investment: the following assets owned or controlled by an investor, directly or indirectly, that have the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk:
(a) an enterprise;
(b) shares, equity and other forms of participation in the equity of an enterprise;
(c) debt instruments of an enterprise:
(i) where the enterprise is an affiliate of the investor, or.
(ii) where the original maturity date of the debt instrument is at least 3 years;
but does not include a debt instrument of a Party or a State enterprise, regardless of the original maturity date;
(d) a loan to an enterprise:
(i) where the enterprise is an affiliate of the investor, or.
(ii) where the original maturity date of the loan is at least 3 years;
but does not include a loan to a Party or a State enterprise, regardless of the original maturity date;
(e) an interest in an enterprise, which entitles the owner to share in the income or profits of the enterprise, or in the equity of that enterprise in a liquidation, provided that it does not arise from an obligation or loan excluded under subparagraphs (c) or (d);
(f) real estate or other property rights, tangible or intangible (including intellectual property rights), real or personal, and rights related to property, such as leases, mortgages, liens and pledges;
(g) participation resulting from capital or other resources in the territory of a Party intended for the development of an economic activity in such territory, inter alia, pursuant to:
(i) contracts involving the presence of an investor's property in the territory of a Party, including concessions, construction and turnkey contracts; or
(ii) contracts where the remuneration depends substantially on the production, revenues or profits of an enterprise;
(h) concessions, licenses, authorizations, permits and similar instruments granted in the territory of a Party, to the extent that they create rights protected under the domestic law of that Party (1);
but investment does not mean:
(i) an order or judgment within a judicial or administrative proceeding;
(j) loans granted by a Party to the other Party;
(k) public debt and debt of public institutions;
(l) pecuniary claims arising exclusively from:
(i) commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Party to a national or enterprise in the territory of the other Party; or
(ii) the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by the provisions of subparagraph (d), or
(m) any other pecuniary claim, not involving the interest rates set forth in subparagraphs (a) through (h);
a modification in the manner in which the assets have been invested or reinvested does not affect their investment status under this Agreement, provided that such modification falls within the definitions of this Article and is made in accordance with the domestic law of the Party into whose territory the investment has been admitted;
covered investment: with respect to a Party, an investment in its territory of an investor of the other Party existing on the date of entry into force of this Agreement, as well as investments made or acquired thereafter;
investor of a Party: a Party or an enterprise of the State of such Party, or a national or enterprise of such Party, that intends to make, through specific actions (2), is making or has made an investment in the territory of the other Party; provided, however, that a natural person having dual nationality shall be deemed to be exclusively a national of the State of his dominant and effective nationality;
investor of a non-Party: with respect to a Party, an investor that intends to make, through specific actions (3) , is making or has made an investment in the territory of that Party, that is not an investor of a Party;
freely usable currency: "freely usable currency" as determined by the International Monetary Fund under the Articles of Agreement of the International Monetary Fund;
disputing party: the claimant or the respondent;
non-disputing party: the Party that is not a party to an investment dispute under Section C of this Chapter;
disputing party: the claimant and the respondent;
UNCITRAL Arbitration Rules: the Arbitration Rules of the United Nations Commission on International Trade Law, adopted by the General Assembly of the United Nations on December 15, 1976;
ICSID Additional Facility Rules: the Arbitration Rules of the Additional Facility for the Administration of Proceedings by the ICSID Secretariat;
Secretary-General: the Secretary-General of ICSID; and
Tribunal: an arbitral tribunal established under Article 10.20 or 10.26.
Article 10.2. Scope of Application
1. This Chapter shall apply to measures adopted or maintained by a Party relating to:
(a) investors of the other Party;
(b) covered investments; and
(c) with respect to Articles 10.7 and 10.9, all investments in the territory of the Party.
2. This Chapter shall be subject to and construed in accordance with Annexes 10.5, 10.11, 10.21, and 10.29.
3. The obligations of a Party under Section B shall apply to a state enterprise or other person where it exercises regulatory, administrative or other governmental authority delegated to it by that Party, such as the authority to expropriate, grant licenses, approve commercial transactions, or impose fees, dues or other charges.
4. This Chapter shall not apply to:
(a) a measure that a Party adopts or maintains if that measure is covered by Chapter 11 (Financial Services);
(b) a measure adopted or maintained by a Party to restrict the participation of investments of the other Party in its territory for reasons of national security or public order, or in pursuance of its duties to maintain or restore international peace and security; and
(c) any controversy, claim, suit or dispute arising prior to the entry into force of this Agreement, even if its effects remain after the entry into force of this Agreement.
5. For greater certainty, nothing in this Chapter shall be construed to:
(a) to impose an obligation on a Party to privatize any investment that it owns or controls, or to prevent a Party from designating a monopoly, or
(b) to prevent a Party from providing social services or carrying out functions such as law enforcement and implementation, social rehabilitation services, pension or unemployment insurance or social security services, social welfare, public education, public training, health, and child protection, when performed in a manner not inconsistent with this Chapter.
6. In the event of any inconsistency between this Chapter and another Chapter of this Agreement, the other Chapter shall prevail to the extent of the inconsistency.
7. A requirement by a Party that a service supplier of the other Party post a bond or other form of financial security as a condition for supplying a cross-border service does not, of itself, make this Chapter applicable to measures adopted or maintained by the Party with respect to the cross-border supply of the service. This Chapter shall apply to measures adopted or maintained by the Party with respect to the bond or financial security, to the extent that such bond or financial security constitutes an investment covered by the Agreement.
Section B. Substantive Obligations
Article 10.3. National Treatment
1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favorable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory.
3. Treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a state, department, or government at the regional level, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that state, department, or government at the regional level to investors and covered investments of which it is a constituent part.
Article 10.4. Most-Favored-Nation Treatment
1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or disposal of a covered investment, management, conduct, operation and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favorable than that it accords, in like circumstances, to investments of investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory.
3. For greater certainty, the treatment accorded by a Party under paragraphs 1 and 2 does not extend to dispute settlement procedures provided for in international treaties, such as that provided for in Section C.
Article 10.5. Minimum Standard of Treatment
1. Subject to Annex 10.5, each Party shall accord to covered investments treatment consistent with customary international law, including fair and equitable treatment and full protection and security.
2. Treatment accorded by a Party in accordance with paragraph 1 means that the minimum standard of treatment of aliens under customary international law is the minimum standard of treatment that may be accorded to covered investments. The concepts of fair and equitable treatment and full protection and security do not require treatment in addition to or beyond that required by that standard and do not create significant additional rights. The obligation in paragraph 1 to accord:
(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 Party to provide the level of police protection that is required by customary international law.
3. A finding of a violation of another provision of this Treaty or of a separate international agreement does not establish a violation of this Article.
Article 10.6. Senior Executives and Boards of Directors
1. No Party may require an enterprise of that Party that is a covered investment to appoint natural persons of a particular nationality to senior management positions.
2. A Party may require that a majority of the members of the boards of directors, or any committees 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 significantly impair the ability of the investor to exercise control over its investment.
Article 10.7. Performance Requirements
1. No Party may impose or enforce any requirement or enforce any obligation or commitment, in connection with the establishment, acquisition, expansion, management, conduct, operation, sale, or other disposition of an investment of an investor of the other Party or of a non-Party in its territory to:
(a) export a specified level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord preference to goods produced in its territory, or to purchase goods from producers or services supplied by service providers in its territory;
(d) 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 such investment;
(e) restrict sales in its territory of the goods or services that such investment produces or provides by relating such sales in any way to the volume or value of its exports or to the foreign exchange earnings it generates;
(f) to transfer a particular technology, production process or other proprietary knowledge to a person in its territory, unless:
(i) the requirement is imposed, or the obligation or commitment is enforced by a judicial or administrative tribunal or competition authority, to remedy a practice that has been found to be anticompetitive under the Party's domestic competition laws (4); or
(ii) a Party authorizes the use of an intellectual property right in accordance with Article 31 of the TRIPS Agreement or measures requiring the disclosure of information of private property that fall within the scope of, and are consistent with, Article 39 of the TRIPS Agreement. (5)
(g) act as the exclusive supplier in its territory of the goods the investment produces or the services it provides to a specific regional market or to the world market.
2. A measure that requires an investment to use a technology to comply with general regulations applicable to health, safety or the environment shall not be considered inconsistent with subparagraph 1(f).
3. Nothing in paragraph 1 shall be construed to prevent a Party, in connection with the establishment, acquisition, expansion, management, conduct, operation or sale or other disposition of a covered investment or an investment of an investor of a non-Party in its territory, from imposing or enforcing a requirement or enforcing an obligation or commitment to train workers in its territory.
4. No Party may condition the receipt of an advantage, or the continued receipt of an advantage, in connection with the establishment, acquisition, expansion, management, conduct, operation, sale or other disposition of an investment in its territory by an investor of the other Party or of a non-Party, on compliance with any of the following requirements:
(a) attaining a certain degree or percentage of domestic content;
(b) to purchase, use or grant preferences to goods produced in its territory or to purchase goods from persons in its territory;
(c) to relate, in any manner, the volume or value of imports to the volume or value of exports, or to the amount of foreign exchange inflows associated with such investment; or
(d) restrict sales in its territory of the goods or services that such investment produces or provides by relating such sales in any way to the volume or value of its exports or to foreign exchange earnings.
5. Nothing in paragraph 4 shall be construed to prevent a Party from conditioning the receipt of an advantage, or the continued receipt of an advantage, in connection with an investment in its territory by an investor of the other Party, or of a non-Party, to compliance with a requirement that it locate production, provide services, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory.
6. Paragraphs 1 and 4 shall not apply to any requirement other than the commitment, obligation or requirements set forth in those paragraphs. In particular, the provisions of
(a) subparagraphs 1(a), 1(b) and 1(c), and 4(a) and 4(b) shall not apply to requirements for qualification of goods or services with respect to export promotion programs and foreign aid programs;
(b) subparagraphs 4(a) and 4(b) shall not apply to requirements imposed by an importing Party with respect to the content of goods necessary to qualify for preferential duties or quotas; and
(c) subparagraphs 1(b), 1(c), 1(f) and 1(g), and 4(a) and 4(b) shall not apply to government procurement.
7. Provided that such measures are not applied in an arbitrary or unjustified manner and provided that such measures do not constitute a disguised restriction on international trade or investment, nothing in subparagraphs 1(b), 1(c) and 1(f), and 4(a) and 4(b) shall be construed to prevent a Party from adopting or maintaining measures, including measures of an environmental nature:
(a) necessary to secure 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) related to the preservation of living or non-living non-renewable natural resources.
8. This Article does not preclude the application of any commitment, obligation, or requirement between private parties where a Party did not impose or require the commitment, obligation, or requirement.
Article Article 10.8: Nonconforming Measures
1. Articles 10.3, 10.4, 10.6, and 10.7 shall not apply to:
(a) any non-conforming measure existing or maintained by a Party in:
(i) the government at the central level, as set out by that Party in its Schedule to Annex I;
(ii) the government at the regional level, as set out by that Party in its Schedule to Annex I; or
(iii) a local level government;
(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a), or
(c) the modification of any non-conforming measure referred to in subparagraph (a) provided that such modification does not decrease the degree of conformity of the measure, as in effect immediately before the modification, with Articles 10.3, 10.4, 10.6 and 10.7.
2. Articles 10.3, 10.4, 10.6 and 10.7 shall not apply to any measure that a Party adopts or maintains, in relation to sectors, sub-sectors or activities, as set out in its Schedule to Annex II.
3. Articles 10.3 and 10.4 shall not apply to any measure that constitutes an exception to or derogation from the obligations set out in the TRIPS Agreement, as specifically provided for in that Agreement.
4. No Party may, pursuant to any measure adopted after the date of entry into force of this Agreement and included in its Schedule to Annex II, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.
5. The provisions of Articles 10.3, 10.4, and 10.6 shall not apply to:
(a) subsidies or grants provided by a Party, including government-backed loans, guarantees and insurance, or.
(b) government procurement.
Article 10.9. Environmental Measures
1. The Parties recognize that it is inappropriate to promote investment by weakening or reducing protections under their domestic environmental laws. Accordingly, each Party shall endeavor to ensure that it shall not waive or derogate from, or offer to waive or derogate from, such laws in a manner that weakens or reduces the protection afforded by such laws as a means of encouraging the establishment, acquisition, expansion, or retention of an investment in its territory.
2. Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investments in its territory are made taking into account environmental concerns.