(b) shares, stock and other forms of equity participation in an enterprise;
(c) bonds, debentures, other debt instruments, and loan (8) (9);
(d) turnkey, construction, management, production, concession, revenue-sharing, and other similar contracts;
(e) intellectual property rights;
(f) licenses, authorizations, permits, and similar rights conferred Pp pursuant to a Party's law (10); and
(g) other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages, liens, and pledges (11).
For greater certainty, investment does not mean claims to money that arise solely from:
(a) commercial contracts for sale of goods or services; or
(b) the extension of credit in connection with such commercial contracts.
investor of a non-Party means, with respect to a Party, an investor that has made an investment in the territory of that Party, that is not an investor of either Party;
investor of a Party means a natural person or an enterprise of a Party that is seeking to make (12), is making, or has made an investment in the territory of the other Party;
non-disputing Party means the Party that is not a party to an investment dispute; and
UNCITRAL Arbitration Rules means the arbitration rules of the United
Nations Commission on International Trade Law adopted by United Nations General Assembly on 28 April 1976.
Article 7.2. Scope and Coverage
1. This Chapter 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 Chapter does not bind either Party in relation to any act or fact that took place or any situation that ceased to exist before the date of entry into force of this Agreement.
3. For purposes of this Chapter, measures adopted or maintained by a Party means measures adopted or maintained by:
(a) central, regional, or local governments and authorities; and
(b) non-governmental bodies in the exercise of powers delegated by central, regional, or local governments or authorities.
4. This Chapter does not apply to:
(a) government procurement;
(b) subsidies or grants provided by a Party;
(c) any taxation measure, except under Article 7.11 and Article 7.12;
(d) services supplied in the exercise of governmental authority such as law enforcement, correctional services, income security or insurance, social security or insurance, social welfare, public education, public training, health, and child care, provided that such services are supplied neither on a commercial basis, nor in competition with one or more service suppliers; or
(e) measures adopted or maintained by a Party to the extent that they are covered by Chapter Six (Trade in Services).
5. Notwithstanding paragraph 4(e), Article 7.6, Article 7.7, Article 7.11, Article 7.12 (13), Article 7.13, and Article 7.19 shall apply, mutatis mutandis, to any measure affecting the supply of service by a service supplier of a Party through commercial presence (14) in the territory of the other Party pursuant to the provisions of Chapter Six (Trade in Services), only to the extent that they constitute a covered investment. (15)
Article 7.3. Relations to other Chapters
1. In the event of any inconsistency between this Chapter and another Chapter, the other Chapter shall prevail to the extent of the inconsistency.
2. 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 of the cross- border supply of a service does not of itself make this Chapter applicable to measures adopted or maintained by the Party relating to such cross-border supply of the service. This Chapter applies to measures adopted or maintained by the Party relating to the posted bond or financial security, to the extent that such bond or financial security is a covered investment.
3. This Chapter does not apply to measures adopted or maintained by a Party to the extent that they are covered by Chapter Six (Trade in Services).
Article 7.4. National Treatment
1. Each Party shall accord to investors of the other Party, and to covered investments of investors of the other Party, treatment no less favorable than that it accords, in like circumstances, (16) to its own investors and investments with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
2. The treatment to be accorded by a Party under paragraph 1 means, with respect to a regional level of government, treatment no less favorable than the most favorable 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 7.5. Most-Favored-Nation Treatment (17)
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 any non-Party 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 in its territory of investors of any non-Party with respect to the establishment, acquisition, expansion, 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, such as those included in Article 7.19.
Article 7.6. Treatment of Investment (18)
1. Each Party shall accord to covered investments fair and equitable treatment and full protection and security, in accordance with customary international law minimum standard of treatment of aliens.
2. For greater certainty:
(a) fair and equitable treatment requires cach Party not to deny justice in any legal or administrative proceedings;
(b) full protection and security require each Party to take such measures as may be reasonably necessary to ensure the physical protection and security of the covered investment; and
(c) the concepts of "fair and equitable treatment" and "full protection and security" do not require treatment to covered investments in addition to or beyond that which is required under customary international law minimum standard of treatment of aliens, and do not create additional substantive rights.
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.
Article 7.7. Compensation for Losses
1. A Party shall accord to investors of the other Party whose covered investment suffered losses due to war or other armed conflict, state of national emergency, riot or other civil strife, treatment no less favorable than that accorded, in like circumstances, to its own investors or investors of a non-Party whichever is more favorable, relating to restitution, indemnification, compensation or any other forms of settlement.
2. An investor of a Party who in any of the events referred to in paragraph 1 suffers loss resulting from:
(a) requisitioning of its investment or part thereof by the forces or authorities of the other Party; or
(b) destruction of its investment or part thereof by the forces or authorities of the other Party, which was not required by the necessity of the situation;
shall in any case be accorded by the latter Party restitution or compensation which in either case shall be prompt, adequate and effective and, with respect to compensation, shall be accordance with Article 7.12.
Article 7.8. Performance Requirements (19) (20) (21)
1. Neither Party shall impose or enforce any of the following requirements, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment in its territory of an investor of a Party or of a non-Party:
(a) to achieve a given level or percentage of domestic content;
(b) to purchase, use, or accord a preference to goods produced in its territory, or to purchase goods from persons in its territory;
(c) 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 investments of the investor;
(d) to restrict sales of goods in its territory that such investment of the investor produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
(e) to export a given level or percentage of goods;
(f) to transfer a particular technology, a production process, or other proprietary knowledge to a person in its territory; or
(g) to supply exclusively from the territory of the Party the goods that such investment produces to a specific regional market or to the world market.
2. Paragraph 1 does not preclude cither Party from conditioning the receipt or continued receipt of an advantage, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment in its territory of an investor of a Party or of a non-Party, on compliance with any of the requirements set forth in subparagraphs 1(c) through (g).
Article 7.9. Senior Management and Boards of Directors
1. A Party shall not require an enterprise of that Party that is a covered investment appoint to senior management positions natural persons of any 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.
Article 7.10. Non-Conforming Measures
1. Articles 7.4, Article 7.5, Article 7.8, and Article 7.9 shall not apply to:
(a) any existing non-conforming measure that is maintained by a Party at:
(i) the central level of government as set out by that Party in its Schedule to Annex I;
(ii) a regional level of government as set out by that Party in its Schedule to Annex I; or
(iii) a local level of government (22);
(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed at the date of entry into force of the Party's Schedule to Annex I with Article 7.4, Article 7.5, Article 7.8, and Article 7.9.
2. Article 7.4, Article 7.5, Article 7.8, and Article 7.9 shall not apply to any measures that a Party adopts or maintains with respect to sectors, sub-sectors or activities, as set out in its Schedule to Annex II.
3. Neither Party may, under any measure adopted after the date of entry into force of this Agreement and covered by 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 and, where applicable, unless otherwise specified in the initial approval by the relevant authorities.
4. Nothing in this Chapter shall be construed so as to derogate from rights and obligations under international agreements in respect of protection of intellectual property rights to which the Parties are party, including the TRIPS Agreement and other treaties concluded under the auspices of the World Intellectual Property Organization.
Article 7.11. Transfers (23)
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 shall include:
(a) the initial capital and additional amounts to maintain or increase an investment;
(b) profits, dividends, interest, capital gains, royalty payments, license fees, technical assistance fees, management fees and other current income accruing from any covered investment;
(c) proceeds from the total or partial sale or liquidation of all or any part of the covered investment;
(d) payments made under a contract, including a loan agreement;
(e) payments made pursuant to Article 7.7 and Article 7.12; and
(f) payments arising out of the settlement 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. Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer through the equitable, non-discriminatory, and good faith application of its laws and regulations relating to:
(a) bankruptcy, insolvency, or the protection of the rights of creditors;
(b) issuing, trading, or dealing in securities, futures, options, or derivatives;
(c) criminal or penal offences;
(d) ensuring compliance with the judgments in judicial or administrative proceedings;
(e) financial reporting or record keeping of transfers including capital movements and payments when necessary to assist law enforcement or financial regulatory authorities;
(f) taxation; or
(g) severance entitlement of employees.
Article 7.12. Expropriation and Compensation
1. A Party shall not nationalize or expropriate covered investments of an investor of the other Party, cither directly or through measures equivalent to expropriation or nationalization (referred hereto as "expropriation"), except:
(a) for public purpose;
(b) in accordance with due process of law;
(c) on a non-discriminatory basis; and
(d) upon payment of prompt, adequate and effective compensation.
2. For purposes of paragraph 1(d), compensation shall:
(a) be equivalent to the fair market value of the expropriated investment at the time when the expropriation was publicly announced, or immediately before or when the expropriation occurred, whichever is applicable; (24)
(b) not reflect any change in value occurring because the intended expropriation had become known earlier;
(c) be settled and paid without undue delay (25); and
(d) be effectively realizable and freely transferable between the territories of the Parties.
3. The compensation referred to in paragraph 1(d) shall include appropriate interest.
4. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights under the TRIPS Agreement.
Article 7.13. Subrogation
1. If a Party or designated agency of a Party makes a payment to an investor of that Party under a guarantee, a contract of insurance or other form of indemnity it has granted on non-commercial risk in respect of a covered investment, the other Party in whose territory the covered investment was made shall recognize the subrogation or transfer of any rights the investor would have possessed under this Chapter with respect to the covered investment but for the subrogation, and the investor shall be precluded from pursuing these rights to the extent of the subrogation.
2. The subrogated or transferred Tight or claim shall not be greater than the original right or claim of the investor. (26)
Article 7.14. Special Formalities and Treatment of Information
1. Nothing in Article 7.4 shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with establishment of investments by investors of the other Party, such as the requirement that investments be legally constituted under the laws or regulations of the Party and compliance with registration requirements, provided that such formalities do not materially impair the rights afforded by a Party to investors of the other Party and investments of investors of the other Party pursuant to this Agreement.
2. Notwithstanding Article 7.4 and Article 7.5, a Party may require an investor of the other Party, or its investment in its territory, to provide routine information concerning that investment solely for information or statistical purposes. The Party shall protect any confidential information which has been provided from any disclosure that would prejudice legitimate commercial interests of the investor and its covered investment, or the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law.
Article 7.15. Denial of Benefits
A Party may deny the benefits of this Chapter:
(a) to an investor of the other Party that is an enterprise of the other Party and to investments of that investor if:
(i) persons of a non-Party, or of the denying Party own or control the enterprise; and
(ii) the enterprise has no substantial business activities in the territory of the other Party;
(b) to an investor of the other Party that is an enterprise of the other Party and to investments of that investor if:
(i) persons of a non-Party own or control the enterprise; and
(ii) the denying Party adopts or maintains measures with respect to the non-Party or a person of the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to its investments; or
(c) to an investor of the other Party if a person of a non-Party owns or controls the enterprise and the denying Party does not maintain diplomatic relations with that non-Party.
Article 7.16. Environmental Measures
Each Party recognizes that it is inappropriate to encourage investments by investors by relaxing its environmental measures. To this effect, each Party should not waive or otherwise derogate from such environmental measures as an encouragement for establishment, acquisition or expansion of investments in its territory.
Article 7.17. Investment Promotion
The Parties recognize the importance of promoting cross-border investment and technology flows as a means for achieving economic growth and development through, inter alia:
(a) identifying investment opportunities and providing information on investment regulations;
(b) sharing of experiences and best practices on investment promotion;
(c) the furthering of a legal environment conducive to increased investment flows; and
(d) developing investments partnership, in particular with small and medium enterprises.