Title
AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED ARAB EMIRATES AND THE GOVERNMENT OF MALAYSIA FOR THE PROMOTION AND PROTECTION OF INVESTMENTS
Preamble
The Government of the United Arab Emirates and the Government of Malaysia (hereinafter collectively referred to as the "Contracting States "and each referred to as a" Contracting State");
Desiring to create favourable conditions for greater economic co-operation between them and in particular for investments by investors of one Contracting State in the territory of the other Contracting State;
Recognizing the need to protect investments by the Contracting States and by natural and juridical persons of the Contracting States and to stimulate the flow of investments and individual business intiative with a view to the economic prosperity of the Contracting States;
Have agreed as follows:
Body
Article 1. Definitions
For the purposes of this Agreement:
(1) (a) The term ‘investment' shall comprise every kind of asset invested by the Government or by a natural or juridical person of one Contracting State in the territory of the other Contracting State in accordance with the laws, regulations and administrative practices of the state. Without restricting the generality of the foregoing the term investment shall include:
(i) Movable and immovable property as well as any other property rights in rtem such as mortgages, liens, pledges, usufruct an similar rights;
(ii) Shares, stocks and debentures of companies or other rights or interests in such companies, loans and bonds issued by a Contracting State or any of its natural or juridical persons and returns retained for the purpose of re -investments;
(iii) Claims to money or to any performance having economic value associated with an investment;
(iv) Copyrights, trademarks, patents, industrial designs and other industrial property rights, know - how, trade secrets, trade names and goodwill;
(v) Any rights conferred by law or contract and any licences and permits pursuant to law, including the rights to search for extraction and exploitation of natural resources.
(b) The said term shall refer:
(i) In respect of investments in the territory of Malaysia, to all investments made in projects classified by the appropriate Ministry of Malaysia in accordance with its legislation and administrative practices as "approved projects", and:
(ii) In respect of investments in the territory of the United Arab Emirates, to all investments approved and classified as investments by competent authorities of the United Arab Emirates in accordance with its legislation and administrative practices.
(c) Any alteration of the form in which assets are invested shall not affect their classification as investments, provided that such alteration is not contrary to the admission, if any, granted in respect of the assets originally invested;
(2) The term ‘investor' shall mean the Government of Contracting State or any of its natural or juridical persons who invest in the territory of the other Contracting State;
(3) The ‘natural person' shall mean with respect to either Contracting State a natural person holding the nationality of the State in accordance with its laws;
(4) The term ‘juridical person' shall mean with respect to either Contracting State, any entity established in accordance with, and recognized as juridical person by the law of the State, such as public and private companies, corporations, business associations, authorities, partnerships, foundations, firms, institutions, establishments, agencies, development, funds, enterprises, cooperatives, and organizations or other similar entities irrespective of whether their liabilities are limited or otherwise; and any entity established outside the jurisdication of a Contracting State as a juridical person and in which such State or any of its nationals or any juridical person established within its jurisdiction has a predominating interest;
(5) The term ‘returns' shall mean amounts yielded by an investment and in particular, though not exclusively, includes profits, interests, capital gains, share dividends, royalties or fees, and any payments in kind;
(6) The term ‘territory' means:
(i) With respect to Malaysia, all land territory comprising Malaysia, the territorial sea and airspace above;
(ii) With respect to the United Arab Emirates all land territory comprising the United Arab Emirates, the territorial sea and airspace above;
(7) Associated activities' include the organization, control, operation, maintenance and dispostition of juridical persons, branches, agencies, offices, factories or other facilities for the conduct of business; making, performance and enforcement of contract; the acquisition, use, protection and disposition of property of all kinds, including intellectual and industrial property rights; and the borrowing of funds, the purchase and issuance of equity shares and the purchase of foreign exchange for improts;
(8) The term ‘freely usable currency' means the United States Dollar, Pound Sterling, Deuzsche Mark, Swiss Franc, French Franc, Japanese Yen or other currency that is widely used to make payments for international transactions and for which there are ready buyers in the principal exchange markets.
Article 2. Promotion and Protection of Investments
(1) Each Contracting State shall encourage and create favourable conditions for investors of the other Contracting State to make investments in its territory and, in exercise of powers conferred by its laws, regulations and administratice proactices, shall admit such investments and activities associated therweith.
(2) Once established, investments shall at all times enjoy full protection and security, in a manner consistent with international law.
(3) Each Contracting State shall at all times ensure fair and equitable treatment to the investments of investors of the other Contracting State. Each Contracting State shall ensure that the management, maintenance, use, enjoyment, acquisition or disposal of investments or rights related to investment and its associated actities in its territory of investors of the other Contracting State shall not in any awy be subjected to or impaired by arbitraty, unreasonable or discriminatory measures.
(4) (a) Each Contracting state shall endeavour to take the necessary measures and legislation for granting appropriate facilities, incentives and other forms of encouragement for investments made by investors of the other Contracting State.
(b) Investors of either Contracting State shall be entitled to apply to the competent authorities in the host State for the appropriate facilities, incentives and other forms of encouragement and the host State shall grant them all assistance, consents, approvals, licences and authorizations to such an extent and on such terms and conditions as shall, from time to time, be determined by the laws and requlations of the host State.
(5) With respect to its tax policies, each Contracting State should strive to accord fairness and equity in the treatment of investment of investors of the other Contracting State.
(6) The Contracting States shall periodically consult between themselves concerning investent opportunities within the territory of each other in various sectors of the economy to determine where investments from one Contracting State into the other may be most beneficial in the interest of both Contracting States.
(7) To attain the objectives of this Agreement, the Contracting States shall encourage and facilitate the formation and establishment of the appropriate joint legal entities between the investors of the Contracting States to establish, develop and execute investment projects in different economic sectors in accordance with the laws and regulations of the host State.
(8) Investors of either Contracting State shall be permitted to engage top managerial personnel of their choice regardless of nationality to the extent permitted by the laws of the host State. The Contracting States shall make available all necessary facilities including the issuance of visas and permits of stay to such managerial personnel and to their families in accordance with the laws, regulations and administrative practices of the two Contracting States.
(9) Contracting States shall seek as far as practicable to avoid performance requirements as a condition of establishment, expansion or maintenance of investments, which require or enforce commitments to export goods produced or which specify that goods or services must be purchased locally, or which impose any other similar requirements.
(10) Each Contracting State shall provide effective means of asserting claims and enforcing-rights, with respect to investment agreements, investment authorization and properties.
(11) Each Contracting State shall make public all laws, regulations, administratice practices and procedures that pertain to or affect investments.
Article 3. Most-favoured-nation Provisions
(1) Each Contracting State shall in its territory accord investments and returns of investors of the other Contracting State treatment not less favourable than that which it accords to investments and returns of its own investors or to investments and returns of investors of any third Stale whichever is the most favourable.
(2) Each Contracting State shall in its territory accord investors of the other Contracting State, as regards management, maintenance, use, enjoyment, acquisition of disposal of their ivestments, or any other activity associated therewith, treatment not less favourable than that which it accords to its own investors or to investors of any third State whichever is the most favourable.
Article 4. Exception
The provisions of this Agreement relating to the grqnting of treatment not less favourable than that accorded to its own investors or the investors of any third State shall not be construed so as to oblige one Contracting State to extend to the investors of the other the benefit of any treatment, preference or privilege resulting from;
(a) Any existing or future custems union, an economic union or free trade area or a common external tariff area or a monetary union or similar international agreement of other forms of regional or sub-regional cooperation arrangement to which either of the Contracting States is or may become a party; or
(b) The adoption of an agreement designed to lead to the formation or extension of such a union or area within a reasonable length of time; or
(c) Any international or regional or sub-regional agreement or other arrangement relating wholly or mainly to taxation or movement of capital or any domestic legislation relating wholly or mainly to taxation.
Article 5. Compensation for Damage or Loss
(1) Investors of one Contracting State whose investments in the territory of the other Contracting State suffer losses owing to war or other armed conflict, revolution, a state of national emergency, revolt, insurrection or riot or other similar events in the territory of the latter Contracting State shall be accorded by the latter Contracting State treatment, as regards restitution indemnification, compensation or other settlement, not less favourable than that which the latter Contracting State accords to its own investors or to investors of any third State whichever is the most favourable.
(2) Without prejudice to Paragraph (1) of this Article, investors of one Contracting State who in any of the events referred to in that paragraph suffer damage or loss in the territory og the other Contracting State resulting from:
(a) Rquisiton of their investment or property by its forces or authorities,
(b) Destruction of their investment or property by its forces or authorities which was not caused in combat action or was not required by the necessity of the situation.
Shall be accorded prompt and adequate compensation for the damage or loss sustained during the period of requisitioning or as a result of the destruction of the property. Resulting payments shall be in freely usable currency and freely transferable without usndue delay.
Article 6. Nationalization or Exproptriation
(1) (a) Investments of either Contracting State or its natural or juridical persons shall not be subject to sequestration, confiscation or any similar measures save with the order of a competent court issued in accordance with laws in force;
(b) Investments of either Contracting State or its natural or juridical persons shall not be directly or indirectly nationalized, expropriated or subjected to measures having effect equivalent to nationalization or expropriation in the territory of the other Contracting State except for a public purpose in the national interest of that State, for prompt, adequate and effective compensation and on condition that such measures are taken on a non-discriminatory basis and in accordance with due process of law;
(c) Such compensation shall be computed on the basis of the fair matrket value of the investment immediatrly prior to the point of time when the decision for nationalization or expropriation was announced or become publicly known and shall be determined in accordance with recognised principles of valuation such as market value. Where the market value cannot be readilty ascertained, the compensation shall be determined on equitable principles taking into accoount, inter alia, the capital invested, depreciation, capital already repatriated, replacement value, goodwill and other relevant factors. In the event that payment of compensation is delayed, such compensation shall be paid in an amount which would put the investor in a position no less favourable than the position in which he would have been had the compensation been paid immediately on the date of expropriation or nationalization. To achieve this goal the compensation shall include an appropriate interest at a commercially reasonable rate as agreed uon by both States or at such rate as prescribed by law, for the currency in which the investment is denominated from the date of nationalization or exproptiation until the date of payment;
(d) Where a Contracting State nationalizes or expropriates the investment of a juridical person which is established or licenced under the law in force in its territory and in which the other Contracting State or any of its investors owns shares, stocksm debentures or other rights of interest, it shall ensure that prompt, adequate and effective compensation is received and allowed to be repatriated. Such compensation shall be determined and paid in accordance with the provisions of Paragraph (1) (c) of this Article.
(2) The provisions of Paragraph (1) of this Article shall also opply to the current returns from an investment as wwll as, in the event of liquidation, to the processds from the liquidation.
Article 7. Repatriation of Capital and Returns
(1) Each Contracting State shall guarantee without undue delay the transfer out of its territory in any freely usable currency of:
(a) The net profits, dividends, royalties, technical assistance and technical service fees, interests and other returns, accruing from any investment by an investor of the other Contracting State;
(b) The proceeds accruing from the sale, total or partial liquidation of any ivestment made by an investor of the other Contracting State;
(c) Funds in repayment of borrowings;
(d) The earnings of nationals of the other Contracting State who are allowed to work in connection with an investment in its territoty; and
(e) Amounts spent for the management of the investment in the territory of the Contracting State or a third State;
(2) Without restricting the generality of Araticle 3 of this Agreement the Contracting States undertake to accord to transfers referred to in Paragraph (1) of this Article a treatment as favourable as that accorded to transfers originating from investments made by investrs of any third State.
(3) The exchange rates applicable to such transfers in Paragraph (1) of this Article shall be the rate of exchange prevailing at the time of remittance.
(4) Such transfers as above shall, however, be subject to such reasonable regulatory procedures as shall, from lime to time, be in force in the host State and shall likewise be subject to the right of the government of the host Stale to impose reasonable restrictions for temporary periods not exceeding three months to meet situations of fundamental economic disequilibrium provided that at least fifty percent (50%) of such transfers are allowed to be repatriated during such periods.
Article 8. Subrogation
(1) If a Contracting State (or its designated Agency) makes payment to any of its investors under an indemnity or a guarantee it has granted in respect of an investment of any part thereof in the territory of the host State, or has otherwise become subrogated to any of the rights of such investors with respect to such investment, the host State shall recognize:
(a) The right of the other Contracting State (or its designated Agency) arising from the assignment, indemnity or other subrogation, whether under law or pursuant to a legal transaction, and
(b) That the other Contracting State (or its designated Agency) is entitled by virtue of subrogation to enforce such right.
(2) If such other Contracting State acquires any amounts in such manner as abvove, it shall be accorded in respect thereof treatment not less fabourable than that accorded to the funds of investors of the host State or of any third State, whichever is most favourable, deriving from investments or associated activities similar to those in which the party indemified was engaged.
Article 9. Settlement of Investment Disputes
(1) Each Contracting State consents to submit any disputes that may arise out of or in relation to an investment or associated activities made in its territory by an investor of the other Contracting State for settlement in accordance with the provisions of this Article.
(2) Each Contracting State consents to submit to the International Centre for the Settlement of Investment Disputes (hereinafter referred to as "the Centre") for settlement by conciliation or arbitration under the convention on the Settlement of Investment Disputes between States and Nationals of other States opened for signature at Washington on 18 March, 1965 (hereinafter referred to as the "the Convention") any dispute arising between that Contracting State and an investor of the other Contracting State which involves;
(a) An obligation entered into by that Contracting State with the investor of the other Contracting State regarding an investment or associated activities by such investor; or
(b) An alleged breach of any right conferred or created by this Agreement with respect to an investment or associated activities by such investor.
(3) If a juridical person which is incorporated or constituted under the law in force in the territory of one Contracting State and in which before such a dispute arises the majority of shares are owned by investors of the other Contracting State shall in accordance with Article 25 (2) (b) of the Convention be treated for the purposes of the Convention as an investor of the other Contracting State.
(4) (a) If any dispute of the type referred to in Paragaraph (2) should arise, the Contracting State and the investor concerned shall seek to resolve the dispute through consultation and negotiation. If the dispute cannot thus be resolved within three (3) months, then if the investor concerned also consents in writing to submit the dispute to the Centre for settlement by conciliation or arbitration under the Convention, either Contracting State to the dispute may institute proceedings by addressing a request to that effect to the Secretary-General of the Centre as set forth in Articles 28 and 36 of the Convention, provided that the investor concerned has not submitted the dispute to the courts of justice or administrative tribunals or agencies of competent jurisdiction of the Contracting State that is party to the dispute.
(b) In the event of disagreement as to whether conciliation or arbitration is the more appropriate procedure the opinion of the investor concemed shall previal.
(c) The Contracting State which is a party to the dispute shall not raise as an objection, defence, or right of set-off at any stage of the proceedings or enforcement of an award the fact that the investor which is the other part to the dispute has received pursuant to an insurance or guarantee contract an indemnity or other compensation for all or part of its losses or damages.
(5) Neither Contracting State shall pursue through displomatic channels any dispute referred to the Centre unless:
(a) The Secretary-General of the Centre, or a conciliation commission or an arbitral tribunal constituted by it, decided that the dispute is not within the jurisdiction of the Centre, or
(b) The other Contracting State should fail to abide by or to comply with any award rendered by an arbitral tribunal.
Article 10. Settlement of Disputes Betweem Contracting States
(1) Should any dispute arise concerning the interpretation or application of this Agreement the Governments of the Contracting States shall try to settle the same by negotiations.
(2) If the dispute cannot be so settled it shall, upon the request of either Contracting State, be submitted to an ad hoc Arbitral Tribunal in accordance with provisions of this Article.
(3) The Arbitral Tribunal shall be constituted in the following way: within two months of the receipt of the request for arbitration, each Contracting State shall appoint one arbitrator. The two arbitrators shall then select a national of a Third State who, on the approval by the two Contracting States, shall act as Chairman of the Tribunal (hererinafter referred to as "the Chairman") The Chairman shall be appointed within two months from the date of appointment of the other two arbitrators.
(4) If within the period specifed in Paragraph (3) of this Article either Contracting State shall not have appointed its arbitrator or the two arbitrators shall not have agreed on the Chairman, a request may be made to the President of the International Court of Justice to make the appointment. If he happens to be a national of either Contracting State or if he is otherwise prevented from discharging the said function, the Vice-President shall be invited to make the appointment. If the Vice-President also happens to be a national of either Contracting State or is prevented from discharging the said function, the member of the International Court of Justice next in seniority who is not a national of either Contracting State shall be invited to make the appointment.
(5) The Arbitral Tribunal shall reach its decision by a majority of votes. Such decision shall be binding. Each Contracting State shall bear the costs of its own arbitrator and its conusel in the arbitral proveedings; the costs of the Chairman and the remaining costs shall be borne in equal parts by both Contracting States. The Tribunal may, however, in its decision direct that a higher proportion of costs shall be borne by one of the two Contracting States. The Arbitral Tribunal shall determine its own procedure.
Article 11. Application to Investments
This Agreement shall apply to investments made in the territory of either Contracting State in accordance with its legislation or rules or regulations by investors of the other Contracting State prior to as well as after the entry into force of this Agreement.
Article 12. Relation between Governments
The provisions of this Agreement shall apply irrespective of the existence of diplmatic or consular relations between the Contracting States.
Article 13. Application of other Rules and Special Commitments
(1) Where a matter is governed simultaneously both by this Agreement and by other agreements to which both the Contracting States are parties or general principles of law commonly recognized by both Contracting States or domestic law of the host State, nothing in this Agreement shall prevent either Contracting State or any of its investors who own investments in the territory of the other Contracting State from taking advantage of whichever rules are the more favourable to their cases.
(2) Investements subject to special contracts or commitments undertaken by one Contracting State with respect tot the investors of the other COntracting State shall be governed, notwithstanding the provisions of this Agreement, by the terms of those contracts and commitments insofar as their provisions are more favourable than those provided by this Agreement.
(3) Each Contracting State shall observe any obligation it may have entered into in the domuments of approval of investments or the approved investment contracts by investors of the other Contracting State.
Article 14. Entry Into Force
This Agreement shall enter into force thirty (30) days after the latter date on which either Contracting State notifies the other that its constitutional requirements for the entry into force of this Agreement have been fulfilled.
Article 15. Duration and Termination
(1) This Agreement shall remain in force for a period of Thirty (30) years and shall continue in force thereafter for similar period or periods unless, one year before the expiry of the initial period or any subsequent period, either Contracting State notifies the other in writing of its intention to terminate this Agreement. The notice of terminationa shall become effective one year after it has been recived by the other Contracting State.
(2) In respect of investments made prior to the date when the notice of termination of this Agreement become effective. The provisions of this Agreement shall continue to be effective for a period of twenty (20) years from the date of termination of this Agreement.
Conclusion
In witness whereof the undersiqgned duly authorized thereto by their respectice Governments, have signed this Agreement.
Done in duplicate at Kuala Lumpur this 11th day of October 1991, corresponding to 3, Rabbi Thani 1412, in the English, Arabic and Bahasa Malaysia Languages, all texts being equally authentic. In case of divergency, the English text shall prevail.
For the Government of the United Arab Emirates
Ahmed Humaid AI Tayer
Mlnister of State For Finance and Industry
For the Government of Malaysia
Chua Jui Meng
Deputy MInister of Intematiooal Trade and Industry