Title

AGREEMENT BETWEEN THE GOVERNMENT OF THE ITALIAN REPUBLIC AND THE GOVERNMENT OF THE REPUBUC OF ECUADOR ON THE PROMOTlON AND PROTECTION OF INVESTMENTS

Preamble

The Government of the Italian Republic and the Government of the Republic of Ecuador (hereafter referred to as the Contracting Parties)

Desiring to establish favourable conditions for improved economic co-operation between the two Countries, and especially in relation to capital investment by investors of one Contracting Party in the territory of the other Contracting Party;

And

Acknowledging that offering encouragement and mutual protection to such investment, based on international Agreements, will contribute to stimulating business ventures, which foster the prosperity of both Contracting Parties,

Hereby have agreed as follows:

Body

Article 1. Definitions

For the purposes of this Agreement:

1 . The term "investment" shall be construed to mean any kind of property invested, before or after the entry into force of this Agreement, by a natural or legal person of a Contracting Party in the territory of the other Contracting Party, in conformity with the laws and regulations of that Party, irrespective of the legal form chosen, as well as of the legal framework.

Without limiting the generality of the foregoing, the term "investment" comprises in particular, but not exclusively:

a) Movable and immovable property and any ownership right in rem, including real guarantee rights on property of a Third Party, to the extent that it can be invested;

b) Shares, debentures, equity holdings or any other instruments of credit, as well as Government and pubic securities in general;

c) Credits for sums of money or any service right having an economic value connected with an investment, as well as reinvested incomes and capital gains;

d) Copyright, commercial trade marks, patents, industrial designs and other intellectual and industrial property rights, Know-how, trade secrets, trade names and goodwill;

e) Any economic rights accruing by law or by contract and any licence and franchise granted in accordance with the provisions in force on economic activities, including the right to prospect for, extract and exploit natural resources; and

f) Any increases in value of the original investment.

Any modification in the form of the investment does not imply a change in the nature thereof.

2 . The term "investor" shall be construed to mean any natural or legal person of a Contracting Party investing in the territory of the other Contracting Party as well as the foreign subsidiaries, affiliates and branches controlled in anyway by the above natural and legal persons.

3 . The term "natural person", in reference to either Contracting Party, shall be construed to mean any natural person holding the nationality of that State in accordance with its laws.

4 . The term "legal person", in reference to either Contracting Party, shall be construed to mean any entity having its head office in the territory of one of the Contracting Parties and recognised by it, such as public institutions, corporations, partnerships, foundations and associations, regardless of whether their liability is limited or otherwise.

5 . The term "income" shall be construed to mean the money accruing to an investment, including in particular profits or interests, interest income, capital gains, dividends, royalties or payments for assistance, technical services and others as well as any considerations in kind such as, but not exclusively, raw materials, produce, products or live-stock.

6 . The term "territory" shall be construed to mean, in addition to the zones contained within the land boundaries, the "maritime zones". The latter also comprise the marine and submarine zones over which the Contracting Parties exercise sovereignty, and sovereign or jurisdictional rights, under international law.

7 . "Investment agreement" means an agreement between a Party (or its agencies or instrumentalities) and an investor of the other Party concerning an investment.

8 . "Non-discriminatory treatment" means treatment that is at least as favourable as the better of national treatment or most-favoured-nation treatment.

9 . "Right of access" means the right to be admitted to carry out investment in the territory of the other Contracting Party.

Article 2. Promotion and Protection of Investments

1 . Both Contracting Parties shall encourage investors of the other Contracting Party to invest in their territory.

2 . Investors of one of the Contracting Parties shall have the right of access to the investment activities, in the territory of the other Contracting Party, not less favourable than the one granted as per Article 3.1.Article 3.1.

3 . Both Contracting Parties shall at all times ensure just and fair treatment of the investments of investors of the other Contracting Party. Both Contracting Parties shall ensure that the management, maintenance, use, transformation, enjoyment or assignment of the investments effected in their territory by investors of the other Contracting Party, as well as companies and enterprises in which these investments have been effected, shall in no way be subject to unjustified or discriminatory measures.

4 . Each Contracting Party shall create and maintain, in its Territory a legal framework apt to guarantee to investors the continuity of legal treatment, including the compliance, in good faith, of all undertakings assumed with regard to each specific investor.

Article 3. National Treatment and the Most Favoured Nation Clause

1 . Both Contracting Parties, within the bounds of their own territory, shall offer investments effected by, and the income accruing to, investors of the other Contracting Party no less favourable treatment than that accorded to investments effected by and income accruing to, its own nationals or investors of Third States.

2 . In case, from the legislation of one of the Contracting Parties, or from the international obligations in force or that may come into force for the future for one of the Contracting Parties, should come out a legal framework according to which the investors of the other Contracting Party would be granted a more favourable treatment than the one foreseen in this Agreement, the treatment granted to the investors of such other Parties will apply also for the outstanding relationships.

3 . The provisions under point 1 and 2 of this Article do not refer to the advantages and privileges which one Contracting Party may grant to investors of Third States by virtue of their membership of a Customs or Economic Union, of a Common Market, of a Free Trade Area, of a regional or sub-regional Agreement, of an international multilateral economic Agreement or under Agreements signed in order to prevent double taxation or to facilitate cross border trade.

Article 4. Compensation for Damage or Losses

1 . Should investors of one of the Contracting Parties incur losses or damages on their investments in the territory of the other Contracting Party due to war, other forms of armed conflict, a state of emergency, civil strife or other similar events, the Contracting Party in which the investment has been effected shall offer adequate compensation in respect of such losses or damages, irrespective whether such losses or damages have been caused by governmental forces or other subjects. Compensation payments shall be freely transferable without undue delay.

The investors concerned shall receive the same treatment as the nationals of the other Contracting Party and, at all events, no less favourable then investors of Third States.

Article 5. Nationalisation or Expropriation

1 . The investments to which this Agreement relates shall not be subject to any measure which might limit the right of ownership, possession, control or enjoyment of the investments, permanently or temporarily, save where specifically provided by current, national or local, legislation or regulations and orders handed down by courts or Tribunals having jurisdiction.

2 . Investments of investors of one of the Contracting Parties shall not be, "de jure" or "de facto", directly or indirectly, nationalised, expropriated, requisitioned or subjected to any measures having an equivalent effect in the territory of the other Contracting Party, except for public purposes or national interest and in exchange for immediate, full and effective compensation, and on condition that these measures are taken on a non-discriminatory basis and in conformity with all legal provisions and procedures.

3 . The just compensation shall be established on the basis of real international markets values immediately prior to the moment in which the decision to nationalise or expropriate is announced or made public.

In the absence of an understanding between the host Contracting Party and the investor during the nationalisation, or expropriation procedure, compensation shall be based on the same reference parameters, and exchange rates, taken into account in the documents for the constitution of the investment.

The exchange rate applicable to any such compensation shall be that prevailing on the date immediately prior to the moment in which the nationalisation or expropriation has been announced or made public.

4 . Without restricting the scope of the above paragraph, in case that the object of nationalisation, expropriation, or similar, is a company with foreign capital, the evaluation of the share of the investor will be, in the currency of the investment not lower than the starting value, increased by capital increases and revaluation of capital, undistributed profits and reserve funds, and diminished by the value of capital reductions and losses.

5 . Compensation will be considered as actual if it will have been paid in the same currency in which the investment has been made by the foreign investor, in as much as such currency is — or remains — convertible, or, otherwise, in any other currency accepted by the investor.

6 . Compensation will be considered as timely if it takes place without undue delay and, in any case, within two months.

7 . Compensation shall include interests calculated on a six months EURIBOR basis from the date of nationalisation or expropriation to the date of payment.

8 . A national or company of either Contracting Party that asserts that all or part of its investment has been expropriated shall have a right to prompt review by the appropriate judicial or administrative authorities of the other Party to determine whether any such expropriation has occurred and, if so, whether such expropriation, and any compensation thereof, conforms to the principles of international law, and to decide all other matters relating thereto.

9 . In the absence of an agreement between the investor and the responsible authority, the amount of compensation will be established according to the procedures for disputes resolution as per Article 9 of this Agreement.Article 9 of this Agreement.

Compensation will be freely transferable.

10 . The provisions of paragraph 2. of this Article shall also apply to profits accruing to an investment and, in the event of winding-up, the proceeds of liquidation.paragraph 2. of this Article shall also apply to profits accruing to an investment and, in the event of winding-up, the proceeds of liquidation.

11 . If after the expropriation, the expropriated investment does not serve the anticipated purpose, wholly or partially, the former owner or his (or its) assignees shall be entitled to repurchase it. The price of such expropriated investment shall be calculated with reference to the date in which the repurchasing takes place, adopting the same valuation criteria taken into account when calculating the compensation referred to in paragraph 3 of this Article.paragraph 3 of this Article.

Article 6. Repatriation of Capital, Profits and Income

1 . Each of the Contracting Parties shall guarantee that the investors of the other may transfer the following abroad, without undue delay, in any convertible currency:

a) Capital and additional capital, including reinvested income, used to maintain and increase investment;

b) The net income, dividends, royalties, payments for assistance and technical services, interests and other profits;

c) Income deriving from the total or partial sale or the total or partial liquidation of an investment;

d) Funds to repay loans connected to an investment and the payment of the related interests;

e) Remuneration and allowances paid to nationals of the other Contracting Party for work and services performed in relation to an investment effected in the territory of the other Contracting Party, in the amount and manner prescribed by the national legislation and regulations in force.

2 . Without restricting the scope of Article 3 of this Agreement, the Contracting Parties undertake to apply to the transfers mentioned in paragraph 1 of this Article the same favourable treatment that is accorded to investments effected by investors of Third States, in case it is more favourable.

Article 7. Subrogation

In the event that one Contracting Party or an Institution thereof has provided a guarantee in respect of non-commercial risks for the investment effected by one of its investors in the territory of the other Contracting Party, and has effected payment to said investor on the basis of that guarantee, the other Contracting Party shall recognise the assignment of the rights of the investor to the first-named Contracting Party. In relation to the transfer of payments to the Contracting Party or its Institution by virtue of this assignment, the provisions of Article 4, 5 and 6 of this Agreement shall apply.

Article 8. Transfer Procedures

1 . The transfers referred to in Article 4, 5, 6 and 7 shall be effected without undue delay and, at all events, within six months after all fiscal obligations have been met, and shall be made in a convertible currency. All the transfers shall be made at the prevailing exchange rate applicable on the date on which the investor applies for the related transfer, with the exception of the provisions under point 3 of article 5 concerning the exchange rate applicable in case of nationalisation or expropriation.

2 . The fiscal obligations under the previous paragraph are deemed to be complied with when the investor has fulfilled the proceedings provided for by the law of the Contracting Party on the territory of which the investment has been carried out.

Article 9. Settlement of Disputes between Investors and Contracting Parties

1 . Any dispute which may arise between one of the Contracting Parties and the investors of the other Contracting Party on investments, including disputes relating to the amount of compensation, shall be settled amicably, as far as possible, previous written application.

2 . In case the Investor and one entity of one of the Parties have stipulated an investment agreement, the procedure foreseen in such investment agreement shall apply.

3 . In the event that such dispute cannot be settled amicably within six months of the date of the written application for settlement, the investor in question may submit at his choice the dispute for settlement to:

a) The Contracting Party's Court or Tribunal having territorial jurisdiction;

b) An ad hoc Arbitration Tribunal, in compliance with the arbitration regulation of the UN Commission on the International Trade Law (UNCITRAL); and the host Contracting Party undertakes hereby to accept the reference to said arbitration.arbitration regulation of the UN Commission on the International Trade Law (UNCITRAL); and the host Contracting Party undertakes hereby to accept the reference to said arbitration.

c) The International Centre for Settlement of Investment Disputes, for the implementation of the arbitration procedures under the Washington Convention of 18 March, 1965, on the settlement of investment disputes between States and nationals of other States, if or as soon as both the Contracting Parties have acceded to it.

4 . Both Contracting Parties shall refrain for negotiating through diplomatic channels any matter relating to an arbitration or judicial procedures underway until these procedures have been concluded, and one of the Contracting Parties has failed to comply with the ruling of the Arbitration Tribunal or the Court of law within the period envisaged by the ruling, or else within the period which can be determined on the basis of the international or domestic law provisions which can be applied to the case.

Article 10. Settlement of Disputes between the Contracting Parties

1 . Any dispute which may arise between the Contracting Parties relating to the interpretation and application of this Agreement shall, as far as possible, be settled amicably through diplomatic channels.

2 . In the event that the dispute cannot be settled within six months of the date on which one of the Contracting Parties notifies, in writing, the other Contracting Party, the dispute shall, at the request of one of the Contracting Parties, be laid before an ad hoc Arbitration Tribunal as provided in this Article.

3 . The Arbitration Tribunal shall be constituted in the following manner: within two months from the moment on which the request for arbitration is received, each of the two Contracting Parties shall appoint a member of the Tribunal. The two members shall than choose a national of a Third State to serve as a President. The President shall be appointed within three months of the date on which the other two members are appointed.

4 . If, within the period specified in paragraph 3 of this Article, the appointments have not been made, each of the two Contracting Parties can, in default of other arrangement, ask the President of the International Court of Justice to make the appointment. In the event that the President of the Court is a national of one of the Contracting Parties or it is, for any reason, impossible for him to make the appointment, the application shall be made to the Vice President of the Court. If the Vice-President of the Court is a national of one of the Contracting Parties, or is unable to make the appointment for any reason, the most senior member of the International Court of Justice, who is not a national of one of the Contracting Parties, shall be invited to make the appointment.

5 . The Arbitration Tribunal shall rule with a majority vote, and its decisions shall be binding. Both Contracting Parties shall pay the costs of their own arbitrator and of their representative at the hearings. The President's costs and any other cost shall be divided equally between the Contracting Parties.

The Arbitration Tribunal shall lay down its own procedures.

Article 11. Relations between Governments

The provisions of this Agreement shall be applied irrespective of whether or not the Contracting Parties have diplomatic or consular relations.

Article 12. Application of other Provisions

1 . If a matter is governed both by this Agreement and by another International Agreement to which both Contracting Parties are signatories, or by general international law provisions, the most favourable provisions shall be applied to the Contracting Parties and to their investors.

2 . Whenever the treatment accorded by one Contracting Party to the investors of the other Contracting Party, according to its laws and regulations or other provisions or specific contract or investment authorisations or agreement, is more favourable than that provided under this Agreement, the most favourable treatment shall apply.

In case the host Contracting Party has not applied such treatment, in conformity with the above, and the investor suffers a damage as a consequence thereof, the investors shall be entitled to a compensation of such damages in conformity with Article 4.

3 . After the date when the investment has been made, any substantial modification in the legislation of the Contracting Parties regulating directly or indirectly the investment shall not be applied retroactively and the investment made under this Agreement shall therefore be protected.

Article 13. Entry Into Force

The present Agreement shall enter into force on the date of receipt of the last notification by which the two Contracting Parties inform each other of the fulfilment of the respective domestic procedures.

Article 14. Duration and Expiry

1 . This Agreement shall remain effective for a period of 10 years from the date of the notification under Article 13 and shall remain in force for further periods of 5 years thereafter, save if one of the two Contracting Parties withdraws in writing by not later than one year before its expiry date.Article 13 and shall remain in force for further periods of 5 years thereafter, save if one of the two Contracting Parties withdraws in writing by not later than one year before its expiry date.

2 . In the case of investments effected prior to the expiry dates, as provided under paragraph 1 of this Article, the provisions of Articles 1 to 12 shall remain effective for a further five years after the aforementioned dates.paragraph 1 of this Article, the provisions of Articles 1 to 12 shall remain effective for a further five years after the aforementioned dates.

Conclusion

DONE AT Rome, this October the day of 25, two thousand and one, in two originals, each in Italian, Spanish and English languages, all texts being equally authentic.

In case of any divergence, the English text shall prevail.

FOR THE GOVERNMENT OF THE ITALIAN REPUBLIC

FOR THE GOVERNMENT OF THE REPUBLIC OF ECUADOR

Attachments

On signing the Agreement between the Government of the Italian RepubliC and tI Government of the Republic of Ecuador on the Promotion and Protection of Investments, tI Contracting Parties also agreed to the following clauses, which shall be deemed to form integral part of the Agreement.

1. General Provision This Agreement and all provisions thereof referred to "Investments" apply as well to the following associa ted activities:

The organisation, control, operation, maintenance and disposition of companie branches, agencies, offices, factories or other facilities for the conduct of busines the making, performance and enforcement of contracts; the acquisition, us protection. and disposition of property of all Idnds including intellectual property; tI borrowing of funds; the purchase, issuance and sale of equity shares and oth secu rities; and the purchase of exchange for imports.

"Associa ted activities" also include, inter alia:

I) the granting of franchises or rights under li cens es;

II) the receipt of registratio ns, licenses, permits and other approvals n ecessa for the conduct of comm ercial activity which shall in a ny event be iss� expeditiously, as provided for in the legislation of the Contracting Parties;

III) access to financial institutions in any cUr re n c y , and to credits and curren. markets; .

IV) acce ss to funds held in financial institutions;

V) the importati on and installation of equipment necessary for the norm conduct of business affairs, induding, but not limited to, office equipment al automobiles, and the export of any equipment and automobile s so imported;

VI) the dissemination of commercial informatio n;

VII) the conduct of market studies;

VIII) the appointment of commercial representatives, induding agents, consultan and distributors (i.e., mediators in the distribution of products which th. themselves did not produce), and the serving as the same, and tht participation in trade fairs and other promotional events;

IX) the marketing of goods and services, including through internal distrib tic and marketing systems, as weu as by advertising and direct conta wi nationals and companies; 2.

X) payment for goods and services in local currency; and

Xl) leasing services rendered in or to the territory of the Contracting Parties.

With reference to Article 2

a) For purposes of dispute resolution a particular measure may be found to be arbitrary discriminatory notwithstanding the fact that a party to a dispute has had or exercise the opportunity to review such measure in the Courts or Administrative Tribunals of Contracting Party.

B) The Contracting Parties may stipulate with investors of the other Contracting Part who carry out investment of national interest in the territory of the Contracting Partie an investment agreement, which win govem the specific legal relationship related said investment.

C) Neither of the Contracting Parties will set any conditions for the creation, the expansic or the continuation of investments, which may imply the taking over or the imposing any limitation to the sale of the production on domestic and international markets, which specifies that goods must be procured JocaIly, or similar conditions.

D) The citizens of either Contracting Party authorised to work in the territory of the oth Contracting Party in connecti on with an investment as per this Agr eemen t, shall ha' the right to adequate working conditions for the carrying out of their profession activities.

E) Nationa ls of either Contracting Party shall be permitted to enter and to remain in II territory of the other Contracting Party for the purpose of establishing, developln administering, or advising on the operation of an investment to which they, or company of the first Contracting Party that employs them, have committed or are in tI proces s of committing a substantial amount of capital or other r easo ns.

F) Companies which are legaUy constituted 'under the applicable jawS' or regulations one Contracting Party and which are owned or controlled by the other ContractiJ Party, shalJ be permitted to engage to p managerial personnel of theif choic regardless of nationality.

3. With refe rence to Article 3

A) All the activities relating to the procurement, sale and transport of raw and pro cesst materials, energy, fuels and production means, as weU as any other kind of operatic r elated to them and somehow linked to entrepreneurial activities under this Agre � e shall be accord ed, in the territory of each Contracting Party, no less favo rat treatment than that accorded to similar activities and initiatives taken by resi . I nationals or investors of a Third Country. .\

B) According to its laws and regulations, each Contracting Party shall govern ; favourably as possible the problems connected with the entry, stay, work at movement in its territory of nationals of the other Contracting Party, and members their families perfor ming activities related to investm ents under this Agr eemen t.

4. With reference to Artide 5 It will be considered as nationalisation or exprop riation of an investor of one of tl Contracting Parties, a m easu re of nationafisation Of expropriation of goods Of rights beIongir to a company controlled by the investor, as well as substracting from the company financi resources Of other assets, creating obstades to the activities Of otherwise substantia prejudice the value of the same or imposing a tax treatment which could have an efts equivalent to a nationalisation or expropriation.

5. With reference to Article 9

Under Artide 9 (3) (b), arbitration shall be conducted in accordance with the arbitratic standards of the United Nations Commission on International Trade law (UNCITRAL), as Ia down in the UN General Assembly Resolution 31/98 of December 15, 1976 as well i pursuant to the following provisions:

A) The Arbitration Tribunal shall be composed of three arbitrators; if they are not nationz of either Contracting Party, they shall be nationals of States having diplomatic relatioJ with both Contracting Parties. The appointment of arbitrators, when necessary p ursua nt to the UNCITRAL Rules, � be made by the President of the Arbitration Institute of the Stockholm Chamber, in /" ciapacity as Appointing Authority. The arbitration will take place in Stoclcholm, unle: the two parties in the arbitration have agreed otherwise.

b) When delivering its decision, the Arbitration Tribunal shall in any case apply also tl provisions contained in this Agreement, as well as the principles of internatiooal Ie . recognised by the two Contracting Parties. The recognition a nd implementation of the arbitration decision in the territory of tI Contracting Parties shall be governed by their respective national legislation, compliance with the relevant International Conv entions they are parties to.

In WITNESS WHEREOF, the undersigned , being duly authorised thereto by their respecti' Governments, have signed the present Protocol.

DONE AT Rome on this October the day of 25, two thousand and one, in two originals, each in Italian, Spanish and English languages, all texts being equally authentic. In case of any divergen ce, the English text shall prevail.

FOR THE GOVERNMENT OF THE ITALIAN REPUBLIC

FOR THE GOVERNMENT OF THE REPUBLIC OF ECUADOR