(b) profits, dividends, capital gains and other returns, proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;
(c) interest, royalty payments, management fees, and technical assistance and other fees;
(d) payments made under a contract entered into by the investor, or its investment, including payments made pursuant to a loan agreement;
(e) earnings and other remuneration of personnel engaged from abroad and working in connection with an investment;
(f) payments made pursuant to Articles 2.6 (Compensation for Losses) and 2.7 (Expropriation);
(g) payments of damages pursuant to an award issued by a tribunal.
2. Neither Party may require its investors to transfer, or penalise its investors for failing to transfer, the income, earnings, profits or other amounts derived from, or attributable to, investments in the territory of the other Party.
3. For greater certainty, this Article shall not be construed as preventing a Party from making returns in kind relating to a covered investment, which are subject to a written agreement between that Party and a covered investment or an investor of the other Party, as authorised or specified in that agreement, or from restricting transfers of returns in kind in circumstances where it could otherwise restrict such transfers under this Agreement.
Article 2.10. Subrogation
1. If a Party, or an agency thereof, makes a payment to an investor of that Party under a guarantee or contract of insurance or other form of indemnity it has granted on non-commercial risk in respect of a covered investment, the other Party shall recognise the subrogation or transfer of any rights or assignment of any claim of the investor under this Agreement in respect of the covered investment. The investor shall not, unless authorised by the Party or the agency making the payment, pursue those rights against the other Party.
2. The subrogated or transferred right or assigned claim shall not be greater than the original right or claim of the investor. For greater certainty, the recognition of the subrogation referred to in paragraph (1) shall not be construed as implying recognition of the merits of any claim or the amount of damages arising therefrom.
ANNEX 2-A. EXPROPRIATION
The Parties confirm their shared understanding that:
1. Expropriation may be either direct or indirect:
(a) direct expropriation occurs when an investment is nationalised or otherwise directly expropriated through formal transfer of title or outright seizure;
(b) indirect expropriation occurs where a measure or series of measures by a Party has an effect equivalent to direct expropriation, in that it substantially deprives the investor of the fundamental attributes of property in its investment, including the right to use, enjoy and dispose of its investment, without formal transfer of title or outright seizure.
2. The determination of whether a measure or series of measures by a Party, in a specific situation, constitutes an indirect expropriation requires a case-by-case, fact-based inquiry that considers, among other factors
(a) the economic impact of the measure or series of measures, although the sole fact that a measure or series of measures of a Party has an adverse effect on the economic value of an investment does not establish that an indirect expropriation has occurred;
(b) the duration of the measure or series of measures by a Party;
(c) the character of the measure or series of measures, notably their object and context;
(d) whether the expectations of the investor arising out of the covered investment were distinct and reasonable.
3. For greater certainty, non-discriminatory measures by a Party that are designed and applied to protect legitimate policy objectives, such as the protection of public health, safety, environment, including climate change, or public morals, social or consumer protection or promotion and protection of cultural diversity do not constitute indirect expropriations, except in rare circumstances when they are manifestly excessive in light of the above-mentioned objectives.
ANNEX 2-B. COMPETENT AUTHORITIES MENTIONED IN ARTICLE 2.1 PARAGRAPH 6
In the case of the EU, the competent authorities entitled to order the actions mentioned in Article 2.1 (Scope) paragraph 6 are the European Commission or a court or tribunal of a Member State when applying EU law on State aid.
In the case of Indonesia, the competent authority entitled to order the actions mentioned in Article 2.1 (Scope) paragraph 6 is the Government of Indonesia under its law.
Chapter 3. MEDIATION MECHANISM FOR INVESTOR-TO-STATE DISPUTES
Article 3.1. Objective and Scope
1. The objective of the mediation mechanism is to facilitate the finding of a mutually agreed solution through a comprehensive and expeditious procedure with the assistance of a mediator.
2. The mediation mechanism applies to disputes between an investor of a Party and the other Party concerning the application of this Agreement (hereinafter referred to as "disputing parties").
3. Recourse to mediation is voluntary and without prejudice to the legal position of either disputing party.
Article 3.2. Initiation of the Procedure
1. Either disputing party may request, at any time, the commencement of a mediation procedure. Such request shall be addressed to the other disputing party in writing, with a copy to the home State of the investor, for information. Where the request is addressed to the European Union, the European Union may involve one or several Member States in the mediation, as appropriate.
2. The party to which such request is addressed shall give sympathetic consideration to the request and accept or reject it in writing within 30 working days of its receipt.
Article 3.3. Selection of the Mediator
1. If both disputing parties agree to a mediation procedure, a mediator shall be selected in accordance with the procedure set out in paragraphs 2 and 3. The disputing parties shall endeavour to agree on a mediator within 15 working days from the receipt of the reply to the request.
2. The Committee shall, upon the entry into force of this Agreement, establish a list of six individuals, of high moral character and recognised competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment and who are willing and able to serve as mediators.
3. The mediator shall be appointed by agreement of the disputing parties from the list established pursuant to paragraph 2, unless otherwise agreed. In the absence of an agreement on the choice of the mediator, the disputing parties may jointly request the Secretary General of the Permanent Court of Arbitration to appoint a mediator from that list, or, in the absence of a list, from individuals proposed by either Party.
4. A mediator shall not be a national of either Party to the Agreement, unless the disputing parties agree otherwise.
5. The mediator shall assist, in an impartial and transparent manner, the disputing parties in reaching a mutually agreed solution.
Article 3.4. Rules of the Mediation Procedure
1. Within 10 working days after the appointment of the mediator, the disputing party having invoked the mediation procedure shall present, in writing, a detailed description of the problem to the mediator and to the other disputing party. Within 20 working days after the date of delivery of this submission, the other disputing party may provide, in writing, its comments to the description of the problem. Either disputing party may include in its description or comments any information that it deems relevant.
2. The mediator may decide on the most appropriate way of bringing clarity to the measure concerned. In particular, the mediator may organise meetings between the disputing parties, consult the disputing parties jointly or individually, seek the assistance of or consult with relevant experts and stakeholders and provide any additional support requested by the disputing parties. However, before seeking the assistance of or consulting with relevant experts and stakeholders, the mediator shall consult with the disputing parties.
3. The mediator may offer advice and propose a solution for the consideration of the disputing parties which may accept or reject the proposed solution or may agree on a different solution. However, the mediator shall not advise or give comments on the consistency of the measure at issue with this Agreement.
4. The procedure shall take place in the territory of the Party concerned, or by mutual agreement in any other location or by any other means.
5. The disputing parties shall endeavour to reach a mutually agreed solution within 60 days from the appointment of the mediator. Pending a final agreement, the disputing parties may consider possible interim solutions.
6. Mutually agreed solutions shall be made publicly available. However, the version disclosed to the public may not contain any information that a disputing party has designated as confidential.
7. The procedure shall be terminated:
(a) by the adoption of a mutually agreed solution by the disputing parties, on the date of adoption;
(b) by a written declaration of the mediator, after consultation with the disputing parties, that further efforts at mediation would be to no avail;
(c) by written notice of a disputing party.
Article 3.5. Implementation of a Mutually Agreed Solution
1. Where a solution has been agreed, each disputing party shall take the measures necessary to implement the mutually agreed solution within the agreed timeframe.
2. The implementing disputing party shall inform the other disputing party in writing of any steps or measures taken to implement the mutually agreed solution.
3. On request of the disputing parties, the mediator shall issue to the disputing parties, in writing, a draft factual report, providing a brief summary of (1) the measure at issue in these procedures; (2) the procedures followed; and (3) any mutually agreed solution reached as the final outcome of these procedures, including possible interim solutions. The mediator shall provide the disputing parties 15 working days to comment on the draft report. After considering the comments of the disputing parties submitted within the period, the mediator shall submit, in writing, a final factual report to the disputing parties within 15 working days. The factual report shall not include any interpretation of this Agreement.
Article 3.6. Relationship to Dispute Settlement
1. The procedure under this mediation mechanism is not intended to serve as a basis for dispute settlement procedures under this Agreement or another agreement. A disputing party shall not rely on or introduce as evidence in such dispute settlement procedures, nor shall any adjudicative body take into consideration:
(a) positions taken by a disputing party in the course of the mediation procedure;
(b) the fact that a disputing party has indicated its willingness to accept a solution to the measure subject to mediation; or
(c) advice given or proposals made by the mediator.
2. The mediation mechanism is without prejudice to the rights and obligations of the Parties under Chapter 4 (Dispute Settlement between the Parties).
3. Unless the disputing parties agree otherwise, all steps of the procedure, including any advice or proposed solution, shall be confidential. However, any disputing party may disclose to the public that mediation is taking place.
Article 3.7. Time Limits
Any time limit referred to in this Chapter may be modified by mutual agreement between the disputing parties.
Article 3.8. Costs
1. Each disputing party shall bear its own expenses derived from the participation in the mediation procedure.
2. The disputing parties shall share jointly and equally the expenses derived from organisational matters, including the remuneration and expenses of the mediator.
Chapter 4. DISPUTE SETTLEMENT BETWEEN THE PARTIES
Section A. OBJECTIVE AND SCOPE
Article 4.1. Objective
The objective of this Chapter is to establish an effective and efficient mechanism for avoiding and settling any dispute between the Parties concerning the interpretation and application of this Agreement with a view to reaching, where possible, a mutually agreed solution.
Article 4.2. Scope
This Chapter shall apply with respect to any dispute between the Parties concerning the interpretation and application of the provisions of this Agreement (hereinafter referred to as "covered provisions"). (1)
Article 4.3. Definitions
1. For the purposes of this Chapter and Annexes 4-A (Rules of Procedure) and 4-B (Code of Conduct):
(a) "administrative staff" means individuals, other than assistants, under the direction and control of a panellist;
(b) "adviser" means an individual retained by a Party to advise or assist that Party in connection with the panel proceedings;
(c) "assistant" means an individual who, under the terms of appointment and under the direction and control of a panellist, conducts research or provides assistance to that panellist;
(d) "candidate" means an individual whose name is on the list of panellists referred to in Article 4.7 (Lists of Panellists) and who is under consideration for selection as a panellist in accordance with Article 4.6 (Establishment of a Panel);
(e) "complaining Party" means any Party that requests the establishment of a panel under Article 4.5 (Initiation of Panel Procedures);
(f) "day" means a calendar day;
(g) "mediator" means an individual who has been selected as mediator in accordance with Article 4.29 (Selection of the Mediator);
(h) "panel" means a panel established pursuant to Article 4.6 (Establishment of a Panel);
(i) "panellist" means a member of a panel;
(j) "Party complained against" means the Party that is alleged to be in violation of the covered provisions;
(k) "representative of a Party" means an employee or any individual appointed by a government department, agency, or any other public entity of a Party who represents the Party for the purposes of a dispute under this Agreement.
Section B. CONSULTATIONS
Article 4.4. Consultations
1. The Parties shall endeavour to resolve any dispute referred to in Article 4.2 (Scope) by entering into consultations in good faith with the aim of reaching a mutually agreed solution.
2. A Party shall seek consultations by means of a request in writing, including electronically, delivered to the other Party identifying the measure at issue and the covered provisions that it considers applicable.
3. The Party to which the request for consultations is made shall reply to the request promptly, but no later than ten days after the date of its receipt. Unless the Parties agree otherwise, consultations shall be held within 30 days of the date of receipt of the request and take place in the territory of the Party to which the request is made. The consultations shall be days of the date of receipt of the request and take place in the territory of the Party to which the request is made. The consultations shall be deemed concluded within 60 days of the date of receipt of the request, unless the Parties agree to continue consultations.
4. Consultations on matters which the Party seeking consultations considers to be of urgency, including those regarding perishable goods or seasonal goods or services, shall be held within 20 days of the date of receipt of the request. The consultations shall be deemed concluded within those 20 days unless the Parties agree to continue consultations.
5. During consultations each Party shall provide sufficient factual information so as to allow a complete examination of the manner in which the measure at issue could affect the application of this Agreement. Each Party shall endeavour to ensure the participation of personnel of their competent governmental authorities who have expertise in the matter subject to the consultations.
6. Consultations, including all information disclosed and positions taken by the Parties during consultations, shall be confidential, and without prejudice to the rights of either Party in any further proceedings.
Section C. PANEL PROCEDURES
Article 4.5. Initiation of Panel Procedures
1. The Party that sought consultations pursuant to Article 4.4 may request the establishment of a panel if:
(a) the Party to which the request is made pursuant to paragraph 3 of Article 4.4 does not respond to the request for consultations within ten days of the date of its receipt;
(b) the consultations are not held within the timeframes laid down in paragraph 3 or in paragraph 4 of Article 4.4 respectively;
(c) the Parties agree not to have consultations; or
(d) the consultations have been concluded and no mutually agreed solution has been reached.
2. The request for the establishment of a panel shall be made by means of a request in writing, including electronically, delivered to the other Party. The complaining Party shall identify the measure at issue in its request, and explain how that measure constitutes a breach of the covered provisions in a manner sufficient to present the legal basis for the complaint clearly.
3. If a request is made pursuant to paragraph 1, a panel shall be established in accordance with Article 4.6 (Establishment of a panel).
4. The Committee may decide, if it deems necessary and appropriate, to entrust an external body with assisting panels under this Chapter, including providing administrative and legal support. (2)
Article 4.6. Establishment of a Panel
1. A panel shall consist of three panellists.
2. Within ten days of the date of receipt by the Party complained against of the request in writing, including electronically, for the establishment of a panel, the Parties shall consult with a view to agree on the composition of the panel.
3. If the Parties do not agree on the composition of the panel within the time period provided for in paragraph 2, each Party shall appoint within five days from the expiry of the time period established in paragraph 2 a panellist from the sub-list of that Party established under Article 4.7 (List of Panellists).
If a Party does not appoint a panellist from its sub-list within that time period, the co-chair of the Committee from the complaining Party shall select by lot, within five days from the expiry of that time period, the panellist from the sub-list of that Party. The co-chair of the Committee from the complaining Party may delegate such selection by lot of the panellist.
4. If the Parties do not agree on the chairperson of the panel within the time period established in paragraph 2, the co-chair of the Committee from the complaining Party shall select by lot, within five days from the expiry of that time period, the chairperson of the panel from the sub-list of chairpersons established under Article 4.7 (List of Panellists).
The co-chair of the Committee from the complaining Party may delegate such selection by lot of the chairperson of the panel.
5. The panel shall be deemed to be established 15 days after the three selected panellists have accepted their appointment in accordance with Rule [6] of Annex 4-A (Rules of Procedure), unless the Parties agree otherwise.
6. If an individual selected to serve as a panellist is not available or does not accept his or her appointment within the time period set out in Rule [6] of Annex 4-A (Rules of Procedure), a new individual shall be selected in accordance with the same selection method used for the selection of the individual who was not available or did not accept the appointment.
7. If the list provided for in Article 4.7 (List of Panellists) has not been established or if a sub-list does not contain any available individual, at the time a selection by lot is to be made pursuant to paragraphs 3 or 4, the panellists shall be drawn by lot from the individuals who have been formally proposed by one Party or both Parties in accordance with Annex 4-A (Rules of Procedure) within five days after the expiry of the time period set out in paragraph 2 or after the confirmation that no individual is available, as the case may be.
Article 4.7. List of Panellists
1. The Committee shall, no later than six months after the date of entry into force of this Agreement, adopt a decision to establish a list of at least 15 individuals who are willing and able to serve as panellists. The list shall be composed of three sub-lists:
(a) one sub-list of individuals established on the basis of proposals by the European Union;
(b) one sub-list of individuals established on the basis of proposals by Indonesia; and
(c) one sub-list of individuals that are not nationals of either Party and who shall serve as chairperson to the panel.
2. Each sub-list shall include at least five individuals. The Committee shall ensure that the list is always maintained at this minimum number of individuals.
3. The Committee may establish additional lists of individuals with expertise in specific sectors covered by this Agreement. Subject to the agreement of the Parties, such additional lists shall be used to compose the panel in accordance with the procedure set out in Article 4.6 (Establishment of a Panel).
Article 4.8. Requirements for Panellists
1. Each panellist shall:
(a) have demonstrated expertise in law, international trade or investment, and other matters covered by this Agreement;
(b) be independent of, and not be affiliated with (3) or take instructions from, either Party;
(c) serve in their individual capacities and not take instructions from any organisation or government with regard to matters related to the dispute; and
(d) comply with Annex 4-B (Code of Conduct for Panellists and Mediators).
2. The chairperson shall also have experience in dispute settlement procedures.
3. In view of the subject-matter of a particular dispute, the Parties may agree to derogate from the requirements listed in subparagraph 1(a).
Article 4.9. Functions of the Panel
The panel:
(a) shall make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the covered provisions;
(b) shall set out, in its decisions and reports, the findings of facts, the applicability of the covered provisions and the basic rationale behind any findings and conclusions that it makes; and
(c) should consult regularly with the Parties and provide adequate opportunities for the development of a mutually agreed solution.
Article 4.10. Terms of Reference
1. Unless the Parties agree otherwise within five days after the date of establishment of the panel, the terms of reference of the panel shall be:
"to examine, in the light of the relevant provisions of this Agreement cited by the Parties, the matter referred to in the request for the establishment of the panel, to make findings on the conformity of the measure at issue with the provisions of this Agreement referred to in Article 4.2 (Scope) and to deliver a report in accordance with Articles 4.12 (Interim Report) and 4.13 (Final Report)."
2. If the Parties agree on other terms of reference, they shall notify the agreed terms of reference to the panel within the time period set out in paragraph 1.
Article 4.11. Decision on Urgency
1. If a Party so requests, the panel shall decide, within ten days of its establishment, whether the case concerns matters of urgency.
2. In the Panel decides that the dispute concerns matters of urgency, it shall, after consulting the Parties, shorten the applicable time periods set out in Section C (Panel Procedures) in this Chapter, except for the time periods referred to in Article 4.6 (Establishment of a Panel) and Article 4.10 (Terms of Reference).
Article 4.12. Interim Report
1. The panel shall deliver an interim report to the Parties, to the extent practicable within 90 days after the date of establishment of the panel. When the panel considers that this deadline cannot be met, the chairperson of the panel shall notify the Parties in writing, including electronically, stating the reasons for the delay and the date on which the panel plans to deliver its interim report. The panel should, under no circumstances, deliver its interim report later than 120 days after the date of establishment of the panel. If the complaining Party chooses to deliver a second written submission pursuant to Rule [10A] of the Rules of Procedure, the time periods set out in this paragraph shall be extended by 30 days.
2. Each Party may deliver to the panel a written request, including electronically, to review precise aspects of the interim report within ten days of its receipt. A Party may comment on the other Party?s request within six days of the delivery of the request.
Article 4.13. Final Report
1. The panel shall deliver its final report to the Parties, to the extent practicable within 120 days of the date of establishment of the panel. When the panel considers that this deadline cannot be met, the chairperson of the panel shall notify the Parties in writing, including electronically, stating the reasons for the delay and the date on which the panel plans to deliver its final report. The panel should, under no circumstances, deliver its final report later than 150 days after the date of establishment of the panel. If the complaining Party chooses to deliver a second written submission pursuant to Rule [11] of the Rules of Procedure, the time periods set out in this paragraph shall be extended by 30 days.
2. The final report shall include a discussion of any request in writing, including electronically, by the Parties on the interim report and clearly address the comments of the Parties.