Title

AGREEMENT BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FOR THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS

Preamble

The Government of Canada and the Republic of the Philippines hereinafter referred to as the "Contracting Parties";

DESIRING to intensify economic cooperation between the Contracting Parties;

INTENDING to create favourable conditions for investments by investors of one Contracting Party in the territory of the other Contracting Party, and to increase prosperity in their respective territories;

RECOGNIZING that encouragement and protection of such investments will benefit the economic prosperity of the Contracting Parties;

Body

Article 1. Definitions

For the purpose of this Agreement:

(a) "enterprise" means

(i) any entity constituted or organized under applicable law, whether or not for profit, whether privately-owned or governmentally-owned, including any corporation, trust, partnership, sole proprietorship, joint venture or other association; and

(ii) a branch of any such entity;

(b) "fair market value" means the value of an investment or return, immediately prior to its expropriation or immediately before the. expropriation became public knowledge, whichever is the earlier. Valuation criteria shall include going concerned value, asset value including declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value.

(c) "financial service" means a service of a financial nature, such as, but not limited to, insurance, and services incidental or auxiliary to a service of a financial nature;

(d) "financial institution" includes any financial intermediary or other enterprise that is authorized to do business and regulated or supervised as a financial institution under the law of the Contracting Party in whose territory it is located;

(e) "intellectual property rights" includes copyright and related rights, trademark rights, patent rights, and the other rights referred to in the Agreement on Aspects of Trade-Related Intellectual Property Rights forming part of the Agreement establishing the World Trade Organization, done at Marrakesh, April 1994.

(f) "investment" means any kind of asset owned or controlled either directly, or indirectly through an investor of a third State, by an investor of one Contracting Party in the territory of the other Contracting Party in accordance with the latter's laws and, in particular, though not exclusively includes:

(i) movable and immovable property and any related property rights, such as mortgages, liens usufructs or pledges;

(ii) shares, stock, bonds and debentures or any other form of equity participation in a company, business enterprise or joint venture;

(iii) money, claims to money, and claims to performance . under contract having an economic value;

(iv) goodwill;

(v) intellectual property rights;

(vi) rights, conferred by law or under contract, to undertake any economic and commercial activity, including any rights to search for, cultivate, extract or exploit natural resources. Any change in the form of an investment does not affect its character as an investment.

(g) "investor" means:

in the case of Canada:

(i) Any natural person possessing the citizenship of or permanently residing in Canada in accordance with its laws; or

(ii) Any enterprise incorporated or duly constituted In accordance with the applicable laws of Canada,

who makes investment in the territory of the Republic of the Philippines; and

in the case of the Republic of the Philippines,

(i) Individuals who are citizens of the Philippines within the meaning of its Constitution; or

(ii) enterprises that are incorporated or, in any event, are properly organized and actually doing business under the laws of the Republic of the Philippines and have their headquarters in the territory of the Philippines where effective management is carried out.

who makes the investment in the territory of Canada and who does not possess the citizenship of Canada;

(h) "measure" includes any law, rule, regulation, requirement, or established governmental procedure or practice; "existing measure" means a measure existing at the time this Agreement enters into force;

(i) "returns" means all amounts yielded by an investment and in particular, though not exclusively, includes profits, interest, capital gains, dividends, royalties, fees or other current income;

(j) "state enterprise" means an enterprise that is governmentally-owned or controlled through ownership interests by a government;

(k) "territory" means:

(i) In respect of Canada, the territory of Canada as well as those maritime areas, including the seabed and subsoil adjacent to the outer limit of the territorial sea, over which Canada exercises, in accordance with international law, sovereign rights for the purpose of exploration and exploitation of the natural resources of such areas.

(ii) In respect of the Republic of the Philippines, the national territory as defined in Article 1 of its Constitution.

Article II. Establishment, Acquisition and Protection of Investment

(1) Each Contracting Party shall promote investments in its territory by nationals and companies of the other Contracting Party.

(2) Each Contracting Party shall accord investments or returns of investors of the other Contracting Party. (a) fair and equitable treatment in accordance with principles of international law, and (b) full protection and security.

(3) Each Contracting Party shall, subject to the terms of this Agreement and the Annex, including inter-alia paragraphs 4 and 5 of this Article and paragraph 2 of Article 4, permit establishment of a new business enterprise or acquisition of an existing business enterprise or a share of such enterprise by investors or prospective investors of the other Contracting Party on a basis no less favourable than that which, in like circumstances, it permits such acquisition or establishment by:

(a) its own investors or prospective investors; or

(b) investors or prospective investors of any third state.

(4) Decisions by either Contracting party, pursuant to measures not inconsistent with this Agreement, as to whether or not to permit an acquisition shall not be subject to the provisions of Articles XIII or XV of this Agreement.

(5) Decisions by either Contracting Party not to permit establishment of a new business enterprise or acquisition of an existing business enterprise or a share or such enterprise by investors or prospective investors shall not be subject to the provisions of Article XIII of this Agreement.

Article III. Most Favoured Nation (mfn) Treatment after Establishment and Exceptions to Mfn

(1) Each Contracting Party shall grant to investments, or returns of investors of the other Contracting Party, treatment no less favourable than that which, in like circumstances, it grants to investments or returns of investors of any third State.

(2) Each Contracting Party shall grant investors of the other Contracting party, as regards their management, use, enjoyment or disposal of their investments or returns, treatment no less favourable than that which, in like circumstances, it grants to investors of any third State.

(3) Subparagraph (3)(b) of Article II and paragraphs (1) and (2) of this Article do not apply to treatment by a Contracting Party pursuant to any existing or future bilateral or multilateral agreement:

(a) establishing, strengthening or expanding a free trade area or customs union or an interim agreement leading to the formation of a free trade area or customs· union of which either Contracting Party is or may become a member;

(b) negotiated within the framework of the GAIT or its successor organization and liberalizing trade in services; or

(c) relating to:

(i) aviation;

(ii) telecommunications transport networks and telecommunications transport services;

(iii) fisheries;

(iv) maritime matters, including salvage; or

(v) financial services.

(d) relating wholly or mainly to taxation, in accordance with, and subject to the provisions of Article XII.

Article IV. National Treatment after Establishment and Exceptions to National Treatment

(1) Each Contracting Party shall grant to investments or returns of investors of the other Contracting Party treatment no less favourable than that which, in like circumstances, it grants to investments or returns of its own investors with respect to the expansion, management, conduct, operation and sale or disposition of investments.

(2) Subparagraph (3)(a) of Article II, paragraph (1) of this Article, and paragraphs (1) and (2) of Article IV do not apply to:

(a)

(i) any existing non-conforming measures maintained within the territory of a Contracting Party; and

(ii) any measure maintained or adopted after the date of entry into force of this Agreement, that, at the time of sale or other disposition of a government's equity interests in, or the assets of , an existing state enterprise or an existing governmental entity, prohibits or imposes limitations on the ownership of equity interests or assets or imposes nationality requirements relating to senior management or members of the board of directors;

(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a);

(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 immediately before the amendment, with those obligations;

(d) the right of each Contracting Party is to make or maintain exceptions within the sectors or matters listed in Section 1 of the Annex to this Agreement.

Article V. Other Measures

(1)

(a) A Contracting Party may not require that an enterprise of that Contracting Party, that is an investment under this Agreement, appoint to senior management positions individuals of any . particular nationality.

(b) A Contracting Party may require that a majority of the board of directors, or any committee thereof, of an enterprise constituted or organized under the laws of that Contracting Party that is an investment under this Agreement be of a particular nationality, or resident in the territory of the Contracting Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.

(2) Neither Contracting Party may impose any of the following requirements in connection with permitting the establishment or acquisition of an investment or enforce any of the following requirements in connection with the subsequent regulation of that investment:

(a) to export a given level or percentage of goods;

(b) to achieve a given level or percentage of domestic content;

(c) to purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from persons In its territory;

(d) 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 such investment; or

(e) to transfer technology, a production process or other proprietary knowledge to a person in its territory unaffiliated with the transferor, except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority, either to remedy an alleged violation of competition laws or acting in a manner not inconsistent with other provisions of this Agreement.

(3) Subject to its laws, regulations and policies relating to the entry .of aliens. each Contracting Party shall grant temporary entry to citizens of the other Contracting Party employed by an enterprise who seeks to render services to that enterprise or a subsidiary or affiliate thereof, in a capacity that is managerial or executive.

Article VI. Miscellaneous Exceptions

(1)

(a) In respect of intellectual property rights, a Contracting Party may derogate from Articles III and IV in a manner that is consistent with the agreement establishing the World Trade Organisation done at Marrakesh. April 1994.

(b) The provisions of Article VIII do not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with the agreement establishing the World Trade Organisation done at Marrakesh, April 1994.

(2) The provisions of Articles II, III, IV and V of this Agreement do not apply to:

(a) procurement by a government or state enterprise;

(b) subsidies or grants provided by a government or a state enterprise, including government-supported loans, guarantees and insurance;

(c) any current or future foreign aid program to promote economic development, whether under a bilateral agreement, or pursuant to a multilateral arrangement or agreement, such as the OECD Agreement on Export Credits.

Article VII. Compensation for Losses

Investors of one Contracting Party who suffer losses because their investments or returns on the territory of the other Contracting Party are affected by an armed conflict, or a national emergency on that territory, shall be accorded by such latter Contracting Party, in respect of restitution, indemnification, compensation or other settlement, treatment no less favourable than that which it accords to its own investors or to investors of any third State.

Article VIII. Expropriation

(1) Investments or returns of investors of either Contracting Party shall not be nationalized, expropriated or subjected to measures having an effect equivalent to nationalization or expropriation, (hereinafter referred to as "expropriation") in the territory of the other Contracting Party, except for a public purpose, under due process of law, in a nondiscriminatory manner and against prompt, adequate and effective compensation. Such compensation shall be based on the fair market value of the investment or returns expropriated immediately before the expropriation or at the time the proposed expropriation became public knowledge, whichever is the earlier, shall be paid without delay and shall be effectively realizable and freely transferable.

(2) The investor affected shall have a right, under the law of the Contracting Party making the expropriation, to prompt review, by a judicial or other independent authority of that party, of its case and of the valuation of its investment or returns in accordance with the principles set out in this Article.

Article IX. Transfers

(a) Each Contracting Party shall guarantee to an investor of the other Contracting Party the unrestricted investments and returns. Without limiting the generality of the foregoing, each Contracting Party shall also guarantee to the investor the unrestricted transfer of:

(a) funds in repayment of loans related to an investment;

(b) the proceeds of the total or partial liquidation of any investment;

(c) wages and other remuneration accruing to a citizen of the other Contracting Party who was permitted to work in connection with an Investment in the territory of the other Contracting Party.

(d) any compensation owed to an investor by virtue of Articles VII or VIII this Agreement.

(b) Transfers shall be effected without delay in the convertible currency in which the capital was originally invested or in any other convertible currency agreed by the investor, and the Contracting Party concerned. Unless otherwise agreed by the investor, transfer shall be made at the rate of exchange applicable on the date of transfer.

(c) Notwithstanding paragraphs 1 and 2, a Contracting Party may prevent a transfer through the equitable, nondiscriminatory and good faith application of its laws relating to:

(a) bankruptcy, insolvency or the protection of the rights of creditors;

(b) issuing, trading or dealing in securities;

(c) criminal or penal offenses;

(d) reports of transfers of currency or other monetary instruments; or

(e) ensuring the satisfaction of judgments in adjudicatory proceedings.

(d) Neither Contracting Party may require its investors to transfer or penalize its investors that fail to transfer the returns attributable to investments in the territory of the other Contracting Party.

(e) Paragraph 4 shall not be construed to prevent a Contracting Party from imposing any measure through the equitable, non-discriminatory and good faith application of its laws relating to the matters set out in subparagraphs (a) through (e) of paragraph 3.

Article X. Subrogation

(1) If a Contracting Party or any agency thereof makes a payment to any of its investors under a guarantee or a contract of insurance it has entered into in respect of an investment, the other Contracting Party shall recognize the validity of the subrogation in favour of such Contracting Party or agency thereof to any right or title held by the investor. This does not necessarily imply, however, a recognition on the part of the other Contracting Party of the merits of any case or the amount of any claim arising therefrom.

(2) A Contracting Party or any agency thereof which is subrogated to the rights of an investor in accordance with paragraph (1) of this Article, shall be entitled in all circumstances to the same rights as those of the investor in respect of the investment concerned and its related returns. Such rights may be exercised by the Contracting Party or any agency thereof or by the investor if the Contracting Party or any agency thereof so authorizes. If a Contracting Party or any of its agencies makes payment è one of its investors under a guarantee or a contract of insurance given by it in connection with an investment, the other Contracting Party shall recognize the validity of the subrogation in favour of such Contracting Party or agency to any right or title held by the investor. by such recognition, it cannot be presumed, however, that the Contracting Party shall recognize the validity of any dispute or the value of any request for such subrogation.

Article XI. Prudential and Financial Measures

(1) Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining reasonable measures for prudential reasons, such as:

(a) the protection of investors, depositors, financial market participants, policy holders, policy claimants, or persons to whom a fiduciary duty is owed by a financial institution;

(b) the maintenance of the safety, soundness, integrity or financial responsibility of financial institutions; and

(c) ensuring the integrity and stability of a Contracting Party's financial system.

(2) Notwithstanding paragraphs (1), (2) and (4) of Article IX, and without limiting the applicability of paragraph (3) of Article IX, a Contracting Party may prevent or limit transfers by a financial institution to, or for the benefit of, an affiliate of or person related to such institution or provider, through the equitable, non-discriminatory and good faith application of measures relating to maintenance or the safety, soundness, integrity or financial responsibility of financial institutions.

(3) Sub-paragraph 3(b) of Article II does not apply in respect of financial services.

Article XII. Taxation Measures

(1) Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.

(2) Nothing in this Agreement shall affect the rights and obligations of the Contracting Parties under any tax convention. In the event of any inconsistency between the provisions of this Agreement and any such convention, the provisions of that convention apply to the extent of the inconsistency.

(3) Subject to paragraph (2), a claim by an investor that a tax measure of a Contracting Party is in breach of an agreement between the central government authorities of a Contracting Party and the investor concerning an investment shall be considered a claim for breach of this Agreement unless the taxation authorities of the Contracting Parties, no later than. six months after being notified of the claim by the investor, jointly determine that the measure does not contravene such agreement.

(4) Article VIII may be applied to a taxation measure unless the taxation authorities of the Contracting Parties, no later than six months after being notified by an investor that he disputes a taxation measure, jointly determine that the measure is not an expropriation.

(5) If the taxation authorities of the Contracting Parties fail to reach the joint determinations specified in paragraphs (3) and (4) within six months after being notified, the investor may submit its claim for resolution under Article XIII.

Article XIII. Settlement of Disputes between an Investor and the Host Contracting Party

(1) Any dispute between one Contracting Party and an investor of the other Contracting Party, relating to a claim by the investor that a measure taken or not taken by the former Contracting Party is in breach of this Agreement, and that the investor has incurred loss or damage by reason of, or arising out of, that breach, shall, to the extent possible, be settled amicably between them.

(2) If a dispute has not been settled amicably within a period of six months from the date on which it was initiated, it may be submitted by the investor to arbitration in accordance with paragraph (4). For the purposes of this paragraph, a dispute is considered to be initiated when the investor of one Contracting Party has delivered notice in writing to the other Contracting Party alleging that a measure taken or not taken by the latter Contracting Party is in breach of this Agreement, and that the investor has incurred loss or damage by reason of, or arising out of, that breach.

(3) An investor may submit a dispute as referred to in paragraph (1) to arbitration in accordance with paragraph (4) only if:

(a) the investor has consented in writing thereto;

(b) the investor has waived its right to initiate or continue any other proceedings in relation to the measure that is alleged to be in breach of this Agreement before the courts or tribunals of the Contracting Party concerned or in a dispute settlement procedure of any kind;

(c) if the matter involves taxation, the conditions specified in paragraph 5 of Article XII have been fulfilled; and

(d) not more than three years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage.

(4) The dispute may, at the election of the investor concerned, be submitted to arbitration under:

(a) The International Centre for the Settlement of Investment Disputes (ICSID), established pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of other States, opened for signature at Washington 18 March, 1965 (ICSID Convention), provided that both the disputing Contracting Party and the Contracting Party of the investor are parties to the ICSID convention; or

(b) the Additional Facility Rules of ICSID, provided that either the disputing Contracting Party or the Contracting Party of the investor, but not both, is a party to the ICSID Convention; or

(c) an international arbitrator or ad hoc arbitration tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).

(5) Each Contracting Party hereby gives its unconditional consent to the submission of a dispute to international arbitration in accordance with the provisions of this Article.

(6)

(a) The consent given under paragraph (5), together with either the consent given under paragraph (3), or the consents given under paragraph (12), shall satisfy the requirements for:

(i) written consent of the parties to a dispute for purposes of Chapter 11 (Jurisdiction of the Centre) of the ICSID Convention and for purposes of the Additional Facility Rules; and

(ii) an "agreement in writing" for purposes of Article II of the United Nations Convention for the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958 ("New York Convention").

(b) Any arbitration under this Article shall be held in a State that is a party to the New York Convention, and claims submitted to arbitration shall be considered to arise out of a commercial relationship or transaction for the purposes of Article 1 of that Convention.

(7) A tribunal established under this Article shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law.

(8) A tribunal may order an interim measure of protection to preserve the rights of a disputing party, or to ensure that the tribunal's jurisdiction is made fully effective, including an order to preserve evidence in the possession or control of a disputing party or to protect the tribunal's jurisdiction. A tribunal may not order attachment or enjoin the application of the measure alleged to constitute a breach of this Agreement. For purposes of this paragraph, an order includes a recommendation.

(9) A tribunal may award, separately or in combination, only:

(a) monetary damages and any applicable interest;

(b) restitution of property, in which case the award shall provide that the disputing Contracting Party may pay monetary damages and any applicable interest in lieu of restitution. A tribunal may also award costs in accordance with the applicable arbitration rules.

(10) An award of arbitration shall be final and binding and shall be enforceable in the territory of each of the Contracting Parties.

(11) Any proceedings under this Article are without prejudice to the rights of the Contracting Parties under Articles XIV and XV.

(a) A claim that a Contracting Party is in breach of this Agreement, and that an enterprise that is a juridical person incorporated or duly constituted in accordance with applicable laws of that Contracting Party has incurred loss or damage by reason of, or arising out of, that breach, may be brought by an investor of the other Contracting Party acting on behalf of an enterprise which the investor owns or controls directly or indirectly. In such a case