Title
AGREEMENT ON INVESTMENT UNDER THE FRAMEWORK AGREEMENT ON COMPREHENSIVE ECONOMIC COOPERATION BETWEEN THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS AND THE REPUBLIC OF INDIA
Preamble
The Governments of Brunei Darussalam, the Kingdom of Cambodia (Cambodia), the Republic of Indonesia (Indonesia), the Lao Peoples Democratic Republic (Lao PDR), Malaysia, the Republic of the Union of Myanmar (Myanmar), the Republic of the Philippines (Philippines), the Republic of Singapore (Singapore), the Kingdom of Thailand (Thailand) and the Socialist Republic of Viet Nam (Viet Nam), collectively, the Member States of the Association of Southeast Asian Nations, and the Government of the Republic of India;
RECALLING the Framework Agreement on Comprehensive Economic Cooperation between the Association of Southeast Asian Nations and the Republic of India (Framework Agreement) signed in Bali on 8 October 2003;
RECALLING further Article 2 of the Framework Agreement reflecting their commitment to establish an ASEAN-India Regional Trade and Investment Area (RTIA) including a Free Trade Area in goods, services and investment;
RECOGNISING the objectives of promoting investment, creating a liberal, facilitative, transparent and competitive investment regime, progressively liberalising investment; strengthening cooperation in investment, facilitating
Investment, improving transparency of investment rules and regulations; and providing for protection of investment;
REAFFIRMING their commitment to establish a liberal and competitive investment regime that facilitates and promotes investment within the ASEAN-India RTIA;
CONSIDERING the different levels of development and the need to provide flexibility and special and differential treatment to the newer ASEAN Member States;
HAVE AGREED as follows:
Body
Article 1. Scope
1. This Agreement shall apply to measures adopted or maintained by a Party relating to:
(a) investors of any other Party; and
(b) investments of investors of another Party in its territory, in existence as of the date of entry into force of this Agreement or established, acquired or expanded thereafter, and which, where applicable, has been admitted (1) by that Party, subject to its relevant laws, regulations and policies.
2. This Agreement shall not apply to:
(a) government procurement;
(b) subsidies or grants provided by a Party;
(c) services supplied in the exercise of governmental authority by the relevant body or authority of a Party. For the purposes of this Agreement, a service supplied in the exercise of governmental authority means any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers; and
(d) any taxation measure, except under Article 11 (Transfers).
3. This Agreement shall not apply to claims arising out of events which occurred, or claims which have been raised prior to the entry into force of this Agreement.
4. (a) This Agreement does not apply to measures adopted or maintained by a Party to the extent that they are covered by the ASEAN-India Trade in Services Agreement.
(b) Notwithstanding paragraph 4 (a), for the purpose of protection, Article 7 (Treatment of Investment), Article 8 (Expropriation and Compensation), Article 9 (Compensation for Losses), Article 10 (Subrogation), Article 11 (Transfers), and Article 20 (Investment Disputes between a Party and an Investor), shall apply, mutatis mutandis, to any measure affecting the supply of service by a service supplier of a Party through commercial presence in the territory of any one of the other Parties pursuant to the ASEAN-India Trade in Services Agreement but only to the extent that any such measures relate to an investment as referred to paragraph 1 (b) of Article 1 (Scope) and an obligation under this Agreement, regardless of whether such a service sector is scheduled in a Party's schedule of specific services commitments made under the ASEAN-India Trade in Services Agreement. (2)
5. For the purpose of liberalisation and subject to Article 4 (Reservations), this Agreement shall apply to the following sectors:
(a) Manufacturing;
(b) Agriculture;
(c) Fishery;
(d) Forestry; and
(e) Mining and quarrying.
Article 2. Definitions
For the purposes of this Agreement:
(a) Agreement means the Agreement on Investment under the Framework Agreement on Comprehensive Economic Cooperation between the Association of Southeast Asian Nations and the Republic of India;
(b) ASEAN means the Association of Southeast Asian Nations which comprises of Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People's Democratic Republic, Malaysia, the Republic of the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand and the Socialist Republic of Viet Nam and whose members are referred to in this Agreement collectively as the ASEAN Member States and individually as an ASEAN Member State;
(c) freely usable currency means a freely usable currency as determined by the Internationa! Monetary Fund (IMF) in accordance with the IMF Articles of Agreement and any amendments thereto;
(d) IMF Articles of Agreement means the Articles of Agreement of the International Monetary Fund;
(e) investment (3) means every kind of asset that an investor owns or controls in the territory of another Party, and that has the characteristics of an investment, including such characteristics as the commitment of capital, the expectation of gain or profit, or the assumption of risk.
Forms that an investment may take include, but are not limited to:
(i) shares, stocks and other forms of equity participation in a juridical person and rights derived therefrom;
(ii) bonds, debentures, loans, and other debt instruments of a juridical person and rights derived therefrom;
(iii) movable and immovable property and other property rights such as mortgages, liens or pledges;
(iv) Intellectual property rights recognised under the laws and regulations of each Party and connected with the substantial business operation of a juridical person of that Party;
(v) claims to money or to any contractual performance related to a business of a juridical person and having financial value. For greater certainty, investment does not mean claims to money that arise solely from (a) commercial contracts for sale of goods or services; or (b) the extension of credit in connection with such commercial contracts;
Investment will not include any other claims to money that do not involve subparagraph (e) (i) to (vii) of this Article;
(vi) Rights under contracts, including turnkey, construction, management, production or revenue-sharing contracts;
(vii) Business concessions required to conduct economic activity and having financial value conferred by law or under a contract, including concessions related to natural resources.
For the purpose of the definition of investment in this Article, returns that are invested shall be treated as investments and any alteration of the form in which assets are invested or reinvested shall not affect their character as investments;
(f) investor of a Party means a natural person of a Party or a juridical person of a Party that is making, or has made an investment in the territory of another Party;
(g) juridical person means any legal entity duly constituted or otherwise organised under applicable laws of a Party, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship, association or cooperatives;
(h) juridical person of a Party means a juridical person constituted or organised under the applicable laws of that Party;
(i) measure means any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action and includes measures taken by:
(i) central, regional, or local governments and authorities; and
(ii) non-governmental bodies in the exercise of powers delegated by central, regional, or local governments or authorities;
(j) natural person of a Party means a person possessing the nationality or citizenship of that Party in accordance with its laws and regulations.
In the case of Brunei Darussalam, in accordance with its laws, regulations and national policies, the term natural person of a Party" means a person possessing the nationality of Brunei Darussalam or a Permanent Resident of Brunei Darussalam who does not possess the nationality of another Party or non-Party. Brunei Darussalam shall request bilateral consultations with another Party, on a case-by-case basis, on the issue of whether to recognise such Permanent Resident as an investor of Brunei Darussalam;
(k) newer ASEAN Member States means the Kingdom of Cambodia, the Lao People's Democratic Republic, the Republic of the Union of Myanmar and the Socialist Republic of Viet Nam;
(l) Parties mean the ASEAN Member States and India, collectively;
(m) Party means an ASEAN Member State or India;
(n) returns mean amounts yielded by or derived from an investment, including profits, dividends, interest, capital gains, royalties, fees, or payments in connection with intellectual property rights;
(o) WTO means the World Trade Organization; and
(p) WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994.
Article 3. National Treatment
1. Each Party shall accord to investors of another Party, and to investments as referred to in subparagraph 1(b) of Article 1 (Scope), in relation to the establishment, acquisition, expansion, management, conduct, operation, liquidation, sale, transfer or other disposition of investments, treatment no less favourable than that it accords, in like circumstances, to its own investors and their investments. (4)
2. The treatment to be accorded by a Party under paragraph 1 of this Article means, with respect to a regional or local level, treatment no less favourable than the most favoured treatment accorded at that regional or local level, in like circumstances, to investors, and investments of the investors, of the Party to which it forms a part.
3. A Party shall not be obliged to extend to the investors of another Party the benefits or privileges arising from customs union, free trade agreements or similar bilateral, regional or international agreements or arrangements of which that Party is or may become a member, including any arrangements between or among ASEAN Member States.
4. A determination of whether investments or investors are in like circumstances should be made, based upon an objective assessment of all circumstances on a case-by-case basis, including, inter alia:
(a) the sector the investor is in;
(b) the location of the investment;
(c) the aim of the measure concerned; and
(d) the regulatory process generally applied in relation to the measure concerned.
The examination shall not be limited to or biased towards any one factor.
5. Extension of financial assistance or measures taken by a Party in favour of its investors and their investments in pursuit of legitimate public purpose including the protection of health, safety, the environment shall not be considered as a violation of this Article.
Article 4. Reservations (5)
1. Article 3 (National Treatment) shall not apply to:
(a) any existing non-conforming measure that is maintained by a Party at:
(i) the central level of government as set out by that Party in its Schedule of Reservations in List 1;
(ii) the regional level of government as set out by that Party in its Schedule of Reservations in List 1; or
(iii) the local level of government.
(b) the continuation or prompt renewal of any nonconforming measure referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed at the date of entry into force of the Partys Schedule of Reservations in List 1, with Article 3 (National Treatment).
2. Article 3 (National Treatment) shall not apply to any reservation for measures that a Party adopts or maintains with respect to existing or new and emerging sectors, subsectors or activities, as set out in List 2.
3. Other than pursuant to any procedures for the modification of Schedules of Reservations, a Party may not, under any measure adopted after the date of entry into force of this Agreement and covered by List 2, require an investor of another Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.
4. Procedures for the modification of the Schedules of Reservations referred to in paragraph 3 of this Article are to be pursuant to Article 6 (Work Programme).
5. Nothing in this Agreement shall be construed so as to derogate from rights and obligations under international agreements in respect of protection of intellectual property rights to which the Parties are party, including the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights {TRIPS Agreement) and other treaties concluded under the auspices of the World Intellectual Property Organization.
6. A Party may take reservations to exclude admission, establishment, acquisition, expansion, management, conduct, operation, liquidation, sale, transfer or other disposition of portfolio investments from the benefits of this Agreement. Such reservations shall be notified upon entry into force of this Agreement.
Article 5. Review of Reservations (6)
1. If, after this Agreement enters into force, a Party enters into any agreement on investment with a non-Party, it could give consideration to a request by another Party for the incorporation herein of treatment no less favourable than that provided under the aforesaid agreement. Any such incorporation will be subject to mutual agreement and should maintain the overall balance of commitments undertaken by each Party under this Agreement.
2. As part of the review of this Agreement pursuant to Article 28 (Review), the Parties agree to review their respective Schedules of Reservations with a view to improving reservations on national treatment with regard to the establishment, acquisition or expansion of investments.
Article 6. Work Programme
1. The Parties shall enter into discussions on:
(a) Schedules of Reservations to this Agreement; and
(b) Procedures for the modification of Schedules of Reservations.
2. The Parties shall conclude the discussions referred to in paragraph 1 of this Article, within three (3) years from the date of entry into force of this Agreement unless the Parties otherwise agree. These discussions shall be overseen by the Joint Committee on Investment established under Article 23 (Joint Committee on Investment).
3. Schedules of Reservations referred to in paragraph 1 of this Article shall enter into force on a date agreed to by the Parties.
4. Notwithstanding anything to the contrary in this Agreement, Article 3 (National Treatment), Article 28 (Review), and paragraphs 1 to 5 of Article 4 (Reservations), shall not apply until the Parties Schedules of Reservations have entered into force in accordance with paragraph 3 of this Article.
5. For the purpose of subparagraph (j) of Article 2 (Definitions), the Parties recognise that the criteria for recognition of Brunei Darussalams Permanent Residents may be established during such bilateral consultations.
Article 7. Treatment of Investment
1. Each Party shall accord to investments as referred to in subparagraph 1(b) of Article 1 (Scope), fair and equitable treatment and full protection and security.
2. For greater certainty: (7)
(a) fair and equitable treatment requires each Party not to deny justice in any legal or administrative proceedings;
(b) full protection and security requires each Party to take such measures as may be reasonably necessary to ensure the protection and security of the investments as referred to in subparagraph 1 (b) of Article 1 (Scope); and
(c) the concepts of fair and equitable treatment and full protection and security do not require treatment in addition to or beyond that which is required under customary international law, and do not create additional substantive rights.
3. A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article.
Article 8. Expropriation and Compensation
1. A Party shall not expropriate or nationalise investments as referred to in subparagraph 1(b) of Article 1 (Scope) either directly or through measures equivalent to expropriation or nationalisation (expropriation), except:
(a) for a public purpose;
(b) in a non-discriminatory manner;
(c) on payment of prompt, adequate, and effective compensation; and
(d) in accordance with due process of law.
2. A measure or a series of related measures by a Party cannot constitute an expropriation unless it interferes with a tangible or intangible property right in an investment as referred to in subparagraph 1(b) of Article 1 (Scope). Such measure addresses two situations:
(a) the first situation is direct expropriation, where an investment as referred to in subparagraph 1 (b) of Article 1 (Scope) is nationalised or otherwise directly expropriated through formal transfer of title or outright seizure; and
(b) the second situation is where a measure or series of related measures by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure.
3. The determination of whether a measure or series of related measures by a Party, in a specific fact situation, constitutes an expropriation of the type referred to in subparagraph 2(b) of this Article requires a case-by-case, fact-based inquiry that considers, among other factors:
(a) the economic impact of the government measure, although the fact that a measure or series of related measures by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that such an expropriation has occurred;
(b) whether the government measure breaches the governments prior binding written commitment to the investor whether by contract, licence or other legal document; and
(c) the character of the government measure, including its objectives and whether the measure is disproportionate to the public purpose.
4. The compensation referred to in subparagraph 1 (c) of this Article shall:
(a) be paid without delay; (8)
(b) be equivalent to the fair market value of the expropriated investment at the time when or immediately before the expropriation was publicly announced, (9) or when the expropriation occurred, whichever is applicable;
(c) not reflect any change in value because the intended expropriation had become known earlier; and
(d) be effectively realisable and freely transferable.
5. In the event of delay, the compensation shall include an appropriate interest at the prevailing commercial rate. (10)
The compensation, including any accrued interest, shall be payable either in the currency in which the investment was originally made or, if requested by the investor, in a freely usable currency.
6. If an investor requests payment in a freely usable currency, the compensation referred to in subparagraph 1 (c) of this Article, including any accrued interest, shall be converted into the currency of payment at the market rate of exchange prevailing on the date of payment.
7. This Article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights, in accordance with the TRIPS Agreement.
8. Notwithstanding paragraphs 1,4, 5 and 6 of this Article, any measure of expropriation relating to land shall be as defined in the expropriating Partys existing domestic laws and regulations and any amendments thereto, and shall be for the purposes of and upon payment of compensation in accordance with the aforesaid laws and regulations.
9. Non-discriminatory regulatory measures by a Party or measures and awards by judicial bodies of a Party that are designed and applied in pursuit of public policy to achieve legitimate public interest or public welfare objectives, such as the protection of public health, safety, and the environment, do not constitute expropriation of the type referred to in subparagraph 2(b) of this Article.
Article 9. Compensation for Losses
Investors of a Party whose investments as referred to in subparagraph 1 (b) of Article 1 (Scope) in the territory of another Party suffer losses owing to war or other armed conflict, a state of national emergency or civil disturbances in the territory of the latter Party, shall be accorded by the latter Party treatment, as regards restitution, indemnification, compensation or other settlement, if any, no less favourable than that which the latter Party accords to its own investors and their investments or to investors of any other Party or non-Party and their investments.
Article 10. Subrogation
1. If a Party or an agency of a Party makes a payment to an investor of that Party under a guarantee, a contract of insurance or other form of indemnity it has granted on noncommercial risk in respect of an investment, the other Party shall recognise the subrogation or transfer of any right or claim in respect of such investment. The subrogated or transferred right or claim shall not be greater than the original right or claim of the investor.
2. Where a Party or an agency of a Party has made a payment to an investor of that Party and has taken over rights and claims of the investor, that investor shall not, unless authorised to act on behalf of the Party or the agency making the payment, pursue those rights and claims against the other Party.
3. In any proceeding involving an investment dispute, a Party shall not assert, as a defence, counter-claim, right of set-off or otherwise, that the investor or the investment as referred to in subparagraph 1 (b) of Article 1 (Scope) has received or will receive, pursuant to an insurance or guarantee contract, indemnification or other compensation for all or part of any alleged loss.
4. In the exercise of subrogated rights or claims, a Party or the agency of the Party exercising such rights or claims shall disclose the coverage of the claims arrangement with its investors to the relevant Party.
Article 11. Transfers
1. Each Party shall allow all transfers relating to investments as referred to in subparagraph 1 (b) of Article 1 (Scope) to be made freely and without delay. Such transfers include:
(a) initial capital and additional amount to maintain or increase the investment;
(b) profits, capital gains, dividends, royalties, licence fees, technical assistance and technical and management fees, interest and other current income accruing from any investments as referred to in subparagraph 1 (b) of Article 1 (Scope);
(c) proceeds from the total or partial sale or liquidation of any investments as referred to in subparagraph 1(b) of Article 1 (Scope);
(d) payments made under a contract, including a loan agreement;