lf a Party, or any agency, institution, statutory body or corporation designated by the Party, makes a payment to an investor of the Party under a guarantee, a contract of insurance or other form of indemnity that it has entered into with respect to a covered investment, the other Party in whose territory the covered investment was made shall recognise the subrogation or transfer of any rights the investor would have possessed under this Chapter with respect to the covered investment but for the subrogation, and the investor shall be precluded from pursuing these rights to the extent of the subrogation. 

Chapter IV. INVESTOR-STATE DISPUTE SETTLEMENT

Article 12. Scope

This Chapter applies to disputes between a claimant of a Party and the other Party arising from an alleged breach of an obligation under Chapter Jif (Investment Protection), which allegedly causes loss or damage to the claimant or its locally established enterprise, hereinafter referred to as an "investment dispute".

Article 13. Consultations

1. An investment dispute should as far as possible be settled amicably, which may include the use of non-binding, third-party procedures, such as good offices, conciliation or mediation, before the submission of a request for consultations pursuant to this Article. Such a settlement may be agreed at any time, including after the claim has been submitted to arbitration pursuant to Article 14 (Submission of a Claim to Arbitration).

2. If an investment dispute cannot be settled as provided for in paragraph 1, a claimant seeking to submit a claim under Article 14 (Submission of a Claim to Arbitration) shall submit a request for consultations to the other Party setting out:

(a) the name and address of the claimant and, if the claim is submitted on behalf of a locally established enterprise. the name, address, place of incorporation of the locally established enterprise and that it owns or controls the locally established enterprise;

(b) a description of the investment and of its ownership and control of the investment;

(c) information concerning the ultimate beneficial owner and corporate structure of the claimant;

(d) evidence establishing that the claimant is an investor of the non-disputing Party; 

(e) the legal and the factual basis for the claim, including the provisions of Chapter III (Investment Protection) alleged to have been breached and the measures at issue alleged to be inconsistent with the provisions of Chapter III (Investment Protection); and

(f) the relief sought and the estimated amount of damages claimed.

3. In the event that the investor has not submitted a claim pursuant to Article 14 (Submission of a Claim to Arbitration) within 18 months of submitting the request for consultations, the investor is deemed to have withdrawn its request for consultations and shall not submit a claim under this Chapter with respect to the same measures. This period may be extended by agreement of the disputing parties.

Article 14. Submission of a Claim to Arbitration

1. If an investment dispute has not been resolved within 12 months of the receipt by the respondent of a written request for consultations pursuant to Article 13 (Consultations):

(a) the claimant, on its own behalf, may submit to arbitration under this Chapter acla'im:

(i) that the respondent has breached an obligation under Chapter III (Investment Protection); and

(ii) that the claimant has incurred loss or damage by reason of, or arising out of, that breach; and

(b) the claimant, on behalf of a locally established enterprise which it owns or controls directly or indirectly, may submit to arbitration under this Chapter a claim:

(i) that the respondent has breached an obligation under Chapter III (Investment Protection); and

(ii) that the locally established enterprise has incurred loss or damage by reason of, or arising out of, that breach. If there is a claim submitted by a claimant on behalf of a locally established enterprise, all claims on the same subject matter initiated by either such claimant or locally established enterprise on national level shall be withdrawn. 

2. At least 90 days before submitting any claim to arbitration under this Chapter, the claimant shall deliver to the respondent a written notice of its intention to submit a claim to arbitration.

3. All the claims identified by the claimant in the submission of its claim pursuant to this Article must be based on the information identified in its request for consultations pursuant to subparagraph 2 (e) of Article 13 (Consultations).

4. Claims submitted by an investor of a Party, which has changed its corporate structure with a main purpose to gain the protection of this Agreement at a point in time where an investment dispute had arisen or was foreseeable, shall not be admissible. For greater certainty, this includes situations where an investor has changed its corporate structure with the main purpose to submit a claim to its original home State.

5. A claim may be submitted to arbitration under the following rules:

(a) the ICSID Convention and the ICSID Rules of Procedure for Arbitration Proceedings, provided that both Parties are parties to the ICSID Convention;

(b) the ICSID Additional Facility Rules, provided that one of the Parties is a party to the ICSID Convention;

(c) the UNCITRAL Arbitration Rules; or

(d) if the disputing parties agree, to any other arbitration institution or under any other arbitration rules.

6. In case of any conflict between the provisions of this Agreement and the provisions of applicable arbitration rules, the provisions of this Agreement shall prevail to the extent of any such inconsistency. The arbitration rules applicable under this Agreement shall be applied as in force on the date the claim is submitted to arbitration.

7. A claimant who is a natural person and has the nationality of the respondent on the date of submission of a claim may not submit a claim to arbitration.

Article 15. Consent to Arbitration

1. Each Party hereby consents to the submission of an investment dispute to arbitration under Article 14 (Submission of a Claim to Arbitration) in accordance with the provisions of this Chapter. XVII

2. The consent under paragraph 1 and the submission of a claim to arbitration under this Chapter shall satisfy the requirements of:

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

(b) Article II of the New York Convention for an agreement in writing.

Article 16. Conditions and Limitations on Consent of Each Party

1. No claim shall be submitted to arbitration under this Chapter if more than four years have elapsed from the date on which the claimant first acquired. or should have first acquired, knowledge of the alleged breach of a provision in Chapter III (Investment Protection), and of the loss or damage alleged to have been incurred thereby.

2. No claim shall be submitted to arbitration under this Chapter unless:

(a) the claimant consents in writing to arbitration in accordance with the procedures set out in this Agreement; and

(b) the notice of arbitration is accompanied:

(i) for claims submitted to arbitration under subparagraph 1 (a) of Article 14 (Submission of a Claim to Arbitration), by the claimant's written waiver; and

(ii) for claims submitted to arbitration under subparagraph 1 (b) of Article 14 (Submission of a Claim to Arbitration), by the claimant's and the enterprise's written waivers, of any right to initiate or continue before any court or administrative tribunal under the law of a Party, or any other dispute settlement procedures, any proceeding with respect to any measure alleged to constitute a breach referred to in Article 14 (Submission ofa Claim to Arbitration).

3. Notwithstanding subparagraph 2 (b). the claimant (for claims brought under subparagraph 1 (a) of Article 14 (Submission of a Claim to Arbitration)) and the claimant or the enterprise (for claims brought under subparagraph 1 (b) of Article 14 (Submission of a Claim to Arbitration)) may initiate or continue an action that seeks interim injunctive relief and does not involve the payment of monetary damages before a judicial or administrative tribunal of the respondent, provided that the action is brought for the sol'e purpose of preserving the claimant's or the enterprise's rights and interests during the pendency of the arbitration.

Article 17. Constitution of the Arbitral Tribunal

1. Unless the disputing parties otherwise agree, the arbitral tribunal shall be composed of three arbitrators. Each disputing party shall appoint one arbitrator and the third, who shall be the presiding arbitrator, shall be appointed by agreement between the disputing parties.

2. The appointing authority for an arbitral tribunal under this Article shall be:

(a) the Secretary-General of IC SID if the claim is submitted to arbitration under the ICSID Convention and the lCSID Rules of Procedure for Arbitration Proceedings, or under the ICSID Additional Facility Rules; or

(b) the Secretary-General of the Permanent Court of Arbitration if the claim is submitted to arbitration under the UNCITRAL Arbitration Rules or under any other arbitration institution or any other arbitration rules.

3. In appointing arbitrators, the respondent shall endeavour to ensure diversity and a balanced gender representation, and the claimant is encouraged to adopt the same approach.

4. If an arbitral tribunal has not been established within 90 days from the date on which the claim was submitted to arbitration under this Chapter, the appointing authority, upon request of either disputing party, shall appoint, at his or her own discretion, the arbitrator or arbitrators not yet appointed. The appointing authority shall not appoint a national of either the respondent or the Party of the claimant as the presiding arbitrator unless the disputing parties agree otherwise. If the Secretary-General of ICSID or the Secretary-General of the Permanent Court of Arbitration is a national or permanent resident of either Party, or he or she is otherwise unable to act, the Deputy Secretary-General of ICSID or the Deputy Secretary-General of the Permanent Court of Arbitration, respectively. shall be invited to make the necessary appointments.

5. The arbitrators shall have experience or expertise in public international law, international investment law and the resolution of disputes arising under international investment law.

6. Where any arbitrator appointed as provided for in this Article resigns or becomes unable to act, a successor shall be appointed in the same manner as prescribed for the appointment of the original arbitrator, and the successor shall have all the powers and duties of the original arbitrator. 

7. Arbitrators appointed under this Chapter shall comply with the UNCITRAL Code of Conduct for Arbitrators in International Investment Disputes.

Article 18. Place of Arbitration

The disputing parties may agree on the legal place of any arbitration under the arbitral rules applicable under Article 14 (Submission of a Claim to Arbitration). If the disputing parties fail to reach an agreement, the arbitral tribunal shall determine the place which shall be in the territory of a State that is a party to the New York Convention.

Article 19. Applicable Law and Joint Interpretation

1. When a claim is submitted under paragraph 1 of Article 14 (Submission of a Claim to Arbitration), the arbitral tribunal shall decide the issues in dispute in accordance with this Agreement and other rules of international law applicable between the Parties. The arbitral tribunal may consider, when relevant, the domestic law of a Party as a matter of fact. In doing so, the arbitral tribunal shall follow the prevailing interpretation given to the domestic law by the courts or authorities of that Party and any meaning given to domestic law by the arbitral tribunal shall not be binding upon the courts or authorities of that Party.

2. For greater certainty, the arbitral tribunal shall not have jurisdiction to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of the respondent.

3. A decision of the Parties on the interpretation of a provision of this Agreement shall be binding on the arbitral tribunal, and any decision or award issued by the arbitral tribunal must be consistent with this joint interpretation. The Parties may decide that this joint interpretation shall have binding effect from a specific date.

Article 20. Expert Reports

Without prejudice to' the appointment of other experts when authorised by the applicable arbitration rules, the arbitral tribunal, on request of a disputing party or, unless the disputing parties disapprove, on its own initiative, may appoint one or more experts to report to it in writing on any factual issue concerning scientific matters raised by a disputing party in a proceeding, subject to any terms and conditions that the disputing parties may agree.

Article 21. Third-Party Funding

1. "Third-party funding" means the provision of any direct or indirect funding to a disputing party by a natural or legal person that is not a party to the proceeding but enters into an agreement to provide, or otherwise provides, funding for a proceeding either through a donation or a grant, or in return for remuneration dependent on the outcome of the proceeding ("third-party funder").

2. A disputing party in receipt of third-party funding shall disclose to the arbitral tribunal and the other disputing party the following information:

(a) the name and address of the third-party funder;

(b) the name and address of the beneficial owner of the third-party funder and any natural or legal person with decision-making authority for or on behalf of the third-party funder in relation to the proceeding;

(c) whether the third-party funder agrees to cover any adverse cost mvard; and (d) any other information required by the arbitral tribunal.

3. The disputing party shall disclose the information listed in subparagraphs 2 (a), (b) and (c) when submitting its statement of claim, or if the funding agreement is entered into after the submission of the statement of claim, within ten days after the conclusion of such agreement. The disputing party shall disclose the information required by the arbitral tribunal in accordance with subparagraph 2 (d) as promptly as possible.

4. If there is any new information or any change in the information disclosed in accordance with paragraph 2, the disputing party shall disclose such information to the arbitral tribunal and the other disputing party as promptly as possible.

5. If the disputing party fails to comply with the disclosure obligations under this Article. the arbitral tribunal may:

(a) order security for costs;

(b) take this fact into account when allocating costs; or

(c) suspend or terminate the proceeding.

Article 22. Transparency

1. The UNCITRAL Transparency Rules shall apply to the settlement of disputes under this Chapter, except to the extent modified by this Agreement.

2. The non-disputing Party has the right to attend a hearing held under this Chapter.

3. The arbitral tribunal shall accept or, after consultation with the disputing parties, may invite written or oral submissions from the non-disputing Party on issues relating to the interpretation of this Agreement. The arbitral tribunal shall ensure that the disputing parties are given a reasonable opportunity to present their observations on any submission from the non-disputing Party.

4. Whether a third person has a significant interest in the arbitral proceedings pursuant to paragraph 3(a) of Article 4 of the UNCITRAL Transparency Rules includes situations where the third person is directly affected by the specific circumstances of the dispute, such as a local community.

Article 23. Security for Costs

1. Upon request of the respondent, the arbitral tribunal may order the claimant to provide security for costs.

2. In determining whether to order a disputing party to provide security for costs, the arbitral tribunal shall consider all relevant circumstances, including:

(a) the claimant's ability to comply with an adverse decision on costs;

(b) the claimant's willingness to comply with an adverse decision on costs;

(c) the effect that providing security for costs may have on the claimant's ability to pursue its claim; and

(d) the conduct of the claimant.

3. The arbitral tribunal shall specify any relevant terms in an order to provide security for costs and shall fix a time limit for compliance with the order.

4. If the claimant fails to comply with an order to provide security for costs within 30 days after the arbitral tribunal's order or within any other time period set by the arbitral tribunal_, the arbitral tribunal shall inform the disputing parties and may suspend the proceeding. If the proceeding is suspended for more than 90 days, the arbitral tribunal may, after consulting with the disputing parties, order the discontinuance of the proceeding.

5. The claimant shall promptly disclose any material change in the circumstances upon which the arbitral tribunal ordered security for costs. 6. The arbitral tribunal may at any time modify or revoke its order on security for costs, on its own initiative or upon a disputing party's request.

Article 24. Claims Manifestly without Legal Merit

1. The respondent may, no later than 45 days after the constitution of the arbitral tribunal, and in any event before its first session, or no later than 45 days after the respondent became aware of the facts on which the objection is based, file an objection that a claim is manifestly without legal merit.

2. The objection may relate to the substance of the claim or the jurisdiction of the arbitral tribunal. The respondent shall specify as precisely as possible the basis for the objection.

3. On receipt of an objection pursuant to this Article, the arbitral tribunal shall not begin the proceedings on the merits and establish a schedule for considering such an objection consistent with its schedule for considering any other preliminary question.

4. The arbitral tribunal shall, after giving the disputing parties an opportunity to present their observations, at its first session or promptly thereafter, issue a decision or award stating the grounds therefor. In the event that the objection is received after its first session, the arbitral tribunal shall issue such decision or award as soon as possible, and in any event no later than 120 days after the objection was filed. In doing so, the arbitral tribunal shall assume the alleged facts to be true.

5. The decision of the arbitral tribunal that a claim is not manifestly without legal merit shall be without prejudice to the right of the respondent to raise a plea that the arbitral tribunal does not have jurisdiction or to argue subsequently in the proceeding that the claim is without legal merit. 

Article 25. Consolidation

Where two or more claims have been submitted separately to arbitration under Article 14 (Submission of a Claim to Arbitration) and the claims have a question of law or fact in common and arise out of the same or similar events or circumstances, all concerned disputing parties may agree to consolidate those claims.

Article 26. Discontinuance

If, following the submission of a claim to arbitration under Article 14 (Submission of a Claim to Arbitration), the claimant fails to take any steps in the proceeding during 6 months or such period as the disputing parties may agree, the claimant is deemed to have withdrawn its claim and to have discontinued the proceeding. The arbitral tribunal shall, at the request of the respondent, and after notice to the disputing parties, take note of the discontinuance in an order and issue an award on costs. After the order has been rendered the authority of the arbitral tribunal shall lapse. For greater certainty, the claimant may not subsequently submit a claim on the same matter.

Article 27. Diplomatic Protection

Neither Party shall give diplomatic protection, or bring an international claim, in respect of an investment dispute which one of its investors and the other Party shall have consented to submit or have submitted to arbitration under this Chapter, unless such other Party has failed to abide by and comply with the award rendered in such dispute. Diplomatic protection, for the purposes of this Article, shall not include informal diplomatic exchanges for the sole purpose of facilitating a settlement of the dispute.

Article 28. Final Award

1. If the arbitral tribunal makes a final award against the respondent, the arbitral tribunal may only award, separately or in combination:

(a) monetary damages and any applicable interest; and 

(b) restitution of property, in which case the final award shall provide that the respondent may pay monetary damages and any applicable interest in lieu of restitution, determined in a manner consistent with Article 8 (Expropriation).

2. For greater certainty, the arbitral tribunal may not award remedies other than those referred to in paragraph 1, nor may order the repeal, cessation or modification of the measure concerned.

3. Monetary damages shall not be greater than the loss suffered by the claimant or, if the claimant acted on behalf of the locally established enterprise, by the locally established enterprise as a result of the breach of the relevant provisions referred to in paragraph 1 of Article 14 (Submission of a Claim to Arbitration), reduced by any prior damages or compensation already provided by the Party conc,erned. The arbitral tribunal shall establish such monetary damages on the basis of the submissions of the disputing parties, and shall consider, if applicable, contributory fault, whether deliberate or negligent, or failure to mitigate damages.

4. The arbitral tribunal shall only award monetary damages that are established on the basis of satisfactory evidence and that are not inherently speculative.

5. The arbitral tribunal shall not award punitive damages.

6. A final award made by an arbitral tribunal shall have no binding force except between the disputing parties and in respect of the particular case,

Article 29. Enforcement of Awards

1. Subject to paragraph 2, a disputing party shall recognise and comply with a final award without delay.

2. A disputing party shall not seek enforcement of a final award until:

(a) in the case of a final award issued under the ICSID Convention:

(i) 120 days have elapsed from the date the award was rendered and no disputing party has requested revision or annulment of the award; or

(ii) enforcement of the award has been stayed and revision or annulment proceedings have been completed;

(b) in the case of a final award under the ICSID Additional Facility Rules, the UNCITRAL Arbitration Rules, or any other rules applicable pursuant to subparagraph 5 (d) of Article 14 (Submission of a Claim to Arbitration):

(i) 90 days have elapsed from the date the award was rendered and no disputing party has commenced a proceeding to revise, set aside ur annul the award; or

(ii) enforcement of the award has been stayed and a court has dismissed or allowed an application to revise, set aside or annul the award and there is no further appeal.

3. Each Party shall provide for the enforcement of a final award in its territory.

4. A disputing party may seek enforcement of a final award under the LCIA Convention or the New York Convention.

5. Execution of the final award shall be governed by the laws concerning the execution of judgments or awards in force where the execution is sought.

6. A final award issued pursuant to this Chapter is an arbitral award that is considered to arise out of a commercial relationship or transaction for the purposes of Article I of the New York Convention. 

Article 30. Costs

1. The arbitral tribunal shall order that the costs of the proceedings be borne by the unsuccessful disputing party. In exceptional circumstances, the arbitral tribunal may apportion costs between the disputing parties if it determines that apportionment is appropriate in the circumstances of the case.

2. Other reasonable costs, including costs of legal representation and assistance, shall be borne by the unsuccessful disputing party, when the arbitral tribunal dismisses a claim and renders an award pursuant to Article 24 (Claims Manifestly without Legal Merit). In other circumstances, the arbitral tribunal shall determine the allocation of other reasonable costs, including the reasonable costs of legal representation and assistance among the disputing parties, taking into consideration the outcome of the proceedings and other relevant circumstances, such as the conduct of the disputing parties.

3. If only parts of the claims have been successful, the costs shall be adjusted. proportionately, to the number or extent of the successful parts of the claims. 

4. The arbitral tribunal shall ensure that all decisions on costs are reasoned and form part of the final award.

Article 31. Special Rules Regarding Financial Services

1. Chapter IV (Investor-State Dispute Settlement) applies to the settlement of investment disputes relating to investors and their investments in financial institutions, as modified by this Article.

2. lf an investor of a Party submits a claim to arbitration under Chapter IV (Investor-State Dispute Settlement) involving an investment dispute referred to in paragraph 1:

(a) the disputing parties shall take into account the expertise or experience in financial services law or practice in the appointment of arbitrators: and

(b) the arbitral tribunal may appoint, pursuant to Article 20 (Expert Reports), one or more experts with expertise or experience in financial services law or practice, which may include the regulation of financial institutions, to report to it on any factual issue concerning financial services matters raised by a disputing party in the proceeding.

3. lf an investor of a Party submits a claim to arbitration under Article 14 (Submission of a Claim to Arbitration), and the respondent invokes Article 39 (Prudential Measures) as a defence, the following provisions shall apply:

(a) the respondeht may, no later than the date the arbitral tribunal fixes for the respondent to subIIlit its counter-memorial, or in the case of an amendment to the notice of arbitration, the date the arbitral tribunal fixes for the respondent to submit its response to the amendment, submit in writing to the competent financial authorities of the respondent and the Party of the claimant referred to in Annex F (Competent Authorities for the Purposes of Article 31) a request for a joint determination on the issue of whether and to what extent Article 39 (Prudential Measures) is a valid defence to the claim. If the respondent refers the matter to the financial authorities under this paragraph, the periods of time or proceedings referred to in Chapter IV (Investor-State Dispute Settlement) are suspended;

(b) in a referral under subparagraph (a), the competent financial authorities referred to in Annex F (Competent Authorities for the Purposes of Article 31) should attempt in good faith to make a joint determination within six months after the referral of the matter by the respondent as to whether and to what extent Article 39 (Prudential Measures) is a valid defence to the claim. They shall transmit a copy of the joint determination to the disputing parties and the arbitral tribunal. If the joint determination concludes that Article 39 (Prudential Measures) is a valid defence to all parts of the claim in their entirety, the investor is deemed to have withdrawn its claim, and the proceedings are discontinued in accordance with Article 26 (Discontinuance). If the joint determination concludes that Article 39 (Prudential Measures) is a valid defence to only parts of the claim, the joint determination is binding on the arbitral tribunal with respect to those parts of the claim. The suspension of the periods of time or proceedings described in subparagraph (a) then no longer applies and the investor may proceed with the remaining parts of the claim;

(c) if the competent financial authorities referred to in Annex F (Competent Authorities for the Purposes of Article 31) have not made a joint determination in accordance With subparagraph (b), within six months after the referral of the matter by the respondent, the suspension of the periods of time or proceedings referred to in subparagraph (a) no longer applies and the investor may proceed with its claim; and

(d) failure of the respondent to make a request pursuant to subparagraph (a) is without prejudice to the right of the respondent to invoke Article 39 (Prudential Measures) as a defence in a later phase of the proceedings. The arbitral tribunal shall draw no adverse inference from the fact that the competent financial authorities referred to in Annex F (Competent Authorities for the Purposes of Article 31) have not agreed on a joint determination.

Article 32. Future International Investment Agreements

lf a separate multilateral or plurilateral international investment agreement signed by both Parties enters into force, including an agreement on establishing an appellate mechanism or a multilateral investment court, the Parties shall endeavour to agree on incorporating the relevant provisions or developments of such agreement into this Agreement, ensuring alignment with the ongoing reform process on international investment agreements.

Article 33. Service of Documents

Delivery of notice and other documents to a Party shall be made to the place named for that Party in Annex E (Service of Documents on a Party under Chapter IV).

Chapter V. SETTLEMENT OF DISPUTES BETWEEN THE PARTIES

Article 34. Disputes between the Parties

1. Any dispute between the Parties regarding the interpretation or application of this Agreement shall, to the extent possible, be resolved through consultations.

2. If the dispute has not been resolved within six months after the request for consultations, the dispute shall, at the request of either Party, be submitted to arbitration.

3. Each Party shall appoint one arbitrator, and both Parties shall agree on the appointment of the third arbitrator to chair the tribunal. The chair of the tribunal shall not be a national of one of the Parties, nor have his or her usual place of residence in the territory of one of the Parties, nor be employed or previously have been employed by one of the Parties, nor have dealt with the case in any capacity. If all three arbitrators have not been appointed within two months of the request for arbitration, the undesignated arbitrator or arbitrators shall be appointed at the request of either Party by the Secretary-General of the Permanent Court of Arbitration.

4. If the Secretary-General of the Permanent Court of Arbitration is prevented from carrying out the said function or is a national of one of the Parties, the President of the International Court of Justice shall act as appointing authority. If the President of the International Court of Justice is prevented from carrying out the said function or is a national of one of the Parties, the appointments shall be made by the Vice-President of the International Court of Justice, and if the latter is prevented or is a national of one of the Parties, the appointments shall be made by the next senior member of the Court who is not a national of a Party.

5. Unless the Parties agree otherwise, the arbitral tribunal shall determine its own procedure. The arbitral tribunal shall decide the issues in dispute in accordance with this Agreement and other applicable rules of international law. The award of the arbitral tribunal is final and shall be binding on each Party.