(b) “full protection and security” requires each Party to provide the level of police protection required under customary international law.
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.
4. For greater certainty, the mere fact that a Party takes or fails to take an action that may be inconsistent with an investor’s expectations does not constitute a breach of this Article, even if there is loss or damage to the covered investment as a result.
5. For greater certainty, the mere fact that a subsidy or grant has not been issued, renewed or maintained, or has been modified or reduced, by a Party, does not constitute a breach of this Article, even if there is loss or damage to the covered investment as a result.
Article 96. Compensation for Losses
1. Notwithstanding Article 100.3, each Party shall accord to investors of the other Party, and to covered investments, non-discriminatory treatment with respect to measures it adopts or maintains relating to losses suffered by investments in its territory owing to armed conflict or civil strife.
2. Notwithstanding paragraph 1, if an investor of a Party, in the situations referred to in paragraph 1, suffers a loss in the territory of the other Party resulting from:
(a) requisitioning of its covered investment or part thereof by the latter’s forces or authorities; or
(b) destruction of its covered investment or part thereof by the latter’s forces or authorities, which was not required by the necessity of the situation,
the latter Party shall provide the investor restitution, compensation, or both, as appropriate, for such loss. Any compensation shall be in accordance with Article 97.2 through 97.4, mutatis mutandis.
3. Paragraph 1 does not apply to existing measures relating to subsidies or grants that would be inconsistent with Article 93 but for Article 100.3.
Article 97. Expropriation and Compensation (13)
1. No Party may expropriate or nationalize a covered investment either directly or indirectly through measures equivalent to expropriation or nationalization (“expropriation”), except:
(a) for a public purpose;
(b) in a non-discriminatory manner;
(c) on payment of compensation in accordance with this Article; and
(d) in accordance with due process of law.
2. The compensation referred to in paragraph 1(c) shall:
(a) be paid without delay;
(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (“the date of expropriation”);
(c) not reflect any change in value occurring because the intended expropriation had become known earlier; and
(d) be fully realizable and freely transferable.
3. If the fair market value is denominated in a freely usable currency, the compensation referred to in paragraph 1(c) shall be no less than the fair market value on the date of expropriation, plus interest at a commercially reasonable rate for that currency accrued from the date of expropriation until the date of payment.
4. If the fair market value is denominated in a currency that is not freely usable, the compensation referred to in paragraph 1(c) – converted into the currency of payment at the market rate of exchange prevailing on the date of payment – shall be no less than:
(a) the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date, plus
(b) interest at a commercially reasonable rate for that freely usable currency accrued from the date of expropriation until the date of payment.
5. Any measure of expropriation or the amount of compensation may, at the request of the investors affected, be reviewed by a judicial or other independent authority of the Party taking the measure as prescribed by the Party’s laws.
6. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights in accordance with the TRIPS Agreement, 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 TRIPS Agreement.
7. For greater certainty, the mere fact that a subsidy or grant has not been issued, renewed or maintained, or has been modified or reduced, by a Party, does not constitute a breach of this Article, even if there is loss or damage to the covered investment as a result.
Article 98. Transfers (14)
1. Each Party shall permit all transfers relating to a covered investment to be made freely and without delay into and out of its territory. Such transfers include:
(a) contributions to capital;
(b) profits, dividends, capital gains, and proceeds from the sale of all or any part of the covered investment or from the partial or complete liquidation of the covered investment;
(c) interest, royalty payments, management fees, and technical assistance and other fees;
(d) payments made under a contract, including a loan agreement;
(e) payments made pursuant to Articles 96 and 97;
(f) payments arising out of a dispute; and
(g) earnings and remuneration of a national of a Party who works in a covered investment in the territory of the other Party.
2. Each Party shall permit transfers relating to a covered investment to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.
3. Each Party shall permit returns in kind relating to a covered investment to be made as authorized or specified in a written agreement between the Party and a covered investment or an investor of the other Party.
4. Notwithstanding paragraphs 1 through 3, a Party may prevent a transfer through the equitable, non-discriminatory, and good faith application of its laws and regulations relating to:
(a) bankruptcy, insolvency, or the protection of the rights of creditors;
(b) issuing, trading, or dealing in securities, futures, options, or derivatives;
(c) criminal or penal offenses;
(d) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities; or
(e) ensuring compliance with orders or judgments in judicial or administrative proceedings.
5. In case of a serious balance of payments difficulty or of a threat thereof, a Party may temporarily restrict transfers, provided that such a Party implements measures in accordance with the Articles of Agreement of the International Monetary Fund. These restrictions shall be imposed on an equitable, non-discriminatory and good faith basis, and shall not exceed what is necessary to deal with such circumstances.
6. For greater certainty, provided that such measures are not applied in an arbitrary or unjustifiable manner, and provided that such measures do not constitute a disguised restriction on international trade or investment, paragraphs 1 through 3 shall not be construed to prevent a Party from adopting or maintaining measures that are necessary to secure compliance with its laws and regulations, including those relating to the prevention of deceptive and fraudulent practices, that are not inconsistent with this Agreement.
Article 99. Performance Requirements
The Parties agree that the provisions of the WTO Agreement on Trade-Related Investment Measures are incorporated mutatis mutandis into this Agreement and shall apply with respect to all investments falling within the scope of this Chapter.
Article 100. Non-Conforming Measures
1. Articles 93 and 94 do not apply to:
(a) any existing non-conforming measures maintained within the territory of a Party;
(b) the continuation 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 increase the non-conformity of the measure, as it existed immediately before the amendment, with those obligations.
2. Articles 93 and 94 do not apply to any measure covered by an exception to, or derogation from, the obligations under Article 3 or 4 of the TRIPS Agreement, as specifically provided in those Articles and in Article 5 of the TRIPS Agreement.
3. Articles 93 and 94 do not apply to subsidies or grants provided by a Party, including government-supported loans, guarantees, and insurance.
4. Articles 93 and 94 do not apply to government procurement.
5. The Parties will endeavor to progressively remove the non-conforming measures.
Article 101. Special Formalities and Information Requirements
1. Nothing in Article 93 shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with covered investments, such as a requirement that investors be residents of the Party or that covered investments be legally constituted under the laws or regulations of the Party, provided that such formalities do not materially impair the protections afforded by a Party to investors of the other Party and covered investments pursuant to this Chapter.
2. Notwithstanding Articles 93 and 94, a Party may require an investor of the other Party or its covered investment to provide information concerning that investment solely for informational or statistical purposes. The Party shall protect any confidential business information from any disclosure that would prejudice the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law.
Article 102. Subrogation
If a Party (or any statutory body, governmental agency or institution, 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 recognize the subrogation or transfer of any rights the investor would have possessed in this Chapter with respect to the covered investment but for the subrogation, including any rights under Section B, and the investor shall be precluded from pursuing such rights to the extent of the subrogation.
Article 103. Denial of Benefits
1. A Party may deny the benefits (15) of this Chapter to an investor of the other Party that is an enterprise of such other Party and to investments of that investor if a non-Party or persons of a non-Party own or control the enterprise and the denying Party:
(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party or a person of the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to its investments.
2. A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of such other Party and to investments of that investor if the enterprise has no substantial business activities in the territory of the other Party and a non-Party, or persons of a non-Party or the denying Party, own or control the enterprise.
Article 104. Essential Security
Nothing in this Chapter shall be construed:
(a) to require a Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests; or
(b) to preclude a Party from applying measures that it considers necessary for the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.
Article 105. Protection of Confidential Information
Nothing in this Chapter shall be construed to require a Party to furnish or allow access to protected information or other confidential information the disclosure of which would impede law enforcement or otherwise be contrary to the public interest, or which would prejudice the legitimate commercial interests of particular enterprises, public or private.
Article 106. Measures to Safeguard the Balance of Payments
1. In case of a serious balance of payments difficulty or of a threat thereof, a Party may restrict transfers, provided that such a Party implements measures in accordance with the Articles of Agreement of the International Monetary Fund. These restrictions shall be imposed on an equitable, non-discriminatory and temporary basis that shall be phased out progressively as such situation improves, and shall not exceed what is necessary to deal with such circumstances.
2. Any restrictions adopted or maintained under paragraph 1, or any changes therein, shall be promptly notified to the other Party.
Article 107. Prudential Measures
1. Notwithstanding any other provision of this Chapter, a Party shall not be prevented from adopting or maintaining measures relating to financial services for prudential reasons, including for the protection of investors, depositors, policy holders, or persons to whom a fiduciary duty is owed by a financial services supplier, or to ensure the integrity and stability of the financial system. (16)
2. Nothing in this Chapter applies to non-discriminatory measures of general application in pursuit of monetary and related credit policies or exchange rate policies. (17) This paragraph shall not affect a Party’s obligations under Article 98.
3. Where an investor submits a claim to arbitration under Section B, and the disputing Party invokes paragraphs 1 and 2, the investor-State tribunal established pursuant to Section B may not decide whether and to what extent it is a valid defence to the claim of the investor. It shall seek a report in writing from the Parties on this issue. The investor-State tribunal may not proceed pending receipt of such a report or of a decision of a State-State arbitral tribunal, should such a State-State arbitral tribunal be established.
4. Pursuant to a request for a report received in accordance with the above paragraph, the financial services authorities of the Parties shall engage in consultations. If the financial services authorities of the Parties reach a joint decision on the issue of whether and to what extent the relevant paragraphs of this Article is a valid defence to the claim of the investor, they shall prepare a written report describing their joint decision. The report shall be transmitted to the investor-State tribunal, and shall be binding on the investor-State tribunal.
5. If, after 60 days, the financial services authorities of the Parties are unable to reach a joint decision on the issue of whether and to what extent the relevant paragraphs of this Article is a valid defence to the claim of the investor, the issue shall, within 30 days, be referred by either of the Parties to a State-State arbitral tribunal established pursuant to Chapter 13 (Dispute Settlement). In such a case, the provisions requiring consultations between the Parties in Article 146 shall not apply. The decision of the State-State arbitral tribunal shall be transmitted to the investor-State tribunal, and shall be binding on the investor-State tribunal. All of the members of any such State-State arbitral tribunal shall have expertise or experience in financial services law or practice, which may include the regulation of financial institutions.
Article 108. Taxation
1. Except as provided in this Article, nothing in this Section shall impose obligations with respect to taxation measures.
2. Article 97 shall apply to all taxation measures (18), except that a claimant that asserts that a taxation measure involves an expropriation may submit a claim to arbitration under Section B only if:
(a) the claimant has first referred to the competent tax authorities (19) of the Parties in writing the issue of whether that taxation measure involves an expropriation; and
(b) within 180 days after the date of such referral, the competent tax authorities of the Parties fail to agree that the taxation measure is not an expropriation.
3. Nothing in this Chapter shall affect the rights and obligations of a Party under any tax convention. In the event of any inconsistency between this Chapter and any such convention, that convention shall prevail to the extent of the inconsistency. In the case of a tax convention between the Parties, the competent authorities under that convention shall have sole responsibility for determining whether any inconsistency exists between this Chapter and that convention.
Article 109. Promotion of Investment
The Parties shall cooperate in promoting investment through, amongst others:
(a) increasing investments between the Parties;
(b) organizing investment promotion activities;
(c) promoting business matching events;
(d) organizing and supporting the organization of various briefings and seminars on investment opportunities and on investment laws, regulations and policies; and
(e) conducting information exchanges on other issues of mutual concern relating to investment promotion and facilitation.
Article 110. Facilitation of Investment
Subject to their laws and regulations, the Parties shall cooperate to facilitate investment between the Parties through, amongst others:
(a) creating the necessary environment for all forms of investment;
(b) simplifying procedures for investment applications and approvals;
(c) promoting dissemination of investment information, including investment laws, regulations, policies and procedures; and
(d= establishing one-stop investment centers in the respective host Parties to provide assistance and advisory services to the business sectors including facilitation of operating licenses and permits.
Article 111. Committee on Investment
1. The Parties hereby establish a Committee on Investment that shall meet on the request of a Party or the FTA Joint Commission to consider any matter arising under this Chapter.
2. The Committee’s functions shall include:
(a) reviewing the implementation of this Chapter;
(b) identifying and recommending measures or initiatives to promote and increase investment flows between the Parties; and
(c) may, pursuant to Article 117.3, adopt a joint decision of the Parties, declaring their interpretation of a provision of this Chapter and Annexes 6 through 8; and
(d) may propose amendments to this Chapter in the light of experience of its operation.
Section B. Investor-State Dispute Settlement
Article 112. Consultations
1. In the event of an investment dispute, if the claimant intends to submit the dispute to arbitration, it shall deliver a request for consultations to the respondent at least 90 days prior to submission of the dispute to arbitration. The request shall:
(a) specify the name and address of the claimant and, where a claim is submitted on behalf of an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, the name, address, and place of incorporation of the enterprise;
(b) for each claim, identify the provision of this Agreement or the investment agreement alleged to have been breached and any other relevant provisions;
(c) for each claim, identify the measures or events giving rise to the claim;
(d) for each claim, provide a brief summary of the legal and factual basis; and
(e) specify the relief sought and the approximate amount of damages claimed.
2. After a request for consultations is made pursuant to this Section, the claimant and the respondent shall enter into consultations with a view to reaching a mutually satisfactory solution.
Article 113. Submission of a Claim to Arbitration
1. In the event that a disputing party considers that an investment dispute cannot be settled by consultations pursuant to Article 112 and 90 days have elapsed since the date of the request for consultations:
(a) the claimant, on its own behalf, may submit to arbitration under this Section a claim:
(i) that the respondent has breached
(A) an obligation under Articles 93 through 98; or
(B) an investment agreement; 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 an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, may submit to arbitration under this Section a claim:
(i) that the respondent has breached
(A) an obligation under Articles 93 through 98; or
(B) an investment agreement; and
(ii) that the enterprise has incurred loss or damage by reason of, or arising out of, that breach (20),
provided that a claimant may submit pursuant to subparagraph (a)(i)(B) or (b)(i)(B) a claim for breach of an investment agreement only if the subject matter of the claim and the claimed damages directly relate to the covered investment that was established or acquired, or sought to be established or acquired, in reliance on the relevant investment agreement.
2. An investor of a Party may not initiate or continue a claim under this Section if a claim involving the same measure or measures alleged to constitute a breach under this Article and arising from the same events or circumstances is initiated or continued pursuant to an agreement between the respondent and a non-Party by:
(a) an enterprise of a non-Party that owns or controls, directly or indirectly, the investor of a Party, or
(b) an enterprise of a non-Party that is owned or controlled, directly or indirectly, by the investor of a Party.
Notwithstanding the previous paragraph, the claim may proceed if the respondent agrees that the claim may proceed, or if the investor of a Party and the enterprise of a non-Party agree to consolidate the claims under the respective agreements before a tribunal constituted under this Section.
3. Provided that 6 months have elapsed since the events giving rise to the claim, a claimant may submit a claim referred to in paragraph 1:
(a) under the ICSID Convention and the ICSID Rules of Procedure for Arbitration Proceedings, provided that both the respondent and the non-disputing Party are parties to the ICSID Convention;
(b) under the ICSID Additional Facility Rules, provided that either the respondent or the non-disputing Party is a party to the ICSID Convention;
(c) under the UNCITRAL Arbitration Rules (21); or
(d) if the claimant and respondent agree, to any other arbitration institution or under any other arbitration rules.