1. If a Party or a designated agency of a Party makes a payment to any of its investors under a guarantee, a contract of insurance, or other form of indemnity it has granted in respect of an investment of an investor of that Party, the other Party shall recognize 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 a designated 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 authorized to act on behalf of the Party or the designated agency of the Party making the payment, pursue those rights and claims against the other Party.
Section B. SETTLEMENT OF DISPUTES BETWEEN AN INVESTOR AND THE HOST PARTY
Article 9.16. Investor-state Dispute Settlement
1. This Article shall apply to disputes between a Party and an investor of the other Party concerning an alleged breach of an obligation of the former Party under this Chapter, which causes loss or damage to the investor or its investments.
2. The disputing parties shall initially seek to resolve the dispute by consultations and negotiations, which may include the use of non-binding third-party procedures.
3. Any such dispute which has not been settled within a period of six months from the date of request for consultations and negotiations may be submitted to the courts or administrative tribunals of the Party concerned or to arbitration. In the latter event, the investor has the choice, among any of the following:
(a) the ICSID Convention and the ICSID Rules of Procedure for Arbitration Proceedings, provided that both the disputing Party and the Party of the disputing investor are parties to the ICSID Convention;
(b) the ICSID Additional Facility Rules, provided that either the disputing Party or the Party of the disputing investor, but not both, is a party to the ICSID Convention;
(c) the UNCITRAL Arbitration Rules; or
(d) any other arbitration institution or any other arbitration rules, if disputing parties so agree.
4. Once the investor has submitted the dispute to either the courts or administrative tribunals of the disputing Party or any of the arbitration mechanisms provided for in paragraph 3, the choice of the procedure shall be definitive and exclusive.
5. Each Party hereby consents to the submission of a dispute to arbitration under paragraphs 3(a), (b), and (c) in accordance with this Article, provided that: (10)
(a) the submission of the dispute to such arbitration takes place within three years from the date on which the disputing investor became aware, or should reasonably have become aware, of a breach of an obligation under this Chapter and of the loss or damage incurred by the disputing investor or its investment; and
(b) the disputing investor gives written notice which shall be delivered at least 90 days before the claim to arbitration is submitted, to the disputing Party of its intention to submit the dispute to such arbitration and which: (11)
(i) states the name and address of the disputing investor;
(ii) selects one of the fora in paragraph 3 as the forum for dispute settlement;
(iii) waives its right to initiate any proceedings, excluding proceedings for interim injunctive relief referred to in paragraph 6, before any of the other dispute settlement fora referred to in paragraph 3 in relation to the matter under dispute; and
(iv) briefly summarizes the alleged breaches of the disputing Party under this Chapter (including the articles alleged to have been breached) and the loss or damage allegedly caused to the investor or its investment.
6. Notwithstanding paragraph 4, the disputing investor may initiate or continue an action that seeks interim injunctive relief that does not involve the payment of monetary damages or the resolution of the substance of the matter in dispute before a court or administrative tribunal of the disputing Party, provided that the action is brought for the sole purpose of preserving the disputing investor's rights and interests during the pendency of the arbitration.
7. The arbitral tribunal established under paragraph 3 shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law. 10 In case where the Parties agree to submit the dispute to other arbitration institution or in accordance with any other arbitration rules, provided for in paragraph 3(d), the conditions established in paragraphs 5(a) and (b) shall apply.
8. The arbitral tribunal shall decide as a preliminary question any objection by the disputing Party that a dispute is not within the tribunal's competence or jurisdiction, or that, as a matter of law, a claim submitted is not a claim for which an award in favor of the disputing investor may be made under paragraph 9.
9. The award rendered by the arbitral tribunal shall include:
(a) a judgment whether or not there has been a breach by the disputing Party of any obligation under Section A with respect to the disputing investor and its investments; and
(b) a remedy if there has been such breach. The remedy shall be limited to one or both of the following:
(i) payment of monetary damages and applicable interest; and
(ii) restitution of property, in which case the award shall provide that the disputing Party may pay monetary damages and any applicable interest in lieu of restitution. Costs may also be awarded in accordance with the applicable arbitration rules.
10. The award rendered in accordance with paragraph 9 shall be final and binding to the disputing parties.
11. The assumption of expenses incurred by the disputing parties in the arbitration shall be established:
(a) by the arbitration institution to which the dispute has been submitted, in accordance with its rules of procedure for arbitration proceedings; or
(b) in accordance with the rules of procedure for arbitration proceedings agreed by the disputing parties, where applicable.
12. Neither Party shall give diplomatic protection, or bring an international claim, in respect of a dispute which one of its investors and the other Party shall have consented to submit or have submitted to arbitration under this Article, unless such other Party has failed to abide by and comply with the award rendered in such dispute. Diplomatic protection, for purposes of this paragraph, shall not include informal diplomatic exchanges for the sole purpose of facilitating a settlement of the dispute.
For Peru:
General Directorate of International Economy, Competition and Private Investment Affairs (Dirección General de Asuntos de Economía Internacional, Competencia e Inversión Privada) Ministry of Economy and Finance (Ministerio de Economía y Finanzas) Jirón Lampa 277, 5th floor (Jirón Lampa # 277 piso 5) Lima 1, Perú;
For Korea: Office of International Legal Affairs, Ministry of Justice, Government Complex, Gwacheon Korea
Article 9.17. Term of the Bilateral Investment Treaty
1. Subject to paragraph 2, the Parties hereby agree that the Bilateral Investment Treaty, as well as all the rights and obligations derived from the said Treaty, will cease to have effect on the date of entry into force of this Agreement.
2. Any and all investments made pursuant to the Bilateral Investment Treaty before the entry into force of this Agreement will be governed by the rules of the said Treaty regarding any matter arising while the Treaty was in force. An investor may only submit an arbitration claim pursuant to the Bilateral Investment Treaty, regarding any matter arising while the said Treaty was in force, in accordance with the rules and procedures established in it, and provided that no more than three years have elapsed since the date of entry into force of this Agreement.
Section C. Definitions
Article 9.18. Definitions
For purposes of this Chapter:
Bilateral Investment Treaty means the Agreement between the Government of the Republic of Korea and the Government of the Republic of Peru for the Promotion and Reciprocal Protection of Investments,done at Seoul, June 3, 1993;
disputing investor means an investor that makes a claim under Section B;
disputing parties means the disputing investor and the disputing Party;
disputing Party means a Party against which a claim is made under Section B;
disputing party means the disputing investor or the disputing Party;
enterprise means an enterprise as defined in Article 1.4 (General Definitions), and its branch;
freely usable currency means any currency designated as such by the IMF and any amendments thereto;
ICSID means the International Centre for Settlement of Investment Disputes;
ICSID Convention means the Convention on the Settlement of Investment Disputes between
States and Nationals of other States, done at Washington, March 18, 1965;
investment means every asset that an investor owns or controls, directly or indirectly, and that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms that an investment may take include:
(a) an enterprise;
(b) shares, stock, and other forms of equity participation in an enterprise;
(c) bonds, debentures, other debt instruments, and loans；(12) (13) (14)
(d) futures, options, and other derivatives;
(e) turnkey, construction, management, production, concession, revenue-sharing, and other similar contracts;
(f) intellectual property rights;
(g) licenses, authorizations, permits, and similar rights conferred pursuant to domestic law; (15) (16) and
(h) other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages, liens, and pledges.(17)
For purposes of this Agreement, a claim to payment that arises solely from the commercial sale of goods and services is not an investment, unless it is a loan that has the characteristics of an investment.
investment of an investor of a Party means an investment owned or controlled directly or indirectly by an investor of such Party;
investor of a non-Party means an investor other than an investor of a Party, that seeks to make, (18) is making, or has made an investment;
investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of a Party, that seeks to make, (19) is making, or has made an investment in the territory of the
other Party, provided, however, that a natural person who is a dual national shall be deemed to be exclusively a national of the State of his or her dominant and effective nationality;
negotiated restructuring means the restructuring or rescheduling of a debt instrument that has been effected through (i) a modification or amendment of such debt instrument, as provided for under the terms of such debt instrument, or (ii) a comprehensive debt exchange or other similar process in which the holders of no less than 75 percent of the aggregate principal amount of the outstanding debt under such debt instrument have consented to such debt exchange or other process;
state enterprise means an enterprise that is owned or controlled through ownership interests by a Party;
TRIMs Agreement means the Agreement on Trade-Related Investment Measures, contained in Annex 1A to the WTO Agreement; and
UNCITRAL Arbitration Rules means the arbitration rules of the United Nations Commission on International Trade Law, approved by the United Nations General Assembly on December 15, 1976.
Annex 9A. MOST-FAVORED-NATION TREATMENT
For greater certainty, treatment “with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments” referred to in paragraphs 1 and 2 of Article 9.4 does not encompass dispute resolution mechanisms, such as those set out in Section B, that are provided for in international treaties or trade agreements.
Annex 9B. EXPROPRIATION
The Parties confirm their shared understanding that:
(a) An action or a series of actions by a Party cannot constitute an expropriation unless it interferes with a tangible or intangible property right in an investment.
(b) Article 9.12.1 addresses two situations. The first is direct expropriation, where an investment is nationalized or otherwise directly expropriated through formal transfer of title or outright seizure.
(c) The second situation addressed by Article 9.12.1 is indirect expropriation, where an action or series of actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure.
(i) The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by-case, fact-based inquiry that considers, among other factors:
(A) the economic impact of the government action, although the fact that an action or series of actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred;
(B) the extent to which the government action interferes with distinct, reasonable investment-backed expectations; and
(C) the character of the government action, including its objectives and context. Relevant considerations could include whether the investor bears a disproportionate burden, such as a special sacrifice, that exceeds what the investor or investment should be expected to endure for the public interest.
(ii) Except in rare circumstances, such as, for example, when a measure or series of measures have an extremely severe or disproportionate effect in light of its purpose, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, the environment, and real estate policy measures (for example, measures to improve the housing conditions for low-income households), do not constitute indirect expropriations. (20)
Annex 9C. TEMPORARY SAFEGUARD MEASURES
1. Nothing in this Chapter, Chapter Ten (Cross-Border Trade in Services), or Twelve (Financial Services) shall be construed to prevent a Party from adopting or maintaining temporary safeguard measures with regard to payments and capital movements:
(a) in the event of serious balance of payments or external financial difficulties or threat thereof; or
(b) where, in exceptional circumstances, payments and capital movements cause or threaten to cause serious difficulties for macroeconomic management, in particular, the operation of monetary policy or exchange rate policy in either Party.
2. Measures referred to in paragraph 1:
(a) shall not exceed a period of one year; however, if extremely exceptional circumstances arise such that a Party seeks to extend such measures, the Party will coordinate in advance with the other Party concerning the implementation of any proposed extension;
(b) shall be consistent with the Articles of Agreement of the International Monetary Fund;
(c) shall not exceed those necessary to deal with the circumstances described in paragraph 1;
(d) shall avoid unnecessary damage to the commercial, economic, or financial interests of the other Party;
(e) shall not otherwise interfere with investors’ ability to earn a market rate of return in the territory of the Party on any restricted assets; (21)
(f) shall be temporary and phased out progressively as the situation described in paragraph 1 improves;
(g) shall not be confiscatory;
(h) shall promptly be notified to the other Party;
(i) are applied in a manner consistent with Articles 9.3, 10.2 (National Treatment), and 12.2 (National Treatment) and Articles 9.4, 10.3 (Most- Favored-Nation Treatment), and 12.3 (Most-Favored-Nation Treatment) subject to the Schedules set out in Annex I, Annex II, and Annex III, and relevant Annexes in this Chapter, Chapter Ten (Cross-Border Trade in Services), or Twelve (Financial Services);
(j) shall not constitute a dual or multiple exchange rate practice; and
(k) shall not restrict payments or transfers associated with foreign direct investment. (22)
3. Nothing in this Chapter, Chapter Ten (Cross-Border Trade in Services), or Chapter Twelve (Financial Services) shall be regarded to affect the rights enjoyed and obligations undertaken by a Party as a party to the Articles of Agreement of the International Monetary Fund.
Annex 9D. Public Debt
1. The Parties recognize that the purchase of debt issued by a Party entails commercial risk. For greater certainty, no award may be made in favor of a disputing investor for a claim with respect to default or nonpayment of debt issued by a Party unless the disputing investor meets its burden of proving that such default or nonpayment constitutes an uncompensated expropriation for purposes of Article 9.12 or a breach of any other obligation under this Chapter.
2. No claim that a restructuring of debt issued by a Party breaches an obligation under this Chapter may be submitted to, or if already submitted continue in, arbitration under this Chapter if the restructuring is a negotiated restructuring at the time of submission, or becomes a negotiated restructuring after such submission, except for a claim that the restructuring violates Article 9.3 or 9.4.
3. Subject to paragraph 2, an investor of the other Party may not submit a claim under this Chapter that a restructuring of debt issued by a Party breaches an obligation under this Chapter (other than Article 9.3 or 9.4) unless 270 days have elapsed from the date of the events giving rise to the claim.
Chapter TEN. Cross-border Trade In Services
Article 10.1. Scope of Application
1. This Chapter shall apply to measures adopted or maintained by a Party affecting cross-border trade in services by service suppliers of the other Party. Such measures include measures affecting:
(a) the production, distribution, marketing, sale, and delivery of a service;
(b) the purchase or use of, or payment for, a service;
(c) the access to and use of distribution, transport, or telecommunications networks and services in connection with the supply of a service;
(d) the presence in its territory of a service supplier of the other Party; and
(e) the provision of a bond or other form of financial security as a condition for the supply of a service.
2. For purposes of this Chapter, measures adopted or maintained by a Party means measures adopted or maintained by:
3. (a) central, regional, or local governments or authorities; and
(b) non-governmental bodies in the exercise of powers delegated by central, regional, or local governments or authorities.
This Chapter shall not apply to:
(a) financial services as defined in Article 12.20 (Definitions), except that paragraph 4 shall apply where the financial services are supplied by a covered investment that is not a covered investment in a financial institution as defined in Article 12.20 (Definitions) in the Party’s territory;
(b) air services, (1) including domestic and international air transportation services, whether scheduled or non-scheduled, and related services in support of air services, other than:
(i) aircraft repair and maintenance services during which an aircraft is withdrawn from service;
(ii) the selling and marketing of air transport services; and
(iii) computer reservation system (CRS) services;
(c) procurement as defined in Article 16.20 (Definitions); or
(d) subsides or grants provided by a Party, including government-supported loans, guarantees, and insurance. (2)
4. Articles 10.4, 10.7, 10.8, and footnote 2 shall apply to measures adopted or maintained (3) by a Party affecting the supply of a service in its territory by a covered investment .
5. This Chapter does not impose any obligation on a Party with respect to a national of the other Party seeking access to its employment market, or employed on a permanent basis in its territory and does not confer any right on that national with respect to that access or employment.
6. This Chapter shall not apply to services supplied in the exercise of governmental authority in a Party’s territory. 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.
Article 10.2. National Treatment
Each Party shall accord to service suppliers of the other Party treatment no less favorable than that it accords, in like circumstances, to its own service suppliers.
Article 10.3. Most-favored-nation Treatment
Each Party shall accord to service suppliers of the other Party treatment no less favorable than that it accords, in like circumstances, to service suppliers of a non-Party.
Article 10.4. Market Access
Neither Party shall adopt or maintain, either on the basis of a regional subdivision or on the basis of its entire territory, measures that:
(a) impose limitations on:
(i) the number of service suppliers, whether in the form of numerical quotas, monopolies, exclusive service suppliers, or the requirement of an economic needs test;
(ii) the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(iii) the total number of service operations or the total quantity of services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test; (4) or
(iv) the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in the form of numerical quotas or the requirement of an economic needs test; or
(b) restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service.
Article 10.5. Local Presence
Neither Party shall require a service supplier of the other Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border supply of a service.
Article 10.6. Non-conforming Measures
1. Articles 10.2 through 10.5 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 set out in Annex I; or
(ii) a local level of government;
(b) the continuation or prompt renewal of any non-conforming 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 immediately before the amendment, with Article 10.2, 10.3, 10.4, or 10.5.
2. Articles 10.2 through 10.5 shall not apply to any measure that a Party adopts or maintains with respect to sectors, sub-sectors, or activities, as set out in its Schedule set out in Annex II.
Article 10.7. Transparency In Developing and Applying Regulations (5)
Further to Chapter Twenty-One (Transparency):
(a) each Party shall maintain or establish appropriate mechanisms for responding to inquiries from interested persons regarding its regulations related to the subject matter of this Chapter;（6）
(b) to the extent possible, each Party shall:
(i) publish in advance any measure that it proposes to adopt related to the subject matter of this Chapter; and
(ii) provide interested persons and the other Party with a reasonable opportunity to comment on such proposed measures. If a Party does not provide advance notice of and opportunity for comment on regulations it proposes to adopt related to the subject matter of this Chapter, it shall, to the extent possible, address in writing the reasons for not doing so; and
(c) to the extent possible, each Party shall allow reasonable time between publication of final regulations related to the subject matter of this Chapter and their effective date.
Article 10.8. Domestic Regulation
1. Where a Party requires authorization for the supply of a service, the Party's competent authorities shall, within a reasonable time after the submission of an application considered complete under its laws and regulations, inform the applicant of the decision concerning the application. Upon request of the applicant, the Party's competent authorities shall provide, without undue delay, information on the status of the application. This obligation shall not apply to authorization requirements that a Party adopts or maintains with respect to sectors, sub-sectors, or activities as set out in its Schedule set out in Annex II.
2. With a view to ensuring that measures related to qualification requirements and procedures, technical standards, and licensing requirements do not constitute unnecessary barriers to trade in services, each Party shall endeavor to ensure, as appropriate for individual sectors, that such measures are:
(a) based on objective and transparent criteria, such as competence and the ability to supply the service;
(b) not more burdensome than necessary to ensure the quality of the service; and
(c) in the case of licensing procedures, not in themselves a restriction on the supply of the service.
3. If the results of the negotiations related to Article VI:4 of GATS (or the results of any similar negotiations undertaken in other multilateral fora in which both Parties participate) enter into effect, this Article shall be amended, as appropriate, after consultations between the Parties, to bring those results into effect under this Agreement.(7)
Article 10.9. Recognition
1. For purposes of the fulfillment, in whole or in part, of its standards or criteria for the authorization, licensing, or certification of services suppliers, and subject to the requirements of paragraph 4, a Party may recognize the education or experience obtained, requirements met, or licenses or certifications granted in a particular country. Such recognition, which may be achieved through harmonization or otherwise, may be based on an agreement or arrangement with the country concerned or may be accorded autonomously.
2. Where a Party recognizes, autonomously or by agreement or arrangement, the education or experience obtained, requirements met, or licenses or certifications granted in the territory of a non-Party, nothing in Article 10.3 shall be construed to require the Party to accord such recognition to the education or experience obtained, requirements met, or licenses or certifications granted in the territory of the other Party.
3. A Party that is a party to an agreement or arrangement of the type referred to in paragraph 1, whether existing or future, shall afford adequate opportunity for the other Party, if that other Party is interested, to negotiate accession to such an agreement or arrangement or to negotiate a comparable one with it. Where a Party accords recognition autonomously, it shall afford adequate opportunity for the other Party to demonstrate that education, experience, licenses, or certifications obtained or requirements met in that other Party’s territory should be recognized.
4. Neither Party shall accord recognition in a manner that would constitute a means of discrimination between countries in the application of its standards or criteria for the authorization, licensing, or certification of services suppliers, or a disguised restriction on trade in services.
5. Annex 10A shall apply to measures adopted or maintained by a Party related to the licensing or certification of professional service suppliers as set out in that Annex.
Article 10.10. Implementation
The Parties shall consult annually, or as otherwise agreed, through various means including any technological means available to the Parties to review the implementation of this Chapter and consider other matters of mutual interest affecting trade in services.
Article 10.11. Denial of Benefits
Subject to prior notification and consultations, (8) a Party may deny the benefits of this Chapter to a service supplier of the other Party if the service supplier is an enterprise owned or controlled by persons of a non-Party or of the denying Party and the enterprise has no substantial business activities in the territory of the other Party.
Article 10.12. Payments and Transfers (9)
1. Each Party shall permit all transfers and payments related to the cross-border supply of services to be made freely and without delay into and out of its territory.
2. Each Party shall permit such transfers and payments related to the cross-border supply of services to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may prevent or delay a transfer or payment through the equitable, non-discriminatory, and good faith application of its laws related to:
(a) bankruptcy, insolvency, or the protection of the rights of creditors;
(b) issuing, trading, or dealing in securities, futures, options, or derivatives;
(c) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
(d) criminal or penal offences; or
(e) ensuring compliance with orders or judgments in judicial or administrative proceedings.
Article 1013. Definitions
For purposes of this Chapter:
cross-border trade in services or cross-border supply of services means the supply of a service:
(a) from the territory of one Party into the territory of the other Party;
(b) in the territory of one Party by a person of that Party to a person of the other Party; or
(c) by a national of a Party in the territory of the other Party,
but does not include the supply of a service in the territory of a Party by a covered investment;
enterprise means an “enterprise” as defined in Article 1.4 (Definitions), and its branch;
professional services means services, the supply of which requires specialized post- secondary education, or equivalent training or experience or examination, and for which the right to practice is granted or restricted by a Party, but does not include services supplied by trades-persons or vessel and aircraft crew members; and
service supplier of a Party means a person of that Party that seeks to supply or supplies a service. (10)