12. The award shall be final and binding on the parties to the dispute and shall be executed in accordance with the laws and regulations of the Contracting Party in the territory of such execution is sought, and the applicable norms of international law.

13. The arbitral tribunal may award only: (a) a judgement whether or not there has been a breach by the respondent Party of any substantive obligation under this Agreement, and (b) one or both of the following remedies, only if there has been such a breach: (i) monetary damages including applicable interest; and (ii) restitution of property, in which case the award shall provide that the respondent may pay monetary damages including any applicable interest, in lieu of restitution.

14. Unless the disputing parties agree otherwise the place of arbitration shall be in a country that is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, on 10 June 1958.

15. Upon entry into force of an international agreement providing for a multilateral investment tribunal, which may include a multilateral appellate mechanism applicable to disputes under this Agreement, the relevant parts of this Agreement shall cease to apply subject to the agreement of both Contracting Parties. The rules of the multilateral dispute settlement mechanism shall not be applicable to disputes already submitted pursuant to Article 13, unless agreed otherwise by the disputing parties.

16. The provisions of the Article 13 (Settlement of Investment Disputes between a Contracting Party and an Investor of the other Contracting Party) and Article 15 (Settlement of Disputes between the Contracting Parties) shall not apply to the Article 10 (Corporate Social Responsibility), Article 11 (Investment and Environment) and Article 12 (Investment and Labour).

Article 14. Impartiality and Independence of Arbitrators

1. Arbitrators shall be independent of and not be affiliated with or take instructions from any organisation, disputing party or any government with regard to any matter addressed in o the dispute. They shall not participate in the consideration of any disputes that would create a direct or indirect conflict of interest. In addition, unless the disputing parties agree otherwise, upon appointment, the Arbitrators shall refrain from acting concurrently as counsel or as party-appointed expert or witness in any pending or new investment dispute under this or any other international investment treaty, involving the same measures, the same or related disputing parties, or the same provisions of the same treaty Arbitrators shall comply with the Code of Conduct as set out in Annex I in disputes arising out of Article 13.

2. If a disputing party considers that an arbitrator does not meet the requirements set out in paragraph 1 or in Annex I (Code of Conduct), it may invite the Secretary General of the ICSID to issue a decision on the challenge to disqualify such arbitrator. Any notice of a challenge shall be submitted to the Secretary General of the ICSID within 15 days after the constitution of the tribunal was communicated to the disputing party, or within 15 days of the date on which the relevant facts came to the knowledge of the disputing party that proposed the challenge, if the relevant facts could not have reasonably been known at the time of the appointment of the challenged arbitrator.

3. The notice of challenge shall state the grounds on which the challenge is based. Any arbitrator may be challenged in any event before the proceeding is declared closed, if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence on the basis of the Code of Conduct as set out in Annex I. The challenge shall be notified to all other parties, to the arbitrator who is challenged and to the other arbitrators.

4. When an arbitrator has been challenged by a disputing party, all disputing parties may agree to the challenge. The arbitrator may also, after the challenge, withdraw from his or her office. In neither case does this imply acceptance of the validity of the grounds for the challenge. The other disputing party and the challenged arbitrator shall file their statement presenting their position and supporting documents within 15 days after the notice of the challenge.

5. If the other disputing party has not expressed its consent to the challenge or the challenged arbitrator fails to resign within 15 days from the date of the notice of the challenge, the disputing party may request the Secretary General of the ICSID to issue a founded decision on the challenge.

6. The Secretary General of the ICSID shall issue the decision within forty-five (45) days after receiving submissions from the disputing parties and the challenged arbitrator. If the Secretary General of the ICSID admits the challenge, a new arbitrator shall be appointed.

7. The proceeding shall be suspended upon the filing of the notice of the challenge until a decision on the challenge has been made, except to the extent that the disputing parties agree to continue the proceeding.

Article 15. Settlement of Disputes between the Contracting Parties

1. Disputes between the Contracting Parties concerning the interpretation or application of this Agreement shall, if possible, be settled through consultation or negotiation.

2. If the dispute cannot be thus settled within six months, it shall upon the request of either Contracting Party, be submitted to an Arbitral Tribunal of three members, in accordance with the provisions of this Article.

3. The Arbitral Tribunal shall be constituted for each individual case in the following way. Within two months from the date of the receipt of the request for arbitration, each Contracting Party shall appoint one member of the Tribunal. These two members shall then select a national of a third State who shall be appointed the Chairman of the Tribunal (hereinafter referred to as the “Chairman”). The Chairman shall be appointed within three months from the date of appointment of the other two members.

4. If within the periods specified in paragraph 3 of this Article the necessary appointments have not been made, a request may be made to the President of the International Court of Justice to make the appointments. If the President happens to be a national of either Contracting Party, or if the President is otherwise prevented from discharging the said function, the Vice-President shall be invited to make the appointments. If the Vice-President also happens to be a national of either Contracting Party or is prevented from discharging the said function, the member of the International Court of Justice next in seniority who is not a national of either Contracting Party shall be invited to make the appointments.

5. The Arbitral Tribunal shall reach its decision by a majority of votes.

6. The Tribunal shall issue its decision on the basis of the provisions of this Agreement, as well as of the universally accepted principles of international law.

7. Subject to other provisions made by the Contracting Parties, the Tribunal shall determine its procedure.

8. Each Contracting Party shall bear the cost of its own arbitrator and its representation in the arbitral proceedings; the cost of the Chair and the remaining costs shall be borne in equal parts by both Contracting Parties. The Arbitral Tribunal may make a different regulation concerning the costs.

9. The decisions of the Tribunal are final and binding for each Contracting Parties.

Article 16. Transparency

1. The “UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration” as adopted by the United Nations Commission on International Trade Law on 10 July 2013 shall apply to international arbitration proceedings initiated pursuant to Article 13. Nothing in this Article requires a Contracting Party to make available to the public or otherwise disclose during or after the proceedings, including the hearing, confidential or protected information within the meaning of Article7(2) of UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, or information the disclosure of which is protected under its domestic law, or which it considers to be contrary to its essential security interests.

2. Each Contracting Party shall endeavour to publish, or otherwise make publicly available, its laws and regulations of general application as well as international agreements which may affect the investments of investors of the other Contracting Party in the territory of the former Contracting Party.

3. Nothing in this Agreement or the applicable arbitration rules shall prevent the exchange of information between the European Union and Hungary, or vice versa, which relates to international arbitration proceedings initiated pursuant to Article 13 (Settlement of Investment Disputes between a Contracting Party and an Investor of the other Contracting Party).

Article 17. Applicability of this Agreement

This Agreement shall apply to investments made in the territory of one Contracting Party in accordance with its laws and regulations by investors of the other Contracting Party prior to as well as after the entry into force of this Agreement, but shall not apply to any dispute or claim relating to an investment which arose or which was settled before the entry into force of this Agreement.

Article 18. Consultations

Upon request by either Contracting Party, the other Contracting Party shall agree to consultations on the interpretation or application of this Agreement. Upon request by either Contracting Party, information shall be exchanged on the impact that the laws, regulations, decisions, administrative practices or procedures, or policies of the other Contracting Party may have on investments covered by this Agreement.

Article 19. General Exceptions

1. Nothing in this Agreement shall prevent a Contracting Party from adopting or maintaining measures for prudential reasons, including for:

a. the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is owed by a financial service supplier; and

b. ensuring the integrity and stability of a Contracting Party’s financial system.

Where such measures do not conform with the provisions of this Agreement, they shall not be used as a means of avoiding the Contracting Party’s commitments or obligations under the Agreement. Nothing in this Agreement shall be construed as requiring a party to disclose information relating to the affairs and accounts of individual customers or any confidential or proprietary information in the possession of public entities.

2. a. Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining measures that restrict transfers where the Contracting Party experiences serious balance of payments difficulties, or the threat thereof, and such restrictions are consistent with paragraph b.

b. Measures referred to in paragraph a. shall be equitable, neither arbitrary nor unjustifiably discriminatory, in good faith, of limited duration and may not go beyond what is necessary to remedy the balance of payments situation. A Contracting Party that imposes measures under this Article shall inform the other Contracting Party forthwith and present as soon as possible a time schedule for their removal. Such measures shall be taken in accordance with other international obligations of the Contracting Party concerned, including those under the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh, on April 15 1994 and the Articles of Agreement of the International Monetary Fund.

3. Nothing in this Agreement shall be construed:

a. to prevent any Contracting Party from taking any actions that it considers necessary for the protection of its essential security interests

(i) relating to the traffic in arms, ammunition and implements of war and to such traffic and transactions in other goods, materials, services and technology undertaken directly or indirectly for the purpose of supplying a military or other security establishment,

(ii) taken in time of war or other emergency in international relations, or

(iii) relating to the implementation of national policies or international agreements respecting the non-proliferation of nuclear weapons or other nuclear explosive devices; or

b. to prevent any Contracting Party from taking action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

4. Subject to the requirement that such measures are not applied in a manner that would constitute arbitrary or unjustifiable discrimination between investments or between investors, Article 4 (National and Most-Favoured-Nation Treatment) and Article 7 (Transfers) shall not be construed to prevent a Contracting Party from adopting or enforcing measures necessary:

a. to protect public security or public morals or to maintain public order (3);

b. to protect human, animal or plant life or health (4);

c. to ensure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement including those relating to:

(i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on contracts;

(ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts;

(iii) safety.

Article 20. Denial of Benefits

1. A Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is a legal person and to investments of that investor, if natural or legal persons of a third state or that of the denying Contracting Party own or control the investor or investments and:

a. the investor has no substantial business activities in the territory of the Contracting Party under whose law it is constituted, or

b. the denying Contracting Party adopts or maintains measures with respect to that third state that prohibit transactions with such investor and its investments or that would be violated or circumvented if the benefits of the Agreement were accorded to the investments of that investor, or

c. the denying Contracting Party does not maintain diplomatic relations with that third state.

2. The benefits of this Agreement shall be denied to natural persons with double nationality of which one is of the host State.

Article 21. Final Provisions, Entry Into Force, Duration, Termination and Amendments

1. The Contracting Parties shall notify each other through diplomatic channels that their internal procedure requirements for the entry into force of this Agreement have been complied with. This Agreement shall enter into force sixty (60) days after the receipt of the last notification.

2. This Agreement shall remain in force for a period of ten years and afterwards shall continue to be in force unless, either Contracting Party notifies in writing the other Contracting Party of its intention to terminate this Agreement. The notice of termination shall become effective one year after it has been received by the other Contracting Party but not earlier than the expiry of the initial period of ten years.

3. In respect of investments made prior to the termination of this Agreement, the provisions of this Agreement shall continue to be effective for a period of ten years from the date of termination.

4. This Agreement may be amended by written agreement between the Contracting Parties. Any amendment shall be integral part of the Agreement and enter into force under the same procedure required for entering into force of the present Agreement.

5. This Agreement shall, in any event, be automatically terminated as a whole and cease its effects if and on the date Georgia becomes a Member State of the European Union.

Conclusion

IN WITNESS WHEREOF, the undersigned duly authorized have signed this Agreement.

DONE in duplicate at Budapest, this 19th day of July 2024, in the Hungarian, Georgian and English languages, all texts being equally authentic. In case of any divergence of interpretation, the English text shall prevail.

Attachments

Annex I. CODE OF CONDUCT FOR MEMBERS OF TRIBUNALS APPOINTED UNDER THE AGREEMENT BETWEEN THE GOVERNMENT OF HUNGARY AND THE GOVERNMENT OF GEORGIA FOR THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS

1. Definitions

For the purpose of this Code of Conduct, the following definitions apply:

– “member” means a person who has been appointed to serve as a member of a tribunal established pursuant to the applicable provisions of Article 13 paragraph 4 of the Agreement between the Government of Hungary and the Government of Georgia for the promotion and reciprocal protection of investments (the “Agreement”);

– “assistant” means a person, working under the direction and control of a member, who assists the member, conducts research, or supports him or her in his or her duties;

– “candidate” means a person who is under consideration for appointment as member.

2. Governing Principles

Any candidate or member shall avoid impropriety and the appearance of impropriety, and shall observe high standards of conduct so that the integrity and impartiality of the dispute settlement proceeding is preserved. 

3. Disclosure Obligations

1. Prior to confirmation of their appointment as members under Article 13 of this Agreement, the disputing parties or the appointing authority shall provide a candidate a copy of this Code of Conduct. Candidates shall disclose to the disputing parties any past or present interest, relationship or matter that is likely to affect their independence or impartiality, or that might reasonably be seen as creating a direct or indirect conflict of interest, or that creates or might reasonably be seen as creating an appearance of impropriety or bias. To this end, candidates shall make all reasonable efforts to become aware of any such interests, relationships or matters. The disclosure of past interests, relationships or matters shall cover at least the last five years prior to a candidate becoming aware that he or she is under consideration for appointment as member in a dispute under this Agreement.

2. Following their appointment, members shall at all times continue to make all reasonable efforts to become aware of any interests, relationships or matters referred to in Article 3 paragraph 1 of this Code of Conduct. Members shall at all times disclose such interests, relationships or matters throughout the performance of their duties by informing the disputing parties and the Contracting Parties. They shall also communicate matters concerning actual or potential violations of this Code of Conduct to the disputing parties and the Contracting Parties.

4. Independence, Impartiality and other Obligations of Members

1. In addition to the obligations established pursuant to Articles 2 and 3 of this Code of Conduct, members shall:

a. get acquainted with this Code of Conduct;

b. be and appear to be, independent and impartial, and avoid any direct or indirect conflicts of interest;

c. not take instructions from any organisation or government with regard to matters before the tribunal for which they are appointed;

d. avoid creating an appearance of bias and not be influenced by self-interest, outside pressure, political considerations, public clamour, loyalty to a Contracting Party, disputing party or any other person involved or participating in the proceeding, fear of criticism or financial, business, professional, family or social relationships or responsibilities;

e. not, directly or indirectly, incur any obligation, or accept any benefit, enter into any relationship, or acquire any financial interest that would in any way interfere, or appear to interfere, with the proper performance of their duties, or that is likely to affect their impartiality;

f. not use their position as a member to advance any personal or private interests and avoid actions that may create the impression that others are in a special position to influence them;

g. perform their duties thoroughly and expeditiously throughout the course of the proceeding, and with fairness and diligence;

h. avoid engaging in ex parte contacts concerning the proceeding;

i. consider only those issues raised in the proceeding and which are necessary for a decision or award and not delegate this duty to any other person.

2. Members shall take all appropriate steps to ensure that their assistants are aware of, and comply with, Articles 2 and 3, Article 4 paragraph 1 and Articles 5 and 6 of this Code of Conduct mutatis mutandis.

5. Obligations of Former Members

1. Former members shall avoid actions that may create the appearance that they were biased in carrying out their duties or derived advantage from the decisions or awards of the tribunal.

2. Unless the disputing parties agree otherwise, former members shall undertake that for a period of three years after the end of their duties in relation to a dispute settlement proceeding under this Agreement they shall not:

a. become involved in any manner whatsoever in investment disputes related to same measures, the same or related parties, or the same provisions of this Agreement;

b. act as party-appointed member, legal counsel or party-appointed witness or expert of any of the disputing parties, in relation to investment disputes under this or other bilateral or multilateral investment treaties.

3. If the Secretary General of the ICSID is informed or becomes otherwise aware that a former member is alleged to have acted inconsistently with the obligations established in Article 5 paragraph 1 and 2, or any other part of this Code of Conduct while performing the duties of member of a tribunal in an investment dispute under this Agreement, it shall examine the matter, provide the opportunity to the former member to be heard, and after verification, inform:

a. the professional body or other such institution with which the former member is affiliated;

b. the Contracting Parties;

c. the disputing parties in the specific dispute;

d. any other relevant international court or tribunal.

4. The Secretary General of the ICSID shall make its decision public to take the actions referred in subparagraphs 3a.–3d. above, together with the reasons thereof.

6. Confidentiality

1. No member or former member shall at any time disclose or use any non-public information concerning a proceeding or acquired during a proceeding, except for the purposes of that proceeding, and shall not, in any case, disclose or use any such information to gain personal advantage or advantage for others or to adversely affect the interest of others.

2. Members shall not disclose an order, decision, or award or parts thereof prior to adoption or publication.

3. Members or former members shall not at any time disclose the deliberations of the tribunal, or any views of other members forming part of the tribunal, except in an order, decision or award.

4. Members shall not make a public statement regarding the merits of a pending tribunal proceeding.

7. Expenses

Each member shall keep a record and render a final account of the time devoted to the procedure and of the expenses incurred, as well as the time and expenses of their assistants.