Title
COOPERATION AND INVESTMENT FACILITATION AGREEMENT BETWEEN THE FEDERATIVE REPUBLIC OF BRAZIL AND THE REPUBLIC OF ECUADOR
Preamble
PREAMBLE
The Federative Republic of Brazil and the Republic of Ecuador, hereinafter referred to as the "Parties" or individually as "Parties",
Desiring to strengthen and deepen the bonds of friendship and the spirit of cooperation continues between the Parties;
Seeking to create and maintain favorable conditions for the investments of investors of one Party in the territory of the other;
Trying to stimulate, streamline and support bilateral investments, opening new integration initiatives between the two countries;
Recognizing the fundamental role of investment in the promotion of sustainable development, economic growth, poverty reduction, job creation, the expansion of productive capacity and human development;
Understanding that the establishment of a strategic partnership between the Parties regarding investment will bring broad and mutual benefits;
Recognizing the importance of fostering a transparent, agile and friendly environment for the investment of the Parties; Reinsuring autonomy and regulatory space;
Desiring to foster and strengthen contacts between the private sector and the Governments of the two countries; and
Trying to create a mechanism for technical dialogue and government initiatives that contribute to a significant increase in mutual investment;
AGREE THE FOLLOWING:
Body
Part I. Scope of the Agreement and Definitions
Article 1. Objective
The objective of this Agreement is to promote cooperation between the Parties in order to facilitate and promote mutual investment, through the establishment of an institutional framework for the management of an agenda for cooperation and investment facilitation, and mechanisms for the mitigation of risks and conflict prevention, among other instruments mutually agreed upon by the Parties.
Article 2. Scope and Coverage
1. This Agreement covers all investments made before or after its entry into force.
2. The provisions of this Agreement shall not apply to investments covered in respect of existing measures before the date of entry into force of this Agreement. This does not prevent the parties from discussing issues of mutual interest related to such measures in the Joint Committee established by article 18.
3. This Agreement may in no way limit the rights and benefits that an investor of a Party has in accordance with national or international legislation in the territory of the other Party.
4. For greater certainty, the Parties reaffirm that this Agreement shall apply without prejudice to investment-related rights and obligations derived from the Agreements of the World Trade Organization.
5. This Agreement shall not prevent the adoption and implementation of new legal requirements or restrictions to investors and their investments, as long as they are consistent with this Agreement.
Article 3. Definitions
1. For the purpose of this Agreement:
1.1. "Host State" means the Party where the investment is located.
1.2. "Enterprise" means any entity constituted or organized under the applicable domestic law, whether or not for profit, whether privately owned or State-owned.
1.3. "Investment" means a direct investment of an investor of one Party, established or acquired in accordance with the laws and regulations of the other Party, that directly or indirectly, allows the investor to exert control or significant degree of influence over the management of the production of goods or provision of services in the territory of the other Party, and that has the characteristics of an investment, which includes the commitment of capital, the objective of establishing a lasting interest, the expectation of profit or profit and the assumption of risks.
An investment can take the following forms:
a) An enterprise;
b) Shares, participations and other forms of equity in the capital of an enterprise;
c) Movable or immovable property and other property rights such as mortgages, liens, pledges, encumbrances or similar rights;
d) Concesions, licenses or authorizations, granted by the Host Party State to an investor of the other Party;
e) Instruments of debt or loans to an enterprise:
i) When the entreprise is a subsidiary of the investor; or
ii) When the original loan due date is at least three years;
f) Intellectual property rights as defined or referred to in the Agreement on Trade-Related Aspects of Intellectual Property Rights of the World Trade Organization (TRIPS).
1.3.1 For greater certainty, "Investment" does not include:
a) An order or judgment issued as a result of a lawsuit or an administrative process;
b) Debt securities issued by a Party or loans granted by a Party to the other Party, bonds, obligations (debentures), loans or other debt instruments of a State enterprise of a Party that this Party treats as public debt;
c) Portfolio investments, that do not allow the investor to exert a significant degree of influence in the management of the enterprise;
d) Claims to money that arise solely from commercial contracts for the sale of goods or services by a national or a company in the territory of a Party to a national or a company in the territory of another Party, or the granting of credit in connection with a commercial transaction, or any other financial claims that do not involve the types of interest provided in subsections (a) through (f) above.
1.4 "Investor" means a national, permanent resident or enterprise of a Party that has made an investment in the territory of the other Party provided that it is not ultimately controlled by a national of the Host State.
1.5 "National" means a natural person that has the nationality of a Party, according to its laws and regulations.
1.6 "Income" means the values obtained by an investment, including profit, interest, capital gains, dividends or "royalties."
1.7 "Measure" means any law, regulation, rule, procedure, decision, administrative provision, or any other provision adopted by a Party.
1.8 "Territory" means the territory, including its land and air spaces, the exclusive economic zone, the territorial sea, continental shelf, soil and subsoil, within which the Party exercises its sovereign or jurisdictional rights, in accordance with international law and with its internal legislation.
1.9 "TRIPS Agreement" means the Agreement on Trade-Related Aspects of Intellectual Property Rights, contained in Annex 1 C of the Agreement Establishing the World Trade Organization.
Part II. Regulatory Measures and Risk Mitigation
Article 4. Admisssion and Treatment
1. Each Party shall grant the rights granted in this Agreement to the investments of the other Party established in its territory in accordance with its laws and regulations.
2. Each Party shall grant investors of the other Party and its investments a treatment adjusted to due process of law.
3. In accordance with the principles of this Agreement, each Party shall ensure that all measures affecting the investment are administered in a reasonable, objective and impartial manner, in accordance with its legal system.
Article 5. National Treatment
1. Without prejudice to the measures in force under its legislation on the date of entry into force of this Agreement, each Party, subject to its laws and regulations, shall accord to investors of another Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
2. Without prejudice to the measures in force under its legislation on the date of entry into force of this Agreement, each Party, subject to its laws and regulations, shall accord to investments of investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.
3. For greater certainty, whether treatment is accorded in 'like circumstances' depends on the totality of the circumstances, including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public interest objectives.
4. Nothing in this Agreement shall be construed to prevent a Party from adopting new requirements affecting investors of the other Party or their investments, provided such requirements are not discriminatory according to this Agreement.
5. Nothing in this Agreement shall be construed to prohibit or restrict a Party from designating, maintaining or establishing a state monopoly or a state enterprise in accordance with its legislation.
6. This article does not apply to subsidies or donations granted by a Party, including loans, guarantees and insurance, with a State guarantee, notwithstanding that the matter may be dealt with in the Joint Committee for the administration of the Agreement provided for in Article 18.
Article 6. Most-favoured-nation Treatment
1. Each Party, subject to its laws and regulations, shall accord to investors of another Party treatment no less favourable than that it accords, in like circumstances, to investors of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
2. Each Party, subject to its laws and regulations, shall accord to investments of investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investments in its territory of investors of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.
3. This Article shall not be construed as:
(a) An obligation of a Party to give an investor of the other Party or its investments the benefit of any treatment, preference or privilege arising from:
(i) Provisions related to the resolution of investment disputes contained in an international investment agreement, including an agreement that contains an investment chapter; or
(ii) Any international trade agreement, including agreements such as those that create a regional economic integration organization, free trade zone, customs union or common market of which a Party is a member before the Agreement enters into force.
(b) The possibility of invoking, in any dispute settlement mechanism, standards of treatment contained in an international investment agreement or in an agreement containing an investment chapter of which one of the Parties of this Agreement be a part before the Agreement enters into force.
4. For greater certainty, this Agreement does not apply to disciplines related to trade in services contained in any international agreement in force or signed before the entry into force of this Agreement.
5. For greater certainty, whether treatment is accorded in 'like circumstances' depends on the totality of the circumstances, including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public interest objectives.
6. This Article does not apply to subsidies or donations granted by a Party, including loans, guarantees and insurance, with a State guarantee, notwithstanding that the matter may be dealt with in the Joint Committee provided for in Article 18.
Article 7. Direct Expropriation
1. Neither Party shall nationalize or expropriate investments of investors of the other Party, except:
a) For a public purpose or necessity or when justified as a social interest;
b) In a non-discriminatory manner;
c) On payment of compensation, according to paragraphs 2 to 4 of this Article; and
d) In accordance with due process of law
2. The compensation shall:
a) Be paid without undue delay, in accordance with the legal order of the Host State;
b) Be equivalent to the fair market value of the expropriated investment, immediately before the expropriating measure has taken place ('expropriation date');
c) Not reflect any change in the market value due to the knowledge of the intention to expropriate, before the expropriation date; and
d) Be completely payable and transferable, according to Article 10 on transfers.
3. The compensation to be paid shall not be inferior to the fair market value on the expropriation date, plus interests at a rate determined according to market criteria accrued since the expropriation date until the date of payment, according to the legislation of the Host State.
4. The Parties shall cooperate to improve the knowledge of their respective national laws regarding the expropriation of investment.
5. For greater certainty, this Article only provides for direct expropriation, where an investment is nationalized or otherwise directly expropriated through formal transfer of title or ownership rights, and does not cover indirect expropriation.
6. The affected investor shall have the right, in accordance with the law of the Party that performs the expropriation, to review his case, by the administrative, judicial or other competent and independent authorities of the Party, to determine whether the expropriation and The appraisal of your investment have been adopted in accordance with the provisions of this Article.
7. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of such rights to the extent that such issuance, revocation, limitation or creation is compatible with the TRIPS Agreement. For greater certainty, the term "revocation" of intellectual property rights referred to in this paragraph includes the cancellation or nullity of such rights, and the term "limitation" of intellectual property rights also includes exceptions to such rights.
Article 8. Compensation for Losses
1. The investors of a Party whose investments in the territory of the other Party suffer losses due to war or other armed conflict, revolution, state of emergency, insurrection, riot or any other similar events, shall enjoy, with regard to restitution, indemnity or other form of compensation, the same treatment as the latter Party accords to its own investors or the treatment accorded to investors of a third party, whichever is more favourable to the affected investor.
2. Each Party shall provide the investor restitution, compensation, or both, as appropriate, in accordance with Article 6 of this Agreement, in the event that investments suffer losses in its territory in any situation referred to in Paragraph 1 resulting from:
a) Requisitioning of its investment or part thereof by the forces or authorities of the latter Party; or
b) Destruction of its investment or any part thereof by the forces or authorities of the latter Party.
Article 9. Transparency
1. Each Party shall ensure that its laws, regulations, procedures and administrative resolutions of general application relating to any matter covered by this Agreement, in particular with regard to qualification, licensing and certification, are published without delay and made available, as much as possible, in electronic format, so such that interested persons and the other Party are allowed to be aware of them.
2. Each Party shall endeavor to allow reasonable opportunities for those interested to express their opinion on the proposed measures.
3. Whenever possible, each Party shall disseminate this Agreement, after its ratification by both Parties, to their respective public and private financial agents, responsible for the technical evaluation of risks and the approval of loans, credits, guarantees and related insurances for investment in the territory of the other Party.
Article 10. Transfers
1. The Parties will allow the transfer of funds related to an investment to be made freely, without undue delay and prior compliance with the requirements established in their internal legal system, from and to their territory. The transfers will be made in a freely convertible currency at the exchange rate prevailing in the market at the date of the transfer, once the rates and taxes are covered by law.
Such transfers include:
a) The initial capital contribution or any addition thereto in relation to the maintenance or expansion of the investment;
b) Income directly related to the investment;
c) The proceeds of sale or total or partial liquidation of the investment;
d) The repayments of any loan, including interests thereon, relating directly to the investment;
e) The amount of a compensation
2. Without prejudice to the provisions of paragraph 1, a Party may avoid a transfer through the equitable, non-discriminatory and good faith application of its laws relating to:
a) Bankruptcy, insolvency or the protection of the rights of creditors;
b) Criminal infractions;
c) Financial reports or maintenance of transfers' registers when necessary to cooperate with law enforcement or with financial regulators; or
d) The guarantee for the enforcement of decisions in judicial or administrative proceedings.
3. Nothing in this Agreement shall affect the right of a Party to adopt regulatory measures relating to the balance of payments during a balance of payments crisis, nor shall it affect the rights and obligations of the members of the International Monetary Fund contained in the Agreement Establishing the Fund, in particular the use of exchange rate measures that are in accordance with the provisions of the Convention.
4. The adoption of temporary restrictive measures to transfers if there are serious difficulties in the balance of payments, must be non-discriminatory and in accordance with the Articles of the Agreement of the International Monetary Fund.
Article 11. Tax Measures
1. Nothing in this Agreement shall affect the rights and obligations of the Parties under any tax regulations. In the event of any conflict between the provisions of this Agreement and any type of tax regulations, the provisions of the tax regulations will prevail.
2. No provision of this Agreement shall be construed as an obligation of a Party to give an investor of the other Party, in relation to its investments, the benefit of any treatment, preference or privilege resulting from an agreement to avoid double taxation, current or future, of which one of the Parties to this Agreement is a party or becomes a part.
3. No provision of this Agreement shall be construed in a manner that avoids the adoption or execution of any measure intended to guarantee the imposition or fair or effective collection of taxes in accordance with the provisions of the legislation of the Parties, provided that such measure does not be applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination or a disguised restriction.
Article 12. Prudential Measures
1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining prudential measures, such as:
a) The protection of investors, depositors, financial market participants, policyholders, policy-claimants, or persons to whom a fiduciary duty is owed by a financial institution;
b) The maintenance of the safety, soundness, integrity or financial responsibility of financial institutions; and
c) Ensuring the integrity and stability of a Party's financial system.
2. Where such measures do not conform to the provisions of this Agreement, they shall not be used as a means of circumventing the commitments or obligations of the Party under this Agreement.
Article 13. Security Exceptions
1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining measures aimed at preserving its national security or public order, applying the provisions of its criminal laws or complying with its obligations with respect to the maintenance of international peace and security, in accordance with the provisions of the Charter of the United Nations.
2. The measures that a Party adopts pursuant to paragraph 1 of this Article, nor the decision based on its national security laws or public order that at any time prohibits or prohibits shall not be subject to the dispute resolution mechanism provided for in this Agreement. restrict the making of an investment in its territory by an investor from another Party.
3. Nothing in this Agreement shall be construed to require any of the Parties to provide information whose disclosure would, in their judgment, be contrary to the essential interests of their security.
Article 14. Corporate Social Responsibility
1. Investors and their investment shall strive to achieve the highest possible level of contribution to the sustainable development of the Host State and the local community, through the adoption of a high degree of socially responsible practices, based on the principles and voluntary norms set out in this Article.
2. The investors and their investment shall endeavour to comply with the following principles and norms for a responsible business conduct and consistent with the laws adopted by the Host State receiving the investment:
a) Contribute to the economic, social and environmental progress, aiming at achieving sustainable development;
b) Respect the internationally recognized human rights of those involved in the companies' activities;
c) Encourage local capacity building through close cooperation with the local community;
d) Encourage the creation of human capital, especially by creating employment opportunities and offering professional training to workers;
e) Refrain from seeking or accepting exemptions that are not established in the legal or regulatory framework relating to human rights, environment, health, security, work, tax system, financial incentives, or other issues;
f) Support and advocate for good corporate governance principles, and develop and apply good practices of corporate governance;
g) Develop and implement effective self-regulatory practices and management systems that foster a relationship of mutual trust between the companies and the societies in which its operations are conducted;
h) Promote knowledge and compliance, by employees, of company policies by properly disseminating them, including through training programs;
i) Refrain from taking discriminatory or disciplinary measures against workers who prepare, in good faith, management reports or, where appropriate, for the competent public authorities about practices contrary to the law or company policies;
j) Encourage, whenever possible, business associates, including service providers and outsources, to apply the principles of business conduct consistent with the principles provided for in this Article; and
k) Refrain from any undue interference in local political activities.
Article 15. Denial of Benefits
1. One of the Contracting Parties may deny the benefits of this Agreement if the investor does not comply with the requirements established in Article 4.1.
2. Benefits may be denied at any time by the Host State of the investment, even once any claim has been initiated in accordance with the dispute resolution mechanism provided for in this Agreement and provided that any of the following conditions are met :
(a) A company is directly or indirectly controlled by, or under a significant degree of influence of, natural or legal persons of a non-Party country and that company does not have substantial commercial activities in the territory of the Host State;
(b) A company is directly or indirectly controlled by, or under a significant degree of influence of, natural or legal persons of the Party that denies and that company does not have substantial commercial activities in the territory of the other Party;
(c) It has been proven judicially or administratively according to the legal system of the Parties that the investor has incurred in acts of corruption with respect to the investment made.
Article 16. Investment Measures and Combating Corruption and Illegality
1. Each Party shall ensure that measures and efforts are taken to prevent and combat corruption, money laundering and terrorist financing in relation to the matters covered by this Agreement in accordance with its laws and regulations.
2. Nothing in this Agreement shall require any Party to protect investments made with capital or assets of illicit origin or investments in the establishment or operation of which illegal acts have been demonstrated to occur and for which national legislation provides asset forfeiture.