Article 9.9. Senior Management and Board of Directors
1. Neither Party may require that an enterprise of that Party that is an investment of an investor of the other Party appoint to senior management positions individuals of any particular nationality.
2. A Party may require that a majority of the board of directors, or any committee thereof, of an enterprise of that Party that is an investment of an investor of the other Party, be of a particular nationality, or resident in the territory of the Party, provided that the requirement does not materially impair the ability of the investor of the other Party to exercise control over its investment.
Article 9.10. Non-Conforming Measures
1. Articles 9.3, 9.4, 9.6 and 9.9 do not apply to:
(a) any existing non-conforming measure that is maintained by a Party as set out by that Party in its Schedule to Annex I (Non- Conforming Measures);
(b) the continuation or prompt renewal of any non-conforming measure referred to in sub-paragraph (a); or
(c) an amendment to any non-conforming measure referred to in sub-paragraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 9.3, 9.4, 9.6 and 9.9.
2. Articles 9.3, 9.4, 9.6 and 9.9 do 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 to Annex II (Non-Conforming Measures).
3. Neither Party may, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule to Annex II (Non- Conforming Measures), require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.
4. Articles 9.3, 9.4, and 9.9 shall not apply to subsidies or grants provided by a Party, or to any conditions attached to the receipt or continued receipt of such subsidies or grants, whether or not such subsidies or grants are offered exclusively to investors of the Party or investments of investors of the Party, including government-supported loans, guarantees and insurance.
5. Articles 9.3 and 9.4 do not apply to any measure that is an exception to, or derogation from, a Party’s obligations under the TRIPS Agreement, as specifically provided for in that agreement.
Article 9.11. Denial of Benefits
Subject to prior notification and consultation, according to the procedures set out in Article 15.3 (Consultations), a Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of such Party and to investments of such an investor where the Party establishes that the enterprise is owned or controlled by persons of a non-Party, or of the denying Party, and has no substantive business operations in the territory of the other Party.
Article 9.12. Subrogation
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 recognise the subrogation or transfer of any right or title 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 authorised 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.
Article 9.13. 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 under this Chapter, which causes loss or damage to the investor or its investment.
2. The parties to the dispute shall initially seek to resolve the dispute by consultations and negotiations.
3. Where the dispute cannot be resolved as provided for under paragraph 2 within 6 months from the date of a request for consultations and negotiations, then unless the disputing investor and the disputing Party agree otherwise or if the investor concerned has already submitted the dispute for resolution before the courts or administrative tribunals of the disputing Party (excluding proceedings for interim measures of protection referred to in paragraph 5, below), the investor concerned may submit the dispute for settlement to:
(a) the International Centre for Settlement of Investment Disputes (“ICSID”) for conciliation or arbitration pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, if both Contracting Parties are parties to the ICSID Convention; or
(b) arbitration under the rules of the United Nations Commission on International Trade Law (“UNCITRAL”).
4. Each Party hereby consents to the submission of a dispute to conciliation or arbitration under paragraphs 3(a) and (b) in accordance with the provisions of this Article, conditional upon:
(a) the submission of the dispute to such conciliation or arbitration taking place within three years of the time at which the disputing investor became aware, or should reasonably have become aware, of a breach of an obligation under this Chapter causing loss or damage to the disputing investor or its investment;
(b) the disputing investor not being an enterprise of the disputing Party until the disputing investor refers the dispute for conciliation or arbitration pursuant to paragraph 3; and
(c) the disputing investor providing written notice, which shall be submitted at least 30 days before the claim is submitted, to the disputing Party of its intent to submit the dispute to such conciliation or arbitration and which:
(i) nominates either paragraph 3(a) or (b) as the forum for dispute settlement (and, in the case of ICSID, nominates whether conciliation or arbitration is being sought);
(ii) waives its right to initiate or continue any proceedings (excluding proceedings for interim measures of protection referred to in paragraph 5) before any of the other dispute settlement fora referred to in paragraph 3 in relation to the matter under dispute; and
(iii) briefly summarises the alleged breach of the disputing Party under this Chapter (including the articles alleged to have been breached) and the loss or damage allegedly caused to the disputing investor or its investment.
5. Neither Party shall prevent the disputing investor from seeking interim measures of protection, not involving the payment of damages or resolution of the substance of the matter in dispute before the courts or administrative tribunals of the disputing Party, prior to the institution of proceedings before any of the dispute settlement fora referred to in paragraph 3, for the preservation of its rights and interests. No claim may be submitted to arbitration if the disputing investor has previously submitted the same alleged breach to an administrative tribunal or court of the disputing Party, or to any other dispute settlement procedures, for adjudication or resolution. That election shall be definitive and the disputing investor may not thereafter submit the claim to arbitration under this Article.
6. Neither Party shall give diplomatic protection, or bring an international claim, in respect of a dispute in which one of its investors and the other Party shall have consented to submit or have submitted to conciliation or 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 the purposes of this paragraph, shall not include informal diplomatic exchanges for the sole purpose of facilitating a settlement of the dispute.
7. A Tribunal established under this article shall decide the issues in dispute in accordance with this Chapter and customary rules of interpretation of public international law.
8. Without prejudice to the appointment of other kinds of experts where authorised by the applicable arbitration rules, a Tribunal, at the request of the disputing Party or the disputing investor or, on its own initiative, may appoint one or more experts to report to it in writing on any factual issue concerning technical or other scientific matters, provided the disputing parties so agree, and subject to such terms and conditions as the disputing parties may agree.
9. Where a disputing Party asserts as a defence that the measure alleged to be a breach is within the scope of a non-conforming measure as set out in its Annexes I (Non-Conforming Measures) and II (Non-Conforming Measures), the Tribunal shall, on the request of the disputing Party, request the interpretation of the Administrative Commission of the Agreement established in Article 17.1 (Administrative Commission of the Agreement) on the issue. The Administrative Commission shall issue in writing, its interpretation on the issue within 60 days after the date of receipt of the request. An interpretation issued by the Administrative Commission under this paragraph shall be binding on the Tribunal and an award by the Tribunal must be consistent with that interpretation. If the Administrative Commission fails to submit an interpretation within 60 days, the Tribunal shall decide the issue.
Annex 9A. EXPROPRIATION
The Parties confirm their shared understanding that:
1. Article 9.7.1 is intended to reflect customary international law concerning the obligation of States with respect to expropriation.
2. An action or a series of actions by a Party cannot constitute an expropriation unless it interferes with a tangible or intangible property right or property interest in an investment.
3. Article 9.7.1 addresses 2 situations. The first is direct expropriation, where an investment is nationalized or otherwise directly expropriated through the formal transfer of title or outright seizure.
4. The second situation addressed by Article 9.7.1 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.
(a) The determination of whether an action or series actions by a Party, in a specific fact situation, constitutes a measure equivalent to expropriation requires a case-by-case, fact-based inquiry that considers, among other factors:
(i) 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 a measure equivalent to expropriation has occurred;
(ii) the extent to which the government action interferes with distinct, reasonable investment-backed expectations; and
(iii) the character of the government action.
(b) Except in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment, do not constitute indirect expropriations.
Chapter 10. CROSS BORDER TRADE IN SERVICES
Article 10.1. Definition
For purposes of this Chapter:
1. 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 service supplier of a Party, through presence of natural persons 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 an investor of the other Party or an investment of an investor of the other Party as defined in Article 9.1 (Definitions);
2. enterprise means an entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including a corporation, trust, partnership, sole proprietorship, joint venture, association, or similar organization and a branch of an enterprise;
3. enterprise of a Party means an enterprise organized or constituted under the laws of a Party and a branch located in the territory of a Party;
4. maritime transport service supplier of a Party means a person, a shipping company or a vessel of one Party that seeks to supply or supplies a maritime service;
5. port of a Party means the port of that Party that is open to foreign vessels;
6. 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.
7. service supplier means a person of a Party that seeks to supply or supplies a service (1);
8. vessel means any merchant ships engaged in any commercial activity, except a ship that is:
(a) involved solely in the carriage and transportation of cargo for or belonging to; or
(b) used in the service of the Government of either Party; and
9. vessel of a Party means any vessel under the national flag of a Party, registered in the territory of that Party, or any vessel under the flag of a third country that is owned or operated by a shipping company of one Party. “Operated” means owned, managed, chartered, time chartered, or space chartered.
Article 10.2. Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party affecting cross-border trade in services by service suppliers of the other Party. Measures covered by this paragraph 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; and
(d) the presence in its territory of a service supplier of the other Party (2); and
(e) the provision of a bond or other form of financial security as a condition for the supply of a service.
2. Notwithstanding Article 10.1.1, Articles 10.5, 10.8, 10.9 and 10.15 also applies to measures by a Party affecting the supply of a service in its territory by an investor or an investment as defined in Article 9.1 (Definitions) (3).
3. This Chapter does not apply to:
(a) financial services, as defined in Article 11.16 (Definitions), except as otherwise provided for in Chapter 11 (Financial Services);
(b) government procurement, as referred to in Chapter 8 (Government Procurement);
(c) air services, 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;
(iii) computer reservation system (“CRS”) services; and
(d) subsidies or grants provided by a Party or to any conditions attached to the receipt or continued receipt of such subsidies or grants, whether or not such subsidies or grants are offered exclusively to domestic services, service consumers or service suppliers, including government-supported loans, guarantees and insurance.
4. This Chapter does not impose any obligation on a Party with respect to a natural person 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 natural person with respect to that access or employment.
5. This Chapter does not apply to services supplied in the exercise of governmental authority within the territory of each respective Party.
6. Nothing in this Chapter shall prevent a Party from applying measures to regulate the entry of natural persons of the other Party into, or their temporary stay in, its territory, including those measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons across its borders, provided that such measures are not applied in such a manner as to nullify or impair the benefits accruing to the other Party under the terms of this Chapter. (4)
7. Annex 10A (Movement of Business Persons) contains supplementary provisions to this Chapter and provides for additional rights and obligations in relation to the movement of natural persons between the Parties. The commitments made by each Party under Annex 10A (Movement of Business Persons) shall be subject to any reservations it has taken in its Annex I, II and III of Chapters 9 (Investment), 10 (Cross-Border Trade in Services) and Chapter 11 (Financial Services).
8. Annex 10B (Maritime Transport Services) contains supplementary provisions to this Chapter and provides for additional rights and obligations in relation to maritime transport services between the Parties. The commitments made by each Party under Annex 10B (Maritime Transport Services) shall be subject to any reservations it has taken in its Annex I, II and III of Chapters 9 (Investment), 10 (Cross-Border Trade in Services) and Chapter 11 (Financial Services).
Article 10.3. National Treatment
Each Party shall accord to service suppliers of the other Party treatment no less favourable than that it accords, in like circumstances, to its own service suppliers.
Article 10.4. Most-Favoured 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 10.5. Market Access
A Party shall not adopt or maintain, either on the basis of a regional subdivision or on the basis of its entire territory, measures that (5):
(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 (6); 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; and
(b) restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service.
Article 10.6. Local Presence
A Party shall not 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 10.7. Non-Conforming Measures
1. Articles 10.3, 10.4, 10.5 and 10.6 do not apply to:
(a) any existing non-conforming measure that is maintained by a Party as set out by that Party in its Schedule to Annex I;
(b) the continuation or prompt renewal of any non-conforming measure referred to in sub-paragraph (a); or
(c) an amendment to any non-conforming measure referred to in sub-paragraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 10.3, 10.4, 10.5 and 10.6.
2. Articles 10.3, 10.4, 10.5 and 10.6 do 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 to Annex II.
3. Article 10.9 shall not apply to:
(a) any existing non-conforming measure that is maintained by a Party as set out in its Schedule to Annex I; or
(b) any existing or new measure that a Party adopts or maintains with respect to sectors, sub sectors or activities as set out in its Schedule to Annex II.
Article 10.8. New Services
1. The provisions of this Chapter shall apply to measures adopted or maintained by a Party relating to the provision of new services by service suppliers of either Party save as otherwise provided for in this Article.
2. Paragraph 1 is subject to the right of a Party to impose conditions on the supply of any new service by service suppliers of the other Party, provided that:
(a) such conditions are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between the Parties where like conditions prevail, or a disguised restriction on trade in services, and
(b) in seeking such review and imposing such conditions, the Party shall ensure that there is an overall balance of services commitments undertaken by each Party under this Agreement.
3. A Party imposing any conditions pursuant to paragraph 2 shall determine whether such conditions are likely to be of a permanent nature, and if so, such conditions shall be incorporated in its relevant reservations Annex under Article 10.7 by giving written notice to the other Party, except that a Party shall not make a reservation in respect of new services against Article 10.4. Where such conditions are likely to be of a temporary nature, the Party imposing the conditions shall, if it deems fit, phase them out progressively as circumstances giving rise to the need to impose such conditions improve and allow for.
4. For the purpose of this Article, the term new services means a service that at the date of entry into force of this Agreement is:
(a) not currently in existence in the territory of a Party; or
(b) an existing service not covered or defined in the United Nations Central Product Classification (“CPC”) and which is not subject to any regulatory framework in the territory of a Party owing to its infant stage of development as the Party concerned considers it to be as such.
Article 10.9. Domestic Regulation
1. Each Party shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner.
2. Each Party shall ensure that its judicial, arbitral or administrative tribunals or procedures which provide for the prompt review of, and where justified, appropriate remedies for, administrative decisions affecting trade in services are open on a non-discriminatory basis to service suppliers of the other Party. Where such procedures are not independent of the agency entrusted with the administrative decision concerned, the Party shall ensure that the procedures in fact provide for an objective and impartial review.
3. Paragraph 2 shall not be construed to require a Party to institute such tribunals or procedures where this would be inconsistent with its constitutional structure or the nature of its legal system.
4. Where authorisation is required for the supply of a service, the competent authorities of a Party shall promptly, after the submission of an application considered complete under domestic laws and regulations, inform the applicant of the decision concerning the application. At the request of the applicant, the competent authorities of the Party shall provide, without undue delay, information concerning the status of the application.
5. With the objective of ensuring that domestic regulation, including measures relating to qualification requirements and procedures, technical standards and licensing requirements, do not constitute unnecessary barriers to trade in services, the Parties shall jointly review the results of the negotiations on disciplines on these measures, pursuant to Article VI.4 of GATS, with a view to their incorporation into this Agreement. The Parties note that such disciplines aim to ensure that such requirements are inter alia:
(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.
6. Pending the incorporation of disciplines pursuant to paragraph 5, a Party shall not apply licensing and qualification requirements and technical standards that nullify or impair its obligations under this Chapter in a manner which:
(a) does not comply with the criteria outlined in paragraphs 5(a), (b) or (c); and
(b) could not reasonably have been expected of that Party at the time the obligations were undertaken.
7. In determining whether a Party is in conformity with its obligations under paragraph 6, account shall be taken of international standards of relevant international organisations (7) applied by that Party.
8. Each Party shall provide for adequate procedures to verify the competence of professionals of the other Party.
Article 10.10. Mutual Recognition
1. For the purposes of fulfilling, 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, including the other Party and non-Parties. Such recognition, which may be achieved through harmonization or otherwise, may be based upon 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 10.4 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 the other Party is interested, to negotiate its accession to such an agreement or arrangement or to negotiate comparable ones with it. Where a Party accords recognition autonomously, it shall afford adequate opportunity for the other Party to demonstrate that the education, experience, licenses, or certifications obtained or requirements met in that other Party’s territory should be recognised.
4. A Party shall not accord recognition in a manner which would constitute a means of discrimination between countries in the application of its standards or criteria for the authorisation, licensing or certification of services suppliers, or a disguised restriction on trade in services.
Article 10.11. Transfers and Payments
1. Each Party shall permit all transfers and payments relating 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 relating 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 a transfer or payment through the equitable, non-discriminatory and good faith application of its law relating to:
(a) bankruptcy, insolvency or the protection of the rights of creditors;
(b) issuing, trading or dealing in securities, futures, options, or derivatives;