3. Article 10.7.1 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.
4. The second situation addressed by Article 10.7.1 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 of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-bycase, 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 an indirect 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, nondiscriminatory 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.
Annex 10-C. Submission of a Claim to Arbitration
1. An investor of the United States may not submit to arbitration under Section B a claim that Panama has breached an obligation under Section A either:
(a) on its own behalf under Article 10.16.1(a), or
(b) on behalf of an enterprise of Panama that is a juridical person that the investor owns or controls directly or indirectly under Article 10.16.1(b), if the investor or the enterprise, respectively, has alleged that breach of an obligation under Section A in proceedings before a court or administrative tribunal of Panama.
2. For greater certainty, if an investor of the United States elects to submit a claim of the type described in paragraph 1 to a court or administrative tribunal of Panama, that election shall be definitive, and the investor may not thereafter submit the claim to arbitration under Section B.
Annex 10-D. Possibility of a Bilateral Appellate Mechanism
Within three years after the date of entry into force of this Agreement, the Parties shall consider whether to establish a bilateral appellate body or similar mechanism to review awards rendered under Article 10.26 in arbitrations commenced after they establish the appellate body or similar mechanism.
Annex 10-E.
Service of Documents on a Party Under Section B
Panama
Notices and other documents in disputes under Section B shall be served on Panama by delivery to:
Chief of International Trade Negotiations
Ministry of Commerce and Industry
Panama P.O. Box 0815-01119
Panama, Republic of Panama
United States
Notices and other documents in disputes under Section B shall be served on the United States by delivery to:
Executive Director (L/EX)
Office of the Legal Adviser
Department of State
Washington, D.C. 20520
United States of America
10-F. Panama Canal Authority
1. For greater certainty, nothing in this Chapter or Chapter Eleven (Cross-Border Trade in Services) shall be construed to derogate from Panama’s right to appoint the Panama Canal Authority as the entity exclusively responsible for the use, administration, functioning, conservation, maintenance, modernization, and related activities of the Panama Canal, as provided under Panama’s 1972 Constitution, which states:
“a. The Panama Canal is the inalienable patrimony of the Panamanian nation; it shall remain open to the peaceful and uninterrupted transit of the vessels of all nations, and its use is subject to the requirements and conditions established by the Constitution, the law, and its administration.”
“b. An autonomous juridical person is created under Public Law, which is called the Panama Canal Authority, which is exclusively responsible for the administration, functioning, conservation, maintenance, and modernization of the Panama Canal and related activities, subject to constitutional and legal norms that are in effect, in order for the Canal to function in a secure, continuous, efficient, and profitable manner. It shall have its own property and the right to administer it.”
“c. The Panama Canal Authority has the responsibility for the administration, maintenance, use, and conservation of the water resources of the Panama Canal basin, consisting of the water of its lakes and tributary currents, in coordination with the state entities that the law designates. Construction plans, use of waters, expansion, development of ports and of any other work or construction on the shores of the Panama Canal requires prior approval of the Authority.”
2. For greater certainty, a tribunal established under Section B may not order attachment or enjoin the application of a measure that has been adopted or maintained by the Panama Canal Authority in pursuance of the responsibilities described in paragraph 1, and is alleged to constitute a breach referred to in Article 10.16.
3. (a) No claim arising from acts of the Panama Canal Authority and alleging that Panama has breached an investment agreement may be submitted under Section B unless the claim has first been submitted to the Panama Canal Authority and three months have elapsed from the date of such submission.
(b) For greater certainty, the claim referred to in subparagraph (a) may be submitted against Panama under Section B at the expiration of the three-month period referred to in that subparagraph regardless of whether the Panama Canal Authority has issued a decision regarding the claim.
(c) The submission to the Panama Canal Authority of the claim referred to in subparagraph (a) shall not be construed as submission of the claim to an administrative tribunal or a binding dispute settlement procedure within the meaning of Article 10.18.4.
4. (a) The Panama Canal Authority may grant, pursuant to Acuerdo No. 82 of August 17, 2004, as amended, compatibility permits or authorizations for the use of, or for activities, projects, works, or construction undertaken in, the compatibility area (15) or in the waters and shores of the Canal.
(b) The Panama Canal Authority may revoke or modify, pursuant to Acuerdo No. 82 of August 17, 2004, as amended, such compatibility permits or authorizations if it determines that: (i) such use, activities, projects, works, or construction may endanger the efficient operation of the Panama Canal; (ii) the compatibility areas are necessary for the functioning, protection, modernization, or expansion of the Panama Canal; (iii) the use, activity, project, works, or construction is no longer compatible with the functioning of the Panama Canal; or (iv) the terms and conditions of the relevant permit or authorization have not been satisfied. The Panama Canal Authority may also revoke compatibility permits or authorizations for any other reason provided by Panamanian law.
(c) Revocations and other actions that the Panama Canal Authority takes with respect to compatibility permits and authorizations must be otherwise consistent with this Agreement.
Chapter Eleven . Cross-Border Trade In Services
Article 11.1. 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. 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:
(a) central, regional, or local governments and authorities; and
(b) non-governmental bodies in the exercise of powers delegated by central, regional, or local governments or authorities.
3. Articles 11.4, 11.7, and 11.8 also apply to measures adopted or maintained by a Party affecting the supply of a service in its territory by an investor of the other Party as defined in Article 10.29 (Definitions) or a covered investment.(1)
4. This Chapter does not apply to:
(a) financial services, as defined in Article 12.20 (Definitions), except as provided in paragraph 3;
(b) 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, and
(ii) specialty air services;
(c) procurement; or
(d) subsidies or grants provided by a Party, including government-supported loans, guarantees, and insurance.
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 does not apply to services supplied in the exercise of governmental authority. A “service supplied in the exercise of governmental authority” means any service that is supplied neither on a commercial basis, nor in competition with one or more service suppliers.
7. Nothing in this Chapter or any other provision of this Agreement shall be construed to impose any obligation on a Party regarding its immigration measures, including admission or conditions of admission for temporary entry.
Article 11. 2. National Treatment
1. 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.
2. The treatment to be accorded by a Party under paragraph 1 means, with respect to a regional level of government, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that regional level of government to service suppliers of the Party of which it forms a part.
Article 11.3. 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 11.4. Market Access
Neither Party may 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 form of numerical quotas or the requirement of an economic needs test,
(iii) the total number of service operations or on 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, (2)
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 11.5 . Local Presence
Neither Party may 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 11.6. Non-Conforming Measures
1. Articles 11.2, 11.3, 11.4, and 11.5 do 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 to Annex I;
(ii) a regional level of government, as set out by that Party in its Schedule to Annex I; or
(iii) 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 Articles 11.2, 11.3, 11.4, and 11.5.
2. Articles 11.2, 11.3, 11.4, and 11.5 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
Article 11.7 . Transparency In Developing and Applying Regulations (3)
Further to Chapter Eighteen (Transparency):
(a) each Party shall maintain or establish appropriate mechanisms for responding to inquiries from interested persons regarding its regulations relating to the subject matter of this Chapter;
(b) at the time it adopts final regulations relating to the subject matter of this Chapter, each Party shall, to the extent possible, including on request, address in writing substantive comments received from interested persons with respect to the proposed regulations; and
(c) to the extent possible, each Party shall allow a reasonable time between publication of final regulations and their effective date.
Article 11.6. 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. At the request of the applicant, the Party’s competent authorities shall provide, without undue delay, information concerning the status of the application. This obligation shall not apply to authorization requirements that are within the scope of Article 11.6.2.
2. With a view to ensuring that measures relating 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 any such measures that it adopts or maintains 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 the GATS (or the results of any similar negotiations undertaken in other multilateral fora in which the Parties participate) enter into effect for each Party, this Article shall be amended, as appropriate, after consultations between the Parties, to bring those results into effect under this Agreement. The Parties will coordinate on such negotiations as appropriate.
Article 11.9 . Mutual Recognition
1. For the 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 11.3 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 the other Party is interested, to negotiate its 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 the other Party’s territory should be recognized.
4. Neither Party may 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 11.9 applies to measures adopted or maintained by a Party relating to the licensing or certification of professional service suppliers as set out in that Annex.
Article 11.10. 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 laws relating to:
(a) bankruptcy, insolvency, or the protection of the rights of creditors;
(b) issuing, trading, or dealing in securities, futures, options, or derivatives;
(c) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
(d) criminal or penal offenses; or
(e) ensuring compliance with orders or judgments in judicial or administrative proceedings.
Article 11.11 . Denial of Benefits
1. A Party may deny the benefits of this Chapter to a service supplier of the other Party if the service is being supplied by an enterprise owned or controlled by persons of a non-Party, and the denying Party:
(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise.
2. Subject to Articles 18.3 (Notification and Provision of Information) and 20.4 (Consultations), a Party may deny the benefits of this Chapter to a service supplier of the other Party that is an enterprise of the other Party if the enterprise has no substantial business activities in the territory of the other Party, and persons of a non-Party, or of the denying Party, own or control the enterprise.
Article 11.12 . Specific Commitments
1. Express Delivery Services:
(a) The Parties affirm that measures affecting express delivery services are subject to this Agreement.
(b) For purposes of this Agreement, express delivery services means the collection, transport, and delivery, of documents, printed matter, parcels, goods, or other items on an expedited basis, while tracking and maintaining control of these items throughout the supply of the service. Express delivery services do not include (i) air transport services, (ii) services supplied in the exercise of governmental authority, or (iii) maritime transport services. (4)
(c) The Parties express their desire to maintain at least the level of market openness for express delivery services they provided on the date this Agreement is signed.
(d) Panama may not adopt or maintain any restriction on express delivery services that is not in existence on the date this Agreement is signed. Panama confirms that it does not intend to direct revenues from its postal monopoly to benefit express delivery services. Under title 39 of the United States Code, an independent U.S. government agency determines whether U.S. postal rates meet the requirement that each class of mail or type of mail service bear the direct and indirect postal costs attributable to that class or type plus that portion of all other costs of the U.S. Postal Service reasonably assignable to such class or type.
(e) Each Party shall ensure that, where its monopoly supplier of postal services competes, either directly or through an affiliated company, in the supply of express delivery services outside the scope of its monopoly rights, such a supplier does not abuse its monopoly position to act in its territory in a manner inconsistent with the Party’s obligations under Article 10.3 (National Treatment), 10.4 (Most-Favored-Nation Treatment), 11.2, 11.3, or 11.4. The Parties also reaffirm their obligations under Article VIII of the GATS. (5)
(f) Four years after the date of entry into force of this Agreement, Panama shall apply to publicly owned and privately owned suppliers, on a non-discriminatory basis, measures taken pursuant to Articles 8 and 9 of Decreto Ejecutivo No. 30 de 8 de febrero de 1991 por el cual se dictan medidas relacionadas con la recepción, transporte, despacho y entrega extrapostal internacional de envíos de correspondencia urgente (correo paralelo) y se deroga el Decreto No. 86 del 4 de diciembre de 1989 that impose fees on, or set a minimum price for, the supply of express delivery services.
Article 11.13 . Additional Provisions
Annex 10-F (Panama Canal Authority) sets out additional provisions relating to the Panama Canal Authority.
Article 11.14. Implementation
The Parties shall consult annually, or as otherwise agreed, to review the implementation of this Chapter and consider other issues of mutual interest.
Article 11.15 . 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 an investor of the other Party as defined in Article 10.29 (Definitions) or a covered investment;
enterprise means an “enterprise” as defined in Article 2.1 (Definitions of General Application), and a branch of an enterprise;
enterprise of a Party means an enterprise constituted or organized under the laws of that Party, and a branch located in the territory of that Party and carrying out business activities there;
professional services means services, the provision of which requires specialized postsecondary education, or equivalent training or experience, and for which the right to practice is granted or restricted by a Party, but does not include services provided by trades-persons or vessel and aircraft crew members;
service supplier of a Party means a person of a Party that seeks to supply or supplies a service; (6)
and
specialty air services means any non-transportation air services, such as aerial fire-fighting, sightseeing, spraying, surveying, mapping, photography, parachute jumping, glider towing, and helicopter-lift for logging and construction, and other airborne agricultural, industrial, and inspection services.