3. (a) Nothing in paragraph 1 of this Article shall be construed to prevent a Party, in connection with an investment in its territory of an investor of the other Party or of a non-Party, from imposing or enforcing a requirement or enforcing a commitment or undertaking to locate production, supply a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory, provided that such measure is consistent with subparagraph (f) of paragraph 1 of this Article;
(b) Nothing in paragraph 2 of this Article shall be construed to prevent a Party, in connection with an investment in its territory of an investor of the other Party or of a non-Party, from conditioning the receipt or continued receipt of an advantage on compliance with a requirement to locate production, supply a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory;
(c) Subparagraph (f) of paragraph 1 of this Article does not apply:
(i) when a Party authorizes use of an intellectual property right in accordance with Article 31 of the TRIPS Agreement, or to measures requiring the disclosure of proprietary information that fall within the scope of, and are consistent with, Article 39 of the TRIPS Agreement; or
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(ii) when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal, or competition authority to remedy a practice determined after judicial or administrative process to be anticompetitive under the Partyâs competition laws?â;
(d) Provided that such measures are not applied in an arbitral or unjustifiable manner, and provided that such measures do not constitute a disguised restriction on international trade or investment, subparagraphs (b), (c), and (f) of paragraph 1 and subparagraphs (a) and (b) of paragraph 2 of this Article shall not be construed to prevent a Party from adopting or maintaining measures, including environmental measures:
(i) necessary to secure compliance with laws and regulations that are not inconsistent with this Chapter;
(ii) necessary to protect human, animal, or plant life or health; or
(iii) related to the conservation of living and non-living exhaustible natural resources;
(e) Subparagraphs (a), (b) and (c) of paragraph 1 and subparagraphs (a) and (b) of paragraph 2 of this Article do not apply to qualification requirements for goods or services with respect to export promotion and foreign aid programs;
(f) Subparagraphs (b), (c) and (f) of paragraph 1 and subparagraphs (a) and (b) of paragraph 2 of this Article, do not apply to government procurement;
(g) Subparagraphs (a) and (b) of paragraph 2 of this Article do not apply to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas;
37 The Parties recognize that a patent does not necessarily confer market power.
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(h) Paragraphs 1 and 2 of this Article do not apply to subsidies and other forms of State support for research and development.
4. For greater certainty, paragraphs 1 and 2 of this Article do not apply to any commitment, undertaking, or requirement other than those set out in those paragraphs.
5. This Article does not preclude enforcement of any commitment, undertaking, or requirement between private parties, where a Party did not impose or require the commitment, undertaking, or requirement.
Article 3.10. Senior Management and Boards of Directors
1. Neither Party may require that an enterprise of that Party that is a covered investment appoint to senior management position natural persons 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 a covered investment, 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 to exercise control over its investment.
Article 3.11. Transparency
1. Each Party shall ensure, in accordance with its respective laws and regulations, that its laws and regulations of general application, with respect to any matter covered by this Chapter, are promptly published or otherwise made publicly available, including wherever possible in electronic form.
2. To the extent possible, in accordance with its respective laws and regulations, each Party shall:
(a) publish in advance such laws and regulations referred to in paragraph 1 of this Article that it proposes to adopt;
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(b) provide interested persons of the other Party with a reasonable opportunity to comment on such laws and regulations referred to in paragraph 1 of this Article that it proposes to adopt; and
(c) shall endeavour to take into account the comments received from interested persons with respect to such proposed laws and regulations.
3. Upon request of a Party, the other Party shall promptly respond to specific questions and provide information on the laws and regulations referred to in paragraph 1 of this Article.
Article 3.12. Administrative Proceedings
With a view to administering in a consistent, impartial, and reasonable manner all measures referred to in Article 3.11 (Transparency), each Party shall ensure that in its administrative proceedings applying such measures to particular covered investments or investors of the other Party in specific cases:
(a) wherever possible, covered investments or investors of the other Party that are directly affected by a proceeding are provided reasonable notice, in accordance with domestic procedures, when a proceeding is initiated, including a description of the nature of the proceeding, a statement of the legal authority under which it is initiated, and a general description of any issues in controversy;
(b) such persons are afforded a reasonable opportunity to present facts and arguments in support of their positions prior to any final administrative action, when time, the nature of the proceeding, and the public interest permit; and
(c) its procedures are in accordance with domestic law. Article 3.13 Review and Appeal 1. Each Party shall, in accordance with domestic laws and
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regulations, establish or maintain judicial, quasi-judicial, or administrative tribunals or procedures for the purpose of the prompt review and, where warranted, correction of final administrative actions regarding matters covered by this Chapter. Such tribunals shall be impartial and independent of the office or authority entrusted with administrative enforcement and shall not have any substantial interest in the outcome of the matter.
2. Each Party shall ensure that, in any such tribunals or procedures, the parties to the proceeding are provided with the right to:
(a) a reasonable opportunity to support or defend their respective positions; and
(b) a decision based on the evidence and submissions of record or, where required by domestic law, the record compiled by the administrative authority.
3. Each Party shall ensure, subject to appeal or further review as provided in its domestic law, that such decisions shall be implemented by and shall govern the practice of the offices or authorities with respect to the administrative action at issue.
4. This article 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.
Article 3.14. Non-Conforming Measures
1. Article 3.3 (National Treatment), Article 3.4 (Most-Favored- Nation Treatment), Article 3.9 (Performance Requirements) and Article 3.10 (Senior Management and Boards of Directors) do not apply to:
(a) any existing non-conforming measures maintained by a Party as set out by that Party in List A of its Schedule in Annex II (Schedules of Reservations and Non-Conforming Measures for Investment);
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(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a) of paragraph 1 of this Article; or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) of paragraph 1 of this Article to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Article 3.3 (National Treatment), Article 3.4 (Most-Favored-Nation Treatment), Article 3.9 (Performance Requirements) and Article 3.10 (Senior Management and Boards of Directors).
2. Article 3.3 (National Treatment), Article 3.4 (Most-Favored- Nation Treatment), Article 3.9 (Performance Requirements) and Article 3.10 (Senior Management and Boards of Directors) do not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors, or activities, as set out in List B of its Schedule in Annex II (Schedules of Reservations and Non-Conforming Measures for Investment).
3. Neither Party may, under any measure adopted after the date of entry into force of this Agreement and covered by List B of its Schedule in Annex II (Schedules of Reservations and Non- Conforming Measures for Investment), 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. Article 3.3 (National Treatment) and Article 3.4 (Most-Favored- Nation Treatment) do not apply to any measure covered by an exception to, or derogation from, the obligations under Article 3 or 4 of the TRIPS Agreement, as specifically provided in those Articles and in Article 5 of the TRIPS Agreement.
5. Article 3.3 (National Treatment), Article 3.4 (Most-Favored- Nation Treatment), and Article 3.10 (Senior Management and Boards of Directors) do not apply to:
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(a) government procurement; or
(b) subsidies or grants provided by a Party, including government-supported loans, guarantees, insurance and other forms of government support.
Article 3.15. Special Formalities and Information Requirements
1. Nothing in Article 3.3 (National Treatment) shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with covered investments, such as a requirement on the filing for establishment of and changes to the covered investments of the other Party, provided that such formalities do not materially impair the protections afforded by a Party to investors of the other Party and covered investments pursuant to this Chapter.
2. Notwithstanding Article 3.3 (National Treatment) and Article 3.4 (Most-Favored-Nation Treatment), a Party may require an investor of the other Party or its covered investment to provide information concerning that investment solely for informational or statistical or administrative purposes. The Party shall protect any confidential business information from any disclosure that would prejudice the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law.
Article 3.16. Non-Derogation
This Chapter shall not derogate from any of the following that entitle a covered investment, or, with respect to a Party, an investor of the other Party, to treatment more favorable than that accorded by this Chapter: 1. laws or regulations, administrative practices or procedures, or administrative or adjudicatory decisions of a Party;
2. international legal obligations of a Party; or
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3. obligations assumed by a Party, including those contained in an investment agreement.
Article 3.17. Subrogation
If a Party or any designated entity makes a payment to an investor of the Party under a guarantee, a contract of insurance or other form of indemnity that it has entered into with respect to a covered investment, the other Party, in whose territory the covered investment was made, shall recognize the subrogation or transfer of any rights the investor would have possessed under this Chapter with respect to the covered investment but for the subrogation, including any rights under Section B, and the investor shall be precluded from pursuing such rights to the extent of the subrogation.
Article 3.18. Denial of Benefits
1. A Party may, at any time, including after the institution of arbitration proceedings in accordance with Section B of this Chapter, deny the benefits*® of this Chapter to an investor of the other Party that is an enterprise of such other Party and to investments of that investor if a non-Party, or persons of a non-Party own or control the enterprise 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 or a person of 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 or to its investments.
2. A Party may, at any time, including after the institution of arbitration proceedings in accordance with Section B of this Chapter, deny the benefits of this Chapter to an investor of the other Party
38 For greater certainty, benefits referred to in this Article include the rights of an investor of a Party to resort to the dispute settlement mechanism set out in Section B of this Chapter.
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that is an enterprise of such other Party and to investments of that investor if the enterprise has no substantial business activities in the territory of the other Party and a non-Party, persons of a non-Party, or of the denying Party, own or control the enterprise.
Article 3.19. Disclosure of Information
Nothing in this Chapter shall be construed to require a Party to furnish or allow access to protected information, or other confidential information the disclosure of which would impede law enforcement or otherwise be contrary to the public interest, or which would prejudice the legitimate commercial interests of particular enterprises, public or private.
Article 3.20. Essential Security 1. Nothing In this Chapter Shall Be Construed:
a) to prevent a Party from adopting or maintaining measures that it considers necessary for the protection of its own essential security interests, defined by the national legislation;
b) to require a Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests;
c) to preclude a Party from applying measures that it considers necessary for the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.
2. With respect to investors of the other Party and covered investments affected by such measures, each Party shall accord non- discriminatory treatment to them, regardless of whether they are governmentally or privately owned.
Article 3.2. Financial Services
1. Notwithstanding any other provision of this Chapter, a Party shall 88
not be prevented from adopting or maintaining measures relating to financial services for prudential reasons, including for the protection of investors, depositors, policy holders, or persons to whom a fiduciary duty is owed by a financial services supplier, or to ensure the integrity and stability of the financial systemâ.
2. Nothing in this Chapter applies to non-discriminatory measures of general application in pursuit of monetary and related credit policies or exchange rate policies*®. This paragraph shall not affect a Partyâs obligations under Article 3.8 (Transfers).
3. Where a claimant submits a claim to arbitration under Section B and the respondent invokes paragraphs 1 or 2 of this Article as a defence, the following provisions shall apply:
(a) The respondent shall, either within one hundred and twenty (120) days of the date the claim is submitted to arbitration under Section B or no later than a date the tribunal constituted under Section B fixes, submit in writing to the competent financial authorities of the non-disputing Party a request for a joint determination by the competent financial authorities of both Parties on the issue of whether and to what extent paragraphs 1 or 2 of this Article is a valid defence to the claim. The respondent shall promptly provide the tribunal, if constituted, a copy of the request.
(b) The competent financial authorities of both Parties shall attempt in good faith to make a joint determination as described in subparagraph (a) of paragraph 3 of this Article. Any such determination shall be transmitted promptly to the disputing parties and, if constituted, the tribunal under
39 Tt is understood that the term âprudential reasonsâ includes the maintenance of the safety, soundness, integrity, or financial responsibility of individual financial institutions or the financial system, as well as the maintenance of the safety and financial and operational integrity of payment and clearing systems.
# For greater certainty, measures of general application taken in pursuit of monetary and related credit policies or exchange rate policies do not include measures that expressly nullify or amend contractual provisions that specify the currency of denomination or the rate of exchange of currencies.
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Section Section B. the Determination Shall Be Binding on the Tribunal Constituted Under Section B.
(c) If the competent financial authorities of both Parties referred to in subparagraphs (a) and (b) of paragraph 3 of this Article have not made a joint determination within one hundred and twenty (120) days of the date of receipt of the respondentâs written request for a joint determination under subparagraph (a) of paragraph 3 of this Article, the respondent or the non-disputing Party may submit its claim to arbitration in accordance with Chapter IX (Dispute Settlement) for a tribunal constituted under Chapter IX (Dispute Settlement) to consider whether and to what extent paragraphs 1 or 2 of this Article is a valid defence to the claim. The final report of a tribunal constituted under Chapter IX (Dispute Settlement) shall be binding on the tribunal constituted under Section B, and any decision or award issued by the tribunal constituted under Section B must be consistent with the final report. The tribunal constituted under Chapter IX (Dispute Settlement) shall transmit its final report to both Parties and to the tribunal constituted under Section B.
(d) If the respondent or the non-disputing Party has not submitted its claim to arbitration in accordance with Chapter IX (Dispute Settlement) within thirty (30) days after the expiration of the one hundred and twenty (120) days period referred to in subparagraph (c) of paragraph 3 of this Article, the tribunal constituted under Section B may proceed with respect to the claim.
(i) The tribunal constituted under Section B shall draw no inference regarding the application of paragraphs 1 and 2 of this Article from the fact that the competent financial authorities have not made a determination as
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described in subparagraphs (a), (b) and (c) of paragraph 3 of this Article.
(ii) The non-disputing Party may make oral and written submissions to the tribunal constituted under Section B regarding the issue of whether and to what extent paragraphs 1 or 2 of this Article is a valid defence to the claim. Unless it makes such a submission, the non- disputing Party shall be presumed, for the purposes of the arbitration, to take a position on paragraphs 1 and 2 of this Article that it is not inconsistent with that of the respondent.
4. The expertise or experience of any candidate with respect to financial services law or practice shall be taken into account in the appointment of arbitrators to the tribunals as referred to in paragraph 3 of this Article.
Article 3.22. Taxation
1. Except as provided in this Article, nothing in this Chapter shall apply to taxation measures.
2. Article 3.7 (Expropriation and Compensation) shall apply to taxation measures to the extent that such taxation measures constitute expropriation as provided for in Article 3.7 (Expropriation and Compensation).
3. Nothing in this Chapter shall be construed to prevent the adoption or enforcement of any measure designed to secure the equitable or effective imposition or collection of taxes in accordance with the respective laws and regulations of the Parties. However, such measures shall not be applied in a discriminatory, arbitrary or unjustifiable manner or constitute a disguised restriction.
4. For the purposes of this Agreement, in assessing whether a taxation measure constitutes expropriation, the Parties agree to consider the following factors as relevant:
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(a) the imposition of taxes does not generally constitute expropriation. The mere introduction of new taxation measures, or the imposition of taxes in more than one jurisdiction in respect of an investment, generally does not in and of itself constitute expropriation;
(b) taxation measures which are consistent with internationally recognized tax policies, principles and practices do not constitute expropriation. In particular, taxation measures aimed at preventing the avoidance or evasion of taxes should not, generally, be considered to be expropriatory; and
(c) taxation measures which are applied on a non- discriminatory basis, as opposed to being targeted at investors of a particular nationality or specific individual taxpayers, are less likely to constitute expropriation. A taxation measure should not constitute expropriation if, when the investment is made, it was already in force, and information about the measure was made public or otherwise made publicly available.
5. An investor that seeks to invoke 3.7 (Expropriation and Compensation) with respect to a taxation measure must first refer in writing to the competent authorities*!of both Parties, no later than that it delivers its request of consultation under Article 3.23 (Consultations), the issue of whether that taxation measure involves an expropriation. If the competent authorities do not agree to consider the issue, or having agreed to consider it, fail to agree that the measure is not an expropriation within a period of 180 days after the date of such referral, the investor may submit its claim to arbitration. For greater certainty, if the competent authorities agree,
â| For the purposes of this Article: âthe competent authoritiesâ means:
@) for the Republic of Belarus, the Ministry of Finance of the Republic of Belarus and the Ministry of Taxes and Duties of the Republic of Belarus, or their authorized representatives; and
ii) for the Peopleâs Republic of China, the Ministry of Finance and the State Taxation Administration, or their authorized representatives.
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pursuant to this paragraph, that the measure is not an expropriation, the investor shall not invoke Article 3.7 (Expropriation and Compensation) as a basis for a claim.
6. Nothing in this Chapter shall affect the rights and obligations of a Party under any tax convention®. In the event of any inconsistency between this Chapter and any such convention, that convention shall prevail to the extent of the inconsistency. In the case of a tax convention between the Parties, the competent authorities under that convention shall have sole responsibility for determining whether any inconsistency exists between this Chapter and that convention.
Section Section B
Article 3.23. Consultations
1. In the event of an investment dispute, if the claimant intends to submit the dispute to arbitration, it shall deliver a request for consultations to the respondentâ? at least 180 days prior to submission of the dispute to arbitration. The request shall:
(a) specify the name and address of the claimant and, where a claim is submitted on behalf of an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, the name, address, and place of incorporation of the enterprise;
(b) list evidences that the claimant is an investor under this Chapter;
(c) for each claim, identify the provision of this Chapter or the investment agreement alleged to have been breached and any other relevant provisions;
(d) for each claim, identify the measures or events giving rise
# âTax conventionâ means an agreement or convention for the avoidance of double taxation or other international taxation agreement or arrangement.
* For greater certainty, the request for consultations shall be sent to the central government body as listed out in Annex 3-4 (Service of Documents on a Party).
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to the claim;
(e) for each claim, provide a brief summary of the legal and factual basis; and
(f) specify the relief sought and the approximate amount of damages claimed.
2. After a request for consultations is made pursuant to this Section, the claimant and the respondent shall enter into consultationsâ with a view to reaching a mutually satisfactory solution.
Article 3.24. Submission of a Claim to Arbitration
1. With prejudice to the consultation procedure provided in the Article 3.22 (Taxation), in the event that a disputing party considers that an investment dispute cannot be settled by consultations pursuant to Article 3.23 (Consultations) and 180 days have elapsed since the date of the request for consultations:
(a) the claimant, on its own behalf, may submit to arbitration under this Section a claim:
(i) that the respondent has breached
(A) an obligation under Article 3.3 (National Treatment), Article 3.4 (Most-Favored-Nation Treatment) provided that the claim does not in any way relate to treatment with respect to establishment, acquisition or expansion of investment in the territory of the respondent;
(B) Article 3.5 (Minimum Standard of Treatment), Article 3.6 (Compensation for Losses), Article 3.7 (Expropriation and Compensation), Article 3.8 (Transfers); or
â Unless otherwise agreed by the Parties to the dispute, the place for consultation should be the capital of the respondent.
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(C) an investment agreement; and
(ii) that the claimant has incurred loss or damage by reason of, or arising out of, that breach; and
(b) the claimant, on behalf of an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, may submit to arbitration under this Section a claim:
(i) that the respondent has breached
(A) an obligation under Article 3.3 (National Treatment), Article 3.4 (Most-Favored-Nation Treatment) provided that the claim does not in any way relate to treatment with respect to establishment, acquisition or expansion of investment in the territory of the respondent;
(B) Article 3.5 (Minimum Standard of Treatment), Article 3.6 (Compensation for Losses), Article 3.7 (Expropriation and Compensation), Article 3.8 (Transfers); or
(C) an investment agreement; and
(ii) that the enterprise has incurred loss or damage by reason of, or arising out of, that breach*,
provided that a claimant may submit pursuant to subparagraph (a)G@)(C) or (b)G)(C) of this Article a claim for breach of an investment agreement only if the subject matter of the claim and the claimed damages directly relate to the covered investment that was established or acquired, or sought to be established or acquired, in reliance on the relevant investment agreement.
2. An investor of a Party may not initiate or continue a claim under
45 For greater certainty, a minority non-controlling shareholder of an enterprise may not submit a claim on behalf of that enterprise.
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this Section if a claim involving the same measure or measures alleged to constitute a breach under this Article and arising from the same events or circumstances is initiated or continued pursuant to an agreement between the respondent and a non-Party by:
(i) an enterprise of a non-Party that owns or controls, directly or indirectly, the investor of a Party; or
(ii) an enterprise of a non-Party that is owned or controlled, directly or indirectly, by the investor of a Party.