Title
AGREEMENT BETWEEN JAPAN AND THE REPUBLIC OF PERU FOR THE PROMOTION, PROTECTION AND LIBERALISATION OF INVESTMENT
Preamble
Japan and the Republic of Peru,
Desiring to further promote investment in order to strengthen the economic relationship between the two countries;
Intending to further create stable, equitable, favourable and transparent conditions for greater investment by investors of one country in the Area of the other country;
Recognising the growing importance of the progressive liberalisation of investment for stimulating initiative of investors and for promoting prosperity in both countries;
Recognising the importance of observance and fulfilment of the obligations that one country may have entered into with regard to investments and investment activities of investors of the other country;
Recognising that these objectives can be achieved without relaxing health, safety and environmental measures of general application;
Recognising the importance of the cooperative relationship between labour and management in promoting investment between both countries;
Wishing that this Agreement will contribute to the strengthening of international cooperation with respect to the development of international rules on foreign investment; and
Believing that this Agreement marks the beginning of new economic partnership between the two countries;
Have agreed as follows:
Body
Article 1. Definitions
For the purposes of this Agreement,
(1) The term "investments" means every kind of asset owned or controlled, directly or indirectly, by an investor, which has the characteristics of an investment, such as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk, including:
(a) An enterprise and a branch of an enterprise;
(b) Shares, stocks or other forms of equity participation in an enterprise, including rights derived therefrom;
(c) Bonds, debentures, loans and other forms of debt, including rights derived therefrom:
(i) Where an enterprise which owes such debt is affiliated with the investor; or
(ii) Where the original maturity of such debt is at least 12 months,
But does not include a debt of, regardless of original maturity, a Contracting Party or a state enterprise.
Note: Notwithstanding subparagraph (c):
(A) A loan to or debt instrument issued by a financial institution is an investment only where it is treated as regulatory capital by a Contracting Party in whose Area the financial institution is located; and
(B) A loan granted by or debt instrument owned by a financial institution, other than a loan to or debt instrument of a financial institution referred to in (A), is not an investment;
For greater certainty:
(C) A loan to, or debt instrument issued by, a Contracting Party or a state enterprise thereof is not an investment; and
(D) A loan granted by or debt instrument owned by a cross-border financial service supplier, other than a loan to or debt instrument issued by a financial institution referred to in (A), is an investment if such loan or debt instrument meets the criteria for investments set out elsewhere in this subparagraph.
(d) Rights under contracts, including turnkey, construction, management, production or revenue-sharing contracts;
(e) Claims to money and to any performance under contract having a financial value;
(f) Intellectual property rights, including copy rights and related rights, patent rights and rights relating to utility models, trademarks, industrial designs, layout-designs of integrated circuits, new varieties of plants, trade names, indications of source or geographical indications and undisclosed information;
(g) Rights conferred pursuant to laws and regulations or contracts such as concessions, licenses, authorisations and permits, including those for the exploration and exploitation of natural resources; and
(h) Any other tangible and intangible, movable and immovable property, and any related property rights, such as leases, mortgages, liens and pledges.
Investments include the amounts yielded by investments, in particular, profit, interest, capital gains, dividends, royalties and fees. A change in the form in which assets are invested does not affect their character as investments;
But investments do not mean,
(i) Claims to money that arise solely from:
(i) Commercial contracts for the sale of goods or services by a national or enterprise in the Area of a Contracting Party to an enterprise in the Area of the other Contracting Party; or
(ii) The extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by subparagraph (c); nor
(j) Any other claims to money,
That do not involve the kinds of interests set out in subparagraphs (a) through (h).
(2) The term "investor of a Contracting Party" means:
(a) A natural person having the nationality of that Contracting Party in accordance with its applicable laws and regulations; or
(b) An enterprise of that Contracting Party,
That seeks to make, is making or has made investments in the Area of the other Contracting Party.
Note: It is understood that an investor of a Contracting Party seeks to make investments in the Area of the other Contracting Party only when the investor has taken concrete steps necessary to make investments, such as when the investor has made an application for a permit or license which authorises the establishment of investments.
(3) An enterprise is:
(a) "owned" by an investor if more than 50 percent of the equity interest in it is owned by the investor;
(b) "controlled" by an investor if the investor has the power to name a majority of its directors or otherwise to legally direct its actions; and
(c) "affiliated" with an investor when it controls, or is controlled by, the investor; or when it and the investor are both controlled by the same investor.
(4) The term "an enterprise of a Contracting Party" means any legal person or any other entity duly constituted or organised under the applicable laws and regulations of that Contracting Party, whether or not for profit, and whether private or government owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association, organisation or company.
(5) The term "investment activities" means establishment, acquisition, expansion, operation, management, maintenance, use, enjoyment and sale or other disposal of investments.
(6) The term "financial institution" means any enterprise that is authorised to do business and regulated or supervised as a financial institution under the law of the Contracting Party in whose Area it is located.
(7) The term "Area" means:
(a) With respect to Japan: (i) the territory of Japan; and (ii) the exclusive economic zone and the continental shelf with respect to which Japan exercises sovereign rights or jurisdiction in accordance with international law; and
(b) With respect to the Republic of Peru: the mainland territory, the islands, the maritime zones, and the air space above them, over which the Republic of Peru exercises sovereignty or sovereign rights and jurisdiction, in accordance with relevant provisions of the Constitution of the Republic of Peru and international law.
Note: Nothing under this paragraph shall affect the rights and obligations of the Contracting Parties under international law.
(8) The term "the WTO Agreement" means the Marrakesh Agreement Establishing the World Trade Organisation, done at Marrakesh, April 15, 1994.
(9) The term "measure" means any measure which includes any law, regulation, rule, procedure, decision or administrative action.
Note: For greater certainty, in the case of judicial decisions, paragraphs 2 and 4 of Article 18 shall apply.
Article 2. Scope and Coverage
1. This Agreement shall apply to measures adopted or maintained by a Contracting Party relating to:
(a) Investors of the other Contracting Party;
(b) Investments of an investor of the other Contracting Party in the Area of the former Contracting Party existing on the date of entry into force of this Agreement, as well as investments established, acquired or expanded thereafter; and
(c) With respect to Articles 6 and 26, all investments in the Area of the former Contracting Party.
2. This Agreement shall not apply to claims arising out of events which occurred, or to claims which had been settled, prior to its entry into force.
Note: For greater certainty, nothing in this Agreement is intended to grant the investors the right to claim under this Agreement for damages suffered prior to its entry into force.
3. In fulfilling the obligation of each Contracting Party under this Agreement, each central government shall take such reasonable measures as may be available to it to ensure the observance of this Agreement by regional or local governments in its Area.
Article 3. National Treatment
1. Each Contracting Party shall in its Area accord to investors of the other Contracting Party and to their investments treatment no less favourable than the treatment it accords in like circumstances to its own investors and their investments with respect to the investment activities.
2. The treatment accorded by a Contracting Party under paragraph 1 means, with respect to a regional or local government, treatment no less favourable than the most favourable treatment accorded, in like circumstances, by that regional or local government, to investors, and to investments of investors, of the Contracting Party of which it forms a part.
3. Notwithstanding paragraph 1, each Contracting Party may prescribe special formalities in connection with investment activities of investors of the other Contracting Party in its Area, provided that such special formalities do not impair the substance of the rights of such investors under this Agreement.
Article 4. Most Favoured Nation Treatment
1. Each Contracting Party shall in its Area accord to investors of the other Contracting Party and to their investments treatment no less favourable than the treatment it accords in like circumstances to investors of a non-Contracting Party and to their investments with respect to investment activities.
2. It is understood that the treatment referred to in paragraph 1 to be accorded with respect to investment activities does not encompass dispute resolution mechanisms, such as those in Article 18, which are provided for in other international investment treaties or trade agreements.
Article 5. Minimum Standard of Treatment
1. Each Contracting Party shall in its Area accord to investments of investors of the other Contracting Party treatment in accordance with customary international law minimum standard of treatment of aliens, including fair and equitable treatment and full protection and security.
2. For the purpose of paragraph 1, the concept of "fair and equitable treatment" and "full protection and security" do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens.
Note: "Fair and equitable treatment" includes the obligation of the Contracting Party not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process of law. Each Contracting Party shall accord to investors of the other Contracting Party, non-discriminatory treatment with regard to access to the courts of justice and administrative tribunals and agencies of the former Contracting Party in pursuit and in defence of rights of such investors.
3. A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article.
Article 6. Prohibition of Performance Requirements
1. Neither Contracting Party shall impose or enforce any of the following requirements as a condition for investment activities in its Area of investors of a Contracting Party or of a non-Contracting Party:
(a) To export a given level or percentage of goods or services;
(b) To achieve a given level or percentage of domestic content;
(c) To purchase, use or accord a preference to goods produced or services provided in its Area, or to purchase goods or services from natural or legal persons or any other entity in its Area;
(d) To relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with investments of that investor;
(e) To restrict sales of goods or services in its Area that investments of that investor produce or provide by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
(f) To transfer technology, a production process or other proprietary knowledge to a natural or legal person or any other entity in its Area, except when the requirement (i) is imposed or enforced by a court, administrative tribunal or competition authority to remedy an alleged violation of competition laws; or (ii) concerns the transfer of intellectual property rights which is undertaken in a manner not inconsistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreement (hereinafter referred to as "the TRIPS Agreement");
Note: Nothing in subparagraph (f) shall be construed to prevent a Contracting Party, in connection with investment activities in its Area, from imposing or enforcing a requirement or enforcing a commitment to train workers in its Area, provided that such training does not require the transfer of a particular technology, production process or other proprietary knowledge to a person in its Area.
(g) To locate the headquarters of that investor for a specific region or the world market in its Area; or
(h) To supply one or more of the goods that the investor produces or the services that the investor provides to a specific region or the world market, exclusively from the Area of the former Contracting Party.
2. Neither Contracting Party may condition the receipt or continued receipt of an advantage, in connection with investment activities of an investor of a Contracting Party or of a non-Contracting Party in its Area, on compliance with any of the following requirements:
(a) To achieve a given level or percentage of domestic content;
(b) To purchase, use or accord a preference to goods produced or services provided in its Area, or to purchase goods or services from natural or legal persons or any other entity in its Area;
(c) To relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with investments of that investor; or
(d) To restrict sales of goods or services in its Area that investments of that investor produce or provide by relating such sales in any way to the volume or value of its exports or foreign exchange earnings.
3. Nothing in paragraph 2 shall be construed to prevent a Contracting Party from conditioning the receipt or continued receipt of an advantage, in connection with investments in its Area, on compliance with a requirement to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its Area.
Article 7. Non-governmental Bodies or State Enterprises
Each Contracting Party shall take such reasonable measures as may be available to it to ensure that any non-governmental bodies or state enterprises in its Area does not act in a manner inconsistent with the obligation of the Contracting Party under this Agreement in the exercise of powers delegated to them by central government, such as the power to grant import or export licenses, approve commercial transactions or impose quotas, fees or other charges.
Article 8. Reservations and Exceptions
1. Articles 3, 4, 6 and 12 shall not apply to:
(a) Any existing non-conforming measure that is maintained by:
(i) With respect to Japan:
(A) The central government or a prefecture, as set out in its Schedule in Annex I; or
(B) A local government other than prefectures;
(ii) With respect to the Republic of Peru:
(A) The central government or a regional government, as set out in its Schedule in Annex I; or
(B) A local government
(b) The continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
(c) An amendment or modification to any non-conforming measure referred to in subparagraph (a), provided that the amendment or modification does not decrease the conformity of the measure as it existed immediately before the amendment or modification, with Articles 3, 4, 6 and 12.
2. Articles 3, 4, 6 and 12 shall not apply to any measure that a Contracting Party adopts or maintains with respect to sectors, sub-sectors and activities set out in its Schedule in Annex II.
3. Neither Contracting Party shall, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule in Annex II, require an investor of the other Contracting Party, by reason of its nationality, to sell or otherwise dispose of an investment that exists at the time the measure becomes effective.
4. In cases where a Contracting Party makes an amendment or a modification to any existing non-conforming measure set out in its Schedule in Annex I or where a Contracting Party adopts any new or more restrictive measure with respect to sectors, sub-sectors or activities set out in its Schedule in Annex II after the entry into force of this Agreement, the Contracting Party shall, prior to the implementation of the amendment or modification or the new or more restrictive measure, or in exceptional circumstances, as soon as possible thereafter:
(a) Notify the other Contracting Party of detailed information on such amendment, modification or measure; and
(b) Hold, upon request by the other Contracting Party, consultations in good-faith with that other Contracting Party.
5. Each Contracting Party shall endeavour, where appropriate, to reduce or eliminate the reservations specified in its Schedules in Annexes I and II respectively.
6. Articles 3, 4, 6 and 12 shall not apply to any measure covered by the exceptions to, or derogations from, obligations under Articles 3 and 4 of the TRIPS Agreement, as specifically provided in Articles 3 through 5 of the TRIPS Agreement.
7. Articles 3, 4, 6 and 12 shall not apply to any measure that a Contracting Party adopts or maintains with respect to government procurement.
Article 9. Transparency
1. Each Contracting Party shall promptly publish, or otherwise make publicly available, its laws, regulations, administrative procedures and administrative rulings and judicial decisions of general application as well as international agreements which pertain to or affect investment activities.
2. Each Contracting Party shall, upon request by the other Contracting Party, promptly respond to specific questions and provide that other Contracting Party with information on matters set out in paragraph 1, including that relating to contract each Contracting Party enters into with regard to investment.
3. The provisions of paragraphs 1 and 2 shall not be construed so as to oblige either Contracting Party to disclose confidential information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest, or which would prejudice privacy or legitimate commercial interests.
4. The Government of each Contracting Party shall, in accordance with the laws and regulations of the Contracting Party, endeavour to provide, except in cases of emergency or of purely minor nature, a reasonable opportunity for comments by the public before the adoption, amendment or repeal of regulations of general application that affect any matter covered by this Agreement.
Article 10. Measures Against Corruption
Each Contracting Party shall ensure that measures and efforts are undertaken to prevent and combat corruption regarding matters covered by this Agreement in accordance with its laws and regulations.
Article 11. Entry, Sojourn and Residence of Investors
Each Contracting Party shall, in accordance with its applicable laws and regulations, give sympathetic consideration to applications for the entry, sojourn and residence of a natural person having the nationality of the other Contracting Party who wish to enter the territory of the former Contracting Party and remain therein for the purpose of investment activities.
Article 12. Senior Management and Boards of Directors
1. A Contracting Party may not require that an enterprise that is investments of an investor of the other Contracting Party, appoint to senior management positions individuals of any particular nationality.
2. A Contracting Party may require that a majority of the board of directors or any committee thereof, of an enterprise that is investments of an investor of the other Contracting Party, be of a particular nationality, or resident in the former Contracting Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investments.
Article 13. Expropriation
1. Neither Contracting Party shall expropriate or nationalise investments in its Area of investors of the other Contracting Party directly or indirectly through measures equivalent to expropriation or nationalisation (hereinafter referred to as "expropriation") except: (a) for a public purpose; (b) in a non-discriminatory manner; (c) upon payment of prompt, adequate and effective compensation pursuant to paragraphs 2, 3 and 4; and (d) in accordance with due process of law and Article 5.
2. The compensation shall be equivalent to the fair market value of the expropriated investments at the time when the expropriation was publicly announced or when the expropriation occurred, whichever is earlier. The fair market value shall not reflect any change in value occurring because the expropriation had become publicly known earlier.
3. The compensation shall be paid without delay and shall include interest at a commercially reasonable rate, taking into account the length of time until the time of payment. It shall be effectively realisable and freely transferable and shall be freely convertible into the currency of the Contracting Party of the investors concerned, and into freely usable currencies as defined in the Articles of Agreement of the International Monetary Fund, at the market exchange rate prevailing on the date of expropriation.
4. Without prejudice to the provisions of Article 18, the investors affected by expropriation shall have a right of access to the courts of justice or administrative tribunals or agencies of the Contracting Party making the expropriation to seek a prompt review of the investors' case and the amount of compensation in accordance with the principles set out in this Article.
Note: For greater certainty, expropriation shall be interpreted in accordance with Annex III and IV.
Article 14. Compensation for Losses or Damages
1. Each Contracting Party shall accord to investors of the other Contracting Party that have suffered loss or damage relating to their investments in the Area of the former Contracting Party due to armed conflict or a state of emergency such as revolution, insurrection, civil disturbance or any other similar event in the Area of that former Contracting Party, treatment, as regards restitution, indemnification, compensation or any other settlement, that is no less favourable than that which it accords to its own investors or to investors of a non-Contracting Party, whichever is more favourable to the investors of the other Contracting Party.
2. Any payment as a means of settlement referred to in paragraph 1 shall be effectively realisable, freely transferable and freely convertible at the market exchange rate into the currency of the Contracting Party of the investors concerned and freely usable currencies.
Article 15. Subrogation
If a Contracting Party or its designated agency makes a payment to any investor of that Contracting Party under an indemnity, guarantee or insurance contract, pertaining to an investment of such investor in the Area of the other Contracting Party, the latter Contracting Party shall recognise the assignment to the former Contracting Party or its designated agency of any right or claim of such investor on account of which such payment is made and shall recognise the right of the former Contracting Party or its designated agency to exercise by virtue of subrogation any such right or claim to the same extent as the original right or claim of the investor. As regards payment to be made to that former Contracting Party or its designated agency by virtue of such assignment of right or claim and the assignment of such payment, the provisions of Articles 13, 14 and 16 shall apply, mutatis mutandis.
Article 16. Transfers
1. Each Contracting Party shall ensure that all transfers relating to investments in its Area of an investor of the other Contracting Party may be freely made into and out of its Area without delay. Such transfers shall include, in particular, though not exclusively:
(a) The initial capital and additional amounts to maintain or increase investments;
(b) Profits, interest, capital gains, dividends, royalties, fees and other current incomes accruing from investments;
(c) Payments made under a contract including loan payments in connection with investments;
(d) Proceeds of the total or partial sale or liquidation of investments;
(e) Earnings and remuneration of personnel engaged from the other Contracting Party who work in connection with investments in the Area of the former Contracting Party;
(f) Payments made in accordance with Articles 13 and 14; and
(g) Payments arising out of the settlement of a dispute under Article 18.