Title

AGREEMENT BETWEEN AUSTRALIA AND THE ORIENTAL REPUBLIC OF URUGUAY ON THE PROMOTION AND PROTECTION OF INVESTMENTS

Preamble

Australia and the Oriental Republic of Uruguay, hereinafter "the Parties"

RECOGNISING the importance of promoting the flow of capital for economic activity and development and aware of its role in expanding economic relations and technical co-operation between them, particularly with respect to investment by investors of one Party in the territory of the other Party;

CONSIDERING that investment relations should be promoted and economic co-operation strengthened in accordance with the internationally accepted principles of mutual respect for sovereignty, equality, mutual benefit, non-discrimination and mutual confidence;

ACKNOWLEDGING that investments of investors of one Party in the territory of the other Party would be made within the framework of the laws of that other Party;

RECOGNISING that pursuit of these objectives would be facilitated by a clear statement of principles relating to the protection of investments, combined with rules designed to render more effective the application of these principles within the territories of the Parties, and

RECOGNISING their inherent right to regulate and resolving to preserve the flexibility of the Parties to set legislative and regulatory priorities, safeguard public welfare, and protect legitimate public welfare objectives, such as public health, safety, the environment, the conservation of living or non-living exhaustible natural resources, the integrity and stability of the financial system and public morals,

HAVE AGREED as follows:

Body

Article 1. Definitions

1. For the purposes of this Agreement:

(a) "investment" means every kind of asset, owned or controlled by an investor of one Party, made in the territory of the other Party, subject to its laws and regulations, and investment policies applicable from time to time, that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms that an investment may take include:

(i) Tangible and intangible property, including rights such as mortgages, liens and other pledges,

(ii) Shares, stocks, bonds and debentures and any other form of participation in a company but does not include a sovereign debt, regardless of original maturity, of a Party or a debt of a state enterprise,

(iii) A loan or other claim to money or a claim to performance having economic value,

(iv) Intellectual property rights, including rights with respect to copyright, patents, trademarks, trade names, industrial designs, trade secrets, know-how and goodwill, and

(v) Business concessions and any other rights required to conduct economic activity and having economic value conferred by law or under a contract, including rights to engage in agriculture, forestry, fisheries and animal husbandry, to search for, extract or exploit natural resources and to manufacture, use and sell products,

The term "investment" does not include an order or judgment entered in a judicial or administrative action.

(b) "return" means an amount yielded by or derived from an investment, including profits, dividends, interest, capital gains, royalty payments, management or technical assistance fees, payments in connection with intellectual property rights, and all other lawful income;

(c) "investor of a Party" means a natural person of a Party or a company of a Party who has made an investment in the territory of the other Party;

(d) "company of a Party" means any corporation, association, partnership, trust or other legally recognised entity that is duly incorporated, constituted, set up, or otherwise duly organised under the law of a Party, regardless of whether or not it is organised for pecuniary gain, privately or otherwise owned, or organised with limited or unlimited liability, and carrying out substantial business activities in the territory of that Party;

(e) For the purposes of this Agreement, a company is:

(i) "owned" by an investor if more than fifty percent of the equity interest in it is beneficially owned by the investor; and

(ii) "controlled" by an investor if the investor has the power to name a majority of its directors or otherwise to legally direct its actions;

(f) "natural person of a Party" means a citizen or a person enjoying the status of permanent resident under the law of that Party;

(g) "freely convertible currency" means a convertible currency as classified by the International Monetary Fund or any currency that is widely traded in international foreign exchange markets;

(h) "territory" means:

(i) With respect to Australia, the territory of Australia:

(1) Excluding all external territories other than the Territory of Norfolk Island, the Territory of Christmas Island, the Territory of Cocos (Keeling) Islands, the Territory of Ashmore and Cartier Islands, the Territory of Heard Island and McDonald Islands, and the Coral Sea Islands Territory; and

(2) Including Australia's air space, territorial sea, contiguous zone, exclusive economic zone and continental shelf over which Australia exercises sovereign rights or jurisdiction in accordance with international law;

(ii) With respect to the Oriental Republic of Uruguay, the territory of the Oriental Republic of Uruguay, including land territory, internal waters, territorial sea including their seabed and subsoil and air space over them under its sovereignty, and the exclusive economic zone and the continental shelf with respect to which the Oriental Republic of Uruguay exercises sovereign rights or jurisdiction, in accordance with international law and its domestic laws and regulations.

2. For the purposes of paragraph 1(a) of this Article, returns that are invested shall be treated as investments and any alteration of the form in which assets are invested or reinvested shall not affect their character as investments.

Article 2. Application of Agreement

1. This Agreement shall apply to investments whenever made but shall not apply to disputes which have arisen prior to the entry into force of this Agreement.

2. A natural person who is a citizen of both Parties shall be deemed to be exclusively a national of the Party of his or her dominant and effective nationality.

3. This Agreement shall not apply to a permanent resident of one Party where:

(a) The provisions of an investment protection agreement between the other Party and a non-Party of which that person is a citizen have already been invoked in respect of the same matter; or

(b) The permanent resident is a citizen of the other Party.

Article 3. Promotion of Investments

1. Each Party shall encourage and promote investments in its territory by investors of the other Party.

2. This Agreement shall not prevent an investor of one Party from taking advantage of the provisions of any law or policy of the other Party which are more favourable than the provisions of this Agreement.

Article 4. Minimum Standard of Treatment

1. Each Party shall accord to investments of investors of the other Party treatment in accordance with the customary international law minimum standard of treatment of aliens, including fair and equitable treatment and full protection and security.

2. For greater certainty, paragraph 1 prescribes the customary international law minimum standard of treatment of aliens as the standard of treatment to be afforded to investments. The concepts of "fair and equitable treatment" and "full protection and security" do not require treatment in addition to or beyond that which is required by that standard, and do not create additional substantive rights. The obligation in paragraph 1 to provide:

(a) "fair and equitable treatment" includes the obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world; and

(b) "full protection and security" requires each Party to provide the level of police protection required under customary international law.

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.

4. For greater certainty, the mere fact that a Party takes or fails to take an action that may be inconsistent with an investor's expectations does not constitute a breach of this Article, even if there is loss or damage to the investment as a result.

5. For greater certainty, the mere fact that a subsidy or grant has not been issued, renewed or maintained, or has been modified or reduced, by a Party, does not constitute a breach of this Article, even if there is loss or damage to the investment as a result.

Article 5. Most Favoured Nation Treatment

1. Each Party shall at all times treat investments in its own territory on a basis no less favourable than that accorded, in like circumstances (1), to investments of investors of any non-Party, provided that a Party shall not be obliged to extend to investments any treatment, preference or privilege resulting from:

(a) Any customs union, economic union, free trade area or regional economic integration agreement to which the Party belongs;

(b) The provisions of a double taxation agreement with a non-Party;

(c) Any measure that a Party adopts or maintains with respect to government procurement; or

(d) Subsidies or grants provided by a Party, including government-supported loans, guarantees, and insurance.

2. For greater certainty, the treatment referred to in this Article does not encompass international dispute resolution procedures or mechanisms, such as those included in Article 14.

(1) For greater certainty, whether treatment is accorded in "like circumstances" under Article 5 depends on the totality of the circumstances, including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public welfare objectives.

Article 6. Transparency of Laws

Each Party shall, with a view to promoting the understanding of its laws, regulations and investment policies that pertain to or affect investments in its territory by investors of the other Party, make such laws public and readily accessible.

Article 7. Expropriation

1. Neither Party shall nationalise, expropriate or subject to measures having effect equivalent to nationalisation or expropriation (hereinafter referred to as "expropriation") the investments of investors of the other Party unless the following conditions are complied with:

(a) The expropriation is for a public purpose;

(b) Under due process of law;

(c) The expropriation is non-discriminatory; and

(d) The expropriation is accompanied by the payment of prompt, adequate and effective compensation.

2. The compensation referred to in paragraph 1(d) of this Article shall be computed on the basis of the market value of the investment immediately before the expropriation or impending expropriation became public knowledge. Where that value cannot be readily ascertained, the compensation shall be determined in accordance with generally recognised principles of valuation and equitable principles taking into account the capital invested, depreciation, capital already repatriated, replacement value, currency exchange rate movements and other relevant factors.

3. The compensation shall be paid without undue delay, shall include interest at a commercially reasonable rate from the date the measures were taken to the date of payment and shall be freely transferable between the territories of the Parties.

4. For greater certainty, the mere fact that a subsidy or grant has not been issued, renewed or maintained, or has been modified or reduced, by a Party, does not constitute a breach of this Article, even if there is loss or damage to the investment as a result.

5. This Article shall not apply to the issuance of compulsory licenses granted in relation to intellectual property rights in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights, in Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on April 15, 1994 ("TRIPS Agreement"), or to the revocation, limitation, or creation of intellectual property rights, to the extent that the issuance, revocation, limitation or creation is consistent with the TRIPS Agreement. (3)

Footnote (2) This Article shall be interpreted in accordance with Annex B (Expropriation).

Footnote (3) For greater certainty, the Parties recognise that, for the purposes of this Article, the term "revocation" of intellectual property rights includes the cancellation or nullification of those rights, and the term "limitation" of intellectual property rights includes exceptions to those rights.

Article 8. Compensation for Losses

When a Party adopts any measures relating to losses in respect of investments in its territory by investors of any non-Party owing to war or other armed conflict, revolution, a state of national emergency, civil disturbance or other similar events, the treatment accorded to investors of the other Party as regards restitution, indemnification, compensation or other settlement shall be no less favourable than that which the first Party accords to investors of any non-Party.

Article 9. Transfers

1. Each Party shall, when requested by an investor of the other Party permit all funds of that investor related to an investment in its territory to be transferred freely and without unreasonable delay. Such funds include the following:

(a) The initial capital plus any additional capital used to maintain or expand the investment;

(b) Returns;

(c) Proceeds from the sale or partial sale or liquidation of the investment;

(d) Payments made pursuant to a loan agreement or for the losses referred to in Article 8; and

(e) Unspent earnings and other remuneration of personnel engaged from abroad in connection with that investment.

2. Transfers shall be permitted in freely convertible currency. Unless otherwise agreed by the investor and the Party concerned, transfers shall be made at the market rate of exchange prevailing at the time of transfer.

3. Notwithstanding paragraphs 1 and 2, a Party may prevent or delay a transfer through the equitable, non-discriminatory and good faith application of its laws and regulations applicable from time to time 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) Criminal or penal offences;

(d) Financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities; or

(e) Ensuring compliance with orders or judgments in judicial or administrative proceedings.

4. A Party may adopt or maintain measures inconsistent with paragraphs 1 and 2:

(a) In the event of serious balance-of-payments and external financial difficulties or threat thereof; or

(b) In cases where, in exceptional circumstances, movements of capital cause or threaten to cause serious difficulties for macroeconomic management, in particular, monetary and exchange rate policies.

5. Any measures adopted or maintained under paragraph 4 shall:

(a) Be applied such that the other Party is treated no less favourably than any non-Party;

(b) Be consistent with the Articles of Agreement of the International Monetary Fund;

(c) Not exceed those necessary to deal with the circumstances set out in paragraph 4;

(d) Be temporary and be phased out progressively as the situation specified in paragraph 4 improves;

(e) Be promptly notified to the other Party; and

(f) Avoid unnecessary damage to the commercial, economic and financial interests of the other Party.

6. The Party which has adopted any measures under paragraph 4 shall promptly respond to any questions from the other Party in relation to those measures.

Article 10. Subrogation

1. If a Party or an agency of a Party makes a payment to an investor of that Party under a guarantee, a contract of insurance or other form of indemnity it has granted in respect of an investment, 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 an 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 agency of the Party making the payment, pursue those rights and claims against the other Party.

Article 11. Denial of Benefits

1. (a) A Party may at any time deny the benefits of this Agreement to an investor of the other Party that is a company of that other Party and to investments of that investor if the company:

(i) Is owned or controlled by a natural person or company of a non-Party or of the denying Party; and

(ii) Has no substantial business activities in the territory of the other Party.

(b) A Party may at any time deny the benefits of this Agreement to an investor of the other Party that is a company of that other Party and to investments of that investor if natural persons or companies of a non-Party own or control the company and the denying Party adopts or maintains measures with respect to the non-Party or a natural person or company of the non-Party that prohibit transactions with the company or that would be violated or circumvented if the benefits of this Agreement were accorded to the company or to its investments.

Article 12. Consultations between the Parties

The Parties shall consult at the request of either of them on matters concerning the interpretation or application of this Agreement.

Article 13. Settlement of Disputes between the Parties

1. The Parties shall endeavour to resolve any dispute between them connected with this Agreement by prompt and friendly consultations and negotiations.

2. If a dispute is not resolved by such means within six months of one Party seeking in writing such negotiations or consultations, it shall be submitted at the request of either Party to an Arbitral Tribunal established in accordance with the provisions of Annex A of this Agreement or, by agreement, to any other international tribunal.

Article 14. Settlement of Disputes between a Party and an Investor of the other Party

1. For the purposes of this Article:

(a) "claimant" means an investor of a Party that is a party to an investment dispute with the other Party;

(b) "disputing parties" means the claimant and the respondent;

(c) "disputing party" means the claimant or the respondent;

(d) "ICSID Additional Facility Rules" means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for the Settlement of Investment Disputes;

(e) "ICSID Convention" means the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18, 1965;

(f) "New York Convention" means the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958;

(g) "respondent" means the Party that is a party to an investment dispute;

(h) "UNCITRAL Arbitration Rules" means the arbitration rules of the United Nations Commission on International Trade Law.

2. This Article shall apply to disputes between a respondent and a claimant concerning an alleged breach of an obligation of the former under this Agreement which causes loss or damage to the claimant or its investment (referred to hereafter as an "investment dispute").

3. In the event of an investment dispute, the disputing parties shall initially seek to resolve the dispute by consultations and negotiations.

4. If the investment dispute in question has not been resolved within six months of the request for consultations and negotiations, the claimant may submit a claim, where alleged:

(a) That the respondent has breached an obligation under this Agreement; and

(b) That the claimant has incurred loss or damage by reason of, or arising out of, that breach.

5. A claimant may submit a claim referred to in paragraph 2 under one of the following alternatives:

(a) To a competent court of the Party in whose territory the investment is made, provided such a court has jurisdiction over such claims under the law of that Party; or

(b) The ICSID Convention and the ICSID Rules of Procedure for Arbitration Proceedings, provided that both Parties are parties to the ICSID Convention; or

(c) The ICSID Additional Facility Rules, provided that either Party is a party to the ICSID Convention; or

(d) The UNCITRAL Arbitration Rules; or

(e) By agreement, to any other arbitral institution or any other arbitration rules.

Once the claimant has submitted an investment dispute to one of the forums referred to in paragraph 5, the election of the forum shall be definitive and the claimant may not submit thereafter the same claim to any other forum.

6. The arbitration rules applicable under paragraph 5 that are in effect on the date the claim or claims were submitted to arbitration under this Article shall govern the arbitration except to the extent modified by this Agreement.

7. The disputing parties may agree on the legal place of any arbitration under the arbitration rules applicable under paragraph 5. If the disputing parties fail to reach agreement, the tribunal shall determine the place in accordance with the applicable arbitration rules, provided that the place shall be in the territory of a party to the New York Convention.

8. A claimant may not submit a claim alleging a breach of, or otherwise invoking, Article 5 (Most favoured nation treatment) on the basis that another international agreement contains more favourable rights or obligations. For greater certainty, this shall not prevent a claim challenging measures of a Party, including measures taken pursuant to another international agreement, on the basis that those measures breach Article 5 and have resulted in loss or damage to the claimant.

9. At least 90 days before submitting any claim to arbitration under this Article, the claimant shall deliver to the respondent a written notice of its intention to submit a claim to arbitration. This notice of arbitration shall specify:

(a) The name and address of the claimant and, if relevant, place of incorporation of the claimant;

(b) For each claim, the provision of this Agreement alleged to have been breached and any other relevant provisions;

(c) The legal and factual basis for each claim; and

(d) The relief sought and the approximate amount of damages claimed.

10. No claim shall be submitted to arbitration under this Article if more than three years have elapsed from the date on which the claimant first acquired, or should have first acquired, knowledge of the alleged breach.

11. No claim shall be submitted to arbitration under this Article unless:

(a) The claimant consents in writing to arbitration in accordance with the procedures set out in this Agreement; and

(b) The claimant has provided a written waiver of any right to initiate or continue before any court or administrative tribunal under the law of a Party, or any other dispute settlement procedures, any proceeding with respect to any measure alleged to constitute a breach of this Agreement.

12. Once an action referred to in paragraph 5 of this Article has been taken, neither Party shall pursue the dispute through diplomatic channels unless:

(a) The relevant judicial or administrative body, the Secretary-General of ICSID ("Secretary-General"), the arbitral authority or tribunal or the conciliation commission, as the case may be, has decided that it has no jurisdiction in relation to the dispute in question; or

(b) The respondent has failed to abide by or comply with any judgment, award, order or other determination made by the body in question.