Title
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF SINGAPORE AND THE GOVERNMENT OF THE REPUBLIC OF INDONESIA ON THE PROMOTION AND PROTECTION OF INVESTMENTS
Preamble
PREAMBLE
The Government of the Republic of Indonesia and the Government of the Republic of Singapore (hereinafter collectively referred to as the "Parties" or individually as a "Party"),
RECOGNISING that the creation of a business-friendly environment will be conducive to the stimulation of business initiative for greater investment between the Parties;
ACKNOWLEDGING the important contribution that investments can make to sustainable development, and seeking to promote and facilitate such investments within the territories of the Parties;
RECOGNISING that the encouragement and reciprocal protection of such investments can stimulate business initiative, foster the inflow of capital and technology, and increase economic development and prosperity in both States;
REAFFIRMING the right of the Parties to regulate and to introduce new measures relating to investments in their territories in order to meet legitimate policy objectives,
HAVE AGREED AS FOLLOWS:
Body
Chapter I. DEFINITIONS AND SCOPE
Article 1. DEFINITIONS
For the purposes of this Agreement:
enterprise means any entity, with or without legal personality, constituted or organised under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including a corporation, trust, partnership, sole proprietorship, joint venture, association, or similar organisation, and a branch of an enterprise;
enterprise of a Party means an enterprise constituted or organised under the law of a Party, and carrying out business activities there;
freely usable currency means "freely usable currency" as determined by the International Monetary Fund under its Articles of Agreement of the International Monetary Fund and any amendments thereto;
ICSID means the International Centre for Settlement of Investment Disputes;
ICSID Additional Facility Rules means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes, as amended and in effect on April 10, 2006;
ICSID Arbitration Rules means the Rules of Procedure for Arbitration Proceedings (Arbitration Rules), as amended and in effect on April 10, 2006;
ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington on March 18, 1965;
investment means any kind of asset owned or controlled, directly or indirectly, by an investor that has the characteristics of an investment. (1) Forms that an investment may take include, but are not limited to: (2)
(a) shares, stocks and other forms of equity participation in an enterprise, including rights derived therefrom;
(b) bonds, debentures, loans and other debt instruments (3) (4), including rights derived therefrom;
(c) turnkey, construction, management, production, concession, revenue-sharing, and other similar contracts;
(d) claims to money or to any contractual performance related to a business and under contract having an economic value; (5)
(e) intellectual property rights which are conferred pursuant to the laws and regulations of a Party where the investment is located and goodwill;
(f) licences, authorisations, permits, and similar rights conferred pursuant to applicable domestic law, including any concession to search for, cultivate, extract or exploit natural resources; (6) and
(g) other tangible or intangible, movable or immovable property and related property rights such as mortgages, liens or pledges;
For the purpose of the definition of "investment", 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.
investor means:
(a) an enterprise of a Party; or
(b) a natural person who, under the law of a Party, is a national (7) of that Party or has the right of permanent residence in that Party where both that Party and the other Party in which the person is making or has made an investment recognise permanent residents and accord substantially the same treatment to their respective permanent residents as they accord to their respective nationals in respect of measures affecting investment;
that has made an investment;
locally established enterprise means an enterprise owned or controlled (8) by an investor of a Party, established in the territory of the other Party;
Measure means any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form, and includes measures taken 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;
New York Convention means the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, adopted at the United Nations in New York on June 10, 1958;
returns means amounts yielded by or derived from an investment, including, but not limited to, any profits, interest, capital gains, dividends, royalties or fees;
territory means:
(a) in respect of the Republic of Indonesia: the land territories, territorial sea, archipelagic waters, internal waters, including sea-bed and subsoil thereof, and airspace over such territories, as well as continental shelf and exclusive economic zone, over which Indonesia has sovereignty, sovereign rights or jurisdiction, as defined in its laws, and in accordance with the United Nations Convention on the Law of the Sea, done at Montego Bay, 10 December 1982;
(b) in respect of the Republic of Singapore: its land territory, internal waters and territorial sea, as well as any maritime area situated beyond the territorial sea which has been or might in the future be designated under its national law, in accordance with international law, as an area within which Singapore may exercise sovereign rights or jurisdiction with regards to the sea, the sea-bed, the subsoil and the natural resources;
UNCITRAL Arbitration Rules means the Arbitration Rules of the United Nations Commission on International Trade Law, as adopted by the United Nations General Assembly on 15 December 1976; and
WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994.
Article 2. APPLICABILITY OF AGREEMENT
1. This Agreement shall apply, with respect to a Party, to an investment in its territory of an investor of the other Party in existence as of the date of entry into force of this Agreement or made, established, acquired or expanded thereafter, and has been admitted according to the laws, regulations, and national policies of the former Party, and where applicable, specifically approved in writing (9) by the competent authority of the former Party.
2. The provisions in this Agreement shall not apply to claims arising out of events which occurred,(10) or claims which had been raised, prior to the entry into force of this Agreement.
3. This Agreement shall not apply to:
(a) subsidies or grants provided by a Party, including government-supported loans, guarantees, and insurance, or to any conditions attached to the receipt or continued receipt of such subsidies or grants, whether or not such subsidies or grants are offered exclusively to investors of the Party or investments of investors of the Party;
(b) government procurement;
(c) services supplied in the exercise of governmental authority;
(d) matters of taxation (11) in the territory of a Party, which shall, except as set out in Article 43 (Taxation), be governed by the domestic laws of the Party and by any tax treaty between the Parties.
Chapter II. PROTECTION
Article 3. TREATMENT OF INVESTMENT
1. Each Party shall accord to investments fair and equitable treatment and full protection and security.
2. For greater certainty:
(a) "fair and equitable treatment" requires each Party not to deny justice in any legal or administrative proceedings in accordance with the principle of due process of law;
(b) "full protection and security" requires each Party to take such measures as may be reasonably necessary to ensure the protection and security of the investment;
(c) 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; and
(d) 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 under customary international law, and do not create additional substantive rights.
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 4. NATIONAL TREATMENT (12) (13)
1. Each Party shall accord to investments of investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the management, conduct, operation, and sale or other disposition of investments.
2. For greater certainty, the treatment to be accorded by a Party under paragraph 1 means, with respect to a regional level of government, treatment no less favourable than the most favourable treatment accorded, in like circumstances, by that regional level of government to investments of investors, of the Party of which that regional level of government forms a part.
Article 5. MOST-FAVOURED-NATION TREATMENT
1. Each Party shall accord to investments of investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investments in its territory of investors of any non-Party with respect to the management, conduct, operation, and sale or other disposition of investments.
2. The provisions of this Article shall not be construed so as to oblige a Party to extend to the investors of the other Party and investments of investors of the other Party the benefit of any treatment, preference or privilege resulting from:
(a) any bilateral investment agreements (also commonly referred to as "investment guarantee agreements", "investment promotion and protection agreements", or "international investment agreements") that were initialled, signed or have entered into force prior to the entry into force of this Agreement; (14) or
(b) any arrangement with a non-Party or parties in the same geographical region designed to promote regional cooperation in the economic, social, labour, industrial or monetary fields within the framework of specific projects.
3. For greater certainty, paragraphs 1 and 2 shall not apply to options or procedures for the settlement of disputes that are available in other agreements, and shall not be construed as granting to investors options or procedures for the settlement of disputes other than those set out in Section One (Settlement of Disputes between a Party and an Investor of the Other Party) of Chapter III (Dispute Settlement).
4. For greater certainty, substantive obligations in other international investment treaties or other trade agreements do not in themselves constitute "treatment", and thus cannot give rise to a breach of this Article, provided that no measures have been adopted or maintained by a Party pursuant to such obligations.
Article 6. EXPROPRIATION (15)
1. Neither Party shall expropriate or nationalise an investment either directly or indirectly through measures equivalent to expropriation or nationalisation (hereinafter referred to as "expropriation"), except:
(a) for a public purpose; (16)
(b) in a non-discriminatory manner;
(c) on payment of prompt, adequate and effective compensation in accordance with paragraphs 2 and 3; (17) and
(d) in accordance with due process of law.
2. Compensation shall:
(a) be paid without undue delay; (18)
(b) be equivalent to the fair market value (19) of the expropriated investment immediately before the expropriation took place ("the date of expropriation") or before the impending expropriation became public knowledge, whichever is earlier;
(c) not reflect any change in value occurring because the intended expropriation had become known earlier;
(d) be effectively realisable, freely usable and freely transferable in accordance with Article 8 (Transfers).
3. The compensation shall include interest at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment. Valuation criteria used to determine fair market value may include going concern value, asset value including the declared tax value of tangible property, replacement value, capital invested, the nature and duration of the investment, and other criteria, as appropriate.
4. Notwithstanding paragraphs 1, 2 and 3, any measure of expropriation relating to land, which shall be defined in the existing domestic legislation of the expropriating Party on the date of entry into force of this Agreement, shall be for a purpose and upon payment of compensation in accordance with the aforesaid legislation.
5. Any measure of expropriation or valuation may, at the request of investors, be reviewed by a judicial or other independent authority of the Party taking the measure in the manner prescribed by its laws.
6. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation, or creation of intellectual property rights, to the extent that such issuance, revocation, limitation, or creation is consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreement. (20)
Article 7. COMPENSATION FOR LOSSES
Investors of a Party whose investments in the territory of the other Party suffer losses owing to war or other armed conflict, civil disturbances, a state of national emergency, revolt, insurrection, riot or other similar situations in the territory of the latter Party, shall be accorded by the latter Party treatment, as regards restitution, indemnification, compensation or other settlement, if any, no less favourable than that which the latter Party accords to investors of any non-Party or to its own investors, whichever is more favourable. Any resulting compensation shall be made in freely usable currency and be freely transferable in accordance with Article 8 (Transfers).
Article 8. TRANSFERS
1. Each Party shall permit all transfers relating to investments of an investor of the other Party in its territory to be made freely and without delay into and out of its territory. Such transfers include:
(a) contributions to capital, including the initial contribution;
(b) profits, dividends, capital gains, and proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;
(c) interest, royalty payments, management fees, and technical assistance and other fees;
(d) payments made under a contract, entered into by the investor, or its investment, including payments made pursuant to a loan agreement;
(e) payments made pursuant to Article 6 (Expropriation) and Article 7 (Compensation for Losses); and
(f) payments arising under Chapter III (Dispute Settlement).
2. Each Party shall permit such transfers 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 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) criminal or penal offences;
(d) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
(e) ensuring compliance with orders or judgments in judicial or administrative proceedings;
(f) social security, public retirement, or compulsory savings schemes;
(g) severance entitlements of employees; or
(h) the requirement to register and satisfy other formalities imposed by the central bank or other relevant authorities of a Party.
4. Nothing in this Agreement shall affect the rights and obligations of the members of the International Monetary Fund under the Articles of Agreement of the International Monetary Fund, including the use of exchange actions which are in conformity with the Articles of Agreement of the International Monetary Fund provided that a Party shall not impose restrictions on any capital transactions inconsistently with its obligations under this Agreement regarding such transactions, except under Article 9 (Restrictions to Safeguard the Balance of Payments) or at the request of the International Monetary Fund.
Article 9. RESTRICTIONS TO SAFEGUARD THE BALANCE OF PAYMENTS
1. In the event of serious balance of payments and external financial difficulties or threat thereof, or 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, a Party may adopt or maintain restrictions on payments, transfers or capital movements, related to investments. It is recognised that particular pressures on the balance of payments of a Party in the process of economic development may necessitate the use of restrictions to ensure, inter alia, the maintenance of a level of financial reserves adequate for the implementation of its programme of economic development.
2. The restrictions referred to in paragraph 1 shall:
(a) be consistent with the Articles of Agreement of the International Monetary Fund;
(b) avoid unnecessary damage to the commercial, economic and financial interests of the other Party;
(c) not exceed those necessary to deal with the circumstances described in paragraph 1;
(d) be temporary and be phased out progressively as the situation specified in paragraph 1 improves; and
(e) be applied on a non-discriminatory basis such that the other Party is treated no less favourably than any non-Party;
3. Any restrictions adopted or maintained under paragraph 1, or any changes therein, shall be promptly notified to the other Party.
4. The Party adopting any restrictions under paragraph 1 shall promptly agree to the other Party's request for consultation to review the restrictions adopted by it, if such consultations are not otherwise taking place outside this Agreement.
Article 10. SUBROGATION
1. If either Party (or any agency, institution, statutory body or corporation designated by it), as a result of an indemnity it has given on non-commercial risks in respect of an investment or any part thereof, makes payment to its own investors in respect of any of their claims under this Agreement, the other Party shall recognise that the Party making payment to its own investors (or any agency, institution, statutory body or corporation designated by it) is entitled by virtue of subrogation to exercise the rights and assert the claims of its own investors. The subrogated rights or claims shall not be greater than the original rights or
claims of the said investor. This, however, does not necessarily imply recognition by the other Party of the merits of any case or the amount of any claims arising therefrom.
2. Where a Party (or any agency, institution, statutory body or corporation designated by it) 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 any agency, institution, statutory body or corporation designated by it) making the payment, pursue those rights and claims against the other Party.
3. In the exercise of subrogated rights or claims, a Party (or any agency, institution, statutory body or corporation designated by it) exercising such rights or claims shall disclose the coverage of the claims arrangement with its investors to the other Party.
Article 11. RIGHT TO REGULATE
1. The Parties reaffirm their right to regulate within their respective territories to achieve legitimate policy objectives, such as the protection of public health, social services, public education, safety, environment or public morals, social or consumer protection, privacy and data protection, and the promotion and protection of cultural diversity.
2. For greater certainty, the mere fact that a Party regulates, including through a modification to its laws, in a manner which negatively affects an investment or interferes with an investor's expectations, including its expectations of profits, does not amount to a breach of an obligation under this Agreement.
Article 12. CORPORATE SOCIAL RESPONSIBILITY
Each Party affirms the importance of encouraging enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate into their internal policies those internationally recognised standards, guidelines, and principles of corporate social responsibility that have been endorsed or are supported by that Party.
Article 13. MEASURES AGAINST CORRUPTION
1. The Parties reaffirm that bribery and other forms of corruption in any investment activities can undermine democracy and rule of law, discourage foreign investment and adversely affect economic development of the Parties.