Title

AGREEMENT BETWEEN THE GOVERNMENT OF THE ITALIAN REPUBLIC AND THE GOVERNMENT OF XXXX FOR THE PROMOTION AND PROTECTION OF INVESTMENTS

Preamble

The Government of the Italian Republic and the Government of XXXX hereafter referred to as "Parties",

DESIRING to establish favourable conditions to enhance economic co-operation between the two Countries, especially in relation to direct investments by investors of one Party in the territory of the other Party;

RECOGNISING the importance of strengthening their investment relations, in accordance with the objective of sustainable development in the economic, social and environmental dimensions, and of promoting investment between them, mindful of the needs of the business communities of each Party, in particular small and medium-sized enterprises, and of high levels of environmental and labour protection through relevant internationally recognised standards and international agreements, to which both Parties are party;

REAFFIRMING their commitment to the principles of sustainable development and transparency;

SEEKING to establish an investment framework based on mutually advantageous rules to govern investment between the Parties that would enhance the competitiveness of their economies, make their markets more efficient and vibrant, and ensure predictable legal environment for further expansion of investment between them;

REAFFIRMING their commitment to the Charter of the United Nations and having regard to the principles articulated in the Universal Declaration of Human Rights;

ACKNOWLEDGING that the mutual encouragement and protection of investments based on international agreements will contribute to stimulate economic relations that will foster the prosperity of both Parties;

ENCOURAGING enterprises operating within their territory or subject to their jurisdiction to respect internationally recognised guidelines and principles of corporate social responsibility, including the OECD Guidelines for Multinational Enterprises, and to pursue best practices of responsible business conduct;

RECOGNIZING the importance to promote equal opportunities and participation for women and men in the economy;

WILLING to duly protect the intellectual property rights of their investors and

RECOGNISING that the provisions of this Agreement preserve the right of the Parties to regulate within their territories in order to achieve legitimate public policy objectives, such as public health, safety, environment, public morals, financial stability, social or consumer protection, and the promotion and protection of cultural diversity;

HAVE AGREED AS FOLLOWS:

Body

Section 1. OBJECTIVES, SCOPE AND DEFINITIONS

Article 1.

Objectives The objective of this Agreement is to enhance the investment climate between the Parties, in accordance with the following provisions.

Article 2. Definitions

For the purpose of this Agreement:

"covered investment" means an investment in the territory of a Party owned or controlled, directly or indirectly, by an investor of the other Party, made in accordance with the applicable law before or after the date of entry into force of this agreement;

"territory" means the part of a land area, internal and territorial waters, air space above them, the sea area outside the territorial waters, including the seabed and subsoil on which the Party exercises sovereign rights, and subject to its jurisdiction, according to international law;

"freely convertible currency" means a currency that can be freely exchanged against currencies that are widely traded in international foreign exchange markets and widely used in international transactions;

"investment" means every kind of asset that has the characteristics of an investment, including such characteristics as a certain duration, the commitment of capital or other resources, the assumption of risk, or the expectation of gain or profit. Forms that an investment may take include:

(a) an enterprise;

(b) shares, stocks and other forms of equity participation in an enterprise;

(c) bonds, debentures, loans and other financial instruments of an enterprise;

(d) interests arising from:

i) concessions conferred pursuant to domestic law or under a contract, including to search for, cultivate, extract or exploit natural resources,

ii) turnkey, construction, production, or revenue-sharing contracts, or other similar contracts;

(e) intellectual property rights;

(f) claims to money or claims to performance under a contract;

(g) any other moveable or immovable, tangible or intangible property, and related rights.

For greater certainty:

(a) returns that are invested shall be treated as investment;

(b) any alteration of the form in which assets are invested or reinvested shall not affect their qualification as investments, provided that the form taken by the investment or reinvestment maintains its compliance with the definition of investment;

(c) "claims to money" does not include claims to money that arise solely from commercial transactions for the sale of goods or services by a natural person or an enterprise in the territory of a Party to a natural person or an enterprise in the territory of the other Party, or the extension of credit in relation to such transactions; and

(d) an order or judgment entered in a judicial or administrative action or an arbitral award shall not in itself constitute an investment.

"investor of a Party" means:

(a) a natural person of a Party; or

(b) a juridical person duly constituted or otherwise organised under the applicable law of a Party, and engaged in substantive business operations in the territory of a Party, that has made a covered investment in the territory of the other Party.

In respect of the Republic of Italy, the term "investor" also includes:

(a) any national of a Member State of the European Union or of the European Economic Area who, within the context of freedom of establishment pursuant to Article 49 of the Treaty on the Functioning of the European Union, is established in the Italian Republic;

(b) any juridical person of a Member State of the European Union or of the European Economic Area that enjoys freedom of establishment as an agency or permanent establishment in Italy pursuant to Articles 49 and 54 of the Treaty on the Functioning of the European Union and engaged in substantive business operations in Italy;

"juridical person" means any entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, and includes a corporation, trust, partnership, sole proprietorship, joint venture, association, or other organization;

"control" means, in relation to any juridical person, being:

(a) entitled to exercise, or control the exercise of (directly or indirectly) more than 50 per cent of the voting power at any general meeting of the shareholders, members or partners or other equity holders (and including, in the case of a limited partnership, of the limited partners of, or, in the case of a trust, of the beneficiaries thereof) in respect of all or substantially all matters falling to be decided by resolution or meeting of such persons; or

(b) entitled to appoint or remove:

(i) directors on the board of directors or its other governing body (or, in the case of a limited partnership, of the board or other governing body of its general partner) who are able (in aggregate) to exercise more than 50 per cent of the voting power at meetings of that board or governing body in respect of all or substantially all matters; and/or

(ii) any managing member of that undertaking;

(iii) in the case of a limited partnership, its general partner; or

(iv) in the case of a trust, its trustee and/or manager; or

(c) entitled to exercise a dominant influence over that juridical person (otherwise than solely as a fiduciary) by virtue of the provisions contained in its constitutional documents or, in the case of a trust, trust deed or pursuant to an agreement with other shareholders, partners, members (or beneficiaries) of that juridical person;

"measure of a Party" means any measure, whether in form of a law, regulation, rule, procedure, decision, practice, administrative action, or any other form, including failure to act, which is adopted or maintained by:

(a) central, regional or local governments or authorities; and

(b) non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities.

For greater certainty, "measures of a Party" covers measures by entities listed under sub-paragraphs (a) and (b), which are adopted or maintained by instructing, directing or controlling, either directly or indirectly, the conduct of other entities with regard to those measures;

"operation" means conduct, management, maintenance, use, enjoyment and sale or other form of disposal of an investment;

"returns" means any amounts yielded by or derived from an investment or reinvestment, including profits, dividends, capital gains, royalties, interest, revenues from intellectual property rights, returns in kind and other lawful income.

Article 3. Scope

This Agreement shall apply to measures adopted or maintained by a Party affecting:

(a) covered investments; and

(b) investors of a Party in respect of a covered investment.

For greater certainty, this Agreement provides only post-establishment protection and does not cover the pre-establishment phase or matters of market access.

Section 2. PROMOTION, PROTECTION AND TREATMENT OF THE INVESTMENTS

Article 4. Treatment of Investors and of Covered Investments

1. Each Party shall accord in its territory to covered investments and to investors of the other Party with respect to their covered investments fair and equitable treatment and full protection and security in accordance with paragraphs 2 to 5.

2. A Party breaches the obligation of fair and equitable treatment referenced in paragraph 1 through measures or series of measures that constitute:

(a) denial of justice in criminal, civil or administrative proceedings; or

(b) fundamental breach of due process, including a fundamental breach of transparency in judicial and administrative proceedings; or

(c) manifest arbitrariness; or

(d) targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief; or

(e) abusive treatment such as harassment, duress or coercion.

3. When determining a breach of paragraph 2, a tribunal may take into account whether a Party made a specific representation to an investor to induce a covered investment, that created a legitimate expectation, upon which the investor relied in deciding to make or maintain the covered investment, but that the Party subsequently frustrated.

4. For greater certainty, "full protection and security" refers to the Party's obligations to ensure the physical security of investors and covered investments.

5. For greater certainty, a breach of another provision of this Agreement, or of any other international agreement, does not constitute a breach of this Article.

Article 5. Non-discriminatory Treatment

1. Each Party shall accord to investors of the other Party and to covered investments treatment no less favourable than that it accords, in like situations, to its own investors and to their investments, with respect to operation in its territory.

2. Each Party shall accord to investors of the other Party and to covered investments treatment no less favourable than that it accords, in like situations, to investors of a third country and to their investments, with respect to operation in its territory.

3. Paragraph 2 shall not be construed as obliging a Party to extend to investors of the other Party or to covered investment the benefit of any treatment resulting from:

(a) its membership or participation in any existing or future economic integration agreement, such as free trade area, customs union, common market, economic and monetary union, including the European Union; or

(b) an international agreement for the avoidance of double taxation or other international agreement or arrangement relating wholly or mainly to taxation; or

(c) measures providing for recognition, including of the standards or criteria for the authorisation, licencing, or certification of a natural person or enterprise to carry out an economic activity, or of prudential measures.

4. For greater certainty, the "treatment" referred to in paragraph 2 does not include dispute settlement procedures provided for in other international agreements.

5. For greater certainty, substantive provisions in other international agreements concluded by a Party with a third country do not in themselves constitute the "treatment" referred to in paragraph 2. Measures of a Party pursuant to those provisions may constitute such treatment and thus give rise to a breach of this Article. The mere transposition of those provisions into domestic law, to the extent that it is necessary in order to incorporate them into the domestic legal order, does not in itself qualify as a measure.

Article 6. Investment and Regulatory Measures

1. The Parties reaffirm the right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, social services, public education, safety, the environment including climate change, public morals, social or consumer protection, privacy and data protection, or the promotion and protection of cultural diversity.

2. For greater certainty, the provisions of this Agreement shall not be interpreted as a commitment from a Party that it will not change the legal and regulatory framework, including in a manner that may negatively affect the operation of covered investments or the investor's expectations of profits.

3. For greater certainty and subject to paragraph 4, a Party's decision not to issue, renew or maintain a subsidy

(a) in the absence of any specific commitment under law or contract to issue, renew, or maintain that subsidy; or

(b) in accordance with any terms or conditions attached to the issuance, renewal or maintenance of the subsidy,

shall not constitute a breach of the provisions of this Agreement.

4. For greater certainty, nothing in this Agreement shall be construed as preventing a Party from discontinuing the granting of a subsidy or requesting its reimbursement, where such action has been ordered by the competent authorities, or as requiring that Party to compensate the investor therefor.

Article 7. Public Debt

1. No claim that a restructuring of debt of a Party breaches an obligation under this Agreement may be submitted to, or if already submitted, be pursued under Article 24 (Settlement of Disputes between Investors of a Party and the other Party) if the restructuring is a negotiated restructuring at the time of submission, or becomes a negotiated restructuring after such submission.

2. Notwithstanding Article 24, and subject to paragraph 1 of this Article, an investor may not submit a claim that a restructuring of debt of a Party breaches an obligation under this Agreement, unless 270 days have elapsed from the date of submission by the claimant of the written request for consultations pursuant to Article 24 paragraph 1. For greater certainty, a breach of Article 5 (Non- discriminatory Treatment) does not occur merely by virtue of a different treatment provided by a Party to certain categories of investors or investments on grounds of a different macroeconomic impact, for instance to avoid systemic risks or spillover effects, or on grounds of eligibility for debt restructuring.

3. For the purposes of this Article:

(a) "negotiated restructuring" means the restructuring or rescheduling of debt of a Party that has been effected through:

(i) a modification or amendment of debt instruments, as provided for under their terms, including their governing law, or

(ii) a debt exchange or other similar process in which the holders of no less than 75% of the aggregate principal amount of the outstanding debt subject to restructuring, have consented to such debt exchange or other process.

(b) "governing law" of a debt instrument means a jurisdiction's legal and regulatory framework applicable to that debt instrument.

Article 8. Compensation for Damages or Losses

1. Investors of a Party whose covered investments suffer damages or losses owing to war or other armed conflict, revolution, a state of national emergency, revolt, insurrection or riot in the territory of the other Party shall be accorded by that Party, with respect to restitution, indemnification, compensation or other form of settlement, treatment no less favourable than that accorded by that Party to its own investors or to the investors of any non-Party, whichever is more favourable to the investor.

2. Without prejudice to paragraph 1 of this Article, investors of a Party who, in any of the situations referred to in that paragraph, suffer losses in the territory of the other Party shall be accorded prompt, adequate and effective restitution or compensation by the other Party, if these losses result from:

(a) requisitioning of their covered investment or a part thereof by the latter's armed forces or authorities; or

(b) destruction of their covered investment or a part thereof by the latter's armed forces or authorities, which was not required by the necessity of the situation.

The amount of such compensation shall be determined in accordance with the provisions of paragraph 2 of Article 9 (Expropriation), from the date of requisitioning or destruction until the date of actual payment.

Article 9. Expropriation

1. Neither Party shall nationalise or expropriate a covered investment either directly or indirectly through measures having an effect equivalent to nationalisation or expropriation (hereinafter referred to as "expropriation") except:

(a) for a public purpose;

(b) under due process of law;

(c) in a non-discriminatory manner; and

(d) against payment of prompt, adequate and effective compensation.

For greater certainty, this paragraph shall be interpreted in accordance with Annex Il (Expropriation).

2. The compensation referred to in paragraph 1 shall amount to the fair market value of the investment at the time immediately before the expropriation or the impending expropriation became publicly known or when the expropriation took place, whichever is earlier. Valuation criteria shall include going concern value, asset value including the declared tax value of tangible property, and other criteria, as appropriate.

3. The compensation shall include interest at a normal commercial rate from the date of expropriation until the date of payment. It shall be freely transferable in accordance with Article 10 paragraph 11 letter f) (Transfers).

4. The investor affected shall have a right, under the law of the expropriating Party, to prompt review of its claim and of the valuation of its investment, by a judicial or other independent authority of that Party, in accordance with the principles set out in this Article.

5. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, to the extent that such issuance is consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreements ("TRIPS Agreement").

Article 10. Transfers

1. Each Party shall permit all transfers relating to a covered investment to be made in a freely convertible currency, without restriction or delay and at the market rate of exchange prevailing on the date of transfer with regard to the currency to be transferred. Such transfers include:

(a) contributions to capital to maintain, develop or increase the investment;

(b) profits, dividends, capital gains, interest, royalty payments, management fees, technical assistance and other fees or returns derived from the covered investment;

(c) proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;

(d) payments made under a contract entered into by the investor, or its covered investment, including payments made pursuant to a loan agreement;

(e) earnings and other remuneration of personnel engaged from abroad and working in connection with an investment;

(f) payments made pursuant to Articles 8 (Compensation for Losses) and 9 (Expropriation);

(g) payments of damages pursuant to an award issued by an Arbitral Tribunal under Article 24 (Settlement of Disputes between Investors of a Party and the other Party).

2. Neither Party may require its investors to transfer, or penalise its investors for failing to transfer, the income, earnings, profits or other amounts derived from, or attributable to, their covered investments in the territory of the other Party.

3. Notwithstanding paragraphs 1 and 2, this Article shall not be construed as preventing a Party from applying in an equitable and non-discriminatory manner, and not in a way that would constitute a disguised restriction on trade and investment, its laws and regulations relating to:

(a) bankruptcy, insolvency, bank recovery and resolution, or the protection of the rights of creditors;

(b) issuing, trading, or dealing in financial instruments;

(c) financial reporting or record keeping of transfers where necessary to assist law enforcement or financial regulatory authorities;

(d) criminal or penal offenses, deceptive or fraudulent practices;

(e) ensuring compliance with orders or judgments in judicial or administrative proceedings; (f) social security, public retirement or compulsory savings schemes.

Article 11. Subrogation

If a Party, or an agency thereof, makes a payment under an indemnity, guarantee or contract of insurance it has entered into in respect of a covered investment:

(a) the other Party shall recognize that the Party or its agency shall be entitled in all circumstances to the same rights under this Agreement as those of the investor in respect of the covered investment. Such rights are the same as investors would have, had the subrogation not happened. Such rights may be exercised by the Party or an agency thereof, or by the investor if the Party or an agency thereof so authorises;

(b) the investor shall not pursue these rights to the extent of the subrogation.

Article 12. Transparency

1. Each Party shall publish, or otherwise make publicly available, its laws and regulations of general application, as well as international agreements which may affect investors of the other Party and their covered investments in its territory, including any measures aimed at protecting the environment and labour conditions or that may be affecting the protection of the environment or labour conditions, thereby ensuring awareness and providing reasonable opportunities for interested persons and stakeholders to submit views.

2. Nothing in this Article shall require the Party to furnish or allow access to any confidential or proprietary information, including information concerning particular investors or their covered investments, the disclosure of which would impede law enforcement or be contrary to domestic laws protecting confidentiality, or would prejudice legitimate commercial interests of investors and their covered investments.

Article 13. Observance of Written Commitments

Where a Party has entered into any written commitment with investors of the other Party or with their covered investments, that Party shall not breach the said commitment through the exercise of governmental authority.

Article 14. Prudential Carve-out

1. Nothing in this Agreement shall prevent a Party from adopting or maintaining measures for prudential reasons, such as:

(a) the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is owed by a financial service supplier;

(b) ensuring the integrity and stability of a Party's financial system.

2. Where such measures do not conform with this Agreement, they shall not be used as a means of avoiding the Party's commitments or obligations under this Agreement.