(g) shall avoid unnecessary damage to investors and covered investments, and the commercial, economic and financial interests of the other Member State(s).
(8) For greater certainty, any measures taken to ensure the stability of the exchange rate including to prevent speculative capital flows shall not be adopted or maintained for the purpose of protecting a particular sector.
Article 14. Expropriation and Compensation (9)
1. A Member State shall not expropriate or nationalise a covered investment either directly or through measures equivalent to expropriation or nationalisation (expropriation), (10) except:
(a) for a public purpose;
(b) in a non-discriminatory manner;
(c) on payment of prompt, adequate, and effective compensation; and
(d) in accordance with due process of law.
2. The compensation referred to in sub-paragraph 1(c) shall:
(a) be paid without delay; (11)
(b) be equivalent to the fair market value of the expropriated investment immediately before or at the time when the expropriation was publicly announced, or when the expropriation occurred, whichever is applicable;
(c) not reflect any change in value because the intended expropriation had become known earlier; and
(d) be fully realisable and freely transferable in accordance with Article 13 (Transfers) between the territories of the Member States.
3. In the event of delay, the compensation shall include an appropriate interest in accordance with the laws and regulations of the Member State making the expropriation. The compensation, including any accrued interest, shall be payable either in the currency in which the investment was originally made or, if requested by the investor, in a freely usable currency.
4. If an investor requests payment in a freely useable currency, the compensation referred to in sub-paragraph 1(c), including any accrued interest, shall be converted into the currency of payment at the market rate of exchange prevailing on the date of payment.
5. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights in accordance with the TRIPS Agreement.
Article 15. Subrogation
1. If a Member State or an agency of a Member State makes a payment to an investor of that Member State under a guarantee, a contract of insurance or other form of indemnity it has granted on non-commercial risk in respect of an investment, the other Member State 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. This, however, does not necessarily imply recognition of the latter Member State of the merits of any case or the amount of any claims arising therefrom.
2. Where a Member State or an agency of a Member State has made a payment to an investor of that Member State and has taken over rights and claims of the investor, that investor shall not, unless authorised to act on behalf of the Member State or the agency of the Member State making the payment, pursue those rights and claims against the other Member State.
3. In the exercise of subrogated rights or claims, a Member State or the agency of the Member State exercising such rights or claims shall disclose the coverage of the claims arrangement with its investors to the relevant Member State.
Article 16. Measures to Safeguard the Balance-of-payments
1. In the event of serious balance-of-payments and external financial difficulties or threat thereof, a Member State may adopt or maintain restrictions on payments or transfers related to investments. It is recognised that particular pressures on the balance-of-payments of a Member State 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 IMF;
(b) avoid unnecessary damage to the commercial, economic and financial interests of another Member State;
(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;
(e) be applied such that any one of the other Member States is treated no less favourably than any other Member State or non-Member State.
3. Any restrictions adopted or maintained under paragraph 1, or any changes therein, shall be promptly notified to the other Member States.
4. To the extent that it does not duplicate the process under WTO, IMF, or any other similar processes, the Member State adopting any restrictions under paragraph 1 shall commence consultations with any other Member State that requests such consultations in order to review the restrictions adopted by it.
Article 17. General Exceptions
1. Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between Member States or their investors where like conditions prevail, or a disguised restriction on investors of any other Member State and their investments, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member State of measures:
(a) necessary to protect public morals or to maintain public order; (12)
(b) necessary to protect human, animal or plant life or health;
(c) necessary to secure compliance with laws or regulations which are not inconsistent with this Agreement, including those relating to:
(i) the prevention of deceptive and fraudulent practices to deal with the effects of a default on a contract;
(ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts;
(iii) safety;
(d) aimed at ensuring the equitable or effective (13) imposition or collection of direct taxes in respect of investments or investors of any Member State;
(e) imposed for the protection of national treasures of artistic, historic or archaeological value;
(f) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.
2. Insofar as measures affecting the supply of financial services are concerned, paragraph 2 (Domestic Regulation) of the Annex on Financial Services of the General Agreement on Trade in Services in Annex 1B to the WTO Agreement (GATS) shall be incorporated into and form an integral part of this Agreement, mutatis mutandis.
Article 18. Security Exceptions
Nothing in this Agreement shall be construed:
(a) to require any Member State to furnish any information, the disclosure of which it considers contrary to its essential security interests; or
(b) to prevent any Member State from taking any action which it considers necessary for the protection of its essential security interests, including but not limited to:
(i) action relating to fissionable and fusionable materials or the materials from which they derived; (ii)
(ii) action relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment;
(iii) action taken in time of war or other emergency in domestic or international relations;
(iv) Action taken so as to protect critical public infrastructure, including communication, power and water infrastructures, from deliberate attempts intended to disable or degrade such infrastructure; or
(c) to prevent any Member State from taking any action pursuant to its obligations under the United Nations Charter for the maintenance of international peace and security.
Article 19. Denial of Benefits
1. A Member State may deny the benefits of this Agreement to:
(a) an investor of another Member State that is a juridical person of such other Member State and to investments of such investor if an investor of a non-Member State owns or controls the juridical person and the juridical person has no substantive business operations in the territory of such other Member State;
(b) an investor of another Member State that is a juridical person of such other Member State and to investments of such investor if an investor of the denying Member State owns or controls the juridical person and the juridical person has no substantive business operations in the territory of such other Member State; and
(c) an investor of another Member State that is a juridical person of such other Member State and to an investment of such investor if investors of a non-Member State own or control the juridical person, and the denying Member State does not maintain diplomatic relations with the nonMember State.
2. Following notification to the Member State of the investor, and without prejudice to paragraph 1, a Member State may deny the benefits of this Agreement to investors of another Member State and to investments of that investor, where it establishes that such investor has made an investment in breach of the domestic laws of the denying Member State by misrepresenting its ownership in those areas of investment which are reserved for natural or juridical persons of the denying Member State.
3. A juridical person is:
(a) owned by an investor in accordance with the laws, regulations and national policies of each Member States;
(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.
Article 20. Special Formalities and Disclosure of Information
1. Nothing in Articles 5 (National Treatment) or 6 (Most Favoured-Nation Treatment) shall be construed to prevent a Member State from adopting or maintaining a measure that prescribes special formalities in connection with investments, including a requirement that investments be legally constituted or assume a certain legal form under the laws or regulations of the Member State and compliance with registration requirements, provided that such formalities do not materially impair the rights afforded by a Member State to investors of another Member State and investments pursuant to this Agreement.
2. Notwithstanding Articles 5 (National Treatment) or 6 (Most-Favoured-Nation Treatment), a Member State may require an investor of another Member State, or a covered investment, to provide information concerning that investment solely for informational or statistical purposes. The Member State shall protect any confidential information from any disclosure that would prejudice legitimate commercial interests or particular juridical persons, public or private or the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Member State from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law.
Article 21. Transparency
1. In order to achieve the objectives of this Agreement, each Member State shall:
(a) promptly and at least annually inform the AIA Council of any investment-related agreements or arrangements which it has entered into and where preferential treatment was granted;
(b) promptly and at least annually inform the AIA Council of the introduction of any new law or of any changes to existing laws, regulations or administrative guidelines, which significantly affect investments or commitments of a Member State under this Agreement;
(c) make publicly available, all relevant laws, regulations and administrative guidelines of general application that pertain to, or affect investments in the territory of the Member State; and
(d) establish or designate an enquiry point where, upon request of any natural person, juridical person or any other Member State, all information relating to the measures required to be published or made available under subparagraphs (b) and (c) may be promptly obtained.
2. Nothing in this Agreement shall require a Member State to furnish or allow access to any confidential information, including information concerning particular investors or investments, the disclosure of which would impede law enforcement, or otherwise be contrary to the public interest, or which would prejudice legitimate commercial interests of particular juridical persons, public or private.
Article 22. Entry, Temporary Stay and Work of Investors and Key Personnel
Subject to its immigration and labour laws, regulations and national policies relating to the entry, temporary stay and authorisation to work, and consistent with its commitments under AFAS, each Member State shall grant entry, temporary stay and authorisation to work to investors, executives, managers and members of the board of directors of a juridical person of any other Member State, for the purpose of establishing, developing, administering or advising on the operation in the territory of the former Member State of an investment to which they, or a juridical person of the other Member States that employs such executives, managers and members of the board of directors, have committed or are in the process of committing a substantial amount of capital or other resources.
Article 23. Special and Differential Treatment for the Newer Asean Member States
In order to increase the benefits of this Agreement for the newer ASEAN Member States, and in accordance with the objectives and principles set out in the Preamble and Articles 1 (Objective) and 2 (Guiding Principles), Member States recognise the importance of according special and differential treatment to the newer ASEAN Member States, through:
(a) technical assistance to strengthen their capacity in relation to investment policies and promotion, including in areas such as human resource development;
(b) commitments in areas of interest to the newer ASEAN Member States; and
(c) recognising that commitments by each newer ASEAN Member State may be made in accordance with its individual stage of development.
Article 24. Promotion of Investment
Member States shall cooperate in increasing awareness of ASEAN as an integrated investment area in order to increase foreign investment into ASEAN and intra-ASEAN investments through, among others:
(a) encouraging the growth and development of ASEAN small and medium enterprises and multinational enterprises;
(b) enhancing industrial complementation and production networks among multi-national enterprises in ASEAN;
(c) organising investment missions that focus on developing regional clusters and production networks;
(d) organising and supporting the organisation of various briefings and seminars on investment opportunities and on investment laws, regulations and policies; and
(e) conducting exchanges on other issues of mutual concern relating to investment promotion.
Article 25. Facilitation of Investment
Member States shall endeavour to cooperate in the facilitation of investments into and within ASEAN through, among others:
(a) creating the necessary environment for all forms of investments;
(b) streamlining and simplifying procedures for investment applications and approvals;
(c) promoting dissemination of investment information, including investment rules, regulations, policies and procedures;
(d) establishing one-stop investment centres;
(e) strengthening databases on all forms of investments for policy formulation to improve ASEANs investment environment;
(f) undertaking consultation with the business community on investment matters; and
(g) providing advisory services to the business community of the other Member States.
Article 26. Enhancing Asean Integration
Member States recognise the importance of fostering ASEAN economic integration through various initiatives, including the Initiative for ASEAN Integration, Priority Integration Sectors, and AEC, all of which include cooperation on investment. In order to enhance ASEAN economic integration, Member States shall endeavour to, among others:
(a) harmonise, where possible, investment policies and measures to achieve industrial complementation;
(b) build and strengthen capacity of Member States, including human resource development, in the formulation and improvement of investment policies to attract investment;
(c) share information on investment policies and best practices, including promoted activities and industries; and
(d) support investment promotion efforts amongst Member States for mutual benefits.
Article 27. Disputes between or Among Member States
The ASEAN Protocol on Enhanced Dispute Settlement Mechanism signed in Vientiane, Lao PDR on 29 November 2004, as amended, shall apply to the settlement of disputes concerning the interpretation or application of this Agreement.
Section B. Investment Dispute between an Investor and a Member State
Article 28. Definitions
For the purpose of this Section:
(a) Appointing Authority means:
(i) in the case of arbitration under Article 33(1)(b) or (c), the Secretary-General of ICSID;
(ii) in the case of arbitration under Article 33(1)(d), the Secretary-General of the Permanent Court of Arbitration; or
(iii) in the case of arbitration under Article 33(1)(e) and (f), the Secretary-General, or a person holding equivalent position, of that arbitration centre or institution;
(b) disputing investor means an investor of a Member State that makes a claim on its own behalf under this Section, and where relevant, includes an investor of a Member State that makes a claim on behalf of a juridical person of the other Member State that the investor owns or controls;
(c) disputing Member State means a Member State against which a claim is made under this Section;
(d) disputing parties means a disputing investor and a disputing Member State;
(e) ICSID means the International Centre for Settlement of Investment Disputes;
(f) 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;
(g) ICSID Convention means the Convention on the Settlement of Investment Disputes between States and National of other States, done at Washington, D.C., United States of America on 18 March 1965;
(h) New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, United States of America on 10 June 1958;
(i) non-disputing Member State means the Member State of the disputing investor; and
(j) UNCITRAL Arbitration Rules means the arbitration rules of the United Nations Commission on International Trade Law, approved by the United Nations General Assembly on 15 December 1976.
Article 29. Scope of Coverage
1. This Section shall apply to an investment dispute between a Member State and an investor of another Member State that has incurred loss or damage by reason of an alleged breach of any rights conferred by this Agreement with respect to the investment of that investor.
2. A natural person possessing the nationality or citizenship of a Member State shall not pursue a claim against that Member State under this Section.
3. This Section shall not apply to claims arising out of events which occurred, or claims which have been raised prior to the entry into force of this Agreement.
4. Nothing in this Section shall be construed so as to prevent a disputing investor from seeking administrative or judicial settlement available within the country of a disputing Member State.
Article 30. Conciliation
1. The disputing parties may at any time agree to conciliation, which may begin at any time and be terminated at the request of the disputing investor at any time.
2. If the disputing parties agree, procedures for conciliation may continue while procedures provided for in Article 33 (Submission of a Claim) are in progress.
3. Proceedings involving conciliation and positions taken by the disputing parties during these proceedings shall be without prejudice to the rights of either disputing parties in any further proceedings under this Section.
Article 31. Consultations
1. In the event of an investment dispute, the disputing parties shall initially seek to resolve the dispute through consultation and negotiation, which may include the use of non-binding, third party procedures. Such consultations shall be initiated by a written request for consultations delivered by the disputing investor to the disputing Member State.
2. Consultations shall commence within 30 days of receipt by the disputing Member State of the request for consultations, unless the disputing parties otherwise agree.
3. With the objective of resolving an investment dispute through consultations, a disputing investor shall make all reasonable efforts to provide the disputing Member State, prior to the commencement of consultations, with information regarding the legal and factual basis for the investment dispute.
Article 32. Claim by an Investor of a Member State
If an investment dispute has not been resolved within 180 days of the receipt by a disputing Member State of a request for consultations, the disputing investor may, subject to this Section, submit to arbitration a claim:
(a) that the disputing Member State has breached an obligation arising under Articles 5 (National Treatment), 6 (Most-Favoured-Nation Treatment), 8 (Senior Management and Board of Directors), 11 (Treatment of Investment), 12 (Compensation in Cases of Strife), 13 (Transfers) and 14 (Expropriation and Compensation) relating to the management, conduct, operation or sale or other disposition of a covered investment; and
(b) that the disputing investor in relation to its covered investment has incurred loss or damage by reason of or arising out of that breach.
Article 33. Submission of a Claim
1. A disputing investor may submit a claim referred to in Article 32 (Claim by an Investor of a Member State) at the choice of the disputing investor:
(a) to the courts or administrative tribunals of the disputing Member State, provided that such courts or tribunals have jurisdiction over such claims; or
(b) under the ICSID Convention and the ICSID Rules of Procedure for Arbitration Proceedings, (14) provided that both the disputing Member State and the non-disputing Member State are parties to the ICSID Convention; or
(c) under the ICSID Additional Facility Rules, provided that either of the disputing Member State or the non-disputing Member State is a party to the ICSID Convention; or
(d) under the UNCITRAL Arbitration Rules; or
(e) to the Regional Centre for Arbitration at Kuala Lumpur or any other regional centre for arbitration in ASEAN; or
(f) if the disputing parties agree, to any other arbitration institution, provided that resort to any arbitration rules or fora under sub-paragraphs (a) to (f) shall exclude resort to the other.
2. A claim shall be deemed submitted to arbitration under this Section when the disputing investors notice of or request for arbitration (notice of arbitration) is received under the applicable arbitration rules.
3. The arbitration rules applicable under paragraph 1, as in effect on the date the claim or claims were submitted to arbitration under this Section, shall govern the arbitration except to the extent modified by this Agreement.
4. In relation to a specific investment dispute or class of disputes, the applicable arbitration rules may be waived, varied or modified by written agreement between the disputing parties. Such rules shall be binding on the relevant tribunal or tribunals established under this Section, and on individual arbitrators serving on such tribunals.