Title
INVESTMENT AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE'S REPUBLIC OF CHINA
Preamble
PREAMBLE
The Government of Australia (Australia) and the Government of the Hong Kong Special Administrative Region of the People's Republic of China (the HKSAR), having been duly authorised to conclude this Agreement by the Central People's Government of the People's Republic of China (together the Parties):
BUILDING on the Free Trade Agreement between Australia and Hong Kong, China (the FTA);
AFFIRMING that, in accordance with Article V of the General Agreement on Trade in Services, set out in Annex 1B to the WTO Agreement (GATS), this Agreement and the FTA are an integral part of a wider process of economic integration and trade liberalisation between the Parties to establish a free trade area between them;
INTENDING to create and maintain favourable conditions for greater investments by investors of a Party in the Area of the other Party;
RECOGNISING the need to promote and protect foreign investments with the aim of fostering the flow of capital, stimulating individual business initiative and increasing economic prosperity in the Areas of the Parties; and
RECOGNISING their right to regulate and resolving to preserve their flexibility to set legislative and regulatory priorities, safeguard public welfare and protect legitimate public welfare objectives,
HAVE AGREED as follows:
Body
Section A. Definitions and Substantive Obligations
Article 1. Definitions
For the purposes of this Agreement:
Area means:
(a) In respect of Australia, the territory of Australia:
(i) 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
(ii) Including Australia's territorial sea, contiguous zone, exclusive economic zone and continental shelf over which Australia exercises sovereign rights or jurisdiction in accordance with international law; and
(b) In respect of the HKSAR, the HKSAR as delineated by the Order of the State Council of the People's Republic of China No. 221 dated July 1, 1997;
Claimant means an investor of a Party that is a party to an investment dispute with the other Party;
Covered investment means, with respect to a Party, an investment in its Area of an investor of the other Party in existence as of the date of entry into force of this Agreement or established, acquired or expanded thereafter;
Day means a calendar day;
Disputing parties means the claimant and the respondent;
Disputing party means either the claimant or the respondent;
Enterprise means:
(a) Any entity constituted or organised under applicable laws, whether or not for profit, and whether privately or governmentally owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association or similar organisation; or
(b) A branch of an enterprise;
Enterprise of a Party means:
(a) An enterprise constituted or organised under the laws of a Party; or
(b) A branch of an enterprise of a Party located in the Area of a Party,
Which has substantial business activities in the Area of that Party;
Existing means in effect on the date of entry into force of this Agreement;
Forces means:
(a) In respect of Australia, the armed forces of Australia; and
(b) In respect of the HKSAR, the armed forces of the People's Republic of China;
Freely usable currency means "freely usable currency" as determined by the International Monetary Fund under its Articles of Agreement, as amended;
Intellectual property rights means copyright and related rights, trademark rights, rights in geographical indications, rights in industrial designs, rights in patents, rights in layout-designs (topographies) of integrated circuits, rights in plant varieties, and rights in undisclosed information, as defined and described in the TRIPS Agreement;
Investment means every asset that an investor owns or controls, directly or indirectly, 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:
(a) An enterprise;
(b) Shares, stock and other forms of equity participation in an enterprise;
(c) Bonds, debentures, other debt instruments and loans (1);
(d) Futures, options and other derivatives;
(e) Turnkey, construction, management, production, concession, revenue-sharing and other similar contracts;
(f) Intellectual property rights;
(g) Licences, authorisations, permits and similar rights conferred pursuant to the Party's laws (2); and
(h) Other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages, liens and pledges,
But investment does not mean an order or judgment entered in a judicial or administrative action;
Investor of a non-Party means, with respect to a Party, an investor that has made an investment in the Area of that Party, that is not an investor of a Party;
Investor of a Party means a Party, a natural person of a Party or an enterprise of a Party, that has made an investment in the Area of the other Party;
Measure includes any law, regulation, procedure, requirement or practice;
Natural person of a Party means a natural person who under the law of the Party:
(a) For Australia, is an Australian citizen or a permanent resident of Australia; and
(b) For the HKSAR, is a permanent resident of the HKSAR.
A natural person that is both a permanent resident of the HKSAR and a citizen or permanent resident of Australia shall be deemed to be exclusively a natural person of the Party with which he or she has a predominant link, taking into account factors including the natural person's permanent home, centre of vital interests (i.e. where the natural person's personal and economic interests are closer) and habitual residence;
New York Convention means the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on June 10, 1958;
Non-disputing Party means the Party that is not a party to an investment dispute;
Protected information means confidential business information, or other information that is privileged or otherwise protected from disclosure under a Party's laws and regulations, including classified government information;
Respondent means the Party that is a party to an investment dispute;
Secretary-General means the Secretary-General of the Permanent Court of Arbitration established by the Conventions for the Pacific Settlement of International Disputes, done at The Hague on July 29, 1899 and October 18, 1907;
TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights, set out in Annex 1C to the WTO Agreement, as revised or amended from time to time by a revision or amendment that applies to the Parties and including any waiver of any provision thereof granted by Members of the WTO;
UNCITRAL Arbitration Rules means the arbitration rules of the United Nations Commission on International Trade Law;
WTO means the World Trade Organization; and
WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on April 15, 1994.
(1) Some forms of debt, such as bonds, debentures, and long-term notes, are more likely to have the characteristics of an investment, while other forms of debt, such as claims to payment that are immediately due and result from the sale of goods or services, are less likely to have such characteristics.
(2) Whether a particular type of licence, authorisation, permit or similar instrument (including a concession to the extent that it has the nature of such an instrument) is an asset that has the characteristics of an investment depends on such factors as the nature and extent of the rights that the holder has under the Party's laws. Among such instruments that do not constitute assets that have the characteristics of an investment are those that do not create any rights protected under the Party's laws. For greater certainty, the foregoing is without prejudice to whether any asset associated with such instruments has the characteristics of an investment.
Article 2. Scope
1. This Agreement shall apply to measures adopted or maintained by a Party relating to:
(a) Investors of the other Party; and
(b) Covered investments.
2. A Party's obligations under this Agreement shall apply to any person when it exercises any governmental authority delegated to it by that Party. For greater certainty, governmental authority is delegated under the Party's laws, including through a legislative grant or a government order, directive or other action transferring or authorising the exercise of governmental authority.
3. This Agreement shall not apply to:
(a) Subsidies or grants provided by a Party 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 and investments in the Area of that Party, including government-supported loans, guarantees and insurance; or
(b) Any act or fact that took place or any situation that ceased to exist before the date of entry into force of this Agreement.
Article 3. Relation to the Fta
1. In the event of any inconsistency between this Agreement and the FTA, the latter shall prevail to the extent of the inconsistency.
2. A requirement of a Party that a service supplier of the other Party post a bond or other form of financial security as a condition for the cross-border supply of a service does not of itself make this Agreement applicable to measures adopted or maintained by the Party relating to such cross-border supply of the service. This Agreement shall apply to measures adopted or maintained by the Party relating to the posted bond or financial security, to the extent that the bond or financial security is a covered investment.
3. Articles 4 and 5 shall not apply to measures adopted or maintained by a Party to the extent that such measures are covered by Chapter 8 (Financial Services) of the FTA.
4. This Agreement and the FTA establish a free trade area between the Parties.
Article 4. Non-discriminatory Treatment as Compared with a Party's Own Investors (3)
1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the expansion, management, conduct, operation, and sale or other disposition of investments in its Area.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments in its Area of its own investors with respect to the expansion, management, conduct, operation, and sale or other disposition of investments.
3. The concept of "expansion" in this Article shall apply only with respect to investments not subject to a prior approval process or admission requirements under applicable laws, regulations and rules in force at the time of the expansion.
(3) For greater certainty, whether treatment is accorded in "like circumstances" under Articles 4 or 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 5. Non-discriminatory Treatment as Compared with a Non-party's Investors
1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investors of any non-Party with respect to the expansion, management, conduct, operation, and sale or other disposition of investments in its Area.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments in its Area of investors of any non-Party with respect to the expansion, management, conduct, operation, and sale or other disposition of investments.
3. The concept of "expansion" in this Article shall apply only with respect to investments not subject to a prior approval process or admission requirements under applicable laws, regulations and rules in force at the time of the expansion.
4. For greater certainty, the treatment referred to in this Article does not encompass dispute resolution procedures or mechanisms provided under any bilateral or multilateral agreements or arrangements.
5. A claimant may not submit a claim under Section C (Settlement of Disputes between an Investor and the Host Party) alleging a breach of, or otherwise invoking, this Article on the basis that another bilateral or multilateral agreement contains more favourable rights or obligations. For greater certainty, this paragraph shall not prevent a claim challenging measures of a Party, including measures taken in accordance with another bilateral or multilateral agreement, on the basis that such measures breach this Article and have resulted in loss or damage to the claimant's covered investment.
Article 6. Special Formalities and Information Requirements
1. Nothing in Article 4 shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with a covered investment, such as a residency requirement for registration or a requirement that a covered investment be legally constituted or organised under the laws or regulations of the Party, provided that these formalities do not materially impair the protections afforded by the Party to investors of the other Party and covered investments in accordance with this Agreement.
2. Notwithstanding Articles 4 and 5, a Party may require an investor of the other Party or its covered investment to provide information concerning that investment solely for informational or statistical purposes. The Party shall protect such information that is confidential from any disclosure that would prejudice the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law.
Article 7. Non-conforming Measures
1. Articles 4 and 5 shall not apply to:
(a) Any existing non-conforming measure that is maintained by a Party;
(b) The continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
(c) An amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 4 or 5.
2. Articles 4 and 5 shall not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors or activities as set out in its Schedule to Annex I.
3. Article 4 shall not apply to any measure that falls within Article 5 of the TRIPS Agreement, or an exception to, or derogation from, the obligations imposed by Article 3 of the TRIPS Agreement.
4. Article 5 shall not apply to any measure that falls within Article 5 of the TRIPS Agreement, or an exception to, or derogation from, the obligations imposed by Article 4 of the TRIPS Agreement.
5. In respect of the protection of intellectual property rights, Articles 4 and 5 are subject to the exceptions provided under multilateral agreements concluded or administered under the auspices of the World Intellectual Property Organization to which a Party is party. For the purposes of this paragraph, "protection" includes matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights, as well as those matters affecting the use of intellectual property rights.
6. In respect of intellectual property rights, a Party may derogate from obligations under Articles 4 or 5 in relation to its judicial and administrative procedures, including requiring an investor of the other Party to designate an address for service in its Area, or to appoint an agent in its Area, provided that such derogation is:
(a) Necessary to secure compliance with laws and regulations that are not inconsistent with this Agreement; and
(b) Not applied in a manner that would constitute a disguised restriction on international trade or investment.
Article 8. Minimum Standard of Treatment
1. Each Party shall accord to covered investments treatment in accordance with the customary international law minimum standard of treatment of aliens, including fair and equitable treatment and full protection and security (4).
2. For greater certainty, paragraph 1 prescribes the customary international law minimum standard of treatment of aliens, as resulting from a general and consistent practice of States that they follow from a sense of legal obligation, as the standard of treatment to be afforded to covered 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 the customary international law minimum standard of treatment of aliens referred to in paragraph 1 and do not create additional substantive rights. The obligations 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; 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 bilateral or multilateral agreement or arrangement, 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, whether or not there is loss or damage to the covered investment as a result.
(4) The customary international law minimum standard of treatment of aliens refers to all customary international law principles that protect the economic rights of aliens.
Article 9. Treatment In Case of Armed Conflict or Civil Strife
1. Each Party shall accord to investors of the other Party, and to covered investments, with respect to measures it adopts or maintains relating to losses suffered by investments in its Area owing to armed conflict or civil strife, treatment no less favourable than that it accords, in like circumstances, to:
(a) Its own investors and their investments; or
(b) Investors of any non-Party and their investments.
2. Notwithstanding paragraph 1, if an investor of a Party, in a situation referred to in paragraph 1, suffers a loss in the Area of the other Party resulting from:
(a) Requisitioning of its covered investment or part thereof by the latter Party's forces or authorities; or
(b) Destruction of its covered investment or part thereof by the latter Party's forces or authorities, which was not required by the necessity of the situation,
The latter Party shall provide the investor restitution, compensation or both, as appropriate, for that loss.
Article 10. Expropriation and Compensation (5)
1. Neither Party shall expropriate a covered investment either directly or indirectly through measures equivalent to expropriation, except:
(a) For a public purpose;
(b) In a non-discriminatory manner;
(c) On payment of compensation in accordance with paragraph 2, paragraph 3 and paragraph 4; and
(d) In accordance with due process of law.
2. Compensation shall:
(a) Be paid without delay;
(b) Be equivalent to the real value of the expropriated investment immediately before the expropriation took place (the date of expropriation). The valuation of the expropriated investment shall take into account going concern value, asset value including the declared tax value of tangible property, and other criteria, as appropriate;
(c) Not reflect any change in value occurring because the intended expropriation had become known earlier; and
(d) Be fully realisable and freely transferable in accordance with Article 11.
3. If the real value is denominated in a freely usable currency, the compensation paid shall be no less than the real value on the date of expropriation, plus interest at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
4. If the real value is denominated in a currency that is not freely usable, the compensation paid, converted into the currency of payment at the market rate of exchange prevailing on the date of payment, shall be no less than:
(a) The real value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date; plus
(b) Interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.
5. For greater certainty, this Article shall not apply to the issuance of compulsory licences granted in relation to intellectual property rights in accordance with the 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 Chapter 14 (Intellectual Property) of the FTA and the TRIPS Agreement (6).
(5) For greater certainty, this Article shall be interpreted in accordance with Annex II.
(6) 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 11. Transfers
1. Each Party shall permit all transfers relating to a covered investment to be made freely and without delay into and out of its Area. Such transfers include:
(a) Contributions to capital, including the initial contribution;
(b) Profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance fees and other fees, returns-in-kind and other amounts derived from the covered investment;
(c) Proceeds from the sale of all or any part of the covered investment, or from the partial or complete liquidation of the covered investment;
(d) Payments made under a contract entered into by an investor of the other Party or an enterprise that is a covered investment, including a loan agreement;
(e) Payments made in accordance with Articles 9 and 10; and
(f) Payments arising out of a dispute.
2. Each Party shall permit transfers relating to a covered investment to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.
3. Each Party shall permit transfers of returns-in-kind relating to a covered investment to be made as authorised or specified in a written agreement between the Party and a covered investment or an investor of the other Party.
4. Notwithstanding paragraph 1, paragraph 2 and paragraph 3, a Party may prevent or delay a transfer through the equitable, non-discriminatory and good faith application of its laws relating to: