Title
INVESTMENT AGREEMENT BETWEEN THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE'S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE REPUBLIC OF CHILE
Preamble
PREAMBLE
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 Investment Agreement by the Central People's Government of the People's Republic of China, and the Government of the Republic of Chile ("Chile") (together "the Parties"),
Building on the Free Trade Agreement between the Parties done on 7 September 2012 ("the FTA");
Pursuant to Article 19.6 (Future Work Programmes) of the FTA and the Exchange of Notes, which constitutes an agreement on the negotiation of this Investment Agreement, on 7 September 2012; and
Reaffirming that, in accordance with Article V.2 of the General Agreement on Trade in Services ("GATS") contained in Annex 1B to the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994 ("WTO Agreement"), this Investment Agreement is part of a wider process of economic integration and trade liberalisation between the Parties, initiated by the FTA;
Have agreed as follows:
Body
Section A. Definitions
Article 1. Definitions
For the purposes of this Investment Agreement (hereinafter referred to as "this Agreement"):
" area " means:
(a) in respect of Chile, the land, maritime, and air space under its sovereignty, and the exclusive economic zone and the continental shelf within which it exercises sovereign rights and jurisdiction in accordance with international law and its domestic law; and
(b) in respect of the HKSAR, the HKSAR together with such other area(s) over which the HKSAR may be authorised to exercise jurisdiction in accordance with the laws of the HKSAR;
" claimant " means an investor of a Party that is a party to an investment dispute with the other Party;
" confidential information " means confidential business information, or other information that is privileged or otherwise protected from disclosure under the law of a Party, including classified government information;
" covered investment " means, with respect to a Party, an investment in its area of an investor of the other Party in existence on the date of entry into force of this Agreement or established, acquired or expanded thereafter;
" customs duties " means duties or charges of any kind imposed in connection with the importation of goods, but shall not include:
(a) charges equivalent to internal taxes, including excise duties, sales taxes, and goods and services taxes, imposed in accordance with Article III.2 of GATT 1994;
(b) anti-dumping, countervailing or safeguard duties applied in accordance with Chapter 8 (Trade Remedies) of the FTA; or
(c) fees or other charges that are covered by Article VIII of GATT 1994. " disputing party " means either the claimant or the respondent;
" disputing parties " means the claimant and the respondent;
" enterprise " means an entity 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 or other association, and a branch of any such entity;
" enterprise of a Party " means an enterprise constituted or organised under the law of a Party, or a branch located in the area of a Party and carrying out business activities there;
" existing " means in effect on the date of entry into force of this Agreement;
" financial institution " means a financial intermediary or other enterprise that is authorised to provide financial service and regulated or supervised as a financial institution under the law of the Party in whose area it is located;
" financial service " has the same meaning as in Article 12.1 (Definitions) of the FTA;
" freely usable currency " means freely usable currency as determined by the International Monetary Fund under its Articles of Agreement;
" GATT 1994 " means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;
" Government enterprise " means an enterprise that is owned or controlled, directly or indirectly, by a Party;
" government procurement " means the process by which a government obtains the use of or acquires goods or services, or any combination thereof, for governmental purposes and not with a view to commercial sale or resale, or for use in the production or supply of goods or services for commercial sale or resale;
" 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, and other debt instruments and loans (1), but do not include (i) loans issued by one Party to the other Party, or (ii) bonds, bills, notes, or other kinds of debt securities or instruments issued by a Party (including its central bank or monetary authority), or by a Government enterprise;
(d) futures, options and other derivatives;
(e) turnkey, construction, management, production, concession, revenuesharing and other similar contracts;
(f) intellectual property rights;
(g) licences, authorisations, permits and similar rights conferred pursuant to the Party's law (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 attempts to make (3), is making or 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, or a person of such Party, that attempts to make, is making or has made an investment in the area of the other Party;
" measure " means any measure by a Party, whether in the form of a law, regulation, rule, procedure, practice, decision, administrative action or any other form;
" natural person " means:
(a) in respect of Chile, a natural person who has the Chilean nationality as defined in Article 10 of the Constitucion Politica de la Republica de Chile or a permanent resident of Chile; and
(b) in respect of the HKSAR, a permanent resident of the HKSAR under its law;
A natural person of both the HKSAR and Chile 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, but not limited to, the individual's permanent home, centre of vital interests (i.e. where the individual's personal and economic relations are closer), and habitual abode;
" New York Convention " means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958;
" non-disputing Party " means a Party that is not a party to an investment dispute;
" person " means a natural person or an enterprise;
" respondent " means the Party that is a party to an investment dispute;
" returns-in-kind " means returns in the form of an article or commodity, for example in goods or in natural produce, as opposed to money;
" 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 29 July 1899 and 18 October 1907;
" tax convention " means a convention for the avoidance of double taxation or other bilateral or multilateral taxation agreement or arrangement;
" taxation measure " means any measure relating to direct or indirect taxes, but shall not include:
(a) customs duties; or
(b) the measures listed in subparagraphs (b) and (c) of the definition of customs duties;
" tribunal " means an arbitration tribunal constituted under Article 21 (Submission of a Claim to Arbitration) or Article 31 (Consolidation);
" TRIPS Agreement " means the Agreement on Trade-Related Aspects of Intellectual Property Rights, contained 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, with respect to a claim submitted to arbitration under Section C (Settlement of Disputes between an Investor and the Host Party), the arbitration rules of the United Nations Commission on International Trade Law in effect on the date on which the claim is submitted; and
" WTO " means the World Trade Organization.
Section B. Substantive Obligations
Article 2. Scope
1. This Agreement shall apply to measures adopted or maintained by a Party relating to:
(a) an investor of the other Party; and
(b) a covered investment.
2. A Party's obligations under this Agreement shall apply to measures adopted or maintained by any person, including a Government enterprise, or any other body, when it exercises any governmental authority delegated to it by the government or authorities of that Party.
3. This Agreement does not apply to:
(a) financial services, except as provided for in Article 22 (Investment Disputes in Financial Services);
(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;
(c) government procurement; and
(d) subsidies or grants provided by a Party, including government-supported
Loans, guarantees, and insurance.
Article 3. Relation to the FTA
1. Unless otherwise specified in this Agreement, provisions in the FTA shall not apply to this Agreement.
2. In the event of any inconsistency between this Agreement and the FTA, the latter shall prevail to the extent of the inconsistency, unless otherwise agreed by the Parties.
Article 4. Non-discriminatory Treatment as Compared with a Party's Own Investors (4)
1. Each Party shall accord to an investor 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 an investment in its area.
2. Each Party shall accord to a covered investment treatment no less favourable than that it accords, in like circumstances, to investments of its own investors with respect to the expansion, management, conduct, operation and sale or other disposition of an investment in its area.
3. For greater certainty, the concept of "expansion" in this Article shall not include the establishment or acquisition of an investment.
Article 5. Non-discriminatory Treatment as Compared with a Non-party's Investors
1. Each Party shall accord to an investor of the other Party treatment no less favourable than that it accords, in like circumstances, to investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of an investment in its area.
2. Each Party shall accord to a covered investment treatment no less favourable than that it accords, in like circumstances, to investments of investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of an investment in its area.
3. For greater certainty, the treatment referred to in this Article does not encompass any dispute resolution mechanisms, such as those in Section C (Settlement of Disputes between an Investor and the Host Party).
Article 6. Minimum Standard of Treatment
1. Each Party shall accord to a covered investment treatment in accordance with the customary international law minimum standard of treatment of aliens (5), including fair and equitable treatment and full protection and security.
2. The concepts of "fair and equitable treatment" and "full protection and security" in paragraph 1 do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens and do not create additional substantive rights.
3. A breach of another provision of this Agreement, or of a separate bilateral or multilateral agreement, does not establish that there has been a breach of this Article.
4. For greater certainty, the mere fact that a Party takes or fails to take an action that may be inconsistent with an investor's expectations does not constitute a breach of this Article, even if there is loss or damage to the covered investment as a result.
Article 7. Treatment In Case of Armed Conflict or Civil Strife
1. Notwithstanding Article 2.3(d) (Scope), each Party shall accord to investors of the other Party and to covered investments non-discriminatory treatment with respect to measures it adopts or maintains relating to losses suffered by investments in its area owing to armed conflict or civil strife.
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's forces or authorities; or
(b) destruction of its covered investment or part thereof by the latter's forces or authorities, if the destruction 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.
3. In this Article, "forces" in respect of the HKSAR means the armed forces of the People's Republic of China.
4. Paragraph 1 shall not apply to existing measures relating to subsidies or grants that would be inconsistent with Article 4 (Non-discriminatory Treatment as Compared with a Party's Own Investors) but for Article 2.3(d) (Scope).
Article 8. Senior Management and Boards of Directors
1. A Party may not require that an enterprise of that Party that is a covered investment appoint to a senior management position an individual of any particular nationality.
2. A Party may require that a majority of the board of directors, or a committee thereof, of an enterprise of that Party that is a covered investment be of a particular nationality or resident in the area of that Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.
Article 9. Performance Requirements
1. A Party may not, in connection with the establishment, acquisition, expansion, management, conduct or operation of a covered investment in its area, impose or enforce the following requirements, or enforce a commitment or undertaking:
(a) to export a given level or percentage of a good or service;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord a preference to a good produced in its area, or to purchase a good from a person in its area;
(d) to relate the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with that investment;
(e) to restrict sales of a good or service in its area that the investment produces or provides by relating those sales to the volume or value of its exports or foreign exchange earnings;
(f) to transfer technology, a production process or other proprietary knowledge to a person in its area (6); or
(g) to supply exclusively from the area of the Party a good that the investment produces or a service it supplies to a specific regional market or to the world market.
2. Without prejudice to Article 2.3(d) (Scope), a Party may not, in connection with the establishment, acquisition, expansion, management, conduct or operation of a covered investment in its area, condition the receipt or continued receipt of an advantage on compliance with the following requirements:
(a) to achieve a given level or percentage of domestic content;
(b) to purchase, use or accord a preference to a good produced in its area, or to purchase a good from a producer in its area;
(c) To relate the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with that investment; or
(d) To restrict sales of a good or service in its area that the investment produces or provides by relating those sales to the volume or value of its exports or foreign exchange earnings.
3. (a) Paragraph 2 does not prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with a covered investment, on compliance with a requirement to locate production, supply a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its area.
(b) Subparagraph 1(f) does not apply if the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority to remedy a practice determined after judicial or administrative process to be anti-competitive under the Party's competition law.
4. For greater certainty, paragraphs 1 and 2 only apply to commitments, undertakings or requirements set out in those paragraphs.
5. (a) Subparagraphs 1(a), 1(b) and 1(c), and 2(a) and 2(b), do not apply to a qualification requirement for a good or service with respect to exportpromotion and foreign aid programmes.
(b) Subparagraphs 2(a) and 2(b) do not apply to a requirement imposed by an importing Party relating to the content of a good necessary to qualify for a preferential tariff or preferential quota.
6. For greater certainty, nothing in paragraph 1 shall be construed to prevent a Party, in connection with the establishment, acquisition, expansion, management, conduct or operation of a covered investment in its area, from imposing or enforcing a requirement, or enforcing a commitment or undertaking, to employ or train workers in its area provided that the employment or training does not require the transfer of a particular technology, production process or other proprietary knowledge to a person in its area.
7. For greater certainty, this Article does not preclude the imposition or enforcement of any requirement, commitment or undertaking between private parties, where a Party did not impose or enforce the same.
Article 10. Expropriation (7)
1. A Party may not expropriate a covered investment either directly or indirectly through measures having an effect equivalent to expropriation, except:
(a) for a public purpose;
(b) in accordance with due process of law;
(c) in a non-discriminatory manner; and
(d) on payment of compensation in accordance with paragraphs 2 and 3.
2. The compensation referred to in paragraph 1 shall:
(a) be paid without delay;
(b) be equivalent to the real value of the expropriated investment immediately before the expropriation took place ("date of expropriation");
(c) not reflect a change in value occurring because the intended expropriation had become known earlier; and
(d) be fully realisable and freely transferable according to Article 11 (Transfers).
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 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 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 does not apply to the issuance of a compulsory licence granted in relation to intellectual property rights, or to the revocation, limitation or creation of an intellectual property right, to the extent that the issuance, revocation, limitation or creation is consistent with the TRIPS Agreement.
Article 11. Transfers (8)
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. Those transfers include:
(a) contributions to capital, including the initial contribution;
(b) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, returns-in-kind and other amounts derived from the covered investment;
(c) proceeds from the sale of all or part of the covered investment or from the partial or complete liquidation of the covered investment;