(d) payments made under a contract entered into by the investor of the other Party or the covered investment, including payments made pursuant to a loan agreement;
(e) payments made under Articles 7 (Treatment in Case of Armed Conflict or Civil Strife) and 10 (Expropriation); and
(f) payments arising under Section C (Settlement of Disputes between an Investor and the Host Party).
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. Notwithstanding paragraphs 1 and 2, a Party may prevent or delay a transfer through the equitable, non-discriminatory and good faith application of its law relating to:
(a) bankruptcy, insolvency or the protection of the rights of a creditor;
(b) issuing, trading or dealing in securities, futures, options, or derivatives;
(c) a criminal or penal offence;
(d) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities; or
(e) ensuring compliance with an order or judgment in judicial or administrative proceedings.
4. 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.
5. Notwithstanding paragraph 4, a Party may restrict transfers of returns-in-kind in circumstances where it could otherwise restrict such transfers under this Agreement, including as set out in paragraph 3.
6. For greater certainty, this Article does not preclude the equitable, non-discriminatory, and good faith application of a Party's laws relating to its social security, public retirement, or compulsory savings programmes.
Article 12. Transparency
1. Each Party shall ensure that its laws, regulations, procedures, and administrative rulings of general application with respect to any matter covered by this Agreement are
Promptly published or otherwise made available (9) to interested persons and the other Party.
2. To the extent possible, each Party shall:
(a) publish in advance any measure referred to in paragraph 1 that it proposes to adopt; and
(b) provide interested persons and the other Party with a reasonable opportunity to comment on such proposed measures.
3. To the extent practicable, when introducing or changing the laws, regulations or procedures referred to in paragraph 1, each Party shall, in a manner consistent with its legal system, endeavour to provide a reasonable period between the date when those laws, regulations or procedures, proposed or final in accordance with its legal system, are made publicly available and the date when they enter into force.
4. To the extent possible, each Party shall notify the other Party of any actual or proposed measure that the Party considers might materially affect the operation of this Agreement or otherwise substantially affect the other Party's interests under this Agreement.
5. At the request of the other Party, a Party shall promptly provide information and respond to questions pertaining to any actual or proposed measure that the requesting Party considers might materially affect the operation of this Agreement or otherwise substantially affect its interests under this Agreement, regardless of whether the requesting Party has been previously notified of that measure.
6. Any notification, request, response or information under this Article shall be provided to the other Party through the relevant contact points established under the FTA.
7. The notification referred to in paragraph 4 shall be regarded as having been provided in accordance with paragraph 6 when the actual or proposed measure has been notified to the WTO in accordance with the WTO Agreement and copied to the contact point of the other Party.
8. Any notification, response or information provided under this Article shall be without prejudice as to whether the measure is consistent with this Agreement.
Article 13. Subrogation
1. If a Party, or any agency, institution, statutory body or corporation designated by the Party, makes a payment to an investor of the Party under a guarantee, a contract of insurance or other form of indemnity that it has entered into with respect to a covered investment, the other Party in whose area the covered investment was made shall recognise the subrogation or transfer of any rights the investor would have possessed under this Agreement with respect to the covered investment but for the subrogation, and the investor shall be precluded from pursuing these rights to the extent of the subrogation.
2. For greater certainty, the subrogated right or claim shall not be greater than the original right or claim of the investor.
Article 14. Taxation Measures
1. For the purposes of this Article, "designated authorities" means:
(a) for Chile, the Undersecretary of the Ministry of Finance (Subsecretario del Ministerio de Hacienda); and
(b) for the HKSAR, the Director-General of Trade and Industry or his authorised representative.
2. Except as provided in this Article, nothing in this Agreement shall apply to taxes and taxation measures.
3. Nothing in this Agreement shall affect the rights and obligations of a Party under any tax convention. In the event of an inconsistency between this Agreement and a tax convention, that tax convention shall prevail to the extent of the inconsistency.
4. In case an issue arises as to whether any inconsistency exists between this Agreement and a tax convention between the Parties, the issue shall be referred to the designated authorities. If the designated authorities decide to make a determination as to the existence and extent of any inconsistency, they shall do so within six months of the referral of the issue. No procedures concerning the measure giving rise to the issue may be initiated under Section D (Settlement of Disputes between the Parties) or Article 21 (Submission of a Claim to Arbitration) until the expiry of the six-month period. An arbitral panel or tribunal established to consider a dispute related to a taxation measure shall accept as binding a determination of the designated authorities made under this paragraph. If the designated authorities have not determined the issue within six months from the date of the referral, the tribunal or arbitral panel shall decide the issue.
5. Article 10 (Expropriation) shall apply to taxation measures. However, no investor may invoke Article 10 (Expropriation) as the basis for a claim if it has been determined pursuant to this paragraph that the taxation measure is not an expropriation. An investor that seeks to invoke Article 10 (Expropriation) with respect to a taxation measure must refer to the designated authorities, before it gives its notice of intent under Article 21 (Submission of a Claim to Arbitration), the issue of whether or not that taxation measure is an expropriation. If the designated authorities do not agree to consider the issue or, having agreed to consider it, fail to agree whether the taxation measure is an
Expropriation within six months of the referral, the investor may submit its claim to arbitration under Article 21 (Submission of a Claim to Arbitration).
6. If, in connection with a claim by an investor of a Party or a dispute between the Parties, an issue arises as to whether a measure of a Party is a taxation measure, a Party may refer the issue to the designated authorities. A joint determination of the designated authorities shall bind a tribunal established under Section C (Settlement of Disputes between an Investor and the Host Party) or an arbitral panel established under Section D (Settlement of Disputes between the Parties). A tribunal or arbitral panel seized of a claim or a dispute in which the issue arises may not proceed until it receives the joint determination of the designated authorities. If the designated authorities have not determined the issue within six months from the date of the referral, the tribunal or arbitral panel shall decide the issue.
7. This Agreement does not require a Party to furnish or allow access to information which, if disclosed, would be contrary to the Party's law protecting information concerning the taxation affairs of a taxpayer.
Article 15. Investment and Environmental, Health or other Regulatory Objectives
1. Nothing in this Agreement shall be construed to prevent a Party from adopting, maintaining, or enforcing any measure otherwise consistent with this Agreement that it considers appropriate to ensure that investment activity in its area is undertaken in a manner sensitive to environmental, health or other regulatory objectives.
2. The Parties recognise that it is inappropriate to encourage investment by relaxing their measures related to environmental, health or other regulatory objectives. Accordingly, a Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, those measures to encourage the establishment, acquisition, expansion or retention in its area of an investment of an investor of the other Party.
Article 16. Corporate Social Responsibility
The Parties reaffirm the importance of each Party encouraging enterprises operating within its area to voluntarily incorporate into their internal policies those internationally recognised standards, guidelines and principles of corporate social responsibility that have been endorsed or are supported by that Party.
Article 17. Non-conforming Measures
1. Article 4 (Non-discriminatory Treatment as Compared with a Party's Own Investors), Article 5 (Non-discriminatory Treatment as Compared with a Non-Party's Investors), Article 8 (Senior Management and Boards of Directors) and Article 9 (Performance Requirements) shall not apply to:
(a) any existing non-conforming measure 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 Article 4 (Non-discriminatory Treatment as Compared with a Party's Own Investors), Article 5 (Non-discriminatory Treatment as Compared with a Non-Party's Investors), Article 8 (Senior Management and Boards of Directors) and Article 9 (Performance Requirements).
2. Article 4 (Non-discriminatory Treatment as Compared with a Party's Own Investors), Article 5 (Non-discriminatory Treatment as Compared with a Non-Party's Investors), Article 8 (Senior Management and Board of Directors) and Article 9 (Performance Requirements) shall not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors or matters, as set out in its schedule to Annex II (Reservations).
3. Article 5 (Non-discriminatory Treatment as Compared with a Non-Party's Investors) shall not apply to treatment accorded by a Party pursuant to agreements or arrangements set out in Annex III (Exceptions from Non-Discriminatory Treatment as Compared with a Non-Party's Investors).
4. In respect of intellectual property rights, a Party may derogate from Article 4 (Non-discriminatory Treatment as Compared with a Party's Own Investors), Article 5 (Non-discriminatory Treatment as Compared with a Non-Party's Investors) and Article 9.1(f) (Performance Requirements) in a manner that is consistent with the TRIPS Agreement.
Article 18. Exceptions
1. Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on international trade or investment, nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining measures, including environmental measures:
(a) necessary to protect public morals or to maintain public order; (10)
(b) necessary to ensure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;
(c) necessary to protect human, animal or plant life or health; or
(d) relating to the conservation of living or non-living exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.
2. This Agreement does not prevent a Party from adopting or maintaining measures for prudential reasons, such as:
(a) protecting investors, depositors, financial market participants, policy-holders, policy-claimants, or persons to whom a fiduciary duty is owed by a financial institution;
(b) maintaining the safety, soundness, integrity or financial responsibility of financial institutions; and
(c) ensuring the integrity and stability of a Party's financial system.
Where such measures do not conform with the provisions of this Agreement, they shall not be used as a means of avoiding the Party's obligations under such provisions.
3. Notwithstanding Article 11.1 and 11.2 (Transfers), a Party may prevent or limit transfers by a financial institution to, or for the benefit of, an affiliate of or a person related to that institution, through the equitable, non-discriminatory and good faith application of a measure relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions.
4. This Agreement does not apply to non-discriminatory measures of general application taken by a central bank or monetary authority in pursuit of monetary and related credit or exchange rate policies. This paragraph shall not affect a Party's obligations under Article 9 (Performance Requirements) or Article 11 (Transfers).
5. For greater certainty, nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining measures necessary to secure compliance with its laws or regulations that are not inconsistent with this Agreement, including those relating to the prevention of deceptive and fraudulent practices or to deal with the effects of a default on financial services contracts, subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between the Parties or between a Party and a non-Party where like conditions prevail, or a disguised restriction on investment in financial institutions as covered by this Agreement.
6. This Agreement does not:
(a) require a Party to furnish or allow access to information if that Party determines that the disclosure of this information would be contrary to its essential security interests;
(b) prevent a Party from taking an action that it considers necessary to protect its essential security interests:
(i) relating to fissionable and fusionable materials or the materials from which they are derived,
(ii) relating to the traffic in arms, ammunition and implements of war and to such traffic and transactions in other goods, materials, services and technology undertaken directly or indirectly for the purpose of supplying a military or other security establishment,
(iii) taken in time of war or other emergency in international relations,
(iv) relating to the implementation of policies or international agreements respecting the non-proliferation of nuclear weapons or other nuclear explosive devices; or
(c) prevent a Party from taking any action pursuant to the obligations applicable to it under the United Nations Charter for the maintenance of international peace and security.
7. This Agreement does not require a Party to furnish or allow access to information which if disclosed would impede law enforcement or would be contrary to:
(a) any of its laws;
(b) personal data protection;
(c) the confidentiality of the financial affairs and accounts of individual customers of financial institutions;
(d) the confidentiality of information concerning particular investors or investments, the disclosure of which would prejudice legitimate commercial interests of particular investors; or
(e) the public interest.
8. For greater certainty, in the course of a dispute settlement procedure under this Agreement:
(a) a Party is not required to furnish or allow access to information protected under its competition law; and
(b) a competition authority of a Party is not required to furnish or allow access to information that is privileged or otherwise protected from disclosure.
9. If a right or obligation in this Agreement duplicates one under the WTO Agreement, the Parties agree that a measure adopted by a Party in conformity with a waiver decision granted by the WTO pursuant to Article IX of the WTO Agreement is deemed to be also in conformity with this Agreement. Therefore, such conforming measure of either Party may not give rise to a claim by an investor of one Party against the other Party under Section C (Settlement of Disputes between an Investor and the Host Party).
Article 19. Denial of Benefits
A Party may, at any time, including after the institution of arbitral proceedings, in accordance with Section C (Settlement of Disputes between an Investor and the Host Party), deny the benefits of this Agreement to an investor of the other Party that is an enterprise of such other Party and to investments of that investor if the enterprise:
(a) is owned or controlled by persons of either a non-Party or the denying Party; and
(b) has no substantive business operations in the area of the other Party.
Section C. Settlement of Disputes between an Investor and the Host Party
Article 20. Consultations
1. In the event of an investment dispute, the claimant and the respondent shall initially seek to resolve the dispute through consultations, which may include, where this is acceptable to the disputing parties, the use of non-binding, third-party procedures, such as good offices, conciliation and mediation. Such consultations shall be initiated by a written request for consultations delivered by the claimant to the respondent, with the information specified in Article 21.2(a) and 21.2(b) (Submission of a Claim to Arbitration) set out therein.
2. The disputing parties shall endeavour to commence consultations within 30 days after receipt by the respondent of the request for consultations, unless the disputing parties otherwise agree.
3. The claimant shall provide the respondent, prior to the commencement of consultations, with information regarding the legal and factual basis for the investment dispute.
4. The place of consultations would be Hong Kong if the HKSAR is the respondent, or Santiago if Chile is the respondent, unless the disputing parties otherwise agree.
5. For greater certainty, the commencement of consultations shall not be construed as recognition of the jurisdiction of the tribunal.
Article 21. Submission of a Claim to Arbitration
1. If an investment dispute has not been resolved within six months of the receipt by the respondent of a request for consultations:
(a) the claimant, on its own behalf, may submit to arbitration under this Section a claim that:
(i) the respondent has breached an obligation under Section B (Substantive Obligations), other than an obligation under Article 12 (Transparency), Article 15 (Investment and Environmental, Health or other Regulatory Objectives), or Article 16 (Corporate Social Responsibility); and
(ii) the claimant has incurred loss or damage by reason of, or arising out of, that breach; and
(b) the claimant, on behalf of an enterprise of the respondent that the claimant owns or controls directly or indirectly, may submit to arbitration under this Section a claim that:
(i) the respondent has breached an obligation under Section B (Substantive Obligations), other than an obligation under Article 12 (Transparency), Article 15 (Investment and Environmental, Health or other Regulatory Objectives), or Article 16 (Corporate Social Responsibility); and
(ii) the enterprise has incurred loss or damage by reason of, or arising out of, that breach.
2. At least 90 days before submitting any claim to arbitration under this Section, a claimant shall deliver to the respondent a written notice of its intention to submit the claim to arbitration ("notice of intent"). The notice shall specify:
(a) the name and address of the claimant and, where a claim is submitted on behalf of an enterprise, the name, address, and place of constitution or organisation of the enterprise;
(b) for each claim, the provision of this Agreement alleged to have been breached and any other relevant provisions;
(c) the legal and factual basis for each claim; and
(d) the relief sought and the approximate amount of damages claimed.
3. With its notice of intent, a claimant shall deliver to the respondent evidence establishing that it is an investor of the non-disputing Party.
4. A claimant may submit a claim referred to in paragraph 1:
(a) under the UNCITRAL Arbitration Rules; or
(b) if the disputing parties agree, to any other arbitration institution or under any other arbitration rules.
5. The Parties may adopt supplemental rules of procedure to the arbitration rules applicable under paragraph 4 and these rules shall apply to the arbitration. The Parties shall promptly publish the supplemental rules of procedure that they adopt or otherwise make them available to interested persons.
6. A claim shall be deemed submitted to arbitration under this Section when the claimant's notice of or request for arbitration ("notice of arbitration"):
(a) referred to in the UNCITRAL Arbitration Rules, together with the statement of claim referred to therein, are received by the respondent; or
(b) referred to under any arbitral institution or arbitration rules selected under paragraph 4(b) is received by the respondent.
A claim asserted by the claimant for the first time after such notice of arbitration is submitted shall be deemed submitted to arbitration under this Section on the date of its receipt under the applicable arbitration rules.
7. The arbitration rules applicable under paragraph 4 shall govern the arbitration except to the extent modified by this Agreement.
8. The claimant shall provide with the notice of arbitration:
(a) the name of the arbitrator that the claimant appoints; or
(b) the claimant's written consent for the Secretary-General to appoint the claimant's arbitrator.
9. If, following the submission of a claim to arbitration under this Section, the claimant fails to take any steps in the proceeding during six consecutive months, and if the disputing parties do not agree otherwise, the claimant shall be deemed to have withdrawn its claim and to have discontinued the proceedings. Thereupon, the claim shall be deemed not to have been filed under this Section and the authority of any tribunal constituted to hear that claim shall be deemed to have lapsed.
Article 22. Investment Disputes In Financial Services
1. Notwithstanding Article 2.3(a) (Scope), with respect to:
(a) financial institutions of a Party; and
(b) investors of a Party, and investments of those investors, in financial institutions in the respondent's area,
This Section shall only apply to claims that the respondent has breached an obligation under Article 10 (Expropriation) or Article 11 (Transfers). For greater certainty, Article 14 (Taxation Measures), Article 18 (Exceptions) and Article 19 (Denial of Benefits) shall also apply to an investment dispute where such claims have been made.
2. If a disputing party claims that an investment dispute involves measures adopted or maintained by the respondent relating to financial institutions of the non-disputing Party or investors of the non-disputing Party and their investments in financial institutions in the respondent's area, or where the respondent invokes Article 18.2, 18.3, 18.4 or 18.5 (Exceptions), the arbitrators shall, in addition to the criteria set out in Article 25 (Selection of Arbitrators), have expertise or experience in financial services law or practice, which may include the regulation of financial institutions.
3. If a claimant submits a claim to arbitration under this Section, and the respondent invokes Article 18.2, 18.3, 18.4 or 18.5 (Exceptions) as a defence, the following provisions of this Article shall apply:
(a) the respondent shall, no later than the date the tribunal fixes for the respondent to submit its defence, or in the case of an amendment to the notice of arbitration, the date the tribunal fixes for the respondent to submit its response to the amendment, submit in writing to the authorities responsible for financial services of the non-disputing Party, as set out in Annex VII (Authorities Responsible for Financial Services), a request for a joint determination by the authorities of the respondent and the nondisputing Party on the issue of whether and to what extent Article 18.2, 18.3, 18.4 or 18.5 (Exceptions) is a valid defence to the claim. The respondent shall promptly provide the tribunal, if constituted, and the nondisputing Party a copy of the request. The arbitration may proceed with respect to the claim only as provided in paragraph 5 11;
(b) the authorities of the respondent and of the non-disputing Party shall attempt in good faith to make a determination as described in subparagraph (a). Any such determination shall be transmitted promptly to the disputing parties and, if constituted, to the tribunal. The determination shall be binding on the tribunal and any decision or award issued by the tribunal must be consistent with that determination; and
(c) if the authorities referred to in subparagraphs (a) and (b) have not made a determination within 120 days after the date of receipt of the respondent's written request for a determination under subparagraph (a), either Party may request the establishment of an arbitral panel under Section D (Settlement of Disputes between the Parties), to consider whether and to what extent Article 18.2, 18.3, 18.4 or 18.5 (Exceptions) is a valid defence to the claim. When the arbitral panel completes its final report in accordance with Article 17.10 (Report) of the FTA, it shall transmit the final report to the Parties and to the tribunal.
4. The final report of an arbitral panel referred to in subparagraph 3(c) shall be binding on the tribunal, and any decision or award issued by the tribunal must be consistent with the final report.
5. If no request for the establishment of an arbitral panel pursuant to subparagraph 3(c) has been made within 10 days of the expiration of the 120 day period referred to in subparagraph 3(c), the tribunal established under Article 21 (Submission of a Claim to Arbitration) may proceed with respect to the claim:
(a) the tribunal shall draw no inference regarding the application of Article 18.2, 18.3, 18.4 or 18.5 (Exceptions) from the fact that the authorities have not made a determination as described in subparagraphs 3(a), 3(b) and 3(c); and
(b) the non-disputing Party may make oral and written submissions to the tribunal regarding the issue of whether and to what extent Article 18.2, 18.3, 18.4. or 18.5 (Exceptions) is a valid defence to the claim. Unless it makes such a submission, the non-disputing Party shall be presumed, for the purposes of the arbitration, to take a position on Article 18.2, 18.3, 18.4, or 18.5 (Exceptions) that is not inconsistent with that of the respondent.
Article 23. Consent of Each Party to Arbitration
1. Each Party consents to the submission of a claim to arbitration under this Section in accordance with this Agreement.
2. The consent under paragraph 1 and the submission of a claim to arbitration under this Section shall be deemed to satisfy the requirements of:
(a) Article II of the New York Convention for an "agreement in writing"; and
(b) Article 1 of the UNCITRAL Arbitration Rules.
Article 24. Conditions and Limitations on Consent of Each Party
1. No claim may be submitted to arbitration under this Section if more than three years have elapsed from the date on which the claimant first acquired, or should have first acquired, knowledge of the breach alleged under Article 21.1 (Submission of a Claim to Arbitration) causing loss or damage to the claimant or the enterprise.
2. No claim may be submitted to arbitration under this Section unless:
(a) the claimant consents in writing to arbitration in accordance with the procedures set out in this Agreement; and