(a) The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by- case, fact- based inquiry that considers, among other factors:
(i) the economic impact of the government action, although the fact that an action or series of actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred;
(ii) the extent to which the government action interferes with distinct, reasonable investment-backed expectations; and
(iii) the character of the govemment action.
(b) Except in rare circumstances, nondiscriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations.
Annex 10-E. Submission of a Claim to Arbitration. Chile
1. An investor of the United States may not submit to arbitration under Section B:
(a) a claim that Chile has breached an obligation under Section A or Annex 10-F either:
(i) on its own behalf under Article 10.15(1)(a), or
(ii) on behalf of an enterprise of Chile that is a juridical person that the investor owns or controls directly or indirectly under Article 10.15(1}(b),
if the investor or the enterprise, respectively, has alleged that breach of an obligation under Section A or Annex 10-F in proceedings before a court or administrative tribunal of Chile; or
(b) a claim that Chile has breached an investment agreement or investment authorization either:
(i) on its own behalf under Article 10.15(1)(a), or (ii) on behalf of an enterprise of Chile that is a juridical person that the investor owns or controls directly or indirectly under Article 10.15(1}(b),
if the investor or the enterprise, respectively, has alleged that breach of an investment agreement or investment authorization in proceedings before a court or administrative tribunal of Chile.
2. For greater certainty, if an investor of the United States elects to submit a claim of the type described in this Annex to a court or administrative tribunal of Chile, that election shall be definitive and the investor may not thereafter submit the claim to arbitration under Section B.
Annex 10-F. DL 600. Chile
1. Without prejudice to paragraphs 3 through 7, Chile shall accord to an investor of the United States or to a covered investment that is a party to an investment contract under Estaiufo de la Inversion Extranjera, Decreto Ley 600 de 1974 (DL 600) the better of the treatment required under this Agreement or the treatment under the investment contract.
2. Without prejudice to paragraphs 3 through 7, Chile shall permit an investor of the United States or a covered investment that has entered into an investment contract under DL 600 to amend the investment contract to make it consistent with Chileâs obligations under this Agreement.
3. Subject to paragraph 4, when an investor of the United States or a covered investment has entered into an investment contract under DL 600, an investor, on its own behalf or on behalf of the investment, may only submit a claim against Chile under Section B with regard to the contract if the investor alleges that Chile has breached an obligation under:
(a) Section A in connection with the investment contract; or
(b) this Annex; provided, however, that such an investor may not submit any claim under Section B on the basis of the equity/debt ratio requirement of an investment contract under DL 600 except for claims that Chile has accorded the investor or its covered investment treatment less favorable than Chile accords under DL 600 to an investor of a non-Party or its investment in like circumstances.
4. When an investor of the United States or a covered investment has entered into an investment contract under DL 600, and the investor, on its own behalf or on behalf of the investment, claims that Chile has breached the tax provisions of that contract, it shall, with regard to that claim, only have recourse to the dispute settlement provisions of the investment contract or the dispute settlement provisions of this Agreement relevant to taxation measures.
5. For greater certainty, execution of an investment contract under DL 600 by an investor of the United States or a covered investment does not create any right on the part of the investor or covered investment to engage in particular activities in Chile.
6. Nothing in this Agreement shall limit the right of Chile's Comité de Inversiones Extranjeras, its Vicepresidencia Ejecutiva, or their successors to decide whether to authorize an investor of the United States or a covered investment to enter into an investment contract under DL 600, or to establish conditions in such contract, provided that Chile does so in a manner that is not inconsistent with Chile's obligations under Section A.
7. Notwithstanding any other provision in this Agreement, Chile may prohibit an investor of the United States or a covered investment from transferring from Chile proceeds of the sale of all or any part of an investment made pursuant to a contract under DL 600 for up to one year after the date that the investor or covered investment transferred funds to Chile to establish the investment.
Annex 10-G. Service of Documents on a Party Under Section B
Chile
Notices and other documents in disputes under Section B shall be served on Chile by delivery to:
Dirección de Asuntos Jurídicos del Ministerio de Relaciones Exteriores de la República de Chile Morandé 441 Santiago, Chile
United States
Notices and other documents in disputes under Section B shall be served on the United States by delivery to:
Executive Director (L/EX) Office of the Legal Adviser Department of State Washington, D.C. 20520 United States of America
Annex 10-H. Possibility of a Bilateral Appellate Body/Mechanism
Within three years after the date of entry into force of this Agreement, the Parties shall consider whether to establish a bilateral appellate body or similar mechanism to review awards rendered under Article 10.25 in arbitrations commenced after they establish the appellate body or similar mechanism.
Chapter Eleven. Cross-Border Trade In Services
Article 11.1. Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party affecting cross-border trade in services by service suppliers of the other Party. Such measures include measures affecting:
(a) the production, distribution, marketing, sale, and delivery of a service;
(b) the purchase or use of, or payment for, a service;
(c) the access to and use of distribution, transport, or telecommunications networks and services in connection with the supply of a service;
(d) the presence in its territory of a service supplier of the other Party; and
(e) the provision of a bond or other form of financial security as a condition for the supply of a service.
2. For purposes of this Chapter, "measures adopted or maintained by a Party" means measures adopted or maintained by:
(a) central, regional, or local govemments and authorities; and
(b) non-govemmental bodies in the exercise of powers delegated by central, regional, or local govemments or authorities.
3. Articles 11.4, 11.7, and 11.8 also apply to measures by a Party affecting the supply of a service in its territory by an investor of the other Party as defined in Article 10.27 (Definitions) or a covered investment. (1)
4. This Chapter does not apply to:
(a) financial services, as defined in Article 12.19 (Definitions), except as provided in paragraph 3;
(b) air services, including domestic and intemational air transportation services, whether scheduled or non-scheduled, and related services in support of air services, other than:
(i) aircraft repair and maintenance services during which an aircraft is withdrawn from service, and
(ii) specialty air services;
(c) procurement; or
(d) subsidies or grants provided by a Party or a state enterprise, including government-supported loans, guarantees, and insurance.
5. This Chapter does not impose any obligation on a Party with respect to a national of the other Party seeking access to its employment market, or employed on a permanent basis in its territory, and does not confer any right on that national with respect to that access or employment.
6. This Chapter does not apply to services supplied in the exercise of governmental authority. A "service supplied in the exercise of governmental authority" means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.
Article 11.2. National Treatment
1. Each Party shall accord to service suppliers (2) of the other Party treatment no less favorable than that it accords, in like circumstances, to its own service suppliers.
2. The treatment to be accorded by a Party under paragraph 1 means, with respect to a regional level of goverment, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that regional level of government to service suppliers of the Party of which it forms a part.
Article 11.3. Most-Favored-Nation Treatment
Each Party shall accord to service suppliers (3) of the other Party treatment no less favorable than that it accords, in like circumstances, to service suppliers of a non-Party.
Article 11.4. Market Access
Neither Party may, either on the basis of a regional subdivision or on the basis of its entire territory, adopt or maintain measures that:
(a) impose limitations on:
(i) the number of service suppliers, (4) whether in the form of numerical quotas, monopolies, exclusive service suppliers, or the requirement of an economic needs test,
(ii) the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test,
(iii) the total number of service operations or on the total quantity of services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test, (5) or
(iv) the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in the form of a numerical quotas or the requirement of an economic needs test; or
(b) restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service.
Article 11.5. Local Presence
Neither Party may require a service supplier of the other Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border supply of a service.
Article 11.6. Non-conforming Measures
1. Articles 11.2, 11.3, 11.4, and 11.5 do not apply to:
(a) any existing non-conforming measure that is maintained by a Party at:
(i) the central level of government, as set out by that Party in its Schedule to Annex I,
(ii) a regional level of government, as set out by that Party in its Schedule to Annex I, or
(iii) a local level of government;
(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 11.2, 11.3 , 11.4, or 11.5.
2. Articles 11.2, 11.3, 11.4, and 11.5 do not apply to any measure that a Party adopts or maintains with respect to sectors, sub-sectors, or activities, as set out in its Schedule to Annex II.
3. Annex 11.6 sets out specific commitments by the Parties.
Article 11.7. Transparency In Development and Application of Regulations (6)
Further to Chapter Twenty (Transparency):
(a) each Party shall maintain or establish appropriate mechanisms for responding to inquiries from interested persons regarding their regulations relating to the subject matter of this Chapter, (7)
(b) at the time it adopts final regulations relating to the subject matter of this Chapter, each Party shall, to the extent possible, including upon request, address in writing substantive comments received from interested persons with respect to the proposed regulations; and
(c) to the extent possible, each Party shall allow a reasonable period of time between publication of final regulations and their effective date.
Article 11.8. Domestic Regulation
1. Where a Party requires authorization for the supply of a service, the competent authorities of that Party shall, within a reasonable period of time after the submission of an application considered complete under domestic laws and regulations, inform the applicant of the decision concerning the application. At the request of the applicant, the competent authorities of the Party shall provide, without undue delay, information conceming the status of the application. This obligation shall not apply to authorization requirements that are within the scope of Article 11.6(2).
2. With a view to ensuring that measures relating to qualification requirements and procedures, technical standards, and licensing requirements do not constitute unnecessary barriers to trade in services, each Party shall endeavor to ensure, as appropriate for individual sectors, that any such measures that it adopts or maintains are:
(a) based on objective and transparent criteria, such as competence and the ability to supply the service;
(b) not more burdensome than necessary to ensure the quality of the service; and
(c) in the case of licensing procedures, not in themselves a restriction on the supply of the service.
3. If the results of the negotiations related to Article VI:4 of GATS (or the results of any similar negotiations undertaken in other multilateral fora in which both Parties participate) enter into effect, this Article shall be amended, as appropriate, after consultations between the Parties, to bring those results into effect under this Agreement. The Parties agree to coordinate on such negotiations as appropriate.
Article 11.9. Mutual Recognition
1. For the purposes of the fulfillment, in whole or in part, of its standards or criteria for the authorization, licensing, or certification of services suppliers, and subject to the requirements of paragraph 4, a Party may recognize the education or experience obtained, requirements met, or licenses or certifications granted in a particular country. Such recognition, which may be achieved through harmonization or otherwise, may be based upon an agreement or arrangement with the country concemed or may be accorded autonomously.
2. Where a Party recognizes, autonomously or by agreement or arrangement, the education or experience obtained, requirements met, or licenses or certifications granted in the territory of a non-Party, nothing in Article 11.3 shall be construed to require the Party to accord such recognition to the education or experience obtained, requirements met, or licenses or certifications granted in the territory of the other Party.
3. A Party that is a party to an agreement or arrangement of the type referred to in paragraph 1, whether existing or future, shall afford adequate opportunity for the other Party, if the other Party is interested, to negotiate its accession to such an agreement or arrangement or to negotiate comparable ones with it. Where a Party accords recognition autonomously, it shall afford adequate opportunity for the other Party to demonstrate that education, experience, licenses, or certifications obtained or requirements met in that other Party's territory should be recognized.
4. A Party shall not accord recognition in a manner which would constitute a means of discrimination between countries in the application of its standards or criteria for the authorization, licensing, or certification of services suppliers, or a disguised restriction on trade in services.
5. Annex 11.9 applies to measures adopted or maintained by a Party relating to the licensing or certification of professional service suppliers as set out in the provisions of that Annex.
Article 11.10. Implementation
The Parties shall consult annually, or as otherwise agreed, to review the implementation of this Chapter and consider other trade in services issues of mutual interest. Among other issues, the Parties will consult with a view to determining the feasibility of removing any remaining citizenship or permanent residency requirement for the licensing or certification of each other's services suppliers. Such consultations will also include consideration of the development of procedures that could contribute to greater transparency of measures described in Article 11.6(1)(c).
Article 11.11. Denial of Benefits
1. A Party may deny the benefits of this Chapter to a service supplier of the other Party if the service is being supplied by an enterprise owned or controlled by nationals of a non-Party, and the denying Party:
(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise.
2. Subject to Article 22.4 (Consultations), a Party may deny the benefits of this Chapter to:
(a) service suppliers of the other Party where the service is being supplied by an enterprise that is owned or controlled by persons of a non-Party and the enterprise has no substantial business activities in the territory of the other Party, or
(b) service suppliers of the other Party where the service is being supplied by an enterprise that is owned or controlled by persons of the denying Party and the enterprise has no substantial business activities in the territory of the other Party.
Article 11.12. Definitions
For purposes of this Chapter:
cross-border trade in services or cross-border supply of services means the supply of a service:
(a) from the territory of one Party into the territory of the other Party;
(b) in the territory of one Party by a person of that Party to a person of the other Party; or
(c) by a national of a Party in the territory of the other Party,
but does not include the supply of a service in the territory of a Party by an investor of the other Party as defined in Article 10.27 (Investment-Definitions) or a covered investment;
enterprise means an "enterprise" as defined in Article 2.1 (Definitions of General Application), and a branch of an enterprise;
enterprise of a Party means an enterprise constituted or organized under the law of a Party, anda branch located in the territory of a Party and carrying out business activities there;
professional services means services, the provision of which requires specialized post-secondary education, or equivalent training or experience, and for which the right to practice is granted or restricted by a Party, but does not include services provided by trades-persons or vessel and aircraft crew members; service supplier of a Party means a person of a Party that seeks to supply or supplies a service; and specialty air services means any non-transportation air services, such as aerial fire-fighting, sightseeing, spraying, surveying, mapping, photography, parachute jumping, glider towing, and helicopter-lift for logging and construction, and other airborne agricultural, industrial, and inspection services.
Chapter Twelve. Financial Services
Article 12.1. Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party relating to:
(a) Financial Institutions of the other Party;
(b) investors of the other Party, and investments of such investors, in financial institutions in the Party's territory; and
(c) cross-border trade in financial services.
2. Articles 10.8 through 10.12 and 11.11 are hereby incorporated into and made a part of this Chapter. Section B of Chapter Ten (Investment) is hereby incorporated into and made a part of this Chapter solely for breaches by a Party of Articles 10.8 through 10.11, as incorporated into this Chapter. (1) No other provision of Chapter Ten (Investment) or Chapter Eleven (Cross Border Trade in Services) shall apply to a measure described in paragraph 1.
3. This Chapter does not apply to measures adopted or maintained by a Party relating to:
(a) activities or services forming part of a public retirement plan or statutory system of social security; or
(b) activities or services conducted for the account or with the guarantee or using the financial resources of the Party, including its public entities, except that this Chapter shall apply if a Party allows any of the activities or services referred to in subparagraphs (a) or (b) to be conducted by its financial institutions in competition with a public entity or a financial institution.
Article 12.2. National Treatment
1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords to its own investors, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments in financial institutions in its territory.
2. Each Party shall accord to financial institutions of the other Party and to investments of investors of the other Party in financial institutions treatment no less favorable than that it accords to its own financial institutions, and to investments of its own investors in financial institutions, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments.
3. For purposes of the national treatment obligations in Article 12.5(1), a Party shall accord to cross- border financial service suppliers of the other Party treatment no less favorable than that it accords to its own financial service suppliers, in like circumstances, with respect to the supply of the relevant service.
Article 12.3. Most-Favored-Nation Treatment
1. Each Party shall accord to investors of the other Party, financial institutions of the other Party, investments of investors in financial institutions, and cross-border financial service suppliers of the other Party treatment no less favorable than that it accords to the investors, financial institutions, investments of investors in financial institutions and crossborder financial service suppliers of a non- Party, in like circumstances.
2. A Party may recognize prudential measures of a non-Party in the application of measures covered by this Chapter. Such recognition may be:
(a) accorded unilaterally;
(b) achieved through harmonization or other means; or
(c) based upon an agreement or arrangement with the non-Party.
3. A Party according recognition of prudential measures under paragraph 2 shall provide adequate opportunity to the other Party to demonstrate that circumstances exist in which there are or will be equivalent regulation, oversight, implementation of regulation, and, if appropriate, procedures conceming the sharing of information between the Parties.
4. Where a Party accords recognition of prudential measures under paragraph 2(c) and the circumstances set out in paragraph 3 exist, the Party shall provide adequate opportunity to the other Party to negotiate accession to the agreement or arrangement, or to negotiate a comparable agreement or arrangement.
Article 12.4. Market Access for Financial Institutions
Neither Party may, with respect to investors of the other Party, either on the basis of a regional subdivision or on the basis of its entire territory adopt or maintain measures that:
(a) impose limitations on: