(a) The initial capital and additional amounts to maintain or increase investments;
(b) Profits, interest, capital gains, dividends, royalties, fees or other current incomes accruing from investments;
(c) Payments made under a contract including loan payments in connection with investments;
(d) Proceeds of the total or partial sale or liquidation of investments;
(e) Earnings and remuneration of personnel from abroad who work in connection with investments in the Territory of the former Contracting Party;
(f) Payments made in accordance with Articles 11 and 12; and
(g) Payments arising out of a dispute.
2. Each Contracting Party shall further ensure that such transfers may be made without delay in freely usable currencies at the market exchange rate prevailing on the date of the transfer.
3. Notwithstanding paragraphs 1 and 2, a Contracting Party may delay or prevent a transfer through the equitable, non-discriminatory and good-faith application of its laws and regulations relating to:
(a) Bankruptcy, insolvency or the protection of the rights of creditors;
(b) Issuing, trading or dealing in securities, futures, options or derivatives;
(c) Criminal or penal offenses;
(d) Reporting or record keeping of transfers of currency or other monetary instruments when necessary to assist law enforcement or financial regulatory authorities; or
(e) Ensuring compliance with orders or judgments in adjudicatory proceedings.
Article 15. General and Security Exceptions
1. Subject to the requirement that such measures are not applied by a Contracting Party in a manner which would constitute a means of arbitrary or unjustifiable discrimination against, or a disguised restriction on investors of the other Contracting Party and their investments in the Territory of the former Contracting Party, nothing in this Agreement shall be construed so as to prevent the former Contracting Party from adopting or enforcing measures:
(a) Necessary to protect human, animal or plant life or health;
Note: This exception includes environmental measures necessary to protect human, animal or plant life or health.
(b) Necessary to protect public morals or to maintain public order, provided that the public order exception may only be invoked where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society;
(c) Necessary to secure compliance with the laws or regulations which are not inconsistent with the provisions of this Agreement including those relating to:
(i) The prevention of deceptive and fraudulent practices or to deal with the effects of a default on contract;
(ii) The protection of the privacy of the individual in relation to the processing and dissemination of personal data and the protection of confidentiality of personal records and accounts; or
(iii) Safety;
(d) Imposed for the protection of national treasures of artistic, historic or archaeological value; or
(e) 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. Subject to paragraph 3 of Article 12, nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or enforcing measures:
(a) Which it considers necessary for the protection of its essential security interests:
(i) Taken in time of international or non- international armed conflict, or other emergency in that Contracting Party or in international relations; or
(ii) relating to the implementation of national policies or international agreements respecting the non-proliferation of weapons; or
(b) In pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
Article 16. Temporary Safeguard Measures
1. A Contracting Party may adopt or maintain restrictive measures with regard to cross-border capital transactions as well as payments or transfers for transactions related to investments:
(a) In the event of serious balance-of-payments and the external financial difficulties or threat thereof; or
(b) In exceptional cases where movements of capital cause or threaten to cause serious difficulties for macroeconomic management, in particular monetary and exchange rate policies.
2. Restrictive measures referred to in paragraph 1 shall:
(a) Be applied in such a manner that the other Contracting Party is treated no less favorably than any non-Contracting Party;
(b) Be consistent with the Articles of Agreement of the International Monetary Fund;
(c) Not exceed those necessary to deal with the circumstances set out in paragraph 1;
(d) Be temporary and be phased out progressively as the situation specified in paragraph 1 improves;
(e) Be promptly notified to the other Contracting Party; and
(f) Avoid unnecessary damages to the commercial, economic and financial interests of the other Contracting Party.
3. The Contracting Party which has adopted any measures under paragraph 1 shall, upon request, commence consultations with the other Contracting Party in order to review the restrictions adopted by it.
Article 17. Prudential Measures
1. Notwithstanding any other provisions of this Agreement, a Contracting Party shall not be prevented from taking measures relating to financial services for prudential reasons, including measures for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by an enterprise supplying financial services, or to ensure the integrity and stability of its financial system.
2. Where the measures taken by a Contracting Party pursuant to paragraph 1 do not conform with this Agreement, they shall not be used as a means of avoiding the obligations of the Contracting Party under this Agreement.
Article 18. Intellectual Property Rights
1. The Contracting Parties recognize their rights and obligations under the TRIPS Agreement, and promote efficiency and transparency in intellectual property protection system. For this purpose, the Contracting Parties shall promptly consult with each other at the request of either Contracting Party. Depending on the results of the consultation, each Contracting Party shall, in accordance with its laws and regulations, take appropriate measures to remove the factors which are recognized in the consultation as having adverse effects to the investments of investors of the other Contracting Party.
2. Nothing in this Agreement shall affect the rights and obligations of the Contracting Parties under multilateral agreements in respect of protection of intellectual property rights to which the Contracting Parties are parties.
3. Nothing in this Agreement shall be construed so as to oblige either Contracting Party to extend to investors of the other Contracting Party and to their investments treatment accorded to investors of a non-Contracting Party and to their investments by virtue of any existing or future bilateral or multilateral agreements in respect of protection of intellectual property rights, to which the former Contracting Party is a party, provided that the former Contracting Party complies with the TRIPS Agreement.
Article 19. Taxation Measures
1. Nothing in this Section shall impose obligations with respect to taxation measures except as expressly provided in paragraph 3.
2. Nothing in this Agreement shall affect the rights and obligations of either Contracting Party under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency.
3. Articles 4, 5, 9 and 11 shall apply to taxation measures.
Article 20. Health, Safety and Environmental Measures and Labor Standards
Each Contracting Party recognizes that it is inappropriate to encourage investment activities of investors of the other Contracting Party and of a non- Contracting Party by relaxing its domestic health, safety, environmental and labor standards legislation.
Article 21. Denial of Benefits
1. A Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is an enterprise of such other Contracting Party and to investments of that investor if persons of a non- Contracting Party own or control the enterprise and the denying Contracting Party:
(a) Does not maintain diplomatic relations with the non-Contracting Party; or
(b) Adopts or maintains measures with respect to the non-Contracting Party or a person of the non- Contracting Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Agreement were accorded to the enterprise or to its investments.
2. For the purpose of this Article, an enterprise is:
(a) "owned" by an investor if more than 50 percent of the equity interest in it is beneficially owned by the investor; and
(b) "controlled" by an investor if the investor has the power to name a majority of its directors or otherwise to legally direct its actions.
Article 22. Non Derogation
Nothing in this Agreement shall be construed so as to derogate from:
(a) Laws and regulations, administrative practices or procedures, or administrative or judicial decisions of either Contracting Party;
(b) Obligations under the international agreements which are in force between the Contracting Parties; or
(c) Obligations which either Contracting Party may have entered into with regard to investments made by an investor of the other Contracting Party,
That entitle investments and investment activities of investors of the Contracting Parties to treatment more favorable than that accorded by this Agreement.
Section II. Dispute Settlement
Article 23. Settlement of Dispute between the Contracting Parties
1. Each Contracting Party shall afford adequate opportunity for consultation, through diplomatic channels, regarding any dispute with the other Contracting Party concerning the interpretation or application of this Agreement.
2. Any dispute between the Contracting Parties as to the interpretation and application of this Agreement, not satisfactorily adjusted by diplomacy in accordance with paragraph 1 within a period of six months from notification of the dispute, shall upon request by either Contracting Party be referred for decision to an arbitration board.
3. Unless otherwise provided for in this Article, or in the absence of an agreement between the Contracting Parties to the contrary, the UNCITRAL Arbitration Rules shall apply mutatis mutandis to the proceedings of the arbitration board. However, these rules may be modified by the Contracting Parties or modified by the arbitrators appointed pursuant to paragraph 4, provided that both Contracting Parties agree to the modification. The arbitration board may, for its part, determine its own rules and procedures.
4. Within 60 days from the date of receipt by either Contracting Party from the other Contracting Party of a note requesting arbitration of the dispute, each disputing party shall appoint an arbitrator. The two arbitrators shall select a third arbitrator who, upon approval by both Contracting Parties, shall be appointed as the Chairperson, provided that the third arbitrator shall not be a national of either Contracting Party. The Chairperson shall be appointed within 60 days from the date of appointment of the other two arbitrators. All arbitrators shall be nationals of States having diplomatic relations with both Contracting Parties. The UNCITRAL Arbitration Rules applicable to appointing members of three-member panels shall apply mutatis mutandis to other matters relating to the appointment of the arbitrators of the arbitration board provided that the appointing authority referenced in those rules shall be the Secretary-General of the Permanent Court of Arbitration at The Hague. If the Secretary-General is a national of either Contracting Party or otherwise prevented from discharging the said function, the Deputy Secretary- General shall be invited to make the appointment.
5. Unless otherwise agreed by the Contracting Parties, all submissions of documents shall be made and all hearings shall be completed within a period of 180 days from the date of selection of the third arbitrator. The arbitration board shall decide the dispute by a majority of votes in accordance with this Agreement and the rules of international law applicable to the subject matter, within 60 days from the date of the final submissions of documents or the date of the closing of the hearings, whichever is the later. Such decision shall be final and binding.
6. Each Contracting Party shall bear the cost of the arbitrator of its choice and its representation in the arbitral proceedings. The cost of the Chairperson of the arbitration board in discharging his or her duties and the remaining costs of the arbitration board shall be borne equally by the Contracting Parties.
Article 24. Settlement of Investment Disputes between a Contracting Party and an Investor of the other Contracting Party
1. In the event of an investment dispute between the claimant and the respondent, they should initially seek to resolve the dispute through consultation and negotiation, which may include the use of non-binding, third-party procedures.
2. In the event that an investment dispute cannot be settled by consultation and negotiation within six months from the date on which the claimant requested in writing the respondent for consultation and negotiation, the claimant may submit to arbitration under this Article a claim:
(a) That the respondent has breached an obligation under Section I, except an obligation under Articles 9, 18 and 20; and
(b) That the claimant has incurred loss or damage by reason of, or arising out of, that breach.
3. At least 90 days before submitting any claim to arbitration under this Article, a claimant shall deliver to the respondent a written notice of its intention to submit the claim to arbitration (hereinafter referred to as "notice of intent"). The notice of intent shall specify:
(a) The name and address of the claimant;
(b) For each claim, the provision of Section I 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.
4. Provided that six months have elapsed since the claimant requested in writing the respondent for consultation and negotiation, the claimant may submit a claim referred to in paragraph 2 to the arbitration:
(a) Under the ICSID Convention, provided that both Contracting Parties are parties to the ICSID Convention;
(b) Under the ICSID Additional Facility Rules, provided that either Contracting Party, but not both, is a party to the ICSID Convention;
(c) Under the UNCITRAL Arbitration Rules; or
(d) If the disputing parties agree, under any other arbitration institution or arbitration rules.
5. A claim shall be deemed submitted to arbitration under this Article when the claimant's notice of or request for arbitration:
(a) Referred to in paragraph 1 of Article 36 of the ICSID Convention is received by the Secretary- General of ICSID;
(b) Referred to in Article 2 of Schedule C of the ICSID Additional Facility Rules is received by the Secretary-General of ICSID;
(c) Referred to Article 3 of the UNCITRAL Arbitration Rules, together with the statement of claim referred to in Article 20 of the UNCITRAL Arbitration Rules, is received by the respondent; or
(d) Under any other arbitration institution or arbitration rules selected under subparagraph 4(d) is received by the respondent, unless otherwise specified by such institution or in such rules.
6. (a) Each Contracting Party hereby consents to the submission of a claim to arbitration under this Article in accordance with this Agreement.
(b) The consent under subparagraph (a) and the submission of a claim to arbitration under this Article shall satisfy the requirements of:
(i) Chapter II of the ICSID Convention or the ICSID Additional Facility Rules for written consent of the parties; and
(ii) Article II of the New York Convention for an agreement in writing.
7. Notwithstanding paragraph 6, no claim may be submitted to arbitration under this Article 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 paragraph 2 and knowledge that the claimant has incurred loss or damage.
8. No claim may be submitted to arbitration under this Article unless the claimant:
(a) Consents in writing to arbitration in accordance with the procedures set out in this Article; and
(b) Waives in writing any right to initiate or continue before any administrative tribunal or court of justice under the law of either Contracting Party, or other dispute settlement procedures, any proceedings with respect to any measure alleged to constitute a breach referred to in subparagraph 2(a) before any judgment or award has been delivered on the subject matter of the dispute under the abovementioned mechanisms.
9. The waiver provided pursuant to subparagraph 8(b) shall cease to apply where the arbitral tribunal rejects the claim on the basis of a failure to meet the requirements of paragraph 3, 4, 7 or 8, or on any other procedural or jurisdictional grounds.
10. Notwithstanding subparagraph 8(b), the claimant may initiate or continue an action that seeks interim injunctive relief that does not involve the payment of monetary damages before an administrative tribunal or court of justice under the law of the respondent.
11. An arbitral tribunal established under paragraph 4 shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law.
12. In an arbitration under this Article, the respondent shall not assert, as a defense, counterclaim, right of setoff or otherwise, that the claimant has received or will receive indemnification or other compensation for all or part of the alleged damages pursuant to an insurance or guarantee contract.
13. The arbitral tribunal may award only:
(a) A judgment whether or not there has been a breach by the respondent of any obligation under Section I with respect to the claimant and its investments; and
(b) One or both of the following remedies, only if there has been such a breach:
(i) Monetary damages and applicable interest; and
(ii) Restitution of property, in which case the award shall provide that the respondent may pay monetary damages and any applicable interest, in lieu of restitution.
Without prejudice to the competence of the tribunal referred to in subparagraph (a), the arbitral tribunal shall not award a decision whether or not there has been a breach by the respondent of any obligation under the legislation of the respondent with respect to the claimant and its investments.
The arbitral tribunal may also award cost and attorney's fees in accordance with applicable arbitration rules.
14. The respondent may make available to the public in a timely manner all documents, including an award, submitted to, or issued by, an arbitral tribunal established under paragraph 4, subject to redaction of:
(a) Confidential business information;
(b) Information which is privileged or otherwise protected from disclosure under the laws and regulations of either Contracting Party;
(c) Information which shall be withheld pursuant to the relevant arbitration rules;
(d) Information the disclosure of which would impede law enforcement; and
(e) Information the disclosure of which it considers to be contrary to its essential security interests.
15. Unless the disputing parties agree otherwise, the place of arbitration shall be in a country that is a party to the New York Convention.
16. The award rendered by the arbitral tribunal shall be final and binding upon the disputing parties. This award shall be executed in accordance with the applicable laws and regulations, as well as relevant international law including the ICSID Convention and the New York Convention, concerning the execution of award in force in the country where such execution is sought.
Article 25. Service of Documents
1. Notices and other documents relating to arbitration under this Section shall be served on a Contracting Party by delivery to:
(a) With respect to Japan, Economic Affairs Bureau, the Ministry of Foreign Affairs; and
(b) With respect to the State of Israel, International Affairs Department, the Ministry of Finance or its successors.
2. A Contracting Party shall promptly make publicly available and notify to the other Contracting Party any change to the name of the authority referred to in paragraph 1.
3. Each Contracting Party shall make publicly available the address of its authority referred to in paragraphs 1 and 2.
Section III. Joint Committee
Article 26. Joint Committee
1. The Contracting Parties shall establish a Joint Committee (hereinafter referred to as "the Committee") with a view to accomplishing the objectives of this Agreement. The functions of the Committee shall be:
(a) To discuss and review the implementation and operation of this Agreement;
(b) To review the non-conforming measures maintained, amended or modified pursuant to paragraph 1 of Article 8 for the purpose of contributing to the reduction or elimination of such non-conforming measures;
(c) To discuss the non-conforming measures adopted or maintained pursuant to paragraph 2 of Article 8 for the purpose of encouraging favorable conditions for investors of the Contracting Parties;
(d) To exchange information on and to discuss investment-related matters within the scope of this Agreement which relate to improvement of investment environment;
(e) To consider any issues raised by either Contracting Party concerning investment agreements; and
(f) To discuss any other investment-related matters concerning this Agreement.
2. The Committee may, as necessary, make appropriate recommendations by consensus to the Contracting Parties for the more effective functioning or the attainment of the objectives of this Agreement.
3. The Committee shall be composed of representatives of the Contracting Parties. The Committee may, upon mutual consent of the Contracting Parties, invite representatives of relevant entities other than the Governments of the Contracting Parties with the necessary expertise relevant to the issues to be discussed, and hold joint meetings with the private sectors.
4. The Committee shall determine its own rules of procedure to carry out its functions.
5. The Committee may establish sub-committees and delegate specific tasks to such sub-committees.
6. The Committee shall meet upon the request of either Contracting Party.
Section IV. Final Provisions
Article 27. Headings
The headings of the Sections and Articles of this Agreement are inserted for convenience of reference only and shall not affect the interpretation of this Agreement.
Article 28. Final Provisions
1. The Contracting Parties shall notify each other, in writing through diplomatic channels, of the completion of their respective internal procedures necessary for the entry into force of this Agreement. This Agreement shall enter into force on the 30th day after the latter of the dates of receipt of the notifications. It shall remain in force for a period of 10 years after its entry into force and shall continue in force unless terminated as provided for in paragraph 2.
2. A Contracting Party may, by giving one year's advance notice in writing to the other Contracting Party, through diplomatic channels, terminate this Agreement at the end of the initial 10 year period or at any time thereafter.
3. Upon the request of either Contracting Party, the Contracting Parties may agree on any amendment to this Agreement. Any amendment shall be approved by the Contracting Parties in accordance with their respective internal procedures and shall enter into force on such date as the Contracting Parties may agree, and shall thereafter constitute an integral part of this Agreement.