Title

INVESTMENT COOPERATION AND FACILITATION TREATY BETWEEN THE FEDERATIVE REPUBLIC OF BRAZIL AND THE REPUBLIC OF INDIA

Preamble

PREAMBLE

The Federative Republic of Brazil and The Republic of India (hereinafter referred to as the "Parties" collectively or individually as "Party");

Wishing to strengthen and enhance the bonds of friendship and the spirit of continuous cooperation between the parties;

Desiring to promote cooperation between the Parties with respect to bilateral investments;

Recognizing that the cooperation in and facilitation of investments of investors of one Party in the territory of the other Party will be conducive to the stimulation of mutually beneficial business activity, to the development of economic cooperation between them and to the promotion of sustainable development, including poverty reduction;

Reaffirming the right of Parties to regulate investments in their territory in accordance with their law and policy objectives;

Seeking to create and maintain favourable conditions for the investments of investors of a Party in the territory of the other Party;

Recognizing the importance of fostering a transparent and friendly environment for investments by investors of the Parties;

Wishing to encourage and strengthen contacts between investors and the governments of the Parties; and

Seeking to maintain a dialogue and foster government initiatives that may contribute to an increase in bilateral investments.

Agree, in good faith, to the following Investment Cooperation and Facilitation Treaty, hereinafter referred to as "Treaty", as follows:

Body

Part I. Scope and Definitions

Article 1. Objective

The objective of this Treaty is to promote cooperation between the Parties in order to facilitate and encourage bilateral investments, through the establishment of an institutional framework for the management of an agenda for further investment cooperation and facilitation, as well as through mechanisms for risk mitigation and prevention of disputes, among other instruments mutually agreed to by the Parties.

Article 2. Definitions

2. For the purpose of this Treaty:

2.1 "Confidential information" means business confidential information, e.g. confidential commercial, financial or technical information which could result in material loss or gain or prejudice to competitive positions, and information that is privileged or otherwise protected from disclosure under the law of a Party.

2.2 "Enterprise" means:

a) Any legal entity constituted, organized and operated in compliance with the law of a Party, including any company, corporation, limited liability partnership or a joint venture; and

b) A branch of any such entity established in the territory of a Party in accordance with its law and carrying out business activities there. Nothing in this Treaty shall be construed to require any Party to authorize the provision of financial services by branches.

2.3 "Host State" means the Party where the investment is made.

2.4 "Investment" means an enterprise, including a participation therein, in the territory of a Party, that an investor of the other Party owns or controls, directly or indirectly, or over which it exerts a significant degree of influence, that has the characteristics of an investment, including the commitment of capital, the objective of establishing a lasting interest, the expectation of gain or profit and the assumption of risk. The following assets of the enterprise, among others, are covered under this Treaty:

a) Shares, stocks and other forms of equity instruments of the enterprise or in another enterprise;

b) Debt instruments or securities of another enterprise;

c) Licenses, authorizations, permits, concessions or similar rights conferred in accordance with the law of a Party;

d) Loans to another enterprise;

e) Intellectual property rights as defined or referenced to in the Trade-Related Aspects of Intellectual Property Rights of the World Trade Organization (TRIPS); and

f) Movable or immovable property and related rights.

2.4.1 For greater certainty, "Investment" does not include the following:

i) An order or judgment sought or entered in any judicial, administrative or arbitral proceeding;

ii) Debt securities issued by a Party or loans granted from a Party to the other Party, bonds, debentures, loans or other debt instruments of-a State-owned enterprise of a Party that is considered to be public debt under the law of that Party;

iii) Any expenditure incurred prior to the obtainment of all necessary licenses, permissions, clearances and permits required under the law of a Party;

iv) Portfolio investments of the enterprise or in another enterprise;

v) Claims to money that arise solely from commercial contracts for the sale of goods or services by a national or an enterprise in the territory of a Party to an enterprise in the territory of another Party;

vi) Goodwill, brand value, market share or similar intangible rights;

vii) Claims to money that arise solely from the extension of credit in connection with any commercial transaction; and

vii) Any other claims to money that do not involve the kind of interests or operations as set out in the definition of investment in this Treaty.

2.5 "Investor" means:

a) Any natural person of a Party that makes an investment in the territory of the other Party; or

b) Any enterprise constituted and organized in accordance with the law of a Party, other than a branch, that has substantial business activities in the territory of that Party and that makes an investment in the territory of the other Party.

2.6 "Local government" includes:

a) An urban local body, municipal corporation or village level government; or

b) An enterprise owned or controlled by an urban local body, a municipal corporation or a village level government.

2.7 "Measure" includes a law, regulation, rule, procedure, decision, administrative action, requirement or practice.

2.7.1 For India, "law" includes:

a) The Constitution, legislation, subordinate/delegated legislation, laws and bylaws, rules and regulations, ordinance, notifications, policies and guidelines in accordance with an enactment or legislation, procedures, administrative measures/executive actions at all levels of government, as amended, interpreted or modified from time to time;

b) Decisions, judgments, orders, awards and decrees by Courts, regulatory authorities, judicial and administrative institutions having the force of law within the territory of a Party.

2.8 "Natural person" means a national, citizen or a permanent resident of a Party in accordance with its law.

2.9 "PCA Optional Rules" means the Permanent Court of Arbitration Optional Rules for Arbitration Disputes between Two States, signed on 20 October 1992.

2.10 "Pre-investment activity" means any activity undertaken by the investor or its investment pursuant to compliance with sectorial limitations on foreign equity, and other specific limits and conditions applicable under any law relating to the admission of investments in the territory of the Party, prior to the establishment of the investment.

2.11 "Sub-national government" means a State Government and a Union Territory administration in the case of India but does not include local governments; and, in the case of Brazil, means the States, the Federal District and the Municipalities.

2.12 "Territory" means:

a) In respect of Brazil, the territory, including land and air space, the exclusive economic zone, the territorial sea and the continental shelf and its seabed and subsoil, in which the country exerts sovereign rights or jurisdiction in accordance with international law and its national legislation.

b) In respect of India, the territory in accordance with the Constitution of India, including its territorial waters and the airspace above it and other maritime zones including the Exclusive Economic Zone and continental shelf over which the Republic of India has sovereignty, sovereign rights, or exclusive jurisdiction in accordance with its law and the 1982 United Nations Convention on the Law of the Sea and international law.

2.13 "WTO Agreement" means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April, 1994.

2.14 2.14 The Annexures, Provisos and Footnotes in this Treaty constitute an integral part of this Treaty and are to be accorded the same effect as other provisions in this Treaty.

Article 3. Scope and General Provisions

3.1 This Agreement shall apply to measures adopted or maintained by a Party relating to investments of investors of another Party in its territory, in existence as on the date of entry into force of this Treaty or established, acquired, or expanded thereafter, and which have been admitted by a Party in accordance with its law and policies as applicable from time to time.

3.2 The Parties shall encourage investments of investors of the other Party through cooperation and facilitation of investments as set forth in this Treaty.

3.3 This Treaty shall not limit the rights and benefits which an investor of a Party enjoys under national law in the territory of the other Party.

3.4 This Treaty shall not prevent the adoption and implementation of new legal requirements or restrictions to investors and their investments, as long as they are consistent with this Treaty.

3.5 Subject to the provisions of Part Ill, nothing in this Treaty shall apply to any Pre-investment activity, to any measure related to such Pre-investment activity, or to the terms and conditions of admission of an investment, which continue to apply post-establishment.

3.6 This Treaty shall not apply to:

a) Any measure by a local government, provided that it is consistent with Article 5 of this Treaty;

b) Any law or measure regarding taxation, including measures taken to enforce taxation obligations;

c) The issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with the international obligations of Parties under the WTO Agreement;

d) Government procurement by a Party;

e) Subsidies or grants provided by a Party to vulnerable groups in accordance with its law;

f) Services supplied in the exercise of governmental authority by the relevant body or authority of a Party. For the purposes of this provision, a service supplied in the exercise of governmental authority means any service which is not supplied on a commercial basis; or

g) Claims arising out of events which occurred, or claims which have been raised prior to the entry into force of this Treaty.

3.7 A Party may decide not to apply this Treaty to an investor or an investment of an investor of that Party or of a non-party in the territory of that Party, unless inconsistent with this Treaty.

Part II. General Obligations of the Parties

Article 4. Treatment of Investments

4.1 Based on the applicable rules and customs of international law as recognized by each of the Parties and their respective national law, no Party shall subject investments made by investors of the other Party to measures which constitute:

a) Denial of justice in any judicial or administrative proceedings;

b) Fundamental breach of due process;

c) Targeted discrimination, such as gender, race or religious belief;

d) Manifestly abusive treatment, such as coercion, duress and harassment; or

e) Discrimination in matters of law enforcement, including the provision of physical security.

4.2 Nothing in this Treaty shall be construed as to prevent a Party from adopting or maintaining affirmative action measures towards vulnerable groups.

4.3 A determination that there has been a breach of another provision of this Treaty, or of a separate international agreement, does not establish that there has been a breach of this Article.

4.4 Subject to its laws and regulations and policies on the entry of foreign nationals, each Party shall provide the facilities and the necessary permissions for the entry, exit, residence and work of the investor of the other Party and any national of the other Party having a permanent or temporary relationship with the investment, including administrators, experts and technicians.

4.5 Existing investments shall not be affected by subsequent changes in admission requirements.

Article 5. National Treatment

5.1 Without prejudice to the measures in force under its legislation on the date of entry into force of this Treaty, each Party shall accord to investors of the other Party or to investments by investors of the other Party treatment no less favorable than that it accords, in like circumstances, to its own investors or to investments by its own investors, with respect to management, conduct, operation, sale or other disposition of investments in its territory.

5.2 For greater certainty, the treatment accorded 'in like circumstances' depends on the totality of the circumstances, including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public welfare or regulatory objectives.

5.3 For greater certainty, this Article shall not be interpreted as obliging the Parties to compensate for inherent competitive disadvantages which result from the foreign character of the investors and their investments.

Article 6. Direct Expropriation

6.1 Neither Party may nationalize or expropriate an investment of an investor (hereinafter "expropriate") of the other Party, except:

a) For reasons of public purpose; (1)

b) In a non-discriminatory manner;

c) On payment of effective and adequate (2) compensation, according to paragraph 6.2; and

d) In accordance with the due process of law.

6.2 Such compensation shall:

a) Be paid without undue delay;

b) Be at least equivalent to the fair market value of the expropriated investment, immediately before the expropriation takes place but not beyond thirty (30) days prior to the date of expropriation, plus interests at a rate determined according to market criteria, accrued since the expropriation date until the payment date, according to the legislation of the Host State;

c) Not reflect any change in value occurring because the intended expropriation had become known earlier. Valuation criteria shall include going concern value, asset value including declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value; and

d) Be completely payable, freely exchanged into a convertible currency and freely transferable, according to Article 9.

6.3 For greater certainty, this Treaty only covers direct expropriation, which occurs when an investment is nationalised or otherwise directly expropriated through formal transfer of title or outright seizure.

6.4 Non-discriminatory regulatory measures by a Party or measures or awards by judicial bodies of a Party that are designed and applied to protect legitimate public interest or public purpose objectives such as public health, safety and the environment shall not constitute expropriation under this Article.

(1) For the avoidance of doubt, where India is the expropriating Party, any measure of expropriation relating to land shall be for the purposes as set out in its law relating to land acquisition and any questions as to "public purpose" and compensation shall be determined in accordance with the procedure specified in such law.

(2) For the avoidance of doubt, where Brazil is the expropriating Party, for the expropriation of property that is not performing its social function, in accordance with its Constitution and other applicable legislation, compensation may be paid in the form of debt bonds.

Article 7. Compensation for Losses

The investors of a Party whose investments in the territory of the other Party suffer losses due to war or other armed conflict, revolution, state of emergency, civil strife or any other similar events, shall enjoy, with regard to restitution, indemnity or other form of compensation, the same treatment as the latter Party accords to its own investors or the treatment accorded to investors of a third party, whichever is more favorable to the affected investor.

Article 8. Transparency

8.1 Each Party shall, as per its law, ensure that its laws, regulations, procedures and administrative rulings of general application in respect of any matter covered by this Treaty are published, or otherwise made available in electronic format, in such a manner so as to enable interested persons and the other Party to become acquainted with them.

8.2 Each Party shall, as provided for in its laws and regulations:

a) Publish any such measure that it proposes to adopt; and

b) Provide interested persons and the other Party a reasonable opportunity to comment on such proposed measures.

8.3 Whenever possible, each Party shall disseminate this Treaty to their respective public and private financial agents, responsible for the technical evaluation of risks and the approval of loans, credits, guarantees and related insurances for investment in the territory of the other Party.

Article 9. Transfers

9.1 Each Party shall permit all funds of an investor of the other Party related to an investment in its territory to be, in compliance with applicable domestic procedures established by its regulations, freely transferred and on a non-discriminatory basis. Such funds may include:

a) Contributions to capital;

b) Profits, dividends, capital gains and proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;

c) Interest, royalty payments, management fees, and technical assistance and other fees;

d) Payments made under a contract, including a loan agreement, directly related to the investment; and

e) Payments made pursuant to Articles 6 and 7.

9.2 Nothing in this Treaty shall affect the right of a Party to adopt temporary regulatory measures, in a non-discriminatory manner, concerning the balance of payments in a balance of payments crisis, nor will it affect the rights and obligations of the Parties as members of the International Monetary Fund contained in the Articles of the Agreement of the International Monetary Fund, in particular exchange measures which are in conformity with the Agreement of the International Monetary Fund.

9.3 The adoption of temporary restrictive measures for transfers in case of the existence of serious balance of payments difficulties must be non-discriminatory and in accordance with the Articles of the Agreement of the International Monetary Fund.

9.4 Nothing in this Treaty shall prevent a Party from conditioning or preventing a transfer through application of its law, including actions relating to:

a) Bankruptcy, insolvency or the protection of the rights of the creditors;

b) Compliance with judicial, arbitral or administrative decisions and awards;

c) Compliance with labour obligations;

d) Financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;

e) Issuing, trading or dealing in securities, futures, options, or derivatives;

f) Compliance with the law on taxation;

g) Criminal or penal offences and the recovery of the proceeds of crime;

h) Social security, public retirement, or compulsory savings schemes, including provident funds, retirement gratuity programs and employees insurance programs;

i) Severance entitlements of employees;

j) Requirement to register and satisfy other formalities imposed by the Central Bank and other relevant authorities of a Party; and

k) In the case of India, requirements to lock-in initial capital investments, as provided in India's Foreign Direct Investment (FDI) Policy, where applicable, provided that, any new measure which would require a lock-in period for investments will not apply to existing investments.

Article 10. Investment Measures and Combating Corruption and Illegality

10.1 Each Party shall adopt measures and make efforts to prevent and fight corruption, money laundering and terrorism financing with regard to matters covered by this Treaty, in accordance with its laws and regulations.

10.2 Nothing in this Treaty shall require any Party to protect investments made with capital or assets of illicit origin or investments in the establishment or operation of which illegal acts have been demonstrated to occur and for which national legislation provides asset forfeiture.

Part III. Investor Obligations or Responsibilities

Article 11. Compliance with Laws

The Parties reaffirm and recognize that:

a) Investors and their investments shall comply with all laws, regulations, administrative guidelines and policies of a Party concerning the establishment, acquisition, management, operation and disposition of investments.

b) Investors and their investments shall not, either prior to or after the establishment of an investment, offer, promise, or give any undue pecuniary advantage, gratification or gift whatsoever, whether directly or indirectly, to a public servant or official of a Party as an inducement or reward for doing or forbearing to do any official act or obtain or maintain other improper advantage nor shall be complicit in inciting, aiding, abetting, or conspiring to commit such acts.

c) Investors and their investments shall comply with the provisions of law of the Parties concerning taxation, including timely payment of their tax liabilities.

d) An investor shall provide such information as the Parties may require concerning the investment in question and the corporate history and practices of the investor, for purposes of decision making in relation to that investment or solely for statistical purposes.

Article 12. Corporate Social Responsibility

12.1 Investors and their investments shall strive to achieve the highest possible level of contribution to the sustainable development of the Host State and the local community, through the adoption of a high degree of socially responsible practices, based on the voluntary principles and standards set out in this Article and internal policies, such as statements of principle that have been endorsed or are supported by the Parties.

12.2 The investors and their investments shall endeavour to comply with the following voluntary principles and standards for a responsible business conduct and consistent with the laws adopted by the Host State:

a) Contribute to the economic, social and environmental progress, aiming at achieving sustainable development;

b) Respect the internationally recognized human rights of those involved in the companies' activities;