Title
THE SUPPLEMENTARY AGREEMENT ON INVESTMENTS OF THE FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE REPUBLIC OF CHILE
Preamble
The Government of the People's Republic of China ("China") and the Government of the Republic of Chile ("Chile"), hereinafter referred to as "the Parties",
Recalling Article 120 of the Free Trade Agreement between the Government of the People's Republic of China and the Government of the Republic of Chile on conclusion of the negotiations on Investments;
Agree as follows:
Body
Section A. Definitions
Article 1. Definitions
For the purposes of this Supplementary Agreement, hereinafter referred to as "the Agreement":
Centre means the International Centre for Settlement of Investment Disputes (ICSID) established by the ICSID Convention;
Claimant means an investor of a Party that is a party to an investment dispute with the other Party;
Commission means the Free Trade Commission established under Article 97 (The Free Trade Commission) of the Free Trade Agreement;
Committee means the Committee on Investments established under Article 27 (Committee on Investments) of this Agreement;
Disputing parties means the claimant and the respondent;
Disputing party means either the claimant or the respondent;
Free Trade Agreement means the Free Trade Agreement between the Government of the People's Republic of China and the Government of the Republic of Chile done in Pusan, Korea on November 18,2005;
Freely usable currency means freely usable currency as determined by the International Monetary Fund under its Articles of Agreement;
ICSID Additional Facility Rules means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes;
ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18,1965;
Investment means every kind of asset that an investor owns or controls, that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk, invested by investors of one Party in accordance with the laws and regulations of the other Party in the territory of the latter, and in particular, though not exclusively, includes:
(a) tangible or intangible, movable, immovable property and related property rights such as mortgages, liens, leases and pledges;
(b) shares, debentures, stock and any other kind of participation in enterprises;
(c) claims to money or to any other performance having an economic value associated with an investment (1);
(d) intellectual property rights;
(e) concessions conferred by law or under contract, including concessions to search for, cultivate, extract or exploit natural resources;
(f) bonds, loans, and other debt instruments; (2) (3) and
(g) futures, options, and other derivatives;
But investment does not mean an order or judgment entered in a judicial or administrative action;
Investor means a national or an enterprise of one Party who has invested in the territory of the other Party:
(a) the term "national" means:
(i) with respect to China, a natural person who has the Chinese nationality, in accordance with its laws and regulations; and
(ii) with respect to Chile, a natural person who has the Chilean nationality, in accordance with its laws and regulations;
(b) the term "enterprise" means any entities, including companies, firms, associations, partnerships and other organizations, incorporated or constituted under the laws and regulations of either Party, irrespective of whether or not for profit and whether it is owned or controlled by private person or government or not;
Measure means any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form;
Respondent means the Party that is a party to an investment dispute;
Secretary-General means the Secretary-General of ICSID;
Supplementary Agreement on Trade in Services means the Supplementary Agreement on Trade in Services done in Sanya, China, April 11, 2008;
Tribunal means an arbitration tribunal established under Article 17 (Selection of Arbitrators) or Article 20 (Consolidation of Claims) under Section B (Investment); and
UNCITRAL Arbitration Rules means the arbitration rules of the United Nations Commission on International Trade Law.
Section B. Investment (4) (5)
Article 2. Admission of Investments
Each Party shall admit and protect investments in its territory by investors of the other Party in accordance with its laws and regulations.
Article 3. National Treatment
1. Subject to its laws and regulations at the time the investment is made, each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the operation, management, maintenance, use, enjoyment, or disposal of investment.
2. Subject to its laws and regulations at the time the investment is made, each Party shall accord to investment of investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investments of its own investors with respect to the operation, management, maintenance, use, enjoyment, or disposal of investment.
Article 4. Performance Requirements (6)
The Parties agree that the provisions of the WTO Agreement on Trade-Related Investment Measures are incorporated mutatis mutandis into this Agreement and shall apply with respect to all investments falling within the scope of this Agreement.
Article 5. Most-favoured-nation Treatment (7)
1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investors of any non-Party with respect to the management, conduct, operation, and sale or other disposition of investments in its territory.
2. Each Party shall accord to investments of investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investments in its territory of investors of any non-Party with respect to the management, conduct, operation, and sale or other disposition of investments.
Article 6. Minimum Standard of Treatment
1. Each Party shall accord to covered investments fair and equitable treatment and full protection and security, in accordance with international law.
2. The concepts of "fair and equitable treatment" and "full protection and security" do not require treatment in addition to or beyond that which is required by the minimum standard of treatment. (8)
3. A determination that there has been a breach of other articles of this Agreement, or articles of other agreement, does not establish that there has been a breach of this Article.
Article 7. Compensation for Losses
Investors of a Party who suffer losses in respect of their investments owing to war, a state of national emergency, insurrection, riot or other similar events in the territory of the other Party, shall be accorded by the latter Party, treatment no less favourable than that accorded to the investors of its own or any non-Party, whichever is more favourable to the investor concerned, as regards restitution, indemnification, compensation and other settlements.
Article 8. Expropriation and Compensation (9)
1. Neither Party shall expropriate or nationalize, either directly or indirectly through measures equivalent to expropriation or nationalization (hereinafter referred to as "expropriation") against investments of investors of the other Party in its territory, unless the following conditions are met:
(a) for the public interest; (10)
(b) under domestic legal procedure and respecting due process;
(c) without discrimination; and
(d) against compensation in accordance with paragraphs 2 through 4.
2. The compensation mentioned in subparagraph 1(d) of this Article shall be equivalent to the fair market value of the expropriated investments immediately before the expropriation took place ("the date of expropriation") or the impending expropriation becomes public knowledge, whichever is earlier. The compensation shall also include interest at a reasonable commercial rate until the date of payment. The compensation shall be made without undue delay, be effectively realizable and freely transferable.
3. If the fair market value is denominated in a freely usable currency, the compensation paid shall be no less than the fair market value on the date of expropriation, plus interest at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
4. If the fair market value is denominated in a currency that is not freely usable, the compensation paid - converted into the currency of payment at the market rate of exchange prevailing on the date of payment - shall be no less than:
(a) the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date; and
(b) interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.
5. This Article does not apply to the issuance of compulsory licenses or to the revocation or limitation of intellectual property rights, to the extent that such revocation or limitation is in accordance with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, mutatis mutandis, or with other intellectual property agreement to which both Parties are parties.
Article 9. Transfers (11) (12)
1. Each Party shall permit investors of the other Party the transfer of their investments and returns into and out of the territory of the former Party, including:
(a) profits, dividends, capital gains, interests and other legitimate income;
(b) amounts from total or partial sales or liquidation of investments;
(c) payments made pursuant to a loan agreement in connection with an investment;
(d) royalty payments;
(e) payments of technical assistance or technical service fee, management fee;
(f) payments in connection with projects on contract associated with an investment;
(g) earnings of nationals of a Party who work in connection with an investment in the territory of the other Party;
(h) the free transfer of compensation and other payments under Article 7 (Compensation for Losses) and Article 8 (Expropriation and Compensation);
(i) payments arising out of a dispute; or
(j) returns in kind.
2. Each Party shall permit transfers in connection with an investment of investors of the other Party to be made without undue delay in a freely usable currency at the market rate of exchange prevailing on the date of transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer through the equitable, non-discriminatory, and good faith application of its laws 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) ensuring compliance with orders or judgments in judicial or administrative proceedings; or
(e) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities.
Article 10. Subrogation
If a Party or its agency makes payment to an investor under a guarantee it has granted to an investment of such investor in the territory of the other Party, such other Party shall recognize the transfer of any right or claim of such investor to the former Party or its agency and recognize the subrogation of the former Party or its agency to such right or claim. The subrogated right or claim shall not be greater than the original right or claim of the said investor.
Article 11. Denial of Benefits
Subject to prior notification and consultation, a Party may deny the benefits of this Agreement to an investor of the other Party and to investments of that investor if the investor is an enterprise:
(a) owned or controlled either by persons of a non-Party or of the denying Party; and
(b) has no substantive business operations in the territory of the other Party.
Article 12. Exclusions
1. This Agreement does not apply to:
(a) Financial Services as defined in Article 17 (Definitions) of the Supplementary Agreement on Trade in Services; (13)
(b) any act or fact that took place or any situation that ceased to exist before the date of entry into force of this Agreement;
(c) laws, regulations, policies or procedures of general application governing the procurement by government agencies of goods and services purchased for governmental purposes and not with a view to commercial resale or with a view to use in the production of goods or the supply of services for commercial sale; and
(d) subsidies or grants provided by a Party, including government-supported loans, guarantees, and insurance.
2. Notwithstanding Article 5 (Most-Favoured-Nation Treatment), the Parties reserve the right to accord differential treatment to third countries with respect to measures adopted under any international agreement in force or signed prior to the date of entry into force of this Agreement.
3. The Parties reserve the right to accord differential treatment to third countries under any international agreement in force or signed after the date of entry into force of this Agreement involving:
(a) aviation;
(b) fisheries;
(c) maritime matters, including salvage;
(d) any customs union, economic union, monetary union and agreement resulting in such unions, or similar institutions; and
(e) any arrangements for facilitating small scale frontier trade in border areas.
Section C. Investor-State Dispute Settlement
Article 13. Consultations and Negotiations
In the event of an investment dispute, the claimant and the respondent shall initially seek to resolve the dispute through consultations and negotiations, which may include the use of non-binding third-party procedures, where this is acceptable to both parties to the dispute. Such consultations shall be initiated by a written request for consultations in the territory of the respondent delivered by the claimant to the respondent.
Article 14. Submission of a Claim to Arbitration
1. If an investment dispute has not been resolved within 6 months from the receipt by the respondent of a request for consultations, the claimant, on its own behalf, may submit to arbitration under this Section a claim that:
(a) the respondent has breached an obligation under Section B (Investment); and
(b) the claimant 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 of intent shall specify:
(a) the name and address of the claimant;
(b) for each claim, the provision of this Agreement alleged to have been breached;
(c) the legal and factual basis for each claim; and
(d) the relief sought and the approximate amount of damages claimed.
3. If the claimant has not submitted the dispute for resolution to the competent court of the Party receiving the investment, the claimant may submit a claim referred to in paragraph 1 to: (14)
(a) arbitration under arbitration rules of the Centre, under the ICSID Convention;
(b) arbitration under the ICSID Additional Facility Rules provided that either the non-disputing Party or the respondent, but not both, is a party to the ICSID Convention;
(c) arbitration under the UNICTRAL Arbitration Rules; and
(d) if agreed with the disputing Party, any arbitration under other arbitration rules.
4. A claim shall be deemed submitted to arbitration under this Section when the claimant's notice of, or request for, arbitration is received under the applicable arbitral rules.
5. The arbitration rules applicable under paragraph 3, and in effect on the date the claim or claims were submitted to arbitration under this Section, shall govern the arbitration except to the extent modified by this Agreement.
Article 15. 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 Chapter II (Jurisdiction of the Centre) of the ICSID Convention and the ICSID Additional Facility Rules for written consent of the parties to the dispute.
Article 16. Conditions and Limitations on Consent of Each Party
1. No claim may be submitted to arbitration under this Section if more than 3 years have elapsed from the date on which the claimant first acquired, or should have first acquired, knowledge of the breach alleged under Article 14.1 causing loss or damage to a claimant.
2. The claimant may submit a claim:
(a) before any court under the law of the respondent; or
(b) to international arbitration referred to in Article 14.3 accompanied by the claimant's:
(i) consent in writing to arbitration in accordance with the procedures set out in this Agreement; and
(ii) a written waiver of any right to initiate proceedings before any administrative tribunal or court under the law of the respondent.