1. Articles 14.3, 14.4, 14.8 and 14.9 shall not apply to:
(a) any non-conforming measure that is maintained by the following on the date of entry into force of this Agreement, as set out in Schedules in Annex 6 (Non-Conforming Measures Relating to Paragraph 1 of Articles 9.7 and 14.10):
(i) the central government of a Party; or (ai) a State or Territory of Australia or a prefecture of Japan;
(b) any non-conforming measure that is maintained by a local government other than a State or Territory or a prefecture referred to in subparagraph (a)Gi) on the date of entry into force of this Agreement;
(c) the continuation or prompt renewal of any non-conforming measure referred to in subparagraphs (a) and (b); or
(d) an amendment or modification to any non-conforming measure referred to in subparagraphs (a) and (b), provided that the amendment or modification does not decrease the conformity of the measure, as it existed immediately before the amendment or modification, with Articles 14.3, 14.4, 14.8 and 14.9.
2. Articles 14.3, 14.4, 14.8 and 14.9 shall not apply to any measure that a Party adopts or maintains with respect to sectors, sub-sectors and activities set out in its Schedule in Annex 7 (Non-Conforming Measures Relating to Paragraph 2 of Articles 9.7 and 14.10).
3. Neither Party shall, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule in Annex 7 (Non-Conforming Measures Relating to Paragraph 2 of Articles 9.7 and 14.10), require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment that exists at the time the measure becomes effective.
4. In cases where a Party makes an amendment or a modification to any non- conforming measure set out in its Schedule in Annex 6 (Non-Conforming Measures Relating to Paragraph 1 of Articles 9.7 and 14.10) or where a Party adopts any new or more restrictive measure with respect to sectors, sub-sectors or activities set out in its Schedule in Annex 7 (Non-Conforming Measures Relating to Paragraph 2 of Articles 9.7 and 14.10) after the date of the entry into force of this Agreement, the Party shall, prior to the implementation of the amendment or modification or the new or more restrictive measure, or as soon as possible thereafter:
(a) on request of the other Party, promptly provide information and respond to questions pertaining to any such proposed or actual amendment, modification or measure;
(b) to the extent possible, provide a reasonable opportunity for comments by the other Party on any such proposed or actual amendment, modification or measure; and
(c) to the maximum extent possible, notify the other Party of any such amendment, modification or measure that may substantially affect the other Party's interests under this Agreement.
5. Each Party shall endeavour, where appropriate, to reduce or eliminate the non- conforming measures set out in its Schedules in Annexes 6 (Non-Conforming Measures Relating to Paragraph 1 of Articles 9.7 and 14.10) and 7 (Non-Conforming Measures Relating to Paragraph 2 of Articles 9.7 and 14.10) respectively.
6. Articles 14.3 and 14.4 shall not apply to any measure covered by the exceptions to, or derogations from, obligations under Articles 3 and 4 of the TRIPS Agreement.
7. Articles 14.3, 14.4 and 14.8 shall not apply to any measure that a Party adopts or maintains with respect to:
(a) government procurement; or
(b) subsidies or grants provided by a Party, including government-supported loans, guarantees and insurance.
Article 14.11. Expropriation and Compensation
1. Neither Party shall expropriate or nationalise a covered investment either directly or indirectly through measures equivalent to expropriation or nationalisation (hereinafter referred to in this Chapter as "expropriation") except:
(a) for a public purpose;
(b) on a non-discriminatory basis;
(c) in accordance with due process of law; and
(d) upon payment of prompt, adequate and effective compensation in accordance with paragraphs 2 through 4.
2. The compensation shall be equivalent to the fair market value of the expropriated investment at the time when the expropriation was publicly announced or when the expropriation occurred, whichever is the earlier. The fair market value shall not reflect any change in market value occurring because the expropriation had become publicly known earlier.
3. The compensation shall be paid without delay and shall include interest at a commercially reasonable rate accrued from the date of expropriation to the date of payment and shall be effectively realisable and freely transferable in accordance with Article 14.13.
4. If payment is made in a freely usable currency, the compensation paid shall include interest, at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
5. Ifa Party elects to pay in a currency other than a freely usable currency, 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 the sum of the following:
(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.
6. This Article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights in accordance with the TRIPS Agreement, or to the revocation, limitation, or creation of intellectual property rights, to the extent that such issuance, revocation, limitation, or creation is consistent with Chapter 16 (Intellectual Property).
Note: For greater certainty, the reference to the TRIPS Agreement in paragraph 6 includes any waiver in force between the Parties of any provision of that Agreement granted by WTO members in accordance with the WTO Agreement.
Article 14.12. Treatment In Case of Strife
1. Each Party shall, with respect to restitution, indemnification, compensation or any other settlement, accord to investors of the other Party that have suffered loss or damage to their covered investments due to armed conflict or civil strife such as revolution, insurrection, civil disturbance or any other similar event in its Area, treatment that is no less favourable than that it would accord, in like circumstances, to its own investors or to investors of a non-Party.
2. Any payments as a means of settlement referred to in paragraph 1 shall be effectively realisable, freely transferable and freely convertible at the market exchange rate into the currency of the Party of the investors concerned or freely usable currencies.
3. Notwithstanding the provisions of Article 1.10 (General Provisions — Security Exceptions), neither Party shall be relieved of its obligation under paragraph 1 by reason of its measures taken pursuant to that Article.
Article 14.13. Transfers
1. Each Party shall allow all transfers relating to a covered investment to be made freely into and out of its Area without delay. Such transfers shall include those of:
(a) the initial capital and additional amounts to maintain or increase investments;
(b) profits, capital gains, dividends, royalties, interest, fees and other current incomes accruing from investments;
(c) proceeds from the total or partial sale or liquidation of investments;
(d) payments made under a contract including loan payments in connection with investments;
(e) earnings and remuneration of personnel from abroad who work in connection with investments in the Area of the Party;
(f) payments made in accordance with Articles 14.11 and 14.12; and
(g) payments arising out of a dispute.
2. Each Party shall allow such transfers to be made in freely usable currencies at the market exchange rate prevailing at the time of each transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may delay or prevent such transfers 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; issuing, trading or dealing in securities or derivatives;
(b) criminal or penal offences;
(c) reporting or record keeping of transfers of currency or other monetary instruments when necessary to assist law enforcement or financial regulatory authorities; or
(d) ensuring compliance with orders or judgments in judicial or administrative proceedings.
Article 14.14. Subrogation
Ifa Party or its designated agency makes a payment to an investor of the Party pursuant to an indemnity, guarantee or insurance contract pertaining to an investment of that investor within the Area of the other Party, that other Party shall recognise:
(a) the assignment, to the Party or its designated agency, of any right or claim of the investor in respect of such investment, that formed the basis of such payment; and
(b) the right of the Party or its designated agency to exercise by virtue of subrogation such right or claim to the same extent as the original right or claim of the investor.
Article 14.15. General Exceptions
Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between covered investments or investors of the other Party and other investments or investors, where like conditions prevail, or a disguised restriction on investment, nothing in Articles 14.3, 14.4, and 14.9 shall prevent the adoption or enforcement by either Party of measures:
(a) necessary to protect public morals or to maintain public order;
Note: The public order exception may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society.
(b) 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.
(c) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Chapter, including those relating to:
(i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on a contract;
(ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; or
(iii) safety;
(d) imposed for the protection of national treasures of artistic, historic or archacological 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.
Article 14.16. Temporary Safeguard Measures
1. A Party may adopt or maintain restrictive measures with regard to cross-border capital transactions as well as payments or transfers for transactions related to covered investments:
(a) in the event of serious balance-of-payments and 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 such that the other Party is treated no less favourably than any non-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 Party; and
(f) avoid unnecessary damages to the commercial, economic and financial interests of the other Party.
3. The Party which has adopted any measures under paragraph 1 shall, on request, commence consultations with the other Party in order to review the restrictions adopted by it.
Article 14.17. Denial of Benefits
1. A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of the other Party and to its investments, where the denying Party establishes that the enterprise is owned or controlled by an investor 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 or to its investments.
2. A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of the other Party and to its investments, where the denying Party establishes that the enterprise is owned or controlled by an investor of a non-Party or of the denying Party and the enterprise has no substantial business activities in the Area of the other Party.
Note: For the purposes of this Article, an enterprise is:
(a) "owned" by an investor if more than 50 per cent of the equity interest in itis 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 14.18. Sub-committee on Investment
1. For the purposes of the effective implementation and operation of this Chapter, the Parties hereby establish a Sub-Committee on Investment (hereinafter referred to in this Article as "the Sub-Committee").
2. The functions of the Sub-Committee shall be:
(a) exchanging information on any matters related to this Chapter;
(b) reviewing and monitoring the implementation and operation of this Chapter and the non-conforming measures set out in each Party's Schedules in Annexes 6 (Non-Conforming Measures Relating to Paragraph 1 of Articles 9.7 and 14.10) and 7 (Non-Conforming Measures Relating to Paragraph 2 of Articles 9.7 and 14.10);
(c) discussing any issues related to this Chapter;
(d) considering any issues raised by either Party concerning the imposition or enforcement of performance requirements, including those specified in Article 14.9;
(e) considering any issues raised by cither Party concerning investment agreements between a Party and an investor of the other Party;
(f) reporting the findings and outcome of discussions of the Sub-Committee to the Joint Committee; and
(g) carrying out other functions as may be delegated by the Joint Committee.
3. The Sub-Committee shall be composed of and co-chaired by representatives of the Governments of the Parties.
4. The Sub-Committee may invite, by consensus, representatives of relevant entities other than the Governments of the Parties with the necessary expertise relevant to the issues to be discussed.
5. The Sub-Committee shall meet at such venues and times and by such means as may be agreed by the Parties.
Article 14.19. Review
1. Unless the Parties otherwise agree, the Parties shall conduct a review of this Chapter with a view to the possible improvement of the investment environment through, for example, the establishment of a mechanism for the settlement of an investment dispute between a Party and an investor of the other Party. Such review shall commence in the fifth year following the date of entry into force of this Agreement or a year on which the Parties otherwise agree, whichever comes first.
2. The Parties shall also conduct such a review if, following the entry into force of this Agreement, Australia enters into any multilateral or bilateral international agreement providing for a mechanism for the settlement of an investment dispute between Australia and an investor of another or the other party to that agreement, with a view to establishing an equivalent mechanism under this Agreement. The Parties shall commence such review within three months following the date on which that international agreement entered into force and will conduct the review with the aim of concluding it within six months following the same date.
3. At any time after the first year following the entry into force of this Agreement, either Party may request the other Party to agree to commence the review provided for in paragraph 1.
Chapter 15. Competition and Consumer Protection
Article 15.1. Objectives
The aim of this Chapter is to contribute to the fulfilment of the objectives of this Agreement by promoting economic efficiency and consumer welfare through the promotion of competition and cooperation on consumer protection.
Article 15.2. Definitions
For the purposes of this Chapter:
(a) the term "anticompetitive activities" means any conduct or transaction that adversely affects competition and may be subject to penalties or other relief under the competition laws of either Party;
(b) the term "competition authority" means:
(i) for Australia, the Australian Competition and Consumer Commission, or its successor; and.
(ii) for Japan, the Fair Trade Commission, or its successor; and
(c) the term "competition law" means:
(i) for Australia, Parts IV and XIA of the Competition and Consumer Act 2010, and any regulations made under those Parts; and provisions of other Parts in so far as they relate to Part IV, but not including Part X; as well as any amendments thereto;
(ii) for Japan, the Law Concerning Prohibition of Private Monopoly and Maintenance of Fair Trade (Law No. 54 of 1947) and its implementing regulations as well as any amendments thereto; and
(iii) for both Australia and Japan, such other laws and regulations as the Parties may from time to time mutually determine to be a "competition law".
Article 15.3. Promotion of Competition by Addressing Anticompetitive Activities
1. Each Party shall, subject to its laws and regulations, take measures which it considers appropriate to promote competition, especially by addressing anticompetitive activities.
2. Any measures referred to in paragraph 1 shall be consistent with the principles of transparency, non-discrimination and procedural fairness.
Article 15.4. State-owned Enterprises
In addition to Article 15.3, bearing in mind the relationship between the promotion of competition and other policy objectives, the Parties recognise that seeking to ensure that governments do not provide competitive advantages to state-owned enterprises simply because they are state owned can contribute to the promotion of competition.
Article 15.5. Cooperation on Addressing Anticompetitive Activities
1. The Parties recognise the importance of cooperation to further the promotion of competition.
2. The Parties shall, subject to their respective laws and regulations as well as available resources, cooperate on the promotion of competition by addressing anticompetitive activities.
3. Cooperation may include, but is not limited to, exchange of information, notification and coordination of enforcement activities, and consultation.
4. Detailed cooperation arrangements to implement this Article may be made between the competition authorities of the Parties.
Article 15.6. Cooperation on Consumer Protection
The Parties recognise the importance of cooperation on matters related to consumer protection in order to enhance consumer welfare in their respective Areas. Accordingly, the Parties shall cooperate, where appropriate, on matters relating to consumer protection, such as through exchange of publicly available information and experience.
Article 15.7. Consultations
The Parties, recognising the importance of respecting the independence of each competition authority to enforce their competition laws, shall consult with each other, on request of either Party, on any matter which may arise in connection with this Chapter.
Article 15.8. Confidentiality of Information
1. Each Party's competition authority may share information with the other Party's competition authority subject to each Party's laws and regulations.
2. Recognising the importance of confidentiality when exchanging information that is not publicly available, the competition authority of the Party receiving such information may only use or disclose that information in accordance with conditions imposed by the providing Party's competition authority.
3. Information provided by the competition authority of a Party to the competition authority of the other Party shall not be used by the other Party for presentation in criminal proceedings carried out by a court or a judge, unless, on request of the other Party, such information was provided for use in criminal proceedings through diplomatic channels or other channels established in accordance with the laws and regulations of the Parties.
4. This Article shall not preclude the use or disclosure of information provided in accordance with this Chapter to the extent such use or disclosure is required by the laws and regulations of the Party receiving the information. The competition authority of a Party shall, wherever possible, give advance notice of any such use or disclosure to the competition authority of the other Party providing the information.
Article 15.9. Non-application of Chapter 19 (dispute Settlement)
The dispute settlement procedures provided for in Chapter 19 (Dispute Settlement) shall not apply to this Chapter.
Chapter 16. Intellectual Property
Article 16.1. General Provisions
1. Each Party shall grant and ensure adequate, effective and non-discriminatory protection of intellectual property, promote efficiency and transparency in the administration of its intellectual property system and provide for measures for adequate and effective enforcement of intellectual property rights against infringement, including counterfeiting and piracy, in accordance with the provisions of this Chapter.
2. Each Party reaffirms its rights and obligations under the international agreements relating to intellectual property to which both Parties are party.
3. Each Party shall endeavour to participate in international efforts, at various fora, in harmonising intellectual property systems.
Article 16.2. Definitions
For the purposes of this Chapter:
(a) the term "intellectual property" means:
(i) copyright and related rights, trade marks, geographical indications, industrial designs, patents, layout-designs (topographies) of integrated circuits, and protection of undisclosed information as defined or referred to in the TRIPS Agreement; and
ii) new varieties of plants as defined or referred to in the UPOV Convention;
(b) the term "nationals" shall have the same meaning as in Article 1 of the TRIPS Agreement;
(c) the term "Paris Convention" means the Paris Convention for the Protection of Industrial Property done at Paris on 20 March 1883, as amended; and
(d) the term "UPOV Convention" means the International Convention for the Protection of New Varieties of Plants done at Paris on 2 December 1961, as amended.