Article 8.10. Senior Management and Boards of Directors
1. Neither Party may require that an enterprise of that Party that is a covered investment appoint to senior management positions natural persons of any particular nationality.
2. A Party may require that a majority of the board of directors, or any committee thereof, of an enterprise of that Party that is a covered investment, be of a particular nationality, or resident in the territory of the Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.
Article 8.11. Investment and Environment
Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining, or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns.
Article 8.12. 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 such other Party and to investments of that investor if:
(a) persons of a non-Party own or control the enterprise; and
(b) the denying Party adopts or maintains measures with respect to the non-Party or a person of 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 such other Party and to investments of that investor if the enterprise has no substantial business activities in the territory of the other Party and persons of a non-Party, or of the denying Party, own or control the enterprise. If, before denying the benefits of this Chapter, the denying Party knows that the enterprise has no substantial business activities in the territory of the other Party and that persons of a non-Party, or of the denying Party, own or control the enterprise, the denying Party shall, to the extent practicable, notify the other Party before denying the benefits. If the denying Party provides such notice, it shall consult with the other Party at the request of the other Party.
Article 8.13. Non-conforming Measures
1. Articles 8.3, 8.4, 8.9, and 8.10 shall 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; or
(ii) a local level of government (10) (11);
(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 Article 8.3, 8.4, 8.9, or 8.10. 2. Articles 8.3, 8.4, 8.9, and 8.10 shall not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors, or activities, as set out in its Schedule to Annex II.
3. Neither Party may, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule to Annex II, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.
4. Articles 8.3 and 8.4 shall not apply to any measure that is an exception to, or derogation from, the obligations under Article 15.4.2 (Basic Principles) as specifically provided in that Article.
5. Articles 8.3, 8.4, and 8.10 shall not apply to:
(a) government procurement; or
(b) subsidies or grants provided by a Party, including government-supported loans, guarantees, and insurance.
Article 8.14. Special Formalities and Information Requirements
1. Nothing in Article 8.3 shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with covered investments, such as a requirement that covered investments be legally constituted under its laws or regulations, provided that such formalities do not materially impair the protections afforded by the Party to investors of the other Party and covered investments pursuant to this Chapter.
2. Notwithstanding Articles 8.3 and 8.4, a Party may require an investor of the other Party or its covered investment to provide information concerning that investment solely for informational or statistical purposes. The Party shall protect any confidential business information from any disclosure that would prejudice the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law.
Article 8.15. Subrogation
1. Where a Party or a designated agency of a Party makes a payment to any of its investors under a guarantee, a contract of insurance, or other form of indemnity, against noncommercial risks it has granted in respect of an investment of an investor of that Party, the other Party shall recognize the subrogation of any right or claim in respect of such investment.
2. Where a Party or the agency authorized by that Party has made a payment to its investor and has taken over rights and claims of the investor, that investor shall not, unless authorized to act on behalf of the Party or agency authorized by the Party making the payment, pursue those rights and claims against the other Party.
Section B. Investor-State Dispute Settlement
Article 8.16. Settlement of Investment Disputes between a Party and an Investor of the other Party
1. This Section shall apply to disputes between a Party and an investor of the other Party concerning an alleged breach by the former Party of an obligation under Section A, provided that such breach causes loss or damage to the investor or its investments.
2. An investor of a Party may not, under this Section, submit a claim to arbitration, concerning the breach of the other Party's obligations under Articles 8.2, 8.11, and 8.14.1.
3. The Parties shall refrain from pursuing through diplomatic channels matters related to disputes between a Party and an investor of the other Party, submitted to court proceedings or international arbitration in accordance with the provisions of this Section, unless one of the disputing parties has failed to comply with the court decision or arbitral award, under the terms established in the respective decision or arbitral award.
Article 8.17. Consultation and Negotiation
1. Any dispute arising in accordance with Article 8.16.1 shall be settled, to the extent possible, by consultation and negotiation and shall be notified by submitting a notice of the dispute (notice of dispute) in writing, including detailed information of the factual and legal basis, by the investor to the Party receiving the investment. The claimant must deliver evidence, establishing that he or she is an investor of the other Party with its notice of dispute.
2. Nothing in this Section shall be construed as to prevent the disputing parties from referring their dispute, by mutual agreement, to ad hoc or institutional mediation or conciliation before or during an arbitral proceeding.
Article 8.18. Submission of a Claim
1. If the dispute has not been settled within eight months from the date of notice of dispute, a claim may be submitted, at the discretion of the investor, to:
(a) any competent court or administrative tribunal of the Party to the dispute; or (b) arbitration in accordance with this Section under:
(i) the ICSID Convention, if the ICSID Convention is available;
(ii) the ICSID Additional Facility Rules, if the ICSID Additional Facility Rules are available;
(iii) the UNCITRAL Arbitration Rules; or
(iv) if agreed by both parties to the dispute, any other arbitration institution or any other arbitration rules.
2. The respondent may require the claimant to initiate the domestic non-judicial administrative review procedure, in accordance with applicable laws and regulations of the respondent before submission of a claim for settlement under paragraph 1(b) (12).
3. The claimant may only submit a claim to arbitration if the term established in paragraph 1 has elapsed, and if the claimant has delivered to the respondent, at least 90 days before the claim to arbitration is submitted, a written notice of its intention to submit a claim to arbitration (notice of intent). Such a notice shall specify:
(a) the name and address of the claimant and its investment;
(b) the provisions of this Chapter alleged to have been breached and any other related provisions;
(c) the legal and factual basis for the claim; and
(d) the relief sought, including the approximate amount of any damages claimed.
4. Once the investor has submitted the dispute to either a competent court or administrative tribunal of the Party, in whose territory the investment has been admitted, or any of the arbitration mechanisms set out in paragraph 1, the choice of the procedure shall be final and the investor shall not submit the same dispute to a different forum.
Article 8.19. Consent of Each Party to Arbitration
Each Party hereby gives irrevocable consent to the submission of a dispute to international arbitration established in Article 8.18.1(b), in accordance with the procedures set out in this Agreement. The consent and the submission of a claim to arbitration under this Section shall satisfy the requirements of:
(a) Chapter II (Jurisdiction of the Centre) of the ICSID Convention and the ICSID Additional Facility Rules with regards to the written consent of the parties to the dispute; and
(b) Article II of the New York Convention for an "agreement in writing."
Article 8.20. Conditions and Limitations on Consent of Each Party
1. No claim may be submitted to arbitration under this Section if more than three years and six months have elapsed from the date the claimant first acquired, or should have first acquired, knowledge of the events which gave rise to the dispute and of the alleged losses and damages incurred by the claimant or its investment.
2. The seeking of interim injunctive relief not involving the payment of monetary damages, before judicial or administrative tribunals of the respondent, by the claimant for the preservation of its rights and interests pending resolution of the dispute, is not deemed to be a submission of the dispute for resolution for purposes of Article 8.18.4, and is permissible in arbitration under any of the provisions of Article 8.18.1(b).
Article 8.21. Constitution of an Arbitral Tribunal
1. Unless the disputing parties otherwise agree, the tribunal shall comprise three arbitrators, one arbitrator appointed by each of the disputing parties and the third, who shall be the presiding arbitrator, appointed by agreement of the disputing parties. If a tribunal has not been constituted within the terms established under the applicable arbitration rules from the date a claim is submitted to arbitration under this Section, the Secretary-General, on the request of a disputing party, shall appoint, in his or her discretion, after consulting the disputing parties, the arbitrator or arbitrators not yet appointed. The Secretary-General shall not appoint a national of either Party as the presiding arbitrator.
2. The arbitrators shall:
(a) have experience or expertise in public international law, international investment rules, or in dispute settlement derived from international investment agreements; and
(b) be independent from the Parties and the claimant, and not be affiliated with or receive instructions from any of them.
3. The decision on any proposal by a disputing party to disqualify an arbitrator shall be taken by the Secretary-General. If it is decided that the disqualification proposal is well-founded the arbitrator shall be replaced.
4. The disputing parties may agree on the fees to be paid to the arbitrators. If the disputing parties do not reach an agreement on the fees to be paid to the arbitrators before the constitution of the tribunal, the fees established for arbitrators by ICSID shall apply.
Article 8.22. Conduct of the Arbitration
1. The disputing parties may agree on the legal place of any arbitration under the arbitral rules applicable under Article 8.18.1(b). If the disputing parties fail to reach an agreement, the tribunal shall determine the place in accordance with the applicable arbitral rules, provided that the place shall be in the territory of a State that is a party to the New York Convention.
2. Before ruling on the merits, the tribunal shall address and decide the preliminary questions that a dispute is not within the tribunal's competence or jurisdiction, or that, as a matter of law, a claim submitted is not a claim for which an award in favor of the claimant may be made under Article 8.26. When deciding on the objection of the respondent, the tribunal shall rule on the costs and attorney's fees incurred during the proceedings, considering whether or not the objection prevailed. The tribunal shall consider whether either the claim of the claimant or the objection of the respondent was frivolous, and shall provide the disputing parties a reasonable opportunity to comment. In the event of a frivolous claim or objection, the tribunal shall award costs and attorney's fees to the prevailing disputing party.
3. A respondent shall not assert as a defense, counter-claim, or right of set-off, or for any other reason, that the claimant has received or will receive indemnification or other compensation for all or part of the alleged damages pursuant to an indemnity, guarantee, or insurance contract, except with respect to any subrogation as provided for under Article 8.15.
4. In any arbitration conducted under this Section, at the request of a disputing party, the tribunal shall, before issuing a decision or award on liability, provide its draft decision or award to the disputing parties. Within 60 days thereafter, the disputing parties may submit written comments to the tribunal concerning any aspect of the draft decision or award. The tribunal shall consider any such comments and issue its decision or award no later than 45 days after the 60-day comment period expires.
Article 8.23. Governing Law
The dispute settlement mechanisms provided in this Section will be based on the provisions of this Agreement and applicable rules of international law.
Article 8.24. Expert Reports
Without prejudice to the designation of other kinds of experts as authorized by the applicable arbitration rule, a tribunal, at the request of a disputing party or on its own initiative, may appoint one or more experts to report to it in writing on any factual issue concerning environmental, health, safety, or other scientific matters raised by a disputing party in a proceeding, subject to the terms and conditions agreed by the disputing parties.
Article 8.25. Consolidation
1. Where two or more claims have been submitted separately to arbitration under this Section, and the claims raised have a question of law or fact in common and arise out of the same events or circumstances, any disputing party may seek a consolidation order, in accordance with the agreement of all the disputing parties sought to be covered by the order or the terms set forth in paragraphs 2 through 10.
2. A disputing party that seeks a consolidation order under this Article shall deliver, in writing, a request to the Secretary-General and to all the disputing parties sought to be covered by the order, specifying:
(a) the names and addresses of all the disputing parties sought to be covered by the order;
(b) the nature of the order sought; and
(c) the grounds on which the order is sought.
3. Unless the Secretary-General finds within 30 days after receiving a request in conformity with paragraph 2 that the request is manifestly unfounded, a tribunal shall be established under this Article.
4. Unless all the disputing parties sought to be covered by the consolidation order otherwise agree, the tribunal established under this Article shall comprise three arbitrators:
(a) one arbitrator appointed by agreement of the claimants;
(b) one arbitrator appointed by the respondent; and
(c) the presiding arbitrator appointed by the Secretary-General, provided, however, that the presiding arbitrator shall not be a national of either Party.
5. If, within 60 days after the Secretary-General receives a request made under paragraph 2, the respondent fails or the claimants fail to appoint an arbitrator in accordance with paragraph 4, the Secretary-General, on request of any disputing party sought to be covered by the order, shall appoint the arbitrator or arbitrators not yet appointed. If the respondent fails to appoint an arbitrator, the Secretary-General shall appoint a national of the respondent, and if the claimants fail to appoint an arbitrator, the Secretary-General shall appoint a national of the non-disputing Party.
6. Where a tribunal established under this Article is satisfied that two or more claims that have been submitted to arbitration in accordance with Article 8.18 have a question of law or fact in common, and arise out of the same events or circumstances, the tribunal may, in the interest of fair and efficient resolution of the claims, and after hearing the disputing parties, by order:
(a) assume jurisdiction over, and hear and determine together, all or part of the claims;
(b) assume jurisdiction over, and hear and determine one or more claims, the determination of which it considers would assist in the resolution of the other claims; or
(c) instruct a tribunal previously established under Article 8.21 to assume jurisdiction over, and hear and determine together, all or part of the claims, provided that:
(i) that tribunal, at the request of any claimant not previously a disputing party before that tribunal, shall be reconstituted with its original members, except that the arbitrator for the claimants shall be appointed pursuant to paragraphs 4 (a) and 5; and
(ii) that tribunal shall decide whether any previous hearing must be repeated.
7. Where a tribunal has been established under this Article, a claimant that has submitted a claim to arbitration pursuant to Article 8.18 and that has not been named in a request made under paragraph 2 may make a written request to the tribunal that it be included in any order issued under paragraph 6, specifying:
(a) the name and address of the claimant;
(b) the nature of the order sought; and
(c) the grounds on which the order is sought.
8. A tribunal established pursuant to this Article shall conduct the proceedings in accordance with the UNCITRAL Arbitration Rules, except as modified by this Section.
9. A tribunal established under Article 8.21 shall not have jurisdiction to decide a claim, or a part of a claim, over which a tribunal established or instructed under this Article has assumed jurisdiction.
10. On application of a disputing party, a tribunal established pursuant to this Article, pending its decision under paragraph 6, may order that the proceedings of a tribunal established under Article 8.21 be stayed, unless the latter tribunal has already adjourned its proceedings. The claimant shall provide the Secretary-General and the respondent with a copy of its request.
Article 8.26. Awards
1. A tribunal, in its award, shall set out its findings of law and fact, together with the reasons for its ruling, and may, at the request of the claimant, award the following forms of relief:
(a) a declaration that the respondent has failed to comply with its obligations under this Agreement;
(b) pecuniary compensation, which shall include applicable interest from the time the loss or damage was incurred until the payment was made;
(c) restitution in kind as appropriate, in which case the award shall provide that the respondent may pay pecuniary compensation in lieu of restitution where the restitution is not practicable; and
(d) with the agreement of the disputing parties, any other form of relief.
2. A tribunal may not award punitive damages.
3. A tribunal shall not be competent to rule on the legality of the measure as a matter of domestic law.
4. A tribunal shall be competent to rule on the consistency of the measures at issue with this Agreement and international law. For greater certainty, this shall not preclude any disputing party from submitting, as a matter of fact, evidence related to the legality of a measure under domestic law.
5. Arbitration awards shall be final and binding for the disputing parties, and each Party shall provide for the enforcement of an award in its territory. An award made by a tribunal shall have no binding force except between the disputing parties and in respect of the particular case.
6. A disputing party may not request enforcement of the final award until:
(a) in the case the final award was issued under the ICSID Convention,
(i) 120 days have elapsed since the date the award was rendered and no disputing party has requested revision or annulment of the award; or
(ii) the proceedings of revision or annulment have been completed; and
(b) in the case the final award was issued under the ICSID Additional Facility Rules, the UNCITRAL Arbitration Rules, or the rules selected in accordance with Article 8.18.1.(b)(iv),
(i) 90 days have elapsed since the date the award was rendered and no disputing party has commenced a proceeding to revise, set-aside, or annul the award; or
(ii) a court has dismissed or admitted an application to revise, set-aside, or annul the award, and there is no further appeal.
Article 8.27. Service of Documents
Delivery of the notice of intent and other documents to a Party shall be made in the place designated by that Party in Annex 8-D.
Section C. Definitions
Article 8.28. Definitions
For purposes of this Chapter:
claimant means an investor of a Party that is a party to an investment dispute with the other Party;
disputing parties means the claimant and the respondent;
disputing party means either the claimant or the respondent; enterprise means an enterprise as defined in Article 1.3 (Definitions), and a branch of an enterprise;
enterprise of a Party means an enterprise constituted or organized under the law of a Party, and a branch located in the territory of a Party and carrying out business activities there;
ICSID means the International Centre for Settlement of Investment Disputes (ICSID) established by the ICSID Convention;
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 asset that an investor owns or controls, directly or indirectly, 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. Forms that an investment may take include:
(a) an enterprise;
(b) shares, stock, and other forms of equity participation in an enterprise;
(c) bonds, debentures, other debt instruments, and loans (13);
(d) futures, options, and other derivatives; (e) turnkey, construction, management, production, concession, revenue-sharing, and other similar contracts;
(f) intellectual property rights;
(g) licenses, authorizations, permits, and similar rights conferred pursuant to domestic law (14) (15); and
(h) other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages, liens, and pledges (16).
But investment does not mean:
(a) public debt operations (17);
(b) claims to money that arise solely from:
(i) commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Party to an enterprise in the territory of the other Party;
(ii) the extension of credit in connection with a commercial transaction, such as trade financing; or
(iii) an order entered in a judicial or administrative action;
investor of a non-Party means, with respect to a Party, an investor that attempts to make, is making, or has made an investment in the territory of that Party, that is not an investor of either Party;
investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of a Party, that attempts to make (18), is making, or has made an investment in the territory of the other Party;
provided, however, that a natural person who is a dual national shall be deemed to be exclusively a national of the State of his or her dominant and effective nationality;
New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958;
non-disputing Party means the Party that is not a party to an investment dispute;