Title

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF MACEDONIA AND THE GOVERNMENT OF MONTENEGRO ON MUTUAL PROMOTION AND PROTECTION OF INVESTMENTS

Preamble

The Government of the Republic of Macedonia and the Government of Montenegro, hereinafter referred to as Contracting Parties,

Desiring to intensify economic cooperation to the mutual benefit of both states,

Intending to create and maintain favorable conditions for investments by investors of one Contracting Party in the territory of the other Contracting Party,

Recognizing the need to promote and protect foreign investments so as to foster the economic prosperity of both Contracting Parties,

Have agreed as follows:

Body

Article 1. Definitions

For the purpose of this Agreement:

1-The term 'investment" shall mean any kind of asset invested by investor of one Co n tracting Party in t heterrito ry of the other Contracting Party, in accordance with the laws and regulations of the Contracting Party in whose territory the investment is made and shall include in particular, though not exclusively:

a) Movable and immovable property, guarantees and property rights, such as servitude, mortgages and other rights under the law;

b) Shares, stocks, debentures or any other form of participation in companies;

c) Claims to money and claims under a contract having financial value and loans directly related to a specific investment;

d) Copyrights, trade marks, patents or other intellectual or industrial property rights, know-how and goodwill;

e) Any rights of financial nature granted by law or agreement, such as concessions granted in accordance with applicable regulations, governing the performance of activities including search, processing, extraction and exploitation of natural resources.

2. The term "investor" shall mean any natural or legal person of one Contracting Party that invests in the territory of the other Contracting Party.

a) The term "natural person* shall, with regard to either Contracting Party, mean any natural person who is a national of one of the Contracting Party to this Agreement.

b) The term "legal person" shall, with regard to either Contracting Party, mean any legal person including, enterprises, companies, corporations, business associations and/or organizations established or organized in accordance with the respective state legislation of either Contracting Party having their seat and their main activities in the territory of that Contracting Party.

3. The term "return" shall mean money yielded by investment, including in particular, profits, interest, dividends, royalties, any fees, capital gains and other current income.

4. The term "territory" shall mean the territory of the Republic of Macedonia and Montenegro, including land, water and airspace, over which the State concerned exercises, in accordance with international law, sovereign rights and jurisdiction of such areas.

5. Any alteration of the form in which assets are invested or reinvested shall not affect their qualification as investments provided that such alteration is not in conflict with the provisions of this Agreement and the legislation of the Contracting Party in whose territory the investment is made.

Article 2. Promotion and Admission of Investments

1. Each Contracting Party shall promote, in its territory, investments made by investors of the other Contracting Party and shall admit such Investments in accordance with its laws and regulations.

2. When a Contracting Party admits an investment in its territory, it shall, in accordance with its laws and regulations, grant the necessary permits related to such investment.

Article 3. Protection and Treatment of Investments

1. Each Contracting Party shall, within its territory, protect investments made in accordance with its laws and regulations by investors of the other Contracting Party and shall not impair by unreasonable or discriminatory measures the management, maintenance, use, enjoyment, extension, sale and liquidation of such investments.

2. Each Contracting Party shall, within its territory, ensure fair and equitable treatment of the investments of investors of the other Contracting Party. This treatment shall not be less favorable than that granted by each Contracting Party to investments made by its own investors or by investors of a third state.

3. Provisions referred to in paragraphs 1 and 2 of this Article shall not be construed so as to oblige one Contracting Party to extend to investors of the other Contracting Party the benefits of any treatment, preference of privilege resulting from membership in or association to any existing or future free trade area, economic, monetary or customs union, common market or existing or future convention on avoidance of double taxation or convention on other fiscal matters.

Article 4. Expropriation and Compensation

1. Neither of the Contracting Parties shall undertake measures of expropriation, nationalization or any other measure having the same effect against investments belonging to investors of the other Contracting Party (hereinafter "expropriation"), except when the measures are undertaken in the public interest, on a non-discriminatory basis, under due legal procedure, whereby, the investor shall receive effective and adequate compensation

Such compensation shall represent the market value of the expropriated investment immediately before the expropriation or the impending expropriation becomes public knowledge. The compensation for damage shall also include the interest calculated on annual LIBOR basis from the date of expropriation until the date of payment.

2. The amount of compensation shall be settled in convertible currency and it shall be freely transferable and paid without undue delay to the person entitled thereto regardless of his/her residence or domicile.

Compensation snail be deemed to be paid "without undue delay", if the payment is effected within such period as usually required for completing the transfer formalities. The said period shall commence on the day when the relevant request was submitted and shall not exceed three months.

3. Investors of either Contracting Party whose investments suffer losses due to war or other aimed conflict, a state of national emergency, revolt, insurrection or riot in the territory of the other Contracting Party shall be accorded treatment, as regards restitution, Indemnification, compensation or other settlement, which shall not be less favorable than that accorded to Its own investors or to investors of any third state.

Resulting payments shall be transferable without any delay, in convertible and freely transferable currency.

Article 5. Transfers

1. Each Contracting Party, in whose territory investments are made by investors of the other Contracting Party, shall grant those investors free transfer of the payments related to these investments, particularly, of:

a) capita! and additional amounts necessary for maintenance and expansion of the -investments;

b) gains, profits, interests, dividends and other current income;

c) funds for repayment of loans directly related to a specific investment, Including interest according to valid contract;

d) royalties and fees;

e) proceeds from total or partial sale or liquidation of an investment;

f) compensations provided for In Article 4;

g) earnings of nationals of one Contracting Party allowed to work in relation to investment In the territory of the other Contracting Party.

2. Transfers shall be made, without any delay, in a freely convertible currency, at the official exchange rate applicable on the date of the transfer, in accordance with the procedures established by the Contracting Party in whose territory the investment is made, provided that ail financial obligations towards this Contracting Party have been fulfilled.

3. The Contracting Parties shail undertake to accord to transfers referred to in paragraphs 1 and 2 of this Article treatment no less favorable than that accorded to transfers originating from investments made by any third state.

Article 6. Subrogation

1. If a Contracting Party or its designated agency (hereinafter referred to as "insured") makes payment to its own investors under a guarantee or insurance against non-commercial risks in respect of investments made in the territory of the other Contracting Party, that Contracting Party shall recognize the subrogation to the insurer, of all rights and claims arising from that investment, and shall recognize that the insurer is entitled to exercise these rights and to ensure execution of the claims to the same extent as the original investor.

2. The subrogated rights or claims shall not exceed the basic rights or claims of the investor.

3. In case of subrogation as defined in paragraph 1 of this Article, the investor shall not be entitled to require claim, unless he is authorized to do so by the Contracting Party or its designated agency.

Article 7. Settlement of Disputes between One Contracting Party and an Investor of the other Contracting Party

1. Disputes between one of the Contracting Parties and an investor of the other Contracting Party shail be notified in writing, including detailed information, by the investor to ihe Contracting Party in whose territory the investment is made. Any dispute between a Contracting Party and an investor of the other Contracting Party should be settled by friendly agreement.

2. if the dispute cannot be settled amicably within six months from the date of the written notification, by which the other Contracting Party was informed about the subject of the dispute, the investor concerned may suggest, at his own choice, for the dispute to be submitted to;

- The competent court of the Contracting Party in whose territory the investment is made;

- "ad hoc" court of arbitration established under the Arbitration Rules of Procedure of the United Nations Commission on International Trade Law (UNCITRAL);

- The international Center for Settlement of Investment Disputes (ICSID), in accordance with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, open for signature since 18.03,1965 in Washington DC, if both Contracting Parties signed this Convention.

3. Once the dispute has been submitted to the competent court of the Contracting Party or to international arbitration, the choice of one or the other procedure shall be definitive.

4. The arbitration decision shall be based on:

- The provisions of this Agreement;

- The national law of the Contracting Party in whose territory the investment is made, including the rules related to conflicts of law;

- The rules and the universally accepted principles of international law.

5. Tile arbitration decisions shall be final and binding on the parties to the dispute. Each Contracting Party shall undertake to execute the decisions in accordance with its national law.

Article 8. Settlement of Disputes between the Contracting Parties

1. Disputes between Contracting Parties regarding the interpretation and application of the provisions of this Agreement shall be settled by consultations and negotiations through diplomatic channels.

2. If both Contracting Parties cannot reach an agreement within six months after the beginning of the dispute between them, upon request by either Contracting Party, it shall be submitted to court of arbitration which shall be constituted as follows:

Each Contracting Party shall appoint one arbitrator and these two arbitrators shall appoint chairman who shall be national of a third state, maintaining diplomatic relations with both Contracting Parties.

3. If one of the Contracting Parties has not appointed its arbitrator and has not followed the invitation of the other Contracting Party to make that appointment within two months, the arbitrator shall be appointed upon request by that Contracting Party by the President of the International Court of Justice.

4. If both arbitrators cannot reach an agreement about the choice of the chairman within two months after their appointment, he/she shall be appointed upon request by either Contracting Party by the President of the international Court of Justice.

5. If in the cases specified under paragraphs 3 and 4 of this Article, the President of the international Court of Justice is prevented from carrying out the said function, or if he/she is a national of either Contracting Party, the appointment shall be made by the Vice President, and if he/she is prevented or if he/she is national of either Contracting Party, the appointment shall be made by the most senior judge of the court who is not a national of either Contracting Party.

6. With regard to other provisions made by the Contracting Parties, the court, shall determine its procedure. The court shall reach its decisions by a majority of votes.

7. The decisions of the court shall be final and binding on each Contracting Party.

8. Each Contracting party shail bear the costs of its own member of the court and its representation in the arbitration proceedings; the costs of the chairman and the remaining costs shall be borne in equal parts by the Contracting Parties. The court may, however, decide for a higher proportion of costs to be borne by one of the Contracting Parties and this decision shail be binding on both Contracting Parties.

Article 9. More Favorable Provisions

If the domestic law of either Contracting Party or obligations under international law existing at present or established hereafter between the Contracting Parties in addition to this Agreement contain a regulation, whether general or specific, entitling investments made by investors of the other Contracting Party to a treatment more favorable than that provided by this Agreement, such regulation shall, to the extent that it is more favorable, prevail over this Agreement.

Article 10. Consultations and Exchange of Information

1. Upon request by either Contracting Party, the other Contracting Party shall agree promptly to hold consultations on interpretation or application of this Agreement.

2. Upon request by either Contracting Party, information on the impact of laws, regulations, decisions, administrative practices or procedures or policies of the other Contracting Party may have on investments covered by this Agreement shail be exchanged.

Article 11. Additional Provisions

1. Nothing in this Agreement shail be construed to prevent any Contracting Party:

a) to undertake any actions which it considers as necessary for the purpose of protecting its essential security interests;

- Undertaken during war, armed conflict, or other emergency in that Contracting Party or in international relations; or

- Related to implementation of national policies or international agreements referring to non-proliferation of weapon;

b) to undertake any measure in line with its obligations under the United Nations Charter for maintenance of international peace and security; or

c) to undertake any measure necessary for maintenance of public order when there is genuine and sufficiently serious threat to one of the fundamental interests of society;

d) to undertake any measures related to balance of payments and external financial difficulties, as well as monetary and exchange rate policies.

2. Contracting Party's essential security interests may include interests deriving from its membership in a customs, economic or monetary union, a common market or a free trade area.

Article 12. Scope of Application

This Agreement shall apply to investments made in the territory of one of the Contracting Parties in accordance with its legislation by investors of the other Contracting Party prior to, as well as after the entry into force of this Agreement, but shall not apply to any dispute raised or any claim concerning investments made before the entry into force of this Agreement.

Article 13. Entry Into Force

This Agreement shall enter into force on the latter date on which either Contracting Party notifies the other that its internal legal requirements for the entry into force of this Agreement have been fulfilled.

Article 14. Duration and Termination

1. This Agreement shall remain in force for a period of ten (10) years and shall continue in force thereafter for a same period or periods unless, one year before the expiration of the initial or any subsequent period, either Contracting Party notifies the other Contracting Party of its intention to terminate the Agreement.

The notice of termination shall become effective one year after it has been received by the other Contracting Party.

2. With regard to investments made prior to the date when the notice of termination of this Agreement becomes effective, the provisions of this Agreement shall continue to be effective for a period of ten years from the date of termination of this Agreement.

Conclusion

Done in ____ on ____ in two originals, each in Macedonian, Montenegrin and English languages, all texts being equally authentic. In case of any divergence of interpretation, the English text shall prevail.

FOR THE GOVERNMENT OF THE REPUBLIC OF MACEDONIA

FOR THE GOVERNMENT OF MONTENEGRO