(b) have expertise or experience in law, international trade, other matters covered by this Agreement, or the resolution of disputes arising under international trade agreements;
(c) be independent of, and not be affiliated with or take instructions from, any of the Parties; and
(d) comply with the code of conduct established by the Joint Committee.
13. If a Party to the dispute believes that a panelist has violated or is in violation of the code of conduct, the Parties to the dispute shall consult and if they agree, the panelist shall be removed and a new panelist shall be selected in accordance with this Article.
Article 22.8. MODEL RULES OF PROCEDURE
1. Unless the Parties to the dispute otherwise agree, the panel shall follow the model rules of procedure established by the Joint Committee, which shall ensure:
(a) a right to at least one hearing before the panel;
(b) that, subject to subparagraph (f), any hearing before the panel shall be open to the public;
(c) the possibility of using technological means to conduct the proceedings;
(d) an opportunity for each Party to the dispute to provide initial and rebuttal submissions;
(e) that each participating Party’s written submissions, written versions of its oral statement, and written response to a request or questions from the panel may be made available to the public subject to subparagraph (f);
(f) the protection of information designated by any of the Parties for confidential treatment; and
(g) that all notices to the Parties are made through the designated office.
2. Unless the Parties otherwise agree, the panel shall follow the model rules of procedure and may, after consulting with the Parties, adopt additional rules of procedure not inconsistent with the model rules.
3. Unless the Parties to the dispute otherwise agree within 20 days of the delivery of the request for the establishment of the panel, the panel’s terms of reference shall be: “To examine, in the light of the relevant provisions of this Agreement, the matter referenced in the request for the establishment of the panel, to make findings, determinations, and recommendations as provided in Articles 22.10.1 and 22.10.2, and to present the written reports referred to in Articles 22.10.1 and 22.10.5.”
4. Upon request of a Party to the dispute, or on its own initiative, the panel may seek information and technical advice from any person or body that it deems appropriate, provided that the Parties to the dispute so agree and subject to such terms and conditions as the Parties to the dispute may agree.
5. The decisions of the panel, including the adoption of the report, shall be adopted by a majority of its members. No panel may disclose which panelists are associated with majority or minority opinions.
Article 22.9. THIRD PARTIES
1. Any Party having a substantial interest in a dispute before a panel and having notified its interest in writing to the Parties to such a dispute and the rest of the Parties shall have an opportunity to make written submissions to the panel. These submissions shall also be given to the parties to the dispute and may be reflected in the report of the panel.
2. Third Parties shall receive the submissions of the Parties to the dispute at the first meeting of the panel.
3. If a third Party considers that a measure that is already the subject of a panel proceeding nullifies or impairs benefits accruing to it under the covered agreements, such Party may have recourse to normal dispute settlement procedures under this Agreement.
Article 22.10. PANEL REPORT
1. Unless the Parties to the dispute otherwise agree, the panel shall, within 90 days after the chair is appointed, present to the Parties to the dispute an initial report containing findings of fact and its determination as to:
(a) (i) whether the measure at issue is inconsistent with the obligations of this Agreement;
(ii) whether a Party to the dispute has otherwise failed to carry out its obligations under this Agreement; or
(iii) whether the measure at issue is causing nullification or impairment in the sense of Article 22.2.1(c); and
(b) any other matter that the Parties to the dispute have jointly requested that the panel address, as well as the reasons for its findings and determinations.
2. When the panel considers that it cannot provide its report within 90 days, it shall inform the Parties to the dispute in writing of the reasons for the delay together with an estimate of the period within which it will provide its report. In no case should the period to provide the report exceed 120 days. The panel shall inform the Parties to the dispute of any determination under this paragraph no later than seven days after the initial written submission of the complaining Party or Parties and shall adjust the remainder of the schedule accordingly.
3. The panel shall base its report on the relevant provisions of this Agreement and the submissions and arguments of the Parties. The panel shall consider this Agreement in accordance with customary rules of interpretation of public international law, such as the ones established in the Vienna Convention on the Law of Treaties (1969). The panel may, at the request of the Parties to the dispute, make recommendations for the resolution of the dispute.
4. Each Party to the dispute may submit written comments to the panel on its initial report within 14 days of the presentation of the report. After considering any written comments by the Parties to the dispute on the initial report, the panel may modify its report and make any further examination it considers appropriate.
5. The panel shall present a final report to the Parties within 30 days of the presentation of the initial report, unless the Parties to the dispute otherwise agree. The Parties shall make the final report available to the public within 15 days thereafter, subject to the protection of confidential information.
6. The final report of a panel shall be final and binding unless the Parties to the dispute otherwise agree. The report of the panel shall set out the findings of fact, the applicability of the relevant provisions of this Agreement and the basic rationale behind any findings and conclusions that it makes.
Article 22.11. SUSPENSION AND TERMINATION OF PROCEEDINGS
1. The Parties to the dispute may agree that the panel suspend its work at any time for a period not exceeding 12 months from the date of such agreement. Within this period, the suspended panel shall be resumed upon the request of either Party to the dispute. If the work of the panel has been continuously suspended for more than 12 months, the authority for establishment of the panel shall lapse unless the Parties to the dispute otherwise agree.
2. The Parties to the dispute may agree to terminate the proceedings of a panel in the event that a satisfactory solution to the dispute has been found. In such event the Parties to the dispute shall jointly notify the chair of the panel.
3. Before the panel provides its final report, it may at any stage of the proceedings propose to the Parties to the dispute that the dispute be settled amicably.
Article 22.12. IMPLEMENTATION OF THE FINAL REPORT
1. Upon receipt of the final report of a panel, the Parties to the dispute shall agree on the resolution of the dispute, which normally shall conform with the determinations and recommendations, if any, of the panel.
2. If, in its final report, the panel determines that a Party to the dispute has not conformed with its obligations under this Agreement or that a Party to the dispute’s measure is causing nullification or impairment in the sense of Article 22.2.1(c), the resolution, whenever possible, shall be to eliminate the non-conformity or the nullification or impairment.
Article 22.13. NON-IMPLEMENTATION AND SUSPENSION OF BENEFITS
1. If a panel has made a determination of the type described in Article 22.12.2, and the Parties to the dispute are unable to reach an agreement on a resolution pursuant to Article 22.12.1, within 30 days of receiving the final report, or such other period as the Parties to the dispute may agree, the Party complained against shall enter into negotiations with the complaining Party with a view to developing acceptable compensation.
2. If the Parties to the dispute:
(a) are unable to agree on compensation within 30 days after the period for developing such compensation has begun; or
(b) have agreed on compensation or on a resolution pursuant to Article 22.12.1, and the complaining Party considers that the Party complained against has failed to observe the terms of the agreement, the complaining Party may at any time thereafter provide written notice to the Party complained against that it intends to suspend the application to the Party complained against of benefits of equivalent effect. The notice shall specify the level of benefits that the complaining Party proposes to suspend. The complaining Party may begin suspending benefits of equivalent effect 15 days after the later of the date on which it provides notice to the other Party to the dispute under this paragraph or the panel issues its determination under paragraph 5, as the case may be.
3. In considering which benefits to suspend pursuant to paragraph 2:
(a) the complaining Party should first seek to suspend benefits or other obligations in the same sector or sectors as those affected by the measure or other matter that the panel has found to be inconsistent with the obligations of this Agreement or to have caused nullification or impairment in the sense of Article 22.2.1(c); and
(b) the complaining Party that considers it is not practicable or effective to suspend benefits or other obligations in the same sector or sectors may suspend benefits in other sectors.
4. The suspension of benefits shall be temporary and be applied by the complaining Party only until the measure found to be inconsistent with the obligations of this Agreement or otherwise nullifying or impairing benefits under Article 22.2.1(c) has been brought into conformity with this Agreement, or until such time as the Parties to the dispute have otherwise reached an agreement on a resolution of the dispute. However, if the Party complained against comprises two or more Republics of Central America, and one or more complies with the final report, or reaches a satisfactory agreement with the complaining Party, the latter shall terminate the suspension of benefits for such Republic or Republics of Central America.
5. If the Party complained against considers that:
(a) the level of benefits that the complaining Party has proposed to be suspended is manifestly excessive; or
(b) it has eliminated the non-conformity or the nullification or impairment that the panel has found, it may, within 30 days after the complaining Party provides notice under paragraph 2, request that the original panel be reconvened to consider the matter. The Party complained against shall deliver its request in writing to the complaining Party. The panel shall reconvene as soon as possible after delivery of the request and shall present its determination to the Parties to the dispute within 90 days after it reconvenes to review a request under either subparagraph (a) or (b), or within 120 days for a request under both subparagraphs (a) and (b). If the panel determines that the level of benefits proposed to be suspended is manifestly excessive, it shall determine the level of benefits it considers to be of equivalent effect.
6. The complaining Party may suspend benefits up to the level the panel has determined under paragraph 5 or, if the panel has not determined the level, the level the Party has proposed to suspend under paragraph 2, unless the panel has determined that the Party complained against has eliminated the non-conformity or the nullification or impairment. If the Party complained against comprises two or more Republics of Central America, and the panel decides that one or more has complied, the complaining Party shall immediately terminate the suspension of benefits for such Republic or Republics of Central America.
Article 22.14. COMPLIANCE REVIEW
1. Without prejudice to the procedures set out in Article 22.13.5, if the Party complained against considers that it has eliminated the non-conformity or the nullification or impairment that the panel has found, it may refer the matter to the panel by providing written notice to the complaining Party. The panel shall reconvene as soon as possible after delivery of the request and shall issue its report on the matter within 60 days after the Party complained against provides notice.
2. If the panel decides that the Party complained against has eliminated the nonconformity or the nullification or impairment, the complaining Party shall promptly reinstate any benefits it has suspended under Article 22.13.
Article 22.15. TIME LIMITS
1. All time limits laid down in this Chapter, including the limits for the panels to issue their rulings, shall be counted in calendar days, the first day being the day following the act or fact to which they refer.
2. Any time limit referred to in this Chapter may be extended by agreement of the Parties.
Article 22.16. ADMINISTRATION OF DISPUTE SETTLEMENT PROCEEDINGS
1. Each Party shall:
(a) designate an office that shall provide administrative assistance to the panels established under this Chapter and perform such other functions as the Joint Committee may direct;
(b) notify the Joint Committee of the location of its designated office; and
(c) be responsible for:
(i) the operation and costs of its designated office; and
(ii) the remuneration and payment of expenses of panelists and experts, as set out in Annex 22-A.
Section B. Domestic Proceedings and Private Commercial Dispute Settlement
Article 22.17. REFERRAL OF MATTERS FROM JUDICIAL OR ADMINISTRATIVE PROCEEDINGS
1. If an issue of interpretation or application of this Agreement arises in any domestic judicial or administrative proceeding of a Party that any Party considers would merit its intervention, or if a court or administrative body solicits the views of a Party, that Party shall notify the other Parties. The Joint Committee shall endeavor to agree on an appropriate response as expeditiously as possible.
2. The Party in whose territory the court or administrative body is located shall submit any agreed interpretation of the Joint Committee to the court or administrative body in accordance with the rules of that forum.
3. If the Joint Committee is unable to agree, any Party may submit its own views to the court or administrative body in accordance with the rules of that forum.
Article 22.18. PRIVATE RIGHTS
No Party may provide for a right of action under its law against the other Party on the ground that the other Party has failed to conform with its obligations under this Agreement.
Article 22.19. ALTERNATIVE DISPUTE RESOLUTION
1. Each Party shall, to the maximum extent possible, encourage and facilitate the use of arbitration and other means of alternative dispute resolution for the settlement of international commercial disputes between private parties in the free trade area.
2. To this end, each Party shall provide appropriate procedures to ensure observance of agreements to arbitrate and for the recognition and enforcement of arbitral awards in such disputes.
3. A Party shall be deemed to be in compliance with paragraph 2 if it is a party to and is in compliance with the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)
Chapter 23. EXCEPTIONS
Article 23.1. GENERAL EXCEPTIONS
1. For the purposes of Chapters 2 (National Treatment and Market Access for Goods), 3 (Rules of Origin and Origin Procedures), 4 (Customs Procedures and Trade Facilitation), 5 (Sanitary and Phytosanitary Measures) and 6 (Technical Barriers to Trade), Article XX of GATT 1994 and its interpretive notes are incorporated into and made part of this Agreement, mutatis mutandis. The Parties understand that the measures referred to in Article XX(b) of GATT 1994 include environmental measures necessary to protect human, animal, or plant life or health, and that Article XX(g) of GATT 1994 applies to measures relating to the conservation of living and non-living exhaustible natural resources.
2. For the purposes of Chapters 9 (Investment), 10 (Cross-border Trade in Services), 11 (Financial Services), 12 (Temporary Entry for Business Persons), 13 (Telecommunications) and 14 (Electronic Commerce), (1) Article XIV of GATS (including its footnotes) is incorporated into and made part of this Agreement, mutatis mutandis. The Parties understand that the measures referred to in Article XIV(b) of the GATS include environmental measures necessary to protect human, animal, or plant life or health.
Article 23.2. ESSENTIAL SECURITY
Nothing in this Agreement shall be construed:
(a) to require a Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests; or
(b) to preclude a Party from applying measures that it considers necessary for the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security or the protection of its own essential security interests.
Article 23.3. TAXATION
1. Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.
2. Nothing in this Agreement shall affect the rights and obligations of either Party under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency. In the case of a tax convention between the Parties, the competent authorities under that convention shall have sole responsibility for determining whether any inconsistency exists between this Agreement and that convention.
3. Notwithstanding paragraph 2:
(a) Article 2.2 (National Treatment) and such other provisions of this Agreement as are necessary to give effect to that Article shall apply to taxation measures to the same extent as does Article III of GATT 1994; and
(b) Article 2.12 (Export Duties, Taxes, or Other Charges) shall apply to taxation measures.
4. Subject to paragraph 2:
(a) Articles 10.2 (National Treatment) and 11.2 (National Treatment) shall apply to taxation measures on income, on capital gains, or on the taxable capital of corporations that relate to the purchase or consumption of particular services, except that nothing in this subparagraph shall prevent a Party from conditioning the receipt or continued receipt of an advantage relating to the purchase or consumption of particular services on requirements to provide the service in its territory; and
(b) Articles 9.3 (National Treatment), 9.4 (Most-Favored-Nation Treatment), 10.2 (National Treatment), 10.3 (Most-Favored-Nation Treatment), 11.2 (National Treatment) and 11.3 (Most-Favored-Nation Treatment) shall apply to all taxation measures, other than those on income, on capital gains, or on the taxable capital of corporations, or taxes on estates, inheritances, gifts, and generation-skipping transfers; except that nothing in the Articles referred to in subparagraphs (a) and (b) shall apply:
(c) to any MFN obligation with respect to an advantage accorded by a Party pursuant to a tax convention;
(d) to a non-conforming provision of any existing taxation measure;
(e) to the continuation or prompt renewal of a non-conforming provision of any existing taxation measure;
(f) to an amendment to a non-conforming provision of any existing taxation measure to the extent that the amendment does not decrease its conformity, at the time of the amendment, with any of those Articles;
(g) to the adoption or enforcement of any taxation measure aimed at ensuring the equitable or effective imposition or collection of taxes (as permitted by Article XIV(d) of GATS); or
(h) to a provision that conditions the receipt, or continued receipt, of an advantage relating to the contributions to, or income of, a pension trust or pension plan on a requirement that the Party maintain continuous jurisdiction over the pension trust or pension plan.
5. Subject to paragraph 2 and without prejudice to the rights and obligations of the Parties under paragraph 3, paragraphs 2, 3, and 4 of Article 9.9 (Performance Requirements) shall apply to taxation measures.
6. (a) Article 9.17 (Submission of a Claim to Arbitration) shall apply to a taxation measure alleged to be an expropriation.
(b) Article 9.7 (Expropriation and Compensation) shall apply to taxation measures. However, no investor may invoke Article 9.7 as the basis for a claim where it has been determined pursuant to this subparagraph that the measure is not an expropriation. An investor that seeks to invoke Article 9.7 with respect to a taxation measure must first refer to the competent authorities, at the time that it gives its notice of intent under Article 9.17.3 (Submission of a Claim to Arbitration), the issue of whether that taxation measure is not an expropriation. (2) If the competent authorities do not agree to consider the issue or, having agreed to consider it, fail to agree that the measure is not an expropriation within a period of 180 days of such referral, the investor may submit its claim to arbitration under Article 9.17.4.
(c) For the purposes of this paragraph, competent authorities means:
(i) for Korea, the Deputy Minister for Tax and Customs, Ministry of Strategy and Finance;
(ii) for Costa Rica, the Minister of Finance (Ministro de Hacienda);
(iii) for El Salvador, the Minister of Finance (Ministro de Hacienda);
(iv) for Honduras, the Secretary of State in the Office of Finance (Secretario de Estado en el Despacho de Finanzas);
(v) for Nicaragua, the Minister of Finance and Public Credit (Ministro de Hacienda y Crédito Público); and
(vi) for Panama, the Minister of Economy and Finance (Ministro de Economía y Finanzas), or their successors.
7. For the purposes of this Article, “taxes” and “taxation measures” do not include:
(a) a customs duty as defined in Article 1.6 (Definitions); or
(b) the measures listed in exceptions (b) and (c) of that definition.
Article 23.4. DISCLOSURE OF INFORMATION
Nothing in this Agreement shall be construed to require a Party to furnish or allow access to confidential information the disclosure of which would impede law enforcement, or otherwise be contrary to the public interest, or which would prejudice the legitimate commercial interests of particular enterprises, public or private.
Article 23.5. MEASURES TO SAFEGUARD THE BALANCE OF PAYMENTS
Where a Party is in serious balance of payments and external financial difficulties or threat thereof, it may, in accordance with GATT 1994, which includes the Understanding on Balance-of-Payments Provisions of GATT 1994, adopt restrictive import measures. In adopting such measures, the Party shall immediately consult with the other Party.
Chapter 24. FINAL PROVISIONS
Article 24.1. ANNEXES, APPENDICES, AND FOOTNOTES
The Annexes, Appendices, and footnotes to this Agreement constitute an integral part of this Agreement.
Article 24.2. AMENDMENTS
The Parties may agree, in writing, to amend this Agreement. Unless otherwise agreed, any amendment shall enter into force 30 days after all the Parties exchange written notifications certifying that they have completed their respective applicable legal requirements and procedures.
Article 24.3. AMENDMENT OF THE WTO AGREEMENT
If any provision of the WTO Agreement that the Parties have incorporated into this Agreement is amended, the Parties shall consult to consider amending the relevant provision of this Agreement, as appropriate, in accordance with Article 24.2.
Article 24.4. ACCESSION
Any country or group of countries may accede to this Agreement subject to such terms and conditions as may be agreed between the country or group of countries and the Joint Committee. Any accession shall enter into force 30 days or on such date as the Parties may agree, after all the Parties and the acceding country or group of countries exchange written notifications certifying that they have completed their respective applicable legal requirements and procedures.
Article 24.5. ENTRY INTO FORCE
1. This Agreement shall enter into force for Korea and each Republic of Central America on the first day of the second month following the latter date on which Korea and the respective Republic of Central America have notified the other in writing that they have completed their internal procedures or on any other date as they may agree.
2. Each Party shall, upon the completion of its internal procedures for the entry into force of this Agreement, notify all the other Parties simultaneously in writing.
Article 24.6. WITHDRAWAL AND TERMINATION
1. Any Party may withdraw from this Agreement by means of a written notification to all the Parties. Unless otherwise agreed, the withdrawal shall take effect 180 days after the date on which the notification is received by all the Parties.
2. If one of the Republics of Central America withdraws, the Agreement shall remain in force for the remaining Parties. If Korea withdraws, this Agreement shall expire on the date specified in paragraph 1.
Article 24.7. RESERVATIONS AND INTERPRETATIVE DECLARATIONS
This Agreement does not allow unilateral reservations or unilateral interpretative declarations.
Article 27.8. AUTHENTIC TEXTS
The Korean, Spanish and English texts of this Agreement are equally authentic. In case of any divergence, the Parties shall resolve the inconsistency based on the English version of the texts.
Conclusion
IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective Governments, have signed this Agreement.
DONE, at Seoul, this 21st day of February, 2018, in the Korean, Spanish, and English languages.
FOR THE GOVERNMENT OF THE REPUBLIC OF KOREA:
FOR THE GOVERNMENT OF THE REPUBLIC OF COSTA RICA:
FOR THE GOVERNMENT OF THE REPUBLIC OF EL SALVADOR:
FOR THE GOVERNMENT OF THE REPUBLIC OF HONDURAS:
FOR THE GOVERNMENT OF THE REPUBLIC OF NICARAGUA:
FOR THE GOVERNMENT OF THE REPUBLIC OF PANAMA:
Annex I: Non-Conforming Measures of Services and Investment
Annex I SCHEDULE OF KOREA