Title

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF BELARUS AND THE GOVERNMENT OF HUNGARY FOR THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS

Preamble

The Government of the Republic of Belarus and the Government of Hungary (hereinafter referred to as the "Contracting Parties"),

Desiring to intensify economic cooperation to the mutual benefit of both Contracting Parties,

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

Seeking to ensure that investment is consistent with the protection of health, safety and the environment, the promotion and protection of internationally and domestically recognised human rights, labour rights, and internationally recognised standards of corporate social responsibility;

Desiring to promote investment that contributes to the sustainable development of the Contracting Parties;

Aiming to secure an overall balance of rights and obligations between investors and the host State;

Being conscious that the promotion and reciprocal protection of investments, according to the present Agreement, stimulates the business initiatives in this field,

Have agreed as follows:

Body

Article 1. Definitions

For the purposes of this Agreement:

1. The term "investment" shall comprise every kind of asset invested in connection with economic activities by an investor of one Contracting Party in the territory of the other Contracting Party in accordance with the laws and regulations of the latter and shall include, in particular, though not exclusively:

a. movable and immovable property as well as any other rights in rem such as mortgages, liens, pledges and similar rights;

b. shares, stocks and debentures of companies or any other form of participation in a company;

c. claims to money or to any performance having an economic value related to an investment;

d. intellectual and industrial property rights, including copyrights, trademarks, patents, designs, rights of breeders, technical processes, know-how, trade secrets, geographical indications, trade names and goodwill associated with an investment as well as other similar rights recognized by the laws and regulations of both Contracting Parties and directly related to covered investments;

e. any right, having economic value, conferred by law or under contract and any licenses and permits pursuant to law, including the concessions to search for, extract, cultivate or exploit natural resources.

Any alteration of the form in which assets are invested shall not affect their character as investment on condition that this alteration is made in accordance with the laws and regulations of the Contracting Party in the territory of which the investment has been made.

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

a. The term "natural person" shall mean any individual having the citizenship of either Contracting Party in accordance with its laws and regulations.

b. The term "legal person" shall mean with respect to either Contracting Party, any legal entity incorporated or constituted in accordance with the laws and regulations having its central administration or principal place of business in the territory of one Contracting Party.

3. "Laws and regulations" with regard to either Contracting Party — shall mean laws and regulations applicable in the territory of each Contracting Party.

4. The term "returns" shall mean amounts yielded by an investment and in particular, though not exclusively, includes profits, interest, capital gains, dividends, royalties or fees.

5. The term "territory" shall mean:

a. in the case of Hungary: the territory over which Hungary exercises, in conformity with international law, sovereignty, sovereign rights or jurisdiction;

b. in the case of the Republic of Belarus: the territory of the Republic of Belarus in accordance with the Constitution of the Republic of Belarus, including land, internal waters and the airspace of the Republic of Belarus and the territory on which the Republic of Belarus exercises sovereignty and/or jurisdiction in accordance with international law;

6. The term "freely convertible currency" means the currency that is widely used to make payments for international transactions and widely exchanged in principal international exchange markets provided it is not contrary to the laws and regulations of either of the Contracting Parties, and independently from how the International Monetary Fund determines the scope of freely convertible, or freely usable currency.

Article 2. Promotion and Protection of Investments

1. Each Contracting Party shall encourage and create favourable conditions for investors of the other Contracting Party to make investments in its territory and, shall admit such investments in accordance with its laws and regulations.

2. Each Contracting Party shall accord in its territory to investments of the other Contracting Party and to investors with respect to their investments fair and equitable treatment and full protection and security in accordance with paragraphs 3 through 6.

3. With respect to the investments the following measures or series of measures constitute breach of the obligation of fair and equitable treatment:

(a.) denial of justice in criminal, civil or administrative proceedings; or

(b.) fundamental breach of due process, including a fundamental breach of transparency and obstacles to effective access to justice, in judicial and administrative proceedings; or

(c.) manifest arbitrariness which means measures taken purely on the basis of prejudice or bias without a legitimate purpose or rational explanation; or

(d.) targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief; or

(e.) harassment, coercion, abuse of power or similar bad faith conduct.

Upon request of a Contracting Party, the Contracting Parties may review the content of the obligation to provide fair and equitable treatment.

4. For greater certainty, "full protection and security" refers to the Contracting Party's obligations relating to physical security of investors and investments.

5. A breach of another provision of this Agreement or of a separate international agreement does not establish a breach of this Article.

6. The fact that a measure breaches domestic law does not, in and of itself, establish a breach of this Article; a Tribunal must consider whether a Contracting Party has acted inconsistently with the obligations in paragraph 2.

7. The Contracting Party shall not encourage investment by lowering domestic environmental, labour or occupational health and safety legislation or by relaxing core labour standards. Where a Contracting Party considers that the other Contracting Party has offered such an encouragement, it may request consultations with the other Contracting Party and the two Contracting Parties shall consult with a view to avoid any such encouragement.

Article 3. Investment and Regulatory Measures

1. The provisions of this Agreement shall not affect the right of the Contracting Parties to regulate within their territories through measures necessary to achieve legitimate policy objectives, such as the protection of public health, safety, environment or public morals, social or consumer protection or promotion and protection of cultural diversity.

2. The mere fact that a Contracting Party regulates, including through a modification to its laws and regulations, in a manner which negatively affects an investment or interferes with an investor's expectations of profits, does not amount to a breach of an obligation under this Agreement.

3. For greater certainty a Contracting Party's decision not to issue, renew or maintain a subsidy

a) in the absence of any specific commitment under law or contract to issue, renew or maintain that subsidy; or

b) in accordance with terms or conditions attached to the issuance, renewal or maintenance of the subsidy,

does not constitute a breach of the provisions of this Agreement.

Nothing in this Agreement shall be construed as preventing a Contracting Party from discontinuing the granting of a subsidy or requesting its reimbursement where such measure is necessary in order to comply with international obligations between the Contracting Parties or has been ordered by a competent court, administrative tribunal or other competent authority, or requiring that Contracting Party to compensate the investor therefor.

Article 4. National and Most-favoured-nation Treatment

1. Each Contracting Party shall in its territory accord to an investor of the other Contracting Party and to an investment, treatment not less favourable than the treatment it accords in like situations to its own investors and their investments with respect to the conduct, operation, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

2. Each Contracting Party shall in its territory accord to investors of the other Contracting Party and their investments treatment no less favourable than that it accords, in like situations, to investors of a third country or to their investments with respect to the operation, conduct, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

3. For greater certainty, the "treatment" referred to in paragraph 2 does not include procedures for the resolution of investment disputes between investors and States provided for in other international investment treaties and any other agreements. Substantive obligations in other international investment treaties and other international trade agreements do not in themselves constitute "treatment", and thus cannot give rise to a breach of this Article, absent measures adopted or maintained by a Contracting Party pursuant to those obligations.

4. The National Treatment and Most-Favoured-Nation Treatment provisions of this Agreement shall not apply to advantages accorded by a Contracting Party pursuant to its obligations as a member of a customs, economic or monetary union, a common market or a free trade area.

5. The Contracting Parties understand the obligations of a Contracting Party as a member of a customs, economic, or monetary union, a common market or a free trade area to include obligations arising out of an international agreement or reciprocity arrangement of that customs, economic, or monetary union, common market or free trade area.

6. The provisions of this Article shall not be construed so as to oblige one Contracting Party to extend to the investors of the other Contracting Party, or to the investments or returns of investments of such investors the benefit of any treatment, preference or privilege, which may be extended by the former Contracting Party by virtue of:

a. any forms of multilateral agreements on investments to which either of the Contracting Parties is or may become a party;

b. any international agreement or arrangement relating wholly or mainly to taxation.

Article 5. Compensation for Losses

1. When investments or returns of investments of investors of either Contracting Party suffer losses owing to war, armed conflict, a state of national emergency, revolt, insurrection, riot or other similar events in the territory of the other Contracting Party, they shall be accorded by the latter Contracting Party treatment, as regards restitution, indemnification, compensation or other settlement, not less favourable than that which the latter Contracting Party accords to its own investors or to investors of any third State whichever is more favourable.

2. Without prejudice to paragraph 1 of this Article, investors of one Contracting Party who in any of the events referred to in that paragraph suffer losses in the territory of the other Contracting Party resulting from:

a. requisitioning of their investment or a part thereof by its forces or authorities;

b. destruction of their investment or a part thereof by its forces or authorities which was not caused in combat action or was not required by the necessity of the situation

shall be accorded by the Contracting Party, in whose territory the losses occurred, just, adequate and effective restitution or compensation.

Compensation shall include interest from the date of losses occurred until the day of payment at a commercially reasonable rate established on a market basis which shall be not less than the London Interbank Offered Rate (LIBOR) in conformity with the currency in which investment has been made or zero if the relevant LIBOR rate falls below zero.

Article 6. Expropriation

1. Investments or returns of investments of investors of either Contracting Party shall not be subject to nationalisation, direct or indirect expropriation, or any measures having equivalent effect (hereinafter referred to as "expropriation") in the territory of the other Contracting Party except for a public purpose. The expropriation shall be carried out under due process of law, on a non-discriminatory basis and shall be accompanied by provisions for the payment of prompt, adequate and effective compensation. Such compensation shall amount to the market value of the expropriated investment at the date of expropriation or impending expropriation became public knowledge (whichever is earlier), shall include interest from the date of expropriation to the date of actual payment at a commercially reasonable rate established on a market basis, which shall in no case be lower than the London Interbank Offered Rate (LIBOR) in conformity with the currency in which investment has been made or zero if the relevant LIBOR rate falls below zero.

Such compensation shall be made without delay, be effectively realizable and be freely transferable in a freely convertible currency.

2. For the purpose of this Agreement:

(a) indirect expropriation results from a measure or series of measures of a Contracting Party having an equivalent effect to direct expropriation without formal transfer of title or outright seizure;

(b) the determination of whether a measure or series of measures by a Contracting Party, in a given specific situation, constitutes an indirect expropriation requires a case-by-case, fact-based inquiry that considers, among other factors:

(i) the economic impact of the measure or series of measures, although the sole fact that a measure or series of a measure of a Contracting Party has an adverse effect on the economic value of an investment does not establish that an indirect expropriation has occurred,

(ii) the duration of the measure or series of measures by a Contracting Party,

(iii) the character of the measure or series of measures, notably their object and content.

(c) non-discriminatory measures that the Contracting Parties take for reason of public purpose including for reasons of public health, safety, and environmental protection, which are taken in good faith, which are not arbitrary, and which are not disproportionate in light of their purpose, shall not constitute indirect expropriation.

Article 7. Transfers

1. The Contracting Parties shall permit the free transfer of payments related to investments and returns. The transfers shall be made in a freely convertible currency and in accordance with the laws and regulations of the Contracting Party where investments were made without any restriction and undue delay. Such transfers shall include in particular, though not exclusively:

a. capital and additional amounts to maintain or increase the investment;

b. returns as defined in paragraph 4 of Article 1 of this Agreement;

c. the amounts required for payment of expenses which arise from the operation of the investment, such as payment of royalties and license fees or other similar expenses;

d. payments in connection with contracts, including loan agreements related to investments;

e proceeds of the total or partial sale or liquidation of the investment;

f. the wages or other similar earnings of natural persons engaged from abroad, in connection with an investment, subject to the laws and regulations of a Contracting Party in which the investment has been made;

g. compensations owed pursuant to Articles 5 and 6 of this Agreement; h. payments arising out of settlement of a dispute under Article 9, of this Agreement.

2. The transfers shall be made after the investor fulfilled all of its related financial including fiscal obligations according to the laws and regulations in force of the Contracting Party in the territory of which the investment was made.

3. Nothing in this Article shall be construed to prevent a Contracting Party from applying in an equitable and non-discriminatory manner and not in a way that would constitute a disguised restriction on transfers, of laws and regulations relating to:

a) bankruptcy, insolvency or protection of the rights of creditors;

b) issuing, trading or dealing in securities;

c) criminal or penal offences;

d) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities; and

e) the satisfaction of judgements in adjudicatory proceedings;

f) severance entitlement of employees.

4. Such measures and their application shall not be used as a means of avoiding the Contracting Party's commitments and obligations under this Agreement.

5. For the purpose of this Agreement, exchange rates shall be the rate published — in accordance with the laws and regulations of the Contracting Party, which has admitted the investment — by the financial institution effecting the transfer unless otherwise agreed. Should such rate not exist the official rate has to be applied unless otherwise agreed.

Article 8. Subrogation

1. If a Contracting Party or its designated agency makes a payment to its own investors under a guarantee or insurance it has accorded in respect of an investment in the territory of the other Contracting Party, the latter Contracting Party shall recognize:

a. the assignment, whether under the law or pursuant to a legal transaction in that country, of any right or claim by the investor to the former Contracting Party or its designated agency, as well as,

b. that the former Contracting Party or its designated agency is entitled by virtue of subrogation to exercise the rights and enforce the claims of that investor and shall assume the obligations related to the investment.

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

Article 9. Settlement of Investment Disputes between a Contracting Party and an Investor of the other Contracting Party

1. Any dispute which may arise between an investor of one Contracting Party and the other Contracting Party in connection with an investment in the territory of that other Contracting Party shall, if possible, be settled amicably and be subject to negotiations between the parties in dispute.

2. The negotiations start on the date when the disputing investor of one Contracting Party requests negotiations in written notification from the other Contracting Party. In order to facilitate the amicable settlement of the dispute the written notice shall specify the issues, the factual basis of the dispute, the findings of the disputing investor (including any supporting documents) and their presumed legal basis. Unless otherwise agreed, at least one negotiation shall be held within ninety days from the date on which the disputing investor of one Contracting Party has requested negotiations from the other Contracting Party in written notification.

3. If any dispute between an investor of one Contracting Party and the other Contracting Party cannot be thus settled within a period of six (6) months following the date on which such negotiations were requested in written notification, the investor shall be entitled to submit the dispute either to:

a. the competent court of the Contracting Party in the territory of which the investment has been made; or

b. the International Centre for Settlement of Investment Disputes (ICSID) pursuant to the applicable provisions of the Convention on the Settlement of Investment Disputes between States and Nationals of other States opened for signature at Washington D.C. on 18 March 1965, in the event both Contracting Parties have become a party to this Convention; or

c. an ad hoc arbitral tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL). The parties to the dispute may agree in writing to deviate from these Arbitration Rules; or

d. under the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes ("Additional Facility Rules of ICSID"), provided that either the disputing Contracting Party or the Contracting Party of the investor, but not both, is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of other States, opened for signature at Washington D. C. on March 18, 1965; or

e. any other arbitration tribunal agreed upon by the parties to the dispute.

4. Once a dispute has been submitted to one of the tribunals mentioned in paragraph 3 a.-e. the investor shall have no recourse to the other dispute settlement fora listed in paragraph 3 a.-e.

5. If any dispute between an investor of one Contracting Party and the other Contracting Party cannot be thus settled within a period of six (6) months following the date on which such negotiations were requested in written notification as mentioned in paragraph 2 of this Article, and the disputing investor intends to submit the dispute to one of the fora listed under paragraphs 3 a.-e. the disputing investor shall at the very latest simultaneously submit any dispute to one of the tribunals and notify the other Contracting Party in a written notice of its intention.

6. An investor may submit a dispute as referred to in paragraph 1 and 2 to arbitration in accordance with paragraph 3 only if not more than three years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage.

7. When rendering its decision, the tribunal shall apply this Agreement as interpreted in accordance with the Vienna Convention on the Law of Treaties, and other rules and principles of international law applicable between the Contracting Parties.

8. The tribunal referred to in paragraph 3 b.-e. shall not have jurisdiction to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of a Contracting Party. For greater certainty, in determining the consistency of a measure with this Agreement, the tribunal may consider, as appropriate, the domestic law of a Contracting Party as a matter of fact. In doing so, the tribunal shall follow the prevailing interpretation given to the domestic law by the courts or authorities of that Contracting Party and any meaning given to domestic law by the tribunal shall not be binding upon the courts or the authorities of that Contracting Party.

For greater certainty the domestic law of the Contracting Parties shall not constitute part of the applicable law. The domestic law of the Contracting Parties comprises the law deriving from their membership or participation in any existing or future customs union, economic union, regional economic integration or similar international agreement.

9. Arbitrators appointed as the members of the tribunal shall be independent. They shall not:

- affiliate with any government,

- take any instructions from any organisations or government with regard to matters related to the dispute,

- participate in the consideration of any disputes that would create a direct conflict of interest. Arbitrators shall take into account best practices in this area, including the International Bar Association Guidelines on Conflicts of Interest in International Arbitration. In addition, upon appointment, they shall refrain from acting as party appointed expert or witness in any pending or new investment dispute under this or any other international agreement. The Contracting Parties may adopt a specific code of conduct for the arbitrators to be applied in disputes arising out of this Article.

10. The awards shall be final and binding on the parties to the dispute and shall be executed in accordance with the laws and regulations of the Contracting Party in the territory of which the investment has been made and the award is relied upon, by the date indicated in the award.

11. Upon entry into force between the Contracting Parties of an international agreement providing for a multilateral investment tribunal and/or a multilateral appellate mechanism applicable to disputes under this Agreement, the relevant parts of this Agreement shall cease to apply.

Article 10. Settlement of Disputes between the Contracting Parties

1. Disputes between the Contracting Parties concerning — the interpretation or application of this Agreement shall, if possible, be settled through consultation or negotiation.

2. If the dispute cannot be thus settled within six months, it shall upon the request of either Contracting Party, be submitted to an Arbitral Tribunal of three members, in accordance with the provisions of this Article.

3. The Arbitral Tribunal shall be constituted for each individual case in the following way. Within two months from the date of the receipt of the request for arbitration, each Contracting Party shall appoint one member of the Tribunal. These two members shall then select a national of a third State who shall be appointed the Chairman of the Tribunal (hereinafter referred to as the "Chairman"). The Chairman shall be appointed within three months from the date of appointment of the other two members.

4, If within the periods specified in paragraph 3 of this Article the necessary appointments have not been made, a request may be made to the President of the International Court of Justice to make the appointments. If the President happens to be a national of either Contracting Party, or if the President is otherwise prevented from discharging the said function, the Vice-President shall be invited to make the appointments. If the Vice-President also happens to be a national of either Contracting Party or is prevented from discharging the said function, the member of the International Court of Justice next in seniority who is not a national of either Contracting Party shall be invited to make the appointments.

5. The Arbitral Tribunal shall reach its decision by a majority of votes.

6. The Tribunal shall issue its decision on the basis of respect for the law, the provisions of this Agreement, as well as of the universally accepted principles of international law.

7. Subject to other provisions made by the Contracting Parties, the Tribunal shall determine its procedure.

8. Each Contracting Party shall bear the cost of its own arbitrator and its representation in the arbitral proceedings; the cost of the Chair and the remaining costs shall be borne in equal parts by both Contracting Parties. The Arbitral Tribunal may make a different regulation concerning the costs.

9. The decisions of the Tribunal are final and binding for each Contracting Parties.

Article 11. Transparency

1. With respect to the laws and regulations of general application adopted at central government level respecting any matter covered by this Agreement the Contracting Parties shall publish the laws and regulations in their official gazette without delay, well before the entry into force of the laws and regulations. On request of a Contracting Party to this Agreement consultation might be held on issues of transparency practices.

2. The Contracting Parties will to the extent possible and in a manner not disruptive to orderly conduct of international arbitration proceedings ensure transparency of such proceedings taking into account best practices in this area, including the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration.

Article 12. Application of other Rules and Special Commitments

Nothing in this Agreement shall be taken to limit the rights of investors of Contracting Parties from benefiting from any more favourable treatment that may be provided for in any existing or future bilateral or multilateral agreement to which they are parties.

Article 13. Applicability of this Agreement

This Agreement shall apply to investments made in the territory of one of the Contracting Parties in accordance with its laws and regulations 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 or claim concerning an investment which arose, or which was settled before the entry into force of this Agreement.

Article 14. Consultations

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

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

Article 15. Denial of Benefits

A Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is a legal person and to investments of that investor, if:

a) an investor of a third State or investor of the denying Contracting Party owns or controls the legal person, and

b) legal persons do not have their seat or any substantial business activity in the home State; or

c) the denying Contracting Party adopts or maintains measures with respect to the third party that:

i) relate to the maintenance of international peace and security; and

ii) prohibit transactions with the legal person or would be violated or circumvented if the benefits of the Agreement were accorded to the legal person or to its investments.