Title

Agreement between the Government of Canada and the Government of Romania for the promotion and reciprocal protection of investments

Preamble

THE GOVERNMENT OF CANADA and THE GOVERNMENT OF ROMANIA, hereinafter referred to as the "Contracting Parties",

RECOGNIZING that the promotion and the protection of investments of investors of one Contracting Party in the territory of the other Contracting Party will be conductive to the stimulation of business initiative and to the development of economic cooperation between them;

HAVE AGREED as follows:

Body

Article I. Definitions

For the purpose of this Agreement:

(a) "confidential information" means confidential business information and information that is privileged or otherwise protected from disclosure;

(b) "enterprise" means:

(i) Any entity constituted or organized under applicable law, whether or not for profit, whether privately-owned or governmentally-owned, including any corporation, trust, partnership, sole proprietorship, joint venture or other association, and

(ii) A branch of any such entity;

(c) "existing measure" means a measure existing at the time this Agreement enters into force;

(d) "financial service" means a service of a financial nature, including insurance, and a service incidental or auxiliary to a service of a financial nature;

(e) "financial institution" means any financial intermediary or other enterprise that is authorized to do business and regulated or supervised as a financial institution under the law of the Contracting Party in whose territory it is located;

(f) "intellectual property rights" means copyright and related rights, trademark rights, patent rights, rights in layout designs of semiconductor integrated circuits, trade secrets rights, plant breeders' rights, rights in geographical indications and industrial design rights;

(g) "investment" means any kind of asset owned or controlled either directly, or indirectly through an investor of a third state, by an investor of one Contracting Party in the territory of the other Contracting Party in accordance with the latter's laws and, in particular, though not exclusively, includes:

(i) Movable and immovable property and any related rights, such as mortgages, liens or pledges,

(ii) Shares, stock, bonds and debentures or any other form of participation in a company, business enterprise or joint venture,

(iii) Money, claims to money, and claims to performance under contract having a financial value,

(iv) Goodwill,

(v) Intellectual property rights,

(vi) Rights, conferred by law or under contract, to undertake any economic and commercial activity, including any rights to search for, cultivate, extract or exploit natural resources,

But does not mean real estate or other property, tangible or intangible, not acquired in the expectation or used for the purpose of economic benefit or other business purposes;

Any change in the form of an investment does not affect its character as an investment;

(h) "investor" means

In the case of Canada:

(i) Any natural person possessing the citizenship of or permanently residing in Canada in accordance with its laws, or

(ii) Any enterprise incorporated or duly constituted in accordance with applicable laws of Canada,

Who makes the investment in the territory of Romania; and

In the case of Romania:

(i) Any natural person who, according to the Romanian law, is considered to be its citizen and who does not possess the citizenship of Canada, or

(ii) Any legal person, including any company, corporation, business association or other organization, which is constituted or otherwise duly organized, under the Romanian law and has its seat, together with real economic activities in the territory of Romania,

Who makes the investment in the territory of Canada;

(i) "measure" includes any law, regulation, procedure, requirement, or practice;

(j) "public entity" means a central bank or monetary authority of a Contracting Party, or of a monetary union of which it is a member, or of any financial institution owned or controlled by a Contracting Party;

(k) "returns" means all amounts yielded by an investment and in particular, though not exclusively, includes profits, interest, capital gains, dividends, royalties, fees or other current income irrespective of the form in which returns are paid;

(l) "state enterprise" means an enterprise that is governmentally-owned or controlled through ownership interests by a government; and

(m) "territory" means:

- in respect of Canada, the territory of Canada, as well as those maritime areas, including the seabed and subsoil adjacent to the outer limit of the territorial sea, over which Canada exercises, in accordance with international law, sovereign rights for the purpose of exploration and exploitation of natural resources of such areas,

- in respect of Romania, the territory of Romania, including the territorial sea and the economic exclusive zone over which Romania exercises, in accordance with internal and international law, sovereignty, sovereign rights and jurisdiction.

Article II. Establishment, Acquisition and Protection of Investment

1. Each Contracting Party shall encourage the creation of favourable conditions for investors of the other Contracting Party to make investments in its territory.

2.(a) Each Contracting Party shall accord investments or returns of investors of the other Contracting Party treatment in accordance with the customary international law minimum standard of treatment of aliens, including fair and equitable treatment and full protection and security.

(b) The concepts of "fair and equitable treatment" and "full protection and security" in subparagraph (a) do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens.

(c) A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this paragraph.

3. Each Contracting Party shall permit establishment of a new business enterprise or acquisition of an existing business enterprise or a share of such enterprise by investors or prospective investors of the other Contracting Party on a basis no less favourable than that which, in like circumstances, it permits such acquisition or establishment by:

(a) Its own domestic investors or prospective investors; or

(b) Investors or prospective investors of any third state.

4.(a) Decisions by either Contracting Party, pursuant to measures not inconsistent with this Agreement, as to whether or not to permit an acquisition shall not be subject to the provisions of Article XIII (Settlement of Disputes between an Investor and the Host Contracting Party) or XV (Disputes between the Contracting Parties) of this Agreement.

(b) Decisions by either Contracting Party not to permit establishment of a new business enterprise or acquisition of an existing business enterprise or a share of such enterprise by investors or prospective investors in accordance with its laws and regulations shall not be subject to the provisions of Article XIII (Settlement of Disputes between an Investor and the Host Contracting Party) of this Agreement.

5. The Contracting Parties recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. Accordingly, a Contracting Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such measures as an encouragement for the establishment, acquisition, expansion or retention in its territory of an investment of an investor. If 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 avoiding any such encouragement.

Article III. Most-favoured-nation (MFN) Treatment and National Treatment after Establishment

1. Each Contracting Party shall grant to investments, or returns of investors of the other Contracting Party, treatment no less favourable than that which, in like circumstances, it grants to investments or returns of investors of any third state.

2. Each Contracting Party shall grant investors of the other Contracting Party, as regards their management, use, enjoyment or disposal of their investments or returns, treatment no less favourable than that which, in like circumstances, it grants to investors of any third state.

3. Each Contracting Party shall grant to investments or returns of investors of the other Contracting Party treatment no less favourable than that which, in like circumstances, it grants to investments or returns of its own investors with respect to the expansion, management, conduct, operation and sale or disposition of investments.

Article IV. Exceptions

1. Paragraph 3 of Article II (Establishment, Acquisition and Protection of Investment), Article III (Most-Favoured-Nation (MFN) Treatment and National Treatment after Establishment), and paragraphs 1 and 2 of Article V (Other Measures) do not apply to:

(a)(i) Any existing non-conforming measures maintained within the territory of a Contracting Party. For further certainty, it is acknowledged that natural persons who do not have Romanian citizenship, as well as legal persons who do not have Romanian nationality and a registered office in Romania, shall be able to acquire land in Romania through acts inter vivos, subject to the fulfillment of the conditions provided by the Constitution and the internal Romanian legislation in force; and

(ii) Any measure maintained or adopted after the date of entry into force of this Agreement that, at the time of sale or other disposition of a government's equity interests in, or the assets of, an existing state enterprise or an existing governmental entity, prohibits or imposes limitations on the ownership of equity interests or assets or imposes nationality requirements relating to senior management or members of the board of directors;

(b) The continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a);

(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 those obligations;

(d) The right of each Contracting Party to make or maintain exceptions within the sectors or matters listed in Annex A of this Agreement.Annex A of this Agreement.

2. The National Treatment and Most-Favoured-Nation Treatment provisions of this Agreement do 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.

3. 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.

4. Subparagraph 3(b) of Article II (Establishment, Acquisition and Protection of Investment) and paragraphs 1 and 2 of Article III (Most-Favoured-Nation (MFN) Treatment and National Treatment after Establishment) do not apply to treatment by a Contracting Party pursuant to any existing or future bilateral or multilateral agreement relating to:

(a) Aviation;

(b) Fisheries;

(c) Maritime matters, including salvage; or

(d) Financial services.

Article V. Other Measures

1.(a) A Contracting Party may not require that an enterprise of that Contracting Party, that is an investment under this Agreement, appoint to senior management positions individuals of any particular nationality.

(b) A Contracting Party may require, in accordance with its laws and regulations, that a majority of the board of directors, or any committee thereof, of an enterprise that is an investment under this Agreement be of a particular nationality, or resident in the territory of the Contracting Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.

2. Neither Contracting Party may impose any of the following requirements in connection with permitting the establishment or acquisition of an investment or enforce any of the following requirements in connection with the subsequent regulation of that investment:

(a) To export a given level or percentage of goods;

(b) To achieve a given level or percentage of domestic content;

(c) To purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from persons in its territory;

(d) To relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment; or

(e) To transfer technology, a production process or other proprietary knowledge to a person in its territory unaffiliated with the transferor, except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority, either to remedy an alleged violation of competition laws or acting in a manner not inconsistent with other provisions of this Agreement.

3. The provisions of paragraph 2 shall not be interpreted to prohibit Romania from adopting or maintaining performance requirements necessary to meet Romania's obligations as a member of the European Union pursuant to measures that are adopted or maintained by the European Union with respect to the production, processing and trade of agricultural and processed agricultural products.

4. The prohibition on performance requirements set forth in paragraph 2 does not extend to conditions for the receipt or continued receipt of an advantage, such as any advantage resulting from the establishment of a marketing organization for agricultural products and its market stabilizing effects.

5. Subject to its laws, regulations and policies relating to the entry of aliens, each Contracting Party shall grant temporary entry to citizens of the other Contracting Party employed by an enterprise who seek to render services to that enterprise or a subsidiary or affiliate thereof, in a capacity that is managerial or executive.

Article VI. Miscellaneous Exceptions

1.(a) In respect of intellectual property rights, a Contracting Party may derogate from Article III (Most-Favoured-Nation (MFN) Treatment and National Treatment after Establishment) in a manner that is consistent with the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at Marrakesh on 15 April 1994.

(b) The provisions of Article VIII (Expropriation) do not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations.

2. The provisions of Articles II (Establishment, Acquisition and Protection of Investment) and III (Most-Favoured-Nation (MFN) Treatment and National Treatment after Establishment), and paragraphs 1, 2 and 5 of Article V (Other Measures) of this Agreement do not apply to:

(a) Procurement by a government or state enterprise;

(b) Subsidies or grants provided by a government or a state enterprise, including government-supported loans, guarantees and insurance;

(c) Any measure denying investors of the other Contracting Party and their investment any rights or preferences provided to the aboriginal peoples of Canada; or

(d) Any current or future foreign aid programme to promote economic development, whether under a bilateral agreement, or pursuant to a multilateral arrangement or agreement, such as the OECD Arrangement on Officially Supported Export Credits.

3. Investments in cultural industries are exempt form the provisions of this Agreement. "Cultural industries" means natural persons or enterprises engaged in any of the following activities:

(a) The publication, distribution, or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the sole activity of printing or typesetting any of the foregoing;

(b) The production, distribution, or sale or exhibition of film or video recordings;

(c) The production, distribution, sale or exhibition of audio or video music recordings;

(d) The publication, distribution, sale or exhibition of music in print or machine readable form; or

(e) Radiocommunications in which the transmissions are intended for direct reception by the general public, and all radio, television or cable broadcasting undertakings and all satellite programming and broadcast network services.

Article VII. Compensation for Losses

Investors of one Contracting Party who suffer losses because their investments or returns in the territory of the other Contracting Party are affected by an armed conflict, a national emergency or a natural disaster in that territory, shall be accorded by such latter Contracting Party, in respect of restitution, indemnification, compensation or other settlement, treatment no less favourable than that which it accords to its own investors or to investors of any third state.

Article VIII. Expropriation

1. Investments or returns of investors of either Contracting Party shall not be nationalized, expropriated or subjected to measures having an effect equivalent to nationalization or expropriation (hereinafter referred to as "expropriation") in the territory of the other Contracting Party, except for a public purpose, under due process of law, in a non-discriminatory manner and against prompt, adequate and effective compensation. Such compensation shall be based on the genuine value of the investment or returns expropriated immediately before the expropriation or at the time the proposed expropriation became public knowledge, whichever is the earlier, shall be payable from the date of expropriation at a normal commercial rate of interest, shall be paid without delay and shall be effectively realizable and freely transferable.

2. The investor affected shall have a right, under the law of the Contracting Party making the expropriation, to prompt review, by a judicial or other independent authority of that Contracting Party, of its case and of the valuation of its investment or returns in accordance with the principles set out in this Article.

Article IX. Transfer of Funds

1. Each Contracting Party shall guarantee to an investor of the other Contracting Party the unrestricted transfer of investments and returns. Without limiting the generality of the foregoing, each Contracting Party shall also guarantee to the investor the unrestricted transfer of:

(a) Funds in repayment of loans related to an investment;

(b) The proceeds of the total or partial liquidation of any investment;

(c) Wages and other remuneration accruing to a citizen of the other Contracting Party who was permitted to work in connection with an investment in the territory of the other Contracting Party; and

(d) Any compensation owed to an investor by virtue of Articles VII (Compensation for Losses) or VIII (Expropriation) of this Agreement.

2. Transfers shall be effected without delay in the convertible currency in which the capital was originally invested or in any other convertible currency agreed by the investor and the Contracting Party concerned. Unless otherwise agreed by the investor, transfers shall be made at the rate of exchange applicable on the date of transfer.

3. Notwithstanding paragraphs 1 and 2, a Contracting Party may prevent a transfer through the equitable, non-discriminatory and good faith application of its laws relating to:

(a) Bankruptcy, insolvency or the protection of the rights of creditors;

(b) Issuing, trading or dealing in securities;

(c) Criminal or penal offences;

(d) Reports of transfers of currency or other monetary instruments; or

(e) Ensuring the satisfaction of judgments in adjudicatory proceedings.

4. Neither Contracting Party may require its investors to transfer, or penalize its investors that fail to transfer, the returns attributable to investments in the territory of the other Contracting Party.

5. Paragraph 4 shall not be construed to prevent a Contracting Party from imposing any measure through the equitable, non-discriminatory and good faith application of its laws relating to the matters set out in subparagraphs 3(a) through 3(e).

6. Notwithstanding paragraph 1, a Contracting Party may restrict transfers of returns in kind in circumstances where it could otherwise restrict such transfers under the Marrakesh Agreement Establishing the World Trade Organization (hereinafter referred to as the "WTO Agreement") and as set out in paragraph 3.

Article X. Subrogation

1. If a Contracting Party or any agency thereof makes a payment to any of its investors under a guarantee or a contract of insurance it has entered into in respect of an investment, the other Contracting Party shall recognize the validity of the subrogation in favour of such Contracting Party or agency thereof to any right or title held by the investor.

2. A Contracting Party or any agency thereof, which is subrogated to the rights of an investor in accordance with paragraph 1 of this Article, shall be entitled in all circumstances to the same rights as those of the investor in respect of the investment concerned and its related returns. Such rights may be exercised by the Contracting Party or any agency thereof or by the investor if the Contracting Party or any agency thereof so authorizes.

Article XI. Investment In Financial Services

1. Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining reasonable measures for prudential reasons, such as:

(a) The protection of investors, depositors, financial market participants, policy-holders, policy-claimants, or persons to whom a fiduciary duty is owed by a financial institution;

(b) The maintenance of the safety, soundness, integrity or financial responsibility of financial institutions; and

(c) Ensuring the integrity and stability of a Contracting Party's financial system.

2. Notwithstanding paragraphs 1, 2 and 4 of Article IX (Transfer of Funds) and without limiting the applicability of paragraph 3 of Article IX (Transfer of Funds), a Contracting Party may prevent or limit transfers by a financial institution to, or for the benefit of, an affiliate of or person related to such institution or provider, through the equitable, non-discriminatory and good faith application of measures relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions.

3.(a) Where an investor submits a claim to arbitration under Article XIII (Settlement of Disputes between an Investor and the Host Contracting Party), and the disputing Contracting Party invokes paragraphs 1 or 2 above, the tribunal established pursuant to Article XIII (Settlement of Disputes between an Investor and the Host Contracting Party) shall, at the request of that Contracting Party, seek a report in writing from the Contracting Parties on the issue of whether and to what extent the said paragraphs are a valid defence to the claim of the investor. The tribunal may not proceed pending receipt of a report under this paragraph.

(b) Pursuant to a request received in accordance with subparagraph 3(a), the Contracting Parties shall proceed in accordance with Article XV (Disputes between the Contracting Parties) to prepare a written report, either on the basis of agreement following consultations, or by means of an arbitral panel. The consultations shall be between the financial services authorities of the Contracting Parties. The report shall be transmitted to the tribunal, and shall be binding on the tribunal.

(c) Where, within 70 days of the referral by the tribunal, no request for the establishment of an arbitral panel pursuant to subparagraph 3(b) has been made and no report has been received by the tribunal, the tribunal may proceed to decide the matter.

4. Panels for disputes on prudential issues and other financial matters shall have the necessary expertise relevant to the specific financial service in dispute.

5. Subparagraph 3(b) of Article II (Establishment, Acquisition and Protection of Investment) does not apply in respect of financial services.

Article XII. Taxation Measures

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 the Contracting Parties under any tax convention. In the event of any inconsistency between the provisions of this Agreement and any such convention, the provisions of that convention shall apply to the extent of the inconsistency.

3. Subject to paragraph 2, a claim by an investor that a tax measure of a Contracting Party is in breach of an agreement between the central government authorities of a Contracting Party and the investor concerning an investment shall be considered a claim for breach of this Agreement unless the taxation authorities of the Contracting Parties, no later than six months after being notified of the claim by the investor, jointly determine that the measure does not contravene such agreement.

4. Article VIII (Expropriation) may be applied to a taxation measure unless the taxation authorities of the Contracting Parties, no later than six months after being notified by an investor that he disputes a taxation measure, jointly determine that the measure is not an expropriation.Article VIII (Expropriation) may be applied to a taxation measure unless the taxation authorities of the Contracting Parties, no later than six months after being notified by an investor that he disputes a taxation measure, jointly determine that the measure is not an expropriation.

5. If the taxation authorities of the Contracting Parties fail to reach the joint determinations specified in paragraphs 3 and 4 within six months after being notified, the investor may submit its claim for resolution under Article XIII (Settlement of Disputes between an Investor and the Host Contracting Party).

Article XIII. Settlement of Disputes between an Investor and the Host Contracting Party

1. Any dispute between one Contracting Party and an investor of the other Contracting Party, relating to a claim by the investor that a measure taken or not taken by the former Contracting Party is in breach of this Agreement, and that the investor has incurred loss or damage by reason of, or arising out of, that breach, shall, to the extent possible, be settled amicably between them.

2. If a dispute has not been settled amicably within a period of six months from the date on which it was initiated, it may be submitted by the investor to arbitration in accordance with paragraph 4. For the purposes of this paragraph a dispute is considered to be initiated when the investor of one Contracting Party has delivered notice in writing to the other Contracting Party alleging that a measure taken or not taken by the latter Contracting Party is in breach of this Agreement, and that the investor has incurred loss or damage by reason of, or arising out of, that breach. It is agreed, subject to the provisions of this Article, that the Contracting Parties encourage investors to make use of domestic courts and tribunals for the resolution of disputes.

3. An investor may submit a dispute as referred to in paragraph 1 to arbitration in accordance with paragraph 4 only if:paragraph 1 to arbitration in accordance with paragraph 4 only if:

(a) The investor has consented in writing thereto;

(b) The investor has waived its right to initiate or continue any other proceedings in relation to the measure that is alleged to be in breach of this Agreement before the courts or tribunals of the Contracting Party concerned or in a dispute settlement procedure of any kind;

(c) If the matter involves taxation, the conditions specified in paragraph 5 of Article XII (Taxation Measures) have been fulfilled; andparagraph 5 of Article XII (Taxation Measures) have been fulfilled; and

(d) 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.

4. The dispute may, at the election of the investor concerned, be submitted to arbitration under:

(a) The International Centre for the Settlement of Investment Disputes (ICSID), established pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington on 18 March 1965 (hereinafter referred to as the "ICSID Convention"), provided that both the disputing Contracting Party and the Contracting Party of the investor are parties to the ICSID Convention; or

(b) The Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes (hereinafter referred to as the "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 ICSID Convention; or

(c) The Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).