Article 12.8. Environmental Measures
1. The Parties recognize that it is inappropriate to promote investment by weakening or reducing the protections afforded by their domestic environmental laws. Accordingly, each Party shall endeavor to ensure that it shall not waive or derogate from, or offer to waive or derogate from, such legislation in a manner that weakens or reduces the protection afforded by that legislation, as a means of encouraging the establishment, acquisition, expansion or retention of an investment in its territory.
2. Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investments in its territory are made taking into account environmental concerns.
Article 12.9. Treatment In the Event of a Dispute
1. Without prejudice to Article 12.7.5(a), each Party shall accord investors of the other Party and covered investments non-discriminatory treatment with respect to any measures it adopts or maintains with respect to losses suffered by investments in its territory as a result of armed conflict or civil strife.
2. Paragraph 1 shall not apply to existing measures relating to grants or donations that would be inconsistent with the provisions of Article 12.2, with the exception of Article 12.7.5(a).
Article 12.10. Expropriation and Compensation (7)
1. Neither Party shall nationalize or expropriate a covered investment, either directly or indirectly, through measures tantamount to expropriation or nationalization ("expropriation"), unless it is:
(a) for reasons of public utility (8), in the case of Panama; and
(b) for reasons of public necessity or national security, in the case of Peru,
in accordance with due process, in a non-discriminatory manner and through the payment of prompt, adequate and effective compensation.
2. The compensation shall be paid without delay and shall be fully liquidable and freely transferable. Such compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place.
The expropriation date will not reflect any change in value because the intention to expropriate was known in advance of the expropriation date.
3. If the fair market value is denominated in a freely usable currency, the compensation referred to in paragraph 1 shall not be less than the fair market value on the date of expropriation, plus interest at a commercially reasonable rate for that currency, accrued from the date of expropriation to the date of payment.
4. If the fair market value is denominated in a currency that is not freely usable, the compensation referred to in paragraph 1 - converted into the currency of payment, at the market rate of exchange prevailing on the date of payment - shall not be less than:
(a) the fair market value at the date of expropriation, converted into a freely usable currency at the market exchange rate prevailing on that date, plus;
(b) interest at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation to the date of payment.
5. The affected investor shall be entitled, under the national law of the Party executing the expropriation, to a review of his case by a judicial or other independent authority of that Party, and to the valuation of his investment in accordance with the principles set forth in this Article.
6. The provisions of this Article shall not apply to the issuance of compulsory licenses granted in connection with 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 Chapter 9 (Intellectual Property).
Article 12.11. Transfers
1. Each Party shall permit all transfers related to a covered investment to be made freely and without delay into and within its territory. Such transfers include:
(a) capital contributions;
(b) earnings, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other charges, returns in kind and other amounts derived from the investment;
(c) proceeds from the sale or total or partial liquidation of the covered investment;
(d) payments made pursuant to a contract entered into by the investor, or the covered investment, including a loan agreement;
(e) payments made under paragraph 1 of Articles 12.9 and 12.10; and
(f) payments arising from the application of Section B.
2. Each Party shall permit transfers related to a covered investment to be made in freely usable currency at the market rate of exchange prevailing on the date of the transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may prevent or delay a transfer in cash or in kind through the equitable, non-discriminatory and good faith application of its laws relating to:
(a) bankruptcy, insolvency or protection of creditors' rights (9) ;
(b) issuance, trading or operations of securities, futures, options or derivatives;
(c) criminal offenses;
(d) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities; and
(e) guarantee compliance with awards or judgments issued in judicial or administrative proceedings.
Article 12.12. Denial of Benefits
A Party may deny the benefits of this Agreement to:
(a) an investor of the other Party that is an enterprise of that other Party and the investments of such investor if a person of a non-Party owns or controls the enterprise and the enterprise does not engage in substantial business activities in the territory of the other Party; or
(b) an investor of the other Party that is an enterprise of that other Party and to the investments of such investor if the enterprise does not carry on substantial business activities in the territory of any Party, other than the denying Party, and a person of the denying Party owns or controls the enterprise.
Article 12.13. Special Formalities and Information Requirements
1. Nothing in Article 12.2 shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with a covered investment, such as a requirement that investors be residents of the Party or that covered investments be constituted pursuant to the legislation or regulation of the Party, provided that such formalities do not significantly impair the protection afforded by a Party to investors of the other Party and to investments covered under this Agreement.
2. Notwithstanding Articles 12.2 and 12.3, a Party may require a n investor of the other Party or its covered investment to provide information concerning that investment solely for informational or statistical purposes. The Party shall protect information that is confidential from any disclosure that could adversely affect the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Party from obtaining or disclosing information relating to the equitable and good faith application of its domestic law.
Article 12.14. Subrogation
1. If a Party or a designated agency of the Party makes a payment to any of its investors under a guarantee, insurance contract or any other form of compensation provided in respect of an investment of an investor of that Party, the other Party shall recognize the subrogation or transfer of any right or claim of such investment. The subrogated or transferred right or claim shall not be greater than the original right or claim of the investor.
2. Where a Party or a designated agency of the Party has made a payment to an investor of that Party and has assumed the rights and claims of the investor, that investor may not, unless it has been authorized to act on behalf of the Party or the designated agency of the Party that has made the payment, assert such rights and claims against the other Party.
Section B. Investor-State Dispute Settlement
Article 12.15. Consultation and Negotiation
1. In the event of an investment dispute, the disputing parties shall first seek to resolve the dispute through consultations and negotiation, which may include the use of non-binding third-party procedures. The consultation and negotiation procedure shall be initiated by the request sent to the address designated in Annex 12.15. Such a request shall be sent to the respondent prior to the notice of intent referred to in Article 12.16 and shall include the information set out in subparagraphs 12.16.2(a), (b) and (c).
2. Consultations shall be held for a minimum period of six (6) months and may include face-to-face meetings in the respondent's capital city.
Article 12.16. Submission of a Claim to Arbitration
1. After the minimum period referred to in Article 12.15.2 has elapsed, if a disputing party considers that an investment dispute cannot be resolved through consultation and negotiation:
(a) the claimant, at its own expense, may submit to arbitration a claim alleging:
(i) that the Respondent has breached an obligation u n d e r Section A, other than an obligation under Article 12.8; and
(ii) that the claimant has suffered loss or damage by reason of or as a result of such breach.
(b) the claimant, on behalf of an enterprise of the respondent that is a legal person owned or controlled directly or indirectly by the claimant, may, in accordance with this Section, submit to arbitration a claim alleging:
(i) that the Respondent has breached an obligation u n d e r Section A, other than an obligation under Article 12.8; and
(ii) that the company has suffered loss or damage by reason of, or as a result of, such violation.
2. At least ninety (90) days before a claim is submitted to arbitration pursuant to this Section, the claimant shall deliver to the respondent a written notice of its intent to submit the claim to arbitration ("notice of intent"). The notice shall specify:
(a) the name and address of the claimant and, if the claim is submitted on behalf of a company, the name, address and place of incorporation of the company;
(b) for each claim, the provision of Section A alleged to have been violated and any other applicable provision;
(c) the legal and factual basis of each claim, including the measures at issue; and
(d) the relief sought and the approximate amount of damages claimed.
3. The claimant must also submit, together with its notice of intent, evidence establishing that it is an investor of the other Party.
4. Provided that at least six (6) months have elapsed since the events giving rise to the claim took place and provided that the claimant has
If the conditions set out in Article 12.18 are fulfilled, the claimant may submit the claim referred to in paragraph 1:
(a) in accordance with the ICSID Convention and the ICSID Rules of Procedure for Arbitral Proceedings, provided that both the respondent and the Party of the claimant are parties to the ICSID Convention;
(b) in accordance with the ICSID Additional Facility Rules, provided that either the respondent or the Party of the claimant is a party to the ICSID Convention;
(c) in accordance with the UNCITRAL Arbitration Rules; or
(d) if the disputing parties so agree, before an ad hoc arbitration institution, or before any other arbitration institution or under any other arbitration rules.
5. A claim shall be deemed to be submitted to arbitration under this Section when the claimant's notice or request for arbitration ("notice of arbitration"):
(a) referred to in Article 36(1) of the ICSID Convention, is received by the Secretary-General;
(b) referred to in Article 2 of Annex C of the ICSID Additional Facility Rules, is received by the Secretary-General;
(c) referred to in Article 3 of the UNCITRAL Arbitration Rules, together with the statement of claim referred to in Article 18 of the UNCITRAL Arbitration Rules, is received by the respondent; or
(d) referred to any other arbitration institution or under any arbitration rules selected under subparagraph 4(d), is received by the respondent.
Where, subsequent to the submission of a claim to arbitration, an additional claim is submitted under the same arbitration procedure, it shall be deemed submitted to arbitration under this Section on the date of its receipt under the applicable arbitration rules and the time limitation set forth in Article 12.18 shall apply.
6. The arbitration rules applicable pursuant to paragraph 4, and in effect on the date of the claim or claims submitted to arbitration under this Section, shall govern the arbitration except to the extent modified or supplemented by this Agreement.
7. Liability between the disputing parties for the bearing of expenses, including, where appropriate, the award of costs pursuant to Article 12.21, arising out of their participation in the arbitration shall be established:
(a) by the arbitration institution before which the claim has been submitted to arbitration, in accordance with its rules of procedure; or
(b) according to the rules of procedure agreed upon by the disputing parties, when applicable.
8. The claimant shall deliver together with the notice of arbitration referred to in paragraph 5:
(a) the name of the arbitrator appointed by the claimant; or
(b) the written consent of the claimant to the appointment of such arbitrator by the Secretary General.
Article 12.17. Consent of Each Party to Arbitration
1. Each Party consents to submit a claim to arbitration under this Section in accordance with this Agreement.
2. The consent referred to in paragraph 1 and the submission of the claim to arbitration under this Section shall comply with the requirements set forth in:
(a) Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the ICSID Additional Facility Rules, which require the written consent of the parties to the dispute;
(b) Article II of the New York Convention, which requires an "agreement in writing"; and
(c) Article I of the Inter-American Convention, which requires an "agreement".
Article 12.18. Conditions and Limitations on Consent of Each Party
1. No claim may be submitted to arbitration under this Section if more than three (3) years have elapsed from the date on which the claimant knew or should have known of the alleged breach under Article 12.16.1, and knowledge that the claimant, for claims brought under Article 12.16.1(a), or the enterprise, for claims brought under Article 12.16.1(b), suffered loss or damage.
2. No claim may be submitted to arbitration under this Section unless:
(a) the claimant consents in writing to arbitration in accordance with the procedures provided for in this Agreement; and
(b) the notice of arbitration referred to in Article 12.16.5 is accompanied:
(i) for claims submitted to arbitration under Article 12.16.1 (a), of the claimant's written waiver; and, where the claim is made for loss or damage to its interest in an enterprise of the respondent Party that is a juridical person that the investor owns or controls directly or indirectly, at the time notice is given, of the claimant's written waiver and the enterprise's written waiver; and
(ii) for claims submitted to arbitration under Article12.16.1 (b), of the written waivers of the claimant and the company, of any right to initiate before any judicial or administrative tribunal under the law of any Party, or other dispute settlement procedures, any action with respect to any measure alleged to constitute a breach referred to in Article 12.16.
3. Notwithstanding subparagraph 2(b), the claimant, for claims brought under Article 12.16.1(a), and the claimant or the enterprise, for claims brought under Article 12.16.1(b), may initiate or continue an interim measure of protection, not involving the payment of monetary damages, before a judicial or administrative tribunal of the respondent, provided that such measure is brought for the sole purpose of preserving the rights and interests of the claimant or the enterprise while the arbitration is pending (10).
4. The waiver of an enterprise set forth in subparagraph 2(b)(i) or 2(b)(ii) shall not be required only when it is alleged that the defendant deprived the plaintiff of control of the enterprise.
5. No claim may be submitted to arbitration under this Section if the claimant (in the case of claims submitted under Article 12.16.1(a)) or the claimant or the enterprise (in the case of claims submitted under Article 12.16.1(b)) has previously submitted the same alleged violation to an administrative or judicial tribunal of the respondent, or to any other binding dispute resolution procedure.
6. For greater certainty, if the claimant elects to submit a claim described under this Section to an administrative or judicial tribunal of the respondent or to any other binding dispute resolution mechanism, that election shall be final and the claimant may not submit the same claim under this Section.
7. Failure to comply with any of the conditions precedent described in paragraphs 1 through 6 shall nullify the consent given by the Parties in Article 12.17.
Article 12.19. Procedure Regarding Prudential Measures
1. Where an investor submits a claim to arbitration under this Section and the respondent invokes as a defense Article 12.11.3, or Article 21.5 (Measures to Safeguard the Balance of Payments), the tribunal established under Article 12.20 shall, at the request of the respondent, request a written report from the Parties, or from each Party, on the issue of whether and to what extent the provisions indicated are a valid defense to the investor's claim. The tribunal may not proceed until it receives the report or reports pursuant to this paragraph, except as provided in paragraph 2.
2. When within ninety (90) days of the request, the court has not received the report(s), the court may proceed to resolve the matter.
Article 12.20. Selection of Arbitrators
1. Unless otherwise agreed by the disputing parties, the tribunal shall be composed of three (3) arbitrators, one (1) arbitrator appointed by each of the disputing parties and the third, who shall be the presiding arbitrator, shall be appointed by agreement of the disputing parties.
2. The Secretary General shall serve as appointing authority for arbitrators in arbitration proceedings pursuant to this Section.
3. The arbitrators shall:
(a) have experience or specialized knowledge in public international law, international investment rules, or in the resolution of disputes arising from international investment agreements;
(b) not be dependent on any of the Parties or the Claimant, nor be bound by or receive instructions from any of them.
4. Where a tribunal other than the tribunal established under Article 12.26 is not constituted within ninety (90) days from the date on which the claim is submitted to arbitration pursuant to this Section, the Secretary-General shall, at the request of either disputing party, appoint, after consultation with the disputing parties, the arbitrator or arbitrators not yet appointed. Unless otherwise agreed by the Parties, the presiding arbitrator or arbitrators shall not be a national of either Party.
5. For the purposes of Article 39 of the ICSID Convention and Article 7 of Part C of the ICSID Additional Facility Rules, and without prejudice to objecting to an arbitrator on grounds other than nationality:
(a) the respondent accepts the appointment of each of the members of the tribunal established in accordance with the ICSID Convention or the ICSID Additional Facility Rules;
(b) the claimant referred to in Article 12.16.1(a) may submit a claim to arbitration under this Section, or continue a claim under the ICSID Convention or the ICSID Additional Facility Rules, only on condition that the claimant consents in writing to the appointment of each member of the tribunal; and
(c) the claimant referred to in Article 12.16.1(b) may submit a claim to arbitration under this Section, or pursue a claim under the ICSID Convention or the ICSID Additional Facility Rules, only on condition that the claimant and the enterprise consent in writing to the appointment of each of the members of the tribunal.
Article 12.21. Conduct of the Arbitration
1. The disputing parties may agree on the legal place where any arbitration is to be held in accordance with the applicable arbitral rules pursuant to Article 12.16.4. In the absence of agreement between the disputing parties, the tribunal shall determine such place in accordance with the applicable arbitral rules, provided that the place is in the territory of a State that is a party to the New York Convention.
2. The tribunal shall have the authority to accept and consider amicus curiae written submissions from a person or entity that is a non-disputing party. Any non-disputing party that wishes to make written submissions to a tribunal (the applicant) may apply to the tribunal for permission in accordance with Annex 12.21.
3. Without prejudice to the tribunal's power to hear other objections as preliminary questions, such as an objection that the dispute is not within the tribunal's jurisdiction, a tribunal shall hear and decide as a preliminary question any objection by the respondent that, as a matter of law, the claim submitted is not a claim upon which an award in favor of the claimant may be made under Article 12.27.
(a) Such objection shall be submitted to the tribunal as soon as possible after the constitution of the tribunal, and in no event later than the date the tribunal fixes for the respondent to file its statement of defense (or in the case of an amendment to the notice of arbitration referred to in Article 12.16.5, the date the tribunal fixes for the respondent to file its response to the amendment).
(b) Upon receipt of an objection under this paragraph, the court shall stay any action on the merits of the dispute,
establish a timetable for the consideration of the objection that shall be consistent with any timetable that has been established for the consideration of any other preliminary matter and issue a decision or award on the objection, setting forth the grounds therefor.
(c) In deciding an objection under this paragraph, the tribunal shall take as true the factual allegations submitted by the claimant in support of any claim contained in the notice of arbitration (or any amendment thereto) and, in disputes brought under the UNCITRAL Arbitration Rules, the statement of claim referred to in Article 18 of the UNCITRAL Arbitration Rules. The tribunal may also consider any other relevant facts not in dispute.
(d) The respondent does not waive any objection with respect to jurisdiction or any substantive argument, merely because it has or has not raised an objection under this paragraph, or avails itself of the expedited procedure set forth in paragraph 4.
4. If the respondent so requests, the tribunal shall, within forty-five (45) days after the date of the constitution of the tribunal, decide, in an expeditious manner, an objection under paragraph 3 and any other objection that the dispute is not within the tribunal's jurisdiction. The tribunal shall suspend any action on the merits of the dispute and shall issue a decision or award on such objection, stating the basis therefor, not later than one hundred and fifty (150) days after the date of the request. However, if a disputing party requests a hearing, the tribunal may take an additional thirty (30) days to issue the decision or award. Regardless of whether a hearing has been requested, the tribunal may, upon a showing of extraordinary cause, delay the issuance of its decision or award for an additional brief period, which may not exceed thirty (30) days.
5. When the tribunal decides a respondent's objection under paragraph 3 or 4, it may, if warranted, award to the prevailing disputing party reasonable costs and attorney's fees incurred in raising or opposing the objection. In determining whether such an award is warranted, the tribunal shall consider whether the claimant's claim or the respondent's objection was frivolous, and shall give the disputing parties a reasonable opportunity to comment.
6. The defendant shall not assert as a defense, counterclaim or right of set-off or for any other reason that the plaintiff has received or will receive indemnity or other compensation for all or any part of the alleged damages pursuant to an insurance or surety agreement.
7. The tribunal may recommend an interim measure of protection to preserve the rights of a disputing party, or for the purpose of ensuring the full exercise of the tribunal's jurisdiction, including an order to preserve evidence in the possession or under the control of a disputing party or to protect the jurisdiction of the court. The court may not order the attachment or prevent the enforcement of a measure alleged to be a violation referred to in Article 12.16.
8. In any arbitration conducted pursuant to this Section, at the request of any disputing party, the tribunal shall, before rendering a decision or award on liability, communicate its proposed decision or award to the disputing parties and to the Party of the claimant. Within sixty (60) days after such proposed decision or award is communicated, the disputing parties may submit written comments to the tribunal concerning any aspect of its proposed decision or award. The tribunal shall consider such comments and render its decision or award not later than forty-five (45) days after the expiration of the sixty (60) day comment period. This paragraph shall not apply to any arbitration in which an appeal is available under paragraph 9.
9. If a separate multilateral treaty enters into force between the Parties establishing an appellate body for the purpose of reviewing awards rendered by tribunals constituted under international trade or investment agreements to hear investment disputes, the Parties shall endeavor to reach an agreement that would cause such an appellate body to review awards rendered pursuant to Article 12.27 in arbitrations commenced after the multilateral treaty enters into force between the Parties.
Article 12.22. Transparency In Arbitration Proceedings
1. Subject to paragraphs 2 and 4, the respondent shall, after receiving the following documents, make them available to the non-disputing party and the public:
(a) the notice of intent referred to in Article 12.16.2;
(b) the notice of arbitration referred to in Article 12.16.5;
(c) the pleadings, statements of claim and explanatory notes submitted to the tribunal by a disputing party and any written communications submitted pursuant to Article 12.21 and Article 12.26;
(d) orders, awards and decisions of the court; and
(e) minutes or transcripts of court hearings, when available.
2. The tribunal shall conduct hearings open to the public and shall determine, in consultation with the disputing parties, the appropriate logistical arrangements. However, any disputing party that intends to use information classified as protected information in a hearing shall so inform the tribunal. The tribunal shall make appropriate arrangements to protect the information from disclosure.
3. Nothing in this Section requires a Respondent to make available protected information or to provide or permit access to information that would withhold in accordance with Article 21.2 (Essential Security) and Article 21.4 (Disclosure of Information).
4. Any protected information that is submitted to the court will be protected from disclosure in accordance with the following procedures:
(a) pursuant to subparagraph (d), neither the disputing parties nor the tribunal shall disclose to the Party of the claimant or to the public any protected information, where the disputing party providing the information clearly designates it as such in accordance with subparagraph (b);
(b) any disputing party claiming that certain information constitutes protected information shall clearly designate it at the time it is submitted to the tribunal;
(c) a disputing party shall, at the same time it submits a document containing information claimed to be protected information, submit a redacted version of the document that does not contain the information. Only the redacted version shall be provided to non-disputing parties and shall be made public in accordance with paragraph 1; and
(d) the tribunal shall decide any objection to the designation of information claimed to be protected information. If the tribunal determines that such information was not properly designated, the disputing party that submitted the information may:
(i) remove all or part of the presentation containing such information; or
(ii) agree to resubmit complete and redacted documents with corrected designations in accordance with the court's determination and subparagraph (c).
In any event, the other disputing party shall, where necessary, resubmit complete and redacted documents, which either omit the information withdrawn pursuant to subparagraph (d)(i) by the disputing party that first submitted the information or redesignate the information in a manner consistent with the designation made pursuant to subparagraph (d)(ii) of the disputing party that first submitted the information.
5. Nothing in this Section requires a respondent to deny the public access to information that, under its national law, must be disclosed.