Article 12.23. Applicable Law
1. Subject to paragraph 2, where a claim is brought under Article 12.16.1(a) or 12.16.1(b), the tribunal shall decide the issues in dispute in accordance with this Agreement and the rules of international law prevailing and, where applicable, with the national law of the Party in whose territory the investment was made.
2. A decision of the Commission declaring the interpretation of a provision of this Agreement under Article 20.1.3(c) (The Free Trade Commission) shall be binding on a tribunal established under this Section and any decision or award rendered by a tribunal shall be consistent with that decision.
Article 12.24. Interpretation of Exhibits
1. Where the respondent raises as a defense that the measure alleged to be in breach is within the scope of Annex I or Annex II, the tribunal shall, at the request of the respondent, request the Commission for an interpretation of the matter. Within sixty (60) days after delivery of the request, the Commission shall submit in writing to the tribunal any decision stating its interpretation under Article 20.1.3(c) (The Free Trade Commission).
2. The decision rendered by the Commission under paragraph 1 shall be binding on the tribunal, and any decision or award rendered by the tribunal shall be consistent with that decision. If the Commission fails to issue such a decision within sixty (60) days, the tribunal shall decide the matter.
Article 12.25. Expert Reports
Without prejudice to the appointment of other types of experts where authorized by the applicable arbitration rules, the tribunal, at the request of a disputing party or, on its own initiative, unless the disputing parties do not agree, may appoint one or more experts to report in writing on any factual issue concerning environmental, health, safety or other scientific matters raised by a disputing party in a proceeding, on such terms and conditions as the disputing parties may agree.
Article 12.26. Consolidation of Proceedings
1. Where two or more separate claims have been submitted to arbitration under Article 12.16.1, and the claims raise in common a question of law or fact and arise out of the same facts or circumstances, any disputing party may seek a consolidation order, pursuant t o t h e agreement of all disputing parties in respect of which the consolidation order is sought or in accordance with the terms of paragraphs 2 through 10.
2. A disputing party seeking a joinder order pursuant to this Article shall deliver a written request to the Secretary-General and to all disputing parties in respect of which the joinder order is sought and shall specify in the request the following:
(a) the name and address of all disputing parties in respect of whom the joinder order is sought;
(b) the nature of the requested consolidation order; and
(c) the basis on which the request is supported.
3. Unless the Secretary-General determines, within thirty (30) days after receipt of a request pursuant to paragraph 2, that the request is manifestly unfounded, a tribunal shall be established under this Article.
4. Unless otherwise agreed by all the disputing parties in respect of which the consolidation order is sought, the tribunal to be established pursuant to this Article shall consist of three (3) arbitrators:
(a) an arbitrator appointed by agreement of the claimants;
(b) an arbitrator appointed by the respondent; and
(c) the presiding arbitrator appointed by the Secretary General, who shall not be a national of either Party.
5. If, within sixty (60) days after receipt by the Secretary-General of the request made pursuant to paragraph 2, the respondent or the claimants fail to appoint an arbitrator pursuant to paragraph 4, the Secretary-General shall, at the request of any disputing party in respect of which the order for consolidation is sought, appoint the arbitrator or arbitrators not yet appointed. If the respondent fails to appoint an arbitrator, the Secretary-General shall appoint a national of the respondent and, if the claimants fail to appoint an arbitrator, the Secretary-General shall appoint a national of a Party of the claimants.
6. Where the tribunal established under this Article has found that two or more claims under Article 12.16.1, raising a common question of law or fact, and arising out of the same facts or circumstances, have been submitted to arbitration, the tribunal may, in the interest of reaching a fair and efficient resolution of the claims and after hearing the disputing parties, by order:
(a) assume jurisdiction, hear and determine jointly all or part of the claims;
(b) assume jurisdiction over, hear and determine one or more claims, the determination of which it believes would contribute to the resolution of the other claims; or
(c) instruct a court established under Article 12.20 to assume jurisdiction over, hear and determine jointly, all or part of the claims, provided that:
(i) that tribunal, at the request of any claimant who was not previously a disputing party before that tribunal, be reinstated with its original members, except that the arbitrator on the claimants' side shall be appointed pursuant to subparagraph 4(a) and paragraph 5; and
(ii) that court decides whether to repeat any previous hearing.
7. Where a tribunal has been established under this Article, a claimant who has submitted a claim to arbitration under Article 12.16.1, and whose name is not mentioned in a request made under paragraph 2, may make a written request to the tribunal to the effect that such claimant be included in any order made under paragraph 6 and shall specify in the request:
(a) the name and address of the plaintiff;
(b) the nature of the order requested; and
(c) the grounds on which the request is based.
The claimant shall deliver a copy of its request to the Secretary General and to the disputing parties listed in the request in accordance with paragraph 2.
8. A tribunal established under this Article shall conduct the proceedings in accordance with the UNCITRAL Arbitration Rules, except as modified by this Section.
9. A tribunal established under Article 12.20 shall not have jurisdiction to decide a claim, or part of a claim, in respect of which a tribunal established or instructed under this Article has assumed jurisdiction.
10. At the request of a disputing party, a tribunal established under this Article may, pending its decision under paragraph 6, order that the proceedings of a tribunal established under Article 12.20 be adjourned, unless the latter tribunal has already adjourned its proceedings.
Article 12.27. Awards
1. When a court makes a final award unfavorable to the defendant, the court may award, separately or in combination, only:
(a) pecuniary damages and interest; and
(b) restitution of the property, in which case the award shall provide that the respondent may pay monetary damages, plus interest in lieu of restitution.
The tribunal may also award costs and attorney's fees in accordance with this Section and the applicable arbitration rules.
2. Subject to paragraph 1, where a claim is submitted to arbitration under Article 12.16.1(b):
(a) the award providing for restitution of the property shall provide that restitution shall be granted to the enterprise;
(b) the award of pecuniary damages and interest shall provide that the sum of money be paid to the company; and
(c) the award shall provide that the award is without prejudice to any right of any person to relief under applicable domestic law.
3. A court is not authorized to order the payment of punitive damages.
4. For greater certainty, a court shall not have jurisdiction to rule on the legality of the measure under domestic law.
Article 12.28. Finality and Enforcement of an Award
1. For greater certainty, an award rendered by a tribunal shall not be binding except upon the disputing parties and then only in respect of the particular case.
2. Subject to paragraph 3 and to the review procedure applicable to an interim award, the disputing party shall comply with and carry out the award without delay.
3. The disputing party may not request enforcement of the final award until:
(a) in the case of a final award rendered under the ICSID Convention:
(i) one hundred and twenty (120) days have elapsed from the date on which the award was rendered and no disputing party has requested revision or annulment of the award; or
(ii) the review or annulment proceedings have been concluded; and
(b) in the case of a final award rendered under the ICSID Additional Facility Rules or the UNCITRAL Arbitration Rules or the rules selected pursuant to Article 12.16.4 (d):
(i) ninety (90) days have elapsed since the date on which the award was rendered and no proceeding to revise, set aside or annul the award has been initiated by any disputing party; or
(ii) a court has dismissed or allowed an application for revision, setting aside or annulment of the award and this decision cannot be appealed.
4. Each Party shall provide for the proper enforcement of an award in its territory.
5. Where the respondent fails to comply with or abide by a final award, upon delivery of a request by the Party of the claimant, a panel shall be established in accordance with Article 18.5 (Establishment of a Panel). The requesting Party may request in such proceedings:
(a) a determination that non-compliance or disregard of the terms of the final award is contrary to the obligations of this Agreement; and
(b) in accordance with the procedures set forth in Article 18.9 (Report of the Panel) a recommendation that the respondent abide by or comply with the final award.
6. A disputing party may seek enforcement of an arbitral award under the ICSID Convention, the New York Convention or the Inter-American Convention, whether or not proceedings under paragraph 5 have been instituted.
7. For the purposes of Article I of the New York Convention and Article I of the Inter-American Convention, a claim submitted to arbitration under this Section shall be deemed to arise out of a commercial relationship or transaction.
Article 12.29. Delivery of Documents
Delivery of the notification and other documents to a Party shall be made at the place designated by it in Annex 12.15.
Section C. Definitions
Article 12.30. Definitions
For the purposes of this Chapter:
ICSID means the International Centre for Settlement of Investment Disputes;
UNCITRAL means the United Nations Commission on International Trade Law;
New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, concluded in New York on June 10, 1958;
Inter-American Convention means the Inter-American Convention on International Commercial Arbitration, concluded in Panama on January 30, 1975;
ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington on March 18, 1965;
Respondent means the Party that is a party to an investment dispute;
claimant means the investor of a Party that is a party to an investment dispute with the other Party;
company means a company as defined in Article 1.5 (Definitions of General Application) and a branch of a company;
enterprise of a Party means an enterprise incorporated or organized under the domestic law of a Party, and a branch office located in the territory of a Party and carrying on substantial business activities in that territory;
protected information means:
(a) confidential business information; or
(b) information that is privileged or otherwise protected from disclosure under the Party's domestic law;
investment means any asset owned or controlled by an investor, directly or indirectly, that has the characteristics of an investment, including characteristics such as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. The forms that an investment may take include:
(a) a company;
(b) shares, capital and other forms of participation in the equity of a company;
(c) debt instruments of a company:
(i) when the company is a subsidiary of the investor; or
(ii) when the original maturity date of the debt instrument is at least three (3) years;
but does not include an obligation of a Party or a State enterprise, regardless of the original maturity date;
(d) a loan to a company:
(i) when the company is a subsidiary of the investor; or
(ii) when the original maturity date of the loan is at least three (3) years;
but does not include a loan to a Party or a State enterprise, regardless of the original maturity date;
(e) futures, options and other derivatives;
(f) turnkey, construction, management, production, concession, revenue sharing and other similar contracts;
(g) intellectual property rights;
(h) licenses, authorizations, permits and similar rights granted in accordance with national legislation (11); and
(i) other tangible or intangible, movable or immovable property rights and rights related to property, such as leases, mortgages, liens and pledges,
but investment does not include:
(j) an order or judgment entered in a judicial or administrative action;
(k) loans granted by one Party to the other Party;
(l) public debt operations and debt of public institutions;
(m) pecuniary claims arising exclusively from:
(i) commercial contracts for the sale of goods or services by a national or company in the territory of a Party to a national or company in the territory of the other Party; or
(ii) the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by the provisions of subparagraph (d); or
(n) any other pecuniary claim, which does not carry the interest rates set forth in subparagraphs (a) through (i),
a modification in the manner in which the assets have been invested or reinvested does not affect their investment status under this Agreement, provided that such modification falls within the definitions of this Article and is made in accordance with the domestic law of the Party into whose territory the investment has been admitted;
covered investment means, with respect to a Party, an investment in its territory of an investor of the other Party existing on the date of entry into force of this Agreement, as well as investments made, acquired or expanded thereafter;
investor of a non-Party means, with respect to a Party, an investor that intends to make, through specific actions (12), that is making or has made an investment in the territory of that Party, that is not an investor of a Party;
investor of a Party means a Party or an enterprise of the State of the Party, or a national or enterprise of the Party, that intends to make, through specific actions (13), is making or has made an investment in the territory of the other Party; provided, however, that a natural person who has dual nationality shall be considered exclusively a national of the State of his or her dominant and effective nationality;
measure includes any law, regulation, procedure, requirement, act or practice;
freely usable currency means "freely usable currency" as determined by the International Monetary Fund under the Articles of Agreement of the International Monetary Fund;
national means a natural person who has the nationality of a Party in accordance with Annex 1.5 (Country-Specific Definitions);
disputing party means the plaintiff or the defendant;
disputing parties means the plaintiff and the defendant;
non-disputing party means a person of a Party, or a person of a non-Party with a significant presence in the territory of a Party, that is not a party to an investment dispute under Section B;
UNCITRAL Arbitration Rules means the Arbitration Rules of the United Nations Commission on International Trade Law, adopted by the General Assembly of the United Nations on December 15, 1976;
ICSID Additional Facility Rules means the ICSID Additional Facility Rules for the Administration of Proceedings by the ICSID Secretariat;
Secretary-General means the Secretary-General of ICSID; and
tribunal means an arbitral tribunal established pursuant to Articles 12.20 ó 12.26.
Annex 12.4. Customary International Law
The Parties confirm their common understanding that customary international law, generally and as specifically referred to in Article 12.4, results from a general and consistent practice of States, followed by them in the sense of a legal obligation. With respect to Article 12.4, the minimum standard of treatment accorded to aliens by customary international law refers to all principles of customary international law that protect the economic rights and interests of aliens.
Annex 12.10. Expropriation
The Parties confirm their common understanding that:
(a) a measure or series of measures of a Party cannot constitute an expropriation unless it interferes with a tangible or intangible property right or with the essential attributes or powers of ownership of an investment;
(b) Article 12.10 addresses two situations. The first is direct expropriation, where an investment is nationalized or otherwise directly expropriated through the formal transfer of title or right of ownership;
(c) the second situation addressed by Article 12.10 is indirect expropriation, where a measure or series of measures by a Party has an effect equivalent to that of a direct expropriation without the formal transfer of title or right of ownership;
(d) the determination of whether a measure or series of measures of a Party, in a specific factual situation, constitutes an indirect expropriation requires a factual, case-by-case inquiry that considers, among other factors:
(i) the economic impact of a Party's measure or series of measures, although the mere fact that a measure or series of measures of a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred;
(ii) the extent to which a Party's measure or series of measures interferes with unambiguous and reasonable expectations of the investment; and
(iii) the nature of a Party's measure or series of measures;
(e) except in exceptional circumstances, such as where a measure or series of measures are disproportionate in light of their objective such that they cannot reasonably be considered to have been adopted and applied in good faith, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment, do not constitute an indirect expropriation (14).
Annex 12.15. Delivery of Documents to a Party under Section B (Investor-State Dispute Settlement)
Notices and other documents in disputes under Section B shall be served by delivery to:
(a) Panama:
Dirección Nacional de Administración de Tratados Comerciales Internacionales y de Defensa Comercial (DINATRADEC) of the Ministry of Commerce and Industries of Panama, or its successor.
Plaza Edison Building, Second Floor, Avenida El Paical,
Panama, Republic of Panama; and
(b) Peru:
Directorate General for International Economic, Competition and Private Investment Affairs
Ministry of Economy and Finance Jirón Lampa # 277 5th Floor Lima 1, Peru,
or their successors.
Annex 12.21. Communications from Non-Disputing Parties
1. An application for leave to file the written submissions of a non-disputing party shall be filed within the time limit set by the tribunal and shall:
(a) be in writing, dated and signed by the applicant, and include the applicant's address and other contact details;
(b) be no longer than five (5) pages;
(c) describe the applicant, including, where relevant, its membership status, as well as its legal status (e.g., corporation, trade association or other non- governmental organization), its general objectives, the nature of its activities, and any parent organization (including any organization that the applicant directly or indirectly controls);
(d) disclose whether the applicant has any affiliation, directly or indirectly, with any disputing party;
(e) identify any government, person or organization that provided financial or other assistance during the preparation of the submission;
(f) specify the nature of the applicant's interest in the arbitration;