(b) activities or services performed for the account or with the guarantee of the Party, or with the use of financial resources of the Party, including its public entities.
Likewise, this Chapter shall not prevent a Party, including its public entities, from carrying out or supplying such activities exclusively in its territory.
Article 14.2. National Treatment
1. Each Party shall accord to an investor of the other Party treatment no less favorable than the treatment it accords to its own investors, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of financial institutions or an investment in financial institutions in its territory.
2. Each Party shall accord to a financial institution of the other Party and to an investment of an investor of the other Party in financial institutions treatment no less favorable than the treatment it accords to its own financial institutions and to investments of its own investors in financial institutions, in like circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of financial institutions and investments.
3. For purposes of the national treatment obligations in Article 14.6.1, a Party shall accord to cross-border financial service suppliers of the other Party treatment no less favorable than that it accords to its own financial service suppliers, in like circumstances, with respect to the supply of the relevant service.
4. Differences in market share, profitability or size do not in themselves establish a breach of obligations under this Article.
Article 14.3. Most-Favored-Nation Treatment
Each Party shall accord to an investor of the other Party, a financial institution of the other Party, an investment of an investor in a financial institution and a cross-border financial service supplier of the other Party treatment no less favorable than the treatment it accords, in like circumstances, to investors, financial institutions, investments of investors in financial institutions and cross-border financial service suppliers of a non-Party.
Article 14.4. Recognition
1. A Party may recognize a prudential measure of a non-Party in the application of a measure covered by this Chapter. Such recognition may be:
(a) granted autonomously;
(b) achieved by harmonization or other means; or
(c) based on a convention or agreement with a non-Party.
2. A Party granting recognition of a prudential measure under paragraph 1 shall provide adequate opportunity for the other Party to demonstrate that circumstances exist in which there is or will be equivalent regulation, supervision and enforcement and, if appropriate, that there are or will be procedures relating to the exchange of information between the Parties.
3. Where a Party grants recognition of prudential measures in accordance with subparagraph 1(c) and the circumstances set out in paragraph 2 exist, the Party shall provide adequate opportunity for the other Party to negotiate accession to the convention or agreement, or to negotiate a comparable convention or agreement.
Article 14.5. Right of Establishment
1. A Party shall permit an investor of the other Party that does not own or control a financial institution in the territory of the Party to establish, without the imposition of numerical restrictions or requirements of specific types of legal form, a financial institution that is permitted to provide a financial service that a similar institution of the Party could provide under the Party's domestic law at the time of establishment. The obligation not to impose a requirement to adopt a specific legal form does not preclude a Party from imposing a condition or requirement in connection with the establishment of a particular type of entity chosen by an investor of the other Party.
2. A Party shall permit an investor of the other Party that owns or controls a financial institution in the territory of the Party to establish such additional financial institutions as may be necessary to enable the supply of the full range of financial services permitted under the Party's domestic law at the time of the establishment of the additional financial institutions. Subject to Article 14.2, a Party may impose a term or condition on the establishment of additional financial institutions and determine the institutional and legal form to be used for the supply of a specified financial service or the conduct of a specified activity.
3. The right of establishment under paragraphs 1 and 2 shall include the acquisition of an existing entity.
4. Subject to Article 14.2, a Party may prohibit a particular financial service or activity. Such a prohibition may not apply to all financial services or to an entire sub- sector of financial services such as banking activities.
5. For purposes of this Article, without prejudice to other forms of prudential regulation, a Party may require that an investor of the other Party be engaged in the business of supplying financial services in the territory of that other Party.
6. For the purposes of this Article, "numerical restrictions" means limitations imposed on the number of financial institutions whether in the form of a numerical quota, a monopoly, an exclusive service provider or the requirements of an economic needs test.
Article 14.6. Cross-Border Trade
1. Each Party shall permit, on terms and conditions that accord national treatment, cross-border financial service suppliers of the other Party to supply the services specified in Annex 14.6.
2. Each Party shall permit a person located in its territory, and its nationals wherever located, to purchase financial services from cross-border financial service suppliers of the other Party located in the territory of the other Party. This does not oblige a Party to allow such suppliers to do business or advertise in its territory. Each Party may define "doing business" and "advertising" for the purposes of this Article provided that such definitions are not inconsistent with the obligations in paragraph 1.
3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require the registration or authorization of cross- border financial service suppliers of the other Party and of financial instruments.
Article 14.7. New Financial Services
1. A Party shall permit a financial institution of the other Party established in its territory to supply a new financial service that the first Party would permit to be supplied, in like circumstances, by its own financial institutions in accordance with its law.
2. A Party may determine the legal and institutional form through which the new financial service may be supplied and may require authorization for the supply of the new financial service. Where a Party permits the new financial service and authorization is required to supply it, the decision shall be made within a reasonable period of time and the authorization may only be refused for prudential reasons.
3. This Article does not preclude a financial institution of a Party from requesting the other Party to authorize the supply of a financial service that is not supplied within the territory of either Party. Such a request shall be subject to the domestic law of the Party to which the request is made and, for greater certainty, shall not be subject to the obligations of this Article.
4. Nothing in this Article prohibits a Party from requesting the issuance of a decree, resolution or regulation by the Executive, regulatory agencies or central bank, to authorize new financial services not specifically authorized in its legislation.
Article 14.8. Treatment of Certain Information
Nothing in this Chapter obligates a Party to disclose or allow access to:
(a) information relating to the financial affairs and accounts of an individual customer of a financial institution or cross-border financial service provider; or
(b) any confidential information the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of a particular company.
Article 14.9. Senior Management and Boards of Directors
1. A Party may not require a financial institution of the other Party to employ persons of a particular nationality for senior executive positions or other key personnel.
2. A Party may not require that more than a minority of the board of directors of a financial institution of the other Party be composed of nationals of the Party, residents of its territory, or a combination of both.
Article 14.10. Nonconforming Measures
1. Articles 14.2, 14.3, 14.5 and 14.9 do not apply to:
(a) any existing non-conforming measure maintained by one of the Parties at the level:
(i) of the national government, as indicated in Section I of its list in Annex III;
(ii) of the sub-national government;
(b) the continuation or prompt renewal of a nonconforming measure referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) provided that such amendment does not diminish the conformity of the measure, as in effect immediately before the amendment, with Articles 14.2, 14.3, 14.5 and 14.9.
2. Article 14.6 does not apply to:
(a) any existing non-conforming measure that is maintained by a Party at the level of the:
(i) national government, as set forth in Section I of its Schedule to Annex III; or
(ii) sub-national government;
(b) the continuation or prompt renewal of any nonconforming measure referred to in subparagraph (a); or
(c) a modification of any non-conforming measure referred to in subparagraph (a) provided that such modification does not diminish the conformity of the measure, as in effect immediately prior to the entry into force of this Agreement, with Article 14.6.
3. Articles 14.2, 14.3, 14.5, 14.6 and 14.9 do not apply to a non-conforming measure that a Party adopts or maintains in accordance with Section II of its Schedule to Annex III.
4. Where a Party has entered a reservation to Article 12.2 (National Treatment),12.3 (Most-Favored-Nation Treatment), 13.3 (National Treatment), or 13.4 (Most- Favored-Nation Treatment) in its Schedule to Annex I or II, the reservation also constitutes a reservation to Article 14.2 or 14.3, insofar as the measure, sector, sub- sector, or activity set out in the reservation is covered by this Chapter.
Article 14.11. Exceptions
1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining measures for prudential reasons (2) including for the protection of investors, depositors, policy holders or persons to whom a financial institution or cross-border financial service supplier owes a fiduciary duty, or to ensure the safety, soundness, integrity and stability of the financial system, as well as the financial liability of individual financial institutions or cross-border financial service suppliers. Where such measures are not in accordance with the provisions of this Agreement, they shall not be used as a means of avoiding the Party's obligations and commitments under this Agreement.
2. Nothing in this Agreement applies to non-discriminatory measures of a general nature taken by any public entity in pursuance of monetary and related credit or exchange rate policies and macroprudential policies.
3. Notwithstanding Article 12.11 (Transfers) and Article 13.12 (Transfers and Payments), a Party may prevent or limit transfers by a financial institution or cross-border financial service supplier to or for the benefit of a person affiliated or related to such institution or supplier through the equitable, non-discriminatory, and good faith application of measures relating to the maintenance of the safety, soundness, integrity, or financial responsibility of financial institutions or cross-border financial service suppliers. This paragraph is without prejudice to any other provision of this Agreement that permits the Party to restrict transfers.
4. A Party may adopt or apply measures necessary to secure compliance with laws or regulations that are not inconsistent with this Chapter, including measures relating to the prevention of deceptive and fraudulent practices or to address the effects of a breach of financial service contracts. A Party shall not apply such measures in a manner that would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on investment in a financial institution or on cross-border trade in financial services.
Article 14.12. Transparency
1. The Parties recognize that transparent regulations and policies governing the activities of financial institutions and financial service suppliers are important to facilitate the access of financial institutions and financial service suppliers and their operations in the market of the other Party. Each Party undertakes to promote regulatory transparency in financial services.
2. Each Party shall ensure that a measure of general application to which this Chapter applies is administered in a reasonable, objective and impartial manner.
3. Each Party shall ensure that its regulatory authorities shall make publicly available the requirements, including any necessary documentation, for completing applications relating to the supply of a financial service.
4. At the request of the applicant, the regulatory authority shall inform the applicant of the status of its application. When such authority requires additional information from the applicant, it shall notify the applicant without undue delay.
5. The regulatory authority of a Party shall make an administrative decision on a complete application by an investor in a financial institution, a cross-border financial service supplier or a financial institution of the other Party relating to the supply of a financial service within one hundred and twenty (120) days, and shall notify the applicant of the decision in a timely manner. An application shall not be considered complete until all relevant hearings have been held and all necessary information has been received, in accordance with the regulatory requirements established for that purpose. When it is not feasible to make a decision within one hundred and twenty (120) days, the regulatory authority shall notify the interested party without undue delay and attempt to make the decision thereafter within a reasonable period of time.
6. Each Party shall maintain or establish appropriate mechanisms to respond to inquiries from interested parties regarding a measure of general application covered by this Chapter.
7. At the request of an applicant whose application has been denied, the regulatory authority that has denied an application shall, to the extent practicable, inform the applicant of the reasons for the denial of the application.
8. In lieu of Article 19.2 (Publication), each Party shall, to the extent practicable:
(a) publish in advance any regulations of general application relating to matters in this Chapter that it proposes to adopt and the purpose of the regulation; and
(b) provide interested persons and the Parties a reasonable opportunity to comment on the proposed regulations.
9. In adopting final regulations, the Party shall, to the extent practicable, consider in writing substantive comments received from interested parties with respect to the proposed regulations (3).
10. To the extent practicable, each Party shall allow a reasonable period of time to elapse between the publication of the final regulations and their entry into force.
11. Each Party shall ensure that standards of general application adopted or maintained by self-regulatory organizations of the Party are published in a timely manner or otherwise made available so that interested persons may become aware of them.
Article 14.13. Self-Regulatory Organizations
Where a Party requires a financial institution or cross-border financial service supplier of the other Party to be a member of, participate in, or have access to a self- regulatory organization in order to provide a financial service in or into its territory, the Party shall ensure that such self-regulatory organization complies with the obligations of Articles 14.2 and 14.3.
Article 14.14. Payment and Clearing Systems
Subject to terms and conditions that accord national treatment, each Party shall grant to a financial institution of the other Party established in its territory access to payment and clearing systems administered by public entities and to official financing and refinancing facilities available in the normal course of business. This Article does not confer access to the Party's lender of last resort facilities.
Article 14.15. Financial Services Committee
1. The Parties establish the Financial Services Committee (hereinafter the Committee). The principal representative of each Party shall be an official of the Party's authority responsible for financial services set out in Annex 14.15.
2. The Committee:
(a) supervise the implementation of this Chapter and its further development;
(b) consider financial services matters referred to it by a Party; and
(c) participate in dispute settlement proceedings in accordance w i t h Article 14.18.
3. The Committee shall meet annually, or as otherwise agreed, to evaluate the operation of this Agreement as it relates to financial services. The Committee shall report to the Commission on the results of each meeting.
Article 14.16. Consultations
1. A Party may request consultations with the other Party with respect to any matter related to this Agreement that affects a financial service. The other Party shall give due consideration to the request. The Parties shall inform the Committee of the results of the consultations.
2. Consultations under this Article shall include officials of the authority specified in Annex 14.15.
3. Nothing in this Article shall be construed to require a regulatory authority participating in consultations under paragraph 1 to disclose information or to act in a manner that would interfere with specific regulatory, supervisory, administrative or enforcement matters.
4. Where a Party requires information for a supervisory purpose concerning a financial institution in the territory of the other Party or a cross-border financial service supplier in the territory of the other Party, the Party may approach the competent regulatory authority in the territory of the other Party to request the information.
5. A Party shall not be required to derogate from its legislation relating to the exchange of information between financial regulators or the requirements of an agreement or arrangement between the Parties' financial authorities.
Article 14.17. Settlement of Disputes
1. Chapter 18 (Dispute Settlement), as amended by this Article, applies to the settlement of disputes arising under this Chapter.
2. Consultations held pursuant to Article 14.16 with respect to a measure or matter constitute consultations pursuant to Article 18.4 (Consultations), unless the Parties agree otherwise. If the matter has not been resolved within forty-five (45) days after the commencement of consultations under Article 14.16, or ninety (90) days after the delivery of the request for consultations under Article 14.16, whichever is earlier, the complaining Party may request in writing the establishment of a panel.
3. The following procedures will replace Article 18.5 (Establishment of a Panel):
(a) the panel will be composed of three members;
(b) each Party shall, within thirty (30) days of receipt of the request for the establishment of the panel, appoint a panelist, who may be a national of that Party, and notify the other Party in writing of such appointment. If a Party fails to designate a panelist within thirty (30) days, the other Party may request that the designating authority designate, at its discretion, the panelist not designated under paragraph 4;
(c) the Parties shall endeavor to agree on the designation of the third panelist who shall chair the panel and, unless the Parties agree otherwise, such panelist shall not be a national of a Party. If the chair of the panel has not been designated within thirty (30) days of the most recent designation under subparagraph (b), any Party may request the designating authority to designate, at its discretion, and subject to paragraph 4, a chair of the panel who shall not be a national of a Party; and
(d) subparagraphs (b) and (c) shall apply, mutatis mutandis, when a panelist or the chair of the panel retires, is removed, or is otherwise unable to serve on the panel. In such a case, a term applicable to the panel proceeding shall be suspended for a period beginning on the date on which a panelist ceases to serve and ending on the date on which his or her replacement is appointed.
4. Each panelist on panels constituted for disputes arising under this Chapter shall have the qualifications required by Article 18.6 (Qualifications of Panelists) with the exception of subparagraph (d) of that Article. In addition, each panelist shall have expertise or experience in financial law or financial services practice, which may include the regulation of financial institutions.
5. In any dispute, if a panel finds that a measure is inconsistent with the obligations of this Agreement and the measure affects:
(a) only to a financial services sector, the complaining Party may suspend benefits only in the financial services sector;
(b) to the financial services sector and any other sector, the complaining Party may suspend benefits in the financial services sector that have an effect equivalent to the effect of the measure on the Party's financial services sector; or
(c) only to a sector other than the financial services sector, the complaining Party may not suspend benefits in the financial services sector.
Article 14.18. Financial Services Investment Disputes
1. Where an investor of a Party submits a claim to arbitration under Section B (Investor-State Dispute Settlement) of Chapter 12 (Investment) and the respondent Party invokes an exception under Article 14.11, the Tribunal shall refer the matter in writing to the Committee for a decision pursuant to paragraph 2. The Tribunal may not proceed until it receives a decision or a report pursuant to this Article.
2. In a referral under paragraph 1, the Committee shall decide the issue of the extent to which Article 14.11 is a valid defense to the investor's claim. The Committee shall transmit a copy of its decision to the Tribunal and to the Commission. The decision shall be binding on the Tribunal.
3. Where the Committee has not decided the matter within sixty (60) days after receipt of the referral under paragraph 1, any Party may request, within ten (10) days thereafter, the establishment of a panel under Article 18.5 (Establishment of a Panel) to decide the matter. The panel shall be constituted in accordance with Article 14.17. In addition to Article 18.9 (Report of the Panel), the panel shall transmit its final report to the Committee and the Tribunal. The report shall be binding on the Tribunal.
4. Where a request for the establishment of a panel under paragraph 3 has not been filed within ten (10) days after the expiration of the sixty (60) day period referred to in paragraph 3, the Tribunal may proceed to decide the matter.
Article 14.19. Definitions
For the purposes of this Chapter:
Designating authority means the Secretary-General or the Assistant Secretary- General or the next most senior member of the Center's staff.
International Centre for Settlement of Investment Disputes, other than a national of one of the Parties;
cross-border trade or supply of financial services means the supply of a financial service:
(a) from the territory of one Party to the territory of the other Party;
(b) in the territory of a Party by a person of that Party to a person of the other Party; or
(c) by a national of a Party in the territory of the other Party;
but does not include the supply of a financial service in the territory of a Party for an investment in that territory;
public entity means a central bank, a monetary authority of a Party or any financial institution owned or controlled by a Party. For greater certainty, a public entity shall not be considered a designated monopoly or a state enterprise for purposes of Chapter 11 (Competition Policy);
investment means "investment" as defined in Article 12.30 (Definitions), except that:
(a) a loan to, or debt instrument issued by, a financial institution is an investment only when it is treated as capital for regulatory purposes by the Party in whose territory the financial institution is located; and
(b) a loan granted by a financial institution or a debt instrument owned by a financial institution is not an investment unless covered by subparagraph (a); and
for greater certainty:
(a) a loan to or debt instrument issued by a Party or a State enterprise of that Party is not an investment, regardless of the original maturity date; and
(b) a loan made by, or a debt instrument owned by, a cross-border financial service supplier, other than a loan to, or a debt instrument issued by, a financial institution, is an investment if such loan or debt instrument meets the criteria for investments set out in Article 12.30 (Definitions);
investor of a Party means "investor of a Party" as defined in Article 12.30 (Definitions);
financial institution means a financial intermediary or other enterprise that is authorized to do business and that is regulated or supervised as a financial institution under the law of the Party in whose territory it is located;
financial institution of the other Party means a financial institution, including a branch, located in the territory of a Party that is controlled by a person of the other Party;
new financial service means a financial service not supplied in the territory of the Party, but which is supplied in the territory of the other Party, and includes a new form of supply of a financial service or the sale of a financial product that is not sold in the territory of the Party;
self-regulatory organization means a non-governmental entity that exercises proprietary or delegated regulatory or supervisory authority over financial service providers or financial institutions, including a securities or futures exchange or market, clearing house or other body or association. For greater certainty, a self-regulatory entity shall not be considered a designated monopoly for purposes of Chapter 11 (Competition Policy);
person of a Party means a national or company of a Party. For greater certainty, it does not include a branch of a company of a non-Party;
financial service supplier of a Party means a person of a Party engaged in the business of supplying a financial service in the territory of that Party;
cross-border financial service supplier of a Party means a person of a Party that is engaged in the business of supplying a financial service in the territory of the Party and that seeks to supply or does supply a financial service through the cross-border supply of such service; and
financial service means a service of a financial nature. Financial services include all insurance and insurance-related services, and all banking and other financial services (except insurance), as well as all services incidental or auxiliary to a service of a financial nature. Financial services include the following activities;
Insurance and insurance-related services
(a) Direct insurance (including coinsurance):
(i) life insurance;
(ii) non-life insurance;
(b) reinsurance and retrocession;
(c) insurance intermediation activities, such as those of insurance brokers and agents; and
(d) auxiliary insurance services, e.g. consultants, actuaries, risk assessment and loss adjusting;
Banking and other financial services (excluding insurance):
(e) acceptance of deposits and other repayable funds from the public;
(f) loans of all types, including personal loans, mortgage loans,
factoring and financing of commercial transactions;
(g) leasing services;
(h) all payment and money transfer services, including credit, charge and debit cards, traveler's checks and money orders;
(i) guarantees and commitments;