Title
Treaty on investment and trade in services between the Republics of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua
Preamble
The Government of the Republic of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua,
Determined to:
To achieve a better balance in their trade relationship;
Promote an expanded and secure market for investments and exchange of services in their territories;
Increasing the competitiveness of the services sector, a sine qua non for the facilitation of trade in goods and the flow of capital and technology, contribute decisively to strengthen the competitiveness of the Parties;
Establish a legal system with clear rules, transparent and mutually beneficial for the promotion and protection of investments, as well as for trade in services;
Respecting their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization (WTO) Agreement, as well as other bilateral and multilateral instruments of cooperation and integration;
Creating job opportunities and improving the living standards of their respective countries; and
Promoting the active participation of the various economic operators, in particular of the business sector in efforts to deepen their economic relations;
Have signed this treaty on investment and trade in services
Body
Part I. Initial Provisions
1. The main objectives of this Treaty is as follows:
a) Establish a legal framework for the liberalization of trade in services and investment between the parties, in accordance with the Central American Economic Integration, the General Agreement on Trade in Services (GATS) which is part of the WTO Agreement, as well as other bilateral and multilateral instruments of integration and cooperation.
This framework will promote the interests of the Parties, on the basis of mutual benefit and the achievement of an overall balance of rights and obligations between the parties;
b) Encourage expansion and diversification of trade in services and investment between the parties;
c) To facilitate the movement of services between the parties;
d) To promote, protect and substantially increase investment in each party; and
e) Create effective procedures for the implementation and application of this Treaty, for its joint administration and for the resolution of disputes between an investor and a party of the other party.
2 The Parties shall interpret and apply the provisions of this Treaty in the light of the objectives set out in paragraph 1 and in accordance with applicable rules of international law.
3. The parties, with the aim of achieving greater integration between them, shall in accordance with article 9.02, begin negotiations to define a future programme of work relating to investment and trade in services.
Article 102. Observance of the Treaty
Each Party shall ensure, in accordance with its constitutional rules, the implementation of the provisions of this treaty in their respective territories.
1. The Parties confirm their rights and obligations existing between them in accordance with the treaties to which they are party.
2. In the event of any inconsistency between the provisions of the treaties referred to in the preceding paragraph and the provisions of this Treaty, the latter shall prevail to the extent of the inconsistency.
Article 104. Succession of Treaties
Any reference to another treaty shall be made on the same terms for a successor agreement to which the parties are party.
Chapter 2. Definitions of General Application
Article 201. Definitions of General Application
For purposes of this Treaty, unless otherwise specified:
WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, dated 15 April 1994.
GATS means the General Agreement on Trade in Services, that form part of the WTO agreement; Committee means the Committee established pursuant to article 9.02;
Council: the Council of Ministers of Economic Integration established by article 37 of protocol of Guatemala;
Calendar days means calendar days; or
Enterprise means any legal person constituted or organized under the applicable law of a party, whether or not for profit and whether private or government owned, including foundations, companies, trusts, shares, firms, sole proprietorship enterprise co-investments or other associations;
Enterprise of a party constituted means an enterprise or organized under the law of a Party and a branch of an enterprise located in the territory of the other party that performs business activities in the same;
State enterprise means an enterprise owned by a party or under the control of the same through ownership rights;
Existing means in effect on the date of Entry into Force of this Treaty;
Measure means any law, regulation, rule, procedure, provision or practice, among others; goods, means any material or product part;
National means a natural or natural person who has the nationality of a Party according to its legislation and permanent residents who shall enjoy the benefits, rights and obligations that this treaty accorded to nationals, only in relation to the implementation of the Treaty;
Means any State Party which has entered into force this Treaty;
National means a person or an enterprise; and
Territory means the territory of each party.
Part II. Provisions Relating to Investment, Services and Related Matters
Chapter 3. Investment
Section A. Investment
Article 301. Definitions
For purposes of this chapter:
ICSID means the International Centre for Settlement of Investment Disputes;
Inter-American Convention: the Inter-American Convention on International Commercial Arbitration, held in Panama; 30 January 1975
ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States done at Washington, D.
C. On 18 March 1965;
New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards done at New York on 10 June 1958;
Application: the claim submitted by an investor litigants against a Party under the terms of section B of this chapter, is an alleged breach of the provisions of section A of this chapter;
"enterprise means an enterprise as defined in article 2.01, and a branch of an enterprise;
Investment means every kind of assets or rights of any kind, acquired or used for the purpose of obtaining an economic benefit or other business purposes, with resources transferred or acquired by an investor reinvested and includes:
a) A company, shares of a company or interests in the capital of an enterprise that allow the owner to participate in its income or profits.
Debt instruments of an enterprise and loans to an enterprise where:
i) The enterprise is an affiliate of the investor, or
ii) The original maturity of the debt instrument or loan is at least three (3) years;
b) An interest in an enterprise that grants to the owner the right to participate in the assets of that enterprise in liquidation, provided that it does not result in a debt instrument or a loan excluded under subparagraph (a);
c) Real estate or other property, tangible or intangible rights, including in the field of intellectual property as well as any other proprietary right (such as mortgages, pledge, usufruct and similar rights), acquired with the expectation of used or with the purpose of obtaining an economic benefit or other business purposes; and
d) Participation or benefit resulting of capital or other resources committed for the development of an economic activity in the territory of a party, inter alia, under:
i) Contracts involving the presence of an investor property in the territory of the party, including concessions and contracts for construction and turnkey; or
ii) Contracts where remuneration depends substantially on the production, income or profits of an enterprise;
But investment does not mean,
1. A payment obligation or a credit granted to the State or a state enterprise;
2. Monetary claims derived exclusively from:
i) Commercial contracts for the sale of goods or services by a national or enterprise in the territory of a party to an enterprise in the territory of the other party; or
ii) The granting of credit in connection with a commercial transaction, the expiry date is less than three (3) years, such as trade financing; except a loan covered by the provisions of a loan to an enterprise as defined in subparagraph (a); or
3. Any other monetary claim that does not involve the kinds of interests set out in subparagraphs (a) to (d);
Investment of an investor Party a means of an investment owned or controlled directly or indirectly by an investor of a Party in the territory of the other party.
In case of a company, an investment is owned by an investor if the investor of a Party has an ownership of more than 50% of their equity capital.
An investment is controlled by an investor of a party if the investor has the power to:
i) Designate a majority of its directors or
ii) Conduct of any such operations;
An investor of a Party means a Party or a company of the same or a national of that Party or an enterprise who carry out acts materials designed to make an investment or conduct or has made an investment in the territory of the other party. The intention to make an investment may occur, inter alia, through legal acts aimed at achieving the investment, or are in the process of committing the financial resources required therefor;
Investors of a non-: an investor Party that is not an investor of a Party that seeks to perform or performs or has made an investment;
Investor combatant: an investor that makes a claim under section B of this chapter;
Opposing side: the party against which a claim is submitted under the terms of section B of this chapter;
The opposing side: investor combatant or the opposing side; contending parties: the investor combatant and the opposing side;
UNCITRAL Arbitration Rules means the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) adopted by the United Nations General Assembly on 15 December 1976;
Secretary-General means the Secretary-General of ICSID;
Transfers means transfers and international payments;
A tribunal means an arbitration tribunal established under article 3.22; and
Court of cumulation: an arbitral tribunal established under article 3.29.
Article 302. Scope and Extent of Obligations
1. This chapter applies to measures adopted or maintained by a Party relating to:
a) Investors of another party in all matters relating to their investment;
b) Investments of investors of another party in the territory of the Party; and
c) As regards article 0307, all investments in the territory of the party.
2. This chapter does not apply to:
a) Economic activities reserved for each Party, as set out in annex II;
b) Measures adopted or maintained by a Party relating to Financial Services;
c) The measures taken by a party to restrict the participation of investments of investors of another party in its territory for reasons of national security or public order; and
d) Disputes or claims arising prior to the Entry into Force of this Treaty, or related events which occurred prior to its entry into force, even if their effects are still thereafter.
3. This chapter applies across the territory of the Parties and at any level of Government, despite the inconsistent measures that may exist in their respective laws.
4. Nothing in this chapter shall be construed as preventing a party from providing services or perform functions related to the implementation of laws, services of social rehabilitation, pension or unemployment insurance or social security services, social welfare, education, health and the protection of children.
Article 303. Minimum Standard of Treatment
Each Party shall accord to investors of another party investments and their treatment in accordance with international law, including fair and equitable treatment and legal protection and security within its territory.
Article 304. National Treatment
Each Party shall accord to investors of another party and to an investor of investments of the other party treatment no less favourable than that accorded in like circumstances to its own to investors and investments of such investors with respect to the establishment, expansion and acquisition, administration, management, operation and sale or other disposition of investments.
Article 305. Most Favoured Nation Treatment
Each Party shall accord to investors of another party and to an investor of investments of the other party treatment no less favourable than that accorded in like circumstances to investments of investors and to an investor of any other party or of a non- party with respect to the establishment, expansion and acquisition, administration, management, operation and sale or other disposition of investments.
Article 306. Treatment In Case of Loss
Each Party shall accord to investors of the other party, in respect of investments in its territory who suffer losses due to armed conflict or civil strife, force majeure or unforeseeable circumstances, non-discriminatory treatment with respect to any measure that it adopts or maintains in connection with such losses.
Article 307. Performance Requirements
1. No party may impose or enforce compliance with commitments under the following requirements or the establishment, acquisition, expansion, conduct, administration or operation of an investment of an investor of a Party on its territory to:
a) Such export a given level or percentage of goods or services;
b) To achieve a given level or percentage of domestic content;
c) To purchase or use a accord preference to produced goods or services provided in its territory or to purchase goods producers or from providers of services in its territory;
d) In any way relate to 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;
e) In its territory to restrict sales of goods or services that such investment produces or provides such sales by relating in any way to the volume or value of its exports or to generate foreign exchange earnings;
f) Transfer to a person in its territory, technology, knowledge production process or other reserved except when the requirement is imposed by a judicial or administrative tribunal or competent authority to remedy an alleged violation of competition laws or to act in a manner not inconsistent with other provisions of this treaty; or
g) To act as the exclusive supplier of the goods it produces or services it provides to a specific region or world market.
This paragraph does not apply to any requirement other than those specified therein.
2. A measure that requires an investment to use a technology to meet requirements of health or safety of general application shall not be considered inconsistent with paragraph 1 verbatim
f) For greater certainty, articles 3.04 and 3.05 on single stream comprehensive apply to the measure.
3. No party may condition the receipt of an advantage or which shall continue to receive the same in connection with an investment in its territory by an investor of a Party on compliance with any of the following requirements:
a) To purchase or use a accord preference to goods produced in its territory or to purchase goods from producers in its territory;
b) To achieve a given level or percentage of domestic content;
c) In any way relate to 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
d) In its territory to restrict sales of goods or services that such investment produces or provides such sales by relating in any way to the volume or value of its exports or foreign exchange earnings which generate.
This paragraph does not apply to any requirement other than those specified therein.
4. Nothing in paragraph 3 shall be construed as preventing a party, in its territory, imposed in connection with an investment of an investor of the other party, legally established requirements of: geographical location of production units, or training, employment generation or activities in the area of research and development.
5. Provided that such measures are not applied in an arbitrary or unjustified or do not constitute a disguised restriction on international trade or investment, nothing in paragraphs 1 (b) or (c) or 2 (a) or (b) shall be construed to prevent a Party from adopting or maintaining environmental nature, including measures necessary to:
a) To ensure compliance with laws and regulations that are not inconsistent with the provisions of this Treaty;
b) Protect human life or health, animal or plant; or
c) Preservation of non-renewable natural resources, living or not.
6. In the event that a party, the imposition by the other party of any other requirements under paragraph 1 do not adversely affect the flow of trade or constitutes a significant barrier to investment, the matter shall be considered by the Committee on investment and cross-border trade in services, established in article 4.09.
7. If the Committee considers that the requirement in question adversely affects the trade or constitutes a significant barrier to investment, the Commission recommend to the provisions necessary to eliminate the practice in question. The Parties shall consider these provisions as incorporated into this Treaty.
Article 308. Senior Management and Boards of Directors
1. No party may require that an enterprise of that Party appoint individuals of any particular nationality to senior management positions.
2. A Party may require that a majority of the members of the governing bodies or any committee of such bodies of an enterprise of that Party that is an investment of an investor of the other party be of a particular nationality or resident in the territory of the Party provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.
Article 309. Reservations and Exceptions
1. Articles 3.04, 3.05 on single stream comprehensive 0307 3.08 and do not apply to:
a) Any existing measure inconsistent to maintain a Party, provided that the same forms part of its list of Annex I inconsistent measures (existing) or Annex II (economic activities reserved for each party);
b) The continuation or prompt renewal of any measure inconsistent referred to in subparagraph (a); or
c) The reform to any inconsistent measure referred to in subparagraph (a), provided that the amendment does not decrease the level of conformity of the measure as it was in force before the reform, with articles 3.04 3.05 on single stream comprehensive 0307 and 3.08.
2. The treatment accorded by a Party pursuant to article 3.05 on single stream comprehensive does not apply to treaties or sectors set out in its schedule to Annex III (exceptions from most-favoured-nation treatment).
3. Articles 3.04, 3.05 on single stream comprehensive 3.08 and do not apply to:
a) Procurement by a party or a state enterprise; or
b) Subsidies or inputs, including government loans and insurance guarantees granted by a party or a state enterprise, except as provided in article 3.06.
4. With a view to achieving a progressively higher level of liberalisation, the parties undertake to conduct future negotiations, at least every two (2) years, within the Council, aimed at eliminating remaining restrictions registered in accordance with paragraph 1 of this article.
Article 310. Transfers
1. Each Party shall permit all transfers relating to an investment of an investor of the other party into its territory be made freely and without delay. Such transfers include:
a) Profits, dividends, interests, capital gains, royalties payments, administration, technical assistance and other fees; returns and other amounts in kind derived from the investment;