For purposes of this chapter:
Regulatory authorities: any government entity or supervisory authority over Financial Services service or financial institutions.
Public entity means a central bank or monetary authority or by any other public institution of the financial system of a Party that is owned or controlled, when it is not exercising business functions;
I nstitución financial means any financial intermediary or other enterprise that is authorised to provide financial services or supervised and regulated as a financial institution under the law of the Party in whose territory it was incorporated;
Financial institution of the other party means a financial institution constituted in the territory of a Party that is owned or controlled by persons of the other party;
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; shares 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;
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; and
e) A loan granted by a service or a Financial Services value of debt owned by the same except a loan to a financial institution or a value of debt issued by the same;
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 subparagraph (a);
3. Any other monetary claim that does not involve the kinds of interests set out in subparagraphs (a) to (e);
4. A loan to a financial institution or a debt owned by a financial institution, except a loan to a financial institution that is treated as capital for regulatory purposes, by any Party in whose territory the financial institution is located;
An investor of a Party means a Party or a state enterprise thereof, or a person of that Party that seeks to perform or performs 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 required financial resources therefor.
Investor combatant: an investor of a Party that makes a claim under section B of chapter 3;
Investment of an investor Party a means of an investment owned or controlled directly or indirectly by an investor of that Party in the territory of another 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;
Investments of a non-: investment of an investor Party that is not an investor of a party;
New financial service means a financial service not paid in the territory of the Party that is provided in the territory of the other party, and includes any new form of delivery of a financial service or the sale of a financial product that is not sold in the territory of the Party;
Agencies autoregulados means any non-governmental entity, including any securities or futures exchange or clearing house and any other organisation or association that exercises its own or delegated authority, control or supervision of financial institutions or Financial Services service;
Person means a person as defined in article 2.01, but does not include a branch of an enterprise of a non- Party;
Cross-border supply of financial services or cross-border trade in Financial Services
a) The provision of a financial service within the territory of a party into the territory of another 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 person of a Party in the territory of another party;
Financial Services Service of a Party means a person of a Party that is engaged in the business of providing financial services in its territory that seeks to perform or performs the Provision of Financial Services; and
Financial service means any service of a financial nature offered by a financial institution of a party. Financial services include all banking services, insurance and reinsurance services involving other financial intermediation and auxiliary services, including related financial nature.
602. Scope and Extent of Obligations
1. This chapter applies to measures adopted or maintained by a Party relating to:
a) Financial institutions of the other party;
b) Cross-border trade in financial services; and
c) Investors of another party and to investments of investors in such financial institutions in the territory of the party.
2. This chapter does not apply to:
a) Activities carried out by the monetary authorities or by any other public institution in pursuit of monetary or exchange rate policies;
b) Activities or services forming part of a public retirement plan or public social security systems;
c) The use of the financial resources of the other party; or
d) Other activities or on behalf of the Financial Services or its party or public entities with the guarantee.
3. In the event of any inconsistency between the provisions of this chapter and any other provision of this, the treaty of this chapter shall prevail to the extent of the inconsistency.
4. Article 3.11 and section B of chapter 3 are incorporated into this chapter and shall form an integral part thereof.
603. Autoregulados Agencies
When a party requires that a financial institution or a Financial Services Service is a member of another party, participates, or have access to an agency autoregulado to provide a financial service in its territory or to him, the Party shall ensure that such a body complies with the obligations of this chapter.
604. Right of Establishment
1. The Parties recognize the principle that investors of each Party shall be permitted to establish a financial institution in the territory of another party, by any of the modalities for the establishment and operation of such legislation.
2. A Party may impose conditions on establishment and terms that are consistent with Article 6.06.
605. Cross-border Trade
1. Each Party shall permit persons located in its territory, wherever located, to purchase Financial Services Financial Services Service of another party located in the territory of that other party. It does not require a party to permit such suppliers of Financial Services or advertising business carried out by any means in its territory. The Parties may define what is "notice" and "business" for purposes of this obligation.
2. Where a Party permits the cross-border supply of financial services and without prejudice to other means of prudential regulation of cross-border trade in Financial Services, a Party may require the registration of Financial Services Service of another party and of financial instruments.
606. National Treatment
1. Each Party shall accord to investors of another party treatment no less favourable than it accords to its own like investors with respect to the establishment, expansion and acquisition, administration, management, operation and sale or other disposition of similar financial institutions and investments in financial institutions in its territory.
2. Each Party shall accord to financial institutions of the other party and to investments of investors of the other party in financial institutions treatment no less favourable than it accords to its own similar financial institutions and similar to its own like investments of investors in similar financial institutions with regard to the establishment, expansion and acquisition, administration, management, operation and sale or other disposition of financial institutions and investments.
3. Where a Party permits the cross-border provision of a financial service shall, pursuant to article 6.05 Financial Services Service of another party treatment no less favourable than it accords to its own Financial Services service with respect to the provision of such service.
4. The treatment that a Party shall accord to financial institutions and Financial Services Service of another party, either identical or different to that accorded to its own like services providers in institutions or is consistent with paragraphs 1 through 3 if affords equal competitive opportunities.
5. The treatment of a Party does not provide equal competitive opportunities if located in a disadvantaged position, similar financial institutions and similar Financial Services Service of another Party in their ability to provide financial services as compared with the ability of its own financial institutions and service providers of the party to provide such services.
607. Most Favoured Nation Treatment
Each Party shall grant to financial institutions and Financial Services Service of another party to investors and to investments of investors in such financial institutions of the other party treatment no less favourable than that accorded in similar financial institutions and similar Financial Services Service, similar to investors and to such investments of investors in similar financial institutions of the other party or of a non- party.
608. Recognition and Harmonization
1. In applying measures under this chapter, a Party may recognize prudential measures of another party or of a non- party. Such recognition may be accorded; harmonization achieved unilaterally or through other means; or based upon an agreement or arrangement with the other Party or non-Party.
2. The party that grants recognition of prudential measures under paragraph 1 shall provide adequate opportunity to another party to demonstrate that circumstances exist in which there are or would be equivalent regulations, monitoring and implementation of the regulation and, where appropriate, procedures for the sharing of information between the parties.
3. Where a Party grants recognition of prudential measures under paragraph 1 and the circumstances set out in paragraph 2, that Party shall afford adequate opportunity for the other party to negotiate accession to the agreement or arrangement to negotiate or a comparable agreement or arrangement.
609. Exceptions
1. Nothing in this chapter shall be construed as preventing a Party may adopt or maintain measures for prudential reasons such as:
a) Protect policy-holders funds, as well as to investors, depositors and creditors or other holders or beneficiaries of policies or persons of fiduciary duties owed by a financial institution or a Financial Services service;
b) Maintaining security, integrity, responsibility or financial soundness of financial institutions or Financial Services Service; and
c) Ensuring the integrity and stability of the financial system of that Party.
2. Nothing in this chapter applies to non-discriminatory application of general measures taken by a public entity in the conduct of monetary policies or credit policies
Related or exchange rate policies. This paragraph shall not affect the obligations of any Party deriving from investment performance requirements with respect to measures covered by Chapter 3 or article 6.18.
3. Notwithstanding article 6.18, a Party may prevent or limit transfers by a financial institution or a supplier to Financial Services or for the benefit of an affiliate of related to such person or institution or in such a service provider, through the fair and non-discriminatory application of measures relating to maintenance of security, integrity, responsibility or financial soundness of financial institutions or Financial Services Service. This paragraph does not prejudice any other provision of this chapter that permits a party to restrict transfers.
4. Article 6.06, shall not apply to the issuance of exclusive rights that makes a party to a financial institution to provide a Financial Services referred to in article 6.02 (2) (b).
610. Transparency
1. In addition to the provisions of article 10.02, regulatory authorities of each Party shall make available to all interested parties information on requirements to fill and submit a request to the supply of financial services.
2. At the request of the applicant, the regulatory authority shall inform the applicant of the status of its application. If such authority requires additional information from the applicant, it shall without undue delay.
3. Regulatory authorities of each Party shall, within a period of one hundred and twenty (120 days), an administrative decision on a complete application relating to the provision of a financial service, submitted by an investor in a financial institution, by a financial institution or a Financial Services Service of the other party. The Authority shall notify the applicant without delay. An application shall not be considered complete until all relevant hearings are held and all necessary information is received. Where it is not feasible to issue a decision within one hundred and twenty (120 days), the regulatory authority shall notify the applicant without undue delay and shall endeavour to make the decision within a reasonable time.
4. Nothing in this chapter requires a party to disclose or allow access to:
a) Information related to the accounts and financial affairs of individual customers of financial institutions or Financial Services service; or
b) Any confidential information the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or prejudice legitimate commercial interests of a particular person.
5. The competent authorities of each Party shall maintain or establish one or more enquiry points to answer as soon as possible to all reasonable inquiries from interested persons regarding general application of measures taken by a Party under this chapter, are identified in annex 6.10.
611. Financial Services Committee
1. The Financial Services Committee, whose composition stated in annex 6.10. It may also include representatives of other institutions where the responsible authorities as appropriate.
2. Without prejudice to Article 9.04, the Committee shall have the following functions:
a) Consider issues regarding Financial Services that are submitted by a party;
b) Participate in the dispute settlement procedures under this chapter and article 6.19; and
c) To facilitate the exchange of information between national supervisory authorities and cooperate in providing advice on prudential regulation, ensuring the harmonization of regulatory frameworks as well as other policies, when it deems appropriate.
612. General Consultations
1. Each Party may request consultations with respect to any matter arising under this Agreement that affects financial services. The other party shall favourably consider that request. The parties entitled to make available to the Committee the results of their consultations, during meetings of the Tribunal.
2. In consultations under this article shall include officials of the competent authorities of each party identified in annex 6.10.
3. Each Party may request that regulatory authorities of the other party participate in consultations under this article or to discuss measures of general application of that other party which may affect the operations of financial institutions or Financial Services service in the territory of the party requested that the consultations.
4. Nothing in this article shall be construed to require regulatory authorities participating in consultations to disclose information under paragraph 3 or to act in a manner that would interfere with specific matters regulatory supervision, administration and implementation of measures.
5. Where, for the purpose of monitoring, information concerning a Party may require a financial institution in the territory of the other party or on Financial Services service in the territory of another party, the party may have recourse to a regulatory authority responsible in the territory of the other party to seek the information.
613. New Financial Services and Data Processing
1. Each Party shall permit a financial institution of the other party to provide any new financial service similar to those of a type that Party may provide for its financial institutions, in accordance with its legislation. A Party may determine the institutional and juridical form through which the service may be provided and may require authorization for the provision of the same. Where such authorization is required, the decision shall be made within a reasonable time and the authorisation may only be refused for prudential reasons.
2. Each Party shall allow a financial institutions of another Party to transfer, for processing information, within or outside the territory of the Party, using any means authorized therein when necessary for carrying out the business activities of such institutions.
614. Senior Management and Boards of Directors
1. No party may require financial institutions of another party to recruit staff of any particular nationality to senior management positions of business or other charges.
2. No party may require that the Board of Directors or the board of directors of a financial institution of another Party be integrated by nationals of that Party, resident in its territory or a combination of the two.
615. Reservations
1. One year after the Entry into Force of the Treaty, no party will increase the degree of inconsistency of its measures relating to Article 6.04, 6.05, 6.06, 6.07, 6.13 and 6.14, which shall be set out in section (a) Inconsistent existing measures of financial services (and annex).
2. Articles of the 6.04 6.07, 6.13 and 6.14 shall not apply to any measure that adopts or maintains a Party in accordance with section B (economic activities reserved for each party) in its schedule and to financial services (annex).
3. Any amendment to a measure inconsistent referred to in paragraph 1, does not decrease the level of conformity of the measure as it was in force immediately before the amendment.
4. Where a Party has set out a reservation to article 3.04, 3.05 on single stream comprehensive 3.08 4.03 4.04, or in its list of annexes (I), existing measures inconsistent LL (Economic activities reserved for each party) and (iii) exceptions from most-favoured-nation treatment, the reservation shall refer to article 6.04 To 6.07, 6.13 and 6.14 As the case may be, to the extent that the measure, sector and subsector activity or set out in the reservation covered by this chapter.
616. Future Liberalization
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 listed in accordance with article 7.10.
617. Denial of Benefits
A Party may deny, partially or totally, the benefits of this chapter to a financial institution of the other party or a Financial Services Service of another party, subject to prior notification and consultation in accordance with Articles 6.10 and 6.12, where the party establishes that the service is being provided by an enterprise that has no substantial business activities in the territory of either party and who under the law of that Party that is owned or controlled by persons of a non- party.
618. Transfers
1. Each Party shall permit all transfers relating to investments in its territory of an investor of the other party, to be made freely and without delay. Such transfers include:
a) Profits, dividends, interests, capital gains, royalties, fees payments for administration, technical assistance and other fees; returns and other amounts in kind derived from the investment;
b) Products derived from the sale or the total or partial liquidation of the investment;
c) Payments made under a contract of which is a party to an investor or its investment;
d) Payments made pursuant to Article 3.11; and
e) Payments arising from the settlement of disputes between an investor and a party of the other party.
2. Each Party shall permit transfers to be made in a freely convertible currency at the rate of exchange prevailing on the date of transfer to spot transactions in the currency to be transferred without prejudice to article 8.04.
3. No party may require its investors to transfers carried out their profits or income, profits or other amounts derived from investments carried out in the territory of another party, or attributable to the same.
4. Notwithstanding paragraphs 1 and 2, each party may prevent a transfer through the equitable and non-discriminatory application of its laws in the following cases:
a) Bankruptcy or insolvency or the protection of the rights of creditors;
b) Issuance of securities, and trade operations;
c) Criminal or administrative offences;
d) Reports of transfers of currency or other monetary instruments; or
e) Guarantee of compliance with the judgments in adjudicatory proceedings.
5. Notwithstanding paragraph 1, each party may restrict transfers of returns in kind in circumstances where it could otherwise restrict those transfers under this chapter.
6. Each Party shall maintain laws and regulations to establish taxes on income and complementary through such means as the withholding tax applicable to dividends and other transfers, provided they are not discriminatory.
619. Disputes between an Investor and a Party
1. Except as provided in this article, claims to make an investor litigants against a party in connection with the obligations under this Chapter shall be settled in accordance with section B of chapter 3.
2. Where the party against which the complaint has invoked any of the exceptions referred to in article 06.55, shall apply the following procedures:
a) The Tribunal shall refer the matter to the Financial Services Committee for a decision. The Tribunal may not proceed pending receipt of a decision by the Committee under the terms of this article or within sixty (60) days from the date of receipt of the case by the Committee;
b) Upon receipt of the Financial Services Committee shall decide on whether and to what extent the invoked article 06.55 exception is a valid defence to the claim of the investor and shall transmit a copy of its decision to the Tribunal and to the Council. Such decision shall be binding on the Tribunal.
620. Disputes between the Parties
1. The Financial Services Committee shall be by consensus a list of fifteen (15) individuals, including three (3) Each party of persons who have the skills and necessary provisions to serve as arbitrators in disputes related to this chapter.
2. A complaining party may suspend benefits only in the financial services sector where an arbitral tribunal finds that a measure is inconsistent with the obligations of this chapter.
1. For purposes of this chapter, the regulatory authorities competent or responsible
Financial Services shall be:
a) In the case of Costa Rica, the Ministry of Foreign Trade or its successor, in consultation with the competent authority concerned (Central Bank of Costa Rica, the Superintendent of Financial Institutions, Superintendence of pensions and Superintendencia de Valores);
b) For El Salvador: the Ministry of Economy, the Superintendency of the financial system, the Superintendency of Securities, the Superintendent of Pensions and the Reserve Bank, or their successors;
c) For Guatemala: the Ministry of Economy, the Monetary Authority, the Bank of Guatemala and the Superintendency of Banks, or their successors;
d) For Honduras: the Secretary of State in the Ministry of Trade and Industry, the Central Bank and the National Banking and Insurance Commission or their successors; and
e) For Nicaragua: the Ministry of Industry, Trade and Development, the Ministry of Finance and Public Credit, the Central Bank and the Superintendency of Banks, or their successors.
2. The principal representative of each Party shall where the relevant authority designated for such
Effect.