(e) to restrict sales of goods or services in its territory that the investment produces or supplies by relating those sales in any way to the volume or value of its exports or foreign exchange earnings;
(f) to transfer a particular technology, a production process or other proprietary knowledge to a person in its territory; or
(g) to supply exclusively from the territory of the Party the goods that the investment produces or the services that it supplies to a specific regional market or to the world market.
2. For greater certainty, a measure that requires an investment to use a technology to meet health, safety or environmental requirements shall not be construed to be inconsistent with paragraph 1. For greater certainty, Articles 8.5 and 8.6 apply to such a measure.
3. No Party shall condition the receipt or continued receipt of an advantage, in connection with the establishment, acquisition, expansion, management, conduct, operation or sale or other disposition of an investment, of an investor of a Party or of a non-Party in its territory, on compliance with any requirement:
(a) to achieve a given level or percentage of domestic content;
(b) to purchase, use or accord a preference to goods produced in its territory, or to purchase goods from persons in its territory;
(c) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with the investment; or
(d) to restrict sales of goods or services in its territory that the investment produces or supplies by relating those sales in any way to the volume or value of its exports or foreign exchange earnings.
4. Nothing in paragraph 3 shall be construed to prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment of an investor of a Party or of a non-Party in its territory, on compliance with a requirement to locate production, supply a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory.
5. Paragraph 1(f) shall not apply:
(a) if a Party authorises use of an intellectual property right in accordance with Article 311 (10) of the TRIPS Agreement or to measures requiring the disclosure of propriety information that fall within the scope of, and are consistent with, Article 39 of the TRIPS Agreement; or
(b) if the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority to remedy a practice determined after a judicial or administrative process to be anticompetitive under the Party's competition laws. (11)
6. Provided that such measures are not applied in an arbitrary or unjustifiable manner and do not constitute a disguised restriction on international trade or investment, nothing in paragraphs 1(b), 1(c), 1(f), 3(a) and 3(b) shall be construed to prevent a Party from adopting or maintaining measures, including those of an environmental nature:
(a) necessary to secure compliance with laws and regulations that are not inconsistent with this Agreement;
(b) necessary for protecting human, animal or plant life or health; or
(c) related to the conservation of living or non-living exhaustible natural resources.
7. Paragraphs 1(a), 1(b), 1(c), 3(a) and 3(b) shall not apply to qualification requirements for goods or services with respect to export promotion and foreign aid programmes.
8. Paragraphs 1(b), 1(c), 1(f), 1(g), 3(a) and 3(b) shall not apply to government procurement.
9. Paragraphs 3(a) and 3(b) shall not apply to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas.
10. For greater certainty, nothing in paragraph 1 shall be construed to prevent a Party, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment of an investor of a Party or of a non-Party in its territory, from imposing or enforcing a requirement, or enforcing a commitment or undertaking, to employ or train workers in its territory provided that the employment or training does not require the transfer of a particular technology, production process or other proprietary knowledge to a person in its territory.
11. For greater certainty, paragraphs 1 and 3 shall not apply to any commitment, undertaking or requirement other than those set out in those paragraphs.
12. This Article does not preclude enforcement of any commitment, undertaking or requirement between private parties, if a Party did not impose or require the commitment, undertaking or requirement.
Article 8.10. Senior Management and Boards of Directors
1. No Party shall require that an enterprise of that Party that is a covered investment appoint to a senior management position a natural person of any particular nationality.
2. A Party may require that a majority of the board of directors, or any committee thereof, of an enterprise of that Party that is a covered investment, 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 8.11. Non-Conforming Measures
1. Articles 8.5, 8.6, 8.9 and 8.10 shall not apply to:
(a) any existing non-conforming measure that is maintained by a Party at:
(i) the central level of government, as set out by that Party in its Schedule to Annex I;
(ii) a regional level of government, as set out by that Party in its Schedule to Annex I; or
(iii) a local level of government;
(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 8.5, 8.6, 8.9 and 8.10.
2. Articles 8.5, 8.6, 8.9 and 8.10 shall not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors or activities, as set out by that Party in its Schedule to Annex IL
3. No Party shall, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule to Annex II, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.
4. Articles 8.5 and 8.6 shall not apply to any measure that constitutes an exception or derogation from the Party's obligations provided in the TRIPS Agreement, as specifically provided for in the TRIPS Agreement.
5. Articles 8.5, 8.6 and 8.10 shall not apply to:
(a) government procurement; or
(b) subsidies or grants provided by a Party, including government-supported loans, guarantees and insurance.
6. For greater certainty, any amendments or modifications to a Party's Schedules to Annex I or Annex I, pursuant to this Article, shall be made in accordance with Article 25.4 (Amendments).
Article 8.12. Transfers (12)
1. Each Party shall permit all transfers relating to a covered investment to be made freely and without delay into and out of its territory. Such transfers include:
(a) contributions to capital; (13)
(b) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance fees and other fees;
(c) proceeds from the sale of all or any part of the covered investment, or from the partial or complete liquidation of the covered investment;
(d) payments made under a contract, including a loan agreement;
(e) payments made pursuant to Article 8.8 and Article 8.13; and (f) payments arising out of a dispute.
2. Each Party shall permit returns in kind relating to a covered investment to be made as authorised or specified in a written agreement between the Party and a covered investment or an investor of the other Party.
3. Each Party shall permit transfers relating to a covered investment to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.
4. Notwithstanding paragraphs 1, 2 and 3, a Party may prevent or delay a transfer through the equitable, non-discriminatory and good faith application of its laws and regulations relating to:
(a) bankruptcy, insolvency or protection of the rights of creditors;
(b) ensuring compliance with orders or judgements in judicial or administrative proceedings;
(c) issuing, trading, or dealing in securities, futures, options or derivatives;
(d) criminal or penal offences; or
(e) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities.
6. Notwithstanding paragraph 2, a Party may restrict transfers of returns in kind in circumstances where it could otherwise restrict such transfers under this Agreement, including as set out in paragraph 4.
7. For greater certainty, this Article does not preclude the equitable, non-discriminatory and good faith application of a Party's laws relating to its social security, public retirement or compulsory savings programs.
Article 8.13. Expropriation and Compensation (14) (15)
1. No Party shall expropriate or nationalise a covered investment either directly or indirectly through measures equivalent to expropriation or nationalisation ("expropriation"), except:
(a) for a public purpose; (16)
(b) in a non-discriminatory manner;
(c) on payment of prompt, adequate and effective compensation in accordance to paragraphs 2, 3 and 4; and
(d) in accordance with due process of law.
2. Compensation referred to in paragraph 1(c) shall:
(a) be paid without delay;
(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (the date of expropriation);
(c) not reflect any change in value occurring because the intended expropriation had become known before the date of expropriation; and
(d) be fully realisable and freely transferable.
3. If the fair market value is denominated in a freely usable currency, the compensation referred to in paragraph 1(c) shall be no less than the fair market value on the date of expropriation, plus interest at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
4. If the fair market value is denominated in a currency that is not freely usable, the compensation referred to in paragraph 1(c), converted into the currency of payment at the market rate of exchange prevailing on the date of payment, shall be no less than:
(a) the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date; plus
(b) interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.
5. This Article shall not apply to the issuance of compulsory licences granted in relation to intellectual property rights in accordance with the TRIPS Agreement, or to the revocation, limitation or creation of intellectual property rights, to the extent that the issuance, revocation, limitation or creation is consistent with the TRIPS Agreement. (17)
6. For greater certainty, a Party's decision not to issue, renew or maintain a subsidy or grant, or decision to modify or reduce a subsidy or grant:
(a) in the absence of any specific commitment under law or contract to issue, renew or maintain that subsidy or grant; or
(b) in accordance with any terms or conditions attached to the issuance, renewal, modification, reduction and maintenance of that subsidy or grant,
standing alone, does not constitute an expropriation.
Article 8.14. Denial of Benefits (18)
A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of that other Party and to investments of that investor if the enterprise:
(a) is owned or controlled by a person of a non-Party or of the denying Party; and
(b) has no substantial business activities in the territory of the other Party.
Article 8.15. Special Formalities and Information Requirements
1. Nothing in Article 8.5 shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with a covered investment, such as a residency requirement for registration or a requirement that a covered investment be legally constituted under the laws or regulations of the Party, provided that such formalities do not materially impair the protections afforded by the Party to investors of the other Party and covered investments pursuant to this Chapter.
2. Notwithstanding Articles 8.5 and 8.6, a Party may require an investor of the other Party or a covered investment to provide information concerning that investment solely for informational or statistical purposes. The Party shall protect such information that is confidential from any disclosure that would prejudice the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Party from obtaining or disclosing information in connection with the equitable and good faith application of its laws and regulations.
Article 8.16. Subrogation
If a Party, or any agency, institution, statutory body or corporation designated by the Party, makes a payment to an investor of the Party under a guarantee, a contract of insurance or other form of indemnity that it has entered into with respect to a covered investment, the other Party in whose territory the covered investment was made shall recognise the subrogation or transfer of any rights the investor would have possessed under this Chapter with respect to the covered investment but for the subrogation, and the investor shall be precluded from pursuing these rights to the extent of the subrogation.
Article 8.17. Corporate Social Responsibility
The Parties reaffirm the importance of each Party encouraging enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate into their internal policies those internationally recognised standards, guidelines and principles of corporate social responsibility, such as the OECD Guidelines for Multinational Enterprises, that have been endorsed or are supported by that Party.
Section B. Settlement of Disputes between a Party and an Investor of the other Party
This Section shall not apply to any dispute concerning any measure adopted or maintained or any treatment accorded to investors or investments by a Party in respect of tobacco or tobacco- related products. (19)
Article 8.18. Consultations
1. In the event of an investment dispute, the disputing parties should initially seek to resolve the dispute amicably through consultations, which may include the use of non-binding, third party procedures, such as good offices, conciliation and mediation.
2. The consultations shall be initiated by a written request for consultations delivered to the respondent setting out a brief description of the facts regarding the measure or measures at issue, and the information specified below:
(a) the name and address of the claimant and, if the claim is submitted on behalf of an enterprise, the name, address and place of incorporation of the enterprise;
(b) for each claim, the provisions of Section A alleged to have been breached.
(c) the factual and legal basis for each claim; and
(d) the relief sought and the approximate amount of damages claimed.
3. Unless otherwise agreed by the disputing parties, the place of consultations shall be: (a) Santiago, if the measures challenged are measures of Chile; (b) Bogota, if the measures challenged are measures of Colombia; (c) Mexico City, if the measures challenged are measures of Mexico; (d) Lima, if the measures challenged are measures of Peru; and (e) Singapore, if the measures challenged are measures of Singapore.
4. The disputing parties may hold the consultations through videoconference or other means, where appropriate.
5. For greater certainty, the initiation of consultations shall not be construed as recognition of the jurisdiction of the tribunal under this Section.
Article 8.19. Mediation
1. The disputing parties may at any time agree to have recourse to mediation.
2. The mediator shall be appointed by agreement of the disputing parties.
3. Recourse to mediation is without prejudice to the legal position or rights of a disputing party under this Chapter and is governed by the rules agreed to by the disputing parties including, if available, the rules for mediation adopted by the Free Trade Commission.
4. If mediation resolves the dispute, a consent award should be issued by the tribunal, if one has been constituted.
5. For greater certainty, the initiation of mediation shall not be construed as recognition of the jurisdiction of the tribunal under this Section.
Article 8.20. Submission of a Claim to Arbitration
1. If an investment dispute has not been resolved within six months of the receipt by the respondent of a written request for consultations pursuant to Article 8.18:
(a) the claimant, on its own behalf, may submit to arbitration under this Section a claim:
(i) that the respondent has breached an obligation under Section A; and
(ii) that the claimant has incurred losses or damages by reason of, or arising out of, that breach; and
(b) the claimant, on behalf of an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, may submit to arbitration under this Section a claim:
(i) that the respondent has breached an obligation under Section A; and
(ii) that the enterprise has incurred losses or damages by reason of, or arising out of, that breach.
2. For greater certainty, objections that a respondent may raise in any proceedings under this Section, would include, but not be limited to, objections on the ground that an investment has been made, established, acquired or admitted through fraud or misrepresentation, concealment, corruption or conduct amounting to an abuse of process.
3. After the end of the six-month period as provided for under paragraph 1, and at least 90 days before submitting any claim to arbitration under this Section, the claimant shall deliver to the respondent a written notice of its intention to submit a claim to arbitration ("Notice of Intent"). The Notice of Intent shall specify:
(a) the name and address of the claimant and, if the claim is submitted on behalf of an enterprise, the name, address and place of incorporation of the enterprise;
(b) for each claim, the provisions of Section A alleged to have been breached;
(c) the factual and legal basis for each claim; and
(d) the relief sought and the approximate amount of damages claimed.
4. For greater certainty, when a Notice of Intent is submitted by more than one claimant or on behalf of more than one enterprise, the information in paragraph 3 shall be submitted for each claimant or each enterprise, as the case may be.
5. The claimant may submit a claim referred to in paragraph 1 under one of the following alternatives:
(a) the ICSID Convention and the ICSID Rules of Procedure for Arbitration Proceedings, provided that both the respondent and the Party of the claimant are parties to the ICSID Convention;
(b) the ICSID Additional Facility Rules, provided that either the respondent or the Party of the claimant is a party to the ICSID Convention;
(c) the UNCITRAL Arbitration Rules; or
(d) if the disputing parties agree, any other arbitral institution or under any other arbitration tules.
6. Acclaim shall be deemed submitted to arbitration under this Section, when the claimant's notice of or request for arbitration ("Notice of Arbitration"):
(a) referred to in the ICSID Convention, is received by the Secretary-General;
(b) referred to in the ICSID Additional Facility Rules, is received by the Secretary- General;
(c) referred to in the UNCITRAL Arbitration Rules, together with the statement of claim referred to therein, are received by the respondent; or
(d) referred to under any other arbitral institution or under any arbitration rules selected under paragraph 5(d), is received by the respondent.
7. A claim asserted by the claimant for the first time after the Notice of Arbitration is submitted shall be deemed submitted to arbitration under this Section on the date of its receipt under the applicable arbitration rules.
8. The arbitration rules applicable under paragraph 5 that are in effect on the date the claim or claims were submitted to arbitration under this Section shall govern the arbitration except to the extent modified by this Agreement.
9. The claimant shall provide with the Notice of Arbitration:
(a) the name of the arbitrator that the claimant appoints; or
(b) the claimant's written consent for the Secretary-General to appoint that arbitrator.
Article 8.21. Consent of Each Party to Arbitration
1. Each Party consents to the submission of a claim to arbitration under this Section in accordance with this Agreement.
2. The consent referred to in paragraph 1 and the submission of a claim to arbitration under this Section shall be deemed to satisfy the requirements of: