(a) reviewing and making appropriate recommendations, as necessary, to the Joint Committee on:
(i) the implementation and operation of this Chapter;
(ii) any amendments to Annex 2 or 3, proposed by
either Party; and
(b) discussing any issues related to this Chapter;
(c) reporting the findings of the Sub-Committee to the Joint Committee; and
(d) carrying out other functions as may be delegated by the Joint Committee in accordance with Article 14.
Article 50. Operational Procedures for Rules of Origin
Upon the date of entry into force of this Agreement, the Joint Committee shall adopt the Operational Procedures for Rules of Origin that provide detailed regulations pursuant to which the customs authorities, the competent governmental authorities and other relevant authorities of the Parties shall implement their functions under this Chapter.
Chapter 4. Customs Procedures
Article 51. Scope
1. This Chapter shall apply to customs procedures required for the clearance of goods traded between the Parties.
2. This Chapter shall be implemented by the Parties in accordance with the laws and regulations of each Party and within the competence and available resources of their respective customs authorities.
Article 52. Definition
For the purposes of this Chapter, the term “customs laws” means the statutory and regulatory provisions relating to the importation, exportation, movement or storage of goods, the administration and enforcement of which are specifically charged to the customs authority of each Party, and any regulations made by the customs authority of each Party under its statutory power.
Article 53. Transparency
1. Each Party shall ensure that all relevant information of general application pertaining to its customs laws is publicly available.
2. When information that has been made available must be amended due to changes in its customs laws, each Party shall endeavor to make the revised information readily available sufficiently in advance of the entry into force of the changes to enable interested persons to take account of them, unless advance notice is precluded.
3. Each Party shall, wherever appropriate, provide, as quickly and as accurately as possible, information relating to the specific customs matters raised by any interested person of the Parties and pertaining to its customs laws. The Party shall endeavor to supply any other pertinent information which it considers the interested person should be made aware of.
Article 54. Customs Clearance
1. Both Parties shall apply their respective customs procedures in a predictable, consistent and transparent manner.
2. For the accomplishment of the purposes of paragraph 1, each Party shall:
(a) make use of information and communications technology;
(b) simplify its customs procedures;
(c) harmonize its customs procedures, as far as possible, with relevant international standards and recommended practices such as those made under the auspices of the Customs Co-operation Council; and
(d) promote cooperation, wherever appropriate, between its customs authority and:
(i) other national authorities of the Party; and
(ii) the trading communities of the Party.
3. Each Party shall provide affected parties with accessible processes of administrative and judicial review in relation to the action concerning the customs matters taken by the Party.
Article 55. Cooperation and Exchange of Information
1. The Parties shall cooperate and exchange information with each other, in the field of customs procedures, including their enforcement against the trafficking of restricted and prohibited goods and the importation and exportation of goods suspected of infringing intellectual property rights.
2. Such cooperation and exchange of information shall be implemented as provided for in the Implementing Agreement.
Article 56. Sub-committee on Customs Procedures
1. For the purposes of the effective implementation and operation of this Chapter, the functions of the Sub-Committee on Customs Procedures (hereinafter referred to in this Article as "the Sub-Committee") established in accordance with Article 15 shall be:
(a) reviewing the implementation and operation of this Chapter;
(b) identifying areas, relating to this Chapter, to be improved for facilitating trade between the Parties;
(c) reporting the findings of the Sub-Committee to the Joint Committee; and
(d) carrying out other functions as may be delegated by the Joint Committee in accordance with Article 14.
2. Further to paragraph 2 of Article 15, the composition of the Sub-Committee shall be specified in the Implementing Agreement.
Chapter 5. Investment
Article 57. Scope
1. This Chapter shall apply to measures adopted or maintained by a Party relating to:
(a) investors of the other Party; and
(b) investments of investors of the other Party in the Area of the former Party.
2. In the event of any inconsistency between this Chapter and Chapter 6:
(a) with respect to matters covered by Articles 59, 60 and 63, Chapter 6 shall prevail to the extent of inconsistency; and
(b) with respect to matters not falling under subparagraph (a), this Chapter shall prevail to the extent of inconsistency.
3. This Chapter shall not apply to measures affecting the movement of natural persons of a Party.
Article 58. Definitions
For the purposes of this Chapter:
(a) the term “enterprise” means any legal person or any other entity duly constituted or organized under applicable laws and regulations, whether for profit or otherwise, and whether privately- owned or controlled or governmentally-owned or controlled, including any corporation, trust, partnership, joint venture, sole proprietorship, organization or company;
(b) an enterprise is:
(i) “owned” by an investor if more than 50 percent of the equity interests in it is beneficially owned by the investor; and
(ii) “controlled” by an investor if the investor has the power to name a majority of its directors or otherwise to legally direct its actions;
(c) the term “enterprise of the other Party” means an enterprise constituted or organized under the applicable laws and regulations of the other Party;
(d) the term “financial services” means financial services as defined in subparagraph 2(a)(i) of
Section 1 of Annex 7;
(e) the term “freely convertible currencies” means currencies which are, in fact, widely used to make payments for international transactions and are widely traded in the principal exchange markets;
(f) the term “investments” means every kind of asset invested by an investor, in accordance with applicable laws and regulations, including, though not exclusively:
(i) an enterprise and a branch of an enterprise;
(ii) shares, stocks or other forms of equity participation in an enterprise, including rights derived therefrom;
(iii) bonds, debentures, loans and other forms of debt, including rights derived therefrom;
(iv) rights under contracts, including turnkey, construction, management, production or
revenue-sharing contracts;
(v) claims to money and claims to any performance under contract having a financial value;
(vi) intellectual property rights, including copyrights, patent rights and rights relating to utility models, trademarks, industrial designs, layout-designs of integrated circuits, new varieties of plants, trade names, indications of source or geographical indications and undisclosed information;
(vii) rights conferred pursuant to laws and regulations or contracts such as concessions, licenses, authorizations and permits; and
(viii) any other tangible and intangible, movable and immovable property, and any related property rights, such as leases, mortgages, liens and pledges;
Note 1: Investments also include amounts yielded by investments, in particular, profit, interest, capital gains, dividends, royalties and fees. A change in the form in which assets are invested does not affect their character as investments.
Note 2: For the purposes of subparagraphs (ii) and (iii), a Party may, on a non-discriminatory basis, exclude portfolio investments which are determined by the use of the non- discriminatory and objective criteria adopted by the Party.
(g) the term “investment activities” means establishment, acquisition, expansion, management, conduct, operation, maintenance, use, enjoyment and sale or other disposition of investments;
(h) the term “investor of the other Party” means a national or an enterprise of the other Party;
(i) the term “national of the other Party” means a natural person having the nationality of the other Party in accordance with the applicable laws and regulations of the other Party;
(j) the term “New York Convention” means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958; and
(k) the term “transfers” means transfers and international payments.
Article 59. National Treatment
1. Each Party shall accord to investors of the other Party and to their investments treatment no less favourable than that it accords in like circumstances to its own investors and to their investments with respect to investment activities.
2. Notwithstanding paragraph 1, each Party may prescribe special formalities in connection with investment activities of investors of the other Party in its Area, provided that such formalities do not materially impair the protection afforded by the former Party to investors of the other Party and to their investments pursuant to this Chapter.
Article 60. Most-favoured-nation Treatment
Each Party shall accord to investors of the other Party and to their investments treatment no less favourable than that it accords in like circumstances to investors of a non-Party and to their investments with respect to investment activities.
Article 61. General Treatment
Each Party shall accord to investments of investors of the other Party fair and equitable treatment and full protection and security.
Article 62. Access to the Courts of Justice
Each Party shall in its Area accord to investors of the other Party treatment no less favourable than that it accords in like circumstances to its own investors or investors of a non-Party, with respect to access to its courts of justice and administrative tribunals and agencies in all degrees of jurisdiction, both in pursuit and in defense of such investors' rights.
Article 63. Prohibition of Performance Requirements
1. Neither Party shall impose or enforce any of the following requirements, in connection with investment activities in its Area of an investor of the other Party:
(a) to export a given level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord a preference to goods produced or services provided in its Area, or to purchase goods or services from natural or legal persons or any other entity in its Area;
(d) 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 investments of the investor;
(e) to restrict sales of goods or services in its Area that investments of the investor produce or provide by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
(f) to appoint, as executives or members of board of directors, individuals of any particular
nationality;
(g) to locate the headquarters of the investor for a specific region or the world market in its Area;
(h) to achieve a given level or value of research and development in its Area; or
(i) to supply to a specific region or the world market exclusively from its Area, one or more of the goods that the investor produces or the services that the investor provides.
2. Paragraph 1 does not preclude either Party from conditioning the receipt or continued receipt of an advantage, in connection with investment activities in its Area of an investor of the other Party, on compliance with any of the requirements set forth in subparagraphs 1 (g) through (i).
Article 64. Reservations and Exceptions
1. Articles 59, 60 and 63 shall not apply to:
(a) any non-conforming measure that is maintained by the following on the date of entry into force of this Agreement, with respect to the sectors or matters specified in Annex 4:
(i) the central government of a Party; or
(ii) a prefecture of Japan or a province of Indonesia;
(b) any non-conforming measure that is maintained by a local government other than a prefecture and a province referred to in subparagraph (a)(ii) on the date of entry into force of this Agreement;
(c) the continuation or prompt renewal of any nonconforming measure referred to in subparagraphs (a) and (b); or
(d) an amendment or modification to any nonconforming measure referred to in subparagraphs (a) and (b), provided that the amendment or modification does not decrease the conformity of the measure, as it existed immediately before the amendment or modification, with Articles 59, 60and 63.
2. Each Party shall, on the date of entry into force of this Agreement, notify the other Party of the following information on any non-conforming measure referred to in subparagraph 1(a):
(a) the sector or matter, with respect to which the measure is maintained;
(b) the domestic or international industry classification codes, where applicable, to which the measure relates;
(c) the level of the government which maintains the measure;
(d) the obligations under this Agreement with which the measure does not conform; (e) the legal source of the measure; and
(f) the succinct description of the measure.
3. Articles 59, 60 and 63 shall not apply to any measure that a Party adopts or maintains with respect to the sectors or matters specified in Annex 5.
4. Where a Party maintains any non-conforming measure on the date of entry into force of this Agreement with respect to the sectors or matters specified in Annex 5, the Party shall, on the same date, notify the other Party of the following information on the measure:
(a) the sector or matter, with respect to which the measure is maintained;
(b) the domestic or international industry classification codes, where applicable, to which the measure relates;
(c) the obligations under this Agreement with which the measure does not conform; (d) the legal source of the measure; and
(e) the succinct description of the measure.
5. Neither Party shall, under any measure adopted after the date of entry into force of this Agreement with respect to the sectors or matters specified in Annex 5, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment that exists at the time the measure becomes effective, unless otherwise specified in the initial approval by the relevant authority.
6. In cases where a Party makes an amendment or a modification to any non-conforming measure notified pursuant to paragraph 2 or 4, or where a Party adopts any new measure with respect to the sectors or matters specified in Annex 5, after the date of entry into force of this Agreement, the Party shall, as soon as possible:
(a) notify the other Party of detailed information on such amendment, modification or new measure; and
(b) respond, upon the request by the other Party, to specific questions from the other Party with respect to such amendment, modification or new measure.
7. Each Party shall endeavor, where appropriate, to reduce or eliminate the non-conforming measures that it adopts or maintains with respect to the sectors or matters specified in Annexes 4 and 5 respectively.
8. Articles 59 and 60 shall not apply to any measure covered by the exceptions to, or derogations from, obligations under Articles 3 and 4 of the TRIPS Agreement, as specifically provided in Articles 3 through 5 of the TRIPS Agreement.
9. Articles 59, 60 and 63 shall not apply to any measure that a Party adopts or maintains with respect to government procurement.
Article 65. Expropriation and Compensation
1. Neither Party shall expropriate or nationalize investments in its Area of investors of the other Party or take any measure tantamount to expropriation or nationalization (hereinafter referred to in this Chapter as “expropriation”) except:
(a) for a public purpose;
(b) on a non-discriminatory basis;
(c) in accordance with due process of law and Article 61; and
(d) upon payment of prompt, adequate and effective compensation pursuant to paragraphs 2 through 4.
2. The compensation shall be equivalent to the fair market value of the expropriated investments at the time when the expropriation was publicly announced or when the expropriation occurred, whichever is the earlier. The fair market value shall not reflect any change in market value occurring because the expropriation had become publicly known earlier.
3. The compensation shall be paid without delay and shall include interest at a commercially reasonable rate taking into account the length of time from the time of expropriation to the time of payment. It shall be effectively realizable and freely transferable and shall be freely convertible, at the market exchange rate prevailing on the date of expropriation, into the currency of the Party of the investors concerned and freely convertible currencies.
4. Without prejudice to Article 69, the investors affected by expropriation shall have a right of access to the courts of justice or the administrative tribunals or agencies of the Party making the expropriation to seek a prompt review of the investors’ case and the amount of compensation in accordance with the principles set out in this Article.
Article 66. Protection from Strife
1. Each Party shall accord to investors of the other Party that have suffered loss or damage relating to their investments in the Area of the former Party due to armed conflict or state of emergency such as revolution, insurrection, civil disturbance or any other similar event in the Area of that former Party, treatment, as regards restitution, indemnification, compensation or any other settlement, that is no less favourable than that it accords to its own investors or to investors of a non-Party.
2. Any payments as a means of settlement referred to in paragraph 1 shall be effectively realizable, freely transferable and freely convertible at the market exchange rate into the currency of the Party of the investors concerned and freely convertible currencies.
Article 67. Transfers
1. Each Party shall ensure that all transfers relating to investments in its Area of an investor of the other Party may be made freely into and out of its Area without delay. Such transfers shall include those of:
(a) the initial capital and additional amounts to maintain or increase investments;
(b) profits, capital gains, dividends, royalties, interests, fees and other current incomes
accruing from investments;
(c) proceeds from the total or partial sale or liquidation of investments;
(d) payments made under a contract including loan payments in connection with investments;
(e) earnings and remuneration of personnel from the other Party who work in connection with investments in the Area of the former Party;
(f) payments made in accordance with Articles 65 and 66; and
(g) payments arising out of the settlement of a dispute under Article 69.
2. Each Party shall further ensure that such transfers may be made in freely convertible currencies at the market exchange rate prevailing on the date of each transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may delay or prevent such transfers through the equitable, non-discriminatory and good-faith application of its laws relating to:
(a) bankruptcy, insolvency or the protection of the rights of creditors;
(b) issuing, trading or dealing in securities;
(c) criminal or penal offenses; or
(d) ensuring compliance with orders or judgments in adjudicatory proceedings.
Article 68. Subrogation
1. If a Party or its designated agency makes a payment to any of its investors under an indemnity, guarantee or contract of insurance given in respect of an investment of that investor within the Area of the other Party, the other Party shall:
(a) recognize the assignment, to the former Party or its designated agency, of any right or claim of the investor that formed the basis of such payment; and
(b) recognize the right of the former Party or its designated agency to exercise by virtue of subrogation such right or claim to the same extent as the original right or claim of the investor.
2. Articles 65 through 67 shall apply mutatis mutandis as regards payment to be made to the Party or its designated agency mentioned in paragraph 1 by virtue of such assignment of right or claim, and the transfer of such payment.
Article 69. Settlement of Investment Disputes between a Party and an Investor of the other Party
1. For the purposes of this Chapter, an “investment dispute” is a dispute between a Party and an investor of the other Party that has incurred loss or damage by reason of, or arising out of, an alleged breach of any obligation under this Agreement with respect to the investor and its investments.
2. An investment dispute shall, as far as possible, be settled amicably through consultation or negotiation between an investor who is a party to the investment dispute (hereinafter referred to in this Article as “disputing investor”) and the Party that is a party to the investment dispute (hereinafter referred to in this Article as “disputing Party”).
3. Nothing in this Article shall be construed so as to prevent a disputing investor from seeking administrative or judicial settlement within the disputing Party in accordance with the laws and regulations of the disputing Party.
4. If the investment dispute cannot be settled through consultation or negotiation referred to in paragraph 2 within five months from the date on which the disputing investor requested for the consultation or negotiation in writing and if the disputing investor has not submitted the investment dispute for resolution under courts of justice or administrative tribunals or agencies, the disputing investor may submit the investment dispute to one of the following international conciliations or arbitrations:
(a) conciliation or arbitration in accordance with the Convention on the Settlement of Investment Dispute between States and Nationals of Other States(hereinafter referred to in this Article as “the ICSID Convention”), so long as the ICSID Convention is in force between the Parties;
(b) conciliation or arbitration under the Additional Facility Rules of the International Centre for Settlement of Investment Disputes, so long as the ICSID Convention is not in force between the Parties;
(c) arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law, adopted by the United Nations Commission on International Trade Law on April 28, 1976; and
(d) if agreed with the disputing Party, any arbitration in accordance with other arbitration rules.
5. The applicable conciliation or arbitration rules shall govern the conciliation or arbitration set forth in paragraph 4 except to the extent modified in this Article.
6. A disputing investor who intends to submit the investment dispute to conciliation or arbitration pursuant to paragraph 4 shall give to the disputing Party written notice of intent to do so at least 90 days before the investment dispute is submitted. The notice of intent shall specify:
(a) the name and address of the disputing investor;
(b) the specific measures of the disputing Party at issue and a brief summary of the factual and legal basis of the investment dispute sufficient to present the problem clearly, including the provisions under this Agreement alleged to have been breached; and
(c) conciliation or arbitration set forth in paragraph 4 which the disputing investor will choose.
7. (a) Each Party hereby consents to the submission of investment disputes by a disputing investor to conciliation or arbitration set forth in paragraph 4.
(b) The consent given by subparagraph (a) and the submission by a disputing investor of an
investment dispute to conciliation or arbitration shall satisfy the requirements of:
(i) Chapter II of the ICSID Convention or the Additional Facility Rules of the International Centre for Settlement of Investment Disputes, for written consent of the parties to a dispute; and
(ii) Article II of the New York Convention for an agreement in writing.
8. Notwithstanding paragraph 7, no investment dispute may
be submitted to conciliation or arbitration set forth in paragraph 4, if more than three years have elapsed since the date on which the disputing investor acquired or should have first acquired, whichever is the earlier, the knowledge that the disputing investor had incurred loss or damage referred to in paragraph 1.
9. Notwithstanding paragraph 4, the disputing investor may initiate or continue an action that seeks interim injunctive relief that does not involve the payment of damages before an administrative tribunal or agency or a court of justice under the law of the disputing Party.
10. Unless the disputing investor and the disputing Party (hereinafter referred to in this Article as “the disputing parties”) agree otherwise, an arbitral tribunal established under paragraph 4 shall comprise three arbitrators, one arbitrator appointed by each of the disputing parties and the third, who shall be the presiding arbitrator, appointed by agreement of the disputing parties. If the disputing investor or the disputing Party fails to appoint an arbitrator or arbitrators within 60 days from the date on which the investment dispute was submitted to arbitration, the Secretary-General of the International Centre for Settlement of Investment Disputes (hereinafter referred to in this Article as “ICSID”), may be requested by either of the disputing parties, to appoint the arbitrator or arbitrators not yet appointed from the ICSID Panel of Arbitrators subject to the requirements of paragraphs 11 and 12.
11. Unless the disputing parties agree otherwise, the third arbitrator shall not be a national of either Party,
nor have his or her usual place of residence in either
Party, nor be employed by either of the disputing parties,