Title
AGREEMENT BETWEEN CANADA AND THE STATE OF KUWAIT FOR THE PROMOTION AND PROTECTION OF INVESTMENTS
Preamble
CANADA AND THE STATE OF KUWAIT, hereinafter referred to as the "Parties,"
RECOGNIZING that the promotion and the protection of investments of investors of one Party in the territory of the other Party will be conducive to the stimulation of mutually beneficial business activity, to the development of economic cooperation
between them and to the promotion of sustainable development,
HAVE AGREED AS FOLLOWS:
Body
Section A. Definitions
Article 1. Definitions
For the purposes of this Agreement:
"central government" means the federal government in the case of Canada and the government of Kuwait in the case of the State of Kuwait;
"confidential information" means confidential business information and information that is privileged or otherwise protected from disclosure;
"covered investments" means, with respect to a Party, existing investments in its territory of an investor of the other Party, as well as investments made or acquired after the entry into force of this Agreement;
"disputing Contracting Party" means a Party against which a claim is made under Section C;
"disputing investor" means an investor that makes a claim under Section C;
"disputing party" means the disputing investor or the disputing Contracting Party;
"enterprise" means:
(a) any entity constituted or organized under applicable law, whether or not for profit, whether privately-owned or governmentally-owned, including any corporation, trust, partnership, sole proprietorship, joint venture or other association; and
(b) a branch of an entity described in subparagraph (a);
"existing" means in effect on the date of entry into force of this Agreement;
"financial institution" means any financial intermediary or other enterprise that is authorized to do business and regulated or supervised as a financial institution under the law of the Party in whose territory it is located;
"financial service" means a service of a financial nature, including insurance, and a service incidental or auxiliary to a service of a financial nature;
"freely convertible currency" means any currency that is widely used to make payments for international transactions and is widely traded in the principal exchange markets;
"ICSID" means the International Centre for Settlement of Investment Disputes;
"ICSID Convention" means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington on 18 March 1965;
"information protected under its competition laws" means:
(a) in the case of Canada, information within the scope of Section 29 of the Competition Act, R.S.C. 1985, c.34, or any successor provision; and,
(b) in the case of the State of Kuwait, information within the scope of Article 14 of Law No.10 of 2007 concerning the Protection of Competition.
"intellectual property rights" means copyright and related rights, trademark rights, rights in geographical indications, rights in industrial designs, patent rights, rights in layout designs of integrated circuits, rights in relation to protection of undisclosed information, and plant breeders' rights;
"investment" means:
(a) an enterprise;
(b) shares, stocks and other forms of equity participation in an enterprise;
(c) bonds, debentures, and other debt instruments of an enterprise;
(d) a loan to an enterprise;
(e) notwithstanding subparagraphs (c) and (d) above, a loan to or debt security issued by a financial institution is an investment only where the loan or debt security is treated as regulatory capital by the Party in whose territory the financial institution is located;
(f) an interest in an enterprise that entitles the owner to a share in income or profits of the enterprise;
(g) an interest in an enterprise that entitles the owner to share in the assets of that enterprise on dissolution;
(h) interests arising from the commitment of capital or other resources in the territory of a Party to economic activity in such territory, such as under:
(1) contracts involving the presence of an investor's property in the territory of the Party, including turnkey or construction contracts, and concessions such as to search for and extract oil and other natural resources, or
(2) contracts where remuneration depends substantially on the production, revenues or profits of an enterprise;
(i) intellectual property rights; and
(j) any other tangible or intangible, moveable or immovable, property and related property rights acquired in the expectation of or used for the purpose of economic benefit or other business purpose;
but "investment" does not mean:
(k) claims to money that arise solely from:
(1) 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
(2) the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by subparagraph (d); or
(l) any other claims to money, that do not involve the kinds of interests set out in subparagraphs (a) to (j);
"investment of an investor of a Party" means an investment owned or controlled directly or indirectly by an investor of such Party;
"investor of a Party" means a Party, a national of a Party or an enterprise of a Party, that seeks to make, is making or has made an investment. For greater certainty, in the case of the State of Kuwait, the Kuwait Fund for Arab Economic Development and the Kuwait Investment Authority are investors of Kuwait;
"measure" includes any law, regulation, procedure, requirement, or practice;
"national", for the purposes of this Agreement, means:
(a) with respect to Canada, a natural person who is a citizen or permanent resident of Canada; and
(b) with respect to Kuwait, a natural person holding the nationality of the State of Kuwait.
A natural person who is a citizen of one Party and a permanent resident of the other Party shall be deemed to be exclusively a national of the Party of his or her citizenship;
"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;
"person" means a natural person or an enterprise;
"sub-national government" means with respect to Canada, provincial, territorial or local governments;
"territory" means:
(a) In respect of Canada
(1) the land territory, internal waters and territorial sea, including the air space above these areas of Canada,
(2) the exclusive economic zone of Canada, as determined by its domestic law, consistent with Part V of the United Nations Convention on the Law of the Sea (UNCLOS), and
(3) the continental shelf of Canada, as determined by its domestic law, consistent with Part VI of UNCLOS;
(b) with respect to the State of Kuwait, the territory of Kuwait including any area beyond the territorial sea which, in accordance with international law, has been or may hereafter be designated under the laws of Kuwait, as an area over which Kuwait may exercise sovereign rights or jurisdiction;
"Tribunal" means an arbitration tribunal established under Article 23 (Submission of a Claim to Arbitration) or Article 27 (Consolidation);
"UNCITRAL Arbitration Rules" means the arbitration rules of the United Nations Commission on International Trade Law, approved by the United Nations General Assembly on 15 December 1976;
"without delay" means, with respect to transfers, such period as is normally required for the completion of necessary formalities for the transfer of payments.
Section B. Substantive Obligations
Article 2. Scope
1. This Agreement shall apply to measures adopted or maintained by a Party relating to:
(a) investors of the other Party; and
(b) covered investments.
2. The obligations in Section B shall apply to any person of a Party when it exercises any regulatory, administrative or other governmental authority delegated to it by that Party.
Article 3. Promotion of Investment
Each Party shall encourage the creation of favourable conditions for investment in its territory by investors of the other Party and shall admit such investments in accordance with this Agreement.
Article 4. National Treatment
1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory.
3. The treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a sub-national government, treatment no less favourable than the treatment accorded, in like circumstances, by that sub-national government to investors, and to investments of investors, of the Party of which it forms a part.
Article 5. Most-favoured-nation Treatment
1. Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments of investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory.
3. For greater certainty, the treatment accorded by a Party under this Article means, with respect to a sub-national government, treatment accorded, in like circumstances, by that sub-national government to investors, and to investments of investors, of a non-Party.
Article 6. Minimum Standard of Treatment
1. Each Party shall accord to covered investments treatment in accordance with the customary international law minimum standard of treatment of aliens, including fair and equitable treatment and full protection and security.
2. The concepts of "fair and equitable treatment" and "full protection and security" in paragraph 1 do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens.
3. A breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article.
Article 7. Compensation for Losses
Notwithstanding paragraph 6 of Article 16, each Party shall accord to investors of the other Party and to covered investments, non-discriminatory treatment with respect to measures it adopts or maintains, including measures concerning compensation relating to losses suffered by investments in its territory owing to armed conflict, civil strife or a natural disaster.
Article 8. Senior Management, Boards of Directors and Entry of Personnel
1. A Party may not require that enterprises of that Party that are covered investments appoint individuals of any particular nationality to senior management positions.
2. A Party may require that a majority of the board of directors, or any committee thereof, of enterprises that are covered investments, 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.
3. Subject to its laws, regulations and policies relating to the entry of non-nationals, each Party shall grant temporary entry to nationals employed by an investor of the other Party who seek to render managerial or executive services, or services that require specialized knowledge, to an investment of that investor in the territory of the Party.
Article 9. Performance Requirements
1. The Parties reaffirm their obligations under the World Trade Organisation Agreement on Trade-Related Investment Measures (TRIMs), the provisions of which, including any amendments made thereto from time to time that have taken effect for both Parties, are incorporated into and made part of this Agreement.
2. The Parties may not impose or enforce any of the following requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, conduct or operation of an investment of an investor of a Party in its territory:
(a) to export a given level or percentage of goods;
(b) to achieve a given level or percentage of domestic content;
(c) to transfer technology, a production process or other proprietary knowledge to a person in its territory except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority to remedy an alleged violation of competition laws or to act in a manner not inconsistent with other provisions of this Agreement; or
(d) to supply exclusively from the territory of the Party the goods it produces or the services it provides to a specific regional market or to the world market.
3. For greater certainty, paragraph 2 shall not be construed to prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory, on compliance with a requirement set out in that paragraph.
4. A measure that requires an investment to use a technology to meet generally applicable health, safety or environmental requirements shall not be construed to be inconsistent with subparagraph 2(c).
Article 10. Expropriation
1. A Party shall not nationalize or expropriate covered investments either directly or indirectly through measures having an effect equivalent to nationalization or expropriation (hereinafter referred to as "expropriation") except for a public purpose, in accordance with due process of law, in a non-discriminatory manner and on payment of prompt, adequate and effective compensation.
2. Such compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place ("date of expropriation"), and shall not reflect any change in value occurring because the intended expropriation had become known earlier. Valuation criteria shall include going concern value, asset value including declared tax value of tangible property, and other criteria to determine fair market value as appropriate.
3. Compensation shall be paid without delay and shall be fully realizable and freely transferable. Compensation shall be payable in a freely convertible currency and shall include interest at a commercially reasonable rate for that currency from the date of expropriation until the date of payment.
4. The investor affected shall have a right under the law of the expropriating Party to prompt review of its case and of the valuation of its investment by a judicial or other independent authority of that Party, in accordance with the principles set out in this Article.
5. For the purposes of this Article, indirect expropriation results from a measure or series of measures of a Party that have an effect equivalent to direct expropriation without formal transfer of title or outright seizure.
6. In the context of any dispute arising under Section C of this Agreement, the determination of whether a measure or series of measures of a Party constitute an indirect expropriation shall be determined through a case-by-case, fact-based inquiry that shall consider, among other factors:
(a) the economic impact of the measure or series of measures, although the sole fact that a measure or series of measures of a Party has an adverse effect on the economic value of an investment shall not establish that an indirect expropriation has occurred;
(b) the extent to which the measure or series of measures interfere with distinct, reasonable investment-backed expectations; and
(c) the character of the measure or series of measures;
7. Except in rare circumstances, such as when a measure or series of measures are so severe in the light of their purpose that they cannot be reasonably viewed as having been adopted and applied in good faith, non-discriminatory measures of a Party that are designed and applied to protect legitimate public welfare objectives, such as health, safety and the environment, do not constitute indirect expropriation.
8. This Article shall not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with the World Trade Organisation Agreement.
Article 11. Transfers
1. Each Party shall permit all transfers relating to covered investments to be made freely and without delay, into and out of its territory. Such transfers include:
(a) contributions to capital;
(b) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, returns in kind and other amounts derived from the investment;
(c) proceeds from the sale of all or any part of covered investments or from the partial or complete liquidation of covered investments;
(d) payments made under a contract entered into by the investor, or covered investments, including payments made pursuant to a loan agreement;
(e) payments made pursuant to Articles 7 (Compensation for Losses) and 10 (Expropriation); and
(f) payments arising under Section C.
2. Each Party shall permit transfers relating to covered investments to be made in the convertible currency in which the capital was originally invested, or in any other convertible currency agreed to by the investor and the Party concerned. Unless otherwise agreed by the investor, transfers shall be made at the market rate of exchange applicable on the date of transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer 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 offences;
(d) reports of transfers of currency or other monetary instruments; or
(e) ensuring the satisfaction of judgments in adjudicatory proceedings.
4. A Party may not require its investors to transfer, or penalize its investors for failure to transfer, the income, earnings, profits or other amounts derived from, or attributable to, investments in the territory of the other Party.
5. Paragraph 4 shall not be construed to prevent a Party from imposing any measure through the equitable, non-discriminatory and good faith application of its laws relating to the matters in subparagraphs (a) through (e) of paragraph 3.
6. Notwithstanding the provisions of paragraphs 1, 2 and 4, and without limiting the applicability of paragraph 5, a Party may prevent or limit transfers by a financial institution to, or for the benefit of, an affiliate of or person related to such institution, through the equitable, non-discriminatory and good faith application of measures relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions.
7, Notwithstanding paragraph 1, a Party may restrict transfers of returns in kind in circumstances where it could otherwise restrict transfers under the World Trade Organisation Agreement and as set out in paragraph 3.
Article 12. Transparency
1. Each Party shall ensure that its laws, regulations, procedures, and administrative rulings of general application respecting any matter covered by this Agreement are promptly published or otherwise made available in such a manner as to enable interested persons and the other Party to become acquainted with them.
2. To the extent possible, each Party shall:
(a) publish in advance any such measure that it proposes to adopt; and
(b) provide interested persons and the other Party a reasonable opportunity to comment on such proposed measures.
3. Upon request by a Party, information shall be exchanged on the measures of the other Party that may have an impact on covered investments.
Article 13. Subrogation
1. If a Party or any agency thereof makes a payment to any of its investors under a guarantee or a contract of insurance it has entered into in respect of an investment, the other Party shall recognize the validity of the subrogation in favour of such Party or agency to any right or title held by the investor.
2. A Party or any agency thereof which is subrogated to the rights of an investor in accordance with paragraph 1 of this Article shall be entitled in all circumstances to the same rights as those of the investor in respect of the investment. Such rights may be exercised by the Party or any agency thereof, or by the investor if the Party or any agency thereof so authorizes.
Article 14. Taxation Measures
1. Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.
2. Nothing in this Agreement shall affect the rights and obligations of the Parties under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall apply to the extent of the inconsistency.
3. Nothing in this Agreement shall be construed to require a Party to furnish or allow access to information the disclosure of which would be contrary to the Party's law protecting information concerning the taxation affairs of a taxpayer.
4. Subject to paragraph 2, the provisions of Articles 4 (National Treatment) and 5 (Most-Favoured-Nation Treatment) shall apply to all taxation measures, other than those on income, capital gains or on the taxable capital of corporations, except that nothing in those Articles shall apply:
(a) to a non-conforming provision of any existing taxation measure;
(b) to the continuation or prompt renewal of a non-conforming provision of any existing taxation measure;
(c) to an amendment to a non-conforming provision of any existing taxation measure to the extent that the amendment does not decrease its conformity at the time of the amendment with any of those Articles;