Title

AGREEMENT BETWEEN THE SLOVAK REPUBLIC AND ......................... FOR THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS

Preamble

PREAMBLE

The Slovak Republic and ................ (hereinafter referred to as the "Contracting Parties");

INTENDING to create and maintain favourable conditions for investments by investors of one Contracting Party in the territory of the other Contracting Party,

RECOGNIZING the need to promote and protect foreign investments and to support cooperation between investors and the Host State with the aim of fostering the economic prosperity and sustainable development of both States,

AIMING to ensure the balance between interests of investors and Host State, AFFIRMING the mutual supportiveness of investment, environment and labour policies in this respect,

REAFFIRMING their commitment to democracy, the rule of law, human rights and fundamental freedoms in accordance with their obligations under international law,

DETERMINED to prevent and combat corruption, including bribery, in international investment and to encourage investors to respect internationally recognised corporate social responsibility standards and principles, such as the OECD Guidelines for Multinational Enterprises,

Have agreed as follows:

Body

Section A. DEFINITIONS AND SCOPE

Article 1. Definitions

For the Purposes of this Agreement:

1. The term "enterprise" means any for profit entity constituted or organized under applicable law of the contracting parties, whether privately or governmentally owned or controlled, including a corporation, partnership, sole proprietorship, association, or similar organization.

2. The term "investment" means the following kinds of asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, inter alia, the commitment of capital or other resources, the expectation of gain or profit the assumption of risk, a certain duration and the investor performs via its investment substantial business activities in the Host State:

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) any other kind of interest in an enterprise;

f) an interest arising from:

(i) a concession conferred pursuant to the law of a Party or under a contract, including to search for, cultivate, extract or exploit natural resources,

(ii) a turnkey, construction, production or revenue-sharing contract; or

(iii) other similar contracts;

g) intellectual property rights;

h) other moveable property, tangible or intangible, or immovable property and related rights;

i) claims to money or claims to performance under a contract.

For greater certainty, the investment does not include:

a) claims to money that arise solely from commercial contracts for the sale of goods or services by a natural person or enterprise in the territory of a Party to a natural person or enterprise in the territory of the other Party.

b) the domestic financing of such contracts; or

c) any order, judgment, or arbitral award related to sub-subparagraph (a) or (b);

d) private equity funds;

e) futures, swaps, forwards, options, and other derivatives traded in nonregulated, over the counter, market.

3. The term "investor" means:

a) a natural person who is cumulatively a national and permanent resident of the Home State; a natural person who is a dual national shall be deemed to be exclusively a national of the state of his or her dominant and effective nationality;

b) an enterprise other than a branch and a representative office or a sovereign wealth fund], which is constituted or organised under the law of the Home State and has its seat, together with substantial business activities in the territory of the Home State.

4. The term "territory" means the territory of a Contracting Party as defined by the land territory, internal waters and the airspace above them over which it exercises sovereignty, sovereign rights and jurisdiction in accordance with international law.

5. The term "Host State" means the Contracting Party in which the investment is located.

6. The term "Home State" means the Contracting Party which is the state of origin of the investor.

7. The term "returns" means all amounts yielded by or derived from an investment or reinvestment, including profits, dividends, capital gains, royalties, interest, payments in connection with intellectual property rights, payments in kind and all other lawful income.

8. The term "ICSID Additional Facility Rules" means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes.

9. The term "ICSID Convention" means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington, March 18, 1965.

10. The term "disputing parties" means the claimant and the respondent.

11. The term "claimant" means investor or alleged investor seeking a remedy for the alleged breach of the Agreement by the Host State under Section C [Investor State Dispute Settlement].

12. The term "respondent" means the Contracting Party that is a party to proceedings under Section C.

Article 2. Scope

1. This Agreement applies to measures adopted or maintained by a Host State relating to investors and their investments.

2. This Agreement shall apply to investments in the territory of a Host State that are made in accordance with its law by investors, whether investments were made before or after entry into force of the Agreement.

3. This Agreement shall not apply to claims or disputes arising from events which occurred prior to its entry into force.

4. This Agreement shall apply without prejudice to the obligations of the Host State deriving from their membership or participation in any existing or future customs unions, economic union, regional economic integration agreement or similar international agreement such as the European Union. Consequently the provisions of this Agreement may not be invoked or interpreted, neither in whole nor in part, in such a way as to invalidate, amend or otherwise affect the obligations of the Slovak Republic arising from the Treaties on which the European Union is founded as well as from the primary and secondary law of the European Union.

5. This Agreement shall not apply to measures by a Host State in public health insurance and pension schemes.

Section B. PROMOTION AND PROTECTION OF INVESTMENTS

Article 3. Promotion of Investments

1. Each Contracting Party shall in its territory promote as far as possible investments by investors of the other Contracting Party and admit such investments in accordance with its laws and regulations.

2. The Contracting Parties recognise that it is inappropriate to weaken or reduce the level of protection provided by domestic health, safety, labour or environmental laws, regulations or standards with the sole intention to encourage investment. Accordingly, a Contracting Party shall not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws, regulations or standards in order to encourage investment of an investor from the other Contracting Party.

3. Each Contracting Party shall publish, or otherwise make publicly available, its laws and regulations of general application as well as international agreements which may affect the investments of investors of the other Contracting Party in the territory of the former Contracting Party.

Article 4. Right to Regulate

1. For the purpose of this Agreement, the Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity.

2. For greater certainty, the mere fact that a Home state regulates, including through a modification to its laws, in a manner which negatively affects an investment or interferes with an investor's expectations, including its expectations of profits, does not amount to a breach of an obligation under this Section.

3. For greater certainty, a Party's decision not to issue, renew or maintain a subsidy:

a) in the absence of any specific commitment under law or contract to issue, renew, or maintain that subsidy;

b) or in accordance with any terms or conditions attached to the issuance, renewal or maintenance of the subsidy,

does not constitute a breach of the provisions of this Section.

4. For greater certainty, nothing in this Section shall be construed as preventing a Party from discontinuing the granting of a subsidy or requesting its reimbursement where such measure is necessary in order to comply with international obligations between the Parties or has been ordered by a competent court, administrative tribunal or other competent authority, or requiring that Party to compensate the investor therefor.

Article 5. Standard of Treatment

1. Each Contracting Party shall accord to investments and returns of investors of the other Contracting Party, and to investors with respect to their investments, at all times fair and equitable treatment and full protection and security in accordance with paragraphs 2 to 4.

2. A breach of the obligation of fair and equitable treatment referenced in paragraph 1 may be found only where a measure or series of measures constitutes:

a) denial of justice in criminal, civil or administrative proceedings;

b) fundamental breach of due process, including a fundamental breach of transparency, in judicial and administrative proceedings;

c) manifest arbitrariness;

d) targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief; or

e) abusive treatment of investors, such as coercion, duress and harassment.

3. For greater certainty, "full protection and security" refers to the Party's obligations relating to physical security of investors and investments.

4. For greater certainty, a breach of another provision of this Agreement, or of a separate international agreement does not establish a breach of this Article.

5. Upon a proposal of a Contracting Party the Contracting Parties shall duly consider the amendment of the paragraph 2. of this Article in order to add another elements which constitute breach of the fair and equitable treatment obligation.

Article 6. National Treatment and Most Favoured Nation Treatment

1. Each Contracting Party shall accord to investors of the other Contracting Party and their investments and returns treatment no less favourable than that it accords, in like circumstances, to its own investors and their investments and returns with respect to the management, conduct, operation, maintenance, use, enjoyment, expansion and sale or other disposition of investments in its territory.

2. Each Contracting Party shall accord to investors of the other Contracting Party and their investments and returns treatment no less favourable than that it accords, in like circumstances, to investors of any third state or to their investments and returns with respect to the management, conduct, operation, maintenance, use, enjoyment, expansion and sale or other disposition of investments in its territory.

3. For greater certainty, a determination of whether an investment or an investor is in like circumstances for the purposes of paragraphs 1 and 2 shall be made based on an assessment of the totality of circumstances related to the investor or the investment, including the business sector in which the investor operates, character of the measure, its nature, purpose, duration or and rationale.

4. For greater certainty, the "treatment" referred to in paragraph 2 includes neither procedures for the resolution of investment disputes between investors and states provided for in other international investment treaties, nor investment contracts concluded between Host State and investors promoting investment of such investors. Substantive obligations in other international investment treaties and other trade agreements do not in themselves constitute "treatment", and thus cannot give rise to a breach of this Article, absent measures adopted or maintained by a Party pursuant to those obligations.

5. The provisions of paragraphs 1 and 2 of this Article shall not apply to:

a) government procurement;

b) subsidies or grants provided by a Host State, including government-supported loans, guarantees and insurance.

Article 7. Expropriation

1. A Party shall not nationalise or expropriate a covered investment either directly, or indirectly through measures having an effect equivalent to nationalisation or expropriation ("expropriation"), except:

a) for a public purpose;

b) under due process of law;

c) in a non-discriminatory manner; and

d) on payment of prompt, adequate and effective compensation.

2. The compensation referred to in paragraph 1 shall amount to the fair market value of the investment at the time immediately before the expropriation or the impending expropriation became known, whichever is earlier. Valuation criteria shall include going concern value, asset value including the declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value.

3. The compensation shall also include interest at a normal commercial rate from the date of expropriation until the date of payment and shall, in order to be effective for the investor, be paid and made transferable, without delay, to the country designated by the investor and in the currency of the country of which the investor is a national or in any freely convertible currency accepted by the investor.

4. Expropriation may be direct or indirect:

a) direct expropriation occurs when an investment is nationalised or otherwise directly expropriated through formal transfer of title or outright seizure; and

b) indirect expropriation occurs if a measure or series of measures of a Party has an effect equivalent to direct expropriation, in that it substantially deprives the investor of the fundamental attributes of property in its investment, including the right to use, enjoy and dispose of its investment, without formal transfer of title or outright seizure.

5. The determination of whether a measure or series of measures of a Party, in a specific fact situation, constitutes an indirect expropriation requires a case-by-case, fact-based inquiry that takes into consideration, 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 does not establish that an indirect expropriation has occurred;

b) the duration of the measure or series of measures of a Party;

c) the extent to which the measure or series of measures interferes with distinct, reasonable investment-backed expectations; and

d) the character of the measure or series of measures, notably their object, context and intent.

6. For greater certainty, except in the rare circumstance when the impact of a measure or series of measures is so severe in light of its purpose that it appears manifestly excessive, 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 expropriations.

7. This Article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights, to the extent that such issuance is consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreements ("TRIPS Agreement").

8. For greater certainty, the revocation, limitation or creation of intellectual property rights, to the extent that these measures are consistent with the TRIPS Agreement, do not constitute expropriation.

Article 8. Compensation for Losses

1. Investors of a Contracting Party whose covered investments suffer losses owing to war or other armed conflict, revolution, a state of national emergency, revolt, insurrection, riot, or any other similar event in the territory of the other Party shall be accorded by the latter Party, with respect to restitution, indemnification, compensation or other form of settlement, treatment no less favourable than that accorded by the latter Party to its own investors or to the investors of any third state, whichever is more favourable to the investor

2. Without prejudice to paragraph 1 of this Article, investors of a Party who, in any of the situations referred to in that paragraph, suffer losses in the territory of the other Party resulting from:

a) requisitioning of their covered investment or a part thereof by the latter's armed forces or authorities; or

b) destruction of their covered investment or a part thereof by the latter's armed forces or authorities, which was not required by the necessity of the situation;

shall be accorded prompt, adequate and effective restitution or compensation by the other Party.

The amount of such compensation shall be determined in accordance with the provisions of paragraph 2 of Article 7, from the date of requisitioning or destruction until the date of actual payment.

Article 9. Transfers

1. Each Party shall permit all transfers relating to a covered investment to be made without restriction or delay in a freely convertible currency and at the market rate of exchange applicable on the date of transfer. Such transfers include:

a) contributions to capital, such as principal and additional funds to maintain, develop or increase the investment;

b) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, or other forms of returns or amounts derived from the covered investment;

c) proceeds from the sale or liquidation of the whole or a part of the covered investment;

d) payments made under a contract entered into by the investor or the covered investment, including payments made pursuant to a loan agreement;

e) payments made pursuant to Articles 7 and 8;

f) earnings and other remuneration of foreign personnel working in connection with an investment; and

g) payments of damages pursuant to an award issued under Section C.

2. Unless otherwise agreed with the investor, each Contracting Party shall ensure that the investor can make such transfers at the rate of exchange applicable on the date of transfer pursuant to the exchange regulations in force of the Contracting Party in whose territory the investment was made.

3. Nothing in this Article shall be construed to prevent a Party from applying in an equitable and non-discriminatory manner and not in a way that would constitute a disguised restriction on transfers, 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) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;

e) the satisfaction of judgments in adjudicatory proceedings.

f) compulsory contributions to social security, public retirement and compulsory savings programs; or

g) compliance with taxation laws.

Article 10. Denial of Benefits

A Party may deny the benefits of this Section to an investor of the other Party that is an enterprise of that Party and to investments of that investor if:

a) an investor of a third country owns or controls the enterprise; and

b) the denying Party adopts or maintains a measure with respect to the third country that:

i. relates to the maintenance of international peace and security; and

ii. prohibits transactions with the enterprise or would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to its investments.

Article 11. Subrogation

1. If a Contracting Party, or an agency thereof, makes a payment under an indemnity, guarantee or contract of insurance it has entered into in respect of an investment made by one of its investors in the territory of the other Contracting Party, the other Contracting Party shall recognize that the Contracting Party or its agency 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 Contracting Party or an agency thereof, or by the investor if the Contracting Party or an agency thereof so authorizes. The subrogated right or claim shall not be greater than the original right or claim of the said investor.

Article 12. Prudential Measures

1. Nothing in this Agreement shall prevent a Contracting Party from adopting or maintaining measures for prudential reasons, including for:

a) the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is owed by a financial service supplier; and

b) ensuring the integrity and stability of a Contracting Party's financial system.

2. [Where such measures do not conform with the provisions of this Agreement, they shall not be used as a means of avoiding the Contracting Party's commitments or obligations under the Agreement.

3. Nothing in this Agreement shall be construed as requiring a Contracting Party to disclose information relating to the affairs and accounts of individual customers or any confidential or proprietary information in the possession of public entities.]

Article 13. Taxation Measures

1. Except as provided in this Article, nothing in this Agreement shall impose obligations on Contracting Parties with respect to taxation measures. 

2. Article 5 shall apply to all taxation measures, except that a claimant that asserts that a taxation measure involves an expropriation may submit a claim to arbitration under Section C only if: 

a) the claimant has first referred to the competent tax authorities of both Contracting Parties in writing the issue of whether that taxation measure involves an expropriation; and

b) within 180 days after the date of such referral, the competent tax authorities of both Contracting Parties fail to agree that the taxation measure is not an expropriation.

3. For the purposes of this Article, the "competent tax authorities" means:

a) for the Slovak Republic, the Ministry of Finance of the Slovak Republic

b) for the............