disputing parties: the disputing investor and the disputing Party;
UNCITRAL Arbitration Rules: the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), adopted by the General Assembly of the United Nations on December 15, 1976;
UNCITRAL Arbitration Rules: the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), adopted by the General Assembly of the United Nations on December 15, 1976;
Secretary-General: the Secretary-General of ICSID;
transfers: international remittances and payments; tribunal: an arbitral tribunal established in accordance with Article 15-21;
consolidation tribunal: an arbitral tribunal established under Article 15-27.
Article 15-02. Scope of Application.
1. This Chapter applies to measures adopted or maintained by a Party relating to:
(a) investors of the other Party;
(b) investments of investors of a Party made in the territory of the other Party; and
(c) with respect to Article 15-05, all investments in the territory of the other Party.
2. This Chapter applies in the territory of each Party, at any level or order of government, notwithstanding any inconsistent measures that may exist in their respective laws, except as provided in Article 15-07.
3. This Chapter does not apply to:
(a) economic activities reserved to each Party, in accordance with its legislation in force, which shall be listed no later than one year after the entry into force of this Agreement;
(b) measures adopted or maintained by a Party relating to financial services; and
c) measures adopted by a Party to restrict the participation of investments of investors of the other Party in its territory for reasons of national security.
Article 15-03. National Treatment
1. Each Party shall accord to investors of the other Party, and to investments of investors of the other Party, treatment no less favorable than that it accords, in like circumstances, to its own investors.
2. Each Party shall accord to investors of the other Party, with respect to investments that suffer losses in its territory due to armed conflict or civil strife, or acts of God or force majeure, nondiscriminatory treatment with respect to any measures it adopts or maintains with respect to such losses.
Article 15-04. Most-Favored-Nation Treatment
1. Each Party shall accord to investors of the other Party, and to investments of investors of the other Party, treatment no less favorable than that it accords, in like circumstances, to investors and investments of investors of the other Party or of a non-Party, except as provided in paragraph 2.
2. If a Party has accorded or hereafter accords special treatment to investors or their investments from a non- Party under conventions establishing double taxation avoidance provisions, free trade areas, customs unions, common markets, economic or monetary unions or similar institutions, that Party shall not be required to accord the treatment in question to investors or investments of the other Party.
Article 15-05. Performance Requirements
1. No Party may impose or enforce the following requirements or commitments with respect to any investment in its territory:
(a) to export a specified level or percentage of goods or services;
(b) to achieve a certain level or percentage of domestic content;
(c) to purchase, use or give preference to goods produced or services provided in its territory, or to purchase goods from producers or services from service providers in its territory;
(d) 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 that investment;
(e) restrict sales in its territory of the goods or services that such investment produces or renders, relating in any way such sales to the volume or value of its exports or to the foreign exchange earnings they generate;
(f) to transfer to a person in its territory, technology, production process or other proprietary know-how, except where the requirement is imposed by a judicial or administrative tribunal or competent authority to remedy an alleged violation of competition laws or to act in a manner not inconsistent with other provisions of this Agreement; or
(g) to act as the exclusive supplier of the goods it produces or services it provides for a specific regional or world market.
2. Paragraph 1 does not apply to any requirement other than those set out in paragraph 1.
3. No Party may condition the receipt or continued receipt of an incentive on compliance with the following requirements in relation to any investment in its territory:
(a) acquiring, using or giving preference to goods produced in its territory or purchasing goods from producers in its territory;
(b) to attain a certain degree or percentage of domestic content;
(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 that investment; or
(d) restrict sales in its territory of goods or services that such investment produces or provides by relating such sales in any way to the volume or value of its exports or to foreign exchange earnings generated by such investment.
4. Paragraph 3 does not apply to a requirement other than those set out in paragraph 3.
5. Nothing in paragraphs 1 and 2 shall be construed to prevent a Party from conditioning the receipt or continued receipt of an incentive, in connection with any investment in its territory, on requirements regarding the geographic location of production units, the generation of employment or training of labor, or the conduct of research and development activities.
Article 15-06. Senior Management and Boards of Directors.
1. No Party may require its companies to appoint individuals of any particular nationality to senior management positions.
2. A Party may require that a majority of the members of the management bodies of an enterprise be of a particular nationality, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.
Article 15-07. Reservations and Exceptions
1. Articles 15-03 through 15-06 do not apply to any inconsistent measure maintained by a Party under its law in force at the entry into force of this Agreement, regardless of the level or order of government. Each Party shall list such measures in Annex 1 to this Article no later than one year after entry into force. Any future measures adopted by a Party shall not be more restrictive than those existing at the time of entry into force of this Agreement.
2. Articles 15-03 through 15-06 shall not apply to any inconsistent measure adopted or maintained by a Party with respect to the activities listed in Annex 2 to this Article at the time of signature of this Agreement. The Parties, in adopting or maintaining the incompatible measures referred to, shall seek to achieve an overall balance in their obligations. After a period of two years from the entry into force of this Agreement, any measure adopted by a Party may not be more restrictive than those existing at the end of this Agreement.
3. The treatment accorded by a Party pursuant to Article 15-04 does not apply to the treaties or sectors set out in its list in the Annex to this Article.
4. Articles 15-03, 15-04 and 15-06 do not apply to:
(a) procurement by a Party or by a state enterprise; or
(b) subsidies or grants, including government loans, guarantees and insurance provided by a Party ora state enterprise.
5. The provisions contained in:
(a) subparagraphs (a) through (c) of paragraph 1 and subparagraphs (a) and (b) of paragraph 3 of Article 15-05 do not apply with respect to requirements for qualification of goods and services with respect to export promotion programs;
(b) subparagraphs (b), (c), (f) and (g) of paragraph 1 and subparagraphs (a) and (b) of paragraph 3 of Article 15-05 do not apply to procurement by a Party or by a state enterprise; and
(c) subparagraphs (a) and (b) of paragraph 3 of Article 15-05 do not apply to requirements imposed by an importing Party relating to the necessary content of goods to qualify for preferential tariffs or quotas.
Article 15-08. Transfers
1. Each Party shall permit all transfers relating to an investment in its territory of an investor of the other Party to be made freely and without delay. Such transfers include:
(a) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance, profits in kind and other amounts derived from the investment;
(b) proceeds from the sale or liquidation, in whole or in part, of the investment;
(c) payments made under a contract to which an investor or its investment is a party, including payments made under a loan agreement;
(d) payments arising from compensation for expropriation; and
(e) payments arising from the application of the provisions relating to the dispute settlement mechanism.
2. Each Party shall permit transfers to be made in freely convertible currency at the market rate of exchange prevailing on the date of transfer.
3. Notwithstanding the provisions of paragraphs 1 and 2, each Party may prevent transfers, through the equitable and non-discriminatory application of its laws, in the following cases:
(a) bankruptcy, insolvency or protection of creditors' rights;
(b) issuance, trading and operations of securities;
(c) criminal or administrative offenses;
(d) reports of transfers of currency or other monetary instruments; or
(e) security for the enforcement of judgments or awards in an adversary proceeding.
4. Notwithstanding the provisions of this Article, each Party may establish temporary controls on foreign exchange transactions, provided that the balance of payments of the Party in question shows an imbalance and implements a program in accordance with internationally accepted criteria.
Article 15-09. Expropriation and Compensation
1. No Party may nationalize or expropriate, directly or indirectly, an investment of an investor of the other Party in its territory, or take an equivalent measure ("expropriation"), except:
(a) in the national interest or in the public interest;
(b) on a non-discriminatory basis;
(c) in accordance with the principle of legality; and
(d) through compensation in accordance with paragraphs 2 through 4.
2. 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 due to the fact that the intention to expropriate was known prior to the date of expropriation. The valuation criteria will include the declared tax value of tangible assets, as well as other criteria that are appropriate for determining fair market value.
3. Payment of compensation shall be made promptly and shall be fully liquidable.
4. The amount paid shall not be less than the equivalent amount of compensation that would have been paid in a freely convertible currency on the international financial market on the date of expropriation, and such currency would have been converted at the market rate prevailing on the date of valuation, plus interest at a reasonable commercial rate for such currency up to the date of payment.
Article 15-10. Special Formalities and Reporting Requirements.
1. Nothing in Article 15-03 shall be construed to prevent a Party from adopting or maintaining a measure prescribing special formalities in connection with the establishment of investments by investors of the other Party, such as that the investments be constituted in accordance with the laws of the Party, provided that such formalities do not substantially impair the protection afforded by a Party under this Chapter.
2. Notwithstanding Articles 15-03 and 15-04, each Party may require an investor of the other Party or its investment in its territory to provide routine information relating to that investment solely for informational or statistical purposes. The Party shall protect information that is confidential from any disclosure that could adversely affect the competitive position of the investment or the investor.
Article 15-11. Relationship with other Chapters
In the event of inconsistency between a provision of this Chapter and a provision of another Chapter, the provision of the latter shall prevail to the extent of the inconsistency.
Article 15-12. Denial of Benefits
After notice to and consultation with the other Party, a Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of that Party, and to investments of that investor, where investors of a non-Party majority own or control the enterprise and the enterprise does not have substantial business activities in the territory of the Party under whose law it is incorporated or organized.
Article 15-13. Extraterritorial Application of a Party's Law.
1. A Party may not, with respect to investments of its investors constituted and organized under the laws of the other Party, exercise jurisdiction or take any action that has the effect of extraterritorially applying its laws or hindering trade between the Parties, or between a Party and a non-Party.
2. If a Party fails to comply with the provisions of paragraph 1, the Party where the investment has been constituted may adopt such measures and take such action as it considers necessary to terminate the legislation or measure in question and the obstacles to trade resulting therefrom.
Article 15-14. Measures Concerning Environment, Health and Safety
1. Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure consistent with this Chapter that it considers appropriate to ensure that investments in its territory comply with environmental laws.
2. The Parties recognize that it is inappropriate to encourage investment by mitigating domestic environmental, health and safety measures. Accordingly, no Party should eliminate, or undertake to exempt from the application of such measures, investors or their investments as a means of inducing the establishment, acquisition, expansion or retention of investment in its territory. If a Party considers that the other Party has encouraged an investment in such a manner, it may request consultations with that other Party.
Article 15-15. Investment Promotion and Exchange of Information.
1. With the intention of significantly increasing reciprocal participation in investment, each Party shall develop documents for the promotion of investment opportunities and design mechanisms for their dissemination, and the Parties shall maintain and improve financial mechanisms that make investments by an investor of one Party in the territory of the other Party viable.
2. Each Party shall disseminate detailed information on opportunities for:
(a) investment in its territory that may be developed by investors of the other Party;
(b) strategic alliances between investors of the Parties, through research and compilation of interests and partnership opportunities; or
(c) investment in specific economic sectors of interest to the Parties and their investors, as expressly requested by either Party.
3. The Parties agree to keep each other informed and updated regarding:
(a) the investment opportunities referred to in paragraph 2, including the dissemination of available financial instruments that assist in increasing investment in the territory of each Party;
(b) legislation or regulations affecting, directly or indirectly, foreign investment, including, inter alia, foreign exchange and taxation regimes; or
(c) the performance of foreign investment in the territory of each Party.
Article 15-16. Double Taxation.
The Parties, with the aim of promoting investment within their respective territories by eliminating tax obstacles and monitoring compliance with tax obligations through the exchange of tax information, agree to initiate negotiations for the conclusion of agreements to avoid double taxation, in accordance with the schedule to be established between the competent authorities of the Parties.
Section B. Dispute Settlement between a Party and an Investor of the other Party
Article 15-17. Objective.
This section establishes a mechanism for the settlement of investment disputes arising from the entry into force of this Agreement between one or more investors of one Party and another Party, based on the ground that the other Party has breached an obligation set forth in this Chapter, and which ensures both equal treatment between investors of the Parties in accordance with the principle of international reciprocity and the due exercise of the guarantee of a hearing and defense in a legal proceeding before an impartial tribunal.
Article 15-18. Dispute Settlement Through Consultation and Negotiation.
The disputing parties shall first attempt to settle the dispute by consultation or negotiation.
Article 15-19. Claim by an Investor of a Party on Its Own Account or on Behalf of an Enterprise.
1. Pursuant to this Section, only an investor of a Party may, on its own account or on behalf of an enterprise of the other Party that is a juridical person owned or controlled directly or indirectly by it, submit to arbitration a claim that the other Party, or an enterprise controlled directly or indirectly by it, has breached an obligation under this Chapter, provided that the enterprise has suffered loss or damage by reason of, or arising out of, the breach.
2. The investor may not bring a claim under this Section if more than three years have elapsed from the date on which it knew or should have known of the alleged breach of its investment and of the loss or damage suffered.
3. Where an investor submits a claim on behalf of an enterprise that is a juridical person owned or controlled directly or indirectly by the investor, and at the same time an investor that does not control an enterprise submits a claim on its own account arising out of the same acts, or two or more claims are submitted to arbitration under the same measure adopted by a Party, the consolidation tribunal established under Article 15-27 shall consider those claims together, unless that tribunal determines that the interests of a disputing party would be prejudiced.
4. Where an enterprise of a Party that is a juridical person owned or controlled directly or indirectly by one or more investors of the other Party alleges in court proceedings that another Party has allegedly breached an obligation under Section A, the investor or investors may not assert the alleged breach in arbitral proceedings under this Section.
5. An investment or an enterprise may not submit a claim to arbitration under this Section.
Article 15-20. Notice of Intent to Submit Claim to Arbitration.
The disputing investor shall notify the disputing Party in writing of its intention to submit a claim to arbitration at least 90 days before the claim is formally submitted and the notice shall state the following:
(a) the name and address of the disputing investor and, where the claim is made on behalf of an enterprise, the name or business name and address of the enterprise;
(b) the provisions of this Chapter alleged to have been breached and any other applicable provisions;
(c) the facts on which the claim is based; and
(d) the relief sought and the approximate amount of the damages claimed.
Article 15-21. Submission of Claim to Arbitration
1. Provided that six months have elapsed since the measures giving rise to the claim took place, a disputing investor may submit the claim to arbitration in accordance with:
(a) the ICSID Convention, provided that both the disputing Party and the Party of the investor are States parties thereto;
(b) the ICSID Additional Facility Rules, where either the disputing Party or the Party of the investor, but not both, are States parties to the ICSID Convention; or
(c) the UNCITRAL Arbitration Rules.
2- Except as provided in Article 15-27 and provided that both the disputing Party and the Party of the disputing investor are States parties to the ICSID Convention, any dispute between them shall be submitted in accordance with paragraph 1(a).
3. The rules to be chosen pursuant to an arbitral proceeding under this Chapter shall apply except as modified by this Section.
Article 15-22. Conditions Precedent to the Submission of a Claim to Arbitral Proceedings
1. A disputing investor on its own account or on behalf of an enterprise may submit a claim to arbitration under this Section only if:
(a) in the case of the self-employed disputing investor, the self-employed disputing investor consents to arbitration under the terms of the procedures set forth in this Section;
(b) in the case of the disputing investor on behalf of an enterprise, both the disputing investor and the enterprise consent to arbitration on the terms of the procedures set forth in this Section; and
(c) both the disputing investor and, where applicable, the enterprise it represents, waive their right to initiate proceedings before any judicial tribunal of any Party with respect to the measure alleged to be a breach of the provisions of this Chapter, except for the pursuit of administrative remedies before the authorities implementing the measure alleged to be a breach as provided in the law of the disputing Party.
2. The consent and waiver required by this Article shall be in writing, shall be delivered to the disputing Party and shall be included in the submission of the claim to arbitration.
Article 15-23. Consent to Arbitration
1. Each Party consents to the submission of claims to arbitration in accordance with the procedures and requirements set forth in this Section.
2. The submission of a claim to arbitration by a disputing investor shall comply with the requirements set out in:
(a) Chapter II of the ICSID Convention (Centre Jurisdiction) and the ICSID Additional Facility Rules requiring the written consent of the Parties;
b) Article II of the New York Convention, which requires an agreement in writing; and
c) Article I of the Inter-American Convention, which requires an agreement.
Article 15-24. Number of Arbitrators and Method of Appointment.
Except as provided in Article 15-27, and notwithstanding any agreement of the disputing parties to the contrary, the tribunal shall consist of three arbitrators. Each disputing party shall appoint one arbitrator; the third arbitrator, who shall be the chairman of the arbitral tribunal, shall be appointed by the disputing parties by mutual agreement.
Article 15-25. Composition of the Tribunal In the Event of Failure of a Disputing Party to Appoint an Arbitrator or Failure to Agree on the Appointment of the Chairman of the Arbitral Tribunal
1. The Secretary-General shall appoint arbitrators in arbitration proceedings in accordance with this Section. 2. Where a tribunal, other than a tribunal established pursuant to section 15-27, is not constituted within 90 days from the date on which the claim is submitted to arbitration, the Secretary-General shall, at the request of either disputing party, appoint, at his discretion, the arbitrator or arbitrators not yet appointed, but not the presiding arbitrator or arbitrators, who shall be appointed in accordance with paragraph 3.
3. The Secretary-General shall appoint the president of the tribunal from among the arbitrators on the list referred to in paragraph 4, ensuring that the president of the tribunal is not a national of the disputing Party or a national of the Party of the disputing investor. In the event that an arbitrator available to chair the tribunal is not found on the list, the Secretary-General shall appoint, from the ICSID Panel of arbitrators, the chair of the tribunal, provided that the chair of the tribunal is not a national of the disputing Party or a national of the Party of the disputing investor.
4. Upon entry into force of this Agreement, the Parties shall establish and maintain a list of 15 arbitrators as potential chairpersons of the arbitral tribunal who meet the qualifications set forth in the ICSID Convention and the rules referred to in Article 15-21 and who have experience in international law and investment matters. The arbitrators on the list shall be appointed by consensus without regard to their nationality.
Article 15-26. Consent to Appointment of Arbitrators
For the purposes of Article 39 of the ICSID Convention and Article 7 of Part C of the ICSID Additional Facility Rules and, without prejudice to objecting to an arbitrator in accordance with paragraph 3 of Article 15-25 or on a basis other than nationality:
(a) the disputing Party accepts the appointment of each member of a tribunal established in accordance with the ICSID Convention or the ICSID Additional Facility Rules;
(b) a disputing investor, whether on its own behalf or on behalf of an enterprise, may submit a claim to arbitration or continue proceedings under the ICSID Convention or the ICSID Additional Facility Rules only on condition that the disputing investor and, if any, the enterprise it represents consent in writing to the appointment of each of the members of the tribunal.
Article 15-27. Consolidation of Proceedings
1. A consolidation tribunal established under this Article shall be established in accordance with the UNCITRAL Arbitration Rules and shall proceed in accordance with the provisions of those rules, except as provided in this Section.