Title
Agreement Between the Government of Canada and the Government of the People's Republic of China for the Promotion and Reciprocal Protection of Investments
Preamble
The Government of Canada and the Government of the People's Republic of China (the "Contracting Parties"),
Recognizing the need to promote investment based on the principles of sustainable development;
Desiring to intensify the economic cooperation of both States, based on equality and mutual benefit;
Have agreed as follows:
Body
Part A.
Article 1. Definitions
For the purpose of this Agreement,
1. "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
(i) where the enterprise is an affiliate of the investor, or
(ii) where the original maturity of the loan is at least three years;
(e) notwithstanding sub-paragraphs (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 Contracting Party in whose territory the financial institution is located;
(f) an interest in an enterprise that entitles the owner to share in the 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 Contracting Party to economic activity in such territory, such as under
(i) contracts involving the presence of an investor's property in the territory of the Contracting Party, including turnkey or construction contracts, or concessions to search for and extract oil and other natural resources, or
(ii) contracts where remuneration depends substantially on the production, revenue 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 or used for business purposes;
But "investment" does not mean:
(k) claims to money that arise solely from
(i) commercial contracts for the sale of goods or services, or
(ii) the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by sub-paragraph (d); or
(l) any other claims to money,
That do not involve the kinds of interests set out in sub-paragraphs (a) to (j);
2. "investor" means with regard to either Contracting Party:
(a) any natural person who has the citizenship or status of
Permanent resident of that Contracting Party in accordance with its laws and who does not possess the citizenship of the other Contracting Party;
(b) any enterprise as defined in paragraph 10(a) of this Article;
That seeks to make, is making or has made a covered investment 1;
3. "investment of an investor of a Contracting Party" means an investment owned or controlled directly or indirectly by an investor of such Contracting Party;
4. "covered investment" means, with respect to a Contracting Party, an investment in its territory of an investor of the other Contracting Party existing on the date of entry into force of this Agreement or an investment of an investor admitted in accordance with its laws and regulations thereafter, and which involves the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk;
5. "returns" means the amounts yielded by investments, and in particular, though not limited to, profits, capital gains, dividends, interest, royalties, returns-in-kind or other income;
6. "measure" includes any law, regulation, rule, procedure, decision, requirement, administrative action, or practice;
7. "existing measure" means a measure existing at the time this Agreement enters into force;
8. "financial service" has the same meaning as in sub-paragraph 5(a) of the Annex on Financial Services of the GATS;
9. "financial institution" means any financial intermediary or other enterprise that is authorized to do business and is regulated or supervised as a financial institution under the law of the Contracting Party in whose territory it is located;
10. "enterprise" means:
(a) any entity constituted or organized in accordance with the laws of a Contracting Party, such as public institutions, corporations, foundations, agencies, cooperatives, trust, societies, associations and similar entities and private companies, firms, partnerships, establishments, joint ventures and organizations, whether or not for profit, and irrespective of whether their liabilities are limited or otherwise; and
(b) a branch of any such entity
11. "intellectual property rights" means copyright and related rights, trademark rights, patent rights, rights in layout designs of semiconductor integrated circuits, trade secret rights, plant breeders' rights, rights in geographical indications and industrial design rights;
12. "confidential information" means business confidential information and information that is privileged or otherwise protected from disclosure;
13. "disputing investor" means an investor that makes a claim under Article 20;
14. "disputing Contracting Party" means a Contracting Party against which a claim is made under Article 20;
15. "disputing party" means the disputing investor or the disputing Contracting Party;
16. "ICSID" means the International Centre for Settlement of Investment Disputes;
17. "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;
18. "Additional Facility Rules of ICSID" means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes and Schedule C (Arbitration) thereto, approved by the Administrative Council on 29 September 2002, as amended from time to time;
19. "Tribunal" means an arbitration tribunal established under Part C;
20. "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, as amended from time to time;
21. "WTO Agreement" means the Agreement Establishing the World Trade Organization done at Marrakesh on 15 April 1994;
22. "territory" means:
In respect of Canada:
(a) the land territory, air space, internal waters and territorial sea over which Canada exercises sovereignty;
(b) the exclusive economic zone of Canada, as determined by its domestic law pursuant to Part V of the United Nations Convention on the Law of the Sea (UNCLOS); and
(c) the continental shelf of Canada as determined by its domestic law pursuant to Part VI UNCLOS.
In respect of China:
The territory of China, including land territory, internal waters, territorial sea, territorial air space, and any maritime areas beyond the territorial sea over which, in accordance with international law and its domestic law, China exercises sovereign rights or jurisdiction with respect to the waters, seabed and subsoil and natural resources thereof.
Part B.
Article 2. Scope and Application
1. This Agreement shall apply to measures adopted or maintained by a Contracting Party relating to investors of the other Contracting Party and covered investments.
2. A Contracting Party's obligations under this Agreement shall apply to any entity whenever that entity exercises any regulatory, administrative or other governmental authority delegated to it by that Contracting Party, such as the power to expropriate, grant licenses, approve commercial transactions or impose quotas, fees or other charges.
3. Each Contracting Party shall take all necessary measures in order to ensure observance of the provisions of this Agreement by provincial governments' 2
Article 3. Promotion and Admission of Investment
Each Contracting Party shall encourage investors of the other Contracting
Party to make investments in its territory and admit such investments in
Accordance with its laws, regulations and rules.
Article 4. Minimum Standard of Treatment
1. Each Contracting Party shall accord to covered investments fair and equitable treatment and full protection and security, in accordance with international law.
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 international law minimum standard of treatment of aliens as evidenced by general State practice accepted as law.
3. A determination that there has been 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 5. Most-favoured-nation Treatment
1. Each Contracting Party shall accord to investors of the other Contracting Party treatment no less favourable than that it accords, in like circumstances, to investors of a non-Contracting Party with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory.
2. Each Contracting Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments of investors of a non-Contracting 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" referred to in paragraphs 1 and 2 of this Article does not encompass the dispute resolution mechanisms, such as those in Part C, in other international investment treaties and other trade agreements.
Article 6. National Treatment
1. Each Contracting Party shall accord to investors of the other Contracting Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the expansion, management, conduct, operation and sale or other disposition of investments in its territory.
2. Each Contracting 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 expansion,
Management, conduct, operation and sale or other disposition of investments in its territory.
3. The concept of "expansion" in this Article applies only with respect to sectors not subject to a prior approval process under the relevant sectoral guidelines and applicable laws, regulations and rules in force at the time of expansion. The expansion may be subject to prescribed formalities and other information requirements.
Article 7. Senior Management, Boards of Directors and Entry of Personnel
1. A Contracting Party may not require that an enterprise of that Party, that is a covered investment, appoint individuals of any particular nationality to senior management positions.
2. A Contracting Party may require that a majority of the board of directors, or any committee thereof, of an enterprise of that Contracting Party that is a covered investment be of a particular nationality or resident in the territory of the Contracting 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 and sojourn of non-citizens, a Contracting Party shall permit natural persons who have the citizenship or status of permanent resident of the other Contracting Party and are employed by any enterprise that is a covered investment of an investor, or a subsidiary or affiliate thereof, to enter and remain temporarily in its territory in a capacity that is managerial, executive or that requires specialized knowledge.
Article 8. Exceptions
1. Article 5 does not apply to:
(a) treatment by a Contracting Party pursuant to any existing or future bilateral or multilateral agreement:
(i) establishing, strengthening or expanding a free trade area or customs union; or
(ii) relating to aviation, fisheries, or maritime matters including salvage;
(b) treatment accorded under any bilateral or multilateral international agreement in force prior to 1 January 1994.
2. Articles 5, 6 and 7 do not apply to 5:
(i) any existing non-conforming measures maintained within the territory of a Contracting Party; and
(ii) any measure maintained or adopted after the date of entry into force of this Agreement that, at the time of sale or other disposition of a government's equity interests in, or the assets of, an existing state enterprise or an existing governmental entity, prohibits or imposes limitations on the ownership or control of equity interests or assets or imposes nationality requirements relating to senior management or members of the board of directors;
(b) the continuation or prompt renewal of any non-conforming measure referred to in sub-paragraph (a); or
(c) An amendment to any non-conforming measure referred to in sub-paragraph (a), to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 5, 6 and 7.
3. Articles 5, 6 and 7 do not apply to any measure that a Contracting Party has reserved the right to adopt or maintain pursuant to Annex B.8.
4. In respect of intellectual property rights, a Contracting Party may derogate from Articles 3, 5 and 6 in a manner that is consistent with international agreements regarding intellectual property rights to which both Contracting Parties are parties.
5. Articles 5, 6 and 7, do not apply to:
(a) procurement by a Contracting Party;
(b) subsidies or grants provided by a Contracting Party, including government-supported loans, guarantees and insurance.
Article 9. Performance Requirements
The Contracting Parties reaffirm their obligations under the WTO Agreement on Trade-Related Investment Measures (TRIMs), as amended from time to time. Article 2 and the Annex of the TRIMs are incorporated into and made part of this Agreement.
Article 10. Expropriation
1. Covered investments or returns of investors of either Contracting Party
Shall not be expropriated, nationalized or subjected to measures having an effect equivalent to expropriation or nationalization in the territory of the other Contracting Party (hereinafter referred to as "expropriation"), except for a public purpose, under domestic due procedures of law, in a non-discriminatory manner and against compensation. 6 Such compensation shall amount to the fair market value of the investment expropriated immediately before the expropriation, or before the impending expropriation became public knowledge, whichever is earlier, shall include interest at a normal commercial rate until the date of payment, and shall be effectively realizable, freely transferable, and made without delay. The investor affected shall have a right, under the law of the Contracting Party making the expropriation, to prompt review, by a judicial or other independent authority of that Contracting Party, of his or its case and of the valuation of his or its investment in accordance with the principles set out in this paragraph.
2. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to other measures in respect of intellectual property rights, to the extent that such measures are consistent with international agreements regarding intellectual property rights to which both Contracting Parties are parties.
Article 11. Compensation for Losses
Investors of one Contracting Party who suffer losses in respect of covered investments owing to war, a state of national emergency, insurrection, riot or other similar events, shall be accorded treatment by the other Contracting Party, in respect of restitution, indemnification, compensation or other settlement, no less favourable than it accords in like circumstances, to its own investors or to investors of any third State.
Article 12. Transfers
1. A Contracting Party shall permit all transfers relating to a covered investment to be made freely and without delay. Such transfers include:
(a) contributions to capital;
(b) profits, capital gains, dividends, interest, royalties including payments in relation to intellectual and industrial property rights, fees, returns-in-kind or other income derived from the investment;
(c) proceeds obtained from the total or partial sale of the covered investment, or from the partial or complete liquidation of the investment;
(d) payments made under a contract entered into by an investor, or its covered investments, including those pursuant to a loan agreement;
(e) payments made pursuant to Articles 10 and 11 and arising under Part C; and
(f) earnings of nationals of a Contracting Party who work in connection with an investment in the territory of the other Contracting Party.
2. Each Contracting Party shall permit transfers relating to a covered investment to be made in a freely convertible currency at the market rate of exchange prevailing on the date of transfer. In the event that the market rate of exchange does not exist, the rate of exchange shall
Correspond to the cross rate obtained from those rates which would be applied by the International Monetary Fund on the date of payment for conversions of currencies concerned into Special Drawing Rights.
3. Notwithstanding the provisions of paragraphs 1 and 2 of this Article, a Contracting 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 offenses
(d) reports of transfers of currency or other monetary instruments; or
(e) ensuring the satisfaction of judgments in adjudicatory proceedings.
(a) Nothing in the Agreement shall be construed to prevent a Contracting Party from adopting or maintaining measures that restrict transfers when the Contracting Party experiences serious balance of payment difficulties, or the threat thereof, provided that such measures:
(i) are of limited duration, applied on a good-faith basis, and
Should be phased out as the situation calling for imposition of such measures improves;
(ii) do not constitute a dual or multiple exchange rate practice;
(iii) do not otherwise interfere with an investor's ability to invest, in the territory of the Contracting Party, in the form chosen by the investor and, as relevant, in local currency, in any assets that are restricted from being transferred out of the territory of the Contracting Party;
(iv) are applied on an equitable and non-discriminatory basis;
(v) are promptly published by the government authorities
Responsible for financial services or central bank of the Contracting Party;
(vi) are consistent with the Articles of Agreement of the
International Monetary Fund done at Bretton Woods on 22 July 1944; and
(vii) avoid unnecessary damage to the commercial, economic and financial interests of the other Contracting Party.
(b) Sub-paragraph (a) does not apply to measures that restrict payments or transfers for current transactions 8, unless the imposition of such measures complies with the procedures set out in the Articles of Agreement of the International Monetary Fund.
5. Notwithstanding paragraph 1, a Contracting Party may restrict transfers of returns-in-kind in circumstances where it could otherwise restrict such transfers under the WTO Agreement.
Article 13. Subrogation
1. If a Contracting Party or its Agency makes a payment to one of its investors under a guarantee or contract of insurance it has granted to a covered investment of that investor, the other Contracting Party shall recognize the transfer of any right or claim of that investor to the first mentioned Contracting Party or its Agency. The subrogated right or claim shall not be greater than the original right or claim of the said investor. Such right may be exercised by the Contracting Party or any agent thereof so authorized.
2. In an arbitration under Part C, a disputing Contracting Party shall not assert, as a defence, counterclaim, right of setoff or otherwise, that the disputing investor has received or will receive, pursuant to an insurance or guarantee contract, indemnification or other compensation for all or part of its alleged damages.
Article 14. Taxation
1. Except as provided 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 Contracting Parties under any tax convention. In the event of any inconsistency between the provisions of this Agreement and any such convention, the provisions of that convention shall apply to the extent of the inconsistency.