Title
Agreement between The Government of the State of Israel and The Government of the United Arab Emirates on Promotion and Protection of Investments
Preamble
The Government of the State of Israel and The Government of The United Arab Emirates (hereinafter, "the Parties")
Further to the Treaty of Peace, Diplomatic Relations and Full Normalization between the United Arab Emirates and the State of Israel, signed in Washington, DC on 15 September 2020 (hereinafter, "the Peace Treaty"), and in particular Article 5 thereof and further to the Agreed Protocol signed between the Parties on 1 September 2020, in Abu Dhabi;
Recalling the agreed principles for cooperation in the sphere of finance and investment, which were annexed to the Peace Treaty, and desiring to cooperate to expeditiously deepen and broaden bilateral investment relations, recognizing the key role of concluding agreements in the sphere of finance and investment in the economic development of the Parties and the Middle East as a whole;
Determined to ensure lasting peace, stability, security and prosperity for both their States and to develop and enhance their dynamic and innovative economies;
Reaffirming their shared belief that the establishment of peace and full normalization between them can help transform the Middle East by spurring economic growth, enhancing technological innovation and forging closer people-to-people relations;
Recognizing the growing importance of foreign investments in creating, maintaining and enhancing sustainable economic growth and prosperity for both Parties;
Reaffirming their commitment to protecting investors, consumers, market integrity and financial stability, as well as maintaining all applicable regulatory standards; Confirming that any kind of investment should be made in good faith;
Acknowledging each Party's right to protect its security, safety, environment and public interests within its territory;
Recognizing that this Agreement shall not apply to the pre-establishment phase of the investment; and
Recognizing that these objectives can be achieved without relaxing health, safety and environmental measures of general application;
Have agreed as follows:
Body
Section A. Definitions
For the purposes of this Agreement:
claimant means an investor of a Party that is a party to an investment dispute with the other Party;
covered investment means, with respect to a Party, an investment:
(a) in its territory;
(b) directly or indirectly owned or controlled by an investor of the other Party; and
(c) existing on the date of entry into force of this Agreement, or made or acquired thereafter;
Customs Union means any territory with respect to which separate tariffs or other regulations of commerce are maintained for a substantial part of the trade of such territory with other territories in accordance with the WTO Agreement.
disputing parties means both the claimant and the respondent;
enterprise means any legal person or any other entity duly constituted or organized under the applicable legislation, whether or not for profit, and whether private or government owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association, organization or company;
enterprise of a Party means an enterprise that is constituted or organized under the legislation of a Party and has substantial business activities in the territory of that Party;
existing measures means measures that are in effect on the date of the entry into force of this Agreement;
Free Trade Agreement means an agreement that has been accepted under Article XXVI or is being applied under Article XXXII or pursuant to the Protocol of Provisional Application in accordance with the WTO Agreement.
freely usable currency means "freely usable currency" as defined under the Articles of Agreement of the International Monetary Fund; ICSID means the International Centre for Settlement of Investment Disputes;
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;
ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington, March 18, 1965;
investment means every kind of asset, made in accordance with the legislation of the Party in whose territory the investment is made, that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, such as the commitment of capital or other resources, the expectation of gain or profit, and the assumption of risk. Forms that an investment may take include (1):
(a) an enterprise;
(b) shares, stock and other forms of equity participation in an enterprise;
(c) bonds, debentures and other forms of debt of an enterprise;
(d) a loan to an enterprise;
(e) futures, options and other derivatives;
(f) rights under contract, including turnkey, construction, management, production, or revenue-sharing contracts;
(g) claims to money and to any performance under contract having a financial value;
(h) intellectual property rights and goodwill;
(i) concessions, licenses, authorizations, permits and similar rights conferred by legislation or under contracts, excluding those for the exploration and exploitation of natural resources (2); and
(j) any other movable and immovable property, and any related property rights, such as leases, mortgages, liens and pledges;
For greater certainty, investment shall not include:
(a) public debt;
(b) 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;
(c) the extension of credit, including bank loans, in connection with a commercial transaction, such as trade financing; and
(d) an order or judgment entered in a judicial or administrative action;
investor of a Party means:
a. with respect to The United Arab Emirates:
i. an enterprise of The United Arab Emirates; or
ii. a natural person who is a national of The United Arab Emirates and who is not also a national or a permanent resident of the State of Israel;
b. with respect to the State of Israel:
i. an enterprise of the State of Israel; or
ii. a natural person who is a national or permanent resident of the State of Israel and who is not also a national of The United Arab Emirates; that has made investments in the Territory of the other Party;
legislation with respect to a Party means the laws, regulations and administrative orders of that Party;
measures includes laws, regulations, rules, procedures, decisions, administrative actions or practices;
New York Convention means the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958;
respondent means the Party that is a party to an investment dispute;
Secretary-General means the Secretary-General of ICSID;
Territory means:
(a) with respect to the State of Israel: the territory of the State of Israel including the territorial sea as well as the continental shelf and the exclusive economic zone, over which the State of Israel exercises sovereignty, sovereign rights or jurisdiction in accordance with international law and the laws of the State of Israel;
(b) With respect to The United Arab Emirates, the term "United Arab Emirates" when used in a geographical sense, means the territory of the United Arab Emirates which is under its sovereignty as well as the area outside the territorial water, airspace and submarine areas over which the United Arab Emirates exercises, in accordance of its international law and the law of United Arab Emirates sovereign and jurisdictional rights including the Exclusive Economic Zone and the mainland under its jurisdiction in respect of any activity carried on in its water, sea bed, subsoil, in connection with the exploration for or the exploitation of natural resources by virtue of its law and international law.
TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreement;
UNCITRAL Arbitration Rules means the arbitration rules of the United Nations Commission on International Trade Law, as revised in 2010 or as subsequently agreed between the Parties;
WTO Agreement means the Marrakesh Agreement establishing the World Trade Organization done on April 15, 1994.
Section B. Investment Promotion and Protection
Article 1. Scope and Coverage
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. For greater certainty, this Agreement shall not apply to claims arising out of events which occurred prior to the entry into force of this Agreement.
Article 2. Treatment of Investors and Investments
1. Subject to its legislation, each Party shall, in its territory, encourage and endeavor to create favorable conditions for investments by investors of the other Party and shall admit such investments.
2. Each Party shall accord in its territory to covered investments of the other Party and to investors with respect to their covered investments, fair and equitable treatment and full protection and security in accordance with paragraphs 3 through 7.
3. A Party breaches the obligation of fair and equitable treatment referenced in paragraph 2 if a measure or series of measures constitutes:
(a) denial of justice in criminal, civil or administrative proceedings;
(b) fundamental breach of due process, in judicial and administrative proceedings;
(c) manifest arbitrariness;
(d) targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief.
4. For greater certainty, "Full protection and security" refers to the Party's obligations relating to physical security of investors and covered investments.
5. For greater certainty, the "Full protection and security" standard does not imply, in any case, a better police protection than that accorded to nationals of the Party where the investment has been made.
6. For greater certainty, "Full protection and security", should not require in any case the treatment in addition to or beyond that which is required by applicable customary international law regarding treatment of aliens.
7. For greater certainty, a breach of another provision of this Agreement, or of any other international agreement, does not constitute a breach of this Article.
Article 3. 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 management, maintenance, use, enjoyment or disposal 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 in its territory of its own investors with respect to the management, maintenance, use, enjoyment or disposal of investments.
Article 4. Most-Favoured-Nation Treatment (3)
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 any non-Party with respect to the management, maintenance, use, enjoyment or disposal 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 in its territory of investors of any non-Party with respect to the management, maintenance, use, enjoyment or disposal of investments.
3. For greater certainty, the treatment referred to in this Article (MFN) does not encompass definitions provided for in other international treaties or any investor-state dispute settlement procedures or mechanisms, including those set out in Section C (Investor-State Dispute Settlement).
4. For greater certainty, 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.
Article 5. Losses and Compensation
1. Notwithstanding Article 13.2(b) (Non-Conforming Measures), each Party shall accord to investors of the other Party that have suffered loss or damage relating to their investments in the territory of the former Party due to war or other armed conflict, revolution, a state of national emergency, revolt, insurrection, riot or other such similar activity in the territory of that former Party, treatment, as regards restitution, indemnification, compensation or any other settlement, that is no less favourable than that which it accords to its own investors or investors of a non- Party.
2. Without prejudice to paragraph 1, if an investor, suffers a loss in the territory of the other Party resulting from:
(a) requisitioning of its property by the Party's forces or authorities; or
(b) destruction of its property by the Party's forces or authorities, which was not caused in combat action or was not required by the necessity of the situation, the other Party shall provide the investor with restitution or adequate compensation for such loss.
3. Any payment under this Article shall be effectively realizable, freely transferable and freely convertible at the market exchange rate into freely usable currencies.
Article 6. Expropriation and Compensation (4)
1. A Party shall not expropriate or nationalize a covered investment, either directly or indirectly through measures having an effect equivalent to expropriation or nationalization (“expropriation”), except:
(a) for a public purpose;
(b) when made in accordance with the legislation of the Party;
(c) in a non-discriminatory manner; and
(d) when accompanied by compensation, in accordance with paragraph 2.
2. The compensation shall:
(a) be paid without delay and in a freely usable currency;
(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place;
(c) not reflect any change in value occurring because the intended expropriation had become known earlier;
(d) be fully realizable and freely transferable; and
(e) include interest, at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
3. Without prejudice to Section C (Investor-State Dispute Settlement), the investors affected shall have a right, under the legislation of the Party making the expropriation, to prompt review, by a judicial or other independent authority of that
4. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights in accordance with the TRIPS Agreement, 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 TRIPS Agreement.
Article 7. Transfers (5)
1. Each Party shall permit all transfers relating to a covered investment to be made freely and without delay into and out of its territory. Such transfers include:
(a) contributions to capital, including the initial contribution and additional amounts to maintain or increase the investment;
(b) profits, dividends, interest, capital gains, royalties, management fees, technical assistance fees and other fees, or other current incomes accruing from covered investments;
(c) proceeds from the sale or liquidation of all or any part of the 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 in accordance with Articles 5 (Losses and Compensation) and 6 (Expropriation and Compensation); and
(f) payments arising out of a dispute.
2. Each Party shall permit transfers relating to a covered investment to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may prevent or delay a transfer through the equitable, non-discriminatory and good faith application of its legislation relating to:
(a) the payment of taxes and dues;
(b) bankruptcy, insolvency or the protection of the rights of a creditor;
(c) issuing, trading or dealing in securities, futures, options or derivatives;
(d) criminal or penal offences;
(e) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
(f) ensuring compliance with an order or judgment in judicial or administrative proceedings; or
(g) social security, public retirement, or compulsory savings schemes.
Article 8. Subrogation
1. If a Party or its designated agency makes a payment to one of its investors under a guarantee, a contract of insurance or other form of indemnity against non-commercial risks it has entered into in respect of an investment in the Territory of the other Party, the other Party shall recognize:
(a) the assignment, to the former Party or its designated agency, of any right or claim of the investor in respect of such investment, that formed the basis of such payment; and
(b) 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. For greater certainty, the Party or its designated agency shall be entitled in all circumstances to:
(a) the same treatment in respect of the rights and claims acquired by it by virtue of the assignment referred to in paragraph 1; and
(b) the same payments due pursuant to those rights and claims, as the investor referred to in paragraph 1 was entitled to receive by virtue of this Agreement in respect of the investment.
3. If a Party or a designated agency has made a payment to its investor and has taken over rights and claims of the investor under paragraph 1, that investor shall not, unless authorized in writing by the Party or its designated agency to act on behalf of the Party or its designated agency making the payment, pursue those rights and claims against the other Party.
Article 9. Performance Requirements
1. Within the context of its national economic policy and goals each Party shall endeavour to avoid imposing on the investments of nationals or companies of the other Party conditions which require the export of goods produced or the purchase of goods and services locally or the transfer of technology, a production process or other proprietary knowledge to a natural person or an enterprise in the territory of either Party.
2. The provisions of paragraph 1 shall not preclude the rights of either Party to impose restriction on importation of goods or services into their respective territories.
Article 10. Taxation Measures (6)
1. Nothing in this Section shall impose obligations with respect to taxation measures except as expressly provided in paragraph 3.
2. Nothing in this Agreement shall affect the rights and obligations of either Party under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency.
3. Articles 2 (Treatment of Investments) and 6 (Expropriation and Compensation), shall apply to taxation measures.