Annex 10-C. NON JUSTICIABILITY OF SECURITY EXCEPTIONS
The Parties confirm the following understanding with respect to the interpretation and/or implementation of this Chapter:
(a) in respect of disputes submitted to arbitration pursuant to Article 10.21.3, where the disputing Party asserts as a defence that the measure alleged to be a breach is within the scope of a security exception as set out in Article 10.18.2, any decision of the disputing Party taken on such security considerations shall be non-justiciable in that it shall not be open to any arbitral tribunal to review the merits of any such decision, even where the arbitral proceedings concern an assessment of any claim for damages and/or compensation, or an adjudication of any other issues referred to the tribunal; and
(b) for the avoidance of doubt, Article 10.21.3 shall be applicable in the arbitral proceedings for damages and/or compensation due to the measures taken under security exceptions as set out in Article 10.18.2.
Annex I. EXPLANATORY NOTES
1. Pursuant to Article 10.8 (Non-Conforming Measures), the Schedule to this Annex sets out the reservations taken by India for sectors, sub-sectors or activities for which it may maintain existing measures that do not conform with some or all of the obligations imposed by :
(a) Article 10.3 (National Treatment);
(b) Article 10.5 (Performance Requirements); or
(c) Article 10.6 (Senior Management and Boards of Directors).
2. Where appropriate, reservations are referenced to the ISIC classification (ISIC Rev.3.1) as set out in Statistical Office of the United Nations Statistical Papers. Where appropriate ISIC code is not available for sectors or sub-sectors, for India, those reservations may be referenced to the National Industrial Classification Code (NIC) 1987 as set out by the Central Statistical Organization of the Government of India as alternatives. And, for Korea, those reservations may be referenced to the Korea Standard Industry Code (KSIC 2000) as set out by the Korea National Statistical Office as alternatives.
3. Each Schedule entry sets out the following elements:
(a) Sector refers to the general sector in which the reservation is taken;
(b) Sub-Sector refers to the specific sector in which the reservation is taken;
(c) Industrial Classification refers, where applicable, to the activity covered by the reservation according to the UN ISIC code (ISIC Rev.3.1) or domestic industry classification codes (National Industrial Classification Code 1987, Korea Standard Industry Code 2000);
(d) Level of Government Indicates the level of government maintaining the scheduled measures;
(e) Type of Reservation specifies the obligation (National Treatment, Performance Requirement and Senior Management and Board of Directors) for which a reservation is taken;
(f) Reservation Measure (1) identifies the laws, regulations, rules, procedures, decisions, administrative actions or any other measures. A measure cited in the Measures element:
(i) means the measure as amended, continued, or renewed as of the date of entry into force of this Agreement; and
(ii) includes any subordinate measure adopted or maintained under the authority of and consistent with the measure; and
(g) Description sets out commitments, if any, for liberalization on the date of entry into force of the Agreement, and the remaining non-conforming aspects of the measure for which the entry is made.
4. In the interpretation of a Schedule entry, all elements of the entry, with the exception of Industry Classification, shall be considered. An entry shall be interpreted in light of the relevant articles of the Chapters against which the entry is made. To the extent that:
(a) the Measures element is qualified by a liberalization commitment from the Description element, the Measures element as so qualified shall prevail over all other elements; and
(b) the Measures element is not so qualified, the Measures element shall prevail over all other elements, unless any discrepancy between the Measures element and the other elements considered in their totality is so substantial and material that it would be unreasonable to conclude that the Measures element should prevail, in which case the other elements shall prevail to the extent of that discrepancy.
5. For India, for purposes of this Annex, unless otherwise specified:
(a) "Foreign Institutional Investor" or "FII" means a foreign entity that is registered with the Securities Exchange Board of India as a Foreign Institutional Investor/FII.
(b) "non-resident" means a person who is not resident in India.
(c) A "person resident in India" means:
(i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include:
A) aperson who has gone out of India or who stays outside India, in either case:
i) for or on taking up employment outside India, or
ii) for carrying on a business outside India or vacation outside India, or
iii) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
B) a person who has come to or stays in India, in either case, otherwise than:
i) for or on taking up employment in India, or
ii) for carrying on in India a business or vacation in India, or
iii) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
(ii) any person or body corporate registered or incorporated in India,
(iii) an office, branch or agency in India owned or controlled by a person resident outside India,
(iv) an office, branch or agency outside India owned or controlled by a person resident in India;
(d) "non-resident Indian" or "NRI" means a person resident outside India who is either a citizen of India or a person of Indian Origin
(e) "Person of Indian Origin" or "PIO" means a citizen of any country other than Bangladesh or Pakistan or Sri Lanka, if:
(i) he at any time holds Indian passport; or
(ii) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or
(iii) the person is a spouse of an Indian citizen or a person referred to in sub-clause (i) or (ii);
(f) "Venture Capital Fund" means a fund established in the form of a trust, a company including a body corporate and registered under the Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996 which has a dedicated pool of capital raised in a manner specified under the said Regulations and which invests in Indian Venture Capital Undertakings in accordance with the said Regulations. An IVCU is defined as a company incorporated in India whose shares are not listed on a recognized stock exchange in India and which is not engaged in an activity under the negative list specified by SEBI
6. For Korea, a foreign person means a foreign national or an enterprise organized under the laws of another country.
7. Regarding commitments on supply of services through commercial presence, only the Schedule of Specific Commitments annexed to Chapter 6 on Trade in Services will apply. For greater certainty, Articles 10.5 (Performance Requirements) and 10.6 (Senior Management and Board of Directors) in Chapter 10 on Investment will not be applicable to Services Sector. Commitments in the form of Reservations on Articles 10.3 (National Treatment), 10.5 (Performance Requirements) and 10.6 (Senior Management and Board of Directors) for investments other than those for supply of a service through commercial presence are described only in Annex I and Annex II to Chapter 10 (Investment). In the event of any inconsistency between the commitments in the form of Reservations under the Chapter 10 on Investment and the specific commitments made under the Chapter 6 on Trade in Services, the provision in the Chapter on Trade in Services shall prevail to the extent of the inconsistency.
8. For Korea, the reservation entry No. 5 and 8 will not apply to services activity under the sector.
9. Both Parties agree that no addition, deletion or modification will be carried out in the entries in the Schedule with regard to the Sector, Sub-sector, Industrial classification, Type of Reservation and Description from the date of entry into force of this Agreement. However, with regard to the Reservation Measures, the Parties shall, within a period of six (6) months from the date of entry into force of the Agreement, specify the details of Reservation Measures including the relevant provision of the legislation relating to the Description as set forth in the Schedules.
Annex I. Schedule of Korea
Article 1.
Sector: Agriculture and Livestock
Sub-Sector
Industry Classification: KSIC 01212 Farming of Beef Cattle KSIC 51312 Wholesale of Meat
Type of Reservation: National Treatment (Article 10.3)
Reservation Measure: Foreign Investment Promotion Act (Law No. 9071, March 28, 2008), Article 4 and 22 Enforcement Decree of the Foreign Investment Promotion Act (Presidential Decree No. 20947, July 29, 2008), Article 5 Consolidated Public Notice for Foreign Investment (No. 2008-55, February 29, 2008, Ministry of Knowledge Economy), Appendix 1
Description: Foreign persons may not: (i) invest in an enterprise engaged in rice or barley farming or (ii) hold 50 percent or more of the equity interest of an enterprise engaged in beef cattle farming or yook- ryu(meat) wholesaling.
Phase-Out: None
Article 2.
Sector: Transportation
Sub-Sector: Air Transportation
Industry Classification
Type of Reservation: National Treatment (Articles 10.3) Senior Management and Board of Directors (Articles 10.6)
Reservation Measure: Articles 3, 6, 112, 113, 114 and 132 of the Aviation Act (Law No. 9071, Mar 28, 2008), Articles 278, 278-2, 298 and 299 of its Enforcement Regulations (Ordinance of the Ministry of Land, Transport & Maritime Affairs No. 12, May 8, 2008)
Description:
None of the following persons may own any of national carriers:
1. a foreign national;
2. a foreign government or a foreign gong-gong-dan-che (organization for public purposes);
3. an enterprise organized under foreign law;
4. an enterprise in which any of those referred to in items 1 through 3 owns 50 percent or more of the equity interest, or has control; or
5. an enterprise organized under Korean law whose dae-pyo-ja (for example, a chief executive officer, president, or similar principal senior officer) is a foreign national or half or more of whose senior management are foreign nationals.
Phase-Out: None
Article 3.
Sector: Sea Map Making
Sub-Sector
Industry Classification
Type of Reservation: National Treatment (Article 10.3)
Reservation Measure: Marine Scientific Research Act (Law No. 8852, February 29, 2008), Articles 6, 7, and 8, Territorial Sea and Contiguous Zone Act (Law No. 4986, December 6, 1995), Article 5
Description: A foreign person, a foreign government, or a Korean enterprise owned or controlled by a foreign person that intends to conduct marine scientific research in the territorial waters or exclusive economic zone of Korea must obtain prior authorization or consent from Minister of Land, Transport and Maritime Affairs whereas a Korean national or a Korean enterprise not owned or controlled by a foreign person need only to provide notification.
Phase-Out: None
Article 4.
Sector: All Manufacturing Sectors
Sub-Sector
Industry Classification
Type of Reservation: Performance Requirements (Article 10.5)
Reservation Measure: Act on the Promotion of Saving and Recycling of Resources(Law No. 8852, Feb.29, 2008), Article 16, 17, 18, 19 and 27, Act for Resource Recycling of Electrical and Electronic equipment and vehicle(Law No. 8852, Feb.29, 2008), Article 15, 16 and 17
Description:
Manufacturers who are under recycling duties and those to whom such manufacturers have entrusted their recycling duties shall follow the recycling standards for their products and packaging materials prescribed by the Minister of Environment.
Furthermore, the above persons shall submit the recycling duty performance plans and result reports each year, and shall pay the recycling levy in case of failure to satisfy the amounts of the prescribed recycling duty.
Phase-Out: None
Article 5.
Sector: Sale, maintenance and repair of low-emission motor vehicles
Sub-Sector
Industry Classification
Type of Reservation: Performance Requirements(Article 10.5)
Reservation Measure: Special Act on Metropolitan Air Quality Improvement(Law No. 9036, Mar.28, 2008), Article 23, Enforcement Decree(Presidential Decree No. 21033, Sep.25, 2008), Article 26
Description:A distributor of motor vehicles shall submit an annual plan to supply low-emission motor vehicles in accordance with the annual popularization standard of low-emission motor vehicle (1.5%, 2006). The distributor shall obtain approval of the plan by the Minister of Environment and report business results to the Minister of Environment.
Phase-Out: None
Article 6.
Sector: Manufacture of Chemical Products
Sub-Sector: Manufacture of Biological Products
Industry Classification: KSIC 24212 Manufacture of Biological Products
Type of Reservation: Performance Requirements (Article 10.5)
Reservation Measure: Pharmaceutical Affairs Act (Law No. 8552, February. 29, 2008), Article 42 Enforcement Regulations of the Pharmaceutical Affairs Act (Ordinance of the Ministry of Health and Welfare No. 71, October. 16, 2008), Article 21
Description: A person who manufactures blood products must procure raw blood materials from a blood management body in Korea.
Phase-Out: None
Article 7.
Sector: Publishing
Sub-Sector: Publishing of Periodicals (Excluding Newspapers)
Industry Classification: Type of Reservation National Treatment (Article 10.3), Senior Management and Boards of Directors (Article 10.6), Reservation Act on the Guarantee of Freedom and Function of Newspapers, Measure Etc. (Law No. 8852, February 29, 2008), Articles 13 and 26, Enforcement Decree of the Act on the Guarantee of Freedom and Function of Newspapers, Etc. (Presidential Decree No. 20676, February 29, 2008), Articles 17, 18, 19, and 20
Description: The publisher or the editor-in-chief of an enterprise that publishes periodicals must be a Korean national.
The following persons may not publish periodicals in Korea:
(a) a foreign government or a foreign person;
(b) an enterprise organized under Korean law whose dae-pyo-ja (for example, a chief executive officer, president, or similar principal senior officer) is not a Korean national; or
(c) an enterprise organized under Korean law in which a foreign person holds 50 percent or more of share or equity interest.
A foreign person that publishes periodicals may establish a branch or office in Korea subject to authorization from the Minister of Culture and Tourism. As of the date this Agreement enters into force, such branch or office may print and distribute its periodicals in Korea in the original language, provided that such periodicals are edited in the territory of the other Party.
Phase-Out: None
Article 8.
Sector: Agriculture
Sub-Sector
Industry Classification
Type of Reservation: National Treatment (Article 10.3)
Reservation Measure: Grain Management Act (Law No. 8852, February 29, 2008), Article 12 Livestock Industry Act (Law No. 8852, February 29, 2008), Articles 24 and 27 Seed Industry Act (Law No. 8852, February 29, 2008), Article 142 Feed Management Act (Law No. 8852, February 29, 2008), Article 6 Ginseng Industry Act(Law No. 8852, February 29, 2008), Article 20 Foreign Investment Promotion Act (Law No. 9071, March 28, 2008), Articles 4 and 22 Enforcement Decree of the Foreign Investment Promotion Act (Presidential Decree No. 20947, July 29, 2008), Article 5 Consolidated Public Notice for Foreign Investment (No. 2008-55, February 29, 2008, Ministry of Knowledge Economy), Appendix 1 Act on Distribution and Price Stabilization of Agricultural and Fishery Products (Law No. 8852, February 29, 2008), Articles 15, 17, and 43 Notice on TRQ Products (Ministry of Agriculture and Forestry Notice No. 2008-17, May 16, 2008)
Description: Only the Livestock Cooperatives under the Agriculture Cooperative Act may establish and manage a ga-chook-sijang (livestock market) in Korea.
Only a local government may establish a gong-yeong-domae- sijang (public wholesale market).
Only producers' organizations or public interest corporations prescribed in the Enforcement Decree of the Act on Distribution and Price Stabilization of Agricultural and Fishery Products may establish a gong-pan-jang (joint wholesale market).
For greater certainty, Articles 10.3(National Treatment) do not prevent Korea from adopting or maintaining any measure with respect to the administration of the WTO Tariff-Rate-Quota.
Phase-Out: None
Article 9.
Sector: Energy Industry
Sub-Sector: Electric Power Generation Other Than Nuclear Power Generation; Electric Power Transmission, Distribution and Sales
Industry Classification;
Type of Reservation:National Treatment (Articles 10.3)
Reservation Measure: Securities and Exchange Act (Law No. 8985, March 21, 2008), Article 203, Enforcement Decree of the Securities and Exchange Act (Presidential Decree No. 20653, February 29, 2008), Article 87-2, Foreign Investment Promotion Act (Law No. 9071, March 28, 2008), Articles 4, 5 and 22, Enforcement Decree of the Foreign Investment Promotion Act, (Presidential Decree No. 20947, July 29, 2008), Article 5, Consolidated Public Notice for Foreign Investment (No. 2008-55, February 29, 2008, Ministry of Knowledge Economy), Appendix 1, Notice of Ministry of Finance and Economy (No. 2000-17, September 28, 2000), Regulation on Supervision of Securities Business (Financial Service Commission Notice No. 2008-16, July 3, 2008), Sec. 7-6
Description:
The aggregate foreign share of KEPCO's issued stocks may not exceed 40 percent. A foreign person may not become the largest shareholder of KEPCO.
The aggregate foreign share of power generation facilities, including cogeneration facilities of heat and power (GHP) for the district heating system (DHS), may not exceed 30 percent of the total facilities in the territory of Korea.
The aggregate foreign share of electric power transmission, distribution and sales businesses should be less than 50 percent. A foreign person may not be the largest shareholder.
The aggregate foreign share of electric power transmission, distribution and sales businesses should be less than 50 percent. A foreign person may not be the largest shareholder.
Phase-Out: None
Article 10.
Sector: Energy Industry
Sub-Sector: Gas Industry Industry Classification
Type of Reservation National Treatment (Articles 10.3)
Reservation Measure: Act on the Improvement of Managerial Structure and Privatization of Public Enterprises (Law No. 8852, Feb 29, 2008), Article 19, Securities and Exchange Act (Law No. 8985, Mar 21, 2008), Article 203, Foreign Investment Promotion Act (Law No. 9071 Mar 28, 2008), Articles 4 and 5, Articles of Incorporation of the Korea Gas Corporation (Mar 28, 2008), Article 11
Description: Foreign persons, in the aggregate, may not own more than 30 percent of the share of KOGAS.
Phase-Out: None
Article 11.
Sector: All Services Sectors