A tribunal may also award costs and attorney' s fees in accordance with this Section and the applicable arbitration rules.
2. Subject to paragraph 1, where a claim is submitted to arbitration under Article 10.16.1(b):
(a) an award of restitution of property shall provide that restitution be made to the enterprise;
(b) an award of monetary damages and any applicable interest shall provide that the sum be paid to the enterprise; and
(c) the award shall provide that it is made without prejudice to any right that any person may have in the relief under applicable domestic law.
3. A tribunal may not award punitive damages.
4. An award made by a tribunal shall have no binding force except between the disputing parties and in respect of the particular case.
5. Subject to paragraph 6 and the applicable review procedure for an interim award, a disputing party shall abide by and comply with an award without delay.
6. A disputing party may not seek enforcement of a final award until:
(a) in the case of a final award made under the ICSID Convention,
(i) 120 days have elapsed from the date the award was rendered and no disputing party has requested revision or annulment of the award; or
(ii) revision or annulment proceedings have been completed; and
(b) in the case of a final award under the ICSID Additional Facility Rules, the UNCITRAL Arbitration Rules, or the rules selected pursuant to Article 10.16.3(d),
(i) 90 days have elapsed from the date the award was rendered and no disputing party has commenced a proceeding to revise, set aside, or annul the award; or
(ii) a court has dismissed or allowed an application to revise, set aside, or annul the award and there is no further appeal.
7. Each Party shall provide for the enforcement of an award in its territory.
8. If the respondent fails to abide by or comply with a final award, on delivery of a request by the Party of the claimant, a panel shall be established under Article 21.6 (Request for an Arbitral Panel). The requesting Party may seek in such proceedings:
(a) a determination that the failure to abide by or comply with the final award is inconsistent with the obligations of this Agreement; and
(b) in accordance with Article 21.13 (Initial Report), a recommendation that the respondent abide by or comply with the final award.
9. A disputing party may seek enforcement of an arbitration award under the ICSID Convention, the New York Convention, or the Inter-American Convention regardless of whether proceedings have been taken under paragraph 8. 10. Acclaim that is submitted to arbitration under this Section shall be considered to arise out of a commercial relationship or transaction for purposes of Article I of the New York Convention and Article I of the Inter-American Convention.
Article 10/27. Service of Documents
Delivery of notice and other documents on a Party shall be made to the place named for that Party in Annex 10-C.
Section C. Definitions
Article 10.28. Definitions
For purposes of this Chapter:
Centre means the International Centre for Settlement of Investment Disputes ("ICSID") established by the ICSID Convention;
claimant means an investor of a Party that is a party to an investment dispute with another Party; disputing parties means the claimant and the respondent; disputing party means either the claimant or the respondent;
enterprise means an enterprise as defined in Article 1.3 (Definitions of General Application), and a branch of an enterprise;
enterprise of a Party means an enterprise constituted or organized under the law of a Party, and a branch located in the territory of a Party and carrying out business activities there;
freely usable currency means "freely usable currency" as determined by the International Monetary Fund under its Articles of Agreement;
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;
Inter-American Convention means the Inter-American Convention on International Commercial Arbitration, done at Panama, January 30, 1975;
investment means every asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms that an investment may take include:
(a) an enterprise;
(b) shares, stock, and other forms of equity participation in an enterprise;
(c) bonds, debentures, other debt instruments, and loans; (12) (13)
(d) futures, options, and other derivatives;
(e) turnkey, construction, management, production, concession, revenue-sharing, and other similar contracts;
(f) intellectual property rights;
(g) licenses, authorizations, permits, and similar rights conferred pursuant to domestic law; (14) (15) and
(h) other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages, liens, and pledges;
investment agreement means a written agreement (16) between a national authority (17) of a Party and a covered investment or an investor of another Party, on which the covered investment or the investor relies in establishing or acquiring a covered investment other than the written agreement itself, that grants rights to the covered investment or investor:
(a) with respect to natural resources that a national authority controls, such as for their exploration, extraction, refining, transportation, distribution, or sale;
(b) to supply services to the public on behalf of the Party, such as power generation or distribution, water treatment or distribution, or telecommunications; or
(c) to undertake infrastructure projects, such as the construction of roads, bridges, canals, dams, or pipelines, that are not for the exclusive or predominant use and benefit of the government;
investment authorization means an authorization that the foreign investment authority of a Party grants to a covered investment or an investor of another Party; (18) (19)
investor of a non-Party means, with respect to a Party, an investor that attempts through concrete action to make, is making, or has made an investment in the territory of that Party, that is not an investor of a Party;
investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of a Party, that attempts through concrete action to make, is making, or has made an investment in the territory of another Party; provided, however, that 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;
national means a natural person who has the nationality of a Party according to Annex 1.3 (Country-Specific Definitions);
negotiated restructuring means the restructuring or rescheduling of a debt instrument that has been effected through (i) a modification or amendment of such debt instrument, as provided for under its terms, or (ii) a comprehensive debt exchange or other similar process in which the holders of no less than 75 percent of the aggregate principal amount of the outstanding debt under such debt instrument have consented to such debt exchange or other process.
New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958;
non-disputing Party means a Party that is not a party to an investment dispute;
protected information means confidential business information or information that is privileged or otherwise protected from disclosure under a Party's law;
respondent means the Party that is a party to an investment dispute; Secretary-General means the Secretary-General of ICSID; and
UNCITRAL Arbitration Rules means the arbitration rules of the United Nations Commission on International Trade Law.
Annex 10-A. Customary International Law
The Parties confirm their shared understanding that âcustomary international lawâ generally and as specifically referenced in Article 10.5 results from a general and consistent ptactice of States that they follow from a sense of legal obligation. With regard to Article 10.5, the customary international law minimum standard of treatment of aliens refers to all customary international law principles that protect the economic rights and interests of aliens.
Annex 10-B. Expropriation
The Parties confirm their shared understanding that:
1. An action or a series of actions by a Party cannot constitute an expropriation unless it interferes with a tangible or intangible property right or property interest in an investment.
2. Article 10.7.1 addresses two situations. The first is direct expropriation, where an investment is nationalized or otherwise directly expropriated through formal transfer of title or outright seizure.
3. The second situation addressed by Article 10.7.1 is indirect expropriation, where an action or series of actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure.
(a) The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by-case, fact-based inquiry that considers, among other factors:
(i) the economic impact of the government action, although the fact that an action or series of actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred;
(ii) the extent to which the government action interferes with distinct, reasonable investment-backed expectations; and
(iii) the character of the government action.
(b) Except in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations. (20)
Annex 10-C. Service of Documents on a Party under Section B
Peru
Notices and other documents in disputes under Section B shall be served on Peru by delivery to:
Dirección General de Asuntos de Economía Internacional, Competencia e Inversión Privada
Ministerio de Economía y Finanzas
Jirón Lampa 277, piso 5
Lima, Pert
United States
Notices and other documents in disputes under Section B shall be served on the United States by delivery to:
Executive Director (L/EX) Office of the Legal Adviser Department of State Washington, D.C. 20520 United States of America
Annex 10-D. Appellate Body or Similar Mechanism
Within three years after the date of entry into force of this Agreement, the Parties shall consider whether to establish an appellate body or similar mechanism to review awards rendered under Article 10.26 in arbitrations commenced after they establish the appellate body or similar mechanism.
Annex 10-E. Special Dispute Settlement Provisions
1. Where a claimant submits a claim to arbitration alleging that a Party other than the United States has breached an obligation under Section A, other than Article 10.3 or 10.4, through the imposition of a restrictive measure with regard to payments and transfers, Section B shall apply, except as follows:
(a) The claimant may not submit any such claim to arbitration until one year after the events that give rise to the claim.
(b) Loss or damages arising from the restrictive measure on capital inflows shall be limited to the reduction in value of the transfers and shall exclude loss of profits or business and any similar consequential or incidental damages.
(c) Subparagraph (a) shall not apply to a claim that arises from restrictions on:
(i) payments or transfers on current transactions,
(ii) payments or transfers associated with equity investments, or
(iii) payments pursuant to a loan or bond, (21) provided that such payments are made in accordance with the terms and conditions of the loan or bond agreement.
(d) If the measure restricts outward payments or transfers:
(i) it shall not prevent investors from earning a market rate of return in the territory of the Party imposing the measure on any restricted assets;
(ii) the Party imposing the measure shall afford investors a reasonable opportunity to mitigate any losses arising from such measure; and
(iii) so long as the Party imposing the measure has complied with its obligations under this paragraph, the claimant may not recover any alleged opportunity costs or any similar consequential or incidental damages from forgoing alternative investments that were incurred during the first year after the events that give rise to the claim.
2. A Party may not request the establishment of a panel under Chapter Twenty-One (Dispute Settlement) relating to the imposition of a restrictive measure with regard to payments and transfers by a Party other than the United States until one year after the imposition of such measure.
Annex 10-F. Public Debt
1. The Parties recognize that the purchase of debt issued by a Party entails commercial risk. For greater certainty, no award may be made in favor of a claimant for a claim under Article 10.16.1(a)(i)(A) or Article 10.16.1(b)G@)(A) with respect to default or non-payment of debt issued by a Party unless the claimant meets its burden of proving that such default or non-payment constitutes an uncompensated expropriation for purposes of Article 10.7.1 or a breach of any other obligation under Section A.
2. No claim that a restructuring of debt issued by a Party other than the United States breaches an obligation under Section A may be submitted to, or if already submitted continue in, arbitration under Section B if the restructuring is a negotiated restructuring at the time of submission, or becomes a negotiated restructuring after such submission, except for a claim that the restructuring violates Article 10.3 or 10.4.
3. Notwithstanding Article 10.16.3, and subject to paragraph 2 of this Annex, an investor of another Party may not submit a claim under Section B that a restructuring of debt issued by a Party other than the United States breaches an obligation under Section A (other than Article 10.3 or 10.4) unless 270 days have elapsed from the date of the events giving rise to the claim
Annex 10-G. Submission of a Claim to Arbitration
1. An investor of the United States may not submit to arbitration under Section B a claim that a Party has breached an obligation under Section A either:
(a) on its own behalf under Article 10.16.1(a), or
(b) on behalf of an enterprise of a Party other than the United States that is a juridical person that the investor owns or controls directly or indirectly under Article 10.16.1(b),
if the investor or the enterprise, respectively, has alleged that breach of an obligation under Section A in proceedings before a court or administrative tribunal of that Party.
2. For greater certainty, if an investor of the United States elects to submit a claim of the type described in paragraph 1 to a court or administrative tribunal of a Party other than the United States, that election shall be definitive, and the investor may not thereafter submit the claim to arbitration under Section B.
Annex 10-H. Certain Agreements between Peru and Covered Investments or Investors of Another Party (22)
1. Pursuant to Legislative Decrees 662 and 757, Peru may enter into agreements known as "stability agreements" with covered investments or investors of another Party.
2. As part of a stability agreement referred to in paragraph 1, Peru accords certain benefits to the covered investment or the investor that is party to the agreement. These benefits typically include a commitment to maintain the existing income tax regime applicable to such covered investment or investor during a specified period of time.
3. Appendices 10-H.A and 10-H.B set forth, respectively, an illustration of a stability agreement with a covered investment and an illustration of a stability agreement with an investor.
4. A stability agreement referred to in paragraph 1 may constitute one of multiple written instruments that make up an "investment agreement," as defined in Article 10.28. (23) Where that is the case, a breach of such a stability agreement by Peru may constitute a breach of the investment agreement of which it is a part.
5. Where a stability agreement is materially identical to the illustration set forth in Appendix 10-H.A or 10-H.B, and does not constitute one of multiple instruments that make up an "investment agreement," as defined in Article 10.28, a breach of such a stability agreement by Peru shall not constitute a breach of an investment agreement.
Appendix 10-H.A.
The following shall constitute a Legal Stability Agreement (hereinafter "the Agreement") concluded between, on the one hand, the Peruvian State, represented by ............., and hereinafter referred to as "the STATE," and, ............. , on the other hand, hereinafter referred to as "the COMPANY," under the terms and conditions set forth in the following Articles:
ONE. The Company has filed with (the appropriate Peruvian agency), an application for entering into a Legal Stability Agreement under the provisions of Title II of Legislative Decree Nº 662; Title V, Chapter I of Legislative Decree Nº 757 and the regulations thereof approved by Executive Decree Nº 162-92- EF (including amending, regulating, and supplementing provisions).
TWO. The COMPANY, by virtue of this Agreement, undertakes to issue shares/interests to the INVESTOR, hereinafter referred to as the INVESTOR. Consequently, it undertakes the following: (Only the obligations corresponding to the type of investment selected by the Investor should be indicated)
• To issue shares/interests to the INVESTOR for US$ ……………in exchange for the contributions the INVESTOR shall make within a term of ……………….. (no greater than two years) from the date of the conclusion of the Legal Stability Agreement by the COMPANY.
• To guarantee that the foreign investments, referred to in section 1, are channeled through the national financial system, as recorded on the certification issued by the bank participating in the transaction. (Applies only to foreign investments.)
• To register the foreign investment referred to in section 1, valued in freely convertible currency, with the appropriate Peruvian agency.
• To generate directly no fewer than 20 permanent positions within no more than three years from the date of this Agreement.
• To generate directly US$ …………. (no less than two million) in foreign exchange earnings from exports within no more than three years from the date of this Agreement.
• To apply the investments referred to in paragraph 1 to expanding productive capacity or technological development.
THREE. The STATE, by virtue of this Agreement and during the term thereof, undertakes to guarantee the legal stability of the COMPANY under the following terms:
1. Stability of the tax system with respect to Income Tax, pursuant to the provisions of Article 40 of Legislative Decree Nº 757, as amended, which implies that the income tax to be paid by the Company shall not be modified during the term of this Agreement; (A brief description of the tax security provisions follows, which may vary depending on the tax regime in force on the date of signature of the Agreement.)
2. Stability of hiring procedures for the COMPANY’s workers while this Agreement is in force, under the provisions of Article 12(a) of Legislative Decree N° 662; in the various forms set forth in (reference to labor regulations in force on date of signature of the Agreement).
3. Stability of export promotion regimes used by the COMPANY under the provisions of Article 12(b) of Legislative Decree N° 662, currently in force (reference to the application of current regulations).
FOUR. In addition, as agreed upon in Two above, the Company undertakes the following: (Only the obligations corresponding to the type of investment selected by the Investor should be indicated)
• To prove that the new investment exceeds, as of the date on which this Agreement is concluded, 50% of the COMPANY’s capital and reserves as indicated in a report, equivalent to an affidavit, and subject to subsequent verification, prepared by an auditing firm;
• To prove that it has complied with the obligation to receive its investment in capital from abroad, in the amount of US$ ……… by filing (list of substantiating documents required);
• To prove that the new investment has been effectively applied to the expansion of its productive capacity, by the appropriate report issued by an auditing firm;
• To show that it has complied with the obligation to generate….. …….permanent positions in the COMPANY by filing an affidavit subject to subsequent verification;
• To show that it has complied with the obligation to generate US$ ………in foreign exchange earnings from (the COMPANY’s) exports, in an affidavit subject to subsequent verification.
Proof of compliance with obligations referred to in the foregoing paragraphs should be submitted to the appropriate Peruvian agency within no more than …. calendar days from the deadline for compliance therewith, pursuant to the provisions of Article Two above.
FIVE. This Legal Stability Agreement shall remain in force for ten years from the date of on which it is concluded. It may not, therefore, be unilaterally amended by either of the parties during such period, even if domestic legislation is amended or if changes more beneficial or more detrimental to either of the parties are incorporated therein.
SIX. The COMPANY shall be entitled to a single waiver of the legal stability system granted hereunder. Such waiver should be formalized by written notice to the (appropriate Peruvian agency), which shall become effective as of the date of receipt of the notice by said agency. If the COMPANY chooses to exercise the right to waive the Stability Agreement acknowledged under this Article, it shall automatically become subject to the provisions of ordinary law.
SEVEN. This Legal Stability Agreement may be amended only by mutual consent of the Parties. It shall not be possible to amend the term established in Article Five, or the investment amount under the limit established in the laws (referred to in Article One). For such purpose, the COMPANY shall file an application with the appropriate Peruvian agency, which shall be processed in accordance with the same procedure used for the conclusion of this Agreement.
EIGHT. It being the intent of the Parties to resolve any matters involving compliance with this Agreement in the most expeditious manner possible, the Parties agree that henceforth, any dispute or claim between them regarding the interpretation, application or validity of this Agreement shall be settled through legal arbitration.
The arbitration shall be carried out in Lima, through the establishment of an Arbitral Tribunal consisting of three members. Each Contracting Party shall appoint an arbitrator, and the two shall in turn appoint the third. The arbitrators shall be expressly empowered to rule on the dispute subject of the arbitration.
If one of the Contracting Parties has not appointed its arbitrator within ten working days of receipt of the request by the party or parties requesting the arbitration, or if, within ten working days of the appointment of the second arbitrator by the parties, the two arbitrators cannot reach an agreement as to the choice of the third arbitrator, the latter shall be appointed, upon request of either Party, by the Lima Chamber of Commerce.
The term for completion of the arbitral procedure shall not exceed sixty (60) working days from the date of appointment of the last arbitrator; said procedure shall be governed by the provisions of the General Law on Arbitration, and/or any modifying or replacing regulations.
Each Contracting Party shall bear the costs incurred by the application of the provisions agreed upon herein in equal parts.