NINE. This Legal Stability Agreement shall be terminated ipso jure without any notification requirement on the following grounds:
1. Failure by The COMPANY to comply with any of the obligations stipulated in Article Two.
2. Failure by The COMPANY to comply any of the obligations set forth in Article Four.
3. The transfer by The COMPANY of its contractual status.
4. Failure by the company to generate the positions pursuant to Article Two.
5. Failure by the company to generate the foreign exchange earnings from exports pursuant to Article Two.
If the COMPANY is responsible for any of the above-mentioned grounds for termination of this Agreement, and if, as a result of the legal stability granted thereunder, it enjoyed a lower tax burden than what it would have been entitled to without this Agreement, it shall be required to reimburse the State the adjusted amount of any taxes that it would have owed had it not concluded the Agreement, in addition to the appropriate surcharges referred to in the Tax Code.
It is hereby understood that in the case referred to in the foregoing paragraph, if a greater tax burden has been imposed on the COMPANY by virtue of this Agreement, the State shall not be required to reimburse any amount whatsoever.
The Parties, having agreed on all its terms, have signed this Agreement at Lima in triplicate, all three copies being identical in content.
Appendix 10-H.B.
The following shall constitute a Legal Stability 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 "INVESTOR" under the terms and conditions set forth in the following Articles:
ONE. The COMPANY has filed with the appropriate Peruvian agency an application for the conclusion of a Legal Stability Agreement under the provisions of , Title II of Legislative Decree N° 662; Title V, Chapter I, of Legislative Decree N° 757; and the Regulations Governing Private Investment Guarantee Regimes, approved by Executive Decree N° 162-92-EF, (including amending, regulating, and supplementing provisions).
TWO. The COMPANY, by virtue of this Agreement (consistent with the form of investment stipulated in the Regulations) undertakes the following: (Only the obligations corresponding to the type of investment selected by the Investor should be included.)
• To make cash contributions to the capital of …………….., in the amount of US$ ……., within a term of ……………….. (no more than two years) from the date of the conclusion of this Agreement;
• To channel the foreign investment referred to in paragraph 1 through the National Financial System, as recorded on the certification issued by the bank participating in the transaction.
• To register the foreign investment referred to in section 1, valued in freely convertible currency, with PROINVERSIÓN (Only for foreign direct investment.);
• To make venture capital investments with third parties, in the amount of US$…… within a term of …………. (no more than two years) from the date of the conclusion of this Agreement;
• To generate directly no fewer than 20 permanent positions within no more than three years from the date the conclusion of this Agreement;
• To generate directly US$ ……………… (no less than two million) in foreign exchange earnings from exports within no more than three years from the date of this Agreement.
THREE. The STATE, by virtue of this Agreement and during the term thereof, undertakes to guarantee the legal security of THE INVESTOR, with respect to the investment referred to in Article Two, under the following terms:
1. Stability of the tax system referred to the income tax, pursuant to the provisions of Article 10(a) of Legislative Decree N° 662; (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. (Only applicable to foreign investment.) Stability of the freely availably currency regime, pursuant to the provisions of Article 10(b) of Legislative Decree N° 662, which provides that the INVESTOR may freely access foreign currency on the exchange market at the most favorable exchange rate, while the STATE may not apply to the investment referred to in Article Two any exchange market regulation system or mechanism restricting this right or involving a less favorable treatment for the INVESTOR than that applied to any natural or legal person carrying out any type of exchange transaction.
3. (Only applicable to foreign investment.) Stability of the right of free remittance of profits and capital pursuant to the provisions of Article 10(b) of Legislative Decree N° 662, which provides that the INVESTOR may effect transfers abroad in freely convertible currency without previous authorization of national, regional or local government entities, provided that the pertinent investment has been registered with the appropriate Peruvian agency, and that the corresponding tax obligations have been met, it being prohibited for the State to establish any further restriction or limitations on this right, such transfers being permitted as follows:
(a) The total amount of the INVESTOR’s foreign capital, including capital generated by the sale of its stocks, interest shares, or options, from capital reduction and partial or total liquidation of any companies, derived from the investment referred to in Article Two;
(b) The total amount of dividends or proven net profits generated by the investment referred to in Article Two, as well as the profits obtained from considerations for the use or enjoyment of goods or assets physically located in the investment target country; and
(c) The total amount of royalties and considerations for the use and transfer of technology, trademarks and patents and any other aspects of industrial property authorized by the appropriate Peruvian agency.
4. Stability of the right to use the most favorable exchange rate in accordance with the provisions of Article 10(b) of Legislative Decree N° 662, which provides that the INVESTOR may access foreign currency in the exchange market at the most favorable exchange rate, while the STATE may not compel the INVESTOR to carry out its exchange transactions under a system or mechanism which grants a less favorable treatment than that applied to any natural or legal person in the execution of any exchange transaction, pursuant to the following:
(a) In the case of conversion of foreign currency to Peruvian currency: THE INVESTOR may sell such currency to any natural or legal person at the most favorable purchase exchange rate on the exchange market at the time of the exchange transaction; and
(b) In the case of conversion of local currency to foreign currency: THE INVESTOR may purchase such currency from any natural or legal person at the most favorable exchange rate on the exchange market at the time of the exchange transaction.
5. The stability of the right to non-discrimination pursuant to the provisions of Article 10(c) of Legislative Decree N° 662, which provides that the STATE, at none of its levels, whether they be national, regional or local government entities or companies, may apply to the INVESTOR different treatment based on nationality, the sector or type of economic activity pursued, or the geographic location of the companies in which it invests, or in the following matters:
(a) (Only applicable to foreign investment.) Currency exchange, in that the State may not apply to the INVESTOR, with respect to the investments referred to in Article Two, an exchange regime that involves a less favorable treatment than that applied to any natural or legal person for the execution of any kind of exchange transaction.
(b) Prices, tariffs or non-tariff duties, in that the STATE may not apply different amounts or rates in this regard to the INVESTOR for the investment referred to in Article Two.
(c) (Not applicable to banking and insurance.)
(d) Form of Incorporation, in that the STATE may not require that the INVESTOR invest in a company that adopts a specific form of incorporation.
(e) The INVESTOR’s individual or corporate status, in that the STATE may not apply to the INVESTOR a different treatment in this regard; and
(f) Any other equivalent grounds, such as the application of discriminatory treatment to the INVESTOR resulting from any combination of the various sections of this item.
This item shall be applied notwithstanding the limits established in Article 3° of the Regulations.
FOUR. The INVESTOR undertakes, in addition to the provisions agreed upon in Article Two, the following:
(Only the obligations corresponding to the type of investment described in Article Two are included.)
• To prove that he has complied with a cash contribution of US$ ………….to the capital of (name of company) ................................ by filing (list of substantiating documents)
• To prove that he has complied with a venture capital investment of US$ …………in the company named ….. by filing (list of substantiating documents)
• To prove that he has complied with the obligation to generate …. permanent positions in (name of company) by submitting an affidavit, subject to subsequent verification.
• To prove that he has complied with the obligation to generate US$.........in foreign exchange earnings from exports from (name of company) by submitting an affidavit, subject to subsequent verification.
Proof of compliance with the 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. Noncompliance with these provisions shall be grounds for termination of this Agreement.
FIVE. This Legal Stability Agreement shall remain in force for ten years from the date 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 INVESTOR 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 INVESTOR chooses to exercise the right to waive the Legal Stability Agreement acknowledged under this Article, it shall automatically become subject to the provisions of ordinary law.
SEVEN. The INVESTOR shall have the right to assign his contractual status under this Agreement, with the prior authorization of the appropriate Peruvian agency, to be formalized by means of an addendum to this Agreement.
It is hereby understood that the assignment of contractual status by the INVESTOR to another shall not extend the term of the Agreement stipulated in Article Five.
EIGHT. 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 (specify pertinent regulation).
For such purpose, the INVESTOR 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.
NINE. 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, of 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.
TEN. This Legal Stability Agreement shall be terminated ipso jure on the following grounds:
1. Failure by the INVESTOR to comply with any of the obligations stipulated in Article Two;
2. Failure by the INVESTOR to comply any of the obligations set forth in Article Four;
3. The assignment by the INVESTOR of its contractual status to another investor without the pertinent prior authorization of the appropriate Peruvian agency, as stipulated in Article Seven;
4. Failure by the COMPANY to generate the positions pursuant to Article Two;
5. Failure by the COMPANY to generate the foreign exchange earnings from exports pursuant to Article Two.
If the INVESTOR is responsible for any of the above-mentioned grounds for termination of this Agreement, and if, as a result of the legal stability granted thereunder, it enjoyed a lower tax burden than what it would have been entitled to without this Agreement, it shall be required to reimburse the State the adjusted amount of any taxes that it would have owed had it not concluded the Agreement, in addition to the appropriate surcharges referred to in the Tax Code.
It is hereby understood that in the case referred to in the foregoing paragraph, if a greater tax burden has been imposed on the INVESTOR by virtue of this Agreement, the State shall not be required to reimburse any amount whatsoever.
The Parties, having agreed on all its terms, have signed this Agreement at Lima in duplicate, both copies of which are identical in content.
Chapter Eleven. Cross-Border Trade In Services
Article 11.1. Scope and Coverage
1. This Chapter applies to measures adopted or maintained by a Party affecting cross-border trade in services by service suppliers of another Party. Such measures include measures affecting:
(a) the production, distribution, marketing, sale, and delivery of a service;
(b) the purchase or use of, or payment for, a service;
(c) the access to and use of distribution, transport, or telecommunications networks and services in connection with the supply of a service;
(d) the presence in its territory of a service supplier of another Party; and
(e) the provision of a bond or other form of financial security as a condition for the supply of a service.
2. For the purposes of this Chapter, "measures adopted or maintained by a Party" means measures adopted or maintained by:
(a) central, regional, or local governments and authorities; and
(b) non-governmental bodies in the exercise of powers delegated by central, regional, or local governments or authorities.
3. Articles 11.4, 11.7, and 11.8 also apply to measures by a Party affecting the supply of a service in its territory by a covered investment.â
4. This Chapter does not apply to:
(a) financial services as defined in Article 12.20 (Definitions), except that paragraph 3 applies where the financial service is supplied by a covered investment that is not a covered investment in a financial institution (as defined in Article 12.20) in the Party's territory;
The Parties understand that nothing in this Chapter, including this paragraph, is subject to investor-state dispute settlement pursuant to Section B of Chapter Ten (Investment).
(b) "government procurement" or "procurement" , as defined in Article 1.3 (Definitions of General Application);
(c) air services, including domestic and international air transportation services, whether scheduled or non-scheduled, and related services in support of air services, other than:
(i) aircraft repair and maintenance services during which an aircraft is withdrawn from service, and
(ii) specialty air services; or
(d) subsidies or grants provided by a Party, including government-supported loans, guarantees, and insurance.
Annex 11-A sets forth an understanding of the Parties related to subparagraph (d).
5. This Chapter does not impose any obligation on a Party with respect to a national of another Party seeking access to its employment market, or employed on a permanent basis in its territory, and does not confer any right on that national with respect to that access or employment.
6. This Chapter does not apply to services supplied in the exercise of governmental authority in a Party's territory. A "service supplied in the exercise of governmental authority" means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.
7. Nothing in this Chapter or any other provision of this Agreement shall be construed to impose any obligation on a Party regarding its immigration measures, including admission or conditions of admission for temporary entry.
Article 11.2. National Treatment
1. Each Party shall accord to service suppliers of another Party treatment no less favorable than that it accords, in like circumstances, to its own service suppliers.
2. The treatment to be accorded by a Party under paragraph 1 means, with respect to a regional level of government, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that regional level of government to service suppliers of the Party of which it forms a part.
Article 11.3. Most-Favored-Nation Treatment
Each Party shall accord to service suppliers of another Party treatment no less favorable than that it accords, in like circumstances, to service suppliers of any other Party or any non- Party.
Article 11.4. Market Access
No Party may adopt or maintain, either on the basis of a regional subdivision or on the basis of its entire territory, measures that:
(a) impose limitations on:
(i) the number of service suppliers whether in the form of numerical quotas, monopolies, exclusive service suppliers, or the requirement of an economic needs test,
(ii) the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test,
(iii) the total number of service operations or the total quantity of services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test,â or
(iv) the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in the form of numerical quotas or the requirement of an economic needs test; or
(b) restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service.
Article 11.5. Local Presence
No Party may require a service supplier of another Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border supply of a service.
Article 11.6. Non-Conforming Measures
1. Articles 11.2, 11.3, 11.4, and 11.5 do not apply to:
(a) any existing non-conforming measure that is maintained by a Party at:
(i) This clause does not cover measures of a Party that limit inputs for the supply of services.
(ii) the central level of government, as set out by that Party in its Schedule to Annex I,
(iii) a regional level of government, as set out by that Party in its Schedule to Annex I, or
(iv) a local level of government;
(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 11.2, 11.3, 11.4, or 11.5.
2. Articles 11.2, 11.3, 11.4, and 11.5 do not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors, or activities as set out in its Schedule to Annex II.
Article 11.7. Domestic Regulation
1. Where a Party requires authorization for the supply of a service, the Partyâs competent authorities shall, within a reasonable time after the submission of an application considered complete under its laws and regulations, inform the applicant of the decision concerning the application. At the request of the applicant, the Partyâs competent authorities shall provide, without undue delay, information concerning the status of the application. This obligation shall not apply to authorization requirements that are within the scope of Article 11.6.2.
2. With a view to ensuring that measures relating to qualification requirements and procedures, technical standards, and licensing requirements do not constitute unnecessary barriers to trade in services, each Party shall endeavor to ensure, as appropriate for individual sectors, that such measures are:
(a) based on objective and transparent criteria, such as competence and the ability to supply the service;
(b) not more burdensome than necessary to ensure the quality of the service; and
(c) in the case of licensing procedures, not in themselves a restriction on the supply of the service.
3. If the results of the negotiations related to Article VI:4 of the GATS (or the results of any similar negotiations undertaken in other multilateral fora in which each of the Parties participate) enter into effect, this Article shall be amended, as appropriate, after consultations between the Parties, to bring those results into effect under this Agreement. The Parties shall coordinate on such negotiations, as appropriate.
Article 11.8. Transparency In Developing and Applying Regulations (3)
Further to Chapter Nineteen (Transparency):
(a) each Party shall maintain or establish appropriate mechanisms for responding to inquiries from interested persons regarding its regulations relating to the subject matter of this Chapter; (4)
(b) if a Party does not provide advance notice and opportunity for comment pursuant to Article 19.2 (Publication), it shall, to the extent possible, address in writing the reasons therefor;
(c) at the time it adopts final regulations relating to the subject matter of this Chapter, each Party shall, to the extent possible, including upon request, address in writing substantive comments received from interested persons with respect to the proposed regulations; and
(d) to the extent possible, each Party shall allow reasonable time between publication of final regulations and their effective date.
Article 11.9. Recognition
1. For the purposes of fulfilment, in whole or in part, of its standards or criteria for the authorization, licensing, or certification of services suppliers, and subject to the requirements of paragraph 4, a Party may recognize the education or experience obtained, requirements met, or licenses or certifications granted in a particular country. Such recognition, which may be achieved through harmonization or otherwise, may be based upon an agreement or arrangement with the country concerned or may be accorded autonomously.
2. Where a Party recognizes, autonomously or by agreement or arrangement, the education or experience obtained, requirements met, or licenses or certifications granted in the territory of a non-Party, nothing in Article 11.3 shall be construed to require the Party to accord such recognition to the education or experience obtained, requirements met, or licenses or certifications granted in the territory of another Party.
3. A Party that is a party to an agreement or arrangement of the type referred to in paragraph 1, whether existing or future, shall afford adequate opportunity for another Party, if that other Party is interested, to negotiate accession to such an agreement or arrangement or to negotiate one comparable with it. Where a Party accords recognition autonomously, it shall afford adequate opportunity for another Party to demonstrate that education, experience, licenses, or certifications obtained or requirements met in that other Party's territory should be recognized.
4. No Party may accord recognition in a manner that would constitute a means of discrimination between countries in the application of its standards or criteria for the authorization, licensing, or certification of services suppliers, or a disguised restriction on trade in services.
5. Annex 11-B (Professional Services) applies to measures adopted or maintained by a Party relating to the licensing or certification of professional service suppliers as set out in that Annex.
Article 11.10. Transfers and Payments
1. Each Party shall permit all transfers and payments relating to the cross-border supply of services to be made freely and without delay into and out of its territory.
2. Each Party shall permit such transfers and payments relating to the cross-border supply of services to be made in a freely usable currency at the market rate of exchange prevailing on the date of transfer.
3. Notwithstanding paragraphs 1 and 2, a Party may prevent or delay a transfer or payment 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, futures, options, or derivatives;
(c) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
(d) criminal or penal offences; or
(e) ensuring compliance with orders or judgments in judicial or administrative proceedings.
Article 11.11. Denial of Benefits 1. a Party May Deny the Benefits of this Chapter to a Service Supplier of Another Party If the
service supplier is an enterprise owned or controlled by persons of a non-Party, and the denying Party:
(a) does not maintain diplomatic relations with the non-Party; or
(b) adopts or maintains measures with respect to the non-Party or a person of the non- Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise.
2. Subject to Article 21.4 (Consultations), a Party may deny the benefits of this Chapter to a service supplier of another Party if the service supplier is an enterprise owned or controlled by persons of a non-Party or of the denying Party that has no substantial business activities in the territory of that other Party.
Article 11.12. Specific Commitments
1. Annex 11-C sets out certain obligations with regard to certain limitations on the employment of specialty personnel and professionals.
2. Annex 11-D sets out obligations with regard to the supply of express delivery services. 3. Annex 11-E will set out other specific commitments that the Parties may agree.