Section B. Investment
Article 13-02. Scope of Application.
1. This Chapter applies to measures adopted or maintained by a Party relating to:
a) investors of the other Party;
b) investments of investors of another Party made in the territory of the Party; and
c) with respect to Article 13-07, all investments in the territory of the Party.
2. This Chapter covers both investments existing on the date of entry into force of this Agreement and investments made or acquired thereafter. The provisions of this Agreement shall not apply to any controversy, claim or dispute arising prior to the entry into force of this Agreement.
3. A Party has the right to engage exclusively in the economic activities listed in Annex IV (Activities Reserved to the State), and to refuse to authorize the establishment of investments in such activities.
4. This Chapter does not apply to measures adopted or maintained by a Party in relation to investors of the other Party and investments of such investors in financial institutions in the territory of the Party.
5. Nothing in this Chapter shall be construed to prevent a Party from providing social services or carrying out functions, such as law enforcement and law enforcement, social rehabilitation services, pension or unemployment insurance or social security services, social welfare, public education, public training, health, and child protection, when performed in a manner not inconsistent with this Chapter.
Article 13-03. National Treatment.
1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, sale or other disposition of investments.
2. Each Party shall accord to investments of investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investments of its own investors in the establishment, acquisition, expansion, management, conduct, operation, sale or other disposition of investments.
3. Treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a state or department, treatment no less favorable than the most favorable treatment accorded by that state or department, in like circumstances, to investors and investments of the Party of which it forms an integral part.
4. For greater certainty, no Party may:
a) impose on an investor of another Party a requirement that a minimum level of equity interest in an enterprise established in the territory of the Party be held by its nationals, except in the case of registered shares for directors or founding members of companies; or
b)} require an investor of another Party, by reason of its nationality, to sell or otherwise dispose of an investment in the territory of a Party.
Article 13-04. Most Favored Nation Treatment.
1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investors of the other Party or of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, sale or other disposition of investments.
2. Each Party shall accord to investments of investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investments of investors of the other Party or of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, sale or other disposition of investments.
Article 13-05. Level of Treatment.
Each Party shall accord to investors and investments of investors of another Party the best treatment required by Articles 13-03 and 13-04.
Article 13-06. Minimum Standard of Treatment.
1. Subject to Annex 13-06(1), each Party shall accord to investments of investors of the other Party treatment in accordance with international law, including fair and equitable treatment and full protection and security.
2. Without prejudice to paragraph 1 and notwithstanding Article 13-09, each Party shall accord to investors of the other Party and to investments of investors of the other Party whose investments suffer losses in its territory due to armed conflict or civil strife, non-discriminatory treatment with respect to any measures it adopts or maintains with respect to such losses.
3. The second paragraph does not apply to existing measures related to subsidies or benefits that may be inconsistent with Article 13-03, except as provided in Article 13-09.
Article 13-07. Performance Requirements.
1. No Party may impose or enforce any of the following requirements, or enforce any commitment or initiative, in connection with the establishment, acquisition, expansion, management, conduct or operation of an investment of an investor of a Party or of a non-Party in its territory for:
a) export a certain level or percentage of goods or services;
b) to reach a certain degree or percentage of domestic content;
c) to purchase or use or give preference to goods produced or services rendered in its territory, or to purchase goods from producers or services from service providers in its territory;
d) relate in any way the volume or value of imports to the volume or value of exports, or to the volume of foreign exchange earnings related to such investment;
e) restrict sales in its territory of the goods or services that such investment produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange eamings; or
f) transfer to a person in its territory, technology, a production process or other proprietary knowledge, except where the requirement is imposed or the commitment or initiative is enforced by a judicial or administrative tribunal or competent authority to remedy an alleged violation of competition laws or to act in a manner not inconsistent with other provisions of this Agreement.
2. A measure that requires an investment to employ a technology to comply generally with applicable health, safety or environmental requirements shall not be considered inconsistent with paragraph 1(f). For greater certainty, Articles 13-03 and 13-04 apply to such a measure.
3. No Party may condition the receipt or continued receipt of an advantage, in connection with an investment in its territory by an investor of a Party or non-Party, on compliance with any of the following requirements:
a) to reach a certain degree or percentage of domestic content;
b) to purchase, use or give preference to goods produced in its territory, or to purchase goods from producers in its territory;
c) relate, in any way, the volume or value of imports to the volume or value of exports, or to the amount of foreign exchange inflows associated with such investment; or
d) restrict sales in its territory of the goods or services that such investment produces or renders, by relating such sales in any way to the volume or value of its exports or to the foreign exchange earnings it generates.
4. Nothing in paragraph 3 shall be construed to prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory by an investor of a Party or non-Party, on the requirement that it locate production, provide services, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory.
5. Paragraphs 1 and 3 do not apply to any requirements other than those set forth in those paragraphs.
6. Provided that such measures are not applied in an arbitrary or unjustified manner, or do not constitute a disguised restriction on international trade or investment, nothing in paragraphs 1(b) or (c) or 3(a) or (b) shall be construed to prevent a Party from adopting or maintaining measures, including environmental, competition, consumer and other measures necessary to:
a) secure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;
b) protecting human, animal or plant life or health; or
c) the preservation of living or non-renewable natural resources, whether living or non-living.
Article 13-08. Senior Executives and Boards of Directors.
1. Neither Party may require an enterprise of that Party, which is an investment of an investor of the other Party, to appoint individuals of any particular nationality to senior management positions.
2. A Party may require that a majority of the members of a board of directors, or of any committee of such a board, of an enterprise of that Party that is an investment of an investor of the other Party be of a particular nationality or resident in the territory of the Party, provided that the requirement does not significantly impair the ability of the investor to exercise control over its investment.
Article 13-09. Reservations and Exceptions.
1. Articles 13-03, 13-04, 13-07 and 13-08 shall not apply to:
a) any existing non-conforming measure that is maintained by:
i) a Party at the national or federal, or state or departmental level, as appropriate, as set forth in its Schedule to Annex I (Reservations and Exceptions) or IV (Activities Reserved to the State); or
ii) a municipal government; nor to b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph a); or
c) the amendment of any non-conforming measure referred to in subparagraph a) provided that such amendment does not diminish the degree of conformity of the measure, as in effect prior to the amendment, with articles 13-03, 13-04, 13-07 and 13-08.
2. Upon entry into force of this Agreement, no Party shall increase the degree of non-conformity of its existing measures with respect to Articles 13-03, 13-04 and 13-07 and 13-08. The Parties shall list their non-conforming measures in Annex I (Reservations and Exceptions), which shall be completed by the Parties no later than one year after the entry into force of this Agreement.
3. Each Party shall have one year from the date of entry into force of this Agreement to indicate in its list in Annex I (Reservations and Exceptions) any non-conforming measure that, not including local governments, is maintained by a state or departmental government.
4. Articles 13-03 and 13-04 do not apply to any measure that constitutes an exception or derogation to the obligations under Article 15-04 (National Treatment), as expressly stated in that article.
5. Article 13-04 does not apply to treatment accorded by a Party pursuant to the treaties, or with respect to the sectors, set forth in its list in Annex III (Exceptions to Most-Favored-Nation Treatment).
6. Articles 13-03, 13-04 and 13-08 do not apply to:
a) purchases made by a Party or a State enterprise; or
b) subsidies or contributions, including government-backed loans, guarantees and insurance, granted by a Party or a state enterprise.
7. The provisions contained in:
a) paragraphs 1(a), (b) and (c), and 3(a) and (b) of article 13-07 shall not apply to the requirements for qualification of goods and services with respect to export promotion and foreign aid programs;
b) paragraphs 1(b), (c), (f} and (g), and 3(a) and (b) of Article 13-07 shall not apply to purchases made by a Party or by a State enterprise; and
c) paragraphs 3(a) and (b) of Article 13-07 shall not apply to requirements imposed by an importing Party on goods that, by virtue of their content, qualify for preferential tariffs or quotas.
Article 13-10. Transfers.
1. Each Party shall permit all transfers related to the investment of an investor of the other Party in the territory of the Party to be made in freely convertible currency without restriction and without delay.
Such transfers include, among others:
a) earnings, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, in-kind profits and other amounts derived from the investment,
b) proceeds from the sale or liquidation, in whole or in part, of the investment;
c) payments made under a contract to which an investor or its investment is a party, including payments made under a loan agreement;
d) payments made in accordance with Article 13-11; and
e) payments arising from the application of Section C.
2. With respect to spot transactions of the currency to be transferred, each Party shall permit transfers to be made in freely usable currency at the market rate of exchange prevailing on the date of transfer.
3. No Party may require its investors to make transfers of their income, profits, or earnings or other amounts derived from or attributable to investments made in the territory of another Party, nor shall it penalize them for failure to make such transfers.
4. Notwithstanding the provisions of paragraphs 1 and 2, the Parties may prevent transfers by means of the equitable, non-discriminatory and good faith application of their laws in the following cases:
a) bankruptcy, insolvency or protection of creditors' rights;
b) issuance, trading and operations of securities;
c) criminal offenses;
d) reports of currency transfers or other monetary instruments; or
e) guaranteeing compliance with rulings in contentious proceedings.
5. Paragraph 3 shall not be construed to prevent a Party, through the application of its laws in an equitable, non-discriminatory and good faith manner, from imposing any measure related to subparagraphs (a) through (e) of paragraph 4.
6. Notwithstanding paragraph 1, a Party may restrict transfers of profits in kind in circumstances where it might otherwise restrict such transfers under this Agreement, including as provided in paragraph 4.
Article 13-11. Expropriation and Compensation.
1. Neither Party may nationalize or expropriate, directly or indirectly, an investment of an investor of the other Party in its territory, or take any measure tantamount to expropriation or nationalization of such investment (expropriation), except:
a) in the public interest;
b) on a non-discriminatory basis;
c) in accordance with the principle of legality and article 13-06; and
d) through the payment of compensation in accordance with paragraphs 2 to 6.
2. The compensation will be equivalent to the market value of the expropriated investment immediately before the expropriation measure was carried out (date of expropriation), and will not reflect any change in value because the intention to expropriate was known prior to the date of expropriation. The valuation criteria will include in the current value, the value of the asset (including the declared tax value of tangible assets), as well as other criteria that are appropriate to determine the market value.
3. Payment of compensation shall be made without delay and shall be fully payable.
4. The amount paid shall not be less than the equivalent amount of compensation that would have been paid on the date of expropriation in a freely convertible currency in the international financial market and such currency would have been converted at the market rate prevailing on the valuation date, plus interest at a reasonable commercial rate for such currency until the date of payment.
5. Once paid, the compensation may be freely transferred in accordance with Article 13-10.
6. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of such rights to the extent that such issuance, revocation, limitation or creation is in accordance with Chapter XV (Intellectual Property).
Article 13-12. Special Formalities and Information Requirements.
1. Nothing in Article 13-03 shall be construed to prevent a Party from adopting or maintaining a measure prescribing special formalities in connection with the establishment of investments by investors of another Party, such as a requirement that investors be residents of the Party or that investments be constituted in accordance with the laws and regulations of the Party, provided that such formalities do not significantly impair the protection afforded by a Party to investors of the other Party and to investments of investors of the other Party in accordance with this Chapter.
2. Notwithstanding Articles 13-03 and 13-04, a Party may require an investor of the other Party or its investment in its territory to provide routine information relating to that investment solely for informational or statistical purposes. The Party shall protect from any disclosure of the information that is confidential, which could adversely affect the competitive position of the investment or the investor. Nothing in this paragraph shall be construed to prevent a Party from obtaining or disclosing information relating to the equitable and good faith application of its laws.
Article 13-13. Relationship with other Chapters.
1. In case of incompatibility between this chapter and another chapter, the latter shall prevail to the extent of the incompatibility.
2. If a Party requires a service supplier of the other Party to post a bond or other form of financial security as a condition for supplying a service in its territory, that does not, of itself, make this Chapter applicable to the cross-border supply of that service. This Chapter applies to the treatment accorded by that Party to the deposited bond or financial security.
Article 13-14. Denial of Benefits.
Upon notification and consultation in accordance with Articles 16-03 (Notification and Provision of Information) and 18-03 (Consultations), a Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of that Party and to investments of such an investor, if investors of a non-Party own or control the enterprise and the enterprise does not have substantial business activities in the territory of the Party under whose law it is incorporated or organized.
Section C. Dispute Settlement between a Party and an Investor of Another Party .
Article 13-15. Objective.
Without prejudice to the rights and obligations of the Parties set forth in Chapter XVIII (Dispute Settlement), this section establishes a mechanism for the settlement of investment disputes that ensures equal treatment between investors of the Parties in accordance with the principle of international reciprocity, ensuring due process of law and the impartiality of tribunals.
Article 13-16. Claim by a Party's Investor for Its Own Account for Damages Suffered by Itself.
1. Pursuant to this section, an investor of a Party may submit to arbitration a claim that the other Party has breached an obligation set forth in:
a) Section B or Article 14-04, paragraph 2 (State Enterprises); or
b) Article 14-03, paragraph 4, subparagraph a) (Monopolies), when the monopolist has acted in a manner inconsistent with the Party's obligations under Section B;
and that the investor has suffered loss or damage by virtue of or as a consequence of the breach.
2. The investor may not file a claim if more than 3 (three) years have elapsed from the date on which it first became aware or should have become aware of the alleged breach and suffered loss or damage.
Article 13-17. Claim by an Investor of a Party on Behalf of an Enterprise for Damages Suffered by an Enterprise of the other Party That Is a Juridical Person Owned or Controlled Directly or Indirectly by the Investor.
1. An investor of a Party may submit to arbitration under this Section a claim that the other Party has breached an obligation set forth in:
(a) Section B or Article 14-04, paragraph 2 (State Enterprises); or
(b) Article 14-03, paragraph 4, subparagraph 4, subparagraph 1 (State Enterprises), subparagraph a) (Monopolies), where the monopolist has acted in a manner inconsistent with the Party's obligations under Section B,
2. An investor may not bring a claim under paragraph 1, if more than 3 (three) years have elapsed from the date on which the enterprise first became aware, or should have first become aware, of the alleged breach and suffered loss or damage.
3. Where an investor submits a claim under this Article and in parallel the investor or an investor that does not control an enterprise submits a claim under Article 13-16 arising out of the same acts that gave rise to the submission of a claim under this Article, and two or more claims are submitted to arbitration under Article 13-20, the Tribunal established under Article 13-26 shall consider such claims together, unless the Tribunal determines that the interests of a disputing party would be prejudiced.
4. An investment may not file a claim under this section.
Article 13-18. Settlement of a Claim Through Consultation and Negotiation.
The disputing parties shall first attempt to settle the dispute through consultation or negotiation.
Article 13-19. Notice of Intention to Submit Claim to Arbitration.
The disputing investor shall notify the disputing Party in writing of its intention to submit a claim to arbitration at least 90 days before the claim is formally submitted, and the notice shall state the following:
a) the name and address of the disputing investor, and when the claim has been made pursuant to Article 13-17, it shall include the name and address of the enterprise;
b) the provisions of this Agreement alleged to have been breached and any other applicable provisions;
c) the matters of fact and law on which the claim is based; and
d) the relief sought and the approximate amount of damages claimed.
Article 13-20. Submission of the Claim to Arbitration.
1. Provided that 6 (six} months have elapsed since the acts giving rise to the claim took place, a disputing investor may submit the claim to arbitration in accordance with:
a) the ICSID Convention, provided that both the disputing Party and the Party of the investor are States parties to the ICSID Convention;
b) the ICSID Additional Facility Rules, where either the disputing Party or the Party of the investor, but not both, is a Party to the ICSID Convention; or
c) the UNCITRAL Arbitration Rules.
2. If a disputing investor or an enterprise of the other Party that is a juridical person owned or controlled directly or indirectly by the investor initiates proceedings before a domestic court with respect to a measure that constitutes an alleged breach under Articles 13-16 or 13-17, the dispute may not be submitted to arbitration under this Section. Likewise, in the event that an investor has submitted the dispute to international arbitration, the choice of that procedure shall be final.
3. In the event that an investor of a Party submits a claim to arbitration, the investment - the enterprise of the other Party that is a juridical person owned or controlled directly or indirectly by the investor - may not initiate or continue proceedings before a domestic court or any other dispute settlement procedure claiming the same measure.
4. The arbitration rules applicable to the dispute resolution procedure shall follow that procedure except as modified in this section.
Article 13-21. Conditions for Submitting a Claim to Arbitration.
1. A disputing investor may submit a claim to arbitration pursuant to Article 13-16 only if:
a) consents to submit to arbitration under the terms of the procedures set forth in this Agreement; and
b) the investor and the enterprise, where the claim relates to loss or damage to an interest of an enterprise of another Party that is a juridical person owned or controlled directly or indirectly by the investor, waive their right to initiate or continue any proceeding before an administrative or judicial tribunal under the law of any Party or other dispute settlement procedures with respect to the measure alleged to be in violation of the provisions referred to in Article 13-16. The foregoing, except for proceedings in which the application of precautionary measures of a suspensive, declaratory or extraordinary nature, which do not involve the payment of damages before the administrative or judicial tribunal, is requested, in accordance with the law of the disputing Party.
2. A disputing investor may submit a claim to arbitration under Article 13-17 only if both the investor and the enterprise:
a) consent to submit to arbitration under the terms of the procedures set forth in this Agreement; and
b) waive their right to initiate or continue any proceeding with respect to the measure of the disputing Party that is alleged to be a violation referred to in Article 13-17 before any administrative tribunal or court under the law of either Party or other dispute settlement procedures. The foregoing, except for proceedings in which the application of precautionary measures of a suspensive, declaratory or extraordinary nature, which do not involve the payment of damages, is requested before the administrative or judicial tribunal, in accordance with the law of the disputing Party.
3. The consent and waiver required by this Article shall be in writing, delivered to the disputing Party and included in the submission of the claim to arbitration.
4. Only in the event that the disputing Party has deprived the disputing investor of control in an enterprise: a) no waiver shall be required under paragraph 1(b) or 2(b); and b) paragraphs 2 and 3 of article 13-20 shall not be applicable.
Article 13-22. Consent to Arbitration.
1. Each Party consents to submit claims to arbitration in accordance with the procedures set forth in this Agreement.
2. The consent referred to in paragraph 1 and the submission of a claim to arbitration by a disputing investor shall comply with the requirements set forth in:
a) Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the Additional Facility Rules requiring the written consent of the Parties;
b) Article Il of the New York Convention, which requires a written agreement; and ¢) Article I of the Inter-American Convention, which requires an agreement.