(a) require a Party to provide any information the disclosure of which it considers contrary to its essential security interests; or
(b) preventing a Party from taking any action it deems necessary to protect its essential security interests:
(i) relating to to fissile or fissionable materials or to materials from which they are derived;
(ii) relating to the trade in arms, ammunition, and war material, and to such trade in other goods and materials as is carried out directly or indirectly for the purpose of supplying a military establishment;
(iii) relating to the provision of services carried out directly or indirectly for the purpose of supplying a military establishment;
(iv) adopted during times of war or in other extraordinary circumstances in international relations; or
(c) prevent a Party from taking any action to fulfill its obligations under the Charter of the United Nations for the purpose of maintaining international peace and security.
Article 4.3. Taxation
1. Nothing in this Agreement shall affect the rights and obligations of either Party in accordance with any tax convention (3). In the event of any inconsistency between this Agreement and any such tax convention, that tax convention shall prevail to the extent of such inconsistency.
Chapter 5. DISPUTE SETTLEMENT
Article 5.1. Purpose
The purpose of this Chapter is to establish an effective mechanism for the prevention and settlement of disputes between the Parties concerning the interpretation and application of the provisions of this Agreement, with a view to reaching, where possible, a mutually agreed solution.
Article 5.2. Cooperation
The Parties shall seek to reach agreement on the interpretation and application of the provisions of this Agreement and shall make every effort, through cooperation, to reach a mutually agreed solution to any matter that may affect the application of this Agreement.
Article 5.3. Scope of Application
1. Except as provided in paragraphs 2 and 3 of this Article, this Chapter applies to any dispute between the Parties concerning the interpretation or application of the provisions of this Agreement (hereinafter referred to as “covered provisions”), in cases where a Party considers that:
(a) any measures of the otherParty do not comply its obligations under this Agreement; or
(b) the other Party has failed to fulfill its obligations under this Agreement in any other manner.
2. This Chapter does not apply to complaints that do not violate the provisions of this Agreement or to other situational complaints.
3. This Chapter does not apply to Chapter 3 (Investment Facilitation).
Article 5.4. Contact Points
1. Each Party shall designate a contact point to facilitate communication between the Parties regardingany dispute initiated under this Chapter.
2. Any request, notification, written statement, or other document prepared in accordance with this Chapter shall be delivered to the other Party through its designated contact point.
Article 5.5. Request for Information
Prior to submitting a request for consultations, good offices, conciliation, or mediation in accordance with Articles 5.6 or 5.7, a Party may request in writing any necessary information regarding the measure in question. The Party to which such a request is addressed shall, in a timely manner, provide the requested information in writing, which must be provided no later than 30 days after the date of receipt of the request.
Article 5.6. Consultations
1. The Parties shall endeavor to resolve any dispute referred to in Article 5.3 through good-faith consultations with a view to reaching a mutually agreed solution.
2. A Party shall request consultations by means of a written request addressed to the other Party, stating the reasons for the request, including the measure at issue and a description of its factual basis and legal justification, as well as the provisions covered that it considers applicable.
3. The Party to which a request for consultations is addressed shall respond to it without delay, no later than 10 days after the date of receipt of the request. Consultations shall be held within 30 days of the date of receipt of the request. Consultations shall be deemed concluded within 30 days of the date of receipt of the request, unless the Parties agree otherwise.
4. Consultations on urgent matters, including those concerning seasonal services, shall be held within 15 days of the date of receipt of the request. Consultations shall be deemed concluded within those 15 days unless the Parties agree otherwise.
5. During consultations, each Party shall provide the necessary information to enable a comprehensive examination of the measure under consideration, including how such a measure affects the operation and application of this Agreement.
6. Consultations, including all information disclosed during the consultations and the positions presented by the Parties, shall be confidential and shall not prejudice the rights of either Party in any subsequent proceedings.
7. Consultations may be held in person or via any other means of communication as agreed by the Parties. Unless the Parties agree otherwise, consultations shall be held in the territory of the Party to which the request is addressed.
8. If the Party to whom the request is addressed fails to respond to the request for consultations within 10 days of its receipt, or the consultations are not held within the timeframes specified in paragraphs 3 and 4 of this Article, or the Parties have agreed not to hold consultations, or the consultations have concluded without reaching a mutually agreed decision, the Party that requested the consultations may resort to the mechanism provided for in Article 5.8.
Article 5.7. Good Offices, Conciliation, or Mediation
1. The Parties may agree at any time to initiate good offices, conciliation, or mediation procedures. Such procedures may be initiated by either Party and terminated at any time.
2. Proceedings related to good offices, conciliation, or mediation, as well as the specific positions taken by the Parties during such proceedings, shall be confidential and shall not prejudice the rights of either Party in any subsequent or other proceedings.
3. Upon agreement of the Parties, procedures involving good offices, conciliation, or mediation may continue until the conclusion of the arbitration panel proceedings.
Article 5.8. Formation of the Arbitration Panel
1. The complaining Party may request the formation of an arbitration panel, if:
(a) The responding Party fails to provide a response to the request for consultations within the time limits specified in Article 5.6 of this Agreement; or
(b) the consultations referred to in Article 5.6 of this Agreement have not been held or the dispute has not been resolved during the consultations within 30 or 15 days for urgent cases matters, including those relating to seasonal services, from the date of receipt of the request for consultations by the responding Party.
2. In accordance with this Article, the complaining Party shall specify in its request for the establishment of an arbitration panel the specific measure at issue, the legal basis of the complaint, including any provisions of this Agreement and any other relevant provisions it deems appropriate, and the factual basis of the complaint.
3. Once the complaining Party has sent the request to the other Party in accordance with paragraph 1 of this Article, an arbitration panel shall be established.
Article 5.9. Composition of the Arbitration Panel
1. Unless the Parties agree otherwise, the arbitration panel shall consist of three members.
2. Within 20 days of the submission of the request for the establishment of the arbitration panel pursuant to paragraph 2 of Article 5.8, each Party shall appoint an arbitrator who is a national of that Party.
The Parties shall, by mutual agreement, appoint a third member of the arbitration panel, who shall serve as the chair of the arbitration panel, within 40 days of the establishment of the arbitration panel in accordance with paragraph 3 of Article 5.8.
3. If either Party fails to appoint a member of the arbitration panel within the time limit established in accordance with paragraph 2 of this Article, the other Party may, within 20 days, request the Secretary-General of the Permanent Court of Arbitration to appoint a member to the vacant position on the arbitration panel within 20 days of receipt of the request.
4. If the Parties fail to agree on a candidate for chair of the arbitration panel within the time limit specified in paragraph 2 of this Article, within the following 10 days, they shall exchange lists containing three candidates each for the position of chair of the arbitration panel, none of whom shall be a national of either Party or a resident of the territory of either Party. The chairperson shall be appointed from the lists proposed by the Parties by drawing lots within 10 days after the expiration of the period during which the Parties are required to exchange the relevant lists of proposed candidates. The selection of the chairperson of the arbitration panel by drawing lots shall be carried out by the Joint Committee.
5. If either Party fails to submit a list of three candidates within the time limit specified in paragraph 4 of this Article, the chairperson of the arbitration panel shall be appointed by lot from the list submitted by the other Party.
6. The date of formation of the arbitration panel shall be the date on which the last of the three selected members of the arbitration panel notifies the Parties of his or her acceptance of the appointment.
Article 5.10. Decision on Urgency
Upon request by one of the Parties, the arbitration panel shall decide whether to treat the dispute as a matter of urgency within 15 days of its establishment.
Article 5.11. Requirements for Members of the Arbitration Panel
1. Each member of the arbitration panel shall:
(a) possess expertise in law, international trade, and other matters covered by this Agreement, or in dispute settlement procedures arising from international trade agreements;
(b) be independent of both Parties, not be under the direction of either Party, and not receive instructions from either Party;
(c) act solely in their own capacity and not accept instructions from third-party organizations or the government regarding matters related to the dispute;
(d) comply with the Code of Conduct for Members of the Arbitration Panel and Other Persons Involved in Dispute Settlement Proceedings under this Agreement, set forth in Annex 5B (hereinafter the “Code of Conduct”); and
(e) be selected strictly on the basis of objectivity, reliability, and sound judgment.
2. The Chair of the arbitration panel and must possess competence in dispute settlement procedures.
3. Persons who are directly or indirectly involved in good offices, conciliation, or mediation proceedings pursuant to Article 5.7 with respect to any matter shall not be eligible for appointment as an arbitrator in the consideration of that matter.
Article 5.12. Replacement of Members of the Arbitration Panel
If any member of the original panel is unable to perform his or her duties properly, resigns, or needs to be replaced due to non-compliance with the Code of Conduct, a new panel member shall be appointed in accordance with Article 5.9. In such a case, the activities of the arbitration panel shall be suspended pending the appointment of a new member of the arbitration panel.
Article 5.13. Functions of the Arbitration Panel
Unless the Parties agree otherwise, the arbitration panel shall:
(a) conduct an objective assessment of the matter at hand, including an objective assessment of the circumstances of the proceedings, the applicability and compliance of the measure in question with the relevant provisions of this Agreement;
(b) set forth in its decisions and reports the factual and legal findings, as well as the reasoning for all conclusions it reaches; and
(c) consult regularly with the Parties and provide an adequate opportunity to reach a mutually agreed solution.
Article 5.14. Terms of Reference
1. Unless the Parties agree otherwise within 15 days of the formation of the arbitration panel, the terms of reference of the arbitration panel shall be formulated as follows:
“taking into account the relevant provisions of this Agreement referred to by the Parties, to make findings on the conformity of the measure at issue with the covered provisions of this Agreement, and to prepare recommendations, if any, on methods for the settlement of the dispute and the submission of a report in accordance with Articles 5.18 and 5.19.”
2. If the Parties agree on terms of reference different from those specified in paragraph 1 of this Article within the time limits specified in paragraph 1 of this Article, they shall notify the arbitration panel of the agreed terms of reference no later than 5 days after their agreement.
Article 5.15. Rules of Interpretation
1. The arbitration panel shall interpret the provisions covered by in accordance withgenerally accepted rules of interpretation of public international law.
2. Where necessary, the arbitration panel may take into account relevant interpretations in reports of arbitration panels established under this Agreement and reports of arbitration panels and the Appellate Body adopted by the WTO Dispute Settlement Body.
3. The decisions of the arbitration panel shall not add to or diminish the rights and obligations of the Parties under this Agreement.
Article 5.16. Panel Procedures
1. Unless the Parties agree otherwise, the arbitration panel shall follow the model rules of procedure setout in Annex 5A (Rules of Procedure of the Arbitration Panel).
2. With respect to matters before the arbitration panel, ex parte communication with the arbitration panel shall not be permitted.
3. The findings of the arbitration panel and the information submitted to it shall be strictly confidential.
4. The Party alleging that a measure of the other Party is inconsistent with the provisions of this Agreement bears the burden of establishing such inconsistency. The Party alleging that a measure is covered by an exception under this Agreement bears the burden of establishing that the exception applies.
5. The arbitration panel shall consult with the Parties as necessary and provide an adequate opportunity to reach a mutually agreed solution.
6. The arbitration panel shall adopt decisions, including reports, by consensus; if consensus cannot be reached, by a majority vote. Any member of the arbitration panel may express an opinion on matters on which a decision was not adopted unanimously, and such opinions shall not be disclosed.
7. The decisions of the arbitration panel shall be binding on the Parties.
Article 5.17. Obtaining Information
1. At the request of a Party or on its own initiative, the arbitration panel may request from the Parties the information it requires. The Parties shall respond promptly and in full to any request by the arbitration panel for information.
2. At the request of a Party or on its own initiative, the arbitration panel may use information from any source it deems necessary.
3. Upon request of a Party or on its own initiative, the arbitration panel may, if it deems it necessary, seek technical advice or expert opinion from any natural or legal person in a manner agreed upon by the Parties.
4. Any information obtained by the arbitration panel pursuant to this Article shall be provided to the Parties, and the Parties shall have the right to comment on such information.
Article 5.18. Interim Report
1. The arbitration panel shall submit an interim report to the Parties within 90 days of the date of its establishment. If the arbitration panel determines that the deadline cannot be met, the chair of the arbitration panel shall notify the Parties and the Joint Committee in writing, stating the reason for the delay and the date on which the interim report is expected to be submitted. Under no circumstances shall the delay exceed 30 days after the expiration of the deadline, unless the Parties agree otherwise. The interim report shall not be made publicly available.
2. The interim report shall contain a descriptive section as well as the findings of the arbitration panel.
3. Each Party may submit to the arbitration panel, in writing, its comments and a request to address specific aspects of the interim report within 15 days of the date of submission of the interim report. A Party may comment on another Party’s request within six days of receiving it.
4. Following a review of the written comments and requests from each Party regarding the interim report, the arbitration panel may amend the interim report and conduct any additional investigation it deems necessary.
Article 5.19. Final Report
1. The arbitration panel shall submit its final report to the Parties and the Joint Committee within 120 days of the date of the arbitration panel’s establishment. If the arbitration panel determines that the deadline cannot be met, the chair of the arbitration panel shall notify the Parties and the Joint Committee in writing, stating the reason for the delay and the date on which the final report is expected to be submitted. Under no circumstances shall the delay exceed 30 days after the expiration of the deadline, unless the Parties agree otherwise.
2. The final report contains:
(a) a descriptive section summarizing the Parties’ submissions and arguments;
(b) a discussion of any written comments and requests made by the Parties regarding the interim report;
(c) conclusions regarding the facts of the proceedings and the applicability of the provisions of this Agreement;
(d) conclusions regarding:
(i) the inconsistency of the measure under review with the obligations under this Agreement; or
(ii) the failure of the Party concerned to fulfill its obligations under this Agreement in any other respect;
(e) the rationale for the findings and conclusions referred to in subparagraphs (c) and (d); and
(f) recommendations for the resolution of the dispute, if any.
3. The final report shall not be published unless the Parties agree otherwise.
Article 5.20. Implementation of the Final Report
1. The Party against which the complaint is filed shall remedy the non-compliance covered by Article 5.3 and identified in the final report of the arbitration panel immediately or, if this is not possible, within a reasonable period of time.
2. If it is not possible to remedy the non-compliance immediately, the Party against which the complaint is filed shall, within 30 days of the date of submission of the panel’s final report, notify the complaining Party and the Joint Committee of a reasonable timeframe for implementing the recommendations of the final report.
The Parties shall endeavor to reach agreement on establishing a reasonable period of time for compliance with the final report’s recommendations.
Article 5.21. Reasonable Time for Compliance
1. If the Parties have not agreed on the duration of the reasonable period, the complaining Party shall, no later than 20 days after the date of receipt of the notification sent by the responding Party in accordance with paragraph 2 of Article 5.20, send a written request to the original panel to determine the length of a reasonable period. The responding Party and the Joint Committee shall be notified of such a request simultaneously. The 20-day period specified in this paragraph may be extended by mutual agreement of the Parties.
2. The members of the original arbitration panel shall submit their decision to the Parties and the Joint Committee within 20 days of receiving the relevant request.
3. The reasonable period for implementing the recommendations of the final report may be extended by agreement of the Parties.
Article 5.22. Verification of Compliance
1. The responding Party shall provide written notification of the progress of implementation of the final report’s recommendations to the complaining Party and the Joint Committee no later than one month before the expiration of the reasonable period, unless the Parties agree otherwise.
2. The Party against which the complaint was filed shall, no later than the day the reasonable period expires, send to the complaining Party and to the Joint Committee a notification of the measures it has taken to implement the recommendations of the final report, as well as a description of how such measures ensure compliance with the recommendations to a degree sufficient for the complaining Party to assess the measures taken before the expiration of the reasonable period.
3. If the Parties fail to reach agreement on the measures necessary to comply with the recommendations of the final report, or on their conformity with the relevant provisions, the complaining Party may submit a written request to the original panel, asking it to rule on the matter prior to the submission of a claim for compensation or the suspension of a concession pursuant to subparagraph (c) of paragraph 1 of Article 5.23. The responding Party and the Joint Committee shall be notified of such a request simultaneously.
4. The request shall set forth the factual and legal basis for the complaint, including an identification of the specific measures at issue, and an explanation of why the measures taken by the Responding Party do not ensure compliance with the final report or otherwise contravene the relevant provisions.
5. The arbitration panel shall notify the Parties and the Joint Committee of its decision within 60 days of the date of submission of the request.
Article 5.23. Interim Measures In Case of Non-Compliance
1. If the responding Party:
(a) fails to notify the complaining Party of any measures taken to comply with the findings of the final report within a reasonable period of time;
(b) notifies the complaining Party in writing that it is unable to comply with the recommendations of the final report within a reasonable period of time; or
(c) the original arbitration panel concluded that the measures taken to implement the recommendations of the final report have not been taken, or that the measures taken to implement the recommendations of the final report, as notified by the Respondent, do not comply with the relevant provisions;
Upon request by the complaining Party, the responding Party shall engage in consultations with a view to agreeing on mutually acceptable compensation or adopting any alternative solution.
2. If the Parties fail to reach a mutually acceptable solution within 20 days of the date of receipt of the request sent in accordance with paragraph 1 of this Article, the complaining Party may send written notice to the responding Party stating that it intends to suspend the provision of concessions or other obligations under this Agreement.
3. The complaining Party may begin to suspend the concessions or other obligations referred to in paragraph 2 of this Article within 20 days from the date of sending the notice to the responding Party, unless the responding Party submits a request in accordance with paragraph 7 of this Article.
4. Suspension of concessions or other obligations:
(a) shall be equivalent to the level of cancellation or damage caused by the Respondent’s failure to comply with the provisions of the final report; and
(b) shall be limited to the benefits received by the Respondent Party under this Agreement.
5. In determining which concessions or other obligations shall be suspended pursuant to paragraph 2 of this Article, the complaining Party shall be guided by the following:
(a) The complaining Party shall first seek to suspend concessions or other obligations in the sector or sectors affected by the measure found by the arbitration panel to be inconsistent with this Agreement; and
(b) The complaining Party may also suspend concessions or other obligations in other sectors if it considers that the suspension of concessions or other obligations in the sector or sectors affected by the measure is impracticable or ineffective. The Party shall specify in the notification of such a decision the reasons on which the decision is based.
6. The suspension of concessions or other obligations or the adoption of a mutually acceptable solution pursuant to paragraph 1 of this Article shall be temporary in nature and shall apply only until the nonconformity of the measure with the provisions covered has been remedied or until the Parties have reached a mutually agreed solution in accordance with Article 5.28 of this Agreement.
7. If the responding Party considers that the suspension of concessions or other obligations is inconsistent with paragraphs 4 and 5 of this Article, that Party may, in writing, request the original panel to review the matter no later than 15 days after the date of receipt of the notification referred to in paragraph 2 of this Article. Such a request shall be sent simultaneously to the complaining Party and to the Joint Committee.
The original panel shall notify the Parties and the Joint Committee of its decision on the matter no later than 45 days after receiving the request from the responding Party or, if the panel cannot be constituted in its original composition, from the date of appointment of the last member of the newly constituted panel. The provision of concessions or other commitments shall not be suspended until the arbitration panel has rendered its decision in accordance with this paragraph. The suspension of the provision of concessions or other commitments shall be consistent with such decision.
Article 5.24. Review of Any Measures Taken to Comply with the Ruling Following the Adoption of Provisional Measures
1. After the Responding Party has notified the Complaining Party and the Joint Committee of the measures taken to implement the arbitration panel’s decision on the final report:
(a) in a situation where the complaining Party has exercised its right to suspend the provision of concessions or other obligations pursuant to Article 5.23, The complaining Party shall terminate the suspension of concessions or other obligations no later than 30 days after the date of receipt of the notification, except in the cases referred to in paragraph 2 of this Article; or
(b) in a situation where agreement has been reached on the need for compensation, the responding Party may terminate the provision of such compensation no later than 30 days after the date of receipt of the notification, except in the cases specified in paragraph 2 of this Article.
2. If the Parties fail to reach agreement on whether a measure, in respect of which a notification has been made pursuant to paragraph 1 of this Article, complies with the relevant provisions within 30 days of the date of receipt of the notification, the complaining Party shall submit a written request to the original panel to review the matter. Such a request shall be sent simultaneously to the responding Party and to the Joint Committee. The panel’s ruling shall be communicated to the Parties and the Joint Committee no later than 30 days from the date of the request. If the arbitration panel determines that the measure in respect of which a notification was sent in accordance with paragraph 1 of this Article complies with the covered provisions, the suspension of concessions or other obligations, or the provision of compensation, as the case may be, shall cease no later than 15 days from the date of the decision. If the arbitration panel determines that the measure in question ensures only partial compliance with the covered provisions, the level of suspension of concessions or other obligations, or the provision of compensation, shall be adjusted in accordance with the arbitration panel’s decision.
Article 5.25. Suspension and Termination of Proceedings
If both Parties submit a written request, the arbitration panel shall suspend its activities for a period agreed upon by the Parties, but not exceeding 12 months from the date of such request. In the event of a suspension of the arbitration panel’s work, the time periods under this Chapter shall be extended by a period of time equivalent to that for which the arbitration panel’s work was suspended. The arbitration panel shall resume its work before the expiration of the period of suspension of its work upon a written requestby both Parties. If the work of the arbitration panel has been suspended for more than 12 months, the mandate of the arbitration panel shall terminate and the dispute settlement procedure shall be concluded.
Article 5.26. Choice of Court
1. Except as provided in this Article, this Chapter shall not prejudice the rights of the Parties underdispute settlement procedures provided for in other international trade agreements to which both Parties are parties.
2. If, under this Agreement and another international trade agreement to which both Parties are parties, a dispute arises regarding a specific measure, the complaining Party may choose the forum for dispute settlement.