Article 127. Special Committee on Financial Services
1. The Parties hereby establish a Special Committee on Financial Services. The Special Committee shall be composed of representatives of the Parties. The principal representative of each Party shall be an official of the Party's authority responsible for financial services set out in Annex IX.
2. The functions of the Special Committee shall include:
(a) supervising the implementation of this Chapter;
(b) considering issues regarding financial services that are referred to it by a Party.
3. The Special Committee shall meet upon request of one of the Parties on a date and with an agenda agreed in advance by the Parties. The office of chair person shall be held alternately. The Special Committee shall report to the Association Committee the results of its meetings.
4. Three years after the entry into force of this Agreement the Special Committee on Financial Services will consider actions with the aim of facilitating and expanding trade in financial services and further contributing to the objectives of this Agreement, and shall report to the Association Committee.
Article 128. Consultations
1. A Party may request consultations with the other Party regarding any matter arising under this Chapter. The other Party shall give sympathetic consideration to the request. The Parties shall report the results of their consultations to the Special Committee on Financial Services.
2. Consultations under this Article shall include officials of the authorities specified in Annex IX.
3. Nothing in this Article shall be construed to require financial authorities participating in consultations to disclose information or take any action that would interfere with individual regulatory, supervisory, administrative or enforcement matters.
4. Where a financial authority of a Party requires information for supervisory purposes concerning a financial service supplier in the other Party's territory, such financial authority may approach the competent financial authority in the other Party's territory to seek the information. The provision of such information may be subject to the terms, conditions and limitations contained in the other Party's relevant law or to the requirement of a prior agreement or arrangement between the respective financial authorities.
Article 129. Specific Provisions on Dispute Settlement
1. Except as otherwise provided in this Article, any disputes under this Chapter shall be settled in accordance with the provisions of Title VIII.
2. For the purpose of Article 184, consultations held under Article 128 shall be deemed to constitute the consultations referred to in Article 183, unless the Parties otherwise agree. Upon initiation of consultations, the Parties shall provide information to enable the examination of how a measure of a Party or any other matter may affect the operation and application of this Chapter, and give confidential treatment to the information exchanged during consultations. If the matter has not been resolved within 45 days after holding the consultations under Article 128 or 90 days after the delivery of the request for consultations under Article 128(1), whichever is earlier, the complaining Party may request in writing the establishment of an arbitration panel. The Parties shall report the results of their consultations directly to the Association Committee.
3. For the purpose of Article 185:
(a) the chairperson of the arbitration panel shall be a financial expert;
(b) the Association Committee shall, no later than six months after the entry into force of this Agreement, establish a list of at least five individuals who are not nationals of either Party, and who are willing and able to serve as arbitrators and be identified as chairperson of arbitration panels in financial services. The Association Committee shall ensure that the list always contains five individuals at any point in time. Those individuals shall have expertise or experience in financial services law or practice, which may include the regulation of financial institutions, be independent, serve in their individual capacities and not be affiliated with, nor take instructions from, any Party or organisation and shall comply with the Code of Conduct set out in Annex XVI. Such list may be amended every three years;
(c) within three days of the request for establishment of the arbitration panel, the chair person of the arbitration panel shall be selected by lot by the chairperson of the Association Committee from the list referred to in paragraph (b). The other two arbitrators of the panel shall be selected by lot by the chairperson of the Association Committee from the list referred to in Article 185(2), one among the individuals proposed to the Association Committee by the complaining Party, and the other among the individuals proposed to the Association Committee by the Party complained against.
Chapter III. Establishment
Article 130. Scope
This Chapter shall apply to establishment in all sectors with the exception of all services sectors, including the financial services sector.
Article 131. Definitions
For the purposes of this Chapter,
(a) "legal person" means any legal entity duly constituted or otherwise organised under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association;
(b) "legal person of a Party" means a legal person constituted or otherwise organised under the law of the Community or its Member States or of Chile. Should such a legal person have only its registered office or central administration in the territory of the Community or of Chile, it shall not be considered as a Community or a Chilean legal person respectively, unless it is engaged in substantive business operations in the territory of the Community or of Chile respectively.
(c) "natural person" means a national of one of the Member States or of Chile according to their respective legislation.
(d) "establishment" means:
(i) the constitution, acquisition or maintenance of a legal person, or
(ii) the creation or maintenance of a branch or a representative office,
within the territory of a Party for the purpose of performing an economic activity.
As regards natural persons, this shall not extend to seeking or taking employment in the labour market or confer a right of access to the labour market of a Party.
Article 132. National Treatment
In the sectors inscribed in Annex X, and subject to any conditions and qualifications set out therein, with respect to establishment, each Party shall grant to legal and natural persons of the other Party treatment no less favourable than that it accords to its own legal and natural persons performing a like economic activity.
Article 133. Right to Regulate
Subject to the provisions of Article 132, each Party may regulate the establishment of legal and natural persons.
Article 134. Final Provisions
1. With respect to this Chapter, the Parties confirm their rights and obligations existing under any bilateral or multilateral agreements to which they are parties.
2. With the objective of progressive liberalisation of investment conditions, the Parties affirm their commitment to review the investment legal framework, the investment environment and the flow of investment between them consistent with their commitments in international investment agreements, no later than three years after the entry into force of this Agreement.
Chapter IV. Exceptions
Article 135. Exceptions
1. Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between the Parties where like conditions prevail, or a disguised restriction on trade in services, financial services or establishment, nothing in this Title shall be construed to prevent the adoption or enforcement by either Party of measures:
(a) necessary to protect public morals or to maintain public order and public security;
(b) necessary to protect human, animal or plant life or health;
(c) relating to the conservation of exhaustible natural resources if such measures are applied in conjunction with restrictions on the domestic supply or consumption of services or on domestic investments;
(d) necessary for the protection of national treasures of artistic, historic or archaeological value;
(e) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Title including those relating to:
(i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on services contracts;
(ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; or
(iii) safety.
2. The provisions of this Title shall not apply to the Parties' respective social security systems or to activities in the territory of each Party which are connected, even occasionally, with the exercise of official authority.
3. Nothing in this Title shall prevent a Party from applying its laws, regulations and requirements regarding entry and stay, work, labour conditions, and establishment of natural persons (11) provided that, in so doing, it does not apply to them in such a manner as to nullify or impair the benefits accruing to the other Party under the terms of a specific provision of this Title.
Title IV. Government Procurement
Article 136. Objective
In accordance with the provisions of this Title, the Parties shall ensure the effective and reciprocal opening of their government procurement markets.
Article 137. Scope and Coverage
1. This Title applies to any law, regulation, procedure or practice regarding any procurement, by the entities of the Parties, of goods and services including works, subject to the conditions specified by each Party in Annexes XI, XII and XIII.
2. This Title shall not be applicable to:
(a) contracts awarded pursuant to:
(i) an international agreement and intended for the joint implementation or exploitation of a project by the contracting Parties;
(ii) an international agreement relating to the stationing of troops; and
(iii) the particular procedure of an international organisation.
(b) non-contractual agreements or any form of government assistance and procurement made in the framework of assistance or cooperation programmes.
(c) contracts for :
(i) the acquisition or rental of land, existing buildings, or other immovable property or concerning rights thereon;
(ii) the acquisition, development, production or co-production of programme material by broadcasters and contracts for broadcasting time.
(iii) arbitration and conciliation services;
(iv) employment contracts; and
(v) research and development services other than those where the benefits accrue exclusively to the entity for its use in the conduct of its own affairs, on condition that the service is wholly remunerated by the entity.
(d) financial services.
3. Public works concessions, as defined in Article 138(i), shall also be subject to this Title, as specified in Annexes XI, XII and XIII. 4. Neither Party may prepare, design or otherwise structure any procurement contract in order to avoid the obligations under this Title.
Article 138. Definitions
For the purpose of this Title, the following definitions shall apply:
(a) "government procurement" means any type of procurement of goods, services or a combination thereof, including works carried out by public entities of the Parties for governmental purposes and not with a view to commercial resale or with a view to use in the production of goods or the supply of services for commercial sale, unless otherwise specified. It includes procurement by such methods as purchase or lease, or rental or hire purchase, with or without an option to buy;
(b) "entities" means the public entities of the Parties, such as central, sub-central or local government entities, municipalities, public undertakings and all other entities that procure in accordance with the provisions of this Title, as set out in Annexes XI, XII and XIII;
(c) "public undertakings" means any undertaking over which the public authorities may exercise directly or indirectly a dominant influence by virtue of their ownership of it, their financial participation therein, or the rules which govern it. A dominant influence on the part of the public authorities shall be presumed when these authorities, directly or indirectly, in relation to an undertaking:
(i) hold the majority of the undertaking's subscribed capital;
(ii) control the majority of the votes attaching to shares issued by the undertaking; or
(iii) can appoint more than half of the members of the undertaking's administrative, managerial or supervisory body.
(d) "supplier of the Parties"Ameans any natural or legal person or public body or group of such persons of a Party and/or bodies of a Party which can provide goods, services or the execution of works. The term shall cover equally a supplier of goods, a service provider or a contractor;
(e) "legal person" means any legal entity duly constituted or otherwise organised under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association;
(f) "legal person of a Party" means a legal person constituted or otherwise organised under the law of the Community or its Member States or of Chile; Should such a legal person have only its registered office or central administration in the territory of the Community or Chile, it shall not be considered as a Community or a Chilean legal person respectively, unless it is engaged in substantive business operations in the territory of the Community or Chile respectively.
(g) a "natural person" means a national of one of the Member States or of Chile according to their respective legislation;
(h) "tenderer" means a supplier who has submitted a tender;
(i) "public works concessions" means a contract of the same type as public works procurement contracts, except for the fact that the remuneration for the works to be carried out consists either solely in the right to exploit the construction or in this right together with a payment;
(j) "offsets"Ameans those conditions imposed or considered by an entity prior to, or in the course of its procurement process, that encourage local development or improve its Party's balance of payments accounts by means of requirements of local content, licensing of technology, investment, counter-trade or similar requirements;
(k) "in writing or written" means any expression of information in words, numbers or other symbols, including electronic means, that can be read, reproduced and stored;
(l) "technical specifications" means a specification which lays down the characteristics of the products or services to be procured, such as quality, performance, safety and dimensions, symbols, terminology, packaging, marking and labelling, or the processes and methods for their production and requirements relating to conformity assessment procedures prescribed by procuring entities;
(m) "privatisation" means a process by means of which government control over an entity is effectively eliminated and is transferred to the private sector;
(n) "liberalisation" means a process as a result of which an entity enjoys no exclusive or special rights and is exclusively engaged in the provision of goods or services on markets that are subject to effective competition.
Article 139. National Treatment and Non-discrimination
1. Each Party shall ensure that the procurement of its entities covered by this Title takes place in a transparent, reasonable and non-discriminatory manner, treating any supplier of either Party equally and ensuring the principle of open and effective competition.
2. With respect to any laws, regulations, procedures and practices regarding government procurement covered by this Title, each Party shall grant the goods, services and suppliers of the other Party a treatment no less favourable than that accorded by it to domestic goods, services and suppliers.
3. With respect to any laws, regulations, procedures and practices regarding government procurement covered by this Title, each Party shall ensure:
(a) that its entities do not treat a locally-established supplier less favourably than another locally-established supplier on the basis of the degree of foreign affiliation to, or ownership by, a person of the other Party; and
(b) that its entities do not discriminate against a locally-established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of the other Party.
4. This Article shall not apply to measures concerning customs duties or other charges of any kind imposed on or in connection with importation, the method of levying such duties and charges, other import regulations, including restrictions and formalities, nor to measures affecting trade in services other than measures specifically governing procurement covered by this Title.
Article 140. Prohibition of Offsets and National Preferences
Each Party shall ensure that its entities do not, in the qualification and selection of suppliers, goods or services, in the evaluation of bids or in the award of contracts, consider, seek or impose offsets, nor conditions regarding national preferences such as margins allowing price preference.
Article 141. Valuation Rules
1. Entities shall not split up a procurement, nor use any other method of contract valuation with the intention of evading the application of this Title when determining whether a contract is covered by the disciplines of thereof, subject to the conditions set out in Annexes XI and XII, Appendices 1 to 3.
2. In calculating the value of a contract, an entity shall take into account all forms of remuneration, such as premiums, fees, commissions and interests, as well as the maximum permitted total amount, including option clauses, provided for by the contract.
3. When, due to the nature of the contract, it is not possible to calculate in advance its precise value, entities shall estimate this value on the basis of objective criteria.
Article 142. Transparency
1. Each Party shall promptly publish any law, regulation, judicial decision and administrative ruling of general application and procedure, including standard contract clauses, regarding procurement covered by this Title in the appropriate publications referred to in Annex XIII, Appendix 2, including officially designated electronic media.
2. Each Party shall promptly publish in the same manner all modifications to such measures.
Article 143. Tendering Procedures
1. Entities shall award their public contracts by open or selective tendering procedures according to their national procedures, in compliance with this Title and in a nondiscriminatory manner.
2. For the purposes of this Title:
(a) open tendering procedures are those procedures whereby any interested supplier may submit a tender.
(b) selective tendering procedures are those procedures whereby, consistent with Article 144 and other relevant provisions of this Title, only suppliers satisfying qualification requirements established by the entities are invited to submit a tender.
3. However, in the specific cases and only under the conditions laid down in Article 145, entities may use a procedure other than the open or selective tendering procedures referred to in paragraph 1 of that Article, in which case the entities may choose not to publish a notice of intended procurement, and may consult the suppliers of their choice and negotiate the terms of contract with one or more of these.
4. Entities shall treat tenders in confidence. In particular, they shall not provide information intended to assist particular participants to bring their tenders up to the level of other participants.
Article 144. Selective Tendering
1. In selective tendering, entities may limit the number of qualified suppliers they will invite to tender, consistent with the efficient operation of the procurement process, provided that they select the maximum number of domestic suppliers and suppliers of the other Party, and that they make the selection in a fair and non-discriminatory manner and on the basis of the criteria indicated in the notice of intended procurement or in tender documents.
2. Entities maintaining permanent lists of qualified suppliers may select suppliers to be invited to tender from among those listed, under the conditions foreseen in Article 146(7). Any selection shall allow for equitable opportunities for suppliers on the lists.
Article 145. Other Procedures
1. Provided that the tendering procedure is not used to avoid maximum possible competition or to protect domestic suppliers, entities shall be allowed to award contracts by means other than an open or selective tendering procedure in the following circumstances and subject to the following conditions, where applicable:
(a) when no suitable tenders or request to participate have been submitted in response to a prior procurement, on condition that the requirements of the initial procurement are not substantially modified;
(b) when, for technical or artistic reasons, or for reasons connected with protection of exclusive rights, the contract may be performed only by a particular supplier and no reasonable alternative or substitute exists;
(c) for reasons of extreme urgency brought about by events unforeseeable by the entity, the products or services could not be obtained in time by means of open or selective tendering procedures;
(d) for additional deliveries of goods or services by the original supplier where a change of supplier would compel the entity to procure equipment or services not meeting requirements of interchangeability with already existing equipment, software or services;
(e) when an entity procures prototypes or a first product or service which are developed at its request in the course of, and for, a particular contract for research, experiment, study or original development;
(f) when additional services which were not included in the initial contract but which were within the objectives of the original tender documentation have, through unforeseeable circumstances, become necessary to complete the services described therein. However, the total value of contracts awarded for the additional construction services may not exceed 50 per cent of the amount of the main contract;
(g) for new services consisting of the repetition of similar services and for which the entity has indicated, in the notice concerning the initial service, that tendering procedures other than open or selective might be used in awarding contracts for such new services;
(h) in the case of contracts awarded to the winner of a design contest, provided that the contest has been organised in a manner which is consistent with the principles of this Title; in case of several successful candidates, all successful candidates shall be invited to participate in the negotiations; and
(i) for quoted goods purchased on a commodity market and for purchases of goods made under exceptionally advantageous conditions which only arise in the very short term in the case of unusual disposals and not for routine purchases from regular suppliers.
2. The Parties shall ensure that, whenever it is necessary for entities to resort to a procedure other than the open or selective tendering procedures based on the circumstances set forth in paragraph 1, the entities shall maintain a record or prepare a written report providing specific justification for the contract awarded under that paragraph.
Article 146. Qualification of Suppliers
1. Any conditions for participation in procurement shall be limited to those that are essential to ensure that the potential supplier has the capability to fulfil the requirements of the procurement and the ability to execute the contract in question.
2. In the process of qualifying suppliers, entities shall not discriminate between domestic suppliers and suppliers of the other Party.
3. A Party shall not impose the condition that, in order for a supplier to participate in a procurement, the supplier has previously been awarded one or more contracts by an entity of that Party or that the supplier has prior work experience in the territory of that Party.
4. Entities shall recognise as qualified suppliers all suppliers who meet the conditions for participation in a particular intended procurement. Entities shall base their qualification decisions solely on the conditions for participation that have been specified in advance in notices or tender documentation.
5. Nothing in this Title shall preclude the exclusion of any supplier on grounds such as bankruptcy or false declarations or conviction for serious crime such as participation in criminal organisations.
6. Entities shall promptly communicate to suppliers that have applied for qualification their decision on whether or not they qualify.
Permanent lists of qualified suppliers
7. Entities may establish permanent lists of qualified suppliers provided that the following rules are respected :
(a) entities establishing permanent lists shall ensure that suppliers may apply for qualification at any time.
(b) any supplier having requested to become a qualified supplier shall be notified by the entities concerned of the decision in this regard.
(c) suppliers requesting to participate in a given intended procurement who are not on the permanent list of qualified suppliers shall be given the possibility to participate in the procurement by presenting the equivalent certifications and other means of proof requested from suppliers who are on the list.
(d) when an entity operating in the utilities sector uses a notice on the existence of a permanent list as a notice of intended procurement, as provided in Article 147(7), suppliers requesting to participate who are not on the permanent list of qualified suppliers shall also be considered for the procurement, provided there is sufficient time to complete the qualification procedure; in this event, the procuring entity shall promptly start procedures for qualification and the process of, and the time required for, qualifying suppliers shall not be used in order to keep suppliers of other Parties off the suppliers' list.
Article 147. Publication of Notices
General provisions
1. Each Party shall ensure that its entities provide for effective dissemination of the tendering opportunities generated by the relevant government procurement processes, providing suppliers of the other Party with all the information required to take part in such procurement.
2. For each contract covered by this Title, except as set out in Articles 143(3) and 145, entities shall publish in advance a notice inviting interested suppliers to submit tenders, or where appropriate, requests for participation for that contract.
3. The information in each notice of intended procurement shall include at least the following.
(a) name, address, telefax number, electronic address of the entity and, if different, the address where all documents relating to the procurement may be obtained;
(b) the tendering procedure chosen and the form of the contract;
(c) a description of the intended procurement, as well as essential contract requirements to be fulfilled;