1. Unless otherwise agreed by the Parties elsewhere in this Agreement, the provisions of this Chapter shall apply with respect to the avoidance or settlement of disputes between the Parties concerning their rights and obligations under this Agreement.
2. The rules and procedures set out in this Chapter may be waived, varied or modified by mutual agreement.
3. Findings and recommendations of an arbitral tribunal cannot add to or diminish the rights and obligations of the Parties under this Agreement.
4. The provisions of this Chapter may be invoked in respect of measures affecting the observance of this Agreement taken by regional or local governments or authorities within the territory of a Party. When an arbitral tribunal has ruled that a provision of this Agreement has not been observed, the responsible Party shall take such reasonable measures as may be available to it to ensure its observance. The provisions of this Chapter relating to compensation and suspension of benefits apply in cases where it has not been possible to secure such observance.
5. Arbitral tribunals shall clarify the provisions of this Agreement in accordance with customary rules of interpretation of public international law.
Article 2. Consultations
1. Each Party shall accord adequate opportunity for consultations regarding any representations made by the other Party with respect to any matter affecting the implementation, interpretation or application of this Agreement. Any differences shall, as far as possible, be settled by consultation between the Parties.
2. Any Party which considers that any benefit accruing to it directly or indirectly under this Agreement is being nullified or impaired, or that the attainment of any objective of this Agreement is being impeded, as a result of the failure of the other Party to carry out its obligations under this Agreement, may, with a view to achieving satisfactory settlement of the matter, make representations or proposals to the other Party, which shall give due consideration to the representations or proposals made to it.
3. If a request for consultation is made, the Party to which the request is made shall reply to the request within 7 days after the date of its receipt and shall enter into consultations within a period of no more than 30 days after the date of receipt of the request, with a view to reaching a mutually satisfactory solution.
4. The Parties shall make every effort to reach a mutually satisfactory resolution of any matter through consultations. To this end, the Parties shall:
(a) provide sufficient information to enable a full examination of how the measure might affect the operation of the Agreement; and
(b) treat as confidential any information exchanged in the consultations which the other Party has designated as confidential.
Article 3. Good Offices, Conciliation or Mediation
1. The Parties may at any time agree to good offices, conciliation or mediation. They may begin at any time and be terminated by either Party at any time.
2. If the Parties agree, procedures for good offices, conciliation or mediation may continue while the dispute proceeds for resolution before an arbitral tribunal appointed under Article 4 (Appointment of Arbitral Tribunals).
Article 4. Appointment of Arbitral Tribunals
If the consultations fail to settle a dispute within 60 days after the date of receipt of the request for consultations, the Party which made the request for consultations may make a written request to the other Party to appoint an arbitral tribunal under this Article. The request shall include a statement of the claim and the grounds on which it is based.
Article 5. Composition of Arbitral Tribunals
1. The arbitral tribunal referred to in Article 4 (Appointment of Arbitral Tribunals) shall consist of three members. Each Party shall appoint an arbitrator within 30 days of the receipt of the request under Article 4, and the two arbitrators appointed shall, within 30 days of the appointment of the second of them, designate by common agreement the third arbitrator.
2. The Parties shall, within 7 days of the designation of the third arbitrator, approve or disapprove the appointment of that arbitrator, who shall, if approved, chair the tribunal.
3. If the third arbitrator has not been designated within 30 days of the appointment of the second arbitrator, or one of the Parties disapproves the appointment of the third arbitrator, the Ministers in charge of trade negotiations of the Parties shall consult directly in order to jointly appoint the chair of the arbitral tribunal within a further period of 30 days.
4. If an arbitrator appointed under this Article resigns or becomes unable to act, a successor arbitrator shall be appointed in the same manner as prescribed for the appointment of the original arbitrator and the successor shall have all the powers and duties of the original arbitrator.
5. Any person appointed as a member or chair of the arbitral tribunal shall not be a national of either Party and shall have expertise or experience in law, international trade, other matters covered by this Agreement or the resolution of disputes arising under international trade agreements, and shall be chosen strictly on the basis of objectivity, reliability, sound judgement and independence. Additionally, the chair shall not have his or her usual place of residence in the territory of, nor be employed by, either Party.
Article 6. Functions of Arbitral Tribunals
1. The function of an arbitral tribunal is to make an objective assessment of the dispute before it, including an examination of the facts of the case and the applicability of and conformity with this Agreement. Where the arbitral tribunal concludes that a measure is inconsistent with a provision of this Agreement, it shall recommend that a Party bring the measure into conformity with that provision.
2. The findings and recommendations of the arbitral tribunal shall be set out in a report released to the Parties. An arbitral tribunal may make its findings and recommendations upon the default of a Party.
3. An arbitral tribunal shall take its decisions by consensus; provided that where an arbitral tribunal is unable to reach consensus it may take its decisions by majority vote.
4, The arbitral tribunal shall, in consultation with the Parties and apart from the matters set out in Article 7 (Proceedings of Arbitral Tribunals), regulate its own procedures in relation to the rights of Parties to be heard and its deliberations.
Article 7. Proceedings of Arbitral Tribunals
1. An arbitral tribunal shall meet in closed session. The Parties shall be present at the meetings only when invited by the arbitral tribunal to appear before it.
2. The deliberations of an arbitral tribunal and the documents submitted to it shall be kept confidential. Nothing in this Article shall preclude a Party from disclosing statements of its own positions or its submissions to the public; provided that a Party shall treat as confidential information submitted by the other Party to the arbitral tribunal which that Party has designated as confidential. Where a Party submits a confidential version of its written submissions to the arbitral tribunal, it shall also, upon request of the other Party, provide a non-confidential summary of the information contained in its submissions that could be disclosed to the public.
3. Before the first substantive meeting of the arbitral tribunal with the Parties, the Parties shall transmit to the arbitral tribunal written submissions in which they present the facts of their case and their arguments.
4. At its first substantive meeting with the Parties, the arbitral tribunal shall ask the Party which has brought the complaint to present its submission. Subsequently, and still at the same meeting, the Party against which the complaint has been brought shall be asked to present its submission.
5. Formal rebuttals shall be made at a second substantive meeting of the arbitral tribunal. The Party complained against shall have the right to present its submission first, and shall be followed by the complaining Party. The Parties shall submit, prior to the meeting, written rebuttals to the arbitral tribunal.
6. The arbitral tribunal may at any time put questions to the Parties and ask them for explanations either in the course of a meeting with the Parties or in writing.
7. The Parties shall make available to the arbitral tribunal a written version of their oral statements.
8. In the interests of full transparency, the presentations, rebuttals and statements referred to in paragraphs 4 to 6 shall be made in the presence of the Parties. Moreover, each Party's written submissions, including any comments on the report, written versions of oral statements and responses to questions put by the arbitral tribunal, shall be made available to the other Party. There shall be no ex parte communications with the arbitral tribunal concerning matters under consideration by it.
9. The arbitral tribunal shall have the right, in consultation with the Parties, to seek information and technical advice from any individual or body which it deems appropriate, and shall make any such information and technical advice available to the Parties. A Party shall respond promptly and fully to any request by an arbitral tribunal for such information as the arbitral tribunal considers necessary and appropriate.
10. The report of the arbitral tribunal shall be drafted without the presence of the Parties in the light of the information provided and the statements made. The arbitral tribunal shall accord adequate opportunity to the Parties to review the entirety of its draft report prior to its finalisation and shall include a discussion of any comments by the Parties in its final report.
11. The arbitral tribunal shall release to the Parties its final report on the dispute referred to it within 60 days of its formation. When the arbitral tribunal considers that it cannot release its final report within 60 days, it shall inform the Parties in writing of the reasons for the delay together with an estimate of the period within which it will issue its report. The final report of the arbitral tribunal shall become a public document within 10 days after its release to the Parties.
Article 8. Suspension and Termination of Proceedings
1. Where the Parties agree, the arbitral tribunal may suspend its work at any time for a period not exceeding 12 months from the date of such agreement. If the work of the arbitral tribunal has been suspended for more than 12 months, the authority for establishment of the tribunal shall lapse unless the Parties agree otherwise.
2. The Parties may agree to terminate the proceedings of an arbitral tribunal established under this Agreement, in the event that a mutually satisfactory solution to the dispute has been found.
3. Before the arbitral tribunal makes its decision, it may at any stage of the proceedings propose to the Parties that the dispute be settled amicably.
Article 9. Implementation
1. The Party concerned shall comply with the arbitral tribunal's recommendations within a reasonable period of time. The reasonable period of time shall be mutually determined by the Parties or, where the Parties fail to agree on the reasonable period of time within 45 days of the release of the arbitral tribunal's report, either Party may refer the matter to the tribunal, which shall determine the reasonable period of time following consultation with the Parties.
2. Where there is disagreement as to the existence or consistency with this Agreement of measures taken within the reasonable period of time to comply with the recommendations of the arbitral tribunal, such dispute shall be decided through recourse to the dispute settlement procedures in this Chapter, including wherever possible by resort to the original arbitral tribunal. The arbitral tribunal shall provide its report to the Parties within 60 days after the date of the referral of the matter to it. When the arbitral tribunal considers that it cannot provide its report within this timeframe, it shall inform the Parties in writing of the reasons for the delay together with an estimate of the period within which it will submit its report.
Article 10. Compensation and Suspension of Benefits
1. If the Party concemed fails to bring the measure found to be inconsistent with the Agreement into compliance with the recommendations of the arbitral tribunal under Article 9.2 within 20 days of the report of that arbitral tribunal being provided to the Parties, that Party shall, if so requested, enter into negotiations with the complaining Party with a view to reaching a mutually satisfactory agreement on any necessary compensatory adjustment.
2. If no mutually satisfactory agreement on compensation has been reached within 20 days after the request of the complaining Party to enter into negotiations on compensatory adjustment, the complaining Party may request the original arbitral tribunal to determine the appropriate level of any suspension of benefits conferred on the other Party under this Agreement. Where the original arbitral tribunal cannot hear the matter for any reason, a new tribunal shall be appointed under Article 4 (Appointment of Arbitral Tribunals).
3. Any suspension of benefits shall be restricted to benefits accruing to the other Party under this Agreement.
4. In considering what benefits to suspend under Article 10.2:
(a) the Party having invoked the dispute settlement procedures should first seek to suspend benefits in the same sector or sectors as that affected by the measure or other matter that the arbitral tribunal has found to be inconsistent with this Agreement or to have caused nullification or impairment; and
(b) the Party having invoked the dispute settlement procedures may suspend benefits in other sectors if it considers that it is not practicable or effective to suspend benefits in the same sector.
5. The suspension of benefits shall be temporary and shall only be applied until such time as the measure found to be inconsistent with this Agreement has been removed, or the Party that must implement the arbitral tribunal's recommendations has done so, or a mutually satisfactory solution is reached.
Article 11. Expenses
Each Party shall bear the costs of its appointed arbitrator and its own expenses and legal costs. The costs of the Chair of the arbitral tribunal and other expenses associated with the conduct of its proceedings shall be borne in equal parts by both Parties.
Chapter 17. Final Provisions
Article 1. Regional and Local Government
Each Party is fully responsible for the observance of all provisions in this Agreement, and, except as otherwise provided for in this Agreement, shall take such reasonable measures (1) as may be available to it to ensure that they are observed by the regional and local governments and authorities within its territory, and in respect of trade in services and investment covered by Chapter 7 (Cross-Border Trade in Services) and Chapter 8 (Investment) of this Agreement, that they are observed by non- governmental bodies (in the exercise of powers delegated by central, regional or local government or authorities) within its territory.
Article 2. Security Exceptions
Nothing in this Agreement shall be construed to:
(a) require a Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests; or
(b) preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.
Article 3. Taxation Measures
1. For the purposes of this Article:
"tax convention" means a convention for the avoidance of double taxation or other international taxation agreement or arrangement; and
"taxation measures" do not include a "customs duty" as defined in Article 2(e) (General Definitions) of Chapter 1 (Objectives and General Definitions).
2. Except as provided in this Article, nothing in this Agreement shall apply to taxation measures.
3. This Agreement shall only grant rights or impose obligations with respect to taxation measures where corresponding rights or obligations are also granted or imposed under Article II of GATT 1994 and, with respect to services, including financial services and services supplied by a covered investment, Articles I, XVII and XIV(d) of GATS, mutatis mutandis (2).
4. Nothing in this Agreement shall affect the rights and obligations of the Parties under any tax convention in force between the Parties. In the event of any inconsistency relating to a taxation measure between this Agreement and such tax convention, the latter shall prevail to the extent of the inconsistency. The competent authorities under that convention shall have sole responsibility for determining whether any inconsistency exists between this Agreement and that convention.
Article 4. Temporary Safeguard Measures
1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining restrictive measures with regard to payments or transfers for current account transactions in the event of serious balance of payments and external financial difficulties or threats thereof.
2. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining restrictive measures with regard to payments or transfers relating to the movements of capital:
(a) in the event of serious balance of payments and external financial difficulties or threats thereof; or
(b) if, in exceptional circumstances, payments or transfers relating to capital movements cause or threaten to cause serious difficulties for macroeconomic management.
3. Any measure adopted or maintained under paragraph 1 or 2 shall:
(a) not be inconsistent with Articles 4 (National Treatment) and 5 (Most- Favoured-Nation Treatment) of Chapter 7 (Cross-Border Trade in Services), Articles 4 (National Treatment) and 5 (Most-Favoured- Nation Treatment) of Chapter 8 (Investment), or Articles 3 (National Treatment) and 4 (Most-Favoured-Nation Treatment) of Chapter 9 (Financial Services); (3)
(b) be consistent with the Articles of Agreement of the International Monetary Fund;
(c) avoid unnecessary damage to the commercial, economic and financial interests of the other Party;
(d) not exceed those necessary to deal with the circumstances described in paragraph 1 or 2;
(e) be temporary and be phased out progressively as the situations specified in paragraph 1 or 2 improve, and shall not exceed 18 months in duration; however, in exceptional circumstances, a Party may extend such measure for additional periods of one year, by notifying the other Party in writing within 30 days of the extension. If the other Party advises, in writing, within 30 days of receiving the notification, that it does not agree that the extended measure is designed and applied to satisfy subparagraphs (c), (d) and (h), the Party imposing the measure shall commence consultations with the other Party within 90 days of receiving the notification from the other Party, and endeavour to modify the measure to bring it into conformity with subparagraphs (c), (d) and (h), taking into account the views of the other Party;
(f) not be inconsistent with Article 13 (Expropriation and Nationalisation) of Chapter 8 (Investment); (4)
(g) in the case of restrictions on capital outflows, not interfere with an investor's ability to earn a market rate of return in the territory of the restricting Party on any restricted assets;(5) and
(h) not be used to avoid necessary macroeconomic adjustment.
4. Measures referred to in paragraphs 1 and 2 shall not apply to payments or transfers relating to foreign direct investment. (6)
5. A Party shall endeavour to provide that any measures adopted or maintained under paragraph 1 or 2 be price-based, and if such measures are not price-based, the Party shall explain the rationale for using quantitative restrictions when it notifies the other Party of the measure.
6. In the case of trade in goods, Article XII of GATT 1994 and the Understanding on the Balance of Payments Provisions of the GATT 1994 are incorporated into and made part of this Agreement, mutatis mutandis. Any measures adopted or maintained under this paragraph shall not impair the relative benefits accorded to the other Party under this Agreement as compared to the treatment of a non-Party.
7. A Party adopting or maintaining measures under paragraph 1, 2 or 6 shall:
(a) notify, in writing, the other Party of the measures, including any changes therein, along with the rationale for their imposition, within 30 days of their adoption;
(b) present, as soon as possible, either a time schedule or the conditions necessary for their removal;
(c) promptly publish the measures; and
(d) promptly commence consultations with the other Party in order to review the measures adopted or maintained by it.
(i) In the case of capital movements, promptly respond to a request for consultations from the other Party in relation to the measures adopted by it, provided that such consultations are not otherwise taking place outside of this Agreement.
(ii) In the case of current account restrictions, if consultations in relation to the measures adopted by it are not taking place under the framework of the WTO Agreement, a Party, if requested, shall promptly commence consultations with the other Party.
Article 5. General Exceptions
1. For the purposes of Chapter 3 (Rules of Origin) and Chapter 5 (Technical Regulations and Sanitary and Phytosanitary Measures), Article XX of GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis.
2. The Parties understand that the measures referred to in Article XX(b) of GATT 1994 include environmental measures necessary to protect human, animal or plant life or health, and that Article XX(g) of GATT 1994 applies to measures relating to the conservation of living and non-living exhaustible natural resources.
Article 6. Contact Point
Each Party shall designate a contact point to facilitate communications between the Parties on any matter covered by this Agreement. On the request of a Party, the contact point of the requested Party shall identify the office or official responsible for the matter and assist in facilitating communication with the requesting Party.
Article 7. Review
In addition to the provisions for consultations elsewhere in this Agreement, Ministers in charge of trade negotiations of the Parties shall meet within a year of the date of entry into force of this Agreement and then biennially or otherwise as appropriate to review this Agreement.
Article 8. Association with the Agreement
This Agreement is open to accession or association by any State or separate customs territory, on terms to be agreed between the Parties.
Article 9. Relation to other Agreements
Unless otherwise provided in this Agreement, in the event of any inconsistency between this Agreement and any other agreement to which both Parties are parties, the Parties shall immediately consult with each other with a view to finding a mutually satisfactory solution in accordance with customary rules of public international law. (7)
Article 10. Annexes
The Annexes in this Agreement shall form an integral part of this Agreement.
Article 11. Amendments
This Agreement may be amended by agreement in writing by the Parties and such amendments shall enter into force on such date or dates as may be agreed between the Parties.
Article 12. Entry Into Force, Duration and Termination
1. This Agreement shall enter into force on the date on which the Parties have exchanged notes confirming the completion of their respective procedures for the entryinto force of this Agreement.
2. Either Party may terminate this Agreement by giving the other Party six months' advance notice in writing.
Conclusion
Attachments
ANNEX 4-I. Reservations to chapter 7 (cross-border trade in services) and chapter 8 (investment)
EXPLANATORY NOTES
1. The Schedule of a Party to this Annex sets out, pursuant to Article 7 (Reservations) of Chapter 7 (Cross-Border Trade in Services) and Article 11 (Reservations) of Chapter 8 (Investment), a Party's existing measures that are not subject to some or all of the obligations imposed by:
(a) Article 3 (Market Access) of Chapter 7 (Cross-Border Trade in Services);
(b) Article 4 (National Treatment) of Chapter 7 (Cross-Border Trade in Services) or Article 4 (National Treatment) of Chapter 8 (Investment);
(c) Article 5 (Most-Favoured-Nation Treatment) of Chapter 7 (Cross- Border Trade in Services) or Article 5 (Most-Favoured-Nation Treatment) of Chapter 8 (Investment);
(d) Article 6 (Local Presence) of Chapter 7 (Cross-Border Trade in Services);
(e) Article 7 (Prohibition of Performance Requirements) of Chapter 8 (Investment); or
(f) Article 8 (Senior Management and Boards of Directors) of Chapter 8 (investment).
2. Each Schedule entry sets out the following elements:
(a) Sector refers to the sector for which the entry is made;
(b) Sub-Sector, where referenced, refers to the specific sector in which the teservation is made;
(c) Industry Classification, where referenced, refers to the activity covered by the non-conforming measure according to the provisional CPC codes as used in the Provisional Central Product Classification (Statistical Papers Series M No. 77, Department of International Economic and Social Affairs, Statistical Office of the United Nations, New York, 1991);
(d) Obligations Concerned specifies the obligations referred to in paragraph 1 that, pursuant to Article 7.1 (Reservations) of Chapter 7 (Cross-Border Trade in Services) and Article 11.1 (Reservations) of Chapter 8 (Investment), do not apply to the listed measure(s) as indicated in the Description element of that entry;
(e) Level of Government indicates the level of government maintaining the listed measures;
(f) Source of Measure identifies the laws, regulations or other measures for which the entry is made. A measure cited in the Measures element:
(i) means the measure as amended, continued or renewed as of the date of entry into force of this Agreement, and
(ii) includes any subordinate measure adopted or maintained under the authority of and consistent with the measure; and
(g) Description sets out the non-conforming aspects of the measure to which the entry applies. However, in the interpretation of an entry, all elements of the entry shall be considered.
3. Articles 4 (National Treatment) and 6 (Local Presence) of Chapter 7 (Cross- Border Trade in Services) are separate disciplines and a measure that is only inconsistent with Article 6 (Local Presence) of Chapter 7 (Cross-Border Trade in Services) need not be reserved against Article 4 (National Treatment) of Chapter 7 (Cross-Border Trade in Services). For greater certainty, requirements that must be met in order to establish a particular form of enterprise, such as a corporation, trust, partnership, sole proprietorship, joint venture, association or similar organisation are not breaches of the local presence obligation unless they are imposed as a condition for the cross-border supply of a service.
4. Article 1 (Definitions) of Chapter 7 (Cross-Border Trade in Services) and Article 1 (Definitions) of Chapter 8 (Investment) shall apply to this Annex.
ANNEX 4-I(A). Australia's reservations to chapter 7 (cross-border trade in services) and chapter 8 (investment)
INTRODUCTORY NOTES
1. Australia reserves the right to maintain and to add to this Schedule any non- conforming measure at the regional level of government that existed at 1 January 2005, but was not listed in this Schedule at the date of entry into force of this Agreement against the following obligations:
(a) Article 4 (National Treatment) of Chapter 7 (Cross-Border Trade in Services) or Article 4(National Treatment) of Chapter 8 (Investment);
(b) Article 5 (Most-Favoured-Nation Treatment) of Chapter 7 (Cross-Border Trade in Services) or Article 5 (Most-Favoured-Nation Treatment) of Chapter 8 (Investment);
(c) Article 6 (Local Presence) of Chapter 7 (Cross-Border Trade in Services);