(vi) turnkey, construction, management, production, concession, revenue-sharing contracts, and other similar contracts including those that involve the presence of the property of an investor in the territory of a Party;
(vii) intellectual property rights;
(viii) any other moveable or immovable, tangible or intangible property, and related property rights, such as leases, mortgages, liens and pledges;
for greater certainty:
(i) returns that are invested are treated as investments, and any alteration of the form in which assets are invested or reinvested does not affect their qualification as investments, provided that the form taken by any investment or reinvestment maintains its compliance with the definition of investment;
(ii) investment does not include an order or judgment entered in a judicial or administrative action;
(l) ‘investor of a Party’ means a natural or juridical person of a Party that seeks to establish, is establishing or has established an enterprise in accordance with subparagraph (h);
(m) ‘juridical person of a Party’ means (26):
(i) for the EU Party:
(A) a juridical person constituted or organised under the law of the European Union or of at least one of its Member States and engaged in substantive business operations (27) in the territory of the European Union; and
(B) shipping companies established outside the European Union, and controlled by natural persons of a Member State, whose vessels are registered in, and fly the flag of, a Member State;
(ii) for Chile:
(A) a juridical person constituted or organised under the law of Chile and engaged in substantive business operations in the territory of Chile; and
(B) shipping companies established outside Chile, and controlled by natural persons of Chile, whose vessels are registered in, and fly the flag of, Chile;
(n) ‘operation’ means the conduct, management, maintenance, use, enjoyment, sale or other form of disposal of an enterprise by an investor of a Party, in the territory of the other Party;
(o) ‘returns’ means all amounts yielded by or derived from an investment or reinvestment, including profits, dividends, capital gains, royalties, interest, payments in connection with intellectual property rights, payments in kind and all other lawful income;
(p) ‘selling and marketing of air transport services’ means opportunities for the air carrier concerned to sell and market freely its air transport services including all aspects of marketing such as market research, advertising and distribution; these activities do not include the pricing of air transport services nor the applicable conditions;
(q) ‘service’ means any service in any sector except for services supplied in the exercise of governmental authority; and
(r) ‘Tribunal’ means the Tribunal of first instance established pursuant to Article 17.34.
Article 17.3. Right to Regulate
The Parties affirm the right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, social services, education, safety, the environment, including climate change, public morals, social or consumer protection, privacy and data protection, or the promotion and protection of cultural diversity.
Article 17.4. Relation to other Chapters
1. In the event of inconsistency between this Chapter and Chapter 25, the latter shall prevail to the extent of the inconsistency.
2. A requirement of a Party that a service supplier of the other Party posts a bond or other form of financial security as a condition for the cross-border supply of a service in its territory does not in itself make this Chapter applicable to such cross-border supply of that service. This Chapter applies to measures adopted or maintained by the Party relating to the bond or financial security, if such bond or financial security constitutes a covered investment.
Article 17.5. Denial of Benefits
A Party may deny an investor of the other Party or a covered investment the benefits of this Chapter if the denying Party adopts or maintains measures related to the maintenance of international peace and security, including the protection of human rights, which:
(a) prohibit transactions with that investor or covered investment; or
(b) would be violated or circumvented if the benefits of this Chapter were accorded to that investor or covered investment, including if the measures prohibit transactions with a person who owns or controls either of them.
Article 17.6. Sub-Committee on Services and Investment
The Sub-Committee on Services and Investment (‘Sub-Committee’) is established pursuant to Article 8.8(1). When addressing matters related to investment, the Sub-Committee shall monitor and ensure proper implementation of this Chapter and of Annexes 17-A, 17-B and 17-C.
Section B. LIBERALISATION OF INVESTMENTS AND NON-DISCRIMINATION
Article 17.7. Scope
1. This Section applies to measures, adopted or maintained by a Party in its territory, affecting the establishment of an enterprise or the operation of a covered investment in all economic activities by an investor of the other Party.
2. This Section does not apply to:
(a) audio-visual services;
(b) national maritime cabotage (28); or
(c) domestic and international air services or related services in support of air services (29), whether scheduled or non-scheduled, and services directly related to the exercise of traffic rights, other than:
(i) aircraft repair and maintenance services during which an aircraft is withdrawn from service;
(ii) selling and marketing of air transport services;
(iii) computer reservation system (CRS) services; and
(iv) ground handling services.
3. Articles 17.8, 17.9, 17.11, 17.12 and 17.13 do not apply with respect to public procurement.
4. Articles 17.8, 17.9, 17.11 and 17.13 do not apply with respect to subsidies granted by a Party, including government-supported loans, guarantees and insurances.
Article 17.8. Market Access
In the sectors or subsectors where market access commitments are undertaken, a Party shall not adopt or maintain, with respect to market access through establishment or operation by investors of the other Party or by enterprises constituting a covered investment, either on the basis of its entire territory or on the basis of a territorial subdivision, a measure that:
(a) limits the number of enterprises that may carry out a specific economic activity, whether in the form of numerical quotas, monopolies, exclusive rights or the requirement of an economic needs test;
(b) limits the total value of transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
(c) limits the total number of operations or the total quantity of output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test (30);
(d) restricts or requires specific types of legal entity or joint venture through which an investor of the other Party may carry out an economic activity; or
(e) limits the total number of natural persons who may be employed in a particular sector or that an enterprise may employ and who are necessary for, and directly related to, the performance of economic activity in the form of numerical quotas or the requirement of an economic needs test.
Article 17.9. National Treatment
1. Each Party shall accord to investors of the other Party and to enterprises constituting a covered investment with respect to the establishment, treatment no less favourable than the treatment it accords, in like situations (31), to its own investors and to their enterprises.
2. Each Party shall accord to investors of the other Party and to covered investments, with respect to the operation, treatment no less favourable than the treatment it accords, in like situations (32), to its own investors and to their investments.
3. The treatment accorded by a Party under paragraphs 1 and 2 means:
(a) with respect to a regional or local government of Chile, treatment no less favourable than the most favourable treatment accorded, in like situations, by that level of government to investors of Chile and to their investments in its territory;
(b) with respect to a government of, or in, a Member State, treatment no less favourable than the most favourable treatment accorded, in like situations, by that government to investors of that Member State and to their investment in its territory (33).
Article 17.10. Public Procurement
1. Each Party shall ensure that enterprises constituting a covered investment are accorded treatment no less favourable than that accorded, in like situations, to its own enterprises with respect to any measure regarding the purchase of goods or services by a procuring entity for governmental purposes.
2. The application of the national treatment obligation provided for in this Article is subject to security and general exceptions as set out in Article 28.3.
Article 17.11. Most Favoured Nation Treatment
1. Each Party shall accord to investors of the other Party and to enterprises constituting a covered investment, with respect to the establishment, treatment no less favourable than the treatment it accords, in like situations (34), to investors of a third country and to their enterprises.
2. Each Party shall accord to investors of the other Party and to covered investments, with respect to the operation, treatment no less favourable than the treatment it accords, in like situations (35), to investors of a third country and to their investments.
3. Paragraphs 1 and 2 shall not be construed as obliging a Party to extend to investors of the other Party or to covered investments the benefit of any treatment resulting from measures providing for the recognition of standards, including of the standards or criteria for the authorisation, licensing or certification of a natural person or an enterprise for carrying out an economic activity, or of prudential measures.
4. For greater certainty, the treatment referred to in paragraphs 1 and 2 does not include investment dispute resolution procedures or mechanisms provided for in other international investment treaties or trade agreements. The substantive provisions in other international investment treaties or trade agreements do not in themselves constitute ‘treatment’ as referred to in paragraphs 1 and 2, and thus cannot give rise to a breach of this Article, absent measures adopted or maintained by a Party. Measures of a Party applied pursuant to such substantive provisions may constitute ‘treatment’ under this Article and thus give rise to a breach of this Article.
Article 17.12. Performance Requirements
1. A Party shall not, in connection with the establishment of an enterprise or the operation of an investment of a Party or of a third country in its territory, impose or enforce any requirement, or enforce any commitment or undertaking, to:
(a) export a given level or percentage of goods or services;
(b) achieve a given level or percentage of domestic content;
(c) purchase, use or accord a preference to goods produced or services provided in its territory, or purchase goods or services from natural persons or enterprises in its territory;
(d) 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 enterprise;
(e) restrict sales of goods or services in its territory that such enterprise produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
(f) transfer technology, a production process or other proprietary knowledge to a natural person or an enterprise in its territory;
(g) supply exclusively from the territory of that Party the goods it produces or the services it supplies to a specific regional or world market;
(h) locate the headquarters of that investor for a specific region of the world, which is broader than the territory of the Party, or the world market in its territory;
(i) hire a given number or percentage of its nationals;
(j) restrict the exportation or sale for export; or
(k) with regard to any licence contract in existence at the time the requirement is imposed or enforced, or any commitment or undertaking is enforced, or to any future licence contract (36) freely entered into between the investor and a natural or juridical person or any other entity in its territory, provided that the requirement is imposed or enforced or the commitment or undertaking is enforced, in a manner that constitutes a direct interference with that licence contract by an exercise of non-judicial governmental authority of a Party, adopt:
(i) a given rate or amount of royalty below a certain level under a licence contract; or
(ii) a given duration of the term of a licence contract.
2. For greater certainty, subparagraph (k) of paragraph 1 does not apply when the licence contract is concluded between the investor and a Party.
3. A Party shall not condition the receipt or continued receipt of an advantage, in connection with the establishment or operation of an enterprise in its territory, of a Party or of a third country, on compliance with any of the following requirements:
(a) to achieve a given level or percentage of domestic content;
(b) to purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from natural persons or enterprises in its territory;
(c) to 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 enterprise;
(d) to restrict sales of goods or services in its territory that such enterprise produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings; or
(e) to restrict the exportation or sale for export.
4. Paragraph 3 shall not be construed as preventing a Party from conditioning the receipt or continued receipt of an advantage, in connection with the establishment or operation of an enterprise in its territory by an investor of a Party or a third country, on compliance with a requirement to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development in its territory.
5. Subparagraphs (f) and (k) of paragraph 1 do not apply if:
(a) a Party authorises the use of an intellectual property right in accordance with Article 31 or 31bis of the TRIPS Agreement or adopts or maintains measures requiring the disclosure of data or proprietary information that fall within the scope of, and are consistent with, paragraph 3 of Article 39 of the TRIPS Agreement; or
(b) the requirement is imposed or enforced or the commitment or undertaking is enforced by a court, administrative tribunal, or competition authority in order to remedy a practice determined after judicial or administrative process as being a violation of the Party's competition law.
6. Subparagraphs (a), (b) and (c) of paragraph 1 and subparagraphs (a) and (b) of paragraph 3 do not apply to qualification requirements for goods or services with respect to participation in export promotion and foreign aid programmes.
7. Subparagraphs (a) and (b) of paragraph 3 do not apply to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas.
8. For greater certainty, this Article shall not be construed as requiring a Party to permit a particular service to be supplied on a cross-border basis where that Party adopts or maintains restrictions or prohibitions on such provision of services which are consistent with the reservations, conditions or qualifications specified with respect to a sector, subsector or activity listed in Annexes 17-A, 17-B and 17-C.
9. This Article is without prejudice to commitments of a Party made under the WTO Agreement.
Article 17.13. Senior Management and Boards of Directors
A Party shall not require that an enterprise of that Party that is a covered investment appoints natural persons of a particular nationality as members of boards of directors, or to a senior management position, such as executives or managers.
Article 17.14. Non-Conforming Measures
1. Articles 17.9, 17.11, 17.12 and 17.13 do not apply to:
(a) any existing non-conforming measure that is maintained by:
(i) for the EU Party:
(A) the European Union, as set out in Appendix 17-A-1;
(B) the central government of a Member State, as set out in Appendix 17-A-1;
(C) a regional level of government of a Member State, as set out in Appendix 17-A-1; or
(D) a local level of government; and
(ii) for Chile:
(A) the central government, as set out in Appendix 17-A-2;
(B) a regional level of government, as set out in Appendix 17-A-2; or
(C) a local level of government;
(b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a) of this paragraph; or
(c) a modification to any non-conforming measure referred to in subparagraph (a) of this paragraph, to the extent that the modification does not decrease the conformity of the measure, as it existed immediately before the modification, with Article 17.9, 17.11, 17.12 or 17.13.
2. Articles 17.9, 17.11, 17.12 and 17.13 do not apply to measures of a Party with respect to sectors, sub-sectors or activities as set out in its schedule in Annex 17-B.
3. A Party shall not, under any measure adopted after the date of entry into force of this Agreement and covered by its reservations set out in Annex 17-B, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of a covered investment existing at the time the measure becomes effective.
4. Article 17.8 does not apply to any measure of a Party which is consistent with the commitments set out in Annex 17-C.
5. Articles 17.9 and 17.11 do not apply to any measure of a Party that constitutes an exception to, or derogation from, Article 3 or 4 of the TRIPS Agreement, as specifically provided for in Articles 3, 4 and 5 of that Agreement.
6. For greater certainty, Articles 17.9 and 17.11 shall not be construed as preventing a Party from prescribing information requirements, including for statistical purposes, in connection with the establishment or operation of investors of the other Party or of a covered investment, provided that it does not constitute a means to circumvent that Party's obligations under those Articles.
Section C. INVESTMENT PROTECTION
Article 17.15. Scope
This Section applies to measures adopted or maintained by a Party affecting:
(a) covered investments; and
(b) investors of a Party with respect to the operation of a covered investment.
Article 17.16. Investment and Regulatory Measures
1. Article 17.3 applies to this Section in accordance with this Article.
2. This Section shall not be interpreted as a commitment of a Party not to change its legal and regulatory framework, including in a manner that can negatively affect the operation of covered investments or the investor's expectations of profits.
3. For greater certainty, the mere fact that a subsidy or grant has not been issued, renewed or maintained, or has been modified or reduced, by a Party does not constitute a breach of obligations under this Section, even if it results in loss or damage to the covered investment:
(a) in the absence of any specific commitment at law or under a contract to issue, renew or maintain that subsidy or grant; or
(b) in accordance with any terms or conditions attached to the issuance, renewal, maintenance, modification or reduction of that subsidy or grant.
4. For greater certainty, nothing in this Section shall be construed as preventing a Party from discontinuing the granting of a subsidy (37) or requesting its reimbursement, if such action has been ordered by one of its competent authorities (38), or as requiring that Party to compensate the investor therefor
Article 17.17. Treatment of Investors and of Covered Investments
1. Each Party shall accord in its territory to covered investments and investors of the other Party, with respect to their covered investments, fair and equitable treatment and full protection and security in accordance with paragraphs 2 to 6.
2. A Party breaches the obligation of fair and equitable treatment referred to in paragraph 1 if a measure or series of measures constitute (39):
(a) denial of justice in criminal, civil or administrative proceedings;
(b) a fundamental breach of due process in judicial and administrative proceedings;
(c) manifest arbitrariness;
(d) targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief; or
(e) abusive treatment of investors, such as coercion, duress, harassment.
3. In determining the breach referred to in paragraph 2, the Tribunal may take into account specific and unambiguous representations made to an investor by a Party, which the investor reasonably relied upon in deciding to make or maintain the covered investment, but that the Party subsequently frustrated.