4. Full protection and security as referred to in paragraph 1 refers to the Party's obligations relating to physical security of investors and covered investments (40).
5. For greater certainty, a breach of another provision of this Agreement, or a breach of any other international agreement, does not constitute a breach of this Article.
6. The fact that a measure breaches the law of a Party does not, in and of itself, constitute a breach of this Article. In order to ascertain whether the measure breaches this Article, the Tribunal shall consider if a Party has acted inconsistently with paragraphs 1 to 4.
Article 17.18. Treatment In Case of Strife
1. Investors of a Party whose covered investments suffer losses as a consequence of war or other armed conflict, revolution or other civil strife, or a state of national emergency (41) in the territory of the other Party shall be accorded by that Party treatment no less favourable than that accorded by that Party to its own investors, or to the investors of any third country, with respect to restitution, indemnification, compensation or other forms of settlement.
2. Without prejudice to paragraph 1, investors of a Party who, in any of the situations referred to in that paragraph, suffer losses in the territory of the other Party shall be accorded by that Party prompt, adequate and effective restitution or compensation, if such losses result from:
(a) requisitioning of their covered investment or a part thereof by the other Party's armed forces or authorities; or
(b) destruction of their covered investment or a part thereof by the other Party's armed forces or authorities, which was not required by the necessity of the situation.
3. The amount of the compensation referred to in paragraph 2 of this Article shall be determined in accordance with Article 17.19(2) from the date of requisitioning or destruction until the date of actual payment.
Article 17.19. Expropriation (42)
1. A Party shall not nationalise or expropriate a covered investment, either directly or indirectly, through measures having an effect equivalent to nationalisation or expropriation (‘expropriation’), except:
(a) for a public purpose;
(b) in a non-discriminatory manner;
(c) on payment of prompt, adequate and effective compensation; and
(d) in accordance with due process of law.
2. The compensation referred to in subparagraph (c) of paragraph 1 shall:
(a) be paid without delay;
(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (‘the date of expropriation’) or the impending expropriation became known, whichever is earlier;
(c) be fully realisable and freely transferable in any freely convertible currency; and
(d) include interest at a normal commercial rate from the date of expropriation until the date of payment.
3. The investor affected shall have a right, under the law of the expropriating Party, to prompt review of its claim and of the valuation of its investment by a judicial or other independent authority of that Party, in accordance with the principles set out in this Article.
4. This Article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights, or to the revocation, limitation or creation of such rights, to the extent that such issuance, revocation, limitation or creation is consistent with the TRIPS Agreement (43).
Article 17.20. Transfers (44)
1. Each Party shall permit all transfers relating to a covered investment to be made in a freely convertible currency, freely and without delay and at the market rate of exchange prevailing on the date of transfer. Such transfers include:
(a) contributions to capital;
(b) profits, dividends, capital gains and other returns, proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the covered investment;
(c) interest, royalty payments, management fees, technical assistance and other fees;
(d) payments made under a contract entered into by the investor of the other Party, or by its covered investment, including payments made pursuant to a loan agreement;
(e) earnings and other remuneration of personnel engaged from abroad and working in connection with a covered investment;
(f) payments made pursuant to Article 17.18 and Article 17.19; and
(g) payments arising under the application of Section D.
2. A Party may not require its investors to transfer, or penalise its investors for failing to transfer, the income, earnings, profits or other amounts derived from, or attributable to, covered investments in the territory of the other Party.
Article 17.21. Subrogation
If a Party, or any agency designated by that Party, makes a payment to an investor of that Party under a guarantee, a contract of insurance or other form of indemnity that it has entered into with respect to a covered investment, the other Party in whose territory the covered investment was made shall recognise the subrogation or transfer of any rights the investor would have possessed under this Chapter with respect to the covered investment but for the subrogation, and the investor shall not pursue those rights to the extent of the subrogation.
Article 17.22. Termination
1. If this Agreement is terminated pursuant to Article 41.13, this Section and Section D shall continue to be effective for a further period of five years from the date of termination with respect to investments made before the date of such termination.
2. The period referred to in paragraph 1 shall be extended for a single additional period of five years, provided that no other investment protection agreement between the Parties is in force.
3. This Article shall not apply if the provisional application of this Agreement is terminated and this Agreement does not enter into force.
Article 17.23. Relationship with other Agreements
1. Upon entry into force of this Agreement, the agreements between Member States and Chile listed in Annex 17-F, including the rights and obligations derived therefrom, shall cease to have effect and shall be replaced and superseded by this Part of this Agreement.
2. In the case of provisional application of Sections C and D of this Chapter in accordance with Article 41.5(2), the application of the agreements listed in Annex 17-F, including the rights and obligations derived therefrom, shall be suspended as of the date from which the Parties provisionally apply Sections C and D of this Chapter in accordance with Article 41.5. If the provisional application of those Sections is terminated and this Agreement does not enter into force, the suspension shall cease and the agreements listed in Annex 17-F shall resume their effect.
3. Notwithstanding paragraphs 1 and 2, a claim pursuant to an agreement listed in Annex 17-F may be submitted in accordance with the rules and procedures established in that agreement, provided that:
(a) the claim arises from an alleged breach of that agreement that took place prior to the date of suspension of the agreement pursuant to paragraph 2 or, if the agreement is not suspended pursuant to paragraph 2, prior to the date of entry into force of this Agreement; and
(b) no more than three years have elapsed from the date of suspension of the agreement pursuant to paragraph 2 or, if that agreement is not suspended pursuant to paragraph 2, from the date of entry into force of this Agreement until the date of submission of the claim.
4. Notwithstanding paragraphs 1 and 2, if the provisional application of Sections C and D of this Chapter is terminated and this Agreement does not enter into force, a claim pursuant to this Agreement may be submitted in accordance with the rules and procedures established in this Agreement, provided that:
(a) the claim arises from an alleged breach of this Agreement that took place during the period of provisional application of Sections C and D of this Chapter; and
(b) no more than three years have elapsed from the date of termination of the provisional application until the date of submission of the claim.
5. For the purposes of this Article, the definition of ‘entry into force of this Agreement’ provided for in Article 41.5 shall not apply.
Article 17.24. Responsible Business Conduct
1. Without prejudice to Chapter 33, each Party shall encourage covered investments to incorporate into their internal policies internationally recognised principles and guidelines of corporate social responsibility or responsible business conduct, such as the OECD Guidelines for Multinational Enterprises, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, and the UN Guiding Principles on Business and Human Rights.
2. The Parties reaffirm the importance of investors conducting a due diligence process to identify, prevent, mitigate, and account for the environmental and social risks and impacts of their investment.
Section D. RESOLUTION OF INVESTMENT DISPUTES AND INVESTMENT COURT SYSTEM
Subsection I. Scope and Definitions
Article 17.25. Scope and Definitions
1. This Section applies to a dispute between a claimant of one Party and the other Party arising from an alleged breach under Article 17.9(2) or Article 17.11(2), or under Section C, which allegedly causes loss or damage to the claimant or its locally established enterprise.
2. This Section also applies to counterclaims in accordance with Article 17.31.
3. A claim with respect to the restructuring of debt of a Party shall be decided in accordance with Annex 17-G.
4. For the purposes of this Section:
(a) ‘claimant’ means an investor of a Party that is a party to an investment dispute with the other Party and that seeks to submit or has submitted a claim, pursuant to this Section, either:
(i) acting on its own behalf; or
(ii) acting on behalf of a locally established enterprise which it owns or controls; the locally established enterprise shall be treated as a national of another Contracting State for the purposes of Article 25(2)(b) of the ICSID Convention;
(b) ‘disputing parties’ means the claimant and the respondent;
(c) ‘ICSID Additional Facility Rules’ means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes;
(d) ‘ICSID Convention’ means the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington on 18 March 1965;
(e) ‘locally established enterprise’ means a juridical person established in the territory of a Party, and owned or controlled by an investor of the other Party (45);
(f) ‘New York Convention’ means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958;
(g) ‘non-disputing Party’ means Chile, if the respondent is the EU Party, or the EU Party, if the respondent is Chile;
(h) ‘proceedings’, unless otherwise specified, means proceedings before the Tribunal or Appeal Tribunal under this Section;
(i) ‘respondent’ means Chile, if the claimant is an investor of the EU Party, or the European Union or the Member State concerned, as determined pursuant to Article 17.28, if the claimant is an investor of Chile;
(j) ‘third-party funding’ means any funding provided to a disputing party, by a person who is not a disputing party, to finance part or all of the cost of the proceedings in return for remuneration dependent on the outcome of the dispute or in the form of a donation or grant (46);
(k) ‘UNCITRAL Arbitration Rules’ means the Arbitration Rules of the United Nations Commission on International Trade Law; and
(l) ‘UNCITRAL Transparency Rules’ means the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration.
Subsection 2. Alternative Dispute Resolution and Consultations
Article 17.26. Mediation
1. The disputing parties may at any time agree to have recourse to mediation.
2. Recourse to mediation is voluntary and without prejudice to the legal position of either disputing party.
3. Mediation procedures shall be governed by the rules set out in Annex 17-H and, where available, rules on mediation adopted by the Sub-Committee (47). The Sub-Committee shall make best efforts to ensure that the rules on mediation are adopted no later than the first day of the provisional application or entry into force of this Agreement, as the case may be, and in any event no later than two years after such date.
4. The Sub-Committee shall, upon the date of entry into force of this Agreement, establish a list of six individuals of high moral character and recognised competence in the fields of law, commerce, industry or finance who may be relied upon to exercise independent judgment and who are willing and able to serve as mediators.
5. The mediator shall be appointed by agreement of the disputing parties. The disputing parties may jointly request the President of the Tribunal to appoint a mediator from the list established pursuant to this Article or, in the absence of such list, from individuals proposed by either Party. Mediators shall comply with Annex 17-I, mutatis mutandis.
6. Once the disputing parties agree to have recourse to mediation, the time limits set out in Articles 17.27(5), 17.27(8), 17.54(10) and 17.55(5) shall be suspended from the date on which it was agreed to have recourse to mediation until the date on which either disputing party decides to terminate the mediation, by way of written notice to the mediator and the other disputing party. At the request of both disputing parties, the Tribunal or the Appeal Tribunal shall stay the proceedings.
Article 17.27. Consultations and Amicable Resolution
1. A dispute may, and should as far as possible, be settled amicably through negotiations, good offices or mediation and, where possible, before the submission of a request for consultations pursuant to this Article. Such settlement may be agreed at any time, including after proceedings pursuant to Sub-section 5 have commenced.
2. A mutually agreed solution between the disputing parties pursuant to paragraph 1 shall be notified to the non-disputing Party within 15 days of that mutually agreed solution being reached. Each disputing party shall abide by and comply with any mutually agreed solution reached in accordance with this Article or with Article 17.26. The Sub-Committee shall keep under surveillance the implementation of such mutually agreed solution, and the Party to the mutually agreed solution shall regularly report to the Sub-Committee on the implementation of such solution.
3. If a dispute cannot be settled as provided for in paragraph 1 of this Article, a claimant of a Party alleging a breach of the provisions referred to in Article 17.25(1) and seeking to submit a claim shall submit a request for consultations to the other Party.
4. The request shall contain the following information:
(a) the name and address of the claimant and, if such request is submitted on behalf of a locally established enterprise, the name, address and place of incorporation of the locally established enterprise;
(b) a description of the investment and of its ownership and control;
(c) the provisions referred to in Article 17.25(1) alleged to have been breached;
(d) the legal and factual basis for the claim, including the measure alleged to be inconsistent with the provisions referred to in Article 17.25(1);
(e) the relief sought and the estimated amount of damages claimed; and
(f) information concerning the ultimate beneficial owner and corporate structure of the claimant and evidence establishing that the claimant is an investor of the other Party and that it owns or controls the investment and, if it acts on behalf of a locally established enterprise which it owns or controls, that locally established enterprise.
5. Unless the disputing parties agree to a longer period, consultations shall commence within 60 days of the date of submission of the request for consultations.
6. Unless the disputing parties agree otherwise, the place of consultations shall be:
(a) Santiago, if the consultations concern an alleged breach by Chile;
(b) Brussels, if the consultations concern an alleged breach by the European Union; or
(c) the capital of the Member State concerned, if the consultations concern an alleged breach by that Member State exclusively.
7. The disputing parties may agree to hold consultations through videoconference or other means if appropriate.
8. The request for consultations shall be submitted:
(a) within three years of the date on which the claimant or, if the claimant acts on behalf of the locally established enterprise, the date on which the locally established enterprise, first acquired, or should have first acquired, knowledge of the measure alleged to be inconsistent with the provisions referred to in Article 17.25(1) and of the loss or damage alleged to have been incurred thereby; or
(b) within two years of the date on which the claimant or, if the claimant acts on behalf of the locally established enterprise, the date on which the locally established enterprise ceases to pursue claims or proceedings before a domestic tribunal or court under the law of a Party, and, in any event, no later than five years after the date on which the claimant or, if the claimant acts on behalf of the locally established enterprise, the date on which the locally established enterprise first acquired, or should have first acquired, knowledge of the measure alleged to be inconsistent with the provisions referred to in Article 17.25(1) and of the loss or damage alleged to have been incurred thereby.
9. In the event that the claimant has not submitted a claim pursuant to Article 17.30 within 18 months of submitting the request for consultations, the claimant shall be deemed to have withdrawn its request for consultations and, if applicable, the notice requesting a determination of the respondent pursuant to Article 17.28, and may not submit a claim under this Section with respect to the same alleged breach. That period may be extended by agreement between the disputing parties involved in the consultations.
10. A continuing breach may not renew or interrupt the periods set out in paragraph 8.
11. If the request for consultations concerns an alleged breach of this Agreement by the EU Party, it shall be sent to the European Union. If an alleged breach of this Agreement by a Member State is identified in accordance with Article 17.28, the request for consultations shall also be sent to the Member State concerned.
Subsection 3. Submission of a Claim and Conditions Precedent
Article 17.28. Request for Determination of the Respondent
1. If the dispute cannot be settled within 90 days of the submission of the request for consultations, the request concerns an alleged breach of this Agreement by the EU Party and the claimant intends to initiate proceedings pursuant to Article 17.30, the claimant shall deliver a notice to the European Union requesting a determination of the respondent.
2. The notice shall identify the measures in respect of which the claimant intends to initiate proceedings. If a measure of a Member State is identified, such notice shall also be sent to the Member State concerned.
3. The EU Party shall, after having made a determination, inform the claimant as soon as possible, and in any case no later than 60 days after the date of receipt of the notice referred to in paragraph 1, as to whether the European Union or a Member State shall be the respondent (48).
4. If the claimant has not been informed of the determination within 60 days of delivering the notice referred to in paragraph 3, the respondent shall be:
(a) the Member State, if the measure or measures identified in the notice referred to in paragraph 1 are exclusively measures of a Member State; or
(b) the European Union, if the measure or measures identified in the notice referred to in paragraph 1 include measures of the European Union.
5. If the claimant submits a claim pursuant to Article 17.30, it shall do so on the basis of the determination communicated as referred to in paragraph 3 of this Article and, if no such determination has been communicated to the claimant, on the basis of paragraph 4 of this Article.
6. If either the European Union or a Member State acts as respondent following a determination made pursuant to paragraph 3, neither the European Union nor the Member State concerned may assert the inadmissibility of the claim or lack of jurisdiction of the Tribunal, or otherwise assert that the claim or award is unfounded or invalid, on the grounds that the proper respondent should be or should have been the European Union rather than the Member State, or vice versa.
7. The Tribunal and the Appeal Tribunal shall be bound by the determination made pursuant to paragraph 3 or, if no such determination has been communicated to the claimant, on the basis of paragraph 4.
8. Nothing in this Agreement or in the applicable rules on dispute settlement shall prevent the exchange of all information relating to a dispute between the European Union and the Member State concerned.
Article 17.29. Requirements for a Submission of a Claim
1. Before submitting a claim, the claimant shall:
(a) withdraw any pending claim or proceedings before any domestic or international court or tribunal under domestic or international law concerning any measure alleged to constitute a breach of the provisions referred to in Article 17.25(1);
(b) provide a written waiver that it will not initiate any claim or proceedings before any domestic or international court or tribunal under domestic or international law concerning any measure alleged to constitute a breach of the provisions referred to in Article 17.25(1);
(c) provide a declaration that it will not enforce any award rendered pursuant to this Section before such award has become final pursuant to Article 17.56, and that it will not seek to appeal, review, set aside, annul, revise or initiate any other similar proceedings before any domestic or international court or tribunal with respect to an award issued pursuant to this Section.
2. The Tribunal shall dismiss a claim by a claimant who has submitted another claim to the Tribunal or to any other domestic or international court or tribunal concerning the same measure as that alleged to be inconsistent with the provisions referred to in Article 17.25(1), unless the claimant withdraws such pending claim. This paragraph shall not apply if the claimant submits a claim to a domestic court or tribunal seeking interim injunctive or declaratory relief.
3. For the purposes of this Article, the claimant includes the investor and, if the investor acted on behalf of the locally established enterprise, the locally established enterprise. In addition, for the purposes of subparagraph (a) of paragraph 1 and paragraph 2, the claimant also includes:
(a) if the claim is submitted by an investor acting on its own behalf, all persons who, directly or indirectly, have an ownership interest in, or are controlled by, the investor and claim to have suffered the same loss or damage (49) as the investor; or
(b) if the claim is submitted by an investor acting on behalf of a locally established enterprise, all persons who, directly or indirectly, have an ownership interest in, or are controlled by, the locally established enterprise and claim to have suffered the same loss or damage (50) as the locally established enterprise.
Article 17.30. Submission of a Claim
1. If the dispute cannot be settled within six months of the submission of the request for consultations and, if applicable, at least three months have elapsed from the submission of the notice requesting a determination of the respondent pursuant to Article 17.28, the claimant may, provided that it satisfies the requirements set out in this Article and in Article 17.32, submit a claim to the Tribunal.
2. A claim may be submitted to the Tribunal under one of the following sets of rules on dispute settlement:
(a) the ICSID Convention, provided that both the respondent and the State of the claimant are parties to the ICSID Convention;
(b) the ICSID Additional Facility Rules, provided that either the respondent or the State of the claimant is a party to the ICSID Convention;
(c) the UNCITRAL Arbitration Rules; or
(d) any other rules agreed by the disputing parties on request of the claimant.
3. The rules on dispute settlement referred to in paragraph 2 shall apply subject to the rules set out in this Section, as supplemented by any rules adopted by the Sub-Committee.
4. All the claims identified by the claimant in the submission of its claim pursuant to this Article shall be based on information identified in its request for consultations pursuant to subparagraphs (c) and (d) of Article 17.27(4).
5. Claims submitted in the name of a class composed of a number of unidentified claimants, or submitted by a representative intending to conduct the proceedings acting in the interests of a number of identified or unidentified claimants that delegate all decisions relating to the proceedings on their behalf, shall not be admissible.
6. For greater certainty, a claimant may not submit a claim under this Section if its investment has been made through fraudulent misrepresentation, concealment, corruption or conduct amounting to an abuse of process.
Article 17.31. Counterclaims
1. The respondent may submit a counterclaim on the basis of a claimant's failure to comply with an international obligation applicable in the territories of both Parties (51), arising in connection with the factual basis of the claim (52).
2. The counterclaim shall be submitted no later than in the respondent's counter-memorial or statement of defence, or at a later stage in the proceedings if the Tribunal decides that the delay was justified in the circumstances.