Section C. INVESTMENT PROTECTION
Article 10.13. 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 10.14. Investment and Regulatory Measures
1. Article 10.2 (Right to Regulate) of this Chapter applies to this Section in accordance with the following paragraphs:
2. The provisions of this Section shall not be interpreted as a commitment from a Party that it will not change its legal and regulatory framework, including in a manner that may 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:
(a) in the absence of any specific commitment under law or contract to issue, renew or maintain that subsidy or grant; or
(b) in accordance with any terms or conditions attached to the issuance, renewal, modification, reduction or maintenance of that subsidy or grant,
does not constitute a breach of obligations of this Section (Investment Protection), even if there is loss or damage to the covered investment as a result.
4. For greater certainty, nothing in this Section shall be construed as preventing a Party from discontinuing the granting of a subsidy (14) or requesting its reimbursement, where such action has been ordered by one of its competent authorities listed in [Annex X], or as requiring that Party to compensate the investor therefor.
Article 10.15. Treatment of Investors and of Covered Investments
1. Each Party shall accord in its territory to covered investments of the other Party, and to investors 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 referenced in paragraph 1 if a measure or series of measures constitutes (15):
(a) denial of justice in criminal, civil or administrative proceedings; or
(b) fundamental breach of due process in judicial and administrative proceedings; or
(c) manifest arbitrariness; or
(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 a breach of paragraph 2, a tribunal may take into account specific and unambiguous representations made to an investor by a Party, and upon which the investor reasonably relied in deciding to make or maintain the covered investment, but that the Party subsequently frustrated.
4. Full protection and security refers to the Party's obligations relating to physical security of investors and covered investments. (16)
5. For greater certainty, a breach of another provision of this Agreement, or 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, establish a breach of this Article. In order to ascertain whether the measure breaches this Article, the Tribunal shall consider whether a Party has acted inconsistently with paragraphs 1 to 4.
Article 10.16. Treatment In Case of Strife
1. Investors of a Party whose covered investments suffer losses owing to war or other armed conflict, [revolution] or other civil strife, a state of national emergency (17) in the territory of the other Party shall be accorded by that Party, with respect to restitution, indemnification, compensation or other form of settlement, treatment no less favourable than that accorded by that Party to its own investors, or to the investors of any non-Party.
2. Without prejudice to paragraph 1 of this Article, 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 prompt, adequate and effective restitution or compensation by the other Party, if these losses result from:
(a) requisitioning of their covered investment or a part thereof by the latterâs armed forces or authorities; or
(b) destruction of their covered investment or a part thereof by the latterâs armed forces or authorities, which was not required by the necessity of the situation.
The amount of such compensation shall be determined in accordance with the provisions of paragraph 2 of Article 10.17 (Expropriation), from the date of requisitioning or destruction until the date of actual payment.
Article 10.17. Expropriation (18)
1. Neither Party shall nationalise or expropriate a covered investment either directly or indirectly through measures having an effect equivalent to nationalisation or expropriation (hereinafter referred to as "expropriation") except:
(a) for a public purpose;
(b) in a non-discriminatory manner;
(c) on payment of prompt, adequate and effective compensation;
(d) in accordance with due process of law.
2. The compensation referred to in paragraph 1 shall:
(a) be paid without delay;
(b) be equivalent to the fair market value of the expropriated investment at the time 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
(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 licenses 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 Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreements ("TRIPS Agreement").(19)
Article 10.18. Transfers (20)
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 investment;
(c) interest, royalty payments, management fees, and technical assistance and other fees;
(d) payments made under a contract entered into by the investor, or its investment, including payments made pursuant to a loan agreement;
(e) earnings and other remuneration of personnel engaged from abroad and working in connection with an investment;
(f) payments made pursuant to Article 10.16 (Treatment in Case of Strife) and Article 10.17 (Expropriation); and
(g) payments arising under the application of Section D [Resolution of Investment Disputes and Investment Court System].
2. Neither Party may 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, investments in the territory of the other Party.
Article 10.19. Subrogation
If a Party, or any agency designated by the Party, makes a payment to an investor of the 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 these rights to the extent of the subrogation.
Article 10.20. Denial of Benefits
A Party may deny the benefits of this Chapter to an investor of the other Party or to a covered investment 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 where accorded to that investor or covered investment, including where the measures prohibit transactions with a natural or juridical person who owns or controls either of them.
Article 10.21. Termination
1. In the event that this Agreement is terminated pursuant to Article [X.X] (Duration), this Section and Section C (Resolution of Investment Disputes and Investment Court System) shall continue to be effective for a further period of 5 years from the date of termination, with respect to investments made before the date of termination of the present Agreement.
2. The period referred to in paragraph 1 shall be extended for a single additional period of 5 years, provided that no other investment protection agreement between the Parties is in force.
3. This Article shall not apply in the case where the provisional application of this Agreement is terminated and this Agreement does not enter into force.
Article 10.22. Relationship with other Agreements
1. Upon the entry into force of this Agreement, the agreements between Member States of the European Union and Chile listed in Annex XXXX (Agreements between the Member States of European Union and Chile) including the rights and obligations derived therefrom, shall cease to have effect and shall be replaced and superseded by this Agreement.
2. In the event of the provisional application in accordance with paragraph 4 of Article xxxx (Entry into Force), including this Chapter, the application of the agreements listed in Annex XXXX (Agreements between the Member States of the European Union and Chile), as well as the rights and obligations derived therefrom, shall be suspended as of the date of provisional application. In the event that the provisional application of this Agreement is terminated and this Agreement does not enter into force, the suspension shall cease and the agreements listed in Annex XXXX (Agreements between the Member States of the European Union and Chile) shall have effect. ]
3. Notwithstanding paragraphs 1 and 2, a claim may be submitted pursuant to an agreement listed in Annex XXXX (Agreements between the Member States of the European Union and Chile), 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 the 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 this Agreement, including this Chapter, is terminated and this Agreement does not enter into force, a claim may be submitted pursuant to this Agreement, 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 this Agreement; 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 âentry into force of this Agreementâ provided for in paragraph 7 of Article [X.X] (Entry into Force) shall not apply.
Article 10.23. Responsible Business Conduct
1. Without prejudice to the TSD Chapter, each Party shall encourage covered investments to incorporate into their internal policies internationally recognised principles and guidelines of Corporate Social Responsibility / Responsible Business Conduct such as the OECD Guidelines for MNEs, the ILO Declaration for MNEs, and the UN Guiding Principles on Business and Human Right.
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 its investment.
[Add ICS section + annexes]
Section D. RESOLUTION OF INVESTMENT DISPUTES AND INVESTMENT COURT SYSTEM
Subsection I. Scope and Definitions
Article 10.24. Scope and Definitions
1. This Section shall apply to a dispute between, on the one hand, a claimant of one Party and, on the other hand, the other Party arising from an alleged breach under Article 10.7(2) (National Treatment) or Article 10.9(2) (Most Favoured Nation Treatment) of Section B (Liberalisation of Investments) or Section C (Investment Protection), which breach allegedly causes loss or damage to the claimant or its locally established company.
2. Where applicable, this Section shall also apply to counterclaims in accordance with article 10.30 (Counterclaims).
3. Acclaim with respect to the restructuring of debt of a Party shall be decided in accordance with Annex [numbering tbd] (Public debt) to Section C (Investment Protection).
4. For the purposes of this Section:
(a) "proceeding", unless otherwise specified, means a proceeding before the Tribunal or Appeal Tribunal under this Section;
(b) "disputing parties" means the claimant and the respondent;
(c) "claimant" means an investor of a Party, as defined in Article 10.1 (Definitions) of Section A (General Provisions), that is a party to an investment dispute with the other Party which 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 company shall be treated as a national of another Contracting State for the purposes of Article 25 (2) (b) of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 18 March 1965 (ICSID-Convention).
(d) "non-disputing Party" means either Chile, when the respondent is the European Union or a Member State of the European Union; or the European Union, when Chile is the respondent.
(e) "respondent" means either Chile, or in the case of the European Union, either the European Union or the Member State of the European Union concerned as determined pursuant to Article 10.27 (Request for Determination of the Respondent).
(f) "locally established enterprise" means a juridical person established in the territory of one Party, and owned or controlled by an investor of the other Party. (21)
(g) "UNCITRAL Transparency Rules" means the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration.
(h) "Third Party funding" means any funding provided to a disputing party, by a natural or legal person who is not a party to the dispute, to finance part or all of the cost of the proceedings in return for a remuneration dependent on the outcome of the dispute or in the form of a donation or grant. (22)
(i) "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;
(j) "ICSID Convention" means the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18, 1965;
(k) "New York Convention" means the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958; and
(l) "UNCITRAL Arbitration Rules" means the arbitration rules of the United Nations Commission on International Trade Law.
Subsection 2. Alternative Dispute Resolution and Consultations
Article 10.25. 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 [numbering tbd] (Mediation Mechanism for Investor-to-State Disputes) and, where available, rules on mediation adopted by the [Investment] Committee. (23) The [Investment] 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 [...] Committee shall, upon the 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 a list, from individuals proposed by either Party.
6. Once the disputing parties agree to have recourse to mediation, the time-limits set out in Articles 10.26 (5) (Consultations and amicable resolution), 2.22 (7) (Consultations and amicable resolution), 10.53 (10) (Provisional Award) and 10.54 (5) (Appeal Procedure) shall be suspended from the date on which it was agreed to have recourse to mediation to 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 parties, the Tribunal or the Appeal Tribunal shall stay the proceedings.
Article 10.26. 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 under this Section have been 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 the mutually agreed solution being agreed. Each disputing party shall abide by and comply with any mutually agreed solution teached in accordance with this article or with Article 10.25 (Mediation). The [..] Committee shall keep under surveillance the implementation of such mutually agreed solutions and the Party to the mutually agreed solution shall regularly report to the [..] Committee on the implementation of such solution.
3. Where a dispute cannot be resolved as provided for under paragraph 1, a claimant of a Party alleging a breach of the provisions referred to in Article 10.24 (1) (Scope and Definitions) 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, where such request is submitted on behalf of a locally established company, the name, address and place of incorporation of the locally established company
(b) a description of the investment and of its ownership and control;
(c) the provisions referred to in Article 10.24 (1) (Scope and Definitions) alleged to have been breached;
(d) the legal and factual basis for the claim, including the measure alleged to be inconsistent with the provisions in Article 10.24 (1) (Scope and Definitions);
(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, where it acts on behalf of a locally established enterprise, that it owns or controls the locally established enterprise.
5. Unless the disputing parties agree to a longer period, consultations shall commence no later than 60 days of the submission of the request for consultations.
Unless the disputing parties agree otherwise, the place of consultation shall be:
(a) Santiago de Chile where the consultations concern an alleged breach by Chile;
(b) Brussels where the consultations concern an alleged breach by the European Union; or
(c) the capital of the Member State of the European Union concerned, where the consultations concern an alleged breach by that Member State exclusively.
The disputing parties may agree to hold consultations through videoconference or other means where appropriate.
7. The request for consultations must 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 10.24 (1) (Scope and Definitions) 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 tribunal or court under the domestic law of a Party; and, in any event, no later than 5 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 10.24 (1) (Scope and Definitions) and of the loss or damage alleged to have been incurred thereby.
8. In the event that the claimant has not submitted a claim pursuant to Article 10.29 (Submission of a Claim) within 18 months of submitting the request for consultations, the claimant shall be deemed to have withdrawn its request for consultations and, where applicable, the notice requesting a determination of the respondent pursuant to Article 10.27 (Request for Determination of the Respondent) and may not submit a claim under this Section with respect to the same alleged breach. This period may be extended by agreement between the parties involved in the consultations.
9. A continuing breach may not renew or interrupt the periods set out in paragraph 7.
10. In the event that the request for consultations concerns an alleged breach of the Agreement by the European Union, or by a Member State of the European Union, it shall be sent to the European Union. Where an alleged breach of the Agreement by a Member State of the European Union is identified, it shall also be sent to the Member State concerned.
Subsection 3. Submission of a Claim and Conditions Precedent
Article 10.27. 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 the Agreement by the European Union or a Member State of the European Union and the claimant intends to initiate proceedings pursuant to Article 10.29 (Submission of a Claim), 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. Where a measure of a Member State of the European Union is identified, such notice shall also be sent to the Member State concerned.
3. The European Union shall, after having made a determination, inform the claimant as soon as possible, and in any case no later than 60 days of the receipt of the notice referred to in paragraph 1, as to whether the European Union or a Member State of the European Union shall be the respondent (24).
4. If the claimant has not been informed of the determination within 60 days after delivering the notice referred to in paragraph 1, the respondent shall be:
(a) the Member State, if the measure or measures identified in the notice are exclusively measures of a Member State of the European Union; or
(b) the European Union, if the measure or measures identified in the notice include measures of the European Union.
5. If the claimant submits a claim pursuant to Article 10.29 (Submission of a Claim), it shall do so on the basis of such determination and, if no such determination has been communicated to the investor, on the basis of the application of paragraph 4.