Title

AGREEMENT BETWEEN THE GOVERNMENT OF HUNGARY AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES FOR THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS

Preamble

The Government of Hungary and the Government of the United Arab Emirates (hereinafter referred to as the "Contracting Parties");

Desiring to intensify economic cooperation to the mutual benefit of both Contracting Parties, especially with respect to investments made by investors of one Contracting Party in the territory of the other Contracting Party;

Recognizing that these objectives should be achieved in a manner consistent with the promotion and protection of public health, environment, security, safety, and sustainable development as well as with the promotion of internationally recognized principles of corporate social responsibility;

Intending to create and maintain favourable conditions for investments of investors of one Contracting Party in the territory of the other Contracting Party; and

Being conscious that the promotion and reciprocal protection of investments, according to the national laws and regulations of either Contracting Party and to the present Agreement, will stimulate the business initiative for sustainable economic development;

Aiming to secure an overall balance of rights and obligations between investors and the host state;

Investments are made in accordance with the laws and regulations of the country in whose territory the investments are made;

Have agreed as follows:

Body

Article 1. Definitions

For the purposes of this Agreement:

1. The term "investment" shall comprise every kind of asset, which is owned directly or indirectly by an investor invested in connection with economic activities of one Contracting Party in the territory of the other Contracting Party in accordance with the laws and regulations of the latter and shall include, in particular, though not exclusively:

a. movable and immovable property as well as any other rights in rem such as mortgages, liens, pledges, usufruct and similar rights;

b. shares, stocks and debentures of companies or any other form of participation in a company;

c. claims to money or to any performance having an economic value associated with an investment;

d. intellectual and industrial property rights, which are protected under the domestic law of the State where the investment is made, including copyrights, trade marks, patents, designs, rights of breeders, technical processes, know-how, trade secrets, geographical indications, trade names and goodwill associated with an investment;

e. any right conferred by law or under contract and any licenses and permits pursuant to law that involve commitment of capital or other resources, assumption of risk and profit, excluding the concessions to search for, extract, cultivate or exploit natural resources;

f. investments shall not cover claim to money that arises solely from:

i. loan to purchase goods or services from an enterprise from a Contracting Party to an enterprise of the other Contracting Party;

ii. grants, credit to finance a commercial transaction such as trade financing.

Any alteration of the form in which assets are invested shall not affect their character as investment on condition that this alteration is made in accordance with the laws and regulations of the Contracting Party in the territory of which the investment has been made.

2. The term "investor" shall mean any natural or legal person of one Contracting Party that has made an investment in the territory of the other Contracting Party.

a. The term "natural person" shall mean any individual having the citizenship of either Contracting Party in accordance with its laws.

b. The term "legal person" shall mean with respect to either Contracting Party, any legal entity incorporated or constituted in accordance with its laws having its central administration or principal place of business in the territory of one Contracting Party, including also sovereign wealth funds and development funds.

3. The term "returns" shall mean amounts yielded by an investment and in particular, though not exclusively, includes profits, interest, capital gains, dividends, royalties or fees.

4. The term "territory" shall mean:

a. in the case of Hungary, the territory over which Hungary exercises, in conformity with international law, sovereignty, sovereign rights or jurisdiction;

b. in the case of the United Arab Emirates, it means the territorial seas, airspace and submarine areas over which the United Arab Emirates exercises in accordance with international law and the law of the United Arab Emirates sovereign rights; including the Exclusive Economic Zone and the mainland and islands under its jurisdiction in respect of any activity carried out on its water, seabed and subsoil in connection with the exploration for the natural resources by virtue of its law and international law.

5. The term "freely convertible currency" means the currency that is widely used to make payments for international transactions and widely exchanged in principal international exchange markets provided it is not contrary to the regulations of either of the Contracting Parties, and independently from how the International Monetary Fund determines the scope of freely convertible, or freely usable currency.

Article 2. Promotion and Protection of Investments

1. Each Contracting Party shall encourage favourable conditions for investors of the other Contracting Party to make investments in its territory, and shall admit such investments in accordance with its laws and regulations.

2. Each Contracting Party shall accord in its territory to investments of the other Contracting Party and to investors with respect to their investments fair and equitable treatment and full protection and security in accordance with paragraphs 3 to 6.

3. With respect to the investments the following measures or series of measures constitute breach of the obligation of fair and equitable treatment:

a. denial of justice in criminal, civil or administrative proceedings; or

b. fundamental breach of due process, including a fundamental breach of transparency and obstacles to effective access to justice, 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. harassment, coercion, abuse of power or similar bad faith conduct;

Upon request of a Contracting Party, the Contracting Parties may review the content of the obligation to provide fair and equitable treatment.

4. For greater certainty, "full protection and security" refers to the Contracting Party's obligations to ensure the physical security of investors and investments and does not require treatment in addition to or beyond that is required by the customary international law minimum standard of treatment of aliens.

5. A breach of another provision of this agreement or any other international agreement cannot be established as a claim for breach of this article.

6. The fact that a measure breaches domestic law does not, in and of itself, establish a breach of this Article; a tribunal must consider whether a Contracting Party has acted inconsistently with the obligations in paragraph 2.

7. The Contracting Party shall not encourage investment by lowering domestic environmental, labour or occupational health and safety legislation or by relaxing core labour standards. Where a Contracting Party considers that the other Contracting Party has offered such an encouragement, it may request consultations with the other Contracting Party and the two Contracting Parties shall consult with a view to avoiding any such encouragement.

Article 3. Investment and Regulatory Measures.

1. The provisions of this Agreement shall not affect the right of the Parties to regulate within their territories through measures necessary to achieve legitimate policy objectives, such as the protection of public health, safety, environment or public morals, social or consumer protection or promotion and protection of cultural diversity.

2. For greater certainty a Contracting Party's decision not to issue, renew or maintain a subsidy

a. in the absence of any specific commitment under law or contract to issue, renew or maintain that subsidy; or

b. in accordance with terms or conditions attached to the issuance, renewal or maintenance of the subsidy, does not constitute a breach of the provisions of this Agreement.

Nothing in this Agreement shall be construed as preventing a Contracting Party from discontinuing the granting of a subsidy or requesting its reimbursement where such measure is necessary in order to comply with international obligations between the Parties or has been ordered by a competent court, administrative tribunal or other competent authority, or requiring that Contracting Party to compensate the investor therefor.

Article 4. National and Most-Favoured-Nation Treatment.

1. Each Contracting Party shall in its territory accord to an investor of the other Contracting Party and to an investment, treatment not less favourable than the treatment it accords, in like situations to its own investors and their investments with respect to the conduct, operation, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

2. Each Contracting Party shall in its territory accord to investors of the other Contracting Party and their investments treatment not less favourable than that it accords, in like situations, to investors of a third country or to their investments with respect to the operation, conduct, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

The concept in like situation requires an overall examination on a case-by-case basis of all situations of an investment including inter alia, its effects on the person of the third party, its effects upon the local population or the environment, the sector in which the investment is made. The examination shall not be limited to or biased toward any one of these factors.

3. For greater certainty, the "treatment" referred to in paragraph 2 does not include procedures for the resolution of investment disputes between investors and states provided for in other international investment treaties and any other agreements. Substantive obligations in other international investment treaties and other trade agreements do not in themselves constitute "treatment", and thus cannot give rise to a breach of this Article, absent measures adopted or maintained by a Party pursuant to those obligations.

4. The National Treatment and Most-Favoured-Nation Treatment provisions of this Agreement shall not apply to advantages accorded by a Contracting Party pursuant to its obligations as a member of a customs, economic, or monetary union, a common market or a free trade area.

5. The Contracting Parties understand the obligations of a Contracting Party as a member of a customs, economic, or monetary union, a common market or a free trade area to include obligations arising out of an international agreement or reciprocity arrangement of that customs, economic, or monetary union, common market or free trade area.

6. The provisions of this Article shall not be construed so as to oblige one Contracting Party to extend to the investors of the other Contracting Party, or to the investments or returns of investments of such investors the benefit of any treatment, preference or privilege, which may be extended by the former Contracting Party by virtue of:

a. any forms of multilateral agreements on investments to which either of the Contracting Parties is or may become a party;

b. any international agreement or arrangement relating wholly or mainly to taxation.

Article 5. Performance Requirements

1. A Contracting Party may not impose or enforce the following requirements, or enforce a commitment or undertaking, in connection with the expansion, management, conduct or operation of a covered investment or any other investment in its territory;

a. to export a given level or percentage of a good or service,

b. to achieve a given level or percentage of domestic content,

c. to purchase, use or accord a preference to a good produce or service provided in its territory, or to purchase a good or service from a person in its territory,

d. to relate the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with that investment,

e to restrict sales of a good or service in its territory that the investment produces or provides by relating those sales to the volume or value of its exports or foreign exchange earnings, or

f. to transfer technology, a production process or other proprietary knowledge to a person in its territory.

2. This Article is not subject to the Most Favoured Nation Treatment.

Article 6. Compensation for Losses

1, When investments or returns of investments of investors of either Contracting Party suffer losses owing to war, armed conflict, a state of national emergency, revolt, insurrection, riot or other similar events in the territory of the other Contracting Party, they shall be accorded by the latter Contracting Party treatment, as regards restitution, indemnification, compensation or other settlement, not less favourable than that which the latter Contracting Party accords to its own investors or to investors of any third State whichever is more favourable.

2. Without prejudice to paragraph 1 of this Article, investors of one Contracting Party who in any of the events referred to in that paragraph suffer losses in the territory of the other Contracting Party resulting from:

a. requisitioning of their investment or a part thereof by its forces or authorities;

b. destruction of their investment or a part thereof by its forces or authorities which was not caused in combat action or was not required by the necessity of the situation

shall be accorded by the Contracting Party, in whose territory the losses occurred, just, adequate and effective restitution or compensation. Compensation shall include interest at a commercially reasonable rate from the date of losses occurred until the day of payment.

Article 7. Expropriation

1. Investments or returns of investors of either Contracting Party shall not be subject to nationalisation, direct or indirect expropriation, or any measures having equivalent effect (hereinafter referred to as "expropriation") in the territory of the other Contracting Party except for a public purpose. The expropriation shall be carried out under due process of law, on a non-discriminatory basis and shall be accompanied by provisions for the payment of prompt, adequate and effective compensation. Such compensation shall amount to the fair market value of the investment expropriated immediately before expropriation or impending expropriation became public knowledge (whichever is earlier), shall include interest at a commercially reasonable rate from the date of expropriation to the date of actual payment and shall be made without delay, be effectively realizable and be freely transferable in a freely convertible currency.

2. For the purpose of this Article:

a. indirect expropriation results from a measure or series of measures of a Contracting Party having an equivalent effect to direct expropriation without formal transfer of title or outright seizure;

b. the determination of whether a measure or series of measures by a Contracting Party, in a given specific situation, constitutes an indirect expropriation requires a case-by-case, fact-based inquiry that considers, among other factors: (i) the economic impact of the measure or series of measures, although the sole fact that a measure or series of a measure of a Contracting Party has an adverse effect on the economic value of an investment does not establish that an indirect expropriation has occurred, (ii) the duration of the measure or series of measures by a Contracting Party, (iii) the character of the measure or series of measures, notably their object and content.

c. For greater certainty, non-discriminatory measures that the Contracting Parties take for reason of public purpose which are taken in good faith, which are not arbitrary, and which are not disproportionate in light of their purpose, shall not constitute indirect expropriation.

3. Where a Contracting Party expropriates the assets of investors that are constituted in its territory in which investors of the other Contracting Party participate, it shall ensure that the provisions of this Article are applied in a way that it guarantees such investors compensation in accordance with this Article.

4. An investor of a Contracting Party affected by the expropriation carried out by the other Contracting Party shall have the right to prompt review of its case, including valuation of its investment and the payment of compensation in accordance with the provisions of this Article by a judicial authority or another competent and independent authority of the latter Contracting Party.

Article 8. Transfers

1. The Contracting Parties shall permit the free transfer of payments related to investments and returns. The transfers shall be made in a freely convertible currency and in accordance with the laws and regulations of the Contracting Party where investments were made without any restriction and undue delay. Such transfers shall include in particular, though not exclusively:

a. capital and additional amounts to maintain or increase the investment;

b. returns as defined in paragraph 3 of Article 1 of this Agreement;

c. the amounts required for payment of expenses which arise from the operation of the investment, such as payment of royalties and license fees or other similar expenses;

d. payments in connection with contracts, including loan agreements;

e. proceeds of the total or partial sale or liquidation of the investment;

f. the wages or other similar earnings of natural persons engaged from abroad, in connection with an investment, subject to the laws and regulations of the Contracting Party, in which the investment has been made;

g. compensations owed pursuant to Articles 6. and 7. of this Agreement;

h. payments arising out of settlement of a dispute under Article 10. of this Agreement;

2. The transfers shall be made after the investor fulfilled all of its related financial obligations according to the laws and regulations in force of the Contracting Party in the territory of which the investment was made.

3. For the purpose of this Agreement, exchange rates shall be the rate published — in accordance with the laws and regulations of the Contracting Party, which has admitted the investment - by the financial institution effecting the transfer unless otherwise agreed. Should such rate not exist the official rate has to be applied unless otherwise agreed.

4. Nothing in this Article shall be construed to prevent a Contracting Party from applying in an equitable and non-discriminatory manner and not in a way that would constitute a disguised restriction on transfers, its laws relating to:

a. bankruptcy, insolvency or protection of the rights of creditors;

b. issuing, trading or dealing in securities;

c. criminal or penal offences;

d. financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities; and

e. the satisfaction of judgements in adjudicatory proceedings.

Article 9. Subrogation

1. If a Contracting Party or its designated agency makes a payment to its own investors under a guarantee or insurance it has accorded in respect of an investment in the territory of the other Contracting Party, the latter Contracting Party shall recognize:

a. the assignment, whether under the law or pursuant to a legal transaction in that country, of any right or claim by the investor to the former Contracting Party or its designated agency, as well as,

b. that the former Contracting Party or its designated agency is entitled by virtue of subrogation to exercise the rights and enforce the claims of that investor and shall assume the obligations related to the investment.

2. The subrogated rights or claims shall not exceed the original rights or claims of the investor.

3. Notwithstanding paragraph 1 of this Article, a guarantee or insurance between the investor and the Home State or its designated agency shall be valid only following the prior approval of the Host State.

Article 10. Settlement of Investment Disputes between a Contracting Party and an Investor of the other Contracting Party

1. Any dispute which may arise between an investor of one Contracting Party and the other Contracting Party in connection with an investment in the territory of that other Contracting Party shall, as far as possible be settled amicably and be subject to negotiations between the parties in dispute.

2. The negotiations start on the date when the disputing investor of one Contracting Party requests negotiations in written notification from the other Contracting Party. In order to facilitate the amicable settlement of the dispute the written notice shall specify the name and address of the disputing investor, the issues, the factual basis of the dispute, the findings of the disputing investor (including any supporting documents) and their presumed legal basis. Unless otherwise agreed, at least one consultation shall be held within 90 days from the date on which the disputing investor of one Contracting Party has requested negotiations from the other Contracting Party in written notification.

3. If any dispute between an investor of one Contracting Party and the other Contracting Party cannot be thus settled within a period of six months following the date on which such negotiations were requested in written notification as mentioned in paragraph 2 of this Article, and the disputing investor intends to submit the dispute to one of the fora listed under paragraphs 4 a-e the disputing investor shall at the very latest simultaneously to submitting any dispute to one of the tribunals, notify the other Contracting Party in a written notice of its intention.

4. If such dispute between an investor of one Contracting Party and the other Contracting Party cannot be thus settled within a period of six months following the date on which such negotiations were requested in written notification, the investor shall be entitled to submit the dispute either to:

a. the competent court of the Contracting Party in the territory of which the investment has been made; or

b. the International Centre for Settlement of Investment Disputes (ICSID) pursuant to the applicable provisions of the Convention on the Settlement of Investment Disputes between States and Nationals of other States opened for signature at Washington D.C. on 18 March 1965, in the event both Contracting Parties have become a party to this Convention; or

c. an ad hoc arbitral tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL). The parties to the dispute may agree in writing to deviate from these arbitration Rules; or

d. under the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes ("Additional Facility Rules of ICSID"), provided that either the disputing Contracting Party or the Contracting Party of the investor, but not both, is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of other States, opened for signature at Washington D. C. on March 18, 1965; or

e. any other form of dispute settlement agreed upon by the parties to the dispute.

5. Once a dispute has been submitted to one of the forums for dispute settlement mentioned in paragraph 4 a-e. the investor shall have no recourse to the other dispute settlement fora listed in paragraph 4-e.

6. Aninvestor may submit a dispute as referred to in paragraph 1 and 2 to arbitration in accordance with paragraph 4 only if not more than three years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage.

Article 11. Governing Law

1. When rendering its decision, the tribunal shall apply this Agreement as interpreted in accordance with the Vienna Convention on the Law of Treaties, and other rules and principles of international law applicable between the Contracting Parties. For greater certainty the domestic law of the Contracting Parties shall not constitute part of the applicable law. In case of Hungary the term "domestic law" comprises the law of the European Union. And in case of the United Arab Emirates the domestic law is not applied.

2. The tribunal referred to in Article 10 paragraph 4 b-e. shall not have jurisdiction to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of a Contracting Party. For greater certainty, in determining the consistency of a measure with this Agreement, the tribunal may consider, as appropriate, the domestic law of a Contracting Party as a matter of fact. In doing so, the tribunal shall follow the prevailing interpretation given to the domestic law by the courts or authorities of that Contracting Party and any meaning given to domestic law by the tribunal shall not be binding upon the courts or the authorities of that Contracting Party.

3. A joint interpretation of the Contracting Parties, exchanged through diplomatic channels, interpreting a provision of this Agreement shall be binding on the tribunal, and any decision or award issued by the tribunal must be consistent with that interpretation.

Article 12. Place of Arbitration

The disputing parties may agree on the legal place of any arbitration under the arbitral rules applicable under Article 10 paragraph 4 be. If the disputing parties fail to reach agreement, the tribunal shall determine the place which shall be in the territory of a state that is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards provided both Contracting Parties are signatories of this Convention.

Article 13. Selection of Arbitrators

1. In case of submitting a claim under the Article 10 paragraph 4 b–e. of this Agreement, the tribunal shall be constituted as soon as possible after submission of a claim.

2. Arbitrators appointed shall have expertise or experience in public international law, in particular international investment law. It is desirable that they have expertise or experience in resolution of disputes arising under international investment agreements.

Article 14. Impartiality and Independence of Arbitrators

1. Arbitrators shall be independent and they shall not affiliate with any government. They shall not participate in the consideration of any disputes that would create a direct or indirect conflict of interest. In addition, upon appointment, they shall refrain from acting as counsel or as party-appointed expert or witness in any pending or new investment protection dispute under this or any other international agreement. Arbitrators shall comply with the code of conduct as set out in Annex I in disputes arising out of Article 9.

2. If a disputing party considers that an arbitrator has a conflict of interest, it may invite the Secretary General of the ICSID to issue a decision on the challenge to disqualify such arbitrator. Any notice of a challenge shall be submitted to the Secretary General of the ICSID within 15 days of the date on which the appointment of the challenged arbitrator has been communicated to the disputing party, or within 15 days of the date on which the relevant facts came to the knowledge of the disputing party that proposed the challenge, if the relevant facts could not have reasonably been known at the time of the appointment of the challenged arbitrator.

3. The notice of challenge shall state the grounds on which the challenge is based. Any arbitrator may be challenged in any event before the proceeding is declared closed, if circumstances exist that give rise to justifiable doubts as to the arbitrator's impartiality or independence on the basis of the code of conduct as set out in Annex I. The challenge shall be notified to all other parties, to the arbitrator who is challenged and to the other arbitrators.

4. When an arbitrator has been challenged by a party, all parties may agree to the challenge. The arbitrator may also, after the challenge, withdraw from his or her office. In neither case does this imply acceptance of the validity of the grounds for the challenge. The other disputing party and the challenged arbitrator shall file their statement presenting their position and supporting documents within 15 days after the notice of the challenge.

5. If the other disputing party has not expressed its consent to the challenge or the challenged arbitrator fails to resign within 15 days from the date of the notice of the challenge, the disputing party may request the Secretary General of the ICSID to issue a founded decision on the challenge.

6. The Secretary General of the ICSID shall endeavour to issue the decision within 30 days after receiving submissions from the disputing parties and the challenged arbitrator. If the Secretary General of the ICSID admits the challenge, a new arbitrator shall be appointed.

7. The proceeding shall be suspended upon the filing of the notice of the challenge until a decision on the challenge has been made, except to the extent that the disputing parties agree to continue the proceeding.

Article 15. Awards

1. An award rendered by the tribunal shall be binding only between the disputing parties in respect of the particular case,

2. No punitive or moral damages may be awarded by the tribunal.

3. Where a tribunal makes a final award against respondent or against claimant in the light of a defence, counterclaim, right of set off or other similar claim of this Agreement, the tribunal may award, separately or in combination, only:

a. monetary damages or, if possible restitution of property; and

b. any costs of the arbitration proceedings and attorneys' fees in accordance with this Agreement and the applicable arbitration rules.

4. The tribunal shall order that the costs of arbitration be borne by the unsuccessful disputing party. In exceptional circumstances, the tribunal may apportion costs between the disputing parties if it determines that apportionment is appropriate in the circumstances of the claim. Other reasonable costs, including costs of legal representation and assistance, shall be borne by the unsuccessful disputing party, unless the tribunal determines that such apportionment is unreasonable in the circumstances of the claim. Where only parts of the claims have been successful the costs shall be adjusted proportionately.

5. The tribunal may order security for costs if it considers that there is a reasonable doubt that claimant would be not capable of satisfying a costs award or consider it necessary from other reasons.

Article 16. Enforcement

1. The award shall be executed in accordance with the law of the Contracting Party in the territory of which the investment has been made and the award is relied upon, by the date indicated in the award.

2. Subject to any applicable review procedure, each disputing party shall abide by and comply with an Award rendered by the Tribunal without delay. A disputing party may seek enforcement of an arbitration Award under the ICSID Convention or the New York Convention.

3. Aclaimant or a Host State may not seek enforcement of a final award until: