Article 10.16. Transfers
1. Each Party shall permit all transfers relating to a covered investment to be made freely without restriction or delay into and out of its territory. Those transfers include:
(a) contributions to capital, such as the principal and additional amounts to maintain, develop or increase the covered investment;
(b) profits, dividends, capital gains, interest, royalty payments, management fees and other returns;
(c) proceeds from the sale of all or part of the covered investment or from the partial or complete liquidation of the covered investment;
(d) payments made under a contract entered into by the investor of a Party, or a 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 Articles 10.17 and 10.18; and
(g) payments of damages pursuant to an award issued by the Tribunal under Section D.
2. Each Party shall permit returns in kind relating to a covered investment to be made as authorised or specified in a written agreement between the Party and a covered investment or an investor of the other Party.
3. Each Party shall permit transfers relating to a covered investment to be made in a freely convertible currency at the market rate of exchange prevailing for that currency on the date of transfer.
4. Notwithstanding paragraph 2, a Party may restrict transfers of returns in kind relating to a covered investment in circumstances where it could otherwise restrict such transfers under this Agreement.
Article 10.17. Compensation for Losses
1. Each Party shall accord to investors of the other Party, whose covered investments suffer losses owing to war or other armed conflict, revolution, a state of national emergency, insurrection, riot or any other similar event, with respect to restitution, indemnification, compensation or other form of settlements, treatment no less favourable than the treatment it accords to its own investors or investors of any third country, whichever is the most favourable.
2. Without prejudice to paragraph 1, investors of a Party shall be accorded adequate and effective restitution or compensation if, in any of the situations referred to in that paragraph, they suffer losses in the territory of the other Party resulting from:
(a) requisitioning of their covered investment or a part thereof by its forces or authorities; or
(b) destruction of their covered investment or a part thereof by its forces or authorities, which was not required by the necessity of the situation.
3. Payments resulting from compensation in accordance with paragraph 2 shall be freely convertible and transferable.
Article 10.18. Expropriation and Compensation
1. A Party shall not expropriate or nationalise a covered investment, either directly or indirectly, through measures having an effect equivalent to expropriation or nationalisation (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 in accordance with paragraphs 2 to 4; and
(d) in accordance with due process of law.
2. Paragraph 1 shall be interpreted in accordance with Annex 10-A (Expropriation).
3. 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;
(c) not reflect any change in value occurring because the intended expropriation had become known earlier;
(d) be fully realisable and freely transferable without delay to the country designated by the investor; and
(e) include interest at a commercially reasonable rate from the date of expropriation until the date of payment.
4. Valuation criteria shall include going concern value, asset value including the declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value.
5. The compensation shall be paid in the currency of the country of which the investor is a national or in a freely convertible currency.
6. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights in accordance with the TRIPS Agreement, or to the revocation, limitation, or creation of intellectual property rights, to the extent that such issuance, revocation, limitation, or creation is consistent with Chapter 25 (Intellectual Property) and the TRIPS Agreement. (43)
Article 10.19. Subrogation
1. If a Party or its designated agency makes a payment under a guarantee, contract of insurance or other form of indemnity that it has entered into in respect of a covered investment, the other Party shall recognise the subrogation or transfer of any right or claim of the investor under this Chapter in respect of that covered investment. The Party or its designated agency shall be entitled by virtue of subrogation to exercise the rights and enforce the claims of that investor. The subrogated or transferred right or claim shall not be greater than the original right or claim of that investor.
2. If a Party or the agency designated by the Party has made a payment to its investor and has taken over rights and claims of the investor, that investor shall not, unless authorised to act on behalf of the Party or the agency designated by the Party making the payment, pursue those rights and claims against the other Party.
Section D. Resolution of Investment Disputes
Article 10.20. Definitions
For the purposes of this Section:
1. "claimant" means a natural person or an enterprise of a Party, other than a branch or representative office, that has made a covered investment, and seeks to submit or has submitted a claim pursuant to this Section, acting either:
(a) on its own behalf; or
(b) on behalf of a locally established enterprise which it owns or controls. (44)
2. "disputing parties" means the claimant and the respondent;
3. "disputing party" means either the claimant or the respondent;
4. "ICSID" means the International Centre for Settlement of Investment Disputes established by the ICSID Convention;
5. "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;
6. "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;
7. "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;
8. "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;
9. "non-disputing Party" means either Mexico, if the respondent is the European Union or a Member State of the European Union; or the European Union, if Mexico is the respondent;
10. "respondent" means either Mexico, 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 10.24;
11. "third party funding" means any funding provided by a natural or legal person who is not a disputing party but who enters into an agreement with a disputing party in order 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;
12. "UNCITRAL Arbitration Rules" means the Arbitration Rules of the United Nations Commission on International Trade Law, approved by the United Nations General Assembly on 15 December 1976, as revised in 2010.
Article 10.21. Scope
1. This Section applies to disputes between a Party and a claimant of the other Party arising from an alleged breach of Articles 10.7.2, 10.8.2 (45) or Section C which allegedly causes loss or damage to the claimant or its locally established enterprise.
2. Annex 10-B (Public Debt) applies to claims with respect to the restructuring of debt of a Party.
3. The Tribunal and the Appeal Tribunal constituted under this Section shall not decide claims that fall outside the scope of this Section.
Article 10.22. Consultations
1. A dispute should as far as possible be settled amicably. Such a settlement may be agreed at any time, including after a claim has been submitted pursuant to Article 10.26.
2. Unless the disputing parties agree to a longer period, consultations shall be held within 60 days after the submission of the request for consultations pursuant to paragraph 5.
3. Unless the disputing parties agree otherwise, the place of consultations shall be:
(a) Mexico City, if the measures challenged are measures of Mexico;
(b) Brussels, if the measures challenged include a measure of the European Union; or
(c) the capital of the Member State of the European Union, if the measures challenged are exclusively measures of that Member State.
4. If the disputing parties agree, consultations may be held through videoconference or other means if appropriate.
5. The claimant shall submit to the other Party a request for consultations setting out:
(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 establishment or incorporation, if applicable, of the locally established enterprise;
(b) the provisions referred to in Article 10.21.1 alleged to have been breached;
(c) the legal and the factual basis for each claim, including the measure or measures alleged to be in breach of the provisions referred to in Article 10.21.1;
(d) the relief sought and the estimated amount of damages claimed; and
(e) evidence establishing that the claimant is an investor of the other Party and that it owns or controls the covered investment and, if it acts on behalf of a locally established enterprise, that it owns or controls the locally established enterprise.
If a request for consultations is submitted by more than one claimant or on behalf of more than one locally established enterprise, the information in subparagraphs (a) and (e) shall be submitted for each claimant or each locally established enterprise, as the case may be.
6. The requirements of the request for consultations set out in paragraph 5 shall be met with sufficient specificity to allow the respondent to effectively engage in consultations and to prepare its defence.
7. A request for consultations shall be submitted within three years after the date on which the claimant or, as applicable, the locally established enterprise, first acquired or should have first acquired, knowledge of the alleged breach and knowledge that the claimant or, as applicable, the locally established enterprise, incurred loss or damage thereby.
8. Notwithstanding paragraph 7, in the event that the request for consultations concerns a measure or measures of the European Union or a Member State of the European Union and the time period referred to in paragraph 7 has elapsed while the claimant or, as applicable, the locally established enterprise pursued proceedings relating to the same measure or measures before a tribunal or court under the law of a Party, the request for consultations shall be submitted:
(a) within two years after the date on which the claimant or, as applicable, the locally established enterprise ceases to pursue such proceedings before a tribunal or court under the law of a Party; and
(b) in any case, no later than 10 years after the date on which the claimant or, as applicable, its locally established enterprise, first acquired or should have first acquired, knowledge of the measure or measures alleged to be in breach of the provisions referred to in Article 10.21.1 and of the loss or damage alleged to have been incurred thereby.
9. A request for consultations concerning an alleged breach by the European Union or a Member State of the European Union shall be sent to the European Union. If the claimant identifies in its request for consultations a measure or measures of a Member State of the European Union, it shall also be sent to the Member State concerned.
10. If the investor has not submitted a claim pursuant to Article 10.26 within 18 months after submitting the request for consultations, the investor is deemed to have withdrawn its request for consultations and, if applicable, its notice requesting a determination of the respondent pursuant to Article 10.24 and shall not submit a claim under this Section with respect to the same measure or measures. This period may be extended by agreement of the parties involved in the consultations.
Article 10.23. Mediation
1. The disputing parties may at any time agree to have recourse to mediation.
2. Recourse to mediation is without prejudice to the legal position or rights of either disputing party under this Chapter and is governed by the rules agreed to by the disputing parties including, if available, any rules for mediation that may be adopted by the Joint Council.
3. The mediator shall be appointed by agreement of the disputing parties. The disputing parties may also jointly request the President of the Tribunal to appoint the mediator.
4. The disputing parties shall endeavour to reach a resolution of the dispute within 60 days after the appointment of the mediator.
5. If the disputing parties agree to have recourse to mediation, the time limits set out in Articles 10.22.7, 10.22.8, 10.48.7 and 10.49.3 shall be suspended from the date on which the disputing parties agreed to have recourse to mediation to the date on which either disputing party decides to terminate the mediation. A decision by a disputing party to terminate the mediation shall be transmitted by way of a letter to the mediator and the other disputing party.
Article 10.24. Determination of the Respondent for Disputes with the European Union or a Member State of the European Union
1. If the dispute cannot be settled within 90 days after the submission of the request for consultations, the request concerns an alleged breach of the provisions referred to in Article 10.21.1 by the European Union or a Member State of the European Union and the claimant intends to submit a claim pursuant to Article 10.26, the claimant shall deliver to the European Union a notice requesting a determination of the respondent.
2. The notice referred to in paragraph 1 shall identify the measure or measures in respect of which the claimant intends to submit a claim. If a measure of a Member State of the European Union is identified, the notice shall also be sent to the Member State concerned.
3. The European Union shall, after having made a determination, inform the claimant within 60 days after 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.
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. The claimant may submit a claim pursuant to Article 10.26 on the basis of the determination made pursuant to paragraph 3 and, if no such determination has been communicated to the claimant within 60 days, in accordance with paragraph 4.
6. If the European Union or a Member State of the European Union is the respondent, pursuant to paragraphs 3 or 4, neither the European Union, nor the Member State of the European Union may assert the inadmissibility of the claim or the lack of jurisdiction of the Tribunal, or otherwise object to the claim or award on the ground that the respondent was not properly determined pursuant to paragraph 3 or identified in accordance with paragraph 4.
7. The Tribunal and the Appeal Tribunal shall be bound by the determination made pursuant to paragraph 3 and, if no such determination has been communicated to the claimant within 60 days, the identification in accordance with paragraph 4.
8. Nothing in this Agreement or the applicable dispute settlement rules referred to in Article 10.26.2 shall prevent the exchange of all information relating to a dispute between the European Union and the Member State concerned.
Article 10.25. Procedural and other Requirements for the Submission of a Claim to the Tribunal
1. A claimant may only submit a claim pursuant to Article 10.26 if the claimant:
(a) delivers to the respondent, with the submission of a claim, its written consent to the settlement of the dispute by the Tribunal in accordance with the procedures set out in this Section;
(b) allows at least 180 days to elapse after the submission of the request for consultations and, if applicable, at least 90 days to elapse after the submission of the notice requesting a determination of the respondent;
(c) has delivered a notice requesting a determination of the respondent in accordance with Article 10.24, if applicable;
(d) has fulfilled the requirements related to the request for consultations;
(e) identifies in its claim only the measure or measures alleged to constitute a breach of the provisions referred to in Article 10.21.1 that were identified in its request for consultations;
(f) withdraws or discontinues any existing proceedings before a tribunal or court under domestic or international law with respect to a measure or measures alleged to constitute a breach referred to in its claim;
(g) waives in writing its right to initiate any proceedings before a tribunal or court under domestic or international law with respect to a measure or measures alleged to constitute a breach referred to in its claim; and
(h) declares that it will not enforce any award issued pursuant to this Section before such award has become final pursuant to Articles 10.48.8, 10.48.9 or 10.49.2, and will not seek to appeal, review, set aside, annul, revise or initiate any other similar proceedings before an international or domestic court or tribunal, as regards an award pursuant to this Section.
2. If the claim submitted pursuant to Article 10.26 is for loss or damage to a locally established enterprise or to an interest in a locally established enterprise that the claimant owns or controls directly or indirectly, the requirements in subparagraphs 1(f) and (g) of this Article apply both to the claimant and the locally established enterprise. The requirement to withdraw or discontinue existing proceedings pursuant to subparagraph 1(f) of this Article also applies:
(a) if the claim is submitted by a claimant acting on its own behalf, to all persons who, directly or indirectly, have an ownership interest in or are controlled by the claimant and claim to have suffered the same loss or damage (46) as the claimant; or
(b) if the claim is submitted by a claimant acting on behalf of a locally established enterprise, to 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 as the locally established enterprise.
3. The requirements of subparagraphs 1(f) and (g) and paragraph 2 do not apply in respect of a locally established enterprise if the respondent or the claimant's host state has deprived the claimant of control of the locally established enterprise, or has otherwise prevented the locally established enterprise from fulfilling those requirements.
4. On request of the respondent, the Tribunal shall decline jurisdiction if the claimant or, as applicable, the locally established enterprise fails to fulfil any of the requirements of paragraphs 1 and 2.
5. The waiver provided pursuant to subparagraph 1(g) shall cease to apply if the claim is rejected on the basis of the failure to meet the nationality requirements to bring a claim under this Section.
6. If the European Union or a Member State of the European Union is the respondent, subparagraphs 1(f) and (g) shall not prevent the claimant from seeking interim measures of protection before the courts or tribunals of the respondent. If Mexico is the respondent, subparagraphs 1(f) and (g) shall not prevent the claimant from seeking interim measures of protection, or from initiating or continuing proceedings for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the law of the respondent.
7. For greater certainty, an investor shall not submit a claim under this Section if the investment has been made through fraudulent misrepresentation, concealment, corruption or conduct amounting to an abuse of process.
8. A Party shall not submit a claim under this Section.
Article 10.26. Submission of a Claim to the Tribunal
1. If a dispute has not been resolved through consultations, a claim may be submitted by:
(a) a claimant on its own behalf; or
(b) a claimant, on behalf of a locally established enterprise which it owns or controls directly or indirectly.
For greater certainty, a locally established enterprise may not submit a claim against the Party in which it is established.
2. The claimant shall submit the claim under any of the following dispute settlement rules:
(a) the ICSID Convention and ICSID Rules of Procedure for Arbitration Proceedings;
(b) the ICSID Additional Facility Rules if the conditions for submitting a claim pursuant to subparagraph (a) do not apply;
(c) the UNCITRAL Arbitration Rules; or
(d) any other rules by agreement of the disputing parties.
3. If the claimant proposes rules pursuant to subparagraph 2(d), the respondent shall reply to the claimant's proposal within 20 days after its receipt. If the disputing parties have not agreed on such rules within 30 days after receipt of the proposal, the investor may submit a claim under the rules provided for in subparagraphs 2(a), (b) or (c).
4. If a claim is submitted pursuant to subparagraphs 2(b), (c) or (d), the disputing parties may agree on the place of the proceedings. If the disputing parties fail to reach an agreement, the division of the Tribunal hearing the claim shall determine the place in accordance with the applicable dispute settlement rules, provided that the place shall be in the territory of a State that is a contracting state to the New York Convention.
5. The dispute settlement rules applicable in accordance with paragraph 2 are those that are in effect on the date that the claim is submitted to the Tribunal under this Section, subject to the specific rules set out in this Section. The Joint Council may adopt rules supplementing the applicable dispute settlement rules and any such rules shall be binding on the Tribunal and the Appeal Tribunal.
6. A claim shall be deemed submitted for dispute settlement under this Section when the request or notice initiating proceedings is received in accordance with the applicable dispute settlement rules.
7. Each Party shall notify the other Party of the place where the notices and other documents shall be delivered by a claimant pursuant to this Section. Each Party shall ensure this information is made publicly available.
Article 10.27. Concurrent Proceedings
If a claim is brought pursuant to this Section and Chapter 31 (Dispute Settlement) or another international agreement, and there is a potential for overlapping compensation or the other international claim could have a significant impact on the resolution of the claim brought pursuant to this Section, the Tribunal shall, as soon as possible after hearing the disputing parties, stay its proceedings or otherwise ensure that proceedings brought pursuant to Chapter 31 (Dispute Settlement) or another international agreement are taken into account in its decision, order or award.
Article 10.28. Consent to the Resolution of the Dispute by the Tribunal
1. The respondent consents to the resolution of the dispute by the Tribunal in accordance with the procedures set out in this Section.
2. The consent referred to in paragraph 1 and the submission of a claim to the Tribunal pursuant to this Section shall be deemed to satisfy the requirements of:
(a) Article 25 of the ICSID Convention and Chapter II of Schedule C of the ICSID Additional Facility Rules regarding written consent of the disputing parties; and
(b) Article II of the New York Convention for an agreement in writing.
Article 10.29. Third Party Funding
1. A disputing party benefiting from third party funding shall notify to the other disputing party and to the division of the Tribunal hearing the claim or, if that division is not composed, to the President of the Tribunal, the name and address of the third party funder.
2. Such notification shall be made at the time of submission of a claim, or, if the funding agreement is concluded or the donation or grant is made after the submission of a claim, without delay as soon as the funding agreement is concluded or the donation or grant is made.
Article 10.30. Tribunal
1. A Tribunal is hereby established to hear claims submitted pursuant to Article 10.26.
2. The Joint Council shall, upon the entry into force of this Agreement, appoint nine Members to the Tribunal. Three of the Members shall be nationals of a Member State of the European Union, three shall be nationals of Mexico and three shall be nationals of third countries. (47)
3. The Joint Council may decide to increase or to decrease the number of the Members by multiples of three. Additional appointments shall be made on the same basis as provided for in paragraph 2.