Title
INVESTMENT AGREEMENT FOR THE COMESA COMMON INVESTMENT AREA
Preamble
The Governments of Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe, Member States of the Common Market for Eastern and Southern Africa (COMESA);
REAFFIRMING the importance of having sustainable economic growth and development in all Member States and the region through joint efforts in liberalising and promoting intra-COMESA trade and investment flows;
RECALLING the decision of the Third COMESA Summit of the Authority held on 29 June 1998 in Kinshasa, Democratic Republic of Congo, to establish the COMESA Common Investment Area (hereinafter referred to as " CCIA "), in order to enhance COMESA's attractiveness and competitiveness for promoting foreign direct and cross border investments;
RECALLING the establishment of the COMESA Free Trade Area (FTA) on 31 st October 2000 and recognising that direct investment is an important source of finance for sustaining the pace of economic, industrial, infrastructure and technology development; hence, the need to attract higher and sustainable level of direct investment flows in COMESA;
RECALLING that the Member States have agreed under paragraph 1 of Article 159 of the Treaty Establishing COMESA to encourage and facilitate private investment flows into COMESA;
RECOGNISING that particular pressures on the balance of payments of a Member State in the process of economic development or economic transition may necessitate the use of restrictions to ensure, inter alia, the maintenance of a level of financial reserves adequate for the implementation of its programme of economic development or economic transition;
DETERMINED to realise the vision of COMESA to establish a competitive COMESA Common Investment Area through a more liberal and transparent investment environment by 1 st January 2010; and
BEARING IN MIND that the measures agreed upon shall contribute towards
The realisation of the Common Market and the achievement of sustainable development in the region.
HAVE AGREED AS FOLLOWS:
Body
Article 1. Definitions
For the purposes of this Agreement:
1. "CCIA means the area that covers the whole of the territories of Member States of COMESA as defined by their respective legislation.
2. "CCIA Committee means the Committee referred to under Article 7 of this Agreement.
3. "COMESA means the Common Market for Eastern and Southern Africa established under Article 1 of the COMESA Treaty.
4. "COMESA investor" means:
(i) a natural person of a Member State; or
(ii) a juridical person of a Member State,
Making an investment in another Member State, in accordance with the laws and regulations of the Member State in which the investment is made. For the purposes of this definition:
For purposes of the definition of COMESA investor:
(i) "Natural person means a person having citizenship of a Member State in accordance with its applicable laws and regulations; and
(ii) "Juridical person" means any legal entity duly constituted or otherwise organised under the applicable laws and regulations of a Member State provided that a juridical person owned or controlled by foreign nationals shall not qualify as a COMESA investor unless it maintains substantial business activity in the Member State in which it is duly constituted or organised.
The concept of substantial business activity requires an overall examination, on a case-by-case basis, of all the circumstances, including, inter alia:
(a) the amount of investment brought into the country;
(b) the number of jobs created;
(c) its effect on the local community; and
(d) the length of time the business has been in operation.
5. "COMESA Treaty means the Treaty establishing the Common Market for Eastern and Southern Africa.
6. "Council means the Council of Ministers of COMESA as established under Article 7 of the COMESA Treaty.
7. "economic activities means all economic activities of the economy, including services, where investment, as defined in this Article, is taking place.
8. "freely convertible currency means a convertible currency as classified by the International Monetary Fund or any currency that is widely traded in international foreign exchange market.
9. "investment means assets admitted or admissible in accordance with the relevant laws and regulations of the COMESA Member State in whose territory the investment is made, and includes:
(a) moveable and immovable property and other related property rights such as mortgages, liens and pledges;
(b) claims to money, goods, services or other performance having economic value;
(c) stocks, shares and debentures of companies and interest in the property of such companies;
(d) intellectual property rights, technical processes, know-how, goodwill and other benefits or advantages associated with a business operating in the territory of the COMESA Member States in which the investment is made;
(e) business concessions conferred by law or under contract, including:
(i) build, operate, own/transfer, rehabilitate, expand, restructure and/or improve infrastructure;
(ii) concessions to search for, cultivate, extract or exploit natural resources; and
(f) such other activities that may be declared by the Council as investments;
But excludes: goodwill market share, whether or not it is based on foreign-origin trade, or rights to trade; claims to money deriving solely from commercial contracts for the sale of goods and services to or from the territory of a Member State to the territory of another Member State, or a loan to a Member State or to a Member State enterprise; a bank letter of credit; or the extension of credit in connection with a commercial transaction, such as trade financing.
10. "measures" means any legal, administrative, judicial or policy decision that is taken by a Member State, directly relating to and affecting an investment in its territory, after this Agreement has come into effect.
11. "Member State means a Member State of COMESA that has ratified or acceeded to this Agreement.
12. Returns mean the amount yielded by an investment and in particular, though not exclusively, includes dividends, profit, interest, capital gains or other equivalent charges, royalties and other payments deriving from licenses, franchises, concessions and other similar rights.
13. "Sensitive List set out in Annex C of this Agreement means those:
(a) economic activities listed by a Member State that are partially Or wholly excluded from foreign investment pursuant to Article 18 of this Agreement; or
(b) measures affecting investment listed by Member States pursuant to Article 18 of this Agreement; or
(c) a list of the forms of investment that a Member State may wish to exclude from the definition of investment under Article 1 of this Agreement.
14. "Temporary Exclusion List set out in Annex D means those:
(a) economic activities listed by a Member State where foreign investment is temporarily excluded for a given period of time pursuant to Article 18 of this Agreement; or
(b) measures affecting investment listed by Member States that are temporarily excluded from the scope of all or part of this Agreement for a given period of time pursuant to Article 18 of this Agreement; or
(c) a list of the forms of investment that a Member State may wish to exclude temporarily for a given period of time from the definition of investment under Article 1 of this Agreement.
Part ONE. Comesa Common Investment Area
Article 2. Objectives of Part One
The objective of Part One of this Agreement is to establish a competitive COMESA Common Investment Area with a more liberal and transparent investment environment among Member States in order to:
(a) substantially increase the free flow of investments into COMESA from both COMESA and non-COMESA sources;
(b) jointly promote COMESA as an attractive investment area;
(c) strengthen and increase the competitiveness of COMESA's economic activities;
(d) gradually eliminate investment restrictions and conditions which may impede investment flows and the operation of investment projects in COMESA.
Article 3. Features
The CCIA shall be an area where:
(a) there is a coordinated COMESA investment co-operation programme that will generate increased investments from COMESA and nonCOMESA sources;
(b) there is freer flow of capital, skilled labour and professionals, and technology amongst Member States. Towards this end, Member States shall make every effort to:
(i) extend national treatment to COMESA investors by 2010;
(ii) ensure all economic activities are opened for investment to COMESA investors by 2010; and
(c) the private sector is a partner and fully participates in investment and related activities of the Common Market as provided for under Article 151 of the COMESA T reaty.
Article 4. Transparency
1. Each Member State shall make available to the CCIA Committee before the Agreement comes into effect all relevant measures, which pertain to, or affect, the operation of this Agreement. This shall also apply to
International agreements pertaining to or affecting investment to which a Member State is also a signatory.
2. Each Member State shall publish all relevant measures which pertain to, or affect, the operation of this Agreement.
3. Each Member State shall, within 30 days of the enactment or the introduction of any new measure or any changes in existing measures which affect investments or its commitments under this Agreement inform the CCIA Committee and the general public.
4. Nothing in this Agreement shall require any Member State to provide confidential information, the disclosure of which would impede law enforcement, or otherwise be contrary to the public interest, or which would prejudice legitimate commercial interests of particular enterprises, public or private.
Article 5. General Obligations
To realise the objectives referred to in Article 2, the Member States shall:
(a) undertake appropriate actions to promote transparency and consistency in the application and interpretation of their investment laws, regulations and administrative procedures;
(b) strengthen the process of facilitation, promotion and liberalisation which would contribute continuously and significantly to achieving the objective of a more liberal and transparent investment environment;
(c) take appropriate actions to enhance the attractiveness of their investment environment for direct investment flows;
(d) take such reasonable actions as may be available to them to ensure observance of the provisions of this Agreement by the regional and local government authorities within their territories.
(e) not waive or otherwise derogate from or offer to waive or otherwise derogate from measures concerning labour, public health, safety or the environment as an encouragement for the establishment, expansion or retension of investments.
Article 6. International Multilateral Agreements
Member States shall, where they have not done so, endeavour to accede to:
(a) the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards;
(b) the International Convention on Settlement of Investment Disputes between States and Nationals of Other States;
(c) the Convention Establishing the Multilateral Investment Guarantee Agency;
(d) the Agreement Establishing the African Trade Insurance Agency; and
(e) any other multilateral agreement designed to promote or protect investment.
Article 7. Institutional Arrangements
1. The following COMESA organs shall be responsible for administering this Agreement:
(a) The Meeting of Ministers responsible for investment of each Member State, which for the purposes of this Agreement, shall be known as the COMESA Common Investment Area Committee ("CCIA Committtee); and
(b) The Co-ordinating Committee on Investment composed of senior officials from Ministeries responsible for investment and Chief Executives of Investment Promotion Agencies as may be designated by each Member State, which for the purposes of this Agreement, shall be known as the Co-ordinating Committee on Investment (CCI)
2. The CCIA Committee shall be responsible for:
(a) overall supervision of the implementation of this Agreement;
(b) making decisions or issuing directions that may require to be made under Articles 18(3), 18(4), 24(3) and 25(5) of this Agreement;
(c) recommending to the Council any review of this Agreement when necessary;
(d) making recommendations to the Council on any policy issues that need to be made to enhance the objectives of this Agreement. For example the development of common minimum standards relating to investment in areas such as:
(i) environmental impact and social impact assessments
(ii) labour standards
(iii) respect for human rights
(iv) Conduct in conflict zones
(v) corruption
(vi) Subsidies; and
(e) conducting a review of the effectiveness of this Agreement and its implementation in the light of its objectives four years after its entry into force and every four years thereafter.
3. The CCI shall be responsible for:
(a) monitoring and keeping under constant review the implementation of this Agreement;
(b) co-ordinating the implementation of this Agreement;
(c) submiting its reports and recommendations to the CCIA Committee, either on its own initiative or upon the request of the CCIA Committee, concerning the implementation of the provisions of this Agreement;
(d) preparation and development of action plans for the implementation of this Agreement; and
(e) carrying out such other functions as are assigned to it by or under this Agreement.
4. The COMESA Secretariat shall provide secretarial services to the institutions described in paragraph 1.
5. The Manager of the COMESA Regional Investment Agency or their representative shall participate in all the meetings of the organs described under paragraph 1 as an ex-officio member
6. Subject to this Agreement and any directions given by Council, the CCIA Committee and the CCI shall meet as often as necessary for the proper discharge of their functions and shall determine their own Rules of Procedure.
7. Subject to the Rules of Procedure agreed pursuant to paragraph 6 of this Article, the key representatives of the private sector and other stakeholders as may be determined by each Member State, shall participate in the meetings of the institutions described under paragraph 1 of this Article as ex-officio members.
Article 8. Implementing Programmes and Action Plans
1. Member States shall, for the implementation of the obligations under this Agreement, undertake the joint development and implementation of the following programmes:
(a) co-operation and facilitation programme as specified in Schedule I annexed hereto;
(b) promotion and awareness programme as specified in Schedule II annexed hereto; and
(c) liberalisation programme as specified in Schedule III annexed hereto.
2. Member States shall submit action plans for the implementation of programmes mentioned in paragraph 1 to the CCIA Committee within a year of ratifying or acceding to this Agreement.
3. The Action Plans shall be reviewed by the CCIA Committee every two years to ensure that the objectives of this Agreement are achieved.
Article 9. Modification of Schedules, Annexes and Action Plans
1. Any modification to or withdrawal of any commitments by Member States in Schedules I, II and III and Action Plans thereof shall be subject to the consideration of the CCIA Committee.
2. Member States may amend the lists in Annexes B, C and D at their discretion subject to the preservation of rights for a COMESA investor who has commenced the process of establishing an investment or who has established an investment pursuant to this Agreement. Member States shall inform the CCIA Committee of any amendments made to Annexes B, C and D.
3. Any modification to Schedules I, II, III and Action Plans thereof, and the Annexes to this Agreement shall be included in any revised Schedules, Action Plans or Annexes published later than such modification. The COMESA Secretariat shall notify the Member States of such modification within one month.
Article 10. Relation to Dispute Settlement
No investor shall have recourse to dispute settlement for any matter relating to Part One of this Agreement.
Part TWO. Rights and Obligations
Article 11. Objectives of Part Two
The objectives of Part Two of this Agreement are to provide COMESA investors with certain rights in the conduct of their business within an overall balance of rights and obligations between investors and Member States.
Article 12. Coverage
1. This Agreement shall only apply to investments of COMESA investors that have been specifically registered pursuant to this Agreement with the relevant authority of the Member State in which the investment is made as set out in Annex B.
2. Subject to paragraph 1 of this Article, this Agreement shall cover investments of COMESA investors made in the territory of Member States in accordance with their laws and regulations prior to or after entry into force of this Agreement.
3. Subject to paragraph 1 of this Article, this Agreement shall not be applicable to claims arising out of disputes which occurred prior to entry into force of the Agreement.
Article 13. Investor Obligation
COMESA investors and their investments shall comply with all applicable domestic measures of the Member State in which their investment is made.
Article 14. Fair and Equitable Treatment
1. Member States shall accord fair and equitable treatment to COMESA investors and their investments, in accordance with customary international law. Fair and equitable treatment includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world.
2. Paragraph 1 of this Article prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to covered investments and does not require treatment in addition to or beyond what is required by that standard.
3. For greater certainty, Member States understand that different Member States have different forms of administrative, legislative and judicial systems and that Member States at different levels of development may not achieve the same standards at the same time. Paragraphs 1 and 2 of this Article do not establish a single international standard in this context.
Article 15. Transfer of Assets
Taking account of the need to facilitate, promote and enhance the movement of capital in the CCIA, and according to their laws and regulations, Member States shall accord to COMESA investors the right to:
(a) repatriate investment returns;
(b) repatriate funds for repayment of loans;
(c) repatriate proceeds from compensation upon expropriation, the liquidation or sale of the whole or part of the investment including an appreciation or increase of the value of the investment capital;
(d) transfer payments for maintaining or developing the investment project, such as funds for acquiring raw or auxillary materials, semi-finished products as well as replacing capital assets; and
(e) remit the unspent earnings of expatriate staff of the investment project.