CHAPTER XVII Investment

Section A     General Aspects

1.1. For the purposes of this Chapter:

[Investment means [every kind of asset and rights of any nature acquired with resources transferred to the territory of a Party or reinvested therein by investors of another Party, and shall include, in particular, although not exclusively:]

[a) an enterprise;]

b) the shares of an enterprise [include share with or without voting rights];

c) the debt instruments of an enterprise [include bonds or convertible debt instruments, stock options and warrants;]:

i) where the enterprise is an affiliate of the investor, or
ii) where the original maturity of the debt instrument is at least three (3) years,

but does not include a debt instrument of a State enterprise, regardless of original maturity;

d) a loan to an enterprise:

i) where the enterprise is an affiliate of the investor, or
ii) where the original maturity of the loan is at least three (3) years,

but does not include a loan, regardless of original maturity, to a State enterprise;

e) an interest in an enterprise that entitles the owner to share in income or profits of the enterprise;

f) an interest in an enterprise that entitles the owner to share in the assets of that enterprise on dissolution, other than a debt instrument or a loan excluded under subparagraphs c) or d) supra;

g) real estate or other property, tangible or intangible, acquired or used for the purpose of economic benefit or other business purposes; and

h) interests arising from the commitment of capital or other resources to the development of economic activity in the territory of another Party, such as under:

i) contracts involving the presence of an investor's property in the territory of another Party, including concessions, or construction or turnkey contracts, or
ii) contracts where remuneration depends substantially on the production, revenues or profits of an enterprise;

but investment does not mean:

i) a debt instrument of the State;

j) claims to money that arise solely from:

i) commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Party to an enterprise in the territory of another Party, or
ii) the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by subparagraph d) supra; or

k) any other claims to money, that do not involve the kinds of interests set out in subparagraphs a) through h) supra;]

[Investment means every kind of asset and rights of any nature acquired with resources transferred to the territory of a Party, or reinvested therein [, by investors of another Party,] such as [but no limited to]:

a) shares and [any] other form of participation in the capital stock of firms constituted or organized pursuant to the legislation of another Party;

b) rights derived from [any type of] contributions made for the purpose of creating economic value (or bonds, claims to money and claims to performance having economic value);

c) movable and immovable property and other property rights such as mortgages, lien, usufruct, and [similar rights];

d) intellectual property rights; and,

e) rights conferred by law or contract to carry out economic and commercial activities;

[but does not include:

a) a payment obligation of the State or a State enterprise and the granting of such credit to the State or a State enterprise; nor

b) claims to money derived exclusively from:

i) commercial contracts for the sale of goods and services by a national or enterprise in the territory of a Party to a national or enterprise in the territory of another Party, or
ii) the granting of credit in relation to a commercial transaction, whose period of maturity is less than three (3) years, such as financing of trade;]]¹

[Investment means every asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms that an investment may take include:

a) an enterprise;

b) shares, stock, and other forms of equity participation in an enterprise;

c) bonds, debentures, other debt instruments, and loans;²

d) futures, options, and other derivatives;

e) turnkey, construction, management, production, concession, revenue-sharing, and other similar contracts;

f) intellectual property rights;

g) licenses, authorizations, permits, and similar rights conferred pursuant to applicable domestic law;^{3 4} and

h) other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages, liens, and pledges;]

[Investment means assets acquired with resources transferred to the territory of a Party, or reinvested therein by investors of another Party for the purpose of obtaining economic benefits, such as:

a) shares or any other type of equity ownership in a company and any other type of joint venture that exists under the legislation of the Party in which the investment is being made;

b) supplementary contributions to the capital assigned to branches by the head office;

c) movable and immovable property, property rights, and other property rights, such as mortgages, liens, usufructs, and easements (servitudes);

d) intellectual property rights such as copyrights and related rights, patents, trademarks, trade names, appellations of origin, geographical indications, industrial designs, utility models, layout designs (topographies) of integrated circuits, trade secrets, and protection of plant varieties;⁵

e) licenses, permits and other rights obtained under public law, including concessions granted by law, administrative act or contract to carry out an economic activity, such as the exploration and exploitation of natural resources, or the construction, conservation and maintenance of works;

f) the reinvestment of profits, which refers to the investment of same in the enterprise that generates them;

g) investments made with local currency which may be transferred abroad;

This definition does not include:

a) assets not directly linked to a productive activity; and

b) loans and other operations resulting in debt, as well as flows of capital related strictly to a commercial transaction;

Any change in the form of the investment does not affect its character as such, provided said change is not a loan or other operation resulting in debt, and is in compliance with the legislation of the Party in whose territory it has been made;]

[The term “investment” means any kind of asset substantially owned or effectively controlled by an investor of one Party in the territory of the other Party in accordance with the latter’s laws, and, in particular, though not exclusively, includes: moveable and immovable property as well as any other property rights such as mortgages, liens and pledges; rights in companies; goodwill; monetary claims and claims to performance; intellectual property rights; concessions and other similar rights;

The term “investment” does not mean real estate or other property, tangible or intangible, not acquired in the expectation or used for the purpose of economic benefit or other business purposes. The term also does not imply stocks or shares (portfolio investment) of companies in one Party acquired for speculative purposes and held for a short-term by nationals of the other Party;]

[The term “investment” means every kind of asset or related rights, provided it has been made pursuant to all the laws and regulations of the Party in whose territory it was done, and shall include, in particular, although not exclusively:

a) movable and immovable property and any related property rights, as well as all other property rights such as easement (servitudes), mortgages, usufruct and liens;

b) shares, and any other kind of economic participation in companies;

c) monetary claims or any other benefit of economic value;

d) intellectual property rights, including copyright, industrial property rights, such as patents, technical processes, trademarks; trade names, industrial designs, know-how, corporate names, and turnkey;

e) concessions conferred by law, an administrative act or under a contract, including concessions to explore, cultivate, extract or exploit natural resources;

Any change relative in the way assets are reinvested shall not affect their nature as an investment, provided such modification is made pursuant to the legislation of the Party in whose territory the investment was made;

Investment shall not be construed to mean external public debt instruments;]

[The term “investment” means every kind of asset invested directly or indirectly by investors from one of the Parties in the territory of another Party, in accordance with the laws and regulations of the latter.⁶ In particular, the following shall be included:

a) movable and immovable property, as well as other property rights such as mortgages, liens and pledges;

b) shares, stock, and any other form of participation in a company;

c) claims to money and claims to performance having an economic value; loans shall be included only when they are directly linked to a specific investment;

d) intellectual or intangible property rights, including in particular, copyrights, patents, industrial designs, trademarks, trade names, technical procedures, know-how and goodwill;

e) state economic concessions conferred by law or under contract, including concessions to search for, cultivate, extract or exploit natural resources;

The Parties may establish exceptions and reservations with respect to sectors and regulations of the investment policy that will be included in an annex and will be part of this Agreement;]

[Investment means every kind of asset and rights of any nature, other than foreign loans, acquired or used for the purpose of:

a) establishing an enterprise of another Party, or to increase the capital of an existing enterprise of another Party, for the purpose of producing an additional flow of goods and services, not including merely financial flows; or

b) participating in the ownership of an enterprise of another Party, and for the purpose of participating in its management, not including investments of a merely financial nature intended only to gain indirect access to the financial market of the other Party;]

[Investment means assets acquired or used by an investor of one Party, for the purpose of establishing lasting economic relations, in the territory of another Party⁷, through:

a) the creation or acquisition of the total ownership of an enterprise;

b) the participation in the ownership of an enterprise which gives a significant grade of influence to the investor in the management of the enterprise;

c) the acquisition of debt instruments of an enterprise:

i) where the enterprise is an affiliate of the investor, or
ii) where the original maturity of the debt instrument is at least five (5) years,⁸

But does not include a debt instrument of a Party or of a State enterprise regardless of original maturity;

d) a loan to an enterprise:

i) where the enterprise is an affiliate of the investor, or
ii) where the original maturity of the debt instrument is at least five (5) years⁹,

But does not include a loan to a Party or to a State enterprise regardless of original maturity;

e) The acquisition or use of movable and immovable property tangible or intangible, destined exclusively for the purpose of obtaining economic benefit derived from business activities;

But investment does not mean:

f) merely financial flows, such as, those destined only to gain indirect access to the financial market of the other Party;

g) claims to money that arise solely from:

i) commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Party to an enterprise in the territory of another Party, or
ii) the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by subparagraph d) supra; or

h) any other claims to money, that do not involve the kinds of interests set out in subparagraphs a) through e) supra;]

[investor of a Party means a Party or an enterprise of a Party [or a natural or juridical person] [or a national or an enterprise] of this Party, [that carries out juridical acts designed to make an investment, [being in the process of committing a [major] amount of capital] [involving a commitment of capital] [[or else] is making or has made an investment in the territory of another Party] [that seeks to make, is making or has made an investment];]

[investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of a Party, that attempts to make, is making, or has made an investment in the territory of another Party; provided, however, that a natural person who is a dual national shall be deemed to be exclusively a national of the State of his/her dominant and effective nationality;]

[For the purposes of this Agreement, an investor is:

a) the natural person who, in compliance with domestic legislation, is considered a citizen of a Party and has made investments in the territory of another Party; and

b) the public or private, non-profit or for profit, juridical person, enterprise or entity constituted, established or domiciled, in compliance with the domestic legislation of a Party, which has made investments in the territory of another Party;

This Agreement shall not apply to the investments made by natural persons who, simultaneously, have the nationality of the Party in which the investment is made and the nationality of the other Party;]

[“Investor” means any natural person who is a national of a Party, in accordance with its laws. “Investor” means any legal person constituted in accordance with the laws and regulations of a Party, and having its seat in the territory of that Party.]

[The term “investor” shall refer to the following subjects that have made investments in the territory of a Party, pursuant to this Chapter:

a) a natural person or individual who, under the legislation of the Party, are considered nationals of that country;

b) legal entities, including companies, corporations, commercial associations or any other entity constituted under the legislation of that Party, that has its seat, as well as effective economic activities, in the territory of the Party;

c) the legal entities constituted under the legislation of any country, that are directly or indirectly controlled by nationals of a Party, in the territory of the Party where the legal entity conducts effective economic activities;]

[The term “investor” means:

a) any natural person who is a citizen of one of the Parties, is a permanent resident thereof, or is domiciled in the territory of same, in accordance with its legislation. The provisions of the Agreement shall not apply to investments made by natural persons who are citizens of one of the Parties in the territory of another Party, if said persons, at the time of the investment, are permanent residents of or are domiciled in the latter Party, unless it is proven that the resources connected with these investments originate abroad.

b) any juridical person constituted under the laws and regulations of a Party, and having its seat in the territory of said Party;

c) those juridical persons constituted in the territory of the host country, and effectively controlled by natural or juridical persons as defined in a) and b);]

[Other Terms]

[capital shares or obligations means shares with or without voting rights, bonds or convertible debt instruments, stock options and guarantees;]

[central level of government means:

a) for the United States, the federal level of government; and

b) for (insert appropriate information for other FTAA countries);]

[Centre means the International Centre for Settlement of Investment Disputes (ICSID) established by the ICSID Convention;]

[claim means a petition submitted by a disputing investor against a Party on the basis of a presumed violation of the provisions of this Chapter;]

[claimant means an investor of a Party that is a party to an investment dispute with another Party;]

[consolidation tribunal means an arbitration tribunal established pursuant to Article 36 (Consolidation);]

[covered investment means, with respect to a Party, an investment in its territory of an investor of another Party in existence as of the date of entry into force of this Agreement or established, acquired, or expanded thereafter;]

[disputing investor means an investor who makes a claim under [Subsection C.2.b. (Dispute Settlement between a Party and an Investor of Another Party) of this Chapter];]

[disputing Party means a Party against which a claim is made under [Section C (Procedures and Institutions)] [Subsection C.2.b (Dispute Settlement between a Party and an Investor of Another Party)] of this Chapter];]

[disputing party means [either the claimant or the respondent] [the disputing investor or the disputing Party];]

[disputing parties means [the claimant and the respondent] [the disputing investor and the disputing Party];]

[[The term [Earnings] means the sums [obtained from or] produced by an investment, such as profits, income, dividends, [interest,] royalties and [any other net income] [other current incomes];]

[enterprise means [any] [an] entity constituted or organized under applicable legislation [or legislation in force] in one of the Parties, whether or not for profit, and whether privately-owned or governmentally-owned, including foundations, companies, [branches], trusts, partnerships, sole proprietorships, joint ventures or other associations;]

[enterprise means any entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including a corporation, trust, partnership, sole proprietorship, joint venture, association, or similar organization; and a branch of an enterprise;]

[enterprise of a Party means an enterprise constituted or organized under the law of a Party[,] and a branch located in the territory of a Party [that carries out business activities in that territory] [and carrying out business activities there];]

[existing means in effect [on the date of entry into force of this Agreement][on April 19, 1998];]

[freely usable currency means a currency that the International Monetary Fund has determined is widely used to make payments for international transactions and widely traded in the principal exchange markets;]

[freely usable currency means “freely usable currency” as determined by the International Monetary Fund under its Articles of Agreement;]

[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;]

[ICSID means International Centre for the Settlement of Investment Disputes;]

[ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington, March 18, 1965;]

[Inter-American Convention means the Inter-American Convention on International Commercial Arbitration, done at Panama, January 30, 1975;]

[investment agreement means (definition to be tabled at a later negotiating round);]

[investment authorization¹⁰ means an authorization that the foreign investment authority of a Party grants to a covered investment or an investor of another Party;]

[investment of an investor of a Party means the investment owned or directly or indirectly controlled by an investor of a Party [undertaken] in the territory of another Party;]

[investor of a non-Party means an investor other than an investor of a Party [that seeks to make, is making or has made an investment];]

[investor of a non-Party means, with respect to a Party, an investor that attempts to make, is making, or has made an investment in the territory of that Party, that is not an investor of a Party;]

[monopoly means “monopoly” as defined in Article XX (Definitions) of Chapter XX (Competition);]

[New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958;]

[non-disputing Party means a Party that is not a party to an investment dispute;]

[protected information means confidential business information or information that is privileged or otherwise protected from disclosure under a Party’s law;]

[respondent means the Party that is a party to an investment dispute;]

[Secretary-General means the Secretary-General of ICSID;]

[transfers means international [transfers] [remittances] and payments;]

[tribunal means [an arbitration tribunal established under Article XX (Selection of Arbitrators) or Article 36 (Consolidation)] [an arbitration tribunal established pursuant to Article XX [(Subsection C.2.b. (Dispute Settlement between a Party and an Investor of Another Party); or an arbitration tribunal established pursuant to Article XX (Subsection C.2.b (Dispute Settlement between a Party and an Investor of Another Party ))];]

[UNCITRAL Arbitration Rules means [the Arbitration Rules of the United Nations Commission on International Trade Law] [the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), approved by the United Nations General Assembly on December 15, 1976];]

Definitions of a Cross-Cutting Nature Sent to the FTAA Technical Committee on Institutional Issues (TCI)¹¹

[national means a natural person who is a citizen of a Party under its law;]

[national means:

a) for the United States, a natural person who is a national of the United States as defined in Title III of the Immigration and Nationality Act; and

b) for (insert appropriate information for other FTAA countries);

A natural person who is a dual national shall be deemed to be exclusively a national of the State of his/her dominant and effective nationality;]

[“National” of a Party means a natural person who is a national or permanent resident of that Party under its applicable law;]

[Party means FTAA member country;]

[person means a national or an enterprise;]

[regional level of government means:

a) for the United States, each of the fifty (50) states, the District of Columbia, or Puerto Rico; and

b) for (insert appropriate information for other FTAA countries);]

[state enterprise means an enterprise owned, or controlled through ownership interests, by a Party;]

[state enterprise means a juridical person owned or directly controlled by a Party;]

[Territory means the land, maritime or air space of each Party, as well as its exclusive economic zone and its continental shelf, over which it exercises sovereign rights and jurisdiction, in accordance with its legislation and international law;]

[The term “territory” comprises, in addition to the land, maritime and air space over which each Party has sovereignty, the marine and submarine zones over which they exercise sovereign rights and jurisdiction, in accordance with their respective legislation and international law;]

[The term “territory” comprises to the national territory of each Party, including those maritime zones adjacent to the outer limit of its territorial waters over which the Party involved can, under international law, enforce sovereign rights and exercise jurisdiction;]

[Others]

[Commission means the Commission established pursuant to Article XX;]

[existing measure means any law, regulation, rule, procedure, provision or administrative practice in effect as of the date of the entry into force of this Agreement;] and

[measure means any law, regulation, rule, procedure, provision or administrative practice, among others;]

Article 2.    Scope

[2.1. This Chapter applies to [measures adopted or maintained by a Party relating to]:

a) investors of another Party [with respect to all aspects of its investment];

b) [investments of investors of another Party in the territory of the Party] [covered investments]; and,

c) [all investments [of the investors of any Party] in the territory of the Party with regard to Article XX (Performance Requirements).] [with respect to Articles 10 (Performance Requirements), 18 (Commitment Not To Relax Domestic Labor Laws To Attract Investment), and 19 (Commitment Not To Relax Domestic Environmental Laws To Attract Investment), all investments in the territory of the Party.]]

[[2.1bis] [2.2]. This Chapter shall apply to investments [made] [existing] [acquired] [admitted] [prior to or after] [after] the entry into force of the Agreement by investors of a Party in the territory of another Party[, in accordance with the [rules], [national] laws and regulations of the host Party].]

[2.3. A Party’s obligations under Section B (Substantive Obligations) of this Chapter shall apply to a state enterprise or other person when exercising any regulatory, administrative, or other governmental authority delegated to it by that Party.]

[2.4. A Party has the right to perform exclusively the economic activities set out in Annex XX and to refuse to authorize the establishment of investment in such activities.]

[2.5. This Chapter does not apply to:

a) [the reservations of the Parties set out in Annex XX to this Chapter;]

b) [measures adopted or maintained by a Party [in relation to financial services] [, pursuant to Chapter XX (Financial Services)] [to the extent they are covered by Chapter XX (Financial Services)];]

c) [measures adopted by a Party to limit the participation of the investments of investors of another Party in its territory for reasons of national security or public order;]

d) [disputes or claims arising or resolved before the entry into force of this Agreement or relating to acts or facts that occurred or that ceased to exist before it entered into force[, even if their effects persist thereafter];]

e) [investments made with capital or assets of illicit origin.]]

[2.6. Parties may exclude investment in certain sectors from the provisions of this Agreement. Smaller economies will be specifically facilitated in this regard.]

[2.7. Nothing in this Chapter shall be construed to prevent a Party from providing a service or performing a function such as law enforcement, correctional services, income or unemployment insurance or social security services, social welfare, public education, public training, health, and child care[, when performed in a manner not inconsistent with this Chapter].]

[2.8. Notwithstanding paragraph 2.7, if an investor of a duly authorized Party provides services or performs functions of correctional services, income insurance or unemployment insurance or social security services, social welfare, public education, public training, health, and child care, the investments of that investor shall be protected by the provisions of this Chapter.]

[2.9. This Chapter applies to the entire territory of the Parties and to any level or order of government regardless of any inconsistent measure that may exist in legislation at those levels or orders of government.]

[2.10. Whatever the scope of the Agreement reached with respect to pre-FTAA investments, smaller economies will have the right to negotiate coverage of such investments on a case-by-case basis.]

[Article 3.    Chapter on Investment and Its Relationship with Other Chapters

3.1. In the event of inconsistency between this Chapter and another Chapter, the latter shall prevail to the extent of the inconsistency.]

Section B    Substantive Provisions

Article 4.    National Treatment¹²

[4.1. Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory. Each Party shall accord to [covered investments] [investments of investors of another Party] treatment no less favorable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments.]

[4.1. Each Party shall accord to the investments of the investors of other Parties made in its territory treatment no less favorable than that accorded[, in like circumstances,] to investments by its own investors. [National treatment shall be granted in accordance with the laws of the host State].]

[4.2. The treatment accorded by a Party, under paragraph 4.1 above, means, with respect to a [state or province] [regional level of government], treatment no less favorable than the most favorable treatment accorded by that [state or province] [regional level of government], in like circumstances, to the investors and investments of investors of the Party to which it belongs.]

[4.2. The treatment to be accorded by a Party under paragraph 4.1 means, with respect to a regional level of government, treatment no less favorable than the treatment accorded, in like circumstances, by that regional level of government to natural persons resident in and enterprises constituted under the laws of other regional levels of government of the Party of which it forms a part, and to their respective investments.]

Article 5.    Most-Favored-Nation Treatment¹³

[5.1. Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to investors of any other Party or any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory. Each Party shall accord [to covered investments] [to investments of investors of another Party] treatment no less favorable than that it accords, in like circumstances, to investments in its territory of investors of any other Party or of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.]

[5.1. Each Party shall accord to the investments of investors of the other Parties made in its territory treatment which is no less favorable than that accorded[, in like circumstances,] to investments by investors of a non-Party.]

[5.2. While recognizing the generality of the MFN principle, a smaller economy may be exempted from same in those circumstances where it extends more favourable treatment to investors/investments from other smaller economies in the Hemisphere.]

[5.3. The treatment accorded by a Party under paragraph 5.1 means, with respect to a state or province, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that state or province to investors, and to investments of investors, of any other Party or of a non-Party.]

Article 6.    Standard of Treatment

[6.1. Each Party shall accord [to investors of another Party] [and] [to the investments of investors of another Party] the better of national treatment or most-favored-nation treatment.]

[6.2. While each Party shall be expected to accord to investors/investments of another Party the better of national treatment or most-favoured-nation treatment, exceptions can be made with respect to treatment favouring small domestic enterprises.]

[7.1. A Party may deny the benefits of this Chapter to an investor of another Party that is an enterprise of such other Party and to investments of that investor if investors of a non-Party own or control the enterprise and the denying Party:

a) does not maintain diplomatic relations with the non-Party; or

b) adopts or maintains measures with respect to the non-Party or an investor of the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to its investments.

7.2. [Subject to prior notification and consultation and in accordance with Article XX of Chapter XX (Administration and Dispute Settlement-Consultation),] [A] [a] Party may deny the benefits of this Chapter to an investor of another Party that is an enterprise of such other Party and to investments of that investor if the enterprise has no substantial business activities in the territory of any Party, other than the denying Party, and investors of a non-Party, or of the denying Party, own or control the enterprise.]

[Article 8.    Extra-Territorial Application of Laws on Investment-Related Issues

8.1. None of the Parties shall adopt or maintain any measure which:

a) imposes or seeks to impose an obligation or responsibility on the investors of another Party or on its investments; or,

b) prohibits or imposes sanctions for establishing trade or investment relations with investors of another Party or its investments;

because of the investments that an investor of another Party makes, has or controls, be it directly or indirectly, in a third country in accordance with the domestic laws of that country.]

Article 9.    [Fair and Equitable Treatment] [Minimum Standard of Treatment]¹⁴

[9.1. Each Party [shall accord] [shall at all times ensure] [to the investments of investors of another Party [made in its territory]] [to the investors of another Party and their investments] [treatment in accordance with international law, including] fair and equitable treatment [as well as full protection and security] in accordance with the [norms and] principles of international law [and shall not impair their management, maintenance, use, enjoyment or disposal through unjustified or discriminatory measures].]¹⁵

[9.1. Each Party shall accord to [investments of investors of another Party] [covered investments] treatment in accordance with [the] customary international law [standard of treatment of aliens], including fair and equitable treatment and full protection and security.

9.2. [For greater certainty, paragraph 9.1 prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to covered investments.] The concepts of “fair and equitable treatment” and “full protection and security” [in paragraph 9.1] do not require treatment in addition to or beyond that which is required by [the customary international law minimum standard of treatment of aliens] [that standard, and do not create additional substantive rights]. [The obligation in paragraph 9.1 to provide:

a) “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; and

b) “full protection and security” requires each Party to provide the level of police protection required under customary international law.]

9.3. A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article.]

[9.4. While a smaller economy shall extend fair and equitable treatment to foreign investors at all times, any treatment less favourable than that extended to investors of other smaller economies shall not constitute [an abrogation] [a violation] of this principle.]

[10.1. No Party shall establish performance requirements through the adoption of investment-related measures that are incompatible with the prevailing disciplines in the framework of the WTO Agreement on Trade-Related Investment Measures and any subsequent developments of those disciplines.]

[[10.1. [Mandatory] Performance Requirements:
No Party may impose or enforce any of the following requirements or [enforce any] commitments [or undertaking], in connection with the establishment, acquisition, expansion, management, conduct or operation [or sale or other disposition] of an investment of an investor of a Party [or of a non Party] in its territory:] [None of the Parties shall impose, or demand, unless otherwise provided for in that Party’s legislation, any of the following requirements, with respect to permission to establish, expand, maintain or acquire an investment:]

a) to export a given level or percentage of goods [or services];

b) to achieve a given level or percentage of domestic content;

c) to purchase, use or accord a preference to goods produced [or services provided] in its territory, or to purchase goods from [producers] [persons] [or services from service providers] in its territory;

d) to relate in any way the volume or value of imports to the volume or value of exports, or to the amount of foreign exchange inflows associated with such investment;

e) [to restrict sales of goods or services in its territory that such investment produces or [provides] [supplies] by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;]

f) [to transfer [a particular] technology, [a] production process[,] or other proprietary knowledge to a person in its territory [, except when the requirement is imposed [or the commitment is enforced] by a court, administrative tribunal or [competent] [competition] authority to remedy an alleged violation of competition laws or to act in a manner not inconsistent with other provisions of this Agreement]; or]

g) [[to act as the exclusive supplier of] [to supply exclusively from the territory of the Party] the goods that it produces or the services that it [provides] [supplies] to a specific regional market or to the world market.]]

[10.2. [A measure of general application which requires an investment to use a technology to meet health, environment and safety requirements shall not be inconsistent with subparagraph 10.1.f).] [A measure that requires an investment to use a technology to meet generally applicable health, environmental, or safety requirements shall not be construed to be inconsistent with subparagraph 10.1.f).] For greater certainty, Articles 4 (National Treatment) and 5 (Most-Favored-Nation Treatment) shall apply to the measure.]

[10.3. Performance Incentives:
No Party may condition the receipt or continued receipt of [an incentive or] an advantage [a benefit], in connection with the establishment, acquisition, expansion, management, conduct, [or] operation, [sale or other disposition] of an investment in its territory of an investor of a Party [or of a non-Party,] on compliance with any of the following requirements:

a) to purchase, use or accord a preference to goods produced [or services provided] in its territory, or to purchase goods from [producers] [persons] [or services from service providers] in its territory;

b) to achieve a given level or percentage of domestic content; [or,]

c) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment[.][;or]

[d) to restrict sales of goods or services in its territory that such investment produces or [provides] [supplies] by relating such sales in any way to the volume or value of its exports or foreign exchange earnings.]]

[10.3. This Article shall not apply, however, to those performance requirements contingent upon the granting of an advantage or benefit by the Party receiving the investment.]

[10.4. Exceptions and Exclusions:¹⁶

a)

i) subparagraphs 10.1.a), 10.1.b) and 10.1.c), and subparagraphs 10.3.a) and 10.3.b) do not apply [in relation] to qualification requirements for goods [or services] with respect to export promotion [such as foreign trade zones] and [domestic] [foreign] aid programs,
ii) subparagraphs 10.1.b) and 10.1.c) [10.1.f), and 10.1.g)] and subparagraphs 10.3. a) and 10.3.b) do not apply [in relation] to [government procurement] [procurement by a Party or a state enterprise], and
iii) subparagraphs 10.3.a) and 10.3.b) do not apply [in relation] to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas;

[b) Subparagraph 10.1.f) does not apply:

i) when a Party authorizes use of an intellectual property right in accordance with the provisions of Article XX on use of the subject matter of a patent without the authorization of the right holder (Subsection B.2.e. (Patents)), and of Article XX on measures requiring the disclosure of proprietary information that fall within the scope of, and are consistent with, Article 39 of the TRIPS Agreement, in Subsection B.2.j. (Undisclosed Information) of Chapter XX (Intellectual Property Rights), or
ii) when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal, or competition authority to remedy a practice determined after judicial or administrative process to be anticompetitive under the Party’s competition laws;¹⁷]

c) Nothing in paragraph 10.3 shall be construed to prevent a Party from conditioning the receipt or continued receipt of an [incentive or] advantage [or benefit] in connection with an investment in its territory of an investor of a Party [or of a non-Party], on [compliance with] a requirement to locate production, [supply][provide] a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory;

d) Nothing in [subparagraphs 10.1.b), 10.1.c) [and 10.1.f)] and 10.3.a) and 10.3.b)] [this Article] shall be construed to prevent a Party from adopting or maintaining measures, [including environmental measures]:

i) necessary to secure compliance with laws and regulations that are not inconsistent with this Agreement,
ii) necessary to protect human, animal or plant life or health, or
iii) [related to] [necessary for] the conservation of living or not living exhaustible natural resources;

provided that such measures are not applied in an arbitrary or unjustifiable manner, and provided that such measures do not constitute a disguised restriction on international trade or investment.]

[10.5. For greater certainty, paragraphs 10.1 and 10.3 do not apply to any requirement other than the requirements set out in those paragraphs.]

[10.6. This Article does not preclude the enforcement of any commitment, undertaking or requirement between private parties[, where a Party did not impose or require the commitment, undertaking, or requirement].]

[10.7. If, in the opinion of a Party, the imposition by another Party of any other requirement not established in paragraph 10.1 adversely affects the trade flow, or represents a significant barrier to the investment, the matter shall be considered by the Investment Committee, to be provided for in this Agreement. If the Committee considers that the requirement in question adversely affects the trade flow, it shall recommend to the Commission that practice in question be suspended.]

[10.8. Smaller economies may exercise the right to impose certain development-related performance requirements, provided these are WTO compatible.]

Article 11.    [Key Personnel] [Senior Management and Boards of Directors]

[11.1. No Party may require that an enterprise of that Party that is [an investment of an investor of another Party] [a covered investment] appoint to senior management positions individuals of any particular nationality.]

[11.1. For the purposes of this Agreement, key personnel shall mean senior management staff or staff with specialized technical expertise considered indispensable to guarantee the proper control, administration and operation of an investment. [The Parties shall not require investors of another Party to appoint key personnel of a specific nationality.] The temporary entry permits to such key personnel shall be subject to its laws, regulations and policies on entry of foreign personnel, in particular the labor and migration laws. All the legal requirements shall be met for the practice of a profession regulated in the Party receiving the investment.]

[11.2. A Party may require that a majority of the board of directors, or any committee thereof, of an enterprise of that Party, that is [an investment of an investor of another Party] [a covered investment], be of a particular nationality, or resident in the territory of the Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.]

[11.3. Smaller economies should be able to require in appropriate circumstances, that a certain percentage of key personnel at the executive and managerial levels be hired locally, since this could act as a form of technical training and transfer of know-how and organizational technology.]

Article 12.    Transfers¹⁸

[12.1. Each Party shall permit investors of another Party the free transfer of investments and income.

12.2. Transfers shall be made without delay, in freely convertible currency, at the market rate of exchange applicable on the date on transfer, subject to compliance with tax law and pursuant to the requirements stipulated in the laws of the Party in whose territory the investment was made.

12.3. The provisions of this Chapter shall not prevent Parties from enforcing [in a manner that is equitable, non-discriminatory and in good faith] [in exceptional or grave balance of payment situations] [where severe balance-of-payment disequilibria or difficulties exist or are impending], measures that temporarily restrict transfers consistent with International Agreements.

12.4. Without prejudice to the provisions set out in previous paragraphs, a Party may prevent a transfer in order to protect [, in particular but not exclusively,] rights arising from administrative, judicial or arbitration proceedings:

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

b) criminal or penal offenses;

c) ensuring the satisfaction of warrants, or court orders in judicial or administrative proceedings;

d) non-fulfillment of tax obligations;

e) non-fulfillment of labor obligations;

f) social security.]

[12.1. Each Party shall permit all transfers relating to [an investment of an investor of another Party in the territory of the Party] [a covered investment] to be made freely and without delay [into and out of its territory]. Such transfers include:

a) [contributions to capital;]

b) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, [returns in kind and other amounts derived from the investment];

c) proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;

d) payments made under a contract entered into by an investor, or its investment, including payments made pursuant to a loan agreement; and

e) payments made pursuant to Article 13 (Expropriation and Compensation) [and Article 14 (Compensation for Losses)]; and

f) payments arising out of [a dispute][Article XX (Dispute Settlement)] [the application of the provisions of Subsection C.2.b. (Dispute Settlement between a Party and an Investor of Another Party)].

12.2. Each Party shall permit transfers relating to [a covered investment] [an investment of an investor of another Party in the territory of the Party] to be made in a freely [convertible] [usable] currency at the market rate of exchange prevailing [on the date] [at the time] of transfer [with respect to spot transactions in the currency to be transferred].

[12.3. Each Party shall permit returns in kind relating to a covered investment to be made as authorized or specified in an investment authorization, investment agreement, or other written agreement between the Party and a covered investment or an investor of another Party.]

[12.4. For purposes of this Chapter, a transfer shall be considered to have been made without delay when it has been made within the time period normally necessary for complying with transfer formalities.]

[12.5. No Party may require its investors to transfer, or penalize its investors that fail to transfer, the income, earnings, profits or other amounts derived from, or attributable to, investments in the territory of another Party.]

12.6. Notwithstanding paragraphs [12.1 and 12.2], [and 12.3] a Party may prevent a transfer through the equitable and non-discriminatory [and good faith] application of its laws [in the following cases] [relating to]:

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

b) issuing, trading or dealing in securities, [futures, options, or derivatives;] [related to the enforcement of laws and regulations:

i) for issuing, trading or dealing in securities, futures or similar instruments,
ii) concerning reports or records of transfers;]

c) criminal or penal offenses [or administrative offenses];

d) [reports of transfers of currency or other monetary instruments; or] [failure to comply with the requirement of presenting reports of transfers of currency or other monetary instruments;] [financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;]

e) ensuring [the satisfaction of] [compliance with] [orders or] [judgments] [or awards] in [adjudicatory] [judicial] [or administrative] proceedings; [or]

f) [the establishment of the instruments or mechanisms necessary for ensuring payment of income tax by means including the withholding of the amount corresponding to dividends or other items.]

[12.7. Paragraph 12.5 shall not be construed to prevent a Party, through the equitable, non-discriminatory and good faith application of its legislation, to impose any measure related to subparagraphs 12.6.a) through e).]

[12.8. Notwithstanding the provisions of paragraph 12.1, a Party may restrict transfers of returns in kind, in circumstances where it otherwise could restrict such transfers in accordance with this Agreement, including as provided for in paragraph 12.6.]

[12.9. [Notwithstanding the provisions of this Article, each Party shall have the right, under circumstances of exceptional or grave difficulty in the balance of payments, to temporarily limit transfers, in an equitable and non-discriminatory manner, pursuant to internationally accepted criteria. Each Party shall give prompt notification to the other Party of the limitations adopted, maintained or eliminated pursuant to this paragraph.] [Notwithstanding the provisions of this Article, each Party may establish temporary limits on exchange operations, provided that the balance of payments of that Party is in serious imbalance and the Party implements a program in accordance with internationally accepted criteria.]]

[12.9. Without prejudice to this Article, each Party may limit transfer in accordance with the provisions contained in this Agreement relating to the Balance of Payments.]]

[12.1. Each Party shall permit all transfers relating to an investment of an investor of another Party in the territory of the Party to be made freely and without delay. Such transfers include:

a) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, returns in kind and other amounts derived from the investment;

b) proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;

c) payments made under a contract entered into by the investor, or its investment, including payments made pursuant to a loan agreement;

d) payments made in accordance with the Article on Expropriation; and

e) payments resulting from the implementation of the provisions in Subsection C.2.b. (Dispute Settlement between a Party and an Investor of Another Party).

12.2. With respect to spot transactions in the currency to be transferred, each Party shall permit transfers to be made in a freely usable currency at the market rate of exchange in force on the date of transfer.

12.3. No Party may require its investors to transfer their income, earnings, profits or other amounts derived from, or attributable to, investments in the territory of another Party, nor shall any Party penalize its investors in the event of a violation.

12.4. Notwithstanding the provisions of paragraphs 12.1 and 12.2, the Parties may prevent a transfer through the equitable, non-discriminatory and good faith enforcement of its laws in the following cases:

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

b) issuing, trading or dealing in securities;

c) criminal or penal offenses;

d) reports of transfers of currency or other monetary instruments; or

e) ensuring the satisfaction of judgments or orders in adjudicatory proceedings.

12.5. Paragraph 12.3 shall not be construed to prevent a Party, through the equitable, non-discriminatory and good faith application of its legislation, to impose any measure related to subparagraphs 12.4.a) through 12.4.e).

12.6. Notwithstanding the provisions of paragraph 12.1, a Party may restrict transfers of returns in kind, in circumstances where it otherwise could restrict such transfers in accordance with this Agreement, including as provided for in paragraph 12.4.]

[12.1. Parties shall guarantee to an investor of another Party with respect to an investment covered by this Agreement the free transfer of investments and returns on an investment. The investor may also transfer:

a) funds in repayment of loans related to an investment;

b) the proceeds of the total or partial liquidation of any investment;

c) wages and other remuneration accruing to a citizen of another Party who was permitted to work in the territory of the Party receiving the investment in connection with an investment;

d) any compensation owed to an investor by virtue of matters related to expropriation and compensation for losses.

12.2. Transfers shall be effected without delay in the convertible currency in which the capital was originally invested or in any other convertible currency agreed by the investor and the Party concerned. Unless otherwise agreed, transfers shall be effected at the applicable rate on the date of transfer, in accordance with regulations in effect with respect to foreign exchange.

12.3. In relation to transfers, Parties may implement in an equitable, non-discriminatory manner their laws relating to:

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

b) issuing, trading or dealing in securities;

c) criminal or penal offenses;

d) reports of transfers of currency or other monetary instruments; or

e) ensuring the satisfaction of judgments in adjudicatory proceedings or court orders.

12.4. No Party shall require its investors to transfer, or penalize its investors for failing to transfer, the returns attributable to investments in the territory of the other Party.

12.5. Small economies may also restrict transfers in cases of severe balance of payments difficulties given the volatility and vulnerability of their economies.

12.6. In addition to the usual restrictions on free transfers of capital to take account of non-payment of taxation, findings of adjudicatory proceedings, and protection of the rights of creditors, smaller economies, which are susceptible to export income volatility, would be allowed to exercise flexibility with respect to the provision that such transfers be made without delay. This would be effected on a case-by-case negotiations basis with the investor, and be influenced by any existing foreign exchange control laws and the potential for exchange rate movement when the reserves situation is significantly impacted.]

[13.1. No Party may nationalize or expropriate¹⁹ [directly or indirectly] a[n] [covered] investment [of an investor of the other Party in its territory or take a] [either directly or indirectly through] measure[s] equivalent to nationalization or expropriation [of such an investment] (“expropriation”), except:

a) for a public purpose [such as for reasons of public order or social interest] [, as provided in the annex to this Article] [in accordance with the national legislation of the Parties];

b) on a non-discriminatory basis;

c) in accordance with [the principle of legality and] due process of law and Article 9 (Minimum Standard of Treatment); and

d) on payment of compensation in accordance with paragraphs 13.2, 13.3 and 13.4.

13.2. Compensation shall:

a) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (“ the date of expropriation”);

b) not reflect any change in value occurring because the intended expropriation had become known earlier. [Valuation criteria may include going concern value, asset value, including declared tax value of tangible property and other criteria, as appropriate, to determine fair market value];

c) be paid without delay; and

d) be fully realizable and freely transferable as provided in Article 12 (Transfers).

[13.3. The amount paid as compensation shall be no less than the equivalent amount that, according to the rate of exchange prevailing on the date of the determination of the fair market value, would have been paid on such date to the investor subject to the expropriation, in a freely convertible currency in the international financial market. Compensation shall include payment of interest from the date on which the investor has been dispossessed of the expropriated investment until the date of payment, which shall be based on an average deposit rate of interest in the national banking system of the Party where the expropriation is carried out.]

[13.3. If the fair market value is denominated in a freely usable currency [or G7 currency], the compensation paid shall be no less than the fair market value on the date of expropriation, plus interest at a commercially reasonable rate [based on an average deposit rate of interest in the national banking system of the Party where the expropriation is carried out] for that currency, accrued from the date of expropriation until the date of payment.]

[13.4. If the fair market value is denominated in a currency that is not freely usable [or a G7 currency], the compensation paid – converted into the currency of payment at the market rate of exchange prevailing on the date of payment – shall be no less than:

a) the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date; plus

b) interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.]

[13.5. For purposes of this Article and for greater certainty, a non-discriminatory measure of general application shall not be considered a measure equivalent to an expropriation of a debt security or loan covered by this Chapter solely on the ground that the measure imposes costs on the debtor that results in default on the debt.]

[13.6. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights [in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (“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 [the TRIPS Agreement] [Chapter XX (Intellectual Property Rights)].]]

[13.1. No Party shall adopt measures to nationalize or expropriate, or any measure having the same effect, investments in its territory owned by investors from other Parties, unless such measures are adopted in the public or social interest, on a non-discriminatory basis and in accordance with due process of law. Such measures shall include provisions for the payment of a prompt, adequate and effective compensation.]

[13.1. Investments or returns of investors of a Party shall not be nationalized, expropriated or subjected to measures having an effect equivalent to nationalization or expropriation (hereinafter referred to as "expropriation") in the territory of another Party, except for a public purpose, under due process of law, in a non-discriminatory manner and against prompt, adequate and effective compensation. The extent of such compensation is to be determined through negotiation between the Party concerned and the affected investor and shall seek to provide fair recompense for the action taken.]

[13.1. No Party shall expropriate or nationalize the investments of investors of another Party that are established in its territory nor enforce measures with equivalent effects, unless such measures are adopted in the cases provided for in the Political Constitutions of the Parties in accordance with the Law, on a non-discriminatory basis and upon prompt, adequate and effective compensation.]

[13.2. The amount of such compensation shall be based on the market value of the expropriated investment immediately before the nationalization or expropriation was made public and shall include interest from the date of the expropriation until the date of payment.]

[13.2. The compensation referred to in the previous paragraph shall be equivalent to the fair price of the investment immediately before the measures were adopted or before the measures were made public, whichever is earlier, and shall include interest accrued between the date of expropriation and the date of payment. Such compensation shall be freely realizable in accordance with Article 12 (Transfers) in this Chapter.]

[13.3. Payments shall be freely transferable at the current exchange rate.]

[13.4. The investor affected shall have a right, under the law of the Party making the expropriation, to prompt review, by a judicial or other independent authority of that Party, of its case and of the valuation of its investment or returns.]

[13.4. An investor whose investment was subject to the measures referred to in this Article shall be entitled to a review of his case and an assessment by the competent authorities of the Party that adopted it.]

[13.5. If one Party or one of its agencies makes a payment to an investor of a Party pursuant to an insurance against non-commercial risks to an investment of that investor, the Party in whose territory the investment was made shall recognize the subrogation of the Party, or of any of its agencies, having made such payment, to the rights or titles of the investor, for the purposes of obtaining the relevant compensation.]

[13.6. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights [in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (“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 [the TRIPS Agreement] [Chapter XX (Intellectual Property Rights)].]

[13.7. Nothing in the provisions of this Agreement shall prevent, in accordance with the Law and to serve the public or social interest, the establishment of monopolies with the discretion to allocate revenue, subject to compensation of the investors that are deprived of their exercise of a licit economic activity. The provisions of this Article shall apply in such cases.]

[13.8. In the event of an expropriation occurring at a time of impending foreign exchange crisis, smaller economies may be granted flexibility with respect to prompt, adequate and effective compensation and therefore a longer time period for payment, with a waiver from payment of interest rates during the extension.]

Article 14.    Compensation for Losses

[14.1. Investors of a Party which suffer losses in their investments in the territory of the other Party, as a consequence of war, armed conflict, revolution, state of [national] emergency, insurrection or civil disorder, or [other similar situations], shall receive from that Party [and in accordance with accepted principles of International Law], in respect of reparation, restitution, indemnification, compensation or other settlement or indemnification, treatment no less favorable than that accorded to its own investors or investors of a non-Party, [whichever is more favorable].]

[14.1. Each Party shall accord investors of another Party whose investments have been adversely affected in their territory as a result of armed conflicts or civil strife, [acts of God or force majeure (natural disasters),] non-discriminatory treatment with respect to [reparation, compensation or other settlement] [any measure adopted or maintained] in relation to [those] [such] losses.]

[14.1. Investors of a Party who suffer losses because their investments or returns on the territory of another Party are affected by an armed conflict, a national emergency or a natural disaster on that territory, shall be accorded by that Party, in respect of restitution, indemnification, compensation or other settlement, treatment no less favorable than that which it accords to investors of any other State. Such compensation as may be granted shall be reinvested in the host country. Smaller economies may delay payment of compensation for balance of payments reasons and may prioritize payments to meet national development objectives.]

[14.1. Notwithstanding Article 16.6.b) (Non-Conforming Measures, subsidies and grants), each Party shall accord to investors of another Party, and to covered investments, non-discriminatory treatment with respect to measures it adopts or maintains relating to losses suffered by investments in its territory owing to armed conflict or civil strife.]

[14.2. Notwithstanding the preceding paragraph, if an investor of a Party which, in the situations referred to in that paragraph, suffers a loss in the territory of another Party resulting from:

a) requisitioning of its covered investment or part thereof by the latter’s forces or authorities; or

b) destruction of its investment or part thereof by the latter’s forces or authorities, which was not required by the necessity of the situation,

the latter Party shall provide the investor restitution or compensation which in either case shall be prompt, adequate and effective and, with respect to compensation, shall be in accordance with Article 13.2, 13.3, and 13.4 (Expropriation and Compensation).]

[14.3. Paragraph 14.1 does not apply to existing measures relating to subsidies or grants that would be inconsistent with Article 4 (National Treatment) but for Article 16.6.b) (Non-Conforming Measures, subsidies and grants).]

[14.4. In the event of catastrophic loss, natural or man-made, smaller economies may not be obligated to compensate foreign investors to the same extent that they do domestic enterprises.]

Article 15.    Exceptions to National Treatment and Most-Favored-Nation Treatment

[15.1. Exceptions to these principles may be notified.]

[15.2. [If a Party grants special treatment to the investor and the investment of an investor of a Party or non-Party under present or future participation in:

a) agreements that establish provisions to avoid double taxation;

b) international agreements relating totally or partially to tax matters;

c) free-trade areas, customs unions, common market, economic or monetary unions and similar institutions;

Such Party shall not be obligated to extend this treatment to the other Parties of the Agreement that are not part of a), b), and c).]

[In applying the most-favored-nation principle, subparagraph f of the General Principles in Annex I of the San José Ministerial Declaration shall be taken into account: “The FTAA can co-exist with bilateral and sub-regional agreements, to the extent that the rights and obligations under these agreements are not covered by or go beyond the rights and obligations of the FTAA.”]]

[15.2. The provisions Article 5 (Most-Favored-Nation Treatment) shall not be extended to: 

a) the privileges, advantages or benefits that one Party concedes to the investors of another Party or a non-Party in virtue of economic integration agreements, including those involving a free trade area, customs union, common market or economic or monetary union; 

b) the privileges, advantages or benefits derived from agreements whose purpose is to facilitate border relations; 

c) the rights and obligations derived from agreements aimed at avoiding double taxation and, in general, any matter related to taxation. 

The reservations to National Treatment and Most-Favored-Nation Treatment regarding specific matters or sectors shall be included in Annex 1 of this Agreement.]

[15.3. Special arrangements between smaller economies, who constitute a common market, shall not be obligated to be extended to Third Parties.]

Article 16.    [Reservations] [Non-Conforming Measures]

[16.1. Articles 4 (National Treatment), 5 (Most-Favored-Nation Treatment), 10 (Performance Requirements), and 11 (Senior Management and Boards of Directors) do not apply to:

a) any existing non-conforming measure that is maintained by a Party at:

i) the [central][national or federal] level of government, as set out by that Party in its Schedule to Annex I [or III],
ii) a [regional] [state or provincial] level of government, [as set out by that Party in its Schedule to Annex I], or
iii) a local level of government [as set out by that Party in its Schedule to Annex I];

b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph a); or

c) an amendment to any non-conforming measure referred to in subparagraph a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Articles 4 (National Treatment), 5 (Most-Favored-Nation Treatment), 10 (Performance Requirements), and 11 (Senior Management and Boards of Directors).

[any non-conforming measure that is maintained or adopted by a Party, regardless of the level or type of government, in Section A (Non-Conforming Measures) of Annex XX (Non-Conforming and Future Measures), which shall be listed at the time of the entry into force of this Agreement. Measures adopted by a Party shall not be more restrictive than those existing at the time the measure is implemented.]

16.2. Articles 4 (National Treatment), 5 (Most-Favored-Nation Treatment), 10 (Performance Requirements), and 11 (Senior Management and Boards of Directors) do not apply to any measure that a Party adopts or maintains with respect to sectors, subsectors, or activities, as set out in [its Schedule to Annex II] [Section B (Future Measures) of Annex XX (Non-Conforming and Future Measures), which shall be listed at the time of the entry into force of this Agreement].

16.3. No Party may, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule to Annex II, require an investor of another Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective.

[16.4. Article 5 (Most-Favored-Nation Treatment) does not apply to treatment accorded by a Party pursuant to agreements or with respect to sectors, set out in its schedule [in Annex XX (Exceptions to Most-Favored-Nation Treatment)] [in Annex IV].]

16.5. Articles 4 (National Treatment) and 5 (Most-Favored-Nation Treatment) do not apply to any measure that is an exception to, or derogation from, the obligations under [the TRIPs Agreement] [Article XX (National Treatment) of Chapter XX (Intellectual Property Rights)] as specifically provided for in that [Agreement] [Article].

16.6. Articles 4 (National Treatment), 5 (Most-Favored-Nation Treatment), and 11 (Senior Management and Boards of Directors) do not apply to:

a) [government procurement] [procurements by a Party or a state enterprise]; or

b) subsidies or grants provided by a Party [or a State enterprise], including government-supported loans, guarantees, and insurance [, except as provided in Article 14 (Compensation for Losses).]

[16.7. Articles 4 (National Treatment), 5 (Most-Favored-Nation Treatment), 10 (Performance Requirements) and 11 (Senior Management and Boards of Directors) do not apply to functions that are carried out in accordance with special or voluntary investment.²⁰]]

[16.1. Parties may present reservations regarding specific provisions and definitions of this Agreement. Parties may also present specific exceptions, in a schedule attached to the Agreement, for the purpose of excluding measures and/or sectors of economic activity in the application of provisions of the Agreement. For the purpose of presenting the country schedules of exceptions, and in order to ensure the necessary transparency, the following criteria shall be applied:

a) sector in which the exception is to be applied;

b) sub-sector;

c) specific obligations to be excepted;

d) nature and specification of the measure (law, regulation, rule, ruling, or equivalent);

e) concise description of the measure.]

[16.1. Parties may maintain measures which are inconsistent with general provisions of this Chapter or which provide for special treatment for particular sectors of their economy, including activities reserved for the State, in consideration of national developmental objectives. Such reservations shall be listed in an Annex to the Chapter in a manner to be agreed upon by the Parties. Parties shall commence negotiations to remove some or all of these reservations within three (3) years of the entry into force of the Agreement. Smaller economies shall be entitled to maintain such reservations as are necessary to achieve their national development objectives and will be able to remove reservations at a slower pace than other Parties.

16.2. Smaller economies shall be entitled to maintain reservations as are necessary to achieve their national development objectives, including those designed to protect small enterprises and sensitive industries, and will be allowed to remove such reservations at a slower pace than other Parties.]

Article 17.    General Exceptions

[17.1. Any Party may present general exceptions.]

[17.1. Among general exceptions, all actions for the protection of international peace and security shall be permitted.]

[17.1. Nothing in this Agreement shall prevent a Party from adopting or enforcing measures it deems necessary to:

a) protect public morality;

b) prevent crime and maintain public order;

c) protect or maintain its essential security interests;

d) protect human, animal and plant life;

e) protect the balance of payments and react to balance of payments difficulties;

f) secure compliance with laws or regulations relating to the prevention of deceptive and fraudulent practices and the effects of a default on contracts;

g) secure compliance with laws relating to taxation;

h) [ensure or guarantee compliance with the penal, labor, tax, and administrative resolutions and judgments;]

i) protect disadvantaged persons/minorities or regions and the interests of smaller economies and countries at a low level of development;

j) secure compliance with laws or regulations relating to the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts;

k) protect national treasures of artistic, historical, anthropological, paleantological and archaeological value;

l) give effect to international obligations including treaties on the avoidance of double taxation; and

m) give effect to benefits granted as a result of agreements establishing customs unions, common markets, economic or monetary unions, or similar arrangements.]

[17.1. Subject to the requirement that such measures are not applied in a manner that would constitute arbitrary or unjustifiable discrimination between investments or between investors, or do not constitute a disguised restriction on international trade or investment, nothing in this Chapter shall be construed to prevent a Party from adopting or enforcing measures:

a) necessary to ensure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;

b) necessary to protect human, animal or plant life or health; or

c) necessary for the conservation of living or non-living exhaustible natural resources.]

[17.2. Parties shall be permitted to adopt measures necessary for maintaining public order in cases where a genuine threat or act could affect a fundamental societal interest.]

[Article 18.    Commitment Not To Relax Domestic Labor Laws To Attract Investment

[18.1. The Parties recognize that it is inappropriate to encourage investment by relaxing domestic labor laws. Accordingly, each Party shall strive to ensure that it does not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws as encouragement for the establishment, acquisition, expansion or retention of an investment of an investor in its territory.]

[18.2. For smaller economies, a commitment not to relax domestic labor laws should be allied with compensating access to the Hemispheric Cooperation Program for the training of workers to make them more productive and the associated enterprises more competitive.]]

[Article 19.    Commitment Not To Relax Domestic Environmental Laws To Attract Investment

[19.1. The Parties recognize that it is inappropriate to encourage investment by relaxing domestic environmental laws. Accordingly, each Party shall strive to ensure that it does not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws as encouragement for the establishment, acquisition, expansion or retention of an investment of an investor in its territory.]

[19.2. For smaller economies, a commitment not to relax domestic environmental laws should be allied with compensating access to the Hemispheric Cooperation Program for the purpose of introducing more modern machinery and industrial practices that would better protect the environment.]]

[Article 20.    Special Formalities and Information Requirements

20.1. Nothing in Article 4 (National Treatment) shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with the establishment of investments by investors of another Party, such as a requirement that investments be constituted pursuant to the legislation of the Party, provided that such formalities do not materially impair the protections afforded by a Party to investors of another Party and investments of investors of another Party pursuant to this Chapter.

20.2. Notwithstanding Articles 4 (National Treatment) and 5 (Most-Favored-Nation Treatment), a Party may require an investor of another Party, or its investment in its territory, to provide routine information concerning that investment solely for informational or statistical purposes. The Party shall protect such information that is confidential from any disclosure that could prejudice the competitive position of the investment or the investor. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law.]

Section C    Procedures and Institutions

Subsection C.1.  Transparency

[Article 21.    Transparency

21.1. Each Party shall ensure that its laws, regulations, administrative practices and procedures of general application, and adjudicatory decisions, that affect or pertain to covered investments or investors are promptly published or otherwise made publicly available. Where a Party establishes policies that affect or pertain to covered investments or investors, which are not expressed in laws or regulations or by other means listed in this paragraph, that Party shall promptly publish them or otherwise make them publicly available.

21.2. To the extent practicable, each Party shall:

a) publish in advance any laws, regulations, administrative practices and procedures of general application that it proposes to adopt; and

b) provide interested persons and Parties a reasonable opportunity to comment on such proposed measures.

21.3. On the request of another Party, a Party shall promptly provide information and respond to questions pertaining to any actual or proposed laws, regulations, administrative practices and procedures of general application, or pertaining to any adjudicatory decision.

21.4. Nothing in this Article requires a Party to furnish or allow access to any confidential or proprietary information, including information concerning particular investors or investments, the disclosure of which would impede law enforcement, be contrary to its laws protecting confidentiality, or prejudice legitimate commercial interests of particular companies.]

Subsection C.2.  Dispute Settlement

Article 22.    Dispute Settlement

[22.1. The application of dispute settlement mechanisms shall be limited to acts or events that occurred or began after the entry into force of the Agreement.]

[22.2. Disputes that arise as a result of direct or indirect governmental administrative decisions of a regulatory or enforcement nature shall not be subject to the dispute settlement provisions of this Agreement, provided that such decisions are consistent with the legislation of the respective Party and with Art