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CANADA - CHILE
Bilateral Free Trade Agreement


Scope of Application [Return to the top of the page]

DEFINITION OF INVESTMENT

Investment means:

  1. an enterprise;
  2. an equity security of an enterprise;
  3. a debt security of an enterprise:
  1. where the enterprise is an affiliate of the investor, or
  2. where the original maturity of the debt security is at least three years, but does not include a debt security, regardless of original maturity, of a state enterprise;
  1. a loan to an enterprise:
  1. where the enterprise is an affiliate of the investor, or
  2. where the original maturity of the loan is at least three years, but does not include a loan, regardless of original maturity, to a state enterprise;
  1. an interest in an enterprise that entitles the owner to share in income or profits of the enterprise;
  2. an interest in an enterprise that entitles the owner to share in the assets of that enterprise on dissolution, other than a debt security or a loan excluded from subparagraph (c) or (d);
  3. real estate or other property, tangible or intangible, acquired in the expectation or used for the purpose of economic benefit or other business purposes; and
  4. interests arising from the commitment of capital or other resources in the territory of a Party to economic activity in such territory, such as under:
  1. contracts involving the presence of an investor's property in the territory of the Party, including turnkey or construction contracts, or concessions, or
  2. contracts where remuneration depends substantially on the production, revenues or profits of an enterprise;

but investment does not mean:

  1. claims to money that arise solely from:
  1. 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 the other Party, or
  2. the extension of credit in connection with a commercial transaction, such as trade financing, other than a loan covered by subparagraph (d); or
  1. any other claims to money, that do not involve the kinds of interests set out in subparagraphs (a) through (h); or
  2. with respect to "loans" and "debt securities" referred to in paragraphs (c) and (d) as it applies to investors of the other Party, and investments of such investors, in financial institution in the Party’s territory:
  1. a loan or debt security issued by a financial institution that is not treated as regulatory capital by the Party in whose territory the financial institution is located;
  2. a loan granted by or debt security owned by a financial institution, other than a loan to or debt security of a financial institution referred to in subparagraph (i); and
  3. a loan to, or debt security issued by, a Party or a state enterprise thereof. (Article G-40 of the Free Trade Agreement between Canada and Chile).

Investment of an investor of a Party means an investment owned or controlled directly or indirectly by an investor of such Party. (Article G-40).

DEFINITION OF INVESTOR

Investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of such Party, that seeks to make, is making or has made an investment. (Article G-40).

Application in Time (Entry into Force and Duration: Applicability to Investments made Prior to Entry into Force)

The Free Trade Agreement between Canada and Chile was signed on December 5, 1996 and entered into force on July 5, 1997.

Admission [Return to the top of the page]

Nothing in Article G-02 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 the other Party such as a requirement that investors be residents of the Party or that investments be legally constituted under the laws or regulations of the Party, provided that such formalities do not materially impair the protections afforded by a Party to investors of the other Party and investments of investors of the other Party pursuant to this Chapter. (Article G-11).

There is no separate clause on admission. The issue is dealt with in the treatment provisions. See section on Treatment.

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Each Party shall accord to investments of investors of the other Party treatment in accordance with international law, including fair and equitable treatment and full protection and security. (Article G-05(1)).

Full Protection and Security

Each Party shall accord to investments of investors of the other Party treatment in accordance with international law, including fair and equitable treatment and full protection and security. (Article G-05(1)).

Non-Discrimination

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National Treatment

Each Party shall accord to investors of the other Party treatment no less favourable 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. (Article G-02(1)).

Each Party shall accord to investments of investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. (Article G-02(2)).

The treatment accorded by a Party under paragraphs 1 and 2 means, with respect to a province, treatment no less favourable than the most favourable treatment accorded, in like circumstances, by that province to investors, and to investments of investors, of the Party of which it forms a part. (Article G-02(3)).

For greater certainty, no Party may:

  1. impose on an investor of the other Party a requirement that a minimum level of equity in an enterprise in the territory of the Party be held by its nationals, other than nominal qualifying shares for directors or incorporators of corporations; or
  2. require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment in the territory of the Party. (Article G-02(4)).

Each Party shall accord to investors of the other Party and to investments of investors of the other Party the better of the treatment required by Articles G-02 and G-03. (Article G-04 (1)).

Annex G-04.2 sets out certain specific obligations by the Party specified in that Annex. (Article G-04(2)).

Chile shall accord to an investor of Canada or an investment of such investor that is party to an investment contract pursuant to Decree Law 600 of 1974 (“Decreto Ley 600 de 1974"), the better of the treatment required under this Agreement or granted under the contract pursuant to the said Decree Law. (Annex G-04.2(1)).

Chile shall permit an investor of Canada or an investment or such investor, referred to in paragraph 1, to amend the investment contract in order to reflect the rights and obligations of this Agreement. (Annex G-04.2(2)).

Most-Favored Nation Treatment

Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investors of any of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. (Article G-03(1)).

Each Party shall accord to investments of investors of the other Party treatment no less favourable than that it accords, in like circumstances, to investments of investors of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. (Article G-03(2)).

Each Party shall accord to investors of the other Party and to investments of investors of the other Party the better of the treatment required by Articles G-02 and G-03. (Article G-04 (1)). Annex G-04.2 sets out certain specific obligations by the Party specified in that Annex. (Article G-04(2)). See Annex G-04.2 in section on national treatment.

Exceptions and Reservations

Articles G-02 [National Treatment], G-03 [Most-Favoured-Nation Treatment], G-06 [Performance Requirements] and G-07 [Senior Management and Boards of Directors] do not apply to:

  1. any existing non-conforming measure that is maintained by
  1. a Party at the national or provincial level, as set out in its Schedule to Annex I, or
  2. a local government;
  1. the continuation or prompt renewal of any non- conforming measure referred to in subparagraph (a); or
  2. 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 G-02, G-03, G-06 and G-07. (Article G-08(1)).

Articles G-02, G-03, G-06 and G-07 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. (Article G-08(2)).

Neither 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 the other Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective. (Article G-08(3)).

Articles G-02 and G-03 do not apply to any measure that is an exception to, or derogation from, a Party's obligations under the TRIPS Agreement, as specifically provided for in that agreement. (Article G-08 (4)).

Article G-03 does not apply to treatment accorded by a Party pursuant to agreements, or with respect to sectors, set out in its Schedule to Annex III. (Article G-08(5)).

Articles G-02, G-03 and G-07 do not apply to:

  1. procurement by a Party or a state enterprise; or
  2. subsidies or grants provided by a Party or a state enterprise, including government-supported loans, guarantees and insurance. (Article G-08(6)).

The provisions of:

  1. Article G-06(1)(a), (b) and (c), and (3)(a) and (b) do not apply to qualification requirements for goods or services with respect to export promotion and foreign aid programs;
  2. Article G-06(1)(b), (c), (f) and (g), and (3)(a) and (b) do not apply to procurement by a Party or a state enterprise; and
  3. Article G-06(3)(a) and (b) do not apply to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas. (Article G-08(7)).

Denial of Benefits

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

  1. does not maintain diplomatic relations with the non-Party; or
  2. adopts or maintains measures with respect to 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. (Article G-13(1)).

Subject to prior notification and consultation in accordance with Articles L-03 (Notification and Provision of Information) and N-06 (Consultations), a Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of such Party and to investments of such investors if investors of a non-Party own or control the enterprise and the enterprise has no substantial business activities in the territory of the Party under whose law it is constituted or organized. (Article G-13(2)).

OTHER ASPECTS

Performance Requirements

Neither Party may impose or enforce any of the following requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, conduct or operation of an investment of an investor of a Party or of a non-Party in its territory:

  1. to export a given level or percentage of goods or services;
  2. to achieve a given level or percentage of domestic content;
  3. to purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from persons in its territory;
  4. 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;
  5. to restrict sales of goods or services in its territory that such investment produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
  6. to transfer technology, a production process or other proprietary knowledge to a person in its territory, except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or 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
  7. to act as the exclusive supplier of the goods it produces or services it provides to a specific region or world market. (Article G-06(1)).

A measure that requires an investment to use a technology to meet generally applicable health, safety or environmental requirements shall not be construed to be inconsistent with paragraph 1(f). For greater certainty, Articles G-02 and G-03 apply to the measure. (Article G-06(2)).

Neither Party may condition the receipt or continued receipt of an advantage, in connection with an investment in its territory of an investor of a Party or of a non-Party, on compliance with any of the following requirements:

  1. to achieve a given level or percentage of domestic content;
  2. to purchase, use or accord a preference to goods produced in its territory, or to purchase goods from producers in its territory;
  3. 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
  4. to restrict sales of goods or services in its territory that such investment produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings. (Article G-06(3)).

Nothing in paragraph 3 shall be construed to prevent a Party from conditioning the receipt or continued receipt of an advantage, 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, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory. (Article G-06 (4)).

Paragraphs 1 and 3 do not apply to any requirement other than the requirements set out in those paragraphs. (Article G-06(5)).

Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on international trade or investment, nothing in paragraph 1(b) or (c) or 3(a) or (b) shall be construed to prevent a Party from adopting or maintaining measures, including environmental measures:

  1. necessary to secure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;
  2. necessary to protect human, animal or plant life or health; or
  3. necessary for the conservation of living or non-living exhaustible natural resources. (Article G-06(6)).

Others

Without prejudice to paragraph 1 and notwithstanding Article G-08(6)(b), each Party shall accord to investors of the other Party, and to investments of investors of the other Party, 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. (Article G-05(2)).

Paragraph 2 does not apply to existing measures relating to subsidies or grants that would be inconsistent with Article G-02 but for Article G-08(6)(b). (Article G-05(3)).

Neither Party may require that an enterprise of that Party that is an investment of an investor of the other Party appoint to senior management positions individuals of any particular nationality. (Article G-07(1)).

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 the other Party, 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. (Article G-07(2)).

Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns. (Article G-14(1)).

The Parties recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. Accordingly, a Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such measures as an encouragement for the establishment, acquisition, expansion or retention in its territory of an investment of an investor. If a Party considers that the other Party has offered such an encouragement, it may request consultations with the other Party and the two Parties shall consult with a view to avoiding any such encouragement. (Article G-14(2)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Except as provided in Annex G-09.1, each Party shall permit all transfers relating to an investment of an investor of the other Party in the territory of the Party to be made freely and without delay. Such transfers include:

  1. profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, returns in kind and other amounts derived from the investment;
  2. proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;
  3. payments made under a contract entered into by the investor, or its investment, including payments made pursuant to a loan agreement;
  4. payments made pursuant to Article G-10; and
  5. payments arising under Section II. (Article G-09(1)).

For the purpose of preserving the stability of its currency, Chile reserves the right:

  1. to maintain existing requirements that transfers from Chile of proceeds from the sale of all or any part of an investment of an investor of Canada or from the partial or complete liquidation of the investment may not take place until a period not to exceed
  1. in the case of an investment made pursuant to Law 18.657 Foreign Capital Investment Fund Law (“Ley 18.657, Ley Sobre Fondo de Inversiones de Capitales Extranjeros”), five years has elapsed from the date of transfer to Chile, or
  2. subject to subparagraph (c)(iii), in all other cases, one year has elapsed from the date of transfer to Chile;
  1. to apply a reserve requirement pursuant to Article 49 No. 2 of Law 18.840, Organic Law of the Central Bank of Chile, (“Ley 18.840, Ley Orgánica del Banco Central de Chile”) on an investment of an investor of Canada, other than foreign direct investment, and on foreign credits relating to an investment, provided that such a reserve requirement shall not exceed 30 per cent of the amount of the investment, or the credit, as the case may be;
  2. to adopt
  1. measures imposing a reserve requirement referred to in (b) for a period which shall not exceed two years from the date of transfer to Chile,
  2. any reasonable measure consistent with paragraph 3 necessary to implement or to avoid circumvention of the measures under (a) or (b), and
  3. measures, consistent with Article G-09 and this Annex, establishing future special voluntary investment programs in addition to the general regime for foreign investment in Chile, except that any such measures may restrict transfers from Chile of proceeds from the sale of all or any part of an investment of an investor of Canada or from the partial or complete liquidation of the investment for a period not to exceed 5 years from the date of transfer to Chile; and
  1. to apply, pursuant to the Law 18.840, measures with respect to transfers relating to an investment of an investor of Canada that
  1. require that foreign exchange transactions for such transfers take place in the Formal Exchange Market,
  2. require authorization for access to the Formal Exchange Market to purchase foreign currency, at the rate agreed upon by the parties to the transaction, which access shall be granted without delay when such transfers are:
  1. payments for current international transactions,
  2. proceeds from the sale of all or any part, and from the partial or complete liquidation of an investment of an investor of Canada, or
  3. payments pursuant to a loan provided they are made in accordance with the maturity dates originally agreed upon in the loan agreement, and
  1. require that foreign currency be converted into Chilean pesos, at the rate agreed upon by the parties to the transaction, except for transfers referred to in (ii) (A) through (C) which are exempt from this requirement. (Annex G-09.1(1)).

Where Chile proposes to adopt a measure referred to in paragraph 1(c), Chile shall, to the extent practicable:

  1. provide in advance to Canada the reasons for the proposed adoption of the measure as well as any relevant information in relation to the measure; and
  2. provide Canada with a reasonable opportunity to comment on the proposed measure. (Annex G-09.1(2)).

A measure that is consistent with this Annex but inconsistent with Article G-02, shall be deemed not to contravene Article G-02 provided that, as required under existing Chilean law, it does not discriminate among investors that enter into transactions of the same nature. (Annex G-09.1(3)).

This Annex applies to Law 18.840, to the Decree Law 600 of 1974 (“Decreto Ley 600 de 1974") to Law 18.657 and any other law establishing a future special voluntary investment program consistent with sub-paragraph 1(c)(iii) and to the continuation or prompt renewal of such laws, and to amendments to those laws, to the extent that any such amendment does not decrease the conformity of the amended law with Article G-09(1) as it existed immediately before the amendment. (Annex G-09.1(4)).

Neither 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 the other Party. (Article G-09(3)).

Paragraph 3 shall not be construed to prevent a Party from imposing any measure through the equitable, non-discriminatory and good faith application of its laws relating to the matters set out in subparagraphs (a) through (e) of paragraph 4. (Article G-09(5)).

Notwithstanding paragraph 1, a Party may restrict transfers of returns in kind in circumstances where it could otherwise restrict such transfers under this Agreement, including as set out in paragraph 4. (Article G-09(6)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Except as provided in Annex G-09.1, each Party shall permit all transfers relating to an investment of an investor of the other Party in the territory of the Party to be made freely and without delay. (Article G-09(1)).

Each Party shall permit transfers to be made in a freely usable currency at the market rate of exchange prevailing on the date of transfer with respect to spot transactions in the currency to be transferred. (Article G-09(2)).

Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer through the equitable, non-discriminatory and good faith application of its laws relating to:

  1. bankruptcy, insolvency or the protection of the rights of creditors;
  2. issuing, trading or dealing in securities;
  3. criminal or penal offenses;
  4. reports of transfers of currency or other monetary instruments; or
  5. ensuring the satisfaction of judgments in adjudicatory proceedings. (Article G-09(4)).

Expropriation [Return to the top of the page]

CONDITIONS

Neither Party may directly or indirectly nationalize or expropriate an investment of an investor of the other Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ("expropriation"), except:

  1. for a public purpose;
  2. on a non-discriminatory basis;
  3. in accordance with due process of law and Article G-05(1) (Minimum Standard of Treatment); and
  4. on payment of compensation in accordance with paragraphs 2 through 6. (Article G-10(1)).

COMPENSATION

Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place ("date of expropriation"), and shall not reflect any change in value occurring because the intended expropriation had become known earlier. Valuation criteria shall include going concern value, asset value including declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value. (Article G-10(2)).

Compensation shall be paid without delay, be fully realizable and freely transferable. If payment is made in a G7 currency, compensation shall include interest at a commercially reasonable rate for that currency from the date of expropriation until the date of actual payment.(Article G-10(3)(4)(5)(6)).

Settlement of Disputes between Contracting Parties
[
Return to the top of the page]

Chapter N (Institutional Arrangements and Dispute Settlement Procedures) is applicable.

Settlement of Disputes between a Contracting Party and an Investor [Return to the top of the page]

PREARBITRAL CONSULTATIONS

The disputing parties should first attempt to settle a claim through consultation or negotiation. (Article G-19).

ARBITRATION

Conditions

An investor of a Party, on his own behalf or on behalf of an enterprise of the other Party that is a juridical person that the investor owns or controls directly or indirectly, may submit to arbitration under this Section a claim that the other Party has breached an obligation under Section I (Investment) or Article J-03(2) (State Enterprises) or Article J-02(3)(a) (Monopolies and State Enterprises), and that the investor or the enterprise has incurred loss or damage by reason of, or arising out of, that breach. (Article G-17(1) and G-18(1)).

An investor may not make a claim if more than three years have elapsed from the date on which the investor or the enterprise first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage. (Articles G-17(2) and G-18(2)).

Where an investor makes a claim on behalf of an enterprise and the investor or a non-controlling investor in the enterprise makes a claim under Article G-17 arising out of the same events that gave rise to the claim, and two or more of the claims are submitted to arbitration, the claims should be heard together by a Tribunal established under Article G-27 (Consolidation), unless the Tribunal finds that the interests of a disputing party would be prejudiced thereby. (Article G-18(3)).

An investment may not make a claim under this Section. (Article G-18(4)).

An investor of a Party may submit a claim under Article G-17 (Investor on its Own Behalf) to arbitration only if:

  1. the investor consents to arbitration in accordance with the procedures set out in this Agreement; and,
  2. the investor and, where the claim is for loss or damage to an interest in an enterprise of the other Party that is a juridical person that the investor owns or controls directly or indirectly, the enterprise, waive their right to initiate or continue before any administrative tribunal or court under the law of a Party, or other dispute settlement procedures, any proceedings with respect to the measure of the disputing Party that is alleged to be a breach referred to in Article G-17, except for proceedings for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the law of the disputing Party. (Article G-22(1)).

A disputing investor may submit a claim under Article G-18 (Investor on Behalf of an Enterprise) to arbitration only if both the investor and the enterprise:

  1. consent to arbitration in accordance with the procedures set out in this Agreement; and
  2. waive their right to initiate or continue before any administrative tribunal or court under the law of a Party, or other dispute settlement procedures, any proceedings with respect to the measure of the disputing Party that is alleged to be a breach referred to in Article G-18, except for proceedings for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the law of the disputing Party. (Article G-22(2)).

Consent

Each Party consents to the submission of a claim to arbitration in accordance with the procedures set out in this Agreement. (Article G-23(1)). The consent given by paragraph 1 and the submission by a disputing investor of a claim to arbitration shall satisfy the requirement of:

  1. Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the Additional Facility Rules for written consent of the parties;
  2. Article II of the New York Convention for an agreement in writing; and
  3. Article I of the Inter-American Convention for an agreement. (Article G-23(2).

Forms of Arbitration

Except as provided in the annex to the Article (Annex G-21.1), and provided that six months have elapsed since the events giving rise to a claim, a disputing investor may submit the claim to arbitration under:

  1. the ICSID Convention, provided that both the disputing Party and the Party of the investor are parties to the Convention;
  2. the Additional Facility Rules of ICSID, provided that either the disputing Party or the Party of the investor, but not both, is a party to the ICSID Convention; or
  3. the UNCITRAL Arbitration Rules. (Article G-21(1)).

1. With respect to the submission of a claim to arbitration:

  1. an investor of Canada may not allege that Chile has breached an obligation under
  1. Section I or Article J-03(2) (State Enterprises), or
  2. Article J-02(3)(a) (Monopolies and State Enterprises) where the monopoly has acted in a manner inconsistent with Chile's obligations under Section I, both in an arbitration under this Section and in proceedings before a Chilean court or administrative tribunal; and
  1. where an enterprise of Chile that is a juridical person that an investor of Canada owns or controls directly or indirectly alleges in proceedings before a Chilean court or administrative tribunal that Chile has breached an obligation under
  1. Section I or Article J-03(2) (State Enterprises), or
  2. Article J-02(3)(a) (Monopolies and State Enterprises) where the monopoly has acted in a manner inconsistent with Chile's obligations under Section I, the investor may not allege the breach in an arbitration under this Section. (Annex G-21.1(1)).

2. For greater certainty, where an investor of Canada or an enterprise of Chile that is a juridical person that an investor of Canada owns or controls directly or indirectly makes an allegation referred to in paragraph 1(a) or (b) before a Chilean court or administrative tribunal, the selection of the Chilean court or administrative tribunal shall be final and such investor or enterprise may not thereafter allege the breach in an arbitration under this Section. (Annex G-21.1(2)).

The applicable arbitration rules shall govern the arbitration except to the extent modified by this Section. (Article G-21(2)).

ARBITRAL PROCEDURES

Constitution of the Tribunal

Except in respect of a Tribunal established under Article G-27, and unless the disputing parties otherwise agree, the Tribunal shall comprise three arbitrators, one arbitrator appointed by each of the disputing parties and the third, who shall be the presiding arbitrator, appointed by agreement of the disputing parties. (Article G-24).

When a Party fails to appoint an arbitrator or the disputing parties are unable to agree on a presiding arbitrator, the Secretary-General [of ICSID] shall serve as appointing authority for an arbitration under this Section. (Article G-25(1)).

If a Tribunal, other than a Tribunal established under Article G-27, has not been constituted within 90 days from the date that a claim is submitted to arbitration, the Secretary-General, on the request of either disputing party, shall appoint, in his discretion, the arbitrator or arbitrators not yet appointed, except that the presiding arbitrator shall be appointed in accordance with paragraph 3. (Article G-25(2)).

The Secretary-General [of ICSID] shall appoint the presiding arbitrator from the roster of presiding arbitrators referred to in paragraph 4, provided that the presiding arbitrator shall not be a national of the disputing Party or a national of the Party of the disputing investor. In the event that no such presiding arbitrator is available to serve, the Secretary-General shall appoint, from the ICSID Panel of Arbitrators, a presiding arbitrator who is not a national of either of the Parties. (Article G-25(3)).

On the date of entry into force of this Agreement, the Parties shall establish, and thereafter maintain, a roster of 30 presiding arbitrators, none of whom may be a national of a Party, meeting the qualifications of the Convention and rules referred to in Article G-21 and experienced in international law and investment matters. The roster members shall be appointed by mutual agreement. (Article G-25(4)).

Consolidation

A Tribunal established under this Article shall be established under the UNCITRAL Arbitration Rules and shall conduct its proceedings in accordance with those Rules, except as modified by this Section. (Article G-27(1)).

Where a Tribunal established under this Article is satisfied that claims have been submitted to arbitration under Article G-21 that have a question of law or fact in common, the Tribunal may, in the interests of fair and efficient resolution of the claims, and after hearing the disputing parties, by order:

  1. assume jurisdiction over, and hear and determine together, all or part of the claims; or
  2. assume jurisdiction over, and hear and determine one or more of the claims, the determination of which it believes would assist in the resolution of the others. (Article G-27(2)).

A disputing party that seeks an order under paragraph 2 shall request the Secretary-General to establish a Tribunal and shall specify in the request:

  1. the name of the disputing Party or disputing investors against which the order is sought;
  2. the nature of the order sought; and
  3. the grounds on which the order is sought. (Article G-27(3)).

Paragraphs 4-13 of Article G-27 contain rules regarding the constitution of the consolidation tribunal and procedures for the settlement of the dispute by the tribunal. (Article G-27)).

Applicable Law

A Tribunal established under this Section shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law. (Article G-32(1)).

An interpretation by the Commission of a provision of this Agreement shall be binding on a Tribunal established under this Section. (Article G-32(2)).

FINAL AWARD

Scope

Where a Tribunal makes a final award against a Party, the Tribunal may award, separately or in combination, only:

  1. monetary damages and any applicable interest;
  2. restitution of property, in which case the award shall provide that the disputing Party may pay monetary damages and any applicable interest in lieu of restitution.

A tribunal may also award costs in accordance with the applicable arbitration rules. (Article G-36(1)).

Subject to paragraph 1, where a claim is made on behalf of an enterprise:

  1. an award of restitution of property shall provide that restitution be made to the enterprise;
  2. an award of monetary damages and any applicable interest shall provide that the sum be paid to the enterprise; and
  3. the award shall provide that it is made without prejudice to any right that any person may have in the relief under applicable domestic law. (Article G-36(2)).

A Tribunal may not order a Party to pay punitive damages. (Article G-36(3)).

Finality and Enforcement

An award made by a Tribunal shall have no binding force except between the disputing parties and in respect of the particular case. (Article G-37(1)).

Subject to paragraph 3 and the applicable review procedure for an interim award, a disputing party shall abide by and comply with an award without delay. (Article G-37(2)).

A disputing party may not seek enforcement of a final award until:

  1. in the case of a final award made under the ICSID Convention:
  1. 120 days have elapsed from the date the award was rendered and no disputing party has requested revision or annulment of the award, or
  2. revision or annulment proceedings have been completed; and,
  1. in the case of a final award under the ICSID Additional Facility Rules or the UNCITRAL Arbitration Rules:
  1. three months have elapsed from the date the award was rendered and no disputing party has commenced a proceeding to revise, set aside or annul the award, or
  2. a court has dismissed or allowed an application to revise, set aside or annul the award and there is no further appeal. (Article G-37(3)).

Each Party shall provide for the enforcement of an award in its territory. (Article G-37(4)).

If a disputing Party fails to abide by or comply with a final award, the Commission, on delivery of a request by a Party whose investor was a party to the arbitration, shall establish a panel under Article N-08 (Request for an Arbitral Panel). The requesting Party may seek in such proceedings:

  1. a determination that the failure to abide by or comply with the final award is inconsistent with the obligations of this Agreement; and,
  2. a recommendation that the Party abide by or comply with the final award. (Article G-37(5)).

A disputing investor may seek enforcement of an arbitration award under the ICSID Convention, the New York Convention or the Inter-American Convention regardless of whether proceedings have been taken under paragraph 5. (Article G-37(6)).

A claim that is submitted to arbitration under this Section shall be considered to arise out of a commercial relationship or transaction for purposes of Article I of the New York Convention and Article I of the Inter-American Convention. (Article G-37(7)).


 
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