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

DEFINITION OF INVESTMENT

The term “investment” refers to any type of goods or rights related to an investment, as long as the investment has been carried out in accordance with the laws and regulations of the Contracting Party in whose territory the investment was made. This general definition is illustrated by a non exhaustive list of specific rights, including:

• traditional property rights;
• rights in companies;
• monetary claims and titles to performance;
• intellectual property rights; and
• concessions and similar rights. (Article 1 (2)).

DEFINITION OF INVESTOR

Nationals

The term “investor” means, with respect to each Contracting Party, all natural persons who are considered nationals of the relevant Contracting Party in accordance with that Party’s laws, and who have made investments in the territory of the other Contracting Party in accordance with the provisions of this Agreement. (Article 1 (1)).

Companies

The term “investor” comprises any juridical person, including a corporation, organization, association or enterprise, incorporated or duly constituted in accordance with the applicable laws of a Contracting Party and having its seat, as well as economic activities in the territory of the said Contracting Party that has made an investment in the other Contracting Party. (Article I (1) (b)).

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

Date of signature: November 8, 1996
Entry into force: The Contracting Parties shall notify each other of the fulfillment of their respective constitutional requirements for the entry into force of the Agreement. The Agreement shall enter into force thirty days after the last notification.
Duration: 15 years.
Thereafter it shall remain in force until the expiration of one year from the date that either Party notifies the other Party in writing of its decision to terminate the Agreement.
The Agreement applies to all investments made before or after the date of its entry into force by investors of one Contracting Party, in compliance with the laws of the other Contracting Party, in the territory of the latter. However, the Agreement does not apply to disputes which pre-date the Agreement’s entry into force. (Article 2).

Admission [Return to the top of the page]

Each Contracting Party, subject to its general policy with respect to foreign investments, shall stimulate in its territory investments of investors of the other Contracting Party. (Article 3 (1)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. Each Contracting Party shall guarantee a fair and equitable treatment, in its territory, to investments of investors of the other Contracting Party and shall ensure that the exercise of the rights recognized here shall not be impaired in practice. (Article 4 (1)).

Full Protection and Security

Each Contracting Party shall protect, in its territory, investments made in accordance with its laws and regulations by investors of the other Contracting Party. (Article 3 (2)).

Non-Discrimination

Yes. Each Contracting Party shall not create obstacles with respect to the management, maintenance, use, usufruct, extension, sale or liquidation of such investments through unjustified or discriminatory measures. (Article 3 (2)).

National Treatment

Yes. Each Contracting Party shall grant investments of investors of the other Contracting Party treatment no less favorable than that it grants to investments of its own investors or investors of a third State, if this latter treatment is more favorable. (Article 4 (2)).

Most-Favored Nation Treatment

Yes. Each Contracting Party shall grant investments of investors of the other Contracting Party treatment no less favorable than that it grants to investments of its own investors or investors of a third State, if this latter treatment is more favorable. (Article 4 (2)).

EXCEPTIONS

If a Contracting Party grants special advantages to investors of any third State by virtue of an agreement related to the creation of a free trade area, customs union, common market, economic union, or other forms of regional economic organization, or by virtue of an agreement related totally or principally to tax matters, this Party shall not be obliged to offer these advantages to investors of the other Contracting Party. (Article 4 (3)).

OTHER ASPECTS

Performance Requirements

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Others

Investors of either Contracting Party who suffer losses due to a war or any other armed conflict, state of national emergency, civil disturbances or other similar events in the territory of the other Contracting Party shall receive from this Contracting Party, in respect of reparation, indemnification, compensation or other settlement, a treatment no less favorable than that accorded to national investors or those of any third State. (Article 6 (4)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Contracting Party shall authorize, without delay, to investors of the other Contracting Party the free transfer of funds relating to investments in a currency freely convertible, in particular, but not exclusively:

1. interests, dividends, profits, and other yields;
2. amortizations of foreign loans relating to an investment;
3. capital or proceeds of the sale or the total or partial liquidation of an investment;
4. payments arising out of an investment dispute and compensations in accordance with Article 6. (Article 5 (1)).

Repayment of Loans

Yes. (Article V (1) (b)).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article V (1) (c)).  

Licenses and Other Fees

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Other Categories of Payment

Yes. (Article V (1) (d)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Each Contracting Party shall permit, without delay, to investors of the other Contracting Party the free transfer of funds relating to investments in a currency freely convertible. (Article 5 (1)).

Exchange Rates

Transfers shall be made at the exchange rate applicable on the date of transfer, in accordance with the law of the Contracting Party that has admitted the investment. (Article 5 (2)).

Time of Transfer

Each Contracting Party shall permit, without delay, to investors of the other Contracting Party the free transfer of funds relating to investments in a currency freely convertible. (Article 5 (1)).

The capital invested shall be allowed to be transferred only one year after the date of entry, unless the legislation of the Contracting Party accords a more favorable treatment. (Protocol, Ad. Article 5).

The expression "without delay" means the normal period of time necessary to fulfill the formalities for the transfer. This period of time shall begin the day when the request, accompanied by the necessary documents, has been presented but shall, in no case, exceed 30 days. (Protocol, Ad. Article 5).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Any measure that deprives an investor of his investment, directly or indirectly. (Article 6 (1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “Public use or national interest.” (Article 6(1)(a)(b)).

Due Process of Law and Judicial Review

Yes. (Article 6(1)(3)).

Other

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Compensation Standard; Form and Time of Payment

“Prompt, adequate and effective compensation”

Compensation shall:

• be based on the market value of the affected investment at a date immediately preceding the adoption or public announcement of the expropriating measure. In cases where it is difficult to determine the market value, the amount of compensation may be determined in accordance with the evaluation principles generally accepted as equitable, taking into account the invested capital, its depreciation, the amount of capital repatriated to date, the replacement value and other relevant factors; interest shall be accumulated according to the normal bank rate in case of delay in payment. (Article 6(1)(2)).

Settlement of Disputes between Contracting Parties
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PRE-ARBITRATION NEGOTIATIONS

Any dispute between the Contracting Parties concerning the interpretation or application of the Agreement shall, whenever possible, be settled amicably through negotiations. (Article 9 (1)).

If it cannot be settled within six months of the notification of the dispute, it shall, at the request of either Contracting Party, be submitted to an ad-hoc arbitral tribunal. (Article 9 (2)).

ARBITRATION

Constitution of the Tribunal

An arbitral tribunal shall be constituted by three members as follows:

• Within two months of the request of arbitration, each Contracting Party shall appoint an arbitrator.
• The two arbitrators are required to select, within thirty days of the designation of the last arbitrator, a national of a third State with which both Parties maintain diplomatic relations, to serve as Chairman of the tribunal. The selection of the Chairman must be confirmed by the Contracting Parties within thirty days of the nomination. (Article 9 (3) (5)).
• When, within the time frame allowed, an agreement cannot be reached, the President of the International Court of Justice might be entrusted by either Contracting Party with the responsibility of making the appointments. (There are also additional provisions to cover cases when the President is a national of either Contracting Party or is otherwise prevented from fulfilling this function). (Article 9 (4)).
• Regarding costs, each Contracting Party is required to bear the expenses of its own member of the tribunal and of its representation in the proceedings, while the costs related to the Chairman are to be paid for equally by the Contracting Parties unless they agree otherwise. (Article 9 (7)).

Procedural Rules of the Tribunal

The arbitral tribunal shall determine its own procedure. (Article 9 (6)).

Decisions of the tribunal shall be taken by a majority of votes and shall be final and binding on both Contracting Parties. (Article 9 (8)).

Applicable Law

The tribunal shall decide on the basis of the provisions of the Agreement, the general principles of international law and the legal principles recognized by the Contracting Parties. (Article 9 (6)).

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

DEFINITION

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PREARBITRAL CONSULTATIONS AND DISPUTE SETTLEMENT MECHANISMS

Disputes relating to this Agreement between one Contracting Party and one investor of the other Contracting Party that has made investments in the territory of the first Contracting Party shall, to the extent possible, be settled amicably. (Article 8 (1)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

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Consent

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Forms of Arbitration

If after such consultations it has not been possible to settle the dispute within a period of three months from the date on which it was initiated, the investor may send the dispute to:

1. to the competent tribunals of the Contracting Party, in which territory the investment was made; or
2. to international arbitration under ICSID. (Article 8 (2)).

Election by the investor of either one of these procedures shall be definitive. (Article 8 (3)).    

Applicable Law

International arbitration under ICSID. (Article 8 (2)).