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

DEFINITION OF INVESTMENT

The term “investor” means every kind of goods or assets invested by an investor from a Contracting Party in the territory of the other Party. This general definition is illustrated by a non exhaustive list of specific rights, including:

• traditional property rights;
• rights in companies;
• goodwill;
• money, claims to money, and claims to performance under contract having a financial value;
• intellectual property rights; and
• rights, conferred by law or under contract, to undertake any economic and commercial activity, including any rights to search for, cultivate, extract or exploit natural resources. (Article 1 (2)).

DEFINITION OF INVESTOR

Nationals

The term “investor” means any natural person with the nationality of a Contracting Party in accordance with the laws of the Contracting Party, who has made an investment in the territory of the other Contracting Party. (Article 1(1)).

Companies

The term “investor” means any juridical person (legal entities including companies, corporations, trade associations, affiliates and any other organization) constituted according to the laws and regulations of a Contracting Party that has its seat in the territory of that Contracting Party, regardless of whether or not its activity is for profit, and that makes an investment in the other Contracting Party. (Article 1 (1)).

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

Date of signature: March 17, 1997
Entry into force: The Contracting Parties shall notify each other of the fulfillment of their respective internal requirements for the entry into force of the Agreement. The Agreement shall enter into force when the last notification has been submitted.
Duration: 10 years
Thereafter the Agreement shall remain in force indefinitely, unless one of the Contracting Parties notifies the other Party in writing, with twelve months advance notice, of its intention to terminate the Agreement.
The Agreement applies to all investments made before or after the date of its entry into force; however, the Agreement does not apply to disputes which pre-date the Agreement’s entry into force.

Admission [Return to the top of the page]

Each Contracting Party shall promote and create favorable conditions for the realization of investments in its territory by investors of the other Contracting Party and shall admit these investments in accordance with its legal provisions. (Article 2 (1)).

A Contracting Party that has admitted an investment in its territory shall facilitate the granting, in accordance with its laws and regulations, of the necessary permits with respect such investment such as those required for the execution of licensing contracts and contracts for technical, commercial and administrative assistance. (Article 2 (3)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. Each Contracting Party, in accordance with the rules and criteria of international law, shall grant a fair and equitable treatment and full protection to investments of investors of the other Contracting Party. (Article 3).

Full Protection and Security

Each Contracting Party, in accordance with the rules and criteria of international law, shall grant a fair and equitable treatment and full protection to investments of investors of the other Contracting Party. (Article 3).

Non-Discrimination

Yes, Each Contracting Party, in accordance with the rules and criteria of international law, shall grant a fair and equitable treatment and full protection to investments of investors of the other Contracting Party and shall abstain from impairing, with arbitrary or discriminatory measures, their maintenance, management, utilization, enjoyment, extension, sale or liquidation. (Article 3).

National Treatment

Yes. Treatment that each Contracting Party gives to investments of investors of the other Contracting Party, once admitted in accordance with its legislation, shall not be less favorable than that given to its own investors or those of any third State. (Article 4 (1)).

Between national treatment and most-favored-nation treatment, each Contracting Party shall apply treatment that is the most favorable to the investment of the investor. (Article 4 (4)).

Most-Favored Nation Treatment

Yes. Treatment that each Contracting Party gives to investments of investors of the other Contracting Party, once admitted in accordance with its legislation, shall not be less favorable than that given to its own investors or those of any third State. (Article 4 (1)).

Between national treatment and most-favored-nation treatment, each Contracting Party shall apply treatment that is the most favorable to the investment of the investor. (Article 4 (4)).

EXCEPTIONS

This treatment (Article 4) shall be not extended to the privileges that a Contracting Party grants to investors of any third State by virtue of its present or future association or participation in a free trade area, customs union, common market, economic and monetary unions, or other institutions of economic integration. (Article 4 (2)).

This treatment (Article 4) shall not be extended to tax deductions, exemptions and to other privileges granted by either Contracting Party to investments of investors of any third State by virtue of a double taxation agreement or any other agreement on tax matters. (Article 4 (3)).

In the case that access to any foreign market by any good produced in the territory of a Contracting Party should be submitted to quantitative restrictions, the distribution of the corresponding export quotas shall not be subject to the provisions of this Agreement. (Article 6).

OTHER ASPECTS

Performance Requirements

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Others

Investors of either Contracting Party who suffer losses due to a war, other armed conflict, revolution, state of national emergency, revolt, insurrection or disturbances or other similar circumstances in the territory of the other Contracting Party shall be granted by this Contracting Party, in respect of restitution, indemnification, compensation or other settlement, a treatment no less favorable than that accorded to national investors or those of any third State, whichever is the most favorable. (Article 7).

If the provisions in the legislation of any Contracting Party or the existing or future obligations under international law between the two Contracting Parties, in addition to the current Agreement, result in general or special provisions granting investors of a Contracting Party a more favorable treatment than the one enjoyed in this Agreement, such provisions shall prevail if they are more favorable. (Article 9).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Contracting Party shall permit investors of the other Contracting Party the transfers of all payments related to their investments, in particular, but not exclusively, the following:

1. the initial capital and additional amounts necessary for the maintenance, growth and development of the investment;
2. funds necessary for the reimbursement of loans linked to an investment;
3. indemnifications as defines in Articles V and VI;
4. proceeds of the sale or the total or partial liquidation of the investment;
5. payments arising out of an investment dispute. (Article 8 (1)).

Repayment of Loans

Yes. (Article 8 (1) (b)).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article 8 (1) (d)).

Licenses and Other Fees

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Other Categories of Payment

Yes. (Article 8 (1) (a), (c ), (e)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Transfers referred to in this Agreement shall be made in a freely convertible currency at the rate of exchange applicable on the date of transfer. Contracting Parties commit themselves to facilitate the necessary formalities so as to make such transfers without delay. In particular, it shall not take more than three months between the date of the application for the transfer and the date when the transfer is made. (Article 8 (2)).

Exchange Rates

Transfers referred to in this Agreement shall be made in a freely convertible currency at the rate of exchange applicable on the date of transfer. (Article 8 (2)).

Time of Transfer

Without delay. In particular, it shall not take more than three months between the date of the application for the transfer and the date when the transfer is made. (Article 8 (2)). Notwithstanding the provisions of Article 8, a Contracting 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. non-compliance with the rules relating to the issuing, trading or dealing in securities;
3. penal or administrative offenses;
4. non-compliance with the rules relating with the reports of transfers of currency or other monetary instruments;
5. ensuring the satisfaction of judgments in adjudicatory proceedings; or
6. ensuring the payment of income tax obligations. (Article 8(3)).

Notwithstanding the provision of Article 8 (1), each Contracting Party shall have the right when experiencing exceptional or serious balance of payments difficulties to limit temporarily transfers in an equitable and non-discriminatory manner, in accordance with internationally accepted criteria. Limits adopted or maintained by one Contracting Party, in accordance with this paragraph, as well as its elimination, shall be notified promptly to the other Contracting Party. (Article 8 (4)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Expropriation or equivalent measures. (Article 5(1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “Public interest.” (Article 5(1)).

Due Process of Law and Judicial Review

Yes. (Article 5 (1)(3)).

Other

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Compensation Standard; Form and Time of Payment

“Prompt, adequate and effective compensation”

Compensation shall:

• amount to the “fair price” (“justo precio”) of the investment immediately before the date of expropriation or before the proposed expropriation became public knowledge;
• include interests at a normal commercial rate from the date of expropriation;
• be made without delay;
• be effectively realizable and freely transferable. (Article 5(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, to the extent possible, be settled through diplomatic channels. (Article 12 (1)).

If it cannot be settled within six months from the start of negotiations, the dispute shall, at the request of either Contracting Party, be submitted to an arbitral tribunal. (Article 12 (2)).

ARBITRATION

Constitution of the Tribunal

The arbitral tribunal shall be constituted as follows:

• Each Contracting Party shall appoint an arbitrator and these arbitrators shall select the national of a third State to serve as Chairman. The two arbitrators shall be selected within three months, and the Chairman within five months from the date when either one of the Contracting Parties has communicated its intention to submit the dispute to an arbitral tribunal. (Article 12 (3)).

If the Contracting Parties have not made the nominations within the established time frames, 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 Party or is otherwise prevented from fulfilling this function). (Article 12 (4)).

Regarding costs, each Contracting Party is required to bear the honoraria and 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. (Article 12 (7)).

Procedural Rules of the Tribunal

Unless otherwise agreed by the Parties, the arbitral tribunal shall determine its own procedure. (Article 12 (6)).

Applicable Law

The tribunal shall decide on the basis of the provisions of the Agreement and of any other agreement in force between the Contracting Parties, and on the universally recognized principles of international law. (Article 12 (5)).

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

Any dispute relating to the Agreement between an investor of one Contracting Party and the other Contracting Party in regard of the compliance of the provisions of this Agreement, relating to his investment, shall, to the extent possible, be settled through amicable consultations. (Article 11 (1)).

If it was not possible to settle the dispute within a period of six months, the investor may submit it:

1. to the competent tribunals of the host party, in which the investment was made; or
2. to international arbitration. (Article 11 (2)).

Election by the investor of either one of these procedures shall be definitive. (Article 11 (3)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

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Consent

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Forms of Arbitration

In the case of international arbitration, the options are:

1. ICSID, when each Party is a party to the Convention (or to the Additional Facility Rules of ICSID when one Contracting Party is not a party to ICSID anymore);
2. ad hoc tribunal established under the rules of UNCITRAL, when none of the Parties is a party to the ICSID Convention anymore. (Article 11 (2)).

Applicable Law

The arbitral tribunal may decide the dispute in accordance with:

1. the provisions of the Agreement and other Agreements between Contracting Parties; with terms of any specific agreement concluded in relation with this investment;
2. the national law, in which territory the investment was made, including the rules on conflicts between laws and terms of specific agreements concluded in relation to this particular investment; and,
3. universally accepted rules and principles of international law. (Article 11 (4)).