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

DEFINITION OF INVESTMENT

The term “investment” comprises every kind of asset invested by an investor of one Contracting Party in the territory of the other Contracting Party, in accordance with the latter’s laws and regulations. This general definition is illustrated by a non exhaustive list of five groups 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 (1)).

DEFINITION OF INVESTOR

Nationals

The term “investor” includes any natural person who is a national of one of the Contracting Parties under its law. (Article 1 (2)(a)).

The treaty does not apply to investments made in the territory of one Contracting Party by natural persons who are nationals of the other Contracting Party if they have been domiciled in the host country for more than two years, unless it is proved that the investment was admitted from abroad. (Article 1 (3)).

Companies

The term “investor” includes:

• any legal person constituted under the laws and regulations of a Contracting Party, and having its seat in the territory of said Party, irrespective of whether or not its activities are directed at profit; and,
• any legal person constituted under the laws of any country but effectively controlled by investors of the other Contracting Party. (Article 1 (2) (b)(c)).

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

Date of signature: March 17, 1994
Entry into force: May 1, 1995
Duration: 10 years
Thereafter it shall remain in force until the expiration of 12 months from the date that either Party in writing notifies the other Party of its decision to terminate the Agreement.
The Agreement shall apply to investments made before or after its entry into force.

Admission [Return to the top of the page]

Each Contracting Party shall promote investments of the other Party in its territory, and shall admit such investments in accordance with its legislation. (Article 2).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. Each Contracting Party shall ensure fair and equitable treatment to investments of investors of the other Contracting Party. (Article 3 (1)).

Full Protection and Security

Yes. Each Contracting Party, once it has admitted in its territory investments of investors of the other Contracting Party, shall accord them full legal protection. (Article 3 (2)).

Non-Discrimination

Yes. Each Contracting Party shall not impair the management, maintenance, use, enjoyment or disposal of investments of investors of the other Contracting Party through unjustified or discriminatory measures. (Article 3 (1)).

National Treatment

Yes, for admitted investments of investors of the other Contracting Party. (Article 3 (2)).

Most-Favored Nation Treatment

Yes, for admitted investments of investors of the other Contracting Party. (Article 3 (2)).

Exceptions

Most-favored-nation (MFN) treatment shall not apply to privileges accorded by each Contracting Party to investors of any third State by virtue of its participation or association in a free trade agreement, customs union, economic union, common market or regional agreement. (Article 3 (3)).

The treatment referred to in Article 3 (2) does not extend to benefits which either Contracting Party accords to investors of any third State under a taxation agreement. (Article 3 (4)).

The treatment referred to in Article 3 (2) does not extend to benefits which the other Contracting Party receives from bilateral agreements providing concessional financing, such as the agreements subscribed by Argentina with Italy on December 10, 1987 and Spain on June 3, 1988. (Article 3 (5)).

OTHER ASPECTS

Performance Requirements

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Others

If the provisions in the legislation of a Contracting Party, or if the existing or future obligations under international law between the two Contracting Parties, or if an agreement between an investor of a Contracting Party and the other Contracting Party include provisions granting investments of investors of the first Contracting Party a more favorable treatment, these provisions shall prevail (if they are more favorable). (Article 7).

Investors of one Contracting Party who suffer losses because their investments or returns in the territory of the other Contracting Party are affected by war or armed conflict, national emergency, revolt, insurrection or civil strife, shall be accorded by such latter Contracting Party, in respect to restitution, indemnification, compensation or other settlement, treatment no less favorable than that it accords to its own investors or to investors of any third State. These payments shall be freely transferable. (Article 4 (2)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Contracting Party shall guarantee to investors of the other Contracting Party the unrestricted transfers of investments and returns and, in particular, but not exclusively:

1. capital and additional amounts necessary for the maintenance and the development of investments;
2. profits, interests, dividends, and other current incomes;
3. funds in repayment of loans;
4. bonuses and honoraria;
5. proceeds of the total or partial liquidation or sale of any investment;
6. any compensation as indicated in Article 4;
7. incomes of nationals of a Contracting Party (nationals that have obtained authorization to work in the territory of the other Contracting Party with respect to an investment). (Article 5 (1)).

Repayment of Loans

Yes. (Article 5 (1) (c)).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article 5 (1) (e)).

Licenses and Other Fees

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Other categories of Payment

Yes. (Article 5 (1) (a), (d), (f), (g)).

CONVERTIBILITY AND EXCHANGE RATES

Currency

Transfers shall be effected without delay, in freely convertible currency, at the exchange rate applicable on the date of transfer, in accordance with the procedures established by the Contracting Party in the territory where the capital was invested. (Article 5 (2)).

Exchange Rates

Transfers shall be effected at the exchange rate applicable on the date of transfer. (Article 5 (2)).

Time of Transfer

Transfers shall be effected without delay. (Article 5 (2)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Expropriation, nationalization or measures which have a similar effect. (Article 4 (1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “National interest and/or public use.” (Article 4 (1)).

Due Process of Law and Judicial Review

Yes. (Article 4 (1)).

Other

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Compensation Standard; Form and Time of Payment

“Prompt, adequate and effective compensation” Compensation shall:

• amount to the market value of the investment immediately before the date of expropriation or before the impending expropriation became publicly known;

• include interests at a normal commercial rate from the date of expropriation;

• be made without delay;

• be effectively realizable and freely transferable. (Article 4 (1)).

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 through diplomatic channels. (Article 8 (2)).

If it cannot be settled within six months, the dispute shall, at the request of either Party, be submitted to an arbitral tribunal for decision. (Article 8 (1)).

ARBITRATION

Constitution of the Tribunal

An arbitral tribunal shall be constituted for each dispute.

• Within two months of the request of arbitration, each Party shall appoint an arbitrator.
• The two arbitrators are required to select, within the next two months, a national of a third State who serves as Chairman of the tribunal. When 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 appointment. 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.
• Regarding costs, each 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 Parties. The Tribunal may, however, direct that a higher proportion of the costs be paid by one of the Parties. (Article 8 (3) (4) (5)).

Procedural Rules of the Tribunal

The arbitral tribunal shall determine its own procedure. Decisions of the tribunal shall be taken by a majority of votes and shall be binding on both Parties. (Article 8 (5)).

Applicable Law

No reference.

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 investments between an investor of one Contracting Party and the other Contracting Party will, to the extent possible, be settled through amicable consultations. (Article 9 (1)). If it was not possible to settle the dispute within a period of six months, it may be submitted:

1. to the competent tribunals of the host party; or
2. to international arbitration.

If the investor is the claimant and the parties do not agree on which dispute settlement mechanism to use, the investor’s opinion shall prevail. Election by the investor of either one of these procedures shall be definitive. (Article 9 (2)(3)(4)).

ARBITRAL SETTLEMENT OF DISPUTES

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Conditions

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Consent

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Forms of Arbitration

Where the dispute is referred to international arbitration, it may be submitted to:

1. ICSID, provided each Contracting Party is a party to the ICSID Convention. (For the interim period, both parties give their consent to the submission of the dispute to the ICSID Additional Facility Rules); or
2. an ad hoc arbitration tribunal established under the UNCITRAL Arbitration Rules. (Article 9 (5)).

Applicable Law

The arbitral tribunal shall decide the dispute in accordance with the provisions of the Agreement; with reference to the laws of the Contracting Party involved in the dispute; terms of any specific agreement concluded in relation to such an investment; and, principles of international law. (Article 9 (6)).