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, according to 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 having a financial value (loans only where directly related to a specific investment, or when related to a financial operation over a period of more than three years);
• intellectual property rights;
• interests or rights that are derived from capital contribution or other resources in the territory of a Contracting Party for the development of an economic activity in the territory of the other Contracting Party, as a result of the granting of a concession;
• the making of an investment by associations, companies or enterprises of a Contracting Party, whose capital is owned (majority) by investors of the other Contracting Party; and
• involvement in activities covered by the investment legislation of the other Contracting Party, such as trust funds.

It includes the investment carried out by associations or companies of one Contracting Party, whose majority capital belongs to investors of the other Contracting Party (Article One (1)).

The investment does not include the obligation to make a payment or grant credit to the State or to a State enterprise; or pecuniary claims derived from commercial contracts for the sale of goods or services (Article One (2)).

DEFINITION OF INVESTOR

Nationals

The term “investor” refers to any natural person who has made or is making an investment and who is a national of one of the Contracting Parties under its law. (Article One (3)).

Companies

The term “investor” means any legal person who has made or is making an investment and is constituted in accordance with the laws and regulations of a Contracting Party, and having its seat in the territory of that Contracting Party. (Article One (3)).

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

Date of signature: November 13, 1996.
Entry into force: Thirty days after the last written notification of fulfillment of constitutional requirements for the entry into force has been received by the relevant Contracting Party.
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.

Admission [Return to the top of the page]

Each Contracting Party, once investments of investors of the other Contracting Party have been admitted in its territory, shall offer full legal protection to such investors and their investments and shall grant treatment no less favorable than the one given to its own investors and their investments or those of third States. (Article 3(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 investments in its territory by investors of the other Contracting Party, shall grant full legal protection to such investments. (Article 3 (2)).

Non-Discrimination

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

National Treatment

Yes. Each Contracting Party, once it has admitted investments in its territory by investors of the other Contracting Party, shall accord them treatment which is no less favorable than that accorded to investments by its own investors or by investors of third States. (Article 3 (2)).

Most-Favored Nation Treatment

Yes. Each Contracting Party, once it has admitted investments in its territory by investors of the other Contracting Party, shall accord them treatment which is no less favorable than that accorded to investments by its own investors or by investors of third States. (Article 3 (2)).

Exceptions

If a Contracting Party grants a special treatment to investors or investments of investors of a third State by virtue of agreements establishing provisions to avoid double taxation, creating free trade areas, customs unions, common market, regional agreements, economic or monetary unions and similar institutions, such Party shall not be obliged to grant such treatment to investors or investments of investors of the other Contracting Party. (Article 3 (3)).

The provisions of Article 3 (2) shall neither be construed so as to extend to investors of the other Contracting Party the benefit of any treatment, preference or privilege resulting from the bilateral agreements providing for concessional treatment concluded by the Argentine Republic and Italy on December 10, 1987 and with Spain on June 3, 1988. (Protocol).

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 8).

Each Contracting Party shall grant to investors of the other Contracting Party with respect to losses suffered in its territory due to armed conflicts, national state of emergency or insurrection, treatment no less favorable than the one granted to its own investors or those of third State, in respect to restitution, indemnification or other settlement. (Article 3 (4)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Contracting Party shall permit that all transfers relating to an investment of an investor of the other Contracting Party in its territory be done freely and without delay. Such transfers include:

1. returns, dividends, interests, reinvestment of capital, bonus payments, administrative expenses, technical assistance and other honoraria, as well as other amounts derived from an investment;
2. proceed from a total or partial sale or liquidation of an investment;
3. payments made in accordance with a contract under which an investor or his investment is, as well as funds in repayment of loans, as defined in Article 1 (1) (c);
4. payments from compensation provided for in Articles 3 (4) and 5; and
5. payments arising out of an investment dispute. (Article IV (1)).

Repayment of Loans

Yes. (Article IV (1) (c)).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article IV (1) (b)).

Licenses and Other Fees

Yes. (Article IV (1) (a)).

Other Categories of Payment

Yes. (Article IV (1) (a), (c), (d), (e)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Transfers shall be effected without delay in a freely convertible currency at the exchange rate applicable on the date of transfer, in accordance with the procedures established by the Contracting Party in which territory the investment was made, procedures which cannot affect the substance of the rights set forth in this Article. (Article IV (2)).

Exchange Rates

Transfers shall be effected without delay at the exchange rate applicable on the date of transfer. (Article IV (2)).

Time of Transfer

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

Notwithstanding the provisions in paragraphs 1 and 2, each Contracting Party can maintain its laws and regulations that require reports on currency transfers. Moreover, through non-discriminatory and good faith application, each Contracting Party can protect the rights of creditors or ensure the compliance with decisions from judicial or arbitrary proceedings. (Art. IV (3)).

In the case of a fundamental disequilibrium in the balance of payments, a country could establish temporary exchange controls when implemented in accordance with internationally accepted criteria. These restrictions shall be established for a limited time period through equitable, non-discriminatory and good faith application. (Art. IV (4)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

To nationalize, expropriate, or adopt directly or indirectly any measure that is equivalent to expropriation or nationalization. (Article V(1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “Public use” (Article V(1)).

Due Process of Law and Judicial Review

Yes. (Article V(1)).
The BIT does not include an independent requirement that expropriations be subject to judicial review. However, it has been argued that the international standard of due process includes such a requirement.

Other

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Compensation Standard; Form and Time of Payment

Compensation shall:

• amount to the market value of the investment immediately before the expropriating measure took effect (“date of expropriation”) or before the impending expropriation became publicly known;
• valuation criteria shall include the current value, the declared fiscal value of tangible goods, as well as all other criteria applicable to the determination of market value; . be made without delay;
• be fully realizable and freely transferable
• the sum paid shall not be less than the equivalent amount that would have been paid for compensation in a freely convertible currency in the international financial market on the date of expropriation, said currency being converted at the market rate on the valuation date, plus the interest that would have been generated at a reasonable commercial rate for that currency up to the date of payment. (Article V(2-4)).

Settlement of Disputes between Contracting Parties
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PRE-ARBITRATION NEGOTIATIONS

The Contracting Parties agree to consult and negotiate on any matter related to the interpretation or the application of this Agreement in the case of any dispute arising from the Agreement. (Article XI (1)).
If after six months of consultations and negotiations the dispute has not been settled, any Contracting Party may, without prejudice as to Contracting Parties agreeing on something else, submit the dispute to an arbitral tribunal. (Article XI (2)).

ARBITRATION

Constitution of the Tribunal

The arbitral tribunal shall comprise three members.

• Each Contracting Party shall assign an arbitrator.
• The two arbitrators are required to select a national of a third State to serve as Chairman of the tribunal, with the approval of both Contracting Parties.
• The Contracting Parties are required to designate their respective arbitrators within two months of the receipt of the request for arbitration.
• If agreement cannot be reached within the designated time frame, 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 Contracting Party or is otherwise prevented from fulfilling this function.
• 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; the costs related to the Chairman and any other ancillary costs shall be borne equally by the Contracting Parties. The Tribunal may, however, direct that a higher proportion of the costs be paid by one of the Contracting Parties, and such an award shall be binding on the Contracting Parties. (Article XI (2) (3) (4) (6)).

Procedural Rules of the Tribunal

The tribunal shall determine its own procedure unless the Contracting Parties decide otherwise.
Decisions of the tribunal shall be taken by a majority of votes and shall be final and binding on both Parties. (Article XI (5)).

Applicable Law

The tribunal shall decide on the basis of the provisions of the Agreement and the applicable rules of international law. (Article XI (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 investments between an investor of one Contracting Party and the other Contracting Party will, to the extent possible, be settled through amicable consultations. (Art. 10 (1)).

If it was not possible to settle the dispute within a period of six months, it may be submitted at the request of the investor:

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

Election by the investor of either one of these procedures shall be definitive. (Article 10 (3)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

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Consent

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Forms of Arbitration

When the dispute is referred to international arbitration, the investor may refer the dispute to:

1. ICSID if both Parties are party to the ICSID Convention;
2. ICSID Additional Facility Rules if one Party is party to ICSID; or
3. UNCITRAL Arbitration Rules. (Article 10 (4)).

The Annex to the Agreement provides for additional rules for the constitution of the ad hoc tribunal.

Applicable Law

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