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

DEFINITION OF INVESTMENT

The term “investment” comprises every kind of asset or right linked to an investment provided that the investment has been made in accordance with the host country’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;

• credits;

• intellectual property rights; and,

• concessions and similar rights. (Article I (2)).

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 I (1) (a)).

Companies

The term “investor” includes any legal person constituted under the law of one of the Contracting Parties, that has its seat and has substantial business activities in the territory of said Party. It also refers to legal persons constituted under the law of any country, if they are effectively controlled by investors as defined in Article I (1) (a) and (b). (Article I (1) (b)(c)).

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

Date of signature: September 22, 1994
Entry into force:
The Agreement enters into force when both Contracting Parties have notified each other that their respective internal legal procedures have been fulfilled (30 days after the date of the latter notification).
Duration: 15 years.
Thereafter it shall remain in force unless either Party notifies the other Party, through diplomatic channels, of its decision to terminate the Agreement.

Admission [Return to the top of the page]

Subject to its general policy on foreign investment, each Contracting Party shall promote, in its territory, investments of investors of the other Contracting Party, and shall authorize such investments in accordance with its legislation. (Article III (1)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. (Article IV (1)).

Full Protection and Security

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

Non-Discrimination

Yes. Each Contracting Party shall not put obstacles with respect to the management, maintenance, use, benefit, extension, transfer, sale or disposal of investments of investors of the other Contracting Party through unjustified and discriminatory measures. (Article III (2)).

National Treatment

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

Most-Favored Nation Treatment

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

EXCEPTIONS

A Contracting Party is not obliged to extend to investors of the other Contracting Party the advantages accorded to investors of a third State by virtue of the creation of a free trade area, customs union, common market, economic union or other type of regional economic organization; or by virtue of a taxation agreement. (Article IV (3)).

OTHER ASPECTS

Performance Requirements

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Others

Investors of each Contracting Party suffering losses with respect to their investments in the territory of the other Contracting Party due to war or other armed conflicts, national emergency, civil disturbances or other similar events, shall receive treatment, in regard to reparation, indemnification, compensation or other settlement, no less favorable than that accorded by the latter Contracting Party to its own investors or those of any third State. (Article VI (4)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

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

1. interests, dividends, profits and other benefits;
2. amortization of external credits with respect to an investment;
3. proceeds of the sale or the total or partial liquidation of an investment;
4. payments arising out of an investment dispute or compensations in accordance with Article VI. Transfers effected in accordance with the Chilean Program for the Conversion of the External Debt shall be governed by the special rules of this Program. (Protocol).

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

Transfers shall be effected in convertible currency. (Article V (1)).

Exchange Rates

Transfers shall be effected at the market exchange rate applicable on the date of transfer, and in accordance with the law of the Contracting Party where the investment was admitted. (Article V (2)).

Time of Transfer

Transfers shall be effected without delay. (Article V (1)).

Transfers shall be considered without delay when they are effected within the normal time to fulfill the formalities for the transfer. The period of time, which in no case could exceed 30 days, shall begin at the time of the request for the transfer. (Protocol).

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).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Deprivation of an investment (direct or indirect). (Article VI (1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “Public benefit or national interest.” (Article VI (1) (a)(b)).

Due Process of Law and Judicial Review

Yes. (Article VI (3)).

Other

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Compensation Standard; Form and Time of Payment

“Prompt, sufficient and effective compensation”

Compensation shall:

• amount to the market value of the investment immediately before the expropriation became publicly known. (Provisions aimed at calculating the market value of expropriated investments are included.)
• include interests at a normal commercial rate from the date of expropriation until the time of payment;
• be made without delay;
• be made in a freely convertible currency. (Articles VI (1) (2) and V).

Settlement of Disputes between Contracting Parties
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PRE-ARBITRATION NEGOTIATIONS

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

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

ARBITRATION

Constitution of the Tribunal

The arbitral tribunal shall have three members.

• Each Party shall appoint an arbitrator within two months.
• The two arbitrators are required to select, within the next two months, a national of a third State with which both Parties maintain diplomatic relations, who serves as Chairman of the tribunal. When a Party does not select an arbitrator or agreement cannot be reached on the designation of the Chairman, 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.
• 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. (Article IX (2) (3) (4) (5) (6) (9)).

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 IX (7) (8)).

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 X (1)). If it was not possible to settle the dispute within a period of six months, the investor may submit the dispute:

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

Election by the investor of either one of these procedures shall be definitive. (Article X (2)(3)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

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Consent

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Forms of Arbitration

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Applicable Law

No reference.