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

DEFINITION OF INVESTMENT

The term “investment” means any kind of asset owned or controlled either directly, or indirectly through an investor of a third State, by an investor of one Contracting Party in the territory of the other Contracting Party in accordance with the latter’s laws.

This general definition is illustrated by a non exhaustive list of groups 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.

An “investment” does not include real estate or other property, tangible or intangible, not acquired in the expectation or used for the purpose of economic benefit or other business purposes.

For further certainty, an investment shall be considered to be controlled by an investor if the investor controls, directly or indirectly, the enterprise which owns the investment. (Article I(d)).

DEFINITION OF INVESTOR

Nationals

The term “investor” means:

• in the case of Canada, any natural person possessing the citizenship of or permanently residing in Canada in accordance with its laws, and who makes the investment in the territory of Uruguay and who does not possess the citizenship of Uruguay;
• in the case of Uruguay, any natural person possessing the citizenship of or permanently residing in Uruguay in accordance with its laws, and who makes the investment in the territory of Canada and who does not possess the citizenship of Canada. (Article I (e)).

Companies

The term “investor” means:

• in the case of Canada, any enterprise incorporated or duly constituted in accordance with applicable laws of Canada and who makes the investment in the territory of Uruguay and does not possess the citizenship of Uruguay, and
• in the case of Uruguay, any enterprise incorporated or duly constituted in accordance with applicable laws of Uruguay and who makes the investment in the territory of Canada and does not possess the citizenship of Canada. (Article I (e)).

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

Date of signature: October 29, 1997
Entry into force: Each Contracting Party shall notify the other in writing of the completion of the procedures required in its territory for the entry into force of this Agreement. This Agreement shall enter into force on the date of the latter of the two notifications.
Duration: The Agreement shall remain in force unless either Contracting Party notifies the other Contracting Party in writing of its intention to terminate the Agreement. The termination shall become effective one year after the notification has been received. In respect of investments or commitments to invest made prior to the date when the termination of this Agreement becomes effective, the provisions of Articles I to XIV inclusive, as well as paragraphs (1) and (2) of Article XV, shall remain in force for a period of 15 years.
The Agreement shall apply to any investments made by an investor of one Contracting Party in the territory of the other Contracting Party before or after the date of the entry into force of this Agreement. The Agreement shall not apply to disputes between an investor of one Contracting Party and the other Contracting Party that have been submitted to a claim before the effective date of this Agreement.

Admission [Return to the top of the page]

Each Contracting Party shall permit establishment of a new enterprise or acquisition of an existing business enterprise or a share of such enterprise by investors or prospective investors of the other Contracting Party on a basis no less favourable than that which, in like circumstances, it permits such acquisition or establishment by:

1. investors or prospective investors of any third state;
2. its own investors or prospective investors. (Article III)

Decisions of a Contracting Party as to whether or not to permit establishment of a new business enterprise, or acquisition of an existing business enterprise or a share of such enterprise, by investors or prospective investors of the other Contracting Party shall not be subject to dispute settlement under Article XII [Settlement of Disputes between an Investor and the Host Contracting Party] of this Agreement. (Annex 1, Article VI (1)).

Further to Article VI (1), decisions by a Contracting Party pursuant to a pre-existing non-conforming measure described in Article II (1)(b) of this Annex as to whether or not to permit an acquisition shall, in addition, not be subject to dispute settlement under Article XIII [Disputes between the Contracting Parties] of this Agreement. (Annex 1, Article VI (2)).

Neither Contracting Party may impose any of the following requirements in connection with permitting the establishment or acquisition of an investment or enforce any of the following requirements in connection with the subsequent regulation of that investment:

1. to export a given level or percentage of goods;
2. to achieve a given level or percentage of domestic content;
3. to purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from persons in its territory;
4. to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment; or
5. to transfer technology, a production process or other proprietary knowledge to a person in its territory unaffiliated with the transferor, except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority, either to remedy an alleged violation of competition laws or acting in a manner not inconsistent with other provisions of this Agreement. (Article VI).

The provisions of Articles II, III, IV, V and VI do not apply to :

1. procurement by a government or state enterprise;
2. subsidies or grants provided by a government or a state enterprise, including government-supported loans, guarantees and insurance;
3. any measure denying investors of the other Contracting Party and their investments any rights or preferences provided to the aboriginal peoples of Canada; or
4. any current or future foreign aid program to promote economic development, whether under a bilateral agreement, or pursuant to a multilateral arrangement or agreement, such as the OECD Agreement on Export Credits. (Annex 1, Article III (5)).

Investments in cultural industries are exempt from the provisions of this Agreement. “Cultural industries” means natural persons or enterprises engaged in any of the following activities:

1. the publication, distribution, or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the sole activity of printing or typesetting any of the foregoing;
2. the production, distribution, sale or exhibition of film or video recordings;
3. the production, distribution, sale or exhibition of audio or video music recordings;
4. the publication, distribution, sale or exhibition of music in print or machine readable form; or
5. Radiocommunications in which the transmissions are intended for direct reception by the general public, in all radio, television or cable broadcasting undertakings and all satellite programming and broadcast network services. (Annex 1, Article III (4)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. Each Contracting Party shall accord investments or returns of investors of the other Contracting Party :

1. fair and equitable treatment in accordance with principles of international law. (Article II (2) (a)).

Full Protection and Security

Yes. Each Contracting Party shall accord investments or returns of investors of the other Contracting Party :

2. full protection and security. (Article II (2) (b)).

Non-Discrimination

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National Treatment

Yes. Each Contracting Party shall permit establishment of a new enterprise or acquisition of an existing business enterprise or a share of such enterprise by investors or prospective investors of the other Contracting Party on a basis no less favourable than that which, in like circumstances, it permits such acquisition or establishment by:

2. its own investors or prospective investors. (Article III).

Each Contracting Party shall grant to investments and to returns of investors of the other Contracting Party treatment no less favourable than that which, in like circumstances, it grants to investments and returns of:

2. its own investors. (Article IV (1) (b)).

Each Contracting Party shall grant investors of the other Contracting Party, as regards the enjoyment, use, management, conduct, operation, expansion, and sale or other disposition of their investments or returns, treatment no less favourable than that which, in like circumstances, it grants to:

2. its won investors. (Article IV (2) (b)).

Most-Favored Nation Treatment

Yes. Each Contracting Party shall permit establishment of a new enterprise or acquisition of an existing business enterprise or a share of such enterprise by investors or prospective investors of the other Contracting Party on a basis no less favourable than that which, in like circumstances, it permits such acquisition or establishment by:

1. investors or prospective investors of any third state. (Article III).

Each Contracting Party shall grant to investments and to returns of investors of the other Contracting Party treatment no less favourable than that which, in like circumstances, it grants to investments and returns of:

1. investors of any third state. (Article IV (1) (a)).

Each Contracting Party shall grant investors of the other Contracting Party, as regards the enjoyment, use, management, conduct, operation, expansion, and sale or other disposition of their investments or returns, treatment no less favourable than that which, in like circumstances, it grants to:

1. investors of any third State. (Article IV (2) (a)).

EXCEPTIONS

MFN Exceptions Articles III (1) (a) and IV (1) (a) and IV (2) (a) shall not apply to treatment by a Contracting Party pursuant to any existing or future bilateral or multilateral agreement:

1. establishing, strengthening or expanding a free trade area, or custom union;
2. negotiated within the framework of the GATT (including in particular the GATT and the General Agreement on Trade in Services (GATS)), the World Trade Organization, or any successor organization , and containing obligations and rights relating to trade in services; or
3. relating to
   1. aviation;
   2. telecommunications transport networks and telecommunications transport services;
   3. fisheries;
   4. maritime matters, including salvage; or
   5. financial services. (Article I (1) of Annex 1).

Article III (1) (a) does not apply in respect of financial services. (Article I (2) of Annex 1).

For the purposes of this Agreement, the term "financial service" means a service of a financial nature, including insurance, and a service incidental or auxiliary to a service of a financial nature. (Article I (3) of Annex 1).

National Treatment Exceptions: Articles III (1) (b), IV (1) (b), IV (2) (b), V (1), V (2) and VI do not apply to:

1. any measure maintained or adopted after the date of entry into force of this Agreement that, at the time of sale or other disposition of a government's equity interests in, or the assets of, an existing state enterprise or an existing governmental entity, prohibits or imposes limitations on the ownership of equity interests or assets or imposes nationally requirements relating to senior management or members of the board of directors;
2. any existing non-conforming measures maintained within the territory of a Contracting Party; the continuation or prompt renewal of any such non-conforming or any measure referred to in paragraph (a) above; any amendment referred to in paragraph (a) above, to the extent that such amendment does not decrease the conformity of the measure as it existed immediately before the amendment with those obligations;
3. the right of each Contracting Party to make or maintain exceptions within the following sectors or matters:

Canada

• social services ( i.e. public law enforcement; correctional services; income security or insurance; social security or insurance; social welfare; public education; public training; health and child care);
• residency requirements for ownership of oceanfront land;
• measures implementing the Northwest Territories Oil and Gas Accord;
• government securities - as described in Standard Industrial Classification number 8152 as set out in Statistics Canada Standard Industrial Classification, fourth edition, 1980.

Uruguay:

• social services ( i.e. public law enforcement; correctional services; income security or insurance; social security or insurance; social welfare; public education; public training; health and child care). (Article II (1) of Annex 1).

The Contracting Parties shall, within a two period after the entry into force of this Agreement, exchange letters listing, to the extent possible any existing measures that it may rely on to limit national treatment obligations in accordance with Paragraph (1) (b) hereof. (Article II (2) of Annex 1).

Notwithstanding any other provision of this Agreement, the Contracting Parties agree that in respect of services, nothing in this Agreement shall oblige a Contracting Party to accord to investors, prospective investors, or to investments of investors of the other Contracting Party any treatment or right under Articles III (1) (b), IV (1) (b), IV (2) (b), V (1), V (2) or VI more favourable than that which the Contracting Party is required to accord to such investor, prospective investor, or investment pursuant to the General Agreement on Trade in Services ("GATS"), as it may from time to time be amended or replaced. (Art. II (3) of Annex 1).

General Exceptions and Exemptions: Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting, maintaining or enforcing any measure otherwise consistent with this Agreement that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns. (Article III (1) of Annex 1).

Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on international trade or investment, nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining measures, including environmental measures:

1. necessary to ensure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;
2. necessary to protect human, animal or plant life or health; or
3. relating to the conservation of living or non-living exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. (Article III (2) of Annex 1).

Investments in cultural industries are exempt from the provisions of this Agreement. "Cultural industries" means natural persons or enterprises engaged in any of the following activities:

1. the publication, distribution, or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the sole activity of printing or typesetting any of the foregoing;
2. the production, distribution, sale or exhibition of film or video recordings;
3. the production, distribution, sale or exhibition of audio or video music recordings;
4. the publication, distribution, sale or exhibition of music in print or machine readable form; or
5. radiocommunications in which the transmissions are intended for direct reception by the general public, and all radio, television or cable broadcasting undertakings and all satellite programming and broadcast network services. (Article III (4) of Annex 1).

The provisions of Articles II, III, IV, V and VI of this Agreement do not apply to:

1. procurement by a government or state enterprise;
2. subsidies or grants provided by a government or a state enterprise, including government-supported loans, guarantees and insurance;
3. any measure denying investors of the other Contracting Party and their investments any rights or preferences provided to the aboriginal peoples of a Contracting Party; or
4. any current or future foreign aid program to promote economic development, whether under a bilateral agreement, or pursuant to a multilateral arrangement or agreement, such as the OECD Agreement on Export Credits. (Article III (5) of Annex 1).

In respect of intellectual property rights, a Contracting Party may derogate from Article IV in a manner that is consistent with the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at Marrakesh, April 15, 1994. (Article IV (1) of Annex 1).

Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining reasonable measures for prudential reasons, such as:

1. the protection of investors, depositors, financial market participants, policy-holders, policy-claimants, or persons to whom a fiduciary duty is owed by a financial institution;
2. the maintenance of the safety, soundness, integrity or financial responsibility of financial institutions; and
3. ensuring the integrity and stability of a Contracting Party's financial system. (Article III (3)).

Except where express reference is made thereto, nothing in this Agreement shall apply to taxation measures. For further certainty, nothing in this Agreement shall affect the rights and obligations of the Contracting Parties under any tax convention. (Article XI (1)).

OTHER ASPECTS

Performance Requirements

Neither Contracting Party may impose any of the following requirements in connection with permitting the establishment or acquisition of an investment or enforce any of the following requirements in connection with the subsequent regulation of that investment:

1. to export a given level or percentage of goods;
2. to achieve a given level or percentage of domestic content;
3. to purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from persons in its territory;
4. to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment; or
5. to transfer technology, a production process or other proprietary knowledge to a person in its territory unaffiliated with the transferor, except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority, either to remedy an alleged violation of competition laws or acting in a manner not inconsistent with other provisions of this Agreement. (Article VI).

Others

Investors of one Contracting Party who suffer losses because their investments or returns on the territory of the other Contracting Party are affected by an armed conflict, a national emergency or a natural disaster on that territory, shall be accorded by such latter Contracting Party, in respect of restitution, indemnification, compensation or other settlement, treatment no less favourable than that which it accords to its own investors or to investors of any third State. (Article VII).

A Contracting Party may not require that an enterprise of that Contracting Party, that is an investment under this Agreement, appoint to senior management positions individuals of any particular nationality. (Article V (1)).

A Contracting Party may require that a majority of the board of directors, or any committee thereof, of an enterprise that is an investment under this Agreement be of a particular nationality, or resident in the territory of the Contracting Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment. (Article V (2)).

Subject to its laws, regulations and policies relating to the entry of aliens, each Contracting Party shall grant temporary entry to citizens of the other Contracting Party employed by an enterprise who seeks to render services to that enterprise or a subsidiary or affiliate thereof, in a capacity that is managerial or executive or requires specialized knowledge. (Article V (3)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Contracting Party shall guarantee to an investor of the other Contracting Party the unrestricted transfer of investments and returns. Without limiting the generality of the foregoing, each Contracting Party shall also guarantee to the investor the unrestricted transfer of:

1. funds in repayment of loans related to an investment;
2. proceeds of the total or partial liquidation of any investment;
3. wages and other remuneration accruing to a citizen of the other Contracting Party who was permitted to work in connection with an investment in the territory of the other Contracting Party;
4. any compensation owed to an investor by virtue or Articles VII or VIII of the Agreement. (Article IX (1)).

Neither Contracting Party may require its investors to transfer, or penalize its investors that fail to transfer, the returns attributable to investments in the territory of the other Contracting Party. (Article V (2) of Annex 1).

Repayment of Loans

Yes. (Article IX (1) (a)).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article IX (1) (b)).  

Licenses and Other Fees

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Other Categories of Payment

Yes. (Article IX (1) (c ) (d)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Transfers shall be effected without delay in the convertible currency in which the capital was originally invested or in any other convertible currency agreed by the investor and the Contracting Party concerned. Unless otherwise agreed by the investor, transfers shall be made at the rate of exchange applicable on the date of transfer. (Article IX (2)).

Exchange Rates

Unless otherwise agreed by the investor, transfers shall be made at the rate of exchange applicable on the date of transfer. (Article IX (2)).

Time of Transfer

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

Notwithstanding the provisions of Article IX, 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. issuing, trading or dealing in securities;
3. criminal or penal offenses;
4. reports or transfers of currency or other monetary instruments; or e) ensuring the satisfaction of judgments in adjudicatory proceedings. (Article V (1) of Annex 1).

Paragraph 2 of Article V shall not be construed to prevent a Contracting Party from imposing any measure through the equitable, non- discriminatory and good faith application of its laws relating to the matters set out in Paragraph 1 (Article V (3) of Annex 1).

Notwithstanding the provisions of Article IX and Paragraph 2 of Article V (Annex 1), and without limiting the applicability of Article V (1), a Contracting Party may prevent or limit transfers by a financial institution to, or for the benefit of, an affiliate of or person related to such institution or provider, through the equitable, non discriminatory and good faith application of measures relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions. (Article V (4) of Annex 1).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Expropriation, nationalization or measures having an effect equivalent to expropriation or nationalization (Article VIII (1)).

The provisions of this Article apply to taxation measures unless the taxation authorities of the Contracting Parties, no later than six months after being notified by an investor that he disputes a taxation measure, jointly determine that the measure in question is not an expropriation. (Article VIII (3)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. (Article VIII (1)).

Due Process of Law and Judicial Review

Yes. (Article VIII (1) (2)).

Other

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Compensation Standard; Form and Time of Payment

“Prompt, adequate and effective compensation”

Such compensation shall be based on the fair market value of the investment or returns expropriated immediately before the expropriation or at the time the proposed expropriation became public knowledge, whichever is earlier, shall be payable from the date of expropriation with interest at a normal commercial rate, shall be paid without delay and shall be effectively realizable and freely transferable. Valuation criteria shall include going concern value, asset value including declared value of tangible property, and other criteria, as appropriate, to determine fair market value. (Article VIII (1)).

Settlement of Disputes between Contracting Parties
[Return to the top of the page]

PRE-ARBITRATION NEGOTIATIONS

Either Contracting Party may request consultations on the interpretation or application of this Agreement. The other Contracting Party shall give sympathetic consideration to the request. Any dispute between the Contracting Parties concerning the interpretation or application of this Agreement shall, whenever possible, be settled amicably through consultations. (Article XIII (1)).

If a dispute cannot be settled through consultations, it shall, at the request of either Contracting Party, be submitted to an arbitral panel for decision. (Article XIII (2)).

ARBITRATION

Constitution of the Tribunal

An arbitral panel shall be constituted for each dispute. Within two months after receipt through diplomatic channels of the request for arbitration, each Party shall appoint one member of the arbitral panel. The two members shall then select a national of a third State who, upon approval by the two Contracting Parties, shall be appointed Chairman of the arbitral panel. The Chairman shall be appointed within two months from the date of appointment of the other two members of the arbitral panel. (Article XIII (3)).

If within the periods specified in Paragraph 3 of this Article the necessary appointments have not been made, either Contracting Party may, in the absence of any other agreement, invite the President of the International Court of Justice to make the necessary 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 XIII (4)).

Each Contracting Party shall bear the costs of its own member of the panel and of its representation in the arbitral proceedings; the costs related to the Chairman and any remaining costs shall be borne equally by the Contracting Parties. The arbitral panel may, however, in its decision direct that a higher proportion of costs shall be borne by one of the two Contracting Parties, and this award shall be binding on both Contracting Parties. (Article XIII (6)).

Procedural Rules of the Tribunal

The arbitral panel shall determine its own procedure. The arbitral panel shall reach its decision by a majority of votes. Such decision shall be binding on both Contracting Parties. Unless otherwise agreed, the decision of the arbitral panel shall be rendered within six months of the appointment of the Chairman in accordance with paragraphs (3) or (4) of this Article. (Article XIII (5)).

The Contracting Parties shall, within 60 days of the decision of the arbitral panel, reach agreement on the manner in which to resolve their dispute. Such agreement shall normally implement the decision of the arbitral panel. If the Contracting Parties fail to reach agreement, the Contracting Party bringing the dispute shall be entitled to compensation or to suspend benefits of equivalent value to those awarded by the panel. (Article XIII (7)).

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 between one Contracting Party and an investor of the other Contracting Party, relating to a claim by the investor that a measure taken or not taken by the former Contracting Party is in breach of this Agreement, and that the investor has incurred loss or damage by reason of, or arising out of, that breach, shall, to the extent possible, be settled amicably between them. The investor may submit the dispute to any competent court or administrative tribunal of the Contracting Party in whose territory the investment was made. (Article XII (1)).

If the dispute has not been settled within a period of six months from the date it was initiated, it may be submitted by the investor to arbitration in accordance with Paragraph 4. (Article XII (2)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

An investor may submit a dispute referred to in Paragraph 1 to arbitration in accordance with Paragraph 4 only if:

1. the investor has consented in writing thereto;
2. the investor has waived its right to initiate or continue any other proceedings in relation to the measure that is alleged to be in breach of this Agreement before the courts or tribunals of the Contracting Party concerned or in a dispute settlement procedure of any kind;
3. not more than three years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has incurred loss or damage. (Article XII (3)).

Consent

Consent set out explicitly in Article XII (5)).

Forms of Arbitration

The dispute may, at the election of the investor concerned, be submitted to arbitration under:

1. ICSID, provided that both the disputing Contracting Party and the Contracting Party of the investor are parties to the ICSID Convention; or
2. the Additional Facility Rules of ICSID, provided that either the disputing Contracting Party or the Contracting Party of the investor, but not both, is a party to the ICSID Convention; or
3. an international arbitrator or ad hoc arbitration tribunal established under the Arbitration Rules of UNCITRAL. (Article XII (4)).

Applicable Law

A tribunal established under this Article shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law. (Article XII (7)).