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

DEFINITION OF INVESTMENT

The term “investment” refers to every kind of asset or right linked to an investment 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;
• claims to money and titles to performance having an economic value;
• intellectual property rights; and,
• concessions and similar rights. (Article 1 (2)).

DEFINITION OF INVESTOR

Nationals

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

Companies

The term “investor”comprises any legal person constituted or otherwise duly organized under the law of one of the Contracting Parties, that has its seat and has effective economic activities in the territory of said Party. (Article 1 (1) (b)).

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

Date of signature: October 26, 1995
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 latter notification).
Duration: 15 years.
Thereafter it shall remain in force until either Party notifies the other Party, a year in advance, 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 investments of investors of the other Contracting Party, in its territory, and shall admit them in accordance with its laws and regulations. (Article 3 (1)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. Each Contracting Party shall guarantee a fair and equitable treatment, in its territory, to investments of investors of the other Contracting Party and shall ensure that the exercise of the rights recognized here shall not be reduced in practice. (Article 4 (1)).

Full Protection and Security

Each Contracting Party shall protect, in its territory, investments made in accordance with its laws and regulations. (Article 3 (2)).

Non-Discrimination

Yes. Each Contracting Party shall not create obstacles with respect to the management, maintenance, use, usufruct, extension, sale or liquidation of such investments through unjustified or discriminatory measures. (Article 3 (2)).

National Treatment

Yes. Each Contracting Party shall grant investments of investors of the other Contracting Party treatment no less favorable than that it grants to investments of its own investors or investors of a third State, if this latter treatment is more favorable. (Article 4 (2)).

Most-Favored Nation Treatment

Yes. Each Contracting Party shall grant investments of investors of the other Contracting Party treatment no less favorable than that it grants to investments of its own investors or investors of a third State, if this latter treatment is more favorable. (Article 4 (2)).

EXCEPTIONS

If a Contracting Party grants special advantages to investors of any third State by virtue of an agreement related to the creation of a free trade area, customs union, common market, economic union, or other forms of regional economic organization, or by virtue of an agreement related totally or principally to tax matters, this Party shall not be obliged to offer these advantages to investors of the other Contracting Party. (Article 4 (3)).

OTHER ASPECTS

Performance Requirements

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Others

Investors of either Contracting Party who suffer losses due to a war or any other armed conflict, state of national emergency, civil disturbances or other similar events in the territory of the other Contracting Party shall receive from this Contracting Party, with respect to reparation, indemnification, compensation or other settlement, a treatment no less favorable than that accorded to national investors or those of any third State. (Article 6 (4)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

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

1. interests, dividends, profits, and other incomes;
2. amortization of loans (from abroad and related to an investment);
3. capital or proceeds of the sale or the total or partial liquidation of an investment;
4. payments arising out of a dispute or compensations in accordance with Article 6. (Article 5 (1)).

Repayment of Loans

Yes. (Article 5 (1) (b)).

Proceeds of the Total or Partial Liquidation of an Investment

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

Licenses and Other Fees

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Other Categories of Payment

Yes. (Article 5 (1) (d)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Each Contracting Party shall authorize investors of the other Contracting Party to transfer, without delay, funds related to investments in convertible currency. (Article 5 (1)).

Exchange Rates

Transfers shall be effected at the exchange rate in effect in the market on the date of transfer, in accordance with the legislation of the Contracting Party that has admitted the investment. (Article 5 (2)).

Time of Transfer

Without delay. (Article 5 (1)).

Transfers relative to investments made in the Special Program for the Conversion of the External Debt of Chile are subject to the rules of this program. (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).

The expression "without delay" means the normal period of time necessary to fulfill the formalities for the transfer. This period of time shall begin the day when the request, accompanied by the necessary documents, has been presented but shall, in no case, exceed 30 days. (Protocol).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Expropriation, nationalization or any measure that might deprive (directly or indirectly) an investor of his investment. (Article 6 (1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “Public use or national interest.” (Article 6 (1) (a)(b)).

Due Process of Law and Judicial Review

Yes. (Article 6 (3)).

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 expropriation became publicly known. (Provisions aimed at calculating the market value of expropriated investments are included.) (Article 6 (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, whenever possible, be settled through amicable negotiations. (Article 9 (1)).

If it cannot be settled within six months, either Contracting Party may submit it to an ad hoc arbitral tribunal. (Article 9 (2)).

ARBITRATION

Constitution of the Tribunal

The arbitral tribunal shall be constituted as follows:

• Within two months of the request of arbitration, each Party shall appoint an arbitrator.
• The two arbitrators are required to select, within thirty days of the last appointment, a national of a third State, with which both Parties maintain diplomatic relations, who serves as Chairman of the tribunal. When the appointments cannot be made within these time limits, 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, unless they decide otherwise. (Article 9 (3) (4) (5) (7)).

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 9 (6) (8)).

Applicable Law

The tribunal shall decide on the basis of the provisions of the Agreement and the general principles of international law. (Article 9 (6)).

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 will, to the extent possible, be settled through amicable consultations. (Article 8 (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; or
2. to international arbitration. (Article 8 (2)).

Election by the investor of either one of these procedures shall be definitive and irreversible. (Article 8 (3)).    

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

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Consent

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Forms of Arbitration

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

1. ICSID, provided each Contracting Party is a party to the ICSID Convention. (For the interim period, both Contracting 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. (Specific procedures for the appointment of the arbitrators are included) (Article 8 (4)(a)(b)).

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 8 (5)).