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

DEFINITION OF INVESTMENT

The term “investment” comprises every kind of asset. This general definition is illustrated by a non exhaustive list of five groups of specific rights, including:

• traditional property rights;
• rights in companies;
• financial titles;
• intellectual property rights; and,
• concessions and similar rights. (Article 1 (1)).

The Republic of Colombia does not consider a loan an investment. (Ad Article 1 (1)).

DEFINITION OF INVESTOR

Nationals

The term “investor” comprises any natural person who is a national of one of the Contracting Parties under its applicable law. (Article 1 (4)).

Companies

The term “investor” means any legal person, including commercial or other company or association with or without legal personality, which participates in any economic activity within the scope of the agreement, and is controlled, directly or indirectly, by nationals of one of the Contracting Parties. (Article 1 (3)).

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

Date of signature: April 26, 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 latter notification).
Duration: 10 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]

Each Contracting Party shall promote, in its territory, investments of nationals and companies of the other Contracting Party, and shall admit them in accordance with its laws and regulations. (Article 2).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. (Article 3 (1)).

Full Protection and Security

Yes. Investments of nationals or firms of the other Contracting Party shall receive protection and security in accordance with the principles of international law, in a way no less favorable than that enjoyed by investments of investors or firms of the other Contracting Party in its territory. (Article 3 (1)).

Non-Discrimination

Yes. Each Contracting Party shall not apply arbitrary and discriminatory measures with respect to the management, maintenance, use, usufruct, selling or other disposition of investments of investors or firms of the other Contracting Party. (Article 3 (2))

National Treatment

Yes. Contracting Parties shall grant to investments or returns of nationals or companies of the other Contracting Party treatment no less favorable than that accorded to investments or returns of its own nationals or companies, or investments or returns of nationals or companies of any third State. (Article 4 (1)).

Contracting Parties shall grant to nationals or companies of the other Contracting Party treatment no less favorable than that accorded to its own nationals or companies, or to nationals or companies of any third State, with respect to the management, maintenance, use, usufruct or sale of investments. (Article 4 (2)).

Most-Favored Nation Treatment

Yes. Contracting Parties shall grant to investments or returns of nationals or companies of the other Contracting Party treatment no less favorable than that accorded to investments or returns of its own nationals or companies, or investments or returns of nationals or companies of any third State. (Article 4 (1)).

Contracting Parties shall grant to nationals or companies of the other Contracting Party treatment no less favorable than that accorded to its own nationals or companies, or to nationals or companies of any third State, with respect to the management, maintenance, use, usufruct or sale of investments. (Article 4 (2)).

EXCEPTIONS

The national treatment and MFN provisions shall not oblige a Contracting Party to extend to nationals or companies of the other Contracting Party benefits resulting from:

1. an existing or future customs union, common market, free trade area or -similar international agreement;
2. a taxation agreement or domestic legislation related to taxation.

The Protocol states that with respect to Articles 3 (2) [Non-Discrimination] and 4 [National Treatment and MFN Treatment], Colombia could establish or maintain limitations, with regard to the granting of national treatment, exclusively in the following sectors:

1. acquisitions which could be made through portfolio investments;
2. public services (telecommunications; energy, aqueduct, and sewage);
3. supply of goods and services to the public sector and;
4. automotive assembly.

Colombia shall not apply the above-mentioned limitations to Peruvian nationals or companies, in accordance with the rules of the Cartagena Agreement (Articles 5 and 11). (Protocol)

OTHER ASPECTS

Performance Requirements

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Others

If a more favorable treatment is available as a result of another agreement, this treatment shall prevail. (Article 11).

Each Contracting Party shall comply with other commitments they have contracted with respect to investments of nationals or companies of the other Contracting Party in its territory. (Article 3 (3)).

Nationals or enterprises of one Contracting Party, suffering losses due to war or armed conflict, revolution, national emergency, state of siege, insurrection or similar events in the territory of the other Contracting Party, shall be treated no less favorably than investors of this Contracting Party or those of any third State, whichever is the more favorable, with regard to restitution, compensation, or indemnification. These payments shall be transferable. (Article 8 (1)).

If forces or authorities of a Contracting Party cause damages to the property of an investor of the other Contracting Party in its territory with respect to events mentioned in Article 8 (1), adequate compensation shall be granted by such latter Contracting Party. These payments shall be transferable. (Article 8 (2)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Contracting Party shall guarantee to nationals or companies of the other Contracting Party the free transfer of payments related to an investment, in particular, but not exclusively:

1. investment capital and reinvestments made in accordance with the laws and regulations of the Contracting Party in which these investments were made;
2. returns;
3. proceeds of the sale or the total or partial liquidation of the investment. (Article 6 (1)).

Repayment of Loans

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Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article 6 (1) (c)).

Licenses and Other Fees

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Other Categories of Payment

Yes. (Article 6 (1) (a)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Transfers shall be effected in a freely convertible currency at the market rate of exchange applicable on the date of transfer, and without restriction and delay. (Article 6 (2)).

Exchange Rates

Transfers shall be effected at the market rate of exchange applicable on the date of transfer. (Article 6 (2)).

Time of Transfer

Transfers shall be effected without restriction and delay. (Article 6 (2)).

Notwithstanding what is said in Article 6 (2), the Contracting Parties could establish restrictions with respect to the free transfer of payments related to an investment in the case of balance-of-payment difficulties. These restrictions shall be exercised for a limited period of time in an equitable way, in good faith and in a non-discriminatory manner. (Article 6 (3)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Nationalization or equivalent measures by which one Contracting Party takes control of certain strategic activities or services. Any other form of expropriation or measures which have an equivalent effect. (Article 7(1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. (Article 7(1) and Ad Article 7(1)).
Pursuant to the BIT’s Protocol, motives for an expropriation are: for Colombia, public use or social interest; and, for Peru, national security or public necessity.

Due Process of Law and Judicial Review

Yes. (Article 7(3)).

Other

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Compensation Standard; Form and Time of Payment

“Prompt, adequate and effective compensation”

Compensation shall:

• be based on the genuine value of the investment immediately before the expropriation or at the time the impending expropriation became public or effective, whichever the earlier;
• be payable from the date of the expropriation at a normal commercial rate of interest;
• be paid without delay;
• be effectively realizable and freely transferable. (Article 7(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 diplomatic channels. (Article 13 (1)).

If it cannot be settled within three months, the dispute shall, at the request of either Contracting Party, be submitted to an arbitral tribunal. (Article 13 (2)).

ARBITRATION

Constitution of the Tribunal

The arbitral tribunal shall be constituted ad hoc.

• Each Party shall appoint an arbitrator within two months.
• The two arbitrators are required to select, within the next three months, a national of a third State, 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 13 (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 13 (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 legal dispute relating to an investment under the Agreement between an investor of one Contracting Party and the other Contracting Party shall be settled through amicable consultations. (Article 12(1)).

If it was not possible to settle the dispute within three months, it may be submitted to:

1. the competent tribunals of the host party; or,
2. to international arbitration. (Article 12(2)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

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Consent

Contracting Parties consent to submit to ICSID any dispute concerning an investment under the Agreement for its settlement through consultation or arbitration. (Article 12(3)).

Forms of Arbitration

In case of international arbitration, the dispute shall be submitted to ICSID. (Article 12(2)). However, ICSID has no jurisdiction if a party submits the dispute to the courts or the administrative tribunals of the other party in the dispute. (Article 12(6)).

Applicable Law

No reference.