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

DEFINITION OF INVESTMENT

The term “investment” comprises every kind of asset and right related to an investment made according to 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;

• monetary claims and titles to performance;

• intellectual property rights; and,

• concessions and similar rights. (Article 1 (2)).

DEFINITION OF INVESTOR

Nationals

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

Companies

The term “investor” includes any legal person constituted or duly organized otherwise 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 1 (1) (a) and (b). (Article 1 (1) (b)(c)).

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

Date of signature: June 13, 1996.
Entry into force: Thirty days after the date of exchange of instruments of ratification.
Duration: 10 years.
Thereafter it shall remain in force until either Party notifies the other Party, six months in advance, of its decision to terminate the Treaty.

Admission [Return to the top of the page]

Subject to its legislation and general policy in the field of foreign investment, each Party shall promote, in its territory, investments of investors of the other Party. (Article 3 (1)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

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

Full Protection and Security

Each Party shall protect, in its territory, investments of investors of the other Party, according to its laws and regulations. (Article 3 (2)).

Non-Discrimination

Yes. Each Party shall not impair the management, use, usufruct, extension, sale and liquidation of investments of investors of the other Party through unjustified or discriminatory measures. (Article 3 (2)).

National Treatment

Yes. Each Party shall accord to investments of investors of the other Party, in its territory, treatment no less favorable than the one accorded to its own investors or those of a third State, if the latter is more favorable. (Article 4 (2)).

Most-Favored Nation Treatment

Yes. Each Party shall accord to investments of investors of the other Party, in its territory, treatment no less favorable than the one accorded to its own investors or those of a third State, if the latter is more favorable. (Article 4 (2)).

EXCEPTIONS

If one of the Parties has accorded a different treatment to a third country by virtue of an agreement which establish provisions to avoid double taxation or other tax-related agreements, free trade agreements, customs unions, common markets, economic or monetary unions or other similar institutions, such Party shall not be obliged to accord such treatment to investments of investors of the other Party. (Article 4 (3)).

OTHER ASPECTS

Performance Requirements

No Party may impose or enforce any of the following requirements or commitments, in connection with any investment in its territory:

1. to export a given type, level or percentage of goods and services, in general terms or with respect to a specific market;
2. to achieve a given level or percentage of domestic content;
3. to purchase, use or accord a preference to goods or services of national origin or internal provenance;
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;
5. to restrict sales of goods and services in its territory that such investment produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
6. to transfer to a natural or juridical person, in its territory, technology, a production process or other proprietary knowledge, except when the requirement is imposed by a court, administrative tribunal or competition authority to remedy an alleged violation of competition laws or to act in a manner not inconsistent with other provisions of this Agreement, (Article 5 (1)).

A measure that requires an investment to use a technology to meet generally applicable health, safety or environmental requirements, shall not be construed to be inconsistent with Article 5 (1) (f). (Article 5 (2)).

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 Article 5 (1) (b) or (c ) shall be construed to prevent any Party from adopting or maintaining measures, including environmental measures:

1. necessary to secure 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. necessary for the conservation of natural resources. (Article 5 (3)).

Others

Investors of each Party whose investments suffer losses in the territory of the other Party due to war or other armed conflict; state of national emergency; civil disturbances and other similar events shall be accorded by such latter Party, in respect to reparation, indemnification, compensation or other settlement, treatment no less favorable than that it accords to its own investors or investors of any third State. (Article 9 (4)).

With respect to its legislation relating to the entry and sojourn of aliens, each Party shall permit to enter and remain in its territory investors of the other Party and other persons hired by these investors for the purpose of establishing, developing, administering or advising on the operation of an investment, to which they have committed or are in the process of committing capital or other resources. (Article 6(1)).

Neither Party shall, in granting entry under Article 6 (1), require a labor certification, academic certifications or other procedures of similar effect. This shall not be understood as a limitation of the internal norms with respect to the granting of non immigrant resident status. (Article 6 (2)).

Without affecting the labor provisions of each Party, each Party shall permit that investments of the other Party appoint individuals of their choice to occupy senior management positions or serve on administrative boards or other operations of the same type, regardless of the nationality of such individuals. (Article 7 (1)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Party shall permit that all transfers related to an investment of an investor of a Party be done freely and without delay. Such transfers shall include, in particular, but not exclusively:

1. returns, dividends, interests, returns of capital, bonuses, payments for administration and technical assistance, returns in kind and other investment-related amounts;
2. proceeds of the sale or of the total or partial liquidation of an investment;
3. payments from a contract, including loan payments;
4. payments from an indemnization;
5. payments arising out of an investment dispute. (Article 8 (1)).

Repayment of Loans

Yes. (Article 8 (1) (c)).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article 8 (1) (b)).

Licenses and Other Fees

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Other Categories of Payment

Yes. (Article 8 (1) (d), (e)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Each Party shall permit the transfer, without delay, in a freely convertible currency, at the exchange rate applicable on the date of transfer. (Article 8 (2)).

Exchange Rates

Each Party shall permit the transfer, without delay, in a freely convertible currency, at the exchange rate applicable on the date of transfer. (Article 8 (2)).

Time of Transfer

Each Party shall permit that all transfers related to an investment of an investor of a Contracting Party be done freely and without delay. (Article 8(1)).

Notwithstanding Article 8 (1) and (2), a Party may prevent transfers through the equitable and non-discriminatory application of its legislation in the following cases:

1. bankruptcy and insolvency;
2. penal or administrative offenses;
3. ensuring the satisfaction of judgments in adjudicatory proceedings;
4. unfulfillment of tax obligations;
5. unfulfillment of labor obligations. (Article 8(3)).

Notwithstanding the provisions of Article 8, a Party may establish temporary controls with respect to exchange operations, when the balance of payments of a Party has an important disequilibrium. (Article 8 (4)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Any measure that might deprive (directly or indirectly) an investor of his investment. (Article 9 (1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “Public use or social interest.” (Article 9 (1)).

Due Process of Law and Judicial Review

Yes. (Article 9 (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 impending expropriation became publicly known;
• include interests at a normal commercial rate from the date of expropriation until the date of payment. (Article 9 (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 diplomatic channels. (Article 12 (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 12 (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. The Tribunal may, however, direct that a higher proportion of the costs be paid by one of the Parties. (Article 12 (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 12 (6) (8)).

Applicable Law

The tribunal shall decide on the basis of the provisions of the Agreement, legal principles recognized by the Parties and the general principles of international law. (Article 12 (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 under the Agreement between an investor of one Contracting Party and the other Contracting Party will be settled, to the extent possible, amicably. (Article 11(1)).

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

1. to the competent tribunals of the host party; or
2. to ICSID for resolution through conciliation or arbitration; or,
3. an ad hoc arbitration tribunal established under the UNCITRAL Arbitration Rules.

Election by the investor of either one of these procedures shall be definitive. (Article 11(2) (3)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

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Consent

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Forms of Arbitration

International arbitration under ICSID or an ad hoc arbitration tribunal established under the UNCITRAL Arbitration Rules. (Article 11 (2)).

Applicable Law

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