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

DEFINITION OF INVESTMENT

The term “investment” means every kind of investment, owned or controlled directly or indirectly, including equity, debt, and service and investment contracts. This general definition is illustrated by a non exhaustive list of seven groups of specific rights, including:

• traditional property rights;

• rights in companies;

• monetary claims and titles to performance associated with an investment;

• intellectual property rights, licences and permits;

• any right conferred by law or contract; and,

• reinvested returns. (Article I (c)).

DEFINITION OF INVESTOR

Nationals

“National” of a Party means a natural person who is a national of a Party under its applicable law. (Article I (e)).

Companies

“Company” means any kind of juridical entity, including any corporation, company, association, or other organization, that is duly constituted, regardless of whether or not the entity is organized for pecuniary gain, privately or governmentally owned, or organized with limited or unlimited liability. “Company of a Party” means a company duly constituted under the applicable laws and regulations of a Party or political subdivision thereof in which natural persons who are nationals of such Party, or such Party or a political subdivision thereof, have a substantial interest as determined by such Party. Each Party has reserved its right to deny the advantages of the Treaty to a company when it is controlled by nationals of any third country. (Article I (a)(b)).

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

Date of signature: December 13, 1983
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, a year in advance, of its decision to terminate the Treaty.
The Treaty shall apply to investments existing at the time of entry into force, as well as to investments made or acquired thereafter.

Admission [Return to the top of the page]

There is no separate clause on admission. The issue is dealt with in the treatment provisions. See Section on Treatment.

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. Investment of nationals and companies of either Party shall at all times be accorded fair and equitable treatment. (Article II (4)).

Each Party agrees to provide fair and equitable treatment and, in particular, the treatment provided for in Article II (1) and (2) (national treatment and MFN treatment) to privately owned or controlled investment of nationals or companies of the other Party, where such investment is in competition, within the territory of the first Party, with investment owned or controlled by the first Party or its agencies or instrumenta-lities. In no case shall such treatment be less favorable than that provided to any privately owned or controlled investment of nationals or companies of the first Party which is also in competition with investment owned or controlled by the Party or its agencies or instrumentalities. (Article II (6)).

Full Protection and Security

Yes. Investment of nationals and companies of either Party shall enjoy full protection and security in the territory of the other Party. The treatment, protection and security of investment shall be in accordance with applicable national laws, and shall in no case be less than that required by international law. (Article II (4)).

Non-Discrimination

Yes. Neither Party shall in any way impair by arbitrary and discriminatory measures the management, operation, maintenance, use, enjoyment, acquisition, expansion, or disposal of investment made by nationals or companies of the other Party. (Article II (4)).

National Treatment

Yes. Article II on treatment requires the better of either national treatment or most-favored nation treatment with respect to both pre-establishment and post-establishment investments.

Each Party shall endeavor to maintain a favorable environment for investments in its territory by nationals and companies of the other Party and shall permit such investments to be established and acquired on terms and conditions that accord treatment no less favorable than the treatment it accords in like situations to investments of its own nationals or companies or to nationals and companies of any third country, whichever is the most favorable. (Article II (1)).

Each Party shall accord existing or new investments and associated activities, in its territory, of nationals or companies of the other Party, treatment no less favorable than that which it accords in like situations to investments, and associated activities, of its own nationals or companies or nationals or companies of any third country, whichever is the most favorable. (Article II (2)).

With respect to Article II (2), associated activities include:

1. the establishment, control and maintenance of branches, agencies, offices, factories or other facilities for the conduct of business;
2. the organization of companies under applicable laws and regulations; the acquisition of companies or interests in companies or in their property; and the management, control, maintenance, use, enjoyment and expansion, and the sale, liquidation, dissolution or other disposition, of companies organized or acquired;
3. the making, performance and enforcement of contracts;
4. the acquisition (whether by purchase, lease or otherwise), ownership and disposition (whether by sale, testament or otherwise), of personal property of all kinds, both tangible and intangible;
5. the leasing of real property appropriate for the conduct of business;
6. the acquisition, maintenance and protection of copyrights, patents, trademarks, trade secrets, trade names, licenses and other approvals of products and manufacturing processes, and other industrial property rights; and,
7. the borrowing of funds, the purchase and issuance of equity shares, and the purchase of foreign exchange for imports. (Protocol).

Except for the obligations specified in this Treaty, neither Party is obliged to provide to the investments of the other Party treatment more favorable than that granted to the investments of its own nationals and companies or to investments of nationals and companies of any third Party. (Article II (11)).

Each Party reserves the right to maintain limited exceptions, as listed in the Annex to the Treaty. Each Party agrees to notify the other Party of all such exceptions at the time this Treaty enters into force. Moreover, each Party agrees to notify the other Party of any future exceptions falling within the sectors or matters listed in the Annex, and to maintain the number of such exceptions at a minimum. Other than with respect to ownership of real property, the treatment accorded pursuant to these exceptions shall not be less favorable than that accorded in like situations to investments and associated activities of nationals or companies of any third country. However, either Party may require that rights to engage in mining on the public domain shall be dependent on reciprocity. (Article II (3) (a)).

No exception introduced after the date of entry into force of the treaty shall apply to investments of nationals or companies of the other Party existing in that sector at the time the exception becomes effective. (Article II (3) (b)).

The treatment accorded by a Party to nationals or companies of the other Party under the provisions of Article II (1) and (2) shall, in any State, Territory or possession of the Party, be the treatment accorded therein to companies incorporated, constituted or otherwise duly organized in other States, Territories or possessions of the Party. (Article II (10)).

Most-Favored Nation Treatment

Yes. Article II on treatment requires the better of either national treatment or most-favored nation treatment with respect to both pre-establishment and post-establishment investments.

Each Party shall endeavor to maintain a favorable environment for investments in its territory by nationals and companies of the other Party and shall permit such investments to be established and acquired on terms and conditions that accord treatment no less favorable than the treatment it accords in like situations to investments of its own nationals or companies or to nationals and companies of any third country, whichever is the most favorable. (Article II (1)).

Each Party shall accord existing or new investments and associated activities, in its territory, of nationals or companies of the other Party, treatment no less favorable than that which it accords in like situations to investments, and associated activities, of its own nationals or companies or nationals or companies of any third country, whichever is the most favorable. (Article II (2)).

With respect to Article II (2), associated activities include:

1. the establishment, control and maintenance of branches, agencies, offices, factories or other facilities for the conduct of business;
2. the organization of companies under applicable laws and regulations; the acquisition of companies or interests in companies or in their property; and the management, control, maintenance, use, enjoyment and expansion, and the sale, liquidation, dissolution or other disposition, of companies organized or acquired;
3. the making, performance and enforcement of contracts;
4. the acquisition (whether by purchase, lease or otherwise), ownership and disposition (whether by sale, testament or otherwise), of personal property of all kinds, both tangible and intangible;
5. the leasing of real property appropriate for the conduct of business;
6. the acquisition, maintenance and protection of copyrights, patents, trademarks, trade secrets, trade names, licenses and other approvals of products and manufacturing processes, and other industrial property rights; and,
7. the borrowing of funds, the purchase and issuance of equity shares, and the purchase of foreign exchange for imports. (Protocol).

Except for the obligations specified in this Treaty, neither Party is obliged to provide to the investments of the other Party treatment more favorable than that granted to the investments of its own nationals and companies or to investments of nationals and companies of any third Party. (Article II (11)).

Each Party reserves the right to maintain limited exceptions, as listed in the Annex to the Treaty.

Each Party agrees to notify the other Party of all such exceptions at the time this Treaty enters into force. Moreover, each Party agrees to notify the other Party of any future exceptions falling within the sectors or matters listed in the Annex, and to maintain the number of such exceptions at a minimum. Other than with respect to ownership of real property, the treatment accorded pursuant to these exceptions shall not be less favorable than that accorded in like situations to investments and associated activities of nationals or companies of any third country. However, either Party may require that rights to engage in mining on the public domain shall be dependent on reciprocity. (Article II (3) (a)).

No exception introduced after the date of entry into force of the treaty shall apply to investments of nationals or companies of the other Party existing in that sector at the time the exception becomes effective. (Article II (3) (b)).

EXCEPTIONS

Consistent with Article II (3), each Party reserves the right to maintain limited exceptions in the following sectors or matters:

Exceptions for the United States: air transportation; ocean and coastal shipping; banking; insurance; government grants; government insurance and loan programs; energy and power production; custom house brokers; ownership of real estate; ownership and operation of broadcast or common carrier radio and television stations; ownership of shares in the Communications Satellite Corporation; the provision of common carrier telephone and telegraph services; the provision of submarine cable services; and use of land and natural resources.

Exceptions for Haiti: banking; insurance; telecommunications; government grants; energy production and trade; real estate; air, sea and land transportation; natural resources and mining exploitation; radio and television broadcast; production and distribution of basic commodities; professions; agro-industrial sector; and chemical industry. (Annex).

The most-favored-nation provisions of Article II (3) shall not apply to advantages accorded by either Party to nationals or companies of a third country by virtue of that Party's binding obligations that derive from full membership in regional customs union. (Article II (12)).

This Treaty shall not preclude the application by either Party of any and all measures necessary for the maintenance of public order, the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests. (Article X (1)).

OTHER ASPECTS

Performance Requirements

In order to maintain a climate favorable to investment, each Party shall seek to avoid interventions which would impose performance requirements upon the investment of nationals and companies of the other Party. (Article II (7)).

Others

Subject to the laws relating to the entry and sojourn of aliens, nationals of either Party shall be permitted to enter and to remain in the territory of the other Party for the purpose of establishing, developing, directing, administering or advising on the operation of an investment to which they, or a company of the first Party that employs them, have committed or are in the process of committing a substantial amount of capital or other resources. (Article II (5) (a)).

Nationals and companies of either Party shall be permitted to engage, within the territory of the other Party, professional, technical and managerial personnel of their choice, regardless of nationality, for the particular purpose of rendering professional, technical and managerial assistance necessary for the planning and operation of investments. (Article II (5) (b)).

Companies which are incorporated, constituted, or otherwise organized under the applicable laws or regulations of one Party, and which are owned or controlled by nationals or companies of the other Party, shall be permitted to engage, within the territory of the first Party, top managerial personnel of their choice regardless of nationality. (Article II (5) (b)).

Nationals or companies of either Party whose investments in the territory of the other Party suffer

1. damages due to war or other armed conflict between such other Party and a third country, or
2. damages due to revolution, state of national emergency, revolt, insurrection or riot in the territory of such other Party,

shall be accorded treatment no less favorable than that which such other Party accords to its own nationals or companies or to nationals or companies of any third country, whichever is the most favorable treatment, when making restitution, indemnification, compensation or other appropriate settlement with respect to such damages. (Article IV (1)).

In the event that such damages result from:

1. a requisitioning of property by the other Party's forces or authorities or
2. destruction of property by the other Party's forces or authorities which was not caused in combat action or was not required by the necessity of the situation,

the national or company shall be accorded restitution or compensation consistent with Article III. (Article IV (2)).

The payment of any indemnification, compensation or other appropriate settlement pursuant to Article IV shall be freely transferable. (Article IV (3)).

The Treaty shall not supersede, prejudice, or otherwise derogate from:

1. laws and regulations, administrative practices or procedures, or administrative or adjudicatory decisions of either Party;
2. international legal obligations; or
3. obligations assumed by either Party, including those contained in an investment agreement or an investment authorization, whether extant at the time of entry into force of this Treaty or thereafter, that entitle investments, or associated activities,

of nationals or companies of the other Party to treatment more favorable than that accorded by the Treaty in like situations. (Article IX).

Each Party shall provide effective means of asserting claims and enforcing rights with respect to investment agreements, investment authorizations and properties. (Article II (8)).

This Treaty shall not preclude either Party from prescribing special formalities in connection with the establishment of investments in its territory of nationals and companies of the other Party, but such formalities shall not impair the substance of any of the rights set forth in this Treaty. (Article X (2)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Party shall permit all transfers related to an investment in its territory of an national or company of the other Party to be made freely and without delay into and out of its territory. Such transfers include the following:

1. returns;
2. compensation;
3. payments made arising out of a dispute concerning an investment;
4. payments made under a contract, including amortization of principal and accrued interest payments made pursuant to a loan agreement;
5. amounts to cover expenses relating to the management of an investment;
6. royalties and other payments derived from licenses, franchises or other grants of rights or from administrative or technical assistance agreements, including management fees;
7. proceeds from the sale of all or any part of an investment and from the partial or complete liquidation of the company concerned, including any incremental value;
8. additional contributions to capital necessary or appropriate for the maintenance or development of an investment. (Article V (1)).

Repayment of Loans

Yes. (Article V (1) (d)).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article V (1) (g)).

Licenses and Other Fees

Yes. (Article V (1) (f)).

Other Categories of Payment

Yes. (Article V (1) (b), (c), (e), (h)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

To the extent that a national or company of either Party has not made another arrangement with the appropriate authorities of the other Party in whose territory the investment of such national or company is situated, currency transfers made pursuant to Article V (1) shall be permitted in a currency or currencies to be selected by such national or company. (Article V (2)).

Exchange Rates

Except as provided in Article III, such transfers shall be made at the prevailing market rate of exchange on the date of transfer with respect to spot transactions in the currency or currencies to be transferred. (Article V (2)).

Time of Transfer

Each Party shall permit all transfers related to an investment in its territory of a national or company of the other Party to be made freely and without delay into and out of its territory. (Article V (1)).

Notwithstanding paragraphs 1 and 2 of Article V, either Party may maintain laws and regulations:

1. requiring reports of currency transfer; and
2. imposing income taxes by such means as a withholding tax applicable to dividends or other transfers.

Furthermore, either Party may protect the rights of creditors, or ensure the satisfaction of judgments in adjudicatory proceedings through the equitable, nondiscriminatory and good faith application of its law. (Article V (3)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Expropriation, nationalization or any other measure or series of measures, direct or indirect, tantamount to expropriation (including the levying of taxation, the compulsory sale of all or part of an investment, or the impairment or deprivation of its management, control or economic value). (Article III (1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. (Article III (1)).

Due Process of Law and Judicial Review

Yes. Review can be made by the appropriate judicial or administrative authorities of the expropriating host Party. (Article III (1) (3)).

Other

Non-violation of any specific provision on contractual stability or expropriation contained in an investment agreement between the national or company concerned and the Party making the expropriation. (Article III (1)).

Compensation Standard; Form and Time of Payment

"Prompt, adequate and effective compensation”

Compensation shall:

• be equivalent to the fair market value of the investment, determined according to different methods of calculation as appropriate in each specific case. The calculation of compensation shall not reflect any reduction of the fair market value by reason of previous public knowledge or announcement of the expropriation, or measures resulting in an expropriation;
• include current interests from the date of expropriation at current international rates;
• be made without delay;
• be fully realizable and freely transferable at the prevailing market rate of exchange at the date of expropriation. (Article III (1)).

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

PRE-ARBITRATION NEGOTIATIONS

Any dispute between the Parties concerning the interpretation or application of the Treaty should, if possible, be settled through consultations between representatives of the two Parties, and if this should fail, through other diplomatic channels. (Article VIII 1)).

If it cannot be settled, and unless there is agreement between the Parties to submit the dispute to the International Court of Justice, the Parties agree to submit it, at the request of either Party, to an arbitral tribunal for decision. (Article VIII (2)).

ARBITRATION

Constitution of the Tribunal

An arbitral tribunal shall be constituted for each dispute.

• Within two months of the request of arbitration, each Party shall appoint an arbitrator.
• The two arbitrators are required to select, within the next two months, a national of a third State who serves as Chairman of the tribunal. When agreement cannot be reached, 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, or when an arbitrator resigns or is unable to perform his duties.
• 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 VIII (3) (4) (5) (7)).

Procedural Rules of the Tribunal

Decisions of the tribunal shall be taken by a majority of votes and shall be binding on both Parties. The Parties may agree to specific arbitral procedures. In the absence of agreement by the Parties to the contrary, the Model Rules on Arbitral Procedures adopted by the United Nations International Law Commission in 1958, shall govern. Unless otherwise agreed, all submissions shall be made and all hearings shall be completed within six months of the date of selection of the third arbitrator, and the Tribunal shall render its decisions within two months of the date of the final submissions or the date of the closing of the hearings, whichever is later. (Article VIII (2) (6) (7) (8)).

Applicable Law

Disputes shall be decided “in accordance with the applicable rules of international law.” (Article VIII (1)).

Settlement of Disputes between a Contracting Party and an Investor [Return to the top of the page]

DEFINITION

An investment dispute is a dispute involving:

1. the interpretation or application of an investment agreement between that Party and such national or company;
2. the interpretation or application of any investment authorization granted by a Party’s foreign investment authority to such national or company; or,
3. an alleged breach of any right conferred or created by the Treaty with respect to an investment. (Article VII(1)).

PREARBITRAL CONSULTATIONS AND DISPUTE SETTLEMENT MECHANISMS

Parties to the dispute shall initially seek resolution through consultation and negotiation, which may include the use of non-binding, third-party procedures.

If the dispute cannot be settled through consultation and negotiation, it shall be submitted for settlement in accordance with any applicable, previously agreed to, dispute settlement procedures. (Article VII(3)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

Provided that the national or company has not submitted the dispute for resolution in accordance with any applicable previously agreed to dispute settlement mechanism or before the courts of justice or administrative tribunals of the Party that is a party to the dispute, and six months have elapsed from the date on which the dispute arose, the national or company may choose to consent in writing to the submission of the dispute for settlement by conciliation or binding arbitration. (Article VII(3)(a)).

Consent

Consent set out explicitly in Article VII(3)(b).

Forms of Arbitration

The submission of the dispute for settlement by conciliation or binding arbitration may be made to the International Chamber of Commerce (ICC). (Article VII(3)(a)).

Applicable Law

Conciliation or binding arbitration shall be done in accordance with the Regulations and Rules of the ICC. (Article VII(3)(c)).