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PARAGUAY - VENEZUELA
Bilateral Investment Treaty

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

DEFINITION OF INVESTMENT

The term “investment” means every kind of asset, invested by an investor of one Contracting Party in the territory of the other Contracting Party, according to the latter’s laws and regulations. This general definition is illustrated by a non exhaustive list of specific rights, including:

  • traditional property rights;

  • rights in companies;

  • monetary claims and titles to performance (loans only where they are directly linked to an investment);

  • intellectual property rights; and

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

DEFINITION OF INVESTOR

Nationals

The term “investor” means any natural person that is a national of a Contracting Party according to its legislation. (Article 1 (2)).

Companies

The term “investor” means any legal person constituted in accordance with the laws and regulations of a Contracting Party and that has its seat in the territory of that Contracting Party, and any legal person established in the territory where the investment is made and is effectively controlled by natural or legal persons who are considered “investors” according to this Treaty. (Article 1 (2)).

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

Date of signature: September 5, 1996
Entry into force:
The Agreement enters into force thirty days after both Contracting Parties have notified each other that their respective internal legal procedures have been fulfilled.
Duration: 10 years
Thereafter the Agreement shall be automatically renewed for consecutive ten-year periods, unless one of the Contracting Parties notifies the other Party with twelve months advance notice of its intention to terminate it.

Admission [Return to the top of the page]

Each Contracting shall promote in its territory, as much as possible, investments of investors of the other Contracting Party and shall admit such investments in accordance with its laws and regulations. (Article 3 (1)).

The Contracting Party that has admitted an investment in its territory shall not negate arbitrarily and shall not delay unduly the necessary permits with respect to such investment, including the execution of licensing contracts and technical, commercial and administrative assistance and income of the necessary managing, administrative, advisory and technical personnel. (Article 3 (2)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. Each Contracting Party shall guarantee, in its territory, fair and equitable treatment, in accordance with international law, to investments of investors of the other Contracting Party. (Article 4 (2)).

Full Protection and Security

Each Contracting Party shall protect, in its territory, investments of investors of the other Contracting Party, according to its laws and regulations. (Article 4 (1)).

Non-Discrimination

Yes. Each Contracting Party shall protect, in its territory, investments of investors of the other Contracting Party, according to its laws and regulations, and shall not impair, with arbitrary and discriminatory measures, the management, maintenance, utilization, enjoyment, growth, sale, and, should this be case, the liquidation of such investments. (Article 4 (1)).

National Treatment

Yes. Treatment shall not be less favorable than that granted by each Contracting Party to investments made in its territory by its own investors or granted by each Contracting Party to investments made in its territory by investors of the most favored nation, when the latter is more favorable. (Article 4 (2)).

Most-Favored Nation Treatment

Yes. Treatment shall not be less favorable than that granted by each Contracting Party to investments made in its territory by its own investors or granted by each Contracting Party to investments made in its territory by investors of the most favored nation, when the latter is more favorable. (Article 4 (2)).

EXCEPTIONS

MFN treatment shall not apply to privileges that a Contracting Party gives to investors of a third State by virtue of its participation or association in a free trade area, customs union, common market or a like regional agreement. (Article 4 (3)).

The treatment referred to in Article 4 does not apply to advantages that a Contracting Party grants to investors of third States as a result of a double taxation agreement or other agreement on tax matters. (Article 4 (4)).

OTHER ASPECTS

Performance Requirements

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Others

If the provisions in the legislation of a Contracting Party, or if the existing or future obligations under international law between the two Contracting Parties, or if an agreement between an investor of a Contracting Party and the other Contracting Party include provisions granting to investments of investors of the first Contracting Party a more favorable treatment, these provisions shall prevail if they are more favorable. (Article 11 (2)).

Investors of either Contracting Party who suffer losses due to a war or any other armed conflict, revolution, state of national emergency, rebellion, insurrection or riot in the territory of the other Contracting Party shall receive from this Contracting Party, in respect of restitution, compensation or other settlement, a treatment no less favorable than that accorded to national investors or those of any third State. (Article 7).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Contracting Party, in which territory investors of the other Contracting Party have made investments, shall guarantee to them, the free transfer of payments related to these investments, in particular but not exclusively:

  1. returns;
  2. amortizations of loans related to an investment;
  3. amounts covering administrative costs related to investments;
  4. additional capital necessary for the maintenance or the development of investments;
  5. proceeds of the sale or the total or partial liquidation of the investment;
  6. compensations as defined in Articles 6 and 7. (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) (e)).  

Licenses and Other Fees

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Other Categories of Payment

Yes. (Article 5 (1) (c ), (d), (f)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Transfers shall be effected without delay, in a freely convertible currency, at the rate of exchange applicable on the date of transfer, in accordance with the regulations of currency regimes in force in the Contracting Party in which territory the investment was made. (Article 5 (2)).

Exchange Rates

Transfers shall be effected at the rate of exchange applicable on the date of transfer, in accordance with the regulations of currency regimes in force in the Contracting Party in which territory the investment was made. (Article 5 (2)).

Time of Transfer

Transfers shall be effected without delay. (Article 5 (2)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Expropriating or nationalizing measures (direct or indirect), or any other measure of the same nature or outcome. (Article 6(1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “Pubic use or social interest”. (Article 6(1)).

Due Process of Law and Judicial Review

Not mentioned.

Other

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Compensation Standard; Form and Time of Payment

“Just, adequate, prompt or opportune compensation.”

Compensation shall:

  • amount to the genuine value of the investment before the expropriation or nationalization, or measure of equivalent effect became publicly known. (Article 6(2)).

Settlement of Disputes between Contracting Parties
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PRE-ARBITRATION NEGOTIATIONS

The disputes arising between the Contracting Parties regarding the interpretation or the application of the provisions contained in this Agreement shall be settled through diplomatic channels. (Article 10 (1)).

If it cannot be settled within six months from the date of the dispute, it shall, at the request of either Contracting Party, be submitted to an arbitral tribunal. (Article 10 (2)).

ARBITRATION

Constitution of the Tribunal

The arbitral tribunal shall have three members.

  • Each Contracting Party shall appoint an arbitrator, and both arbitrators shall name the Chairman of the tribunal, who must be a national of a third State.
  • If one of the Contracting Parties has not designated an arbitrator and has not responded to the invitation to designate extended by the other Contracting Party within two months, the arbitrator shall be appointed by the President of the International Court of Justice at the request of the latter.
  • If the two arbitrators cannot agree on a Chairman within the following two months, the Chairman shall be designated, at the request of either Contracting Party, by the President of the International Court of Justice. (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 10 (2) (3) (4) (5) (6)).

Procedural Rules of the Tribunal

Decisions of the tribunal shall be taken by a majority of votes. (Article 10 (6)). The arbitral tribunal shall determine its own procedure. (Article 10 (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

Disputes between a national or a company of a Contracting Party and the other Contracting Party with respect to compliance with the provisions of this Agreement shall be, to the extent possible, settled amicably between the parties to the dispute. (Article 9 (1)).

If it was not possible to settle the dispute within a period of six months, it may be submitted, to the election of the national or company:

  1. to the competent tribunals of the host party, in which territory the investment was made; or
  2. to international arbitration. (Article 9 (2)).

Election by the investor of either one of these procedures shall be definitive. (Article 9 (4)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

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Consent

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Forms of Arbitration

The dispute shall be submitted to arbitration under:

  1. ICSID, or
  2. if ICSID is not available, to UNCITRAL rules. (Article 9 (3)).  

Applicable Law

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