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

DEFINITION OF INVESTMENT

The term “investment” means every kind of asset invested by investors from one Contracting Party in the territory of the other Contracting Party, in accordance with the laws and regulations of the Contracting Party in whose territory the investment was made. This general definition is illustrated by a non exhaustive list of specific rights, including: traditional property rights; rights in companies; money, claims to money, and claims to performance under contract having a financial value(loans shall be covered only when they are contracted according to regulations and documented in accordance with the requirements of the country in which the investment is made, and are directly linked to a specific investment); intellectual property rights; and concessions conferred by law or under contract or conferred by an administrative decision in the application of the law. (Article 1 (2)).

DEFINITION OF INVESTOR

Nationals

The term “investor” means, for each Contracting Party, the natural persons who are considered nationals of a Contracting Party in accordance with the laws of that Contracting Party. (Article 1 (1) (a)).

Companies

The term “investor” means, for each Contracting Party:

• Any juridical person including companies, corporations, associations, and any other form of organization constituted or otherwise duly organized under the law of one of the Contracting Parties, that has its seat and engages in effective economic activities in the territory of said Party;

• Any juridical person constituted in accordance with the laws of any country, that is controlled directly or indirectly by nationals of a Contracting Party or by legal entities whose seat is in the territory of the same Contracting Party where the legal person engages in effective economic activities. (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 26, 1998
Entry into force: Thirty days after the date when the Governments have notified each other of the fulfillment of their respective constitutional requisites for the entry into force of international agreements.
Duration: 5 years.
Thereafter the Agreement shall be automatically renewed for consecutive five-year periods, unless one of the Contracting Parties notifies the other Party with six months advance notice of its intention to terminate it.

Admission [Return to the top of the page]

Each Party shall promote and foster investments made in its territory by investors of the other Party, and shall admit these investments in accordance with its legislation. (Article 2(1)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

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Full Protection and Security

Each Contracting Party shall protect in its territory investments made by nationals or companies of the other Party, in accordance with its legislation. (Article 3 (1)).

Non-Discrimination

Yes. Each Party shall not impair through the adoption of unjustified or discriminatory measures the management, acquisition, maintenance, utilization, usufruct, expansion, sale, alienation, and liquidation of such investments. (Article 3 (1)).

National Treatment

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Most-Favored Nation Treatment

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EXCEPTIONS

Except where express reference is made thereto, nothing in this Agreement shall apply to taxation measures. (Article 11).

OTHER ASPECTS

Performance Requirements

Neither Contracting Party shall establish requirements as a condition for the establishment, expansion or maintenance of investments tied to set export commitments or local purchase of goods and services. (Article 2 (4)).

Neither Contracting Party may impose any of the following requirements in connection with permitting the establishment or acquisition of an investment or enforce any of the following requirements in connection with the subsequent regulation of that investment:

1. to export a given level or percentage of goods;
2. to achieve a given level or percentage of domestic content;
3. to purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from persons in its territory;
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; or
5. to transfer technology, a production process or other proprietary knowledge to a person in its territory unaffiliated with the transferor, except when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority, either to remedy an alleged violation of competition laws or acting in a manner not inconsistent with other provisions of this Agreement. (Article 6).

Others

Investors of one Contracting Party, suffering losses due to an armed conflict, state of national emergency, or natural disaster 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, with regard to restitution, indemnification, compensation or other settlement. These payments shall be freely transferable. (Article 4 (2)).

A Contracting Party may not require that an enterprise of that Contracting Party, that is an investment under this Agreement, appoint to senior management positions individuals of any particular nationality. (Article 5 (1)).

A Contracting Party may require that a majority of the board of directors, or any committee thereof, of an enterprise that is an investment under this Agreement be of a particular nationality, or resident in the territory of the Contracting Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment. (Article 5 (2)).

Subject to its legislation relating to the entry and stay of aliens, each Party shall allow the entry and stay in its territory of investors of the other Party and other persons under contracts to hold management and technical posts, in their capacity as personnel establishing, developing, managing or advising an investment in which investors have committed capital or other resources. (Article 5 (3)).

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). (Art. 10).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Contracting Party shall guarantee to investors of the other Contracting Party the unrestricted transfer of investments and returns, when the capital is registered with the national authority and the taxes are paid, in particular but not exclusively:

1. investment incomes as defined in Article 1;
2. indemnifications (see Article 4);
3. compensations (see Article 4);
4. proceeds of the sale or the total or partial liquidation of the investment;
5. salaries and other remunerations received by citizens of a Contracting Party that have obtained investment-related contracts to work in the other Contracting Party. (Article 7 (1)).

Repayment of Loans

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Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article 7 (1) (d)).

Licenses and Other Fees

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Other Categories of Payment

Yes. (Article 7 (1) (c ), (e)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Transfers shall be made in freely convertible currencies at the rate of exchange applicable in the market on the date of transfer. (Article 7 (2)).

Exchange Rates

Transfers shall be made in freely convertible currencies at the rate of exchange applicable in the market on the date of transfer. (Article 7 (2)).

Time of Transfer

Transfers shall be made in accordance with the fiscal regulations in force in the host country, in particular with respect to the presentation of reports, tax withholdings on incomes and others. Moreover, each Contracting Party can protect the rights of the creditors or ensure the satisfaction of judgments in adjudicatory proceedings through equitable, non-discriminatory and good faith application. (Article 7 (3)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Nationalization, expropriation, or measures which have a similar effect. (Article 4(1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “Public use” (Article 4(1)).

Due Process of Law and Judicial Review

Yes. (Article 4(1)).

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 date of expropriation or before the impending expropriation became publicly known. (Article 4(1)).

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 be settled through negotiation or other means commonly agreed between the Parties. (Article 12 (1)).

If it cannot be settled within six months from the start of negotiations, the dispute shall, at the request of either Contracting Party, be submitted to an ad-hoc arbitral tribunal composed of three members. (Article 12 (2)).

ARBITRATION

Constitution of the Tribunal

The arbitral tribunal shall be constituted according to the following procedures:

• Each Party shall appoint an arbitrator.
• The two arbitrators are required to select, within three months, a national of a third State, who serves as Chairman of the tribunal. (Article 12 (3)).
• When a Party does not select an arbitrator or agreement cannot be reached within three months on the designation of the Chairman, the President of the International Court of Justice might be entrusted 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). (Article 12 (4) (5) (6)).
• 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 12 (10)).

Procedural Rules of the Tribunal

The arbitral tribunal shall determine its own procedure. (Article 12 (8)).

Decisions of the tribunal shall be taken by a majority of votes and shall be final and binding on both Parties and may not be appealed. (Article 12 (9)).

Applicable Law

The tribunal shall decide on the basis of respect for the law, the provisions of the Agreement and of any other agreement in force between the Contracting Parties, and on the universally accepted principles of international law. (Article 12 (7)).

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

To settle disputes relating to investments between an investor of a Contracting Party and the other Contracting Party, Parties shall consult. (Article 13 (1)).

If it is not possible to settle the dispute within a period of six months, the dispute shall be submitted to ICSID. If the Parties do not agree as to which mechanism, conciliation or arbitration, is the most appropriate, the investor shall decide. (Article 13 (2)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

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Consent

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Forms of Arbitration

International arbitration under ICSID. (Article 13 (2)).

Applicable Law

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