The Multilateral Agreement on Investment (MAI) [*]
Date enacted:
In force: -
Content
- I - Genereral provisions
- II - Scope and application
- III - Treatment of investors and investments
- IV - Investment protection
- V - Dispute settlement
- VI - Exceptions and safeguards
- VII - Financial services
- VIII - Taxation
- IX - Country specific exceptions
- X - Relationship to other international agreements
- XI - Implementation and operation
- XII - Final provisions
The Contracting Parties to this Agreement,
Desiring to strengthen their ties of friendship and to promote greater economic co-operation between them;
Considering that international investment has assumed great importance in the world economy and has considerably contributed to the development of their countries;
Recognising that agreement upon the treatment to be accorded to investors and their investments will contribute to the efficient utilisation of economic resources, the creation of employment opportunities and the improvement of living standards;
Emphasising that fair, transparent and predictable investment regimes complement and benefit the world trading system;
[Wishing that this Agreement enhances international co-operation with respect to investment and the development of world-wide rules on foreign direct investment in the framework of the world trading system as embodied in the World Trade Organization;]
Wishing to establish a broad multilateral framework for international investment with high standards for the liberalisation of investment regimes and investment protection and with effective dispute settlement procedures;
[Recognising that investment, as an engine of economic growth, can play a key role in ensuring that economic growth is sustainable, when accompanied by appropriate environmental policies to ensure it takes place in an environmentally sound manner] [Recognising that appropriate environmental policies can play a key role in ensuring that economic development, to which investment contributes, is sustainable] and resolving to [desiring to] implement this agreement [in accordance with international environmental law and] in a manner consistent with sustainable development, as reflected in the Rio Declaration on Environment and Development and Agenda 21, [including the protection and preservation of the environment and principles of the polluter pays and the precautionary approach];
Renewing their commitment to the Copenhagen Declaration of the World Summit on Social Development and to observance of internationally recognised core labour standards, i.e. freedom of association, the right to organise and bargain collectively, prohibition of forced labour, the elimination of exploitative forms of child labour, and non-discrimination in employment, and noting that the International Labour Organisation is the competent body to set and deal with core labour standards worldwide.
Affirming their decision to create a free-standing Agreement open to accession by all countries;
[Noting] [Affirming their support for] the OECD Guidelines for Multinational Enterprises and emphasising that implementation of the Guidelines, which are non-binding and which are observed on a voluntary basis, will promote mutual confidence between enterprises and host countries and contribute to a favourable climate for investment;
Have Agreed as Follows:
I - Genereral provisions
II - Scope and application
Definitions
1. |
Investor means:
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2. |
Investment means:
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Geographical scope of application
This Agreement shall apply in:
a. |
the land territory, internal waters, and the territorial sea of a Contracting Party, and, in the case of a Contracting Party which is an archipelagic state, its archipelagic waters; and |
b. |
the maritime areas beyond the territorial sea with respect to which a Contracting Party exercises sovereign rights or jurisdiction in accordance with international law, as reflected particularly in the 1982 United Nations Convention on the Law of the Sea. |
Application to overseas territories
1. |
A State may at any time declare in writing to the Depositary that this Agreement shall apply to all or to one or more of the territories for the international relations of which it is responsible. Such declaration, made prior to or upon ratification, accession or acceptance, shall take effect upon entry into force of this Agreement for that State. A subsequent declaration shall take effect with respect to the territory or territories concerned on the ninetieth day following receipt of the declaration by the Depositary. |
A Party may at any time declare in writing to the Depositary, that this Agreement shall cease to apply to all or to one or more of the territories for the international relations of which it is responsible. Such declaration shall take effect upon the expiry of one year from the date of receipt of the declaration by the Depositary, with the same effect regarding existing investment as withdrawal of a Party.
III - Treatment of investors and investments
National treatment and most favoured nation treatment
1. |
Each Contracting Party shall accord to investors of another Contracting Party and to their investments, treatment no less favourable than the treatment it accords [in like circumstances] to its own investors and their investments with respect to the establishment, acquisition, expansion, operation, management, maintenance, use, enjoyment and sale or other disposition of investments. |
2. |
Each Contracting Party shall accord to investors of another Contracting Party and to their investments, treatment no less favourable than the treatment it accords [in like circumstances] to investors of any other Contracting Party or of a non-Contracting Party, and to the investments of investors of any other Contracting Party or of a non-Contracting Party, with respect to the establishment, acquisition, expansion, operation, management, maintenance, use, enjoyment, and sale or other disposition of investments. |
3. |
Each Contracting Party shall accord to investors of another Contracting Party and to their investments the better of the treatment required by Articles 1.1 and 1.2, whichever is the more favourable to those investors or investments. |
Transparency
1. |
Each Contracting Party shall promptly publish, or otherwise make publicly available, its laws, regulations, procedures and administrative rulings and judicial decisions of general application as well as international agreements which may affect the operation of the Agreement. Where a Contracting Party establishes policies which are not expressed in laws or regulations or by other means listed in this paragraph but which may affect the operation of the Agreement, that Contracting Party shall promptly publish them or otherwise make them publicly available. |
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2. |
Each Contracting Party shall promptly respond to specific questions and provide, upon request, information to other Contracting Parties on matters referred to in Article 2.1. |
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3. |
Nothing in this Agreement shall prevent a Contracting Party from requiring an investor of another Contracting Party, or its investment, to provide routine information concerning that investment solely for information or statistical purposes. Nothing in this Agreement requires a Contracting Party to furnish or allow access to:
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Temporary entry, stay and work of investors and key personnel
1. |
Subject to the application of Contracting Parties’ national laws, regulations and procedures affecting the entry, stay and work of natural persons:
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2. |
No Contracting Party may deny entry and stay as provided for by this Article, or authorisation to work as provided for by paragraph 1(a) of this Article, for reasons relating to labour market or other economic needs tests or numerical restrictions in national laws, regulations, and procedures. |
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3. |
For the purposes of this Article: Natural person of another Contracting Party means a natural person having the nationality of [or who is permanently residing in] another Contracting Party in accordance with its applicable law; |
Executive means a natural person who primarily directs the management of an enterprise or establishes goals and policies for the enterprise or a major component or function of the enterprise, exercises wide latitude in decision-making and receives only general supervision or direction from higher-level executives, the board of directors, or stockholders of the enterprise;
Manager means a natural person who directs the management of an enterprise, or department, or subdivision of the enterprise, supervises and controls the work of other supervisory, professional or managerial employees, has the authority to hire and fire or recommend hiring, firing, or other personnel actions and exercises discretionary authority over day-to-day operations at a senior level; and
Specialist means a natural person who possesses knowledge at an advanced level of expertise and who may be required to possess specific or proprietary knowledge of the enterprise's product, service, research equipment, techniques, or management.
Nationality requirements for executives, managers and members of boards of directors
No Contracting Party may require that an enterprise of that Contracting Party that is an investment of an investor of another Contracting Party appoint as executives, managers and members of boards of directors individuals of any particular nationality.
Employment requirements
A Contracting Party shall permit investors of another Contracting Party and their investments to employ any natural person of the investor's or the investment's choice regardless of nationality and citizenship provided that such person is holding a valid permit of sejour and work delivered by the competent authorities of the former Contracting Party and that the employment concerned conforms to the terms, conditions and time limits of the permission granted to such person.
Performance requirements
1. |
A Contracting Party shall not, in connection with the establishment, acquisition, expansion, management, operation, maintenance, use, enjoyment, sale or other disposition of an investment in its territory of an investor of a Contracting Party or of a non-Contracting Party, impose, enforce or maintain any of the following requirements, or enforce any commitment or undertaking:
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2. |
A Contracting Party is not precluded by paragraph 1 from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory of a Contracting Party or of a non-Contracting Party, on compliance with any of the requirements, commitments or undertakings set forth in paragraphs 1(f) through 1(l). |
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3. |
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4. |
[Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on investment, nothing in paragraphs 1(b) and 1(c) shall be construed to prevent any Contracting Party from adopting or maintaining measures, including environmental measures:
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5. |
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Privatisation
Paragraph 1 (Application of National Treatment/MFN)
1. |
The obligation on a Contracting Party to accord National Treatment and MFN treatment as defined in Paragraph XX (NT/MFN) applies to:
[Paragraph 1a (voucher schemes) |
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2. |
Notwithstanding paragraph 1, arrangements under which natural persons of a Contracting Party are granted exclusive rights as regards the initial privatisation are acceptable as a method of privatisation under this Agreement provided that the exclusive right as regards the initial privatisation is limited to natural persons only and provided that there is no restriction on subsequent sales]. Paragraph 2 (Right to privatise) |
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3. |
Nothing in this Agreement shall be construed as imposing an obligation on a Contracting Party to privatise.
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4. |
Contracting Parties acknowledge that special share arrangements are compatible with Paragraph 1, unless they explicitly or intentionally favour investors or investments of a Contracting Party or discriminate against investors or investments of another Contracting Party on the grounds of their nationality or permanent residency.
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5. |
[Special share holding arrangements including, inter alia, a) the retention of “golden shares” by Contracting Parties, b) stable shareholder groups assembled by a Contracting Party, c) management/employee buyouts, and d) voucher schemes for members of the public, hold strong potential for discrimination against foreign investors and are, in fact, inconsistent with National Treatment and MFN treatment obligations in many instances.]
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6. |
Special share arrangements which explicitly discriminate (i.e. de jure) against foreign investors and their investment are contrary to obligations on National Treatment/MFN Treatment. It is also understood that when, in their application, special share arrangements lead to de facto discrimination they are also contrary to National Treatment/MFN Treatment.
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7. |
Nothing in this Agreement shall prevent Contracting Parties from using special methods of privatisation or having special rules as regards ownership, management or control of privatised assets such as:
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8. |
For the purposes of this Article, each Contracting Party or its designated agency shall promptly publish or otherwise make publicly available the essential features and procedures for participation in each prospective privatisation.[*]
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9. |
Privatisation means the sale by a Contracting Party, in part or in full, of its equity interests in any entity or other disposal having substantially the same effect.*
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[*] |
This footnote confirms the application of the Transparency Article YY. This footnote also confirms that the obligations to accord National Treatment and MFN Treatment prohibit discrimination against investors and investments of other Contracting Parties with respect to all arrangements for making public information about a privatisation operation. It is also understood that there can be variance in the methods used to make information available, including in the case of small scale privatisations. |
Monopolies/State enterprises/concessions
a. |
Article on Monopolies
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b. |
[B. Article on [state enterprises][entities with which a Government has a specific relationship]
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c. |
Definitions Related to Articles on Monopolies [and State Enterprises]
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d. |
[D. Article on Concessions |
Transparency
The procedure for granting a concession must envisage, at least, one publication in a journal of official notices. The notice must contain all the relevant information about the purpose and nature of the activity subject to concession, its conditions and deadline. The publication must be made sufficiently in advance in order to enable all interested persons to submit applications or additional relevant information. The reasons for the rejection of an application will be made known to the applicant upon request. ]
[Definition
1. |
A concession is any delegation, direct or indirect, which entails a transferring of operation of activities, carried out by a government authority, national or subnational, or any public or para-public authority[, to a distinct and independent legal entity]. |
2. |
The delegation shall be realised either by any laws, regulations, administrative rulings or established policies, or by any private or public contract. The aim of the delegation is to entrust to a distinct [and independent] legal body with the operation of public services, including the operation of networks or infrastructures, or the exploitation of natural resources and if needed with the construction of all or part of networks or infrastructures. |
3. |
[If necessary: The legal act of delegation includes the modes of payment to the investor. These modes of payment can consist of any price paid by consumers, any royalty, tax licence, subsidy or contribution from the delegatory authority, or any combination of the modes]]. |
[VII. Article on the granting of authorisations for the prospection, exploitation and production of minerals, including hydrocarbons
1. |
“ For the purpose of the present Article, “authorisation” means any law, regulation, administrative or contractual provision or instrument issued thereunder by which the competent authorities of a Contracting Party entitle any investor or a group of investors to exercise, on its own behalf and on its own risk, the exclusive right to prospect or explore for or produce minerals, including hydrocarbons, in a geographical area. |
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2. |
Consistent with the present Agreement, the Contracting Parties may establish:
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3. |
The Contracting Parties shall apply such procedures, criteria, conditions and requirements as referred to in paragraph (2) above in a transparent and objective manner and in a way which ensures that there is no discrimination on grounds of nationality between investors as regards access to and exercise of the activities of prospecting, exploring for and producing minerals, including hydrocarbons.] |
Entities with delegated governmental authority
Each Contracting Party shall ensure that any entity to which it has delegated a regulatory, administrative or other governmental authority acts in a manner that is not inconsistent with the Contracting Party’s obligations under this Agreement wherever such entity exercises that delegated authority.
Investment incentives
Provisions
Alternative 1
Several delegations believe that no additional text is necessary. They consider that the current draft articles in the MAI are sufficient to cover investment incentives at this time.
Alternative 2
Many delegations, however, would favour specific provisions on incentives in the MAI although they hold different views as to their nature and scope. Some proposed a built-in agenda for future work. Discussion of possible provisions focused on the following draft article which is regarded as a compromise text by those who would still prefer more far-reaching disciplines.
Article
1. |
The Contracting Parties confirm that Article XX (on NT and MFN) and Article XX (Transparency) applies to [the granting of] investment incentives. |
2. |
[The Contracting Parties acknowledge that[, in certain circumstances,] even if applied on a nondiscriminatory basis, investment incentives may have distorting effects on the flow of capital and investment decisions. [Any Contracting Party which considers that its investors or their investments are adversely affected by an investment incentive adopted by another Contracting Party and having a distorting effect, may request consultations with that Contracting Party.] [The former Contracting Party may also bring the incentive before the Parties Group for its consideration.]] |
3. |
[In order to further avoid and minimise such distorting effects and to avoid undue competition between Contracting Parties in order to attract or retain investments, the Contracting Parties [shall] enter into negotiations with a view to establishing additional MAI disciplines [within three years] after the signature of this Agreement. These negotiations shall recognise the role of investment incentives with regard to the aims of policies, such as regional, structural, social, environmental or R D policies of the Contracting Parties, and other work of a similar nature undertaken in other fora. These negotiations shall, in particular, address the issues of positive discrimination, [transparency], standstill and rollback.] |
4. |
[For the purpose of this Article, an "investment incentive" means: The grant of a specific advantage arising from public expenditure [a financial contribution] in connection with the establishment, acquisition, expansion, management, operation or conduct of an investment of a Contracting Party or a non-Contracting Party in its territory]. |
Recognition arrangements
Authorisation procedures
Membership of Self-regulatory bodies
Intellectual property
Intellectual property issues are being examined by intellectual property experts. The most recent status of discussions is reproduced here.
Transfers
Agreed: text on collective management charges should be added to the first sentence in paragraph 2 of the Commentary on Transfers after “purposes”: “, or any authorised deduction by an entity charged with collective management of intellectual property rights.”
Not agreed: whether the modified paragraph should remain in the Commentary or be placed in the text of the Agreement.
Monopolies
Agreed: the definition of “monopoly” should be amended to refine the definition’s treatment of intellectual property rights:
“Monopoly” means any person or entity designated by a [national [or subnational] government authority] [Contracting Party] as the sole supplier or buyer of a good or service in a relevant market in the territory of a Contracting Party, but does not include a person or entity that has an exclusive intellectual property right, concession, licence authorisation or permit solely by reason of such right or exercise of such right [nor does it include an entity charged with the collective management of intellectual property rights].
Not agreed: as indicated by the final bracketed phrase, whether entities charged with collective management of IPRs should also be excluded from the definition.
Performance Requirements
Agreed: paragraph 1(f) in the Article on Performance Requirements requires explicit reference to the transfer of IPRs. Not agreed:
a. |
whether the current wording of paragraph 1(f) adequately covers future IPRs and moral rights; and |
b. |
whether paragraphs 1(b) and (c) of the Article on Performance Requirements have an impact on IPRs. |
Expropriation
Agreed: text is needed to ensure that certain IP management and legal provisions do not constitute expropriation.
Not agreed: flowing from proposed text:
“The creation, limitation, revocation, annulment, statutory licensing, compulsory licensing and compulsory collective management of IPRs, the withholding of authorised deductions by an entity charged with the collective management of IPRs, and the sharing of remuneration between different holders of IPRs are not expropriation within the terms of this agreement, to the extent that they are not inconsistent with specialised IPR conventions.”
a. |
whether there should be a specific IP text or reliance on a general text clarifying that expropriation does not include normal government regulatory activity; |
b. |
whether and how the statement should be qualified; |
c. |
whether that list of actions should be exhaustive or illustrative; |
d. |
whether the current wording adequately covers future rights; |
e. |
whether the question of consistency with IPR agreements should be worded positively; |
f. |
whether a specific IP text should be in the text of the Agreement, in an interpretative footnote or in the Commentary; and |
g. |
whether the word “creation” adequately covers the intended concept. |
National Treatment and MFN Treatment and General Treatment
Agreed: MAI obligations should not extend NT/MFN obligations in existing IP agreements.
Not agreed:
a. |
whether there should be a NT/MFN exception through a link to existing IP agreements; |
b. |
whether there should be a NT/MFN exception to MAI obligations for IPRs; |
c. |
whether the eventual solution should also be applied to the General Treatment articles; and |
d. |
the applicability of the MAI obligations with respect to future IPRs. |
Definitions of “Investment” and “Investor”
Agreed: there needs to be clarification of the definition of “investment”. The required clarification is tied to the resolution of the eventual substantial MAI obligations for IPRs.
Not agreed:
a. |
whether the definition of “investment” should be limited to those IPRs included in the TRIPS Agreement; |
b. |
whether it should exclude copyrights and related rights; |
c. |
whether it should include future IPRs; |
d. |
whether it should include only the “economic aspects” of IPRs; |
e. |
whether it should include only those rights provided domestically; and |
f. |
what implications the definition of “investor” has for an IP “rightsholder”. |
Dispute Settlement
Agreed: IP experts wish to limit forum shopping and conflicting jurisprudence with the WTO.
Not agreed:
a. |
how to achieve these goals; |
b. |
the desirability of applying investor-state dispute settlement to IPRs; and |
c. |
whether the existing MFN obligations in the TRIPS Agreement create the risk of “freeriders”. |
Information Transfers and Data Processing
Agreed: there are concerns that the text of the generalisation of financial services (see Information Transfer and Data Processing, page 57) has implications for IPRs, and may have to be amended or deleted to take these concerns into account.
Exhaustion of Rights
Not agreed: whether there needs to be any language on this issue to ensure that the MAI does not create new obligations in this area.
Public debt
Corporate practices
Technology RD
Not lowering standards (labour and environment)
Alternative 1
[The Parties recognise that it is inappropriate to encourage investment by lowering [domestic] health, safety or environmental [standards] [measures] or relaxing [domestic] [core] labour standards. Accordingly, a Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such [standards] [measures] as an encouragement for the establishment, acquisition, expansion or retention in its territory of an investment of an investor. If a Party considers that another Party has offered such an encouragement, it may request consultations with the other Party and the two Parties shall consult with a view to avoiding any such encouragement.]
Alternative 2
[A Contracting Party [shall] [should] not waive or otherwise derogate from, or offer to waive or otherwise derogate from [domestic] health, safety or environmental [measures] [standards] or [domestic] [core] labour standards as an encouragement for the establishment, acquisition, expansion or retention of an investment of an investor.]
Alternative 3
1. |
[1. The Parties recognise that it is inappropriate to encourage investment by lowering domestic health, safety or environmental measures or relaxing international core labour standards. |
2. |
A Contracting Party [shall] [should] accord to investors of another Contracting Party and their investments treatment no more favourable than it accords its own investors by waving or otherwise derogating from, or offering to waive or otherwise derogate from domestic health, safety, environmental or labour measures, with respect to the establishment, acquisition, expansion, operation, management, maintenance, use, enjoyment and sale or other disposition of an investment. |
3. |
A Contracting Party [shall] [should] not take any measure which derogates from, or offer to derogate from, international health, safety or environmental laws or international core labour standards as an encouragement for investment on its territory.] |
Alternative 4 (Environment Only)
1. |
[1. The Parties recognise that it is inappropriate to encourage investment by relaxing health, safety or environmental measures. |
2. |
Accordingly, a Contracting Party shall accord to investors of another Contracting Party and their investments treatment no more favourable than it accords to its own investors and their investments by waving or otherwise derogating from, or offering to waive or otherwise derogate from health, safety environmental measures, with respect to the establishment, acquisition, expansion, operation, management, maintenance, use, enjoyment and sale or other disposition of investments. |
3. |
In addition, a Contracting Party should not encourage investment by lowering its health, safety and environmental standards in general. If a Party considers that another Party has offered such an encouragement, it may request consultations with the other Party and the two Parties shall consult with a view to avoiding any such encouragement.] |
Proposed “Additional clause” on labour and environment
IV - Investment protection
1 - General treatment
1. |
Each Contracting Party shall accord to investments in its territory of investors of another Contracting Party fair and equitable treatment and full and constant protection and security. In no case shall a Contracting Party accord treatment less favourable than that required by international law. |
2. |
A Contracting Party shall not impair by [unreasonable or discriminatory] [unreasonable and discriminatory] measures the operation, management, maintenance, use, enjoyment or disposal of investments in its territory of investors of another Contracting Party. |
2 - Expropriation and compensation
1. |
A Contracting Party shall not expropriate or nationalise directly or indirectly an investment in its territory of an investor of another Contracting Party or take any measure or measures having equivalent effect (hereinafter referred to as "expropriation") except:
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2. |
Compensation shall be paid without delay. |
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3. |
Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation occurred. The fair market value shall not reflect any change in value occurring because the expropriation had become publicly known earlier. |
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4. |
Compensation shall be fully realisable and freely transferable. |
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5. |
[Compensation shall include interest at a commercial rate established on a market basis for the currency of payment from the date of expropriation until the date of actual payment.] |
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6. |
Due process of law includes, in particular, the right of an investor of a Contracting Party which claims to be affected by expropriation by another Contracting Party to prompt review of its case, including the valuation of its investment and the payment of compensation in accordance with the provisions of this article, by a judicial authority or another competent and independent authority of the latter Contracting Party. |
3 - Protection from strife
1. |
An investor of a Contracting Party which has suffered losses relating to its investment in the territory of another Contracting Party due to war or to other armed conflict, state of emergency, revolution, insurrection, civil disturbance, or any other similar event in the territory of the latter Contracting Party, shall be accorded by the latter Contracting Party, as regards restitution, indemnification, compensation or any other settlement, treatment no less favourable than that which it accords to its own investors or to investors of any third State, whichever is most favourable to the investor. |
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2. |
Notwithstanding Article 3.1, an investor of a Contracting Party which, in any of the situations referred to in that paragraph, suffers a loss in the territory of another Contracting Party resulting from
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4 - Transfers
1. |
Each Contracting Party shall ensure that all payments relating to an investment in its territory of an investor of another Contracting Party may be freely transferred into and out of its territory without delay. Such transfers shall include, in particular, though not exclusively:
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2. |
Each Contracting Party shall further ensure that such transfers may be made in a freely convertible currency. [Freely convertible currency means a currency which is widely traded in international foreign exchange markets and widely used in international transactions.] or [Freely convertible currency means a currency which is, in fact, widely used to make payments for international transactions and is widely traded in the principal exchange markets]. |
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3. |
Each Contracting Party shall also further ensure that such transfers may be made at the market rate of exchange prevailing on the date of transfer. |
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4. |
[4.4. In the absence of a market for foreign exchange, the rate to be used shall be the most recent exchange rate for conversion of currencies into Special Drawing Rights.] |
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5. |
Notwithstanding Article 4.1(b) above, a Contracting Party may restrict the transfer of a return in kind in circumstances where the Contracting Party is permitted under the GATT 1994 to restrict or prohibit the exportation or the sale for export of the product constituting the return in kind. Nevertheless, a Contracting Party shall ensure that transfers of returns in kind may be effected as authorised or specified in an investment agreement, investment authorisation, or other written agreement between the Contracting Party and an investor or investment of another Contracting Party. |
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6. |
Notwithstanding paragraphs 1 to 5 of this Article, a Contracting Party may delay or prevent a transfer through the equitable, non-discriminatory and good faith application of measures:
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5 - Information transfer and data processing
1. |
No Contracting Party shall take measures that prevent transfers of information or the processing of information outside the territory of a Contracting Party, including transfers of data by electronic means, where such transfer of information or processing of information is:
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2. |
Nothing in paragraph 1:
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6 - Subrogation
If a Contracting Party or its designated agency makes a payment under an indemnity, guarantee or contract of insurance given in respect of an investment of an investor in the territory of another Contracting Party, the latter Contracting Party shall recognise the assignment of any right or claim of such investor to the former Contracting Party or its designated agency and the right of the former Contracting Party or its designated agency to exercise by virtue of subrogation any such right and claim to the same extent as its predecessor in title.
7 - Protecting existing investments
[This Agreement shall apply to investments made prior to its entry into force for the Contracting Parties concerned [consistent with the legislation of the Contracting Party in whose territory it was made] as well as investments made thereafter. This Agreement shall not apply to claims arising out of events which occurred, or to claims which had been settled, prior to its entry into force.] or [This Agreement shall apply to investments existing at the time of entry into force as well as to those established or acquired thereafter.]
V - Dispute settlement
State-State procedures
A - General provisions
1. |
The rules and procedures set out in Articles A-C shall apply to the avoidance of conflicts and the resolution of disputes between Contracting Parties regarding the interpretation or application of the Agreement unless the disputing parties agree to apply other rules or procedures. However, the disputing parties may not depart from any obligation regarding notification of the Parties Group and the right of Parties to present views, under Article B, paragraphs 1.a and 4.c, and Article C, paragraphs 1.a, 4, and 6.e. |
2. |
Contracting Parties and other participants in proceedings shall protect any confidential or proprietary information which may be revealed in the course of proceedings under Articles B and C and which is designated as such by the Party providing the information. Contracting Parties and other participants in the proceedings may not reveal such information without written authorisation from the Party which provided it. |
3. |
[EC or Contracting Party REIO text being developed for possible inclusion] |
B - Consultation, conciliation and mediation
1. |
Consultations
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2. |
Multilateral consultations
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3. |
Mediation or conciliation
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4. |
Confidentiality of proceedings, notification of results
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C - Arbitration
1. |
Scope and Initiation of Proceedings
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2. |
Formation of the Tribunal
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3. |
Consolidation
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4. |
Third Parties
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5. |
Scientific and Technical Expertise
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6. |
Proceedings and awards
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7. |
Nullification
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8. |
Default rules |
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9. |
Response to Non-compliance |
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Investor-State procedures
D - Disputes between an investor and a Contracting Party
1. |
Scope and standing
on which the investor has relied in establishing acquiring, or significantly expanding an investment. |
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2. |
Means of settlement
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3. |
Contracting Party consent
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4. |
Time periods and notification
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5. |
Written Agreement of the Parties The consent given by a Contracting Party in subparagraph 3.a, together with either the written submission of the dispute to resolution by the investor pursuant to subparagraph 2.c or the investor's advance written consent to such submission, shall constitute the written consent and the written agreement of the parties to the dispute to its submission for settlement for the purposes of Chapter II of the ICSID Convention, the ICSID Additional Facility Rules, Article 1 of the UNCITRAL Arbitration Rules, the Rules of Arbitration of the ICC, and Article II of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"). Neither party may withdraw its consent unilaterally, except as provided in paragraph 9.e of this Article. |
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6. |
[EC or Contracting Party REIO text being developed, for possible inclusion] |
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7. |
Appointments to Arbitral Tribunals
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8. |
Standing of the investment
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9. |
Consolidation of multiple proceedings
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10. |
Preliminary objections
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11. |
Indemnification
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12. |
Third Party rights The arbitral tribunal shall notify the Parties Group of its formation. Taking into account the views of the parties, it may give to any Contracting Party requesting it an opportunity to submit written views on the legal issues in dispute, provided that the proceedings are not unduly delayed thereby. Any Contracting Party requesting it within thirty days after receipt by the Parties Group of the notification of the tribunal’s formation shall be given an opportunity to present its views on issues in dispute in which it has a legal interest. |
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13. |
Scientific and technical expertise
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14. |
Applicable law
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15. |
Interim measures of relief
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16. |
Final awards
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17. |
Confidential and proprietary information Parties and other participants in proceedings shall protect any confidential or proprietary information which may be revealed in the course of the proceedings and which is designated as such by the party providing the information. They shall not reveal such information without written authorisation from the party which provided it. |
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18. |
Place of arbitration and enforceability Any arbitration under this article shall be held in a state that is party to the New York Convention. Claims submitted to arbitration under this article shall be considered to arise out of a commercial relationship or transaction for purposes of Article 1 of that Convention. Each Contracting Party shall provide for the enforcement of the pecuniary obligations imposed by an award rendered pursuant to this Article D. |
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19. |
Tribunal member fees Fees and expenses payable to a member of an arbitral tribunal established under these Articles will be subject to schedules established by the Parties Group and in force at the time of the constitution of the tribunal. |
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20. |
Supplemental provisions The Parties Group may adopt supplemental provisions to ensure the smooth functioning of these rules, in particular to clarify the inter-relationship between these rules and the rules of arbitration available under paragraph 2.c of this article D. |
VI - Exceptions and safeguards
General exceptions
1. |
This Article shall not apply to Article IV, 2 and 3 (Expropriation and compensation and protection from strife). |
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2. |
Nothing in this Agreement shall be construed:
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3. |
Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between Contracting Parties, or a disguised investment restriction, nothing in this Agreement shall be construed to prevent any Contracting Party from taking any measure necessary for the maintenance of public order. |
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4. |
Actions or measures taken pursuant to this Article shall be notified to the Parties Group. |
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5. |
If a Contracting Party (the "requesting Party") has reason to believe that actions or measures taken by another Contracting Party (the "other Party") under this article have been taken solely for economic reasons, or that such actions or measures are not in proportion to the interest being protected, it may request consultations with that other Party in accordance with Article V, B.1 (State-State Consultation Procedures). That other Party shall provide information to the requesting Party regarding the actions or measures taken and the reasons therefor. |
Transactions in pursuit of monetary and exchange rate policies
1. |
Articles XX (National Treatment), YY (Most Favoured Nation Treatment) and ZZ (Transparency) do not apply to transactions carried out in pursuit of monetary or exchange rate policies by a central bank or monetary authority of a Contracting Party. |
2. |
Where such transactions do not conform with Articles XX (National Treatment), YY (Most Favoured Nation Treatment) and ZZ (Transparency), they shall not be used as a means of avoiding the Contracting Party’s commitments or obligations under the Agreement. |
Temporary safeguard
1. |
A Contracting Party may adopt or maintain measures inconsistent with its obligations under:
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2. |
Measures referred to in paragraph 1:
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3. |
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4. |
Measures referred to in paragraph 1 and any changes therein that are approved by the International Monetary Fund in the exercise of its jurisdiction shall be considered as consistent with this Article. |
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5. |
With regard to measures referred to in paragraph 1, and any changes therein, not falling within paragraph 4:
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6. |
The Contracting Parties shall seek agreement with the International Monetary Fund regarding the role of the International Monetary Fund in the review procedures established under this Article. |
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7. |
Measures referred to in paragraph 1 and any changes therein that are approved by the International Monetary Fund in the exercise of its jurisdiction or determined to be consistent with this Article by the International Monetary Fund or the Parties Group cannot be subject to dispute settlement. |
Additional Article
If a dispute arises under this Article or under Article ..... (obligations under the Articles of Agreement of the Fund), a Dispute Settlement Panel shall request an assessment by the International Monetary Fund of the consistency of the measures with its Articles of Agreement, of the conditions mentioned under paragraph 1 and of the consistency of any measures as applied with paragraph 2. Any such assessment by the International Monetary Fund shall be accepted by the Panel.
VII - Financial services
Prudential measures
1. |
Notwithstanding any other provisions of the Agreement, a Contracting Party shall not be prevented from taking prudential measures with respect to financial services, including measures for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by an enterprise providing financial services, or to ensure the integrity and stability of its financial system. |
2. |
Where such measures do not conform with the provisions of the Agreement, they shall not be used as a means of avoiding the Contracting Party's commitments or obligations under the Agreement. |
Recognition arrangements
1. |
A Contracting Party may recognise prudential measures of any other Contracting Party or non-Contracting Party in determining how the Contracting Party's measures relating to financial services shall be applied. Such recognition, which may be achieved through harmonisation or otherwise, may be based on an agreement or arrangement with the other Contracting Party or non-Contracting Party concerned or may be accorded autonomously. |
2. |
A Contracting Party that is a party to such an agreement or arrangement referred to in paragraph 1, whether future or existing, shall afford adequate opportunity for other interested Contracting Parties to negotiate their accession to such agreements or arrangements, or to negotiate comparable ones with it, under circumstances in which there would be equivalent regulation, oversight, implementation of such regulation, and, if appropriate, procedures concerning the sharing of information between the parties to the agreement or arrangement. Where a Contracting Party accords recognition autonomously, it shall afford adequate opportunity for any other Contracting Party to demonstrate that such circumstances exist. |
Authorisation procedures
1. |
Each Contracting Party's regulatory authorities shall make available to interested persons their requirements for completing applications relating to an investment in, or the operations of, a financial services enterprise. |
2. |
On the request of an applicant, the regulatory authority shall inform the applicant of the status of its application. If such authority requires additional information from the applicant, it shall notify the applicant without undue delay. |
3. |
A regulatory authority shall make an administrative decision on a completed application of an investor in a financial services enterprise or a financial services enterprise that is an investment of an investor of another Contracting Party within [120][180] days, and shall promptly notify the applicant of the decision. An application shall not be considered complete until [all relevant hearings are held and] all necessary information is received. Where it is not practicable for a decision to be made within [120][180] days, the regulatory authority shall notify the applicant without undue delay and shall endeavour to make the decision within a reasonable time thereafter. |
Transparency
Nothing in this Agreement requires a Contracting Party to furnish or allow access to:
a. |
information related to the financial affairs and accounts of individual customers of financial services enterprises, or |
b. |
any confidential or proprietary information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or prejudice legitimate commercial interests of particular enterprises. |
Information transfer and data processing
1. |
No Contracting Party shall take measures that prevent transfers of information or the processing of financial information outside the territory of a Contracting Party, including transfers of data by electronic means, where such transfer of information or processing of financial information is:
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2. |
Nothing in paragraph 1:
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Membership of self-regulatory bodies and associations
When membership or participation in, or access to, any self-regulatory body, securities or futures exchange or market, clearing agency, or any other organisation or association is required by a Contracting Party in order for investments of investors of any other Contracting Party in a financial services enterprise established in the territory of the Contracting Party to provide financial services on an equal basis with financial services enterprises of the Contracting Party, or when the Contracting Party provides directly or indirectly such entities, privileges or advantages in providing financial services, the Contracting Party shall ensure that such entities accord national treatment to such investments.
Payments and clearing systems/lender of last resort
1. |
Under terms and conditions that accord National Treatment, each Contracting Party shall grant to financial services enterprises that are investments of investors of any other Contracting Party established in its territory access to payment and clearing systems operated by public entities, and to official funding and refinancing facilities available in the normal course of ordinary business. |
2. |
The provisions of this Agreement are not intended to confer access to the Contracting Party's lender of last resort facilities. |
Dispute settlement
Determination of Certain Financial Issues in Investor to State Proceedings |
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Composition of Dispute Settlement Panels in Financial Matters Disputes |
“Panels for disputes on prudential issues and other financial matters shall have the necessary expertise relevant to the specific financial services under dispute.”
Defintion of financial services
Financial services include all insurance and insurance-related services, and all banking and other financial services (excluding insurance). Financial services include the following activities:
Insurance and insurance-related services
i. |
Direct insurance (including co-insurance):
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ii. |
Reinsurance and retrocession; |
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iii. |
Insurance intermediation, such as brokerage and agency; |
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iv. |
Services auxiliary to insurance, such as consultancy, actuarial, risk assessment and claim settlement services. Banking and other financial services (excluding insurance) |
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v. |
Acceptance of deposits and other repayable funds from the public; |
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vi. |
Lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transaction; |
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vii. |
Financial leasing; |
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viii. |
All payment and money transmission services, including credit, charge and debit cards, travellers cheques and bankers drafts; |
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ix. |
Guarantees and commitments; |
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x. |
Trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following:
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xi. |
Participation in issues of all kinds of securities, including underwriting and placement as agent (whether publicly or privately) and provision of services related to such issues; |
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xii. |
Money broking; |
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xiii. |
Asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository and trust services; |
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xiv. |
Settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments; |
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xv. |
Provision and transfer of financial information, and financial data processing and related software by suppliers of other financial services; |
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xvi. |
Advisory, intermediation and other auxiliary financial services on all the activities listed in subparagraphs (v) through (xv), including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy. |
VIII - Taxation
1. |
Nothing in this Agreement shall apply to taxation measures except as expressly provided in paragraphs 2 to 5 below. |
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2. |
Article ... (Expropriation) shall apply to taxation measures. |
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3. |
Article ... (Transparency) shall apply to taxation measures, except that nothing in this Agreement shall require a Contracting Party to furnish or allow access to information covered by tax secrecy or any other provision or administrative practice protecting confidentiality in domestic laws or international agreements, and including information:
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4. |
The provisions of Article [C] (State to State Dispute Settlement) and Article [D] (Investor to State Dispute Settlement), [except for paragraph 1b of Article [D]], and only those provisions, shall apply to a dispute under paragraph 2 or 3 of this Article. |
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5. |
For the purposes of this Article:
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6. |
Taxes shall be taken for this purpose to include direct taxes, indirect taxes and social security contributions. |
IX - Country specific exceptions
Lodging of country specific exceptions
a. |
Articles X (National Treatment), Y (Most Favoured Nation Treatment), [Article Z, ..., ... and Article ... ], do not apply to:
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b. |
[B. Articles X; Y, [Article Z, ...,and Article ... ]do not apply to any measure that a Contracting Party [adopts ]or [maintains ]with respect to sectors, subsectors or activities, as set out in its Schedule to Annex B of the Agreement. ] |
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c. |
[C. No Contracting Party may, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule to Annex B, require an investor of another Contracting Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective. ] |
Introduction to Annex A of the Agreement listing country-specific exceptions
1. |
The Schedule of a Contracting Party sets out, pursuant to Article ... [on the lodging of country specific exceptions ], the exceptions taken by that Party with respect to existing measures that do not conform with obligations imposed by:
together with any commitment to eliminate or reduce the non-conformity of any of the measures. |
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2. |
Each exception sets out the following elements:
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3. |
In the interpretation of an exception, elements (a) to (f) shall be considered. In the event of a discrepancy between the non-conformity of the measure as set out in the legal source or authority identified and the non-conformity as set out in the other elements in their totality, the exception shall be deemed to apply to the non-conformity of the measure as set out in the legal source or authority. However if the non-conformity of the measure as set out in the legal source or authority exceeds the scope of nonconformity as set out in the other elements in so substantial and material a manner that it would be unreasonable to conclude that the legal source or authority element should prevail, the other elements shall prevail to the extent of that discrepancy. |
X - Relationship to other international agreements
Obligations under the Articles of Agreement of the International Monetary Fund
Nothing in this Agreement shall be regarded as altering the obligations undertaken by a Contracting Party as a Signatory of the Articles of Agreement of the International Monetary Fund.
The OECD Guidelines for Multinational Enterprises
1. |
The following draft text was developed on associating the Guidelines with the MAI:
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2. |
Several delegations proposed that the following additional text be added to the list of powers given to the Parties Group under Section XI of the Consolidated Text, paragraph 2:
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3. |
Finally, delegations developed draft text that would be placed in an annex immediately before the Guidelines, as follows:
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[The text of the preamble to the Declaration on International Investment and Multinational Enterprises, Part I of the Declaration, and the full Annex 1 text of the Guidelines would be set out verbatim]
XI - Implementation and operation
The Preparatory Group
(Text to be included in the Final Act)
1. |
The Signatories to the Final Act and the Signatories to the Agreement shall meet in a Preparatory Group. A Signatory to the Final Act shall cease to be eligible to attend these meetings if it fails to become a Signatory to the Agreement by the closing date for signature of the Agreement. |
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2. |
In the Preparatory Group, the participating Signatories shall:
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3. |
The participating Signatories shall elect a Chair, who shall serve in a personal capacity. Meetings shall be held at intervals to be determined by participating Signatories under rules and procedures they shall determine. |
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4. |
Except where otherwise provided, the Preparatory Group shall make decisions by consensus. A Signatory may abstain and express a differing view without barring consensus. |
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5. |
Decisions under paragraph 4 may include a decision to adopt a different voting rule for a particular question or category of questions. |
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6. |
Where a decision cannot be made by consensus, the decision shall be made by a majority comprising [three quarters] [two thirds] of the Signatories. |
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7. |
Paragraph 6 shall not apply to the following decisions:
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8. |
Where the European Community exercises its right to vote, it shall have a number of votes equal to the number of its Member States which are Contracting Parties to this Agreement. The number of votes of the European Community and its Member States shall in no case exceed the number of the Member States of the European Community which are Contracting Parties to this Agreement. |
The Parties Group
1. |
There shall be a Parties Group comprised of the Contracting Parties. |
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2. |
The Parties Group shall facilitate the operation of this Agreement. To this end, it shall:
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3. |
In carrying out the functions specified in paragraph 2, the Parties Group may consult governmental and non-governmental organisations or persons. |
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4. |
The Parties Group shall elect a Chair, who shall serve in a personal capacity. Meetings shall be held at intervals to be determined by the Parties Group. The Parties Group shall establish its rules and procedures. |
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5. |
Except where otherwise provided, the Parties Group shall make decisions by consensus. A Contracting Party may abstain and express a differing view without barring consensus. |
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6. |
Decisions under paragraph 5 may include a decision to adopt a different voting rule for a particular question or category of questions. |
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7. |
Where a decision cannot be made by consensus, the decision shall be made by a majority comprising [three quarters] [two thirds] of the Contracting Parties. |
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8. |
Paragraph 7 shall not apply to the following decisions:
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9. |
The Parties Group shall be assisted by a Secretariat. |
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10. |
[Parties Group and Secretariat costs shall be borne by the Contracting Parties as approved and apportioned by the Parties Group.] |
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11. |
Where the European Community exercises its right to vote, it shall have a number of votes equal to the number of its Member States which are Contracting Parties to this Agreement. The number of votes of the European Community and its Member States shall in no case exceed the number of the Member States of the European Community which are Contracting Parties to this Agreement. |
XII - Final provisions
Signature
This Agreement shall be open for signature at the Depositary, until [date], by Signatories of the Final Act and thereafter until entry into force by any State, or separate customs territory which possesses full autonomy on the matters covered by this Agreement, which is willing and able to take on its obligations on terms agreed between it and the Signatories of this Agreement.
Acceptance and entry into force
In the Final Act
1. |
The Signatories to this Final Act agree to submit the Agreement for the consideration of their respective competent authorities with a view to seeking approval of the Agreement in accordance with their procedures. |
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2. |
The Signatories to this Final Act agree on the desirability of acceptance of the Agreement by all signatories with a view to its entry into force by [date] or as early as possible thereafter.
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3. |
Not later than [date], the Signatories to this Agreement will meet to determine the date for entry into force and related matters. Decisions shall be made by [consensus] [a [two-thirds] majority of the Signatories]. |
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4. |
This Agreement shall enter into force on the date determined by the Signatories to this Agreement in accordance with paragraph 3 for the Signatories that have accepted this Agreement as of that date. An acceptance following the entry into force of this Agreement shall enter into force on the 30th day following the deposit of its instrument of acceptance. |
Accession
1. |
This Agreement shall be open for accession by any State, regional economic integration organisation, and any separate customs territory which possesses full autonomy in the conduct of matters covered by this agreement, which is willing and able to undertake its obligations on terms agreed between it and the Contracting Parties acting through the Parties Group. |
2. |
Decisions on accession shall be taken by the Parties Group. |
3. |
Accession shall take effect on the thirtieth day following the deposit of the instruments of accession with the Depositary. |
Non-applicability
This Agreement shall not apply as between any Contracting Party and any acceding Party if, at the time of accession, the Contracting Party does not consent to such application.
Review
The Parties Group may review this Agreement as and when it determines.
Amendment
Any Contracting Party may propose to the Parties Group an amendment to this Agreement. Any amendment adopted by the Parties Group shall enter into force on the deposit of an instrument of ratification by all of the Contracting Parties, or at such later date as may be specified by the Parties Group at the time of adoption of the amendment.
Revisions to the OECD Guidelines for Multinational Enterprises
For Guidelines Annex changes any Contracting Party may make a unilateral statement upon signature:
In the event of modification of the Guidelines, Annex -- will be modified accordingly with respect to (Contracting Party name) provided that it has not made a declaration to the contrary within 180 days of notification by the depositary of the adoption of the modification. |
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or |
|
In the event of modification of the Guidelines, Annex -- will be modified accordingly with respect to (Contracting Party name) provided that it has made a declaration to that effect to the depositary. |
Withdrawal
1. |
At any time after five years from the date on which this Agreement has entered into force for a Contracting Party, that Contracting Party may give written notice to the Depositary of its withdrawal from this Agreement. |
2. |
Any such withdrawal shall take effect on the expiry of six months from the date of the receipt of the notice by the Depositary, or on such later date as may be specified in the notice of withdrawal. If a Contracting Party withdraws, the Agreement shall remain in force for the remaining Contracting Parties. |
3. |
The provisions of this Agreement shall continue to apply for a period of fifteen years from the date of notification of withdrawal to an investment existing at that date. |
Depositary
The [...............] shall be the Depositary of this Agreement.
Status of Annexes
The Annexes to this Agreement are [an integral part of the Agreement].
Authentic texts
The English and French [and ............] texts of this Agreement are equally authentic.
Denial of benefits
a. |
[Subject to prior notification to and consultation with the Contracting Party of the investor,] a Contracting Party may deny the benefits of the Agreement to an investor [as defined in 1 (ii)] and to its investments if investors of a non-Party own or control the first mentioned investor and that investor has no substantial business activities in the territory of the Contracting Party under whose law it is constituted or organised. |
b. |
or |
c. |
[Subject to prior notification and consultation in accordance with Articles XXX (Transparency) and XXX (Consultations), a Contracting Party may deny the benefits of this Agreement to an investor of another Contracting Party that is an enterprise of such Contracting Party and to investments of such investors if investors of a non-Contracting Party own or control the enterprise and the enterprise has no substantial business activities in the territory of the Contracting Party under whose law it is constituted or organised.] |
[*] |
The present document consolidates the text of the agreement considered in the course of the MAI negotiations. The texts reproduced here result mainly from the work of expert groups and was not adopted by the Negotiating Group. Negotiations were discontinued in April 1998. |