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Draft text of the Chapter on Investment from the PACER Plus Intersessional meeting in Auckland, NA, 26-28 November 2013
5:25 pm GMT+12, 23/04/2015, Fiji

5th Inter-Sessional Meeting of PACER Plus Officials

Auckland, New Zealand, 26-28November 2013

Chapter on Investment

Clean copy draft text incorporating outcomes of discussions at

the 5th Inter-Sessional Meeting of PACER Plus Officials

Article 1

Definitions

For the purposes of this Chapter, the term

1. [FICs: “company”][AU/NZ: enterprise] means any corporation, trust,

partnership, joint venture, sole proprietorship, association or other legally recognised entity that is duly constituted or organised under the applicable law and regulations of a Party,

whether or not for profit, and whether privately or governmentally owned or controlled;

2. [FICs: “company”] [AU/NZ:enterprise] of a Party” means a [FICs: company]

[AU/NZ:enterprise] constituted or organised under the law of a Party, and which has its seat in that Party and engages in substantive business operations there;

3. “covered investment” means with respect to a Party, an investment in its territory which is owned or controlled by an investor of another Party, in existence as of the date of entry into force of this Agreement or established or acquired thereafter, and which, where applicable, has been admitted by the host Party, subject to its relevant laws, regulations and policies;

4. “freely usable currency” means freely usable currency as defined under the Articles of Agreement of the International Monetary Fund and amendments thereafter, or any currency that is used to make international payments and is widely traded in international principal exchange markets;

5. “investment” means

(a) a [FICs: company] [AU/NZ:enterprise] owned or controlled by an investor of another Party1;

(b) movable and immovable property and other property rights such as

mortgages, liens or pledges;

(c) shares, stocks, bonds and debentures and any other form of participation in a

[FICs: company] [AU/NZ: enterprise];

(d) claims to money or claims to performance having economic value;

(e) intellectual property rights which are protected under the respective

domestic laws and regulations of each Party;

(f) contractual rights, such as turnkey, construction, management, production or

revenue sharing contracts, concessions or other similar contracts; and

(g) rights conferred pursuant to [AU/FICs: domestic] law, such as licences,

authorisations, and permits;

provided that:

(a) such investments are not in the nature of portfolio investments;

(b) there is a significant physical presence of the investment in the host state2;

(c) there is a commitment of resources, an assumption of risk and an expectation of gain or profit associated with the investment; and

(d) the investment in the host state is made in accordance with the laws of the host state.

For greater certainty, an investment does not include:

(a) market share in the host state;

(b) claims to money deriving solely from commercial contracts for the sale of goods and services to or from the territory of a Party to the territory of another country or sovereign debt securities issued by a Party;

(c) a bank letter of credit; or

(d) the extension of credit in connection with a commercial transaction, such as trade financing.

1A company is “owned” by an investor if more than fifty percent of the equity interest in it is owned by the investor. A company is “controlled” by an investor if the investor has the power to name a majority of its directors or otherwise to legally direct its actions.

2A significant physical presence would not include, for example, sales offices without other operational facilities, post office box-based businesses, or other types of business with very limited physical presence in the host state.

3 A change in the form in which assets are invested does not affect their character as investments;

6. “investor” of a Party means a national or permanent resident or a of a contracting Party that has made an investment in the territory of another Party. A person who possesses dual citizenship, or who is a permanent resident of one Party and a citizen of another Party has the nationality or residence of the Party in which they predominantly reside;

7. “measure” means any measure taken by central, regional, local governments or non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities whether in the form of a law, regulation, rule, procedure,

decision, administrative action, or any other form, which directly relates to and affects an investment in the territory of the host state;

8. “national” of a Party means a natural person possessing the nationality or citizenship of that Party in accordance with its laws and regulations; and

9. “permanent resident” of a Party means a natural person who has permanent residence status in a Partyin accordance with its laws and regulations.

[FICs: Article 2

Objectives

The objectives of this Chapter are to:

(a) encourage and promote the flow of investment between the Parties, 2 particularly from the developed country Parties to the developing country Parties in order to promote their inclusive economic growth and sustainable development, including fixed capital formation, transfer of technology, generation of exports, creation of jobs and payment of taxes;

(b) create a secure, predictable and favourable environment for investors of the Parties and their investments, while also respecting the right of governments to regulate investments in the public interest; and

(c) provide for adequate protection of investors of the Parties and their investments within each Party’s territory.]

Article 3

Scope

1. This Chapter shall apply to measures adopted or maintained by a Party relating to:

(a) investors of all other Parties; and

(b) covered investments [AU: ;

(c) with respect to Article 9 (Prohibition of Performance Requirements) all investments in the territory of the Party.]

2. This Chapter shall not apply to:

(a) procurement by a Party [FICs: or state enterprise];

(b) subsidies or grants provided by a Party [FICs: or state enterprise], [AU:

except subsidies provided in connection with measures prohibited

under Article 9 (Prohibition of Performance Requirements)] [FICs:

including government-supported loans, guarantees and insurance]; and

(c) services supplied in the exercise of governmental authority by the relevant body or authority of a Party. For the purposes of this Chapter, a service supplied in the exercise of governmental authority means any service which is supplied not on a commercial basis or in competition with one or more service suppliers.

Article 4

Relation to Other Chapters

1. This Chapter does not apply to measures adopted or maintained by a Party to the extent that they are covered under Chapter X (Trade in Services).

2. Notwithstanding Paragraph 1, Article 8 (Fair and Equitable Treatment), Article 10 (Compensation for Losses), Article 11 (Expropriation and Compensation), Article 12 (Transfers), [AU: and] Article 17 (Subrogation) [FICs: and Article 25 (Settlement of Disputes Between Parties) and Article 26 (Settlement of Dispute Between Parties and Foreign Investors)] shall apply, mutatis mutandis, to any measure affecting the supply of service by a service supplier of a Party through commercial presence in the territory of any other Party pursuant to Chapter X (Trade in Services), but only to the extent that any such measures relate to a covered investment and an obligation under this Chapter, regardless of whether such a service sector is scheduled in a Party's Schedules of Specific Commitments

in Annex X.

Article 5

Obligation to Comply with Domestic Law and Corporate Social Responsibility

[AU: The Parties reaffirm the importance of each Party encouraging enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate into their internal policies those internationally recognised standards, guidelines and principles of corporate social responsibility that have been endorsed or are supported by that Party.]

[FICs: 1. Investors of a Party and their investments are subject to and shall respect the laws, regulations and standards of the host state Party, including those for the protection of human rights, labour rights and the environment, provided that the laws, regulations and standards of the host state Party are not inconsistent with the provisions set out under this Chapter.

2. Depending on the size, capacities and nature of an investment, and taking into account the development plans and priorities of the host state Party, the Millennium Development Goals and the post-2015 development agenda, investors and their investments should strive to make the maximum feasible contributions to the sustainable development of the host state Party and local community through high levels of socially responsible practices. Where standards of corporate social responsibility increase, investors should strive to apply and achieve the higher level standards.

3. Investors are encouraged to comply with the ILO Tripartite Declaration on Multinational Enterprises and Social Policy and the OECD Guidelines for Multinational Enterprises, and be guided by specific or sectoral standards of responsible practice where these exist.]

Article 6

National Treatment

1. Each Party shall accord to [AU: investors and] covered investments of investors of any other Party treatment no less favourable than that it accords, in like circumstances, to investments of its own investors with respect to the management, conduct, operation,and sale or other disposition of investments.

2. A Party may adopt and apply a measure that results in the treatment of investors of any other Party and their investments in a manner that is less favourable than the treatment of its own investors and their investments, provided this measure is adopted and applied in the pursuit of a legitimate public purpose consistently with Article 19 of this Chapter.

3. In respect of intellectual property rights, a Party may derogate from the obligations set out in this Article provided this is not inconsistent with the WTO TRIPS Agreement [FICs: and relevant international agreements on intellectual property rights.].

Article 7

Most Favoured Nation Treatment

1. Each Party shall accord to [AU: investors and] covered investments of investors of any other Party treatment no less favourable than that it accords, in like circumstances, to investors of a third party or to their investments with respect to the management, conduct, operation, and sale or other disposition of investments.

2. [FICs: This Article shall not apply to:

(a) treatment of investors of another Party and their investments under any bilateral or multilateral international agreement in force or signed by the Party prior to the date of entry into force of this agreement;

(b) treatment of investors of another Party and their investments pursuant to any future bilateral or multilateral agreement that strengthens, or expands a free trade area, customs union, common market, labour market integration commitments or similar international agreement;

(c) taxation agreements either existing before the entry into force of this Agreement or concluded thereafter; or

(d) any dispute settlement procedures included in a bilateral ormultilateral agreement signed with a third party prior or followingentry into force of this agreement.]

3. In respect of intellectual property rights, a Party may derogate from the obligations set out in this Article provided this is not inconsistent with the WTO TRIPS Agreement

[FICs: and relevant international agreements on intellectual property rights].

Article 8

[AU: Minimum Standard of Treatment] [FICs: Fair and Equitable Treatment of Investments]

1. Each Party shall accord to covered investments [FICs: of investors of any other Party] the minimum standard of treatment of foreign nationals, including fair and equitable treatment and full protection and security under customary international law minimum standard for the treatment of aliens.

2. For greater certainty:

(a) fair and equitable treatment means treatment that is not manifestly arbitrary, unreasonable or discriminatory, or a gross denial of justice or due process;

(b) full protection and security requires each Party to take such measures as may be reasonably necessary to ensure the protection and security of the covered investment; and

(c) the concepts of “fair and equitable treatment” and “full protection andsecurity” do not require treatment in addition to or beyond that which is required under customary international law, and do not create additional substantive rights.

3. A determination that there has been a breach of another provision of this Chapter, or of a separate international agreement, does not establish that there has been a breach of this Article.

4. [FICs: Parties recognise that they may have different forms of administrative, legislative and judicial systems, and that Parties at different levels of development may not achieve the same standards at the same time and that the standard set in this Article must be interpreted taking this context into account.

5. This Article shall not be interpreted to preclude any Party from adopting any measure pursuing legitimate policy objectives, including measures adopted to comply with other international obligations, so long as the manner in which such measure is implemented is consistent with this Article.]

Article 9

Prohibition of Performance Requirements

No Party shall apply in connection with the management, conduct, operation, and sale or other disposition of a covered investment of an investor of a Party in its territory any measure which is inconsistent with the Agreement on Trade-Related Investment Measures

in Annex 1A to the WTO Agreement.

Article 10

Compensation for Losses

Each Party shall accord to investors of any other Party and to their covered investments, with respect to measures it adopts or maintains relating to losses suffered by investments in its territory owing to armed conflict, civil strife or state of emergency, treatment no less favourable than that it accords, in like circumstances, to:

(a) its own investors and their investments; and

(b) investors of another Party or a third Party and their investments.

Article 113

Expropriation and Compensation

1. A Party shall not expropriate or nationalise a covered investment of an investor from another Party, either directly or indirectly through measures equivalent to expropriation or nationalisation, except:

(a) for a public purpose;

(b) in a non-discriminatory manner;

3This Article shall be interpreted in accordance with this Chapter’s Annex on Expropriation and Compensation.

(c) in accordance with due process of law; and

(d) uponpayment of appropriate and fair compensation pursuant to paragraphs 2, 3 and 4.

2. Compensation shall be [AU: equivalent] [FICs: reasonably related] to fair market value of the expropriated investment at the time when the expropriation was publicly announced or when the expropriation occurred, whichever is the earlier. Compensation shall be determined in accordance with the generally recognised principles of valuation and equitable principles, taking into account, inter alia, the capital invested, depreciation, capital already repatriated, replacement value and other relevant factors. Compensation shall not reflect any change in value occurring because the expropriation had become publicly known earlier.

3. The compensation shall be paid without unreasonable or unjustifiable delay. Such compensation shall be in a freely usable currency and include interest at a commercially reasonable rate, taking into account the length of time until the time of payment. It shall beeffectively realizable and freely transferable.

4. An investor of a Party affected by an expropriation [FICs: shall have a right][AU: to provide alternative language], under the law of the host state making the expropriation, to prompt review, by a judicial or other independent authority of the host country, of the decision to expropriate and of the valuation of its investment in accordance with the principles set out in this Article.

5. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or the revocation, limitation, or creation of intellectual property rights, to the extent that such issuance, revocation, or creation is consistent with applicable international agreements on intellectual property rights binding on the Parties.

Article 12

Free Transfer of Funds

1. Each Party shall allow all transfers relating to a covered investment to be made freely and without delay into and out of its territory. Such transfers include:

(a) contributions to capital, including the initial contribution;

(b) profits, capital gains, dividends, royalties, license fees, technical assistance and technical and management fees, interest and other current income accruing from any covered investment;

(c) proceeds from the total or partial sale or liquidation of any covered investment;

(d) payments made under a contract, including a loan agreement;

(e) payments made pursuant to Article 10 (Compensation for Losses) and Article 11 (Expropriation and Compensation);

(f) payments arising out of the settlement of a dispute or an agreement between the disputing parties; and

(g) earnings and other remuneration of personnel engaged from abroad in connection with that investment.

2. Each Party shall allow such transfers relating to a covered investment to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.

3. Notwithstanding Paragraphs 1 and 2, a Party may prevent or delay a transfer through the equitable, non-discriminatory, and good faith application of its laws and regulations relating to:

(a) bankruptcy, insolvency, or the protection of the rights of creditors;

(b) issuing, trading, or dealing in securities, futures, options, or derivatives;

(c) criminal or penal offences and the recovery of the proceeds of crime;

(d) financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;

(e) ensuring compliance with orders or judgments in judicial or administrative proceedings;

(f) taxation;

(g) social security, public retirement, or compulsory savings schemes; and

(h) payments of remuneration and severance to employees.

Article 13

Temporary Safeguard Measures

1. A Party may adopt or maintain measures not conforming with its obligations under Article 12 (Free Transfer of Funds) in the event of serious balance of payments and external financial difficulties or threat thereof.

2. A Party may adopt or maintain measures not conforming with its obligations under Article 12 (Free Transfer of Funds) in cases where, in exceptional circumstances, movements of capital cause or threaten to cause serious difficulties for macroeconomic management, in particular, monetary and exchange rate policies.

3. Measures referred to in Paragraphs 1 and 2:

(a) shall be consistent with the Articles of Agreement of the InternationalMonetary Fund, so long as the Party taking the measures is a Party to the said Articles;

(b) shall not exceed those necessary to deal with the circumstances set out in these Paragraphs;

(c) shall be temporary and shall be eliminated as soon as conditions permit;

(d) shall be promptly notified to the other Contracting Parties; and

(e) shall avoid unnecessary damage to the commercial, economic and financial interests of the other Parties, particularly the developing country Parties.

4. Nothing in this Chapter shall be regarded as altering the rights and obligations of members of the International Monetary Fund under its Articles of Agreement.

[FICs: Article 14

Prudential Measures

1. Notwithstanding any other provisions of this Chapter, a Party shall not be prevented from taking measures relating to financial services for prudential reasons, including measures for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by an enterprise supplying financial services, or to ensure the integrity and stability of its financial system.

2. Where the measures taken by a Party pursuant to Paragraph 1 do not conform with the provisions of this Chapter, they shall not be used as a means of avoiding the commitments or obligations of the Party under this Chapter.]

Article 15

Transparency

1. Each Party shall, to the extent possible, ensure that its laws, regulations, procedures, administrative rulings of general application and any international agreement to which it is a Party, regarding any matter covered in this Chapter, are published

[AU/FICs: promptly] or otherwise made available in such a manner as to enable other Parties to become acquainted with them.

2. To the extent possible, each Party shall publish in advance a draft of any law or regulation that it proposes to adopt which pertains to any matter covered in this Chapter.

3. Upon request by a Party, information shall be exchanged on measures of another Party that may have a material impact on any covered investment under this Chapter.

4. A Party may request in writing consultations with another Party regarding any actual or proposed measure or any other matter that it considers might materially affect the operation of this Chapter. The other Party shall engage in consultations within a reasonable time.

5. With respect to Paragraph 4, each Party shall designate a contact point to facilitate communications among the Parties on any matter covered by this Chapter. Upon the request of a Party, the contact point shall:

(a) identify the office or official responsible for the relevant matter; and

(b) assist as necessary in facilitating communications with the requesting Party with respect to that matter.

6. Nothing in this Chapter shall require a Party to furnish or allow access to any confidential information, including information concerning particular investors or their investments, the disclosure of which would impede law enforcement, or otherwise be contrary to the public interest, or which would prejudice legitimate commercial interests of particular legal persons, public or private.

Article 16

Special Formalities and Disclosure of Information

1. Nothing in Article 6 (National Treatment) shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with covered investments, including a requirement that covered investments be legally constituted under the laws or regulations of the Party, provided that such formalities do not substantially impair the protections afforded by a Party to investors of any other Party and covered investments pursuant to this Chapter.

2. Notwithstanding Article 6 (National Treatment), a Party may require an investor of another Party to provide information concerning an investment solely for informational or statistical purposes. The Party shall protect to the extent possible any confidential information which has been provided from any disclosure that would prejudice legitimate commercial interests of the investor or the covered investment. Nothing in this Paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law.

Article 17

Subrogation

1. If a Party or an agency of a Party makes a payment to an investor of that Party under a guarantee, a contract of insurance or other form of indemnity it has granted on non-commercial risk in respect of an investment, other Parties shall recognise the subrogation or transfer of any right or claim in respect of such investment. The subrogated or transferred right or claim shall not be greater than the original right or claim of theinvestor.

2. Where a Party or an agency of a Party has made a payment to an investor of that Party and has taken over the investor’s rights and claims, that investor shall not, unless authorised to act on behalf of the Party or the agency making the payment, pursue those rights and claims against any other Party.

3. In any proceedings involving an investment dispute, a Party shall not assert, as a defence, counter-claim, right of set-off or otherwise, that the investor or the covered investment has received or will receive, pursuant to an insurance or guarantee contract, indemnification or other compensation for all or part of any alleged loss.

Article 18

Denial of Benefits

Following notification through the contact point of a Party, the benefits of this Chapter shall be denied:

(a) to an investor of another Party where the covered investment is being made by a [FICs: company] [AU/NZ: enterprise] that it is owned or controlled by persons of a third party and the company has no substantive business operations in the territory of the other Party;

(b) to an investor of another Party where the covered investment is being made by a [FICs: company] [AU/NZ: enterprise] that is owned or controlled by persons of the denying Party;

(c) to an investor of another Party where the investment is ultimately owned by a national of a non-Party, with which the denying Party does not maintain diplomatic relations; and (d) to an investor where the investment is ultimately owned by a national of a non-Party, in relation to which the denying Party has introduced economic sanctions (namely, prohibits transactions with the enterprises and nationals of that non-Party).

Article 19

General Exceptions

1. Subject to the requirement that such measures are not applied in a manner that would constitute arbitrary or unjustifiable discrimination between investments or between investors or a disguised restriction on investment, nothing in this Chapter shall be construed to prevent a Party from adopting or enforcing measures that are designed and applied:

(a) to protect human, animal or plant life or health;

(b) to protect human safety, public health or morality;

(c) to protect internationally and domestically recognised human rights, labour rights or the rights of indigenous people;

(d) to preserve cultural or linguistic diversity;

(e) to protect national treasures of artistic, historic or archeological value;

(f) to ensure compliance with laws and regulations that are not inconsistent with the provisions of this Chapter; and

(g) to protect the bio-security or the environment, including but not limited to the conservation of living and non-living exhaustible resources.

2. Nothing in this Chapter shall be construed to prevent a Party from taking bona fide, non-discriminatory measures to comply with international obligations under other agreements.

Article 20

National Security Exception

1. In circumstances of extreme emergency, the provisions set out under this Chapter shall not preclude any Party from taking or applying such measures in good faith which it considers necessary for or relating to:

(a) the maintenance of public order, where it has been established that a genuine and sufficiently serious threat is posed to one of the fundamental interests of society;

(b) the fulfillment under the United Nations Charter of its obligations with respect to the maintenance or restoration of international and regional peace and security;

(c) the protection of its own essential security interests; or

(d) the supply of services as carried out directly or indirectly for the purpose of provisioning a military establishment.

2. Nothing in this Chapter shall be construed to require a Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests.

3. The exception of national security may only be invoked subject to the requirement that measures taken or applied do not constitute a means of arbitrary or unjustifiable discrimination against another Party, or a disguised restriction on covered investments of investors of any other Party.

[FICs: Article 21

Health, Safety, Bio-Security and Environmental Measures and Labour Standard Parties recognise that it is inappropriate to encourage investment by investors of another Party and of non-Parties by relaxing their health, safety, bio-security or environmental measures, or by lowering their labour standards. To this effect, Parties should not waive or otherwise derogate from such measures and standards in order to attract investment from other Contracting Parties or non-Parties.]

[FICs: Article 22

Special and Differential Treatment

In order to increase the benefits of this Chapter for the developing country Parties, and in accordance with the objectives of and the Preamble to this Agreement, the objectives of this Chapter and of Chapter X (Development Assistance and Economic Cooperation), the Parties recognise the importance of according special and differential treatment to the developing country Parties under this Chapter, through recognising that commitments by each developing country Party may be made in accordance with its individual stage of development.]

[Article 23

Promotion and Facilitation of Investment

1. Taking into account the different levels of economic development of the parties, the developed country Parties shall assist the developing country Parties in the promotion and facilitation of foreign investment into their territories, in particular by their own investors. Such assistance shall be consistent with the development goals and priorities of the developing country Parties.

2. Such assistance may include but is not limited to:

(a) technical assistance to strengthen the developing country Parties’capacity in relation to investment policies and promotion;

(b) insurance programmes;

(c) institutional capacity building with respect to host state agencies and programmes on investment promotion and facilitation;

(d) direct financial assistance and fiscal incentives to a Party’s investors in support of their investments in the other Party or feasibility studies prior to an investment in the other Party being established. Such assistance and incentives may be conditioned on an investor's socially and environmentally sustainable behavior;

(e) measures to attract financing for infrastructure investments or other projects of special development importance;

(f) facilitation of partnerships and joint ventures;

(g) establishing links between a Party’s research and training centres, specialised agencies and business organisations and those in the other Party;

(h) supporting joint investment promotion activities,

(i) facilitating the provision and exchange of investment informationincluding laws, regulations and policies to increase awareness of investment opportunities;

(j) provision of long-term financial resources, including grants for technical assistance and policy reforms, for advisory and consulting services and for measures to increase the competitiveness of enterprises;

(k) technical or financial support for environmental and social impact assessments or a potential investment;

(l) technology transfers;

(m) support for joint business councils and other cooperative efforts to promote sustainable investment; and

(n) other commitments in areas of interest to the developing country

Parties.]

[FICs: Article 24

Access to the Courts of Justice A Party shall in its territory accord to investors of other Parties treatment no less favourable than the treatment which it accords in like circumstances to its own investors or investors of a third party with respect to access to the courts of justice and administrative tribunals and agencies at all levels of jurisdiction, both in pursuit and in defence of such investors’ rights.]

Article 25

Settlement of Disputes between the Parties

1. Any Party may request consultations on any matter falling within the scope of this Chapter or in connection with the interpretation or application of this Chapter. The requested Party shall give sympathetic consideration to such a request and enter into consultations in good faith with a view to settling the dispute amicably.

2. If a dispute cannot be settled through consultations within 180 days of the submission of the request under Paragraph 1, it may at the request of either Party, be submitted to an arbitral panel for a decision.

3. An arbitral panel shall be constituted for each dispute. Within two months after receipt through its Contact Point of the request for arbitration, each Party shall appoint one member to the arbitral panel. The two members shall then select a national of any other Party to this Agreement who, upon approval by the two Parties, shall be appointed chair of the arbitral panel. The chair shall be appointed within two months from the date of the appointment of the other two members of the arbitral panel.

4. If within the periods specified in section 3 of this Article, the necessary appointments have not been made, either Party may invite the Secretary-General of the Pacific Islands Forum Secretariat to make the necessary appointments.

5. Panel members shall:

(a) have demonstrated expertise in public international law, international investment rules or international tradeor development, or the resolution of disputes arising under international investment agreements or international trade law;

(b) shall serve in their own individual capacities and not as government

representatives, nor as representatives of any organisation. Parties shall therefore not give them instructions nor seek to influence them as individuals with regard to matters before the arbitral tribunal; and

(c) comply with any code of conduct for dispute settlement agreed by the

Parties to this Agreement.

6. Once constituted, the arbitral panel shall determine:

(a) the seat of arbitration;

(b) applicable rules of procedures, taking into account the Permanent Court of

Arbitration’s Optional Rules for Arbitrating Disputes Between Two States;

(c) the apportionment of costs between the disputing Parties. As a general rule, each Party to the dispute shall bear the costs of its own member of the arbitral panel and of its representation in the arbitral proceedings. The costs elated to the Chair and any other remaining costs shall be borne equally by he Parties. The arbitral panel may, however, in its decision direct that a igher proportion of costs be borne by one or several of the Parties, and this award shall be binding on the disputing parties; and

(d) the standards of transparency applicable to arbitral proceedings.

7. To resolve the dispute, the arbitral panel shall apply the law chosen by the Parties involved in the dispute, or, in the absence of an agreement on the applicable law between

the Parties, consider the dispute in accordance with this agreement, other applicable rules of international law and domestic law of the host state. This provision shall, however, not prejudice the power of the arbitral tribunal to decide a case ex aequo et bono, if the parties agree thereto.

8. Unless otherwise agreed by the disputing Parties, the decision of the arbitral panel shall be rendered with 180 days of the appointment of the Chair.  The arbitral panel shall reach its decision by majority of votes, and such decision shall be binding on the disputing

Parties.

[FICs: Article 26

Settlement of Disputes between Parties and Foreign Investors

1. Without prejudice to the rights and obligations set out in Article 25(Settlement of Disputes Between the Parties) of this Chapter, this Article establishes a procedure for the settlement of disputes arising between a host state Party and a foreign investor from another Party to this Agreement.

2. Any dispute arising between an investor of a Party and the host state Party in relation to a covered investment under this Chapter shall, to the extent possible, be settled amicably through the use of any non-binding dispute resolution procedures, including negotiations, mediation, fact finding and conciliation.

3. If the dispute is not settled amicably within six months of the initiation of the non-binding dispute settlement procedures, the investor may, pursuant to Article 24 of this Chapter, exercise its right to submit the dispute for resolution to the courts or administrative tribunals in the host state which shall consider, inter alia, the provisions of this Chapter and relevant domestic laws and regulations in resolving the dispute.]

Article 27

Competent Authorities and Contact Points

1. Each Party shall provide all other Parties with a description of its competent authorities and their division of responsibilities.

2. Each Party shall provide all other Parties with a Contact Point to facilitate distribution of requests and notifications made in accordance with this Chapter.

3. Each Party shall ensure the information provided under Paragraphs 1 and 2 is kept up to date.

Article 28

Technical discussions

1. A Party may, through Contact Points, request technical discussions with another Party on any measure affecting investment between them. The requested Party shall respond promptly to any such request. The Parties shall seek to clarify any measure at issue and, where there is any remaining difference of view, they shall endeavour to find a mutually acceptable solution, taking into account the objectives of this Chapter. In case of measures affecting the investment interests of a developing country Party, the Parties shall endeavour to resolve any concerns in a timely manner.

2. A Party may, through Contact Points, arrange to undertake technical discussions with other Parties on investment matters of mutual interest. Technical discussions should be conducted using electronic means. Where this is not possible, they may be conducted in person or by any other means, as mutually determined by the Parties.

3. The Parties participating in technical discussions pursuant to this Chapter may mutually agree to invite another Party and/or a relevant international or regional organisation in the field of investment to participate for the purpose of providing technical advice.

[FICs: Article 29

Joint Committee on Investment

1. The Parties shall establish a Joint Committee on Investment (hereinafter referred to as “the Committee”) with a view to accomplishing the objectives of this Chapter. The functions of the Committee shall be:

(a) to discuss and review the implementation and operation of this Chapter, including with regard to Article 23 on Promotion and Facilitation of Investment; and

(b) to share information on and to discuss any other investment-related matters concerning this Chapter.

2. The Committee may, as necessary, make appropriate recommendations by consensus to the Parties for the more effective functioning or the attainment of the objectives of this Chapter.

3. The Committee shall be composed of representatives of the Governments of the Parties. The Committee may, upon mutual consent of the Parties, invite representatives of relevant entities other than the Governments of the Parties with the necessary expertise relevant to the issues to be discussed, and hold joint meetingswith the private sectors.

4. The Committee shall determine its own rules of procedure to carry out its functions.

5. The Committee may establish sub-committees and delegate specific tasks tosuch sub-committees.

6. The Committee shall meet upon the request of a Party.]

20

ANNEX ON EXPROPRIATION AND COMPENSATION

1. An action or a series of related actions by a Party cannot constitute an

expropriation, unless it interferes with a tangible or intangible property right.

2. Article 11 (Expropriation and Compensation) of Chapter X (Investment) addresses two situations:

(a) the first situation is direct expropriation, where a covered investment is nationalised or otherwise directly expropriated through formal transfer of title or outright seizure; and

(b) the second situation is where an action or series of related actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure.

3. The determination of whether an action or series of related actions by a Party, in a specific fact situation, constitutes an expropriation of the type referred to in Paragraph 2(b) requires a case-by-case, fact-based inquiry that considers, among other factors:

(a) the economic impact of the government action, although the fact that an action or series of related actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that such an expropriation has occurred;

(b) whether the government action breaches the government’s prior binding written commitment to the investor whether by contract or licence.; and

(c) the character of the government action, including, its objective and rationale.

4. Non-discriminatory measures that a Party may take for reasons of public purpose or social interest including for reasons of public health, safety, and environmental protection, which are taken in good faith and are not arbitrary in light of their purpose, shall not constitute indirect expropriation.4

4“Public purpose” shall be read with reference to Article 11.1 (a).


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