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Bilateral Investment Treaty

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


The term “investment” comprises every kind of asset, such as goods and rights, acquired according to the laws of the host country. This general definition is illustrated by a non exhaustive list of five groups of specific rights, including:

  • rights in companies;

  • rights derived from any type of capital contribution, including loans directly related to a specific investment;

  • traditional property rights;

  • concessions and similar rights; and,

  • intellectual property rights. (Article I (1) (II)).



The term “investor” refers to the natural persons who are nationals of the Contracting Party where the investment originates under the law of that Contracting Party. (Article I (1) (I)).


The term “investor” comprises legal persons, including companies or other organizations, constituted under the laws of the Contracting Party where the investment originates and having its seat in its territory. (Article I (1) (I)).

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

Date of signature: March 22, 1994
Entry into force:
The Agreement enters into force when both Contracting Parties have notified each other that their respective internal legal procedures have been fulfilled (30 days after the date of the latter notification).
Duration: 10 years.
Thereafter it shall be extended tacitly for periods of five years, unless notice of termination has been given twelve months in advance.

Admission [Return to the top of the page]

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

Each Contracting Party, in accordance with its legislation, shall give the required authorizations for the realization of these investments. It shall permit contracts of licensing with respect to manufacturing; technical, commercial, financial and administrative assistance; and grant required authorizations for the activities of professionals and consultants under contract with investors of the other Contracting Party. (Article II (2)).

Treatment [Return to the top of the page]


Fair and Equitable Treatment

Yes, in accordance with the principles of international law. (Article III (2)).

Full Protection and Security

Each Party shall protect, in its territory, investments made, in accordance with its legislation, by investors of the other Contracting Party. (Article III (1)).


Yes. Each Contracting Party shall not create obstacles with unjustified and arbitrary measures with respect to the management, maintenance, utilization, usufruct, extension, sale or disposal of investments of investors of the other Contracting Party. (Article III (1)).

Each Contracting Party shall give a treatment that is non-discriminatory. (Article III (2)).

National Treatment

Yes. Each Contracting Party shall accord to investments of investors of the other Contracting Party treatment no less favorable than that it accords to investments of its nationals. (Article III (3)).

Most-Favored Nation Treatment

Yes. The treatment referred to in Article III (2), i.e. non-discriminatory and fair and equitable, shall not be less favorable than that a Contracting Party grants to investments (of same nature) of investors of a third State. (Article III (4)).


The treatment accorded in Article III (4) does not extend to concessions each Contracting Party accords to investors of third States as a result of its participation in a free trade area, customs union, common market or regional integration agreement. (Article III (5)).

The treatment referred to in Article III does not extend to reductions of fiscal exemptions and other incentives granted by a Contracting Party to investors of third States as a result of a taxation agreement. (Article III (6)).

With respect to national treatment, the Government of Brazil reserves the right to:

  1. grant preferential treatment to Brazilian enterprises (with national capital) with respect to the purchasing of goods and services, in accordance with Article 171 (2) of the Brazilian Constitution;
  2. grant only to Brazilians or Brazilian enterprises (with national capital) authorizations to research and exploit mining and hydraulic energy resources, in accordance with Article 176 of the Brazilian Constitution;
  3. prohibit the direct or indirect participation of enterprises (with foreign capital) in the assistance or health sectors, in accordance with Article 199 of the Brazilian Constitution;
  4. exclusively grant to Brazilians (born in Brazil or who have been naturalized for more than 10 years) the ownership of newspaper, radio, sound and recording, and images enterprises, in accordance with Article 222 of the Brazilian Constitution;
  5. limit and submit to special authorization the purchasing or rental of rural property; in accordance with Article 190 of the Brazilian Constitution;
  6. establish conditions for the participation of foreign capital in the institutions of the national financial system, in accordance with Article 192 of the Brazilian Constitution. (Paragraph 1 of the Protocol).

These conditions will cease to be in force if the above-mentioned articles of the Brazilian Constitution are repealed due to amendments or reform to the Constitution. The Government of Chile, in accordance with Article 19, No 24 of the Chilean Political Constitution and Articles 7 and 8 of the Mining Code, declares that the exploration and exploitation of hydrocarbons, liquid and gas, shall only be done directly by the State or its enterprises, or via administrative concessions or special contracts of operation, under conditions set by the President of the Republic of Chile for each case with a Supreme Decree. (Paragraph 2 of the Protocol).  


Performance Requirements



Investors of a Contracting Party suffering losses with respect to their investments in the territory of the other Contracting Party due to any armed conflict, including war, national emergency, civil disturbances or other similar events shall not be treated less favorably than investors of this Contracting Party or those of any third State with regard to reparation, indemnification, compensation or other settlements. (Article IV (4)).

Transfers [Return to the top of the page]



Yes. Each Contracting Party shall allow the free transfer of payments related to investments effected in its territory by the investors of the other Contracting Party, in particular, but not exclusively:

  1. the initial capital and any other additional capital for the maintenance and development of an investment;
  2. returns;
  3. indemnifications as provided in Article IV and payments that shall be effected by virtue of the dispute settlement mechanism between an investor and the host country;
  4. proceeds of the sale or the total or partial liquidation of an investment;
  5. amortization of loans;
  6. salaries of personnel. (Article V (1)).

Repayment of Loans

Yes. (Article V (1) (e)).

Proceeds of the Total or Partial Liquidation of an Investment

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

Licenses and Other Fees


Other Categories of Payment

Yes. (Article V (1) (a), (c), (f)).



Transfers shall be authorized in the currency in which the investment was made or when requested by the investor in another convertible currency. (Article V (3)).

Exchange Rates


Time of Transfer

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

The expression "without delay" means the normal period of time necessary to fulfill the legal and regulatory demands for a transfer. Such period of time shall not exceed six months, and shall begin at the time of the fulfillment of these demands.

Transfers relative to investments made in the Special Program for the Conversion of the External Debt of Chile and Brazil are subject to special rules. (Protocol).

Notwithstanding Article V (1), the Government of Chile reserves the right to allow the repatriation of capital in a period of time established in its legislation, which in no case could exceed one year after the investment has been made. (Protocol).

Expropriation [Return to the top of the page]


Covered Expropriatory Measures

Deprivation of an investment (direct or indirect). (Article IV (1)).


Public Purpose and Non-Discrimination

Yes. “Public use or national interest.” (Article IV (2)).

Due Process of Law and Judicial Review

Yes. (Article IV (3)).



Compensation Standard; Form and Time of Payment

“Prompt, adequate and effective compensation”

Compensation shall:

  • be based on the market value of the investment immediately before the proposed expropriation became public knowledge;
  • include interests from the date of expropriation until the time of payment. (Article IV (2) (3)).

Settlement of Disputes between Contracting Parties
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Any dispute between the Contracting Parties concerning the interpretation or application of the Agreement shall, whenever possible, be settled amicably. (Article VII (1)).

If it cannot be settled within six months, the dispute may, at the request of either Contracting Party, be submitted to an arbitral tribunal for decision. (Article VII (2)).


Constitution of the Tribunal

The arbitral tribunal shall be constituted as follows:

  • Each Party shall appoint an arbitrator within three months.
  • The two arbitrators are required to select, within the next five months, a national of a third state who serves as Chairman of the tribunal. When a Party does not select an arbitrator or agreement cannot be reached on the designation of the Chairman, the President of the International Court of Justice might be entrusted by either Contracting Party with the responsibility of making the appointments. There are also additional provisions to cover cases when the President is a national of either Party or is otherwise prevented from fulfilling this function.
  • Regarding costs, each Party is required to bear the expenses of its own member of the tribunal and of its representation in the proceedings, while the costs related to the Chairman are to be divided in an equitable manner among the Parties. (Article VII (3) (4) (8)).

Procedural Rules of the Tribunal

The arbitral tribunal shall determine its own procedure.
Decisions of the tribunal shall be taken by a majority of votes and shall be binding on both Parties. (Article VII (6) (7)).

Applicable Law

The tribunal shall decide on the basis of the law, the provisions of the Agreement and of other agreements concluded by the Contracting Parties, as well as on the principles of international law. (Article VII (5)).

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




Any dispute relating to the Agreement between an investor of one Contracting Party and the other Contracting Party will, to the extent possible, be settled through amicable consultations. (Article VIII (1)).

If it was not possible to settle the dispute within a period of six months, the investor may choose to submit it:

  1. to the competent tribunals of the host party; or
  2. to international arbitration.

Election by the investor of either one of these procedures shall be definitive and irreversible. (Article VIII (2)(3)).    






Forms of Arbitration

Where the dispute is referred to international arbitration, the investor may refer the dispute to:

  1. ICSID, provided each Contracting Party is a party to the ICSID Convention. (For the interim period, both Contracting Parties give their consent to the submission of the dispute to the ICSID Additional Facility Rules); or
  2. an ad hoc arbitration tribunal established under the UNCITRAL Arbitration Rules. (Specific procedures for the appointment of the arbitrators are included) (Article VIII (4)).

Applicable Law

The arbitral tribunal shall decide the dispute in accordance with the provisions of the Agreement; with reference to the laws of the Contracting Party involved in the dispute; terms of any specific agreement concluded in relation to such an investment; and, principles of international law. (Article VIII (5)).

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