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ECUADOR - PARAGUAY
Bilateral Investment Treaty


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

DEFINITION OF INVESTMENT

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

  • traditional property rights;
  • rights in companies;
  • claims to money and titles to performance;
  • intellectual property rights; and,
  • concessions and similar rights. (Article 1 (1)).

DEFINITION OF INVESTOR

Nationals

“National” of a Party comprises any natural person who is a national of that Party under its law. (Article 1 (2) (a)).

Companies

“National” of a Party comprises companies constituted under the law of one of the Contracting Parties, and having its seat in the territory of said Party, irrespective of whether or not its activities are directed at profit. (Article 1 (2) (b)).

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

Date of signature: January 28, 1994
Entry into force: September 18, 1995
Duration: 10 years.
Thereafter it shall be extended for periods of ten years, unless notice of termination has been given, at least twelve months before the expiry of the current period of validity.

Admission [Return to the top of the page]

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

This Treaty shall not preclude either Party from prescribing special formalities in connection with the establishment of investments, but such formalities shall not impair the substance of any of the rights set forth in this Treaty. (Article 11 (2)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

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

Full Protection and Security

Each Contracting Party shall protect in its territory and in accordance with its laws and regulations investments made by investors of the other Contracting Party. (Article 4 (1)).

Non-Discrimination

Yes. Each Contracting Party shall not impair with undue or discriminatory measures the management, maintenance, utilization, enjoyment, expansion, sale and liquidation of investments of investors of the other Contracting Party. Each Contracting Party shall grant the permits mentioned in Article 3 (2). (Article 4 (1)).

National Treatment

Yes. Each Contracting Party shall guarantee in its territory a fair and equitable treatment to investments of investors of the other Contracting Party. This treatment shall be no less favorable than that it grants to investments of its own nationals or those of investors of third States. (Article 4 (2)).

Most-Favored Nation Treatment

Yes. Each Contracting Party shall guarantee in its territory a fair and equitable treatment. This treatment shall be no less favorable than that it grants to investments of its own nationals or those of investors of third States. (Article 4 (2)).

EXCEPTIONS

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

Treatment accorded in Article 4 does not apply to the advantages that the Contracting Parties have offered to nationals or companies of third States in taxation agreements or agreements on tax matters. (Article 4 (4)).

OTHER ASPECTS

Performance Requirements

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Others

Each Contracting Party that has admitted investments in its territory, shall grant, in accordance with its legislation, the permits necessary to these investments and those for the execution of contracts of licensing, technical, commercial or administrative assistance. Each Contracting Party shall facilitate, when required, the permits necessary for the activities of consultants or other qualified persons of other countries. (Article 3 (2)).

Nationals or companies of one Contracting Party, who suffer losses of their investments in the territory of the other Contracting Party due to a war or other armed conflicts, revolution, national state of emergency, rebellion, insurrection or uprising, shall be treated no less favorably than its own nationals or companies, or nationals or companies of any third State with respect to restitution, indemnifications, adjustments or other payments. These payments shall be freely transferable in accordance with Article 5. (Article 6 (3)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Contracting Party shall guarantee to investors of the other Contracting Party who have invested in its territory the free transfer of payments related to these investments, in particular:

  1. returns;
  2. amortization of loans;
  3. amounts destined to cover expenses related to the management of these investments;
  4. bonuses and other incomes (as defined in Article 1 (c), (d), (e));
  5. additional contribution to the capital necessary for the maintenance and development of investments;
  6. proceeds of the sale or the total or partial liquidation of an investment, including eventual increased values. (Article 5 (1)).

Repayment of Loans

Yes. (Article 5 (1) (b)).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article 5 (1) (f)).

Licenses and Other Fees

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Other Categories of Payment

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

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Transfers shall be effected in a freely convertible currency, without delay. (Article 5 (2)).

Exchange Rates

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Time of Transfer

Without delay. (Article 5 (2)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Expropriation, nationalization or measures which have a similar effect. (Article 6 (1)).

CONDITIONS

Public Purpose and Non-Discrimination

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

Due Process of Law and Judicial Review

Yes. (Article 6 (1)).
The BIT does not include an independent requirement that expropriations be subject to judicial review. However, it has been argued that the international standard of due process includes such a requirement.

Other

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Compensation Standard; Form and Time of Payment

“Just compensation”

Compensation shall:

  • amount to the market value of the investment immediately before the expropriation became publicly known;
  • include interests at a normal commercial rate until the time of payment;
  • be made without delay;
  • be effectively realizable and freely transferable. (Article 6 (2)).

Settlement of Disputes between Contracting Parties
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PRE-ARBITRATION NEGOTIATIONS

Any dispute between the Contracting Parties concerning the interpretation or application of the Agreement shall be settled through diplomatic channels. (Article 9 (1)).

If it cannot be settled within twelve months, the dispute shall, at the request of either Contracting Party, be submitted to an arbitral tribunal. (Article 9 (2)).

ARBITRATION

Constitution of the Tribunal

The arbitral tribunal will have three members.

  • Each Party shall appoint an arbitrator within two months.
  • The two arbitrators are required to select, within the next two 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 with the responsibility of making the appointments. There are also additional provisions to cover cases when the President is a national of either Party or is otherwise prevented from fulfilling this function. (Article 9 (2) (3) (4) (5)).

Procedural Rules of the Tribunal

The arbitral tribunal shall determine its own procedure.
Decisions of the tribunal shall be definitive and binding on both Parties. (Article 9 (6) (7)).

Applicable Law

No reference.

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

DEFINITION

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PREARBITRAL CONSULTATIONS AND DISPUTE SETTLEMENT MECHANISMS

Any dispute relating to the provisions of 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 8(1)).

If it was not possible to settle the dispute within a period of six months, it may be submitted, at the request of the investor:

  1. to the competent tribunals of the host party; or
  2. to international arbitration. (Article 8(2)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

In case the dispute has been submitted to the tribunals of the host party, the investor may not refer it to international arbitration unless:

  • 18 months have elapsed without a final decision by the tribunal; and,
  • both Parties agree to submit the dispute to arbitration. (Article 8(3)).

Consent

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Forms of Arbitration

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

  1. ICSID; or
  2. an ad hoc arbitration tribunal established under the UNCITRAL Arbitration Rules. (Article 8(2)).

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 8(5)).


 
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