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

DEFINITION OF INVESTMENT

The term “investment” means every kind of investment in the territory of one Party owned or controlled by nationals or companies of the other Party, such as equity, debt, and service and investment contracts. This general definition is illustrated by a non exhaustive list of five groups of specific rights, including:

• traditional property rights;
• rights in companies;
• monetary claims and titles to performance associated with an investment;
• intellectual property rights; and,
• any right conferred by law or contract, and any licenses and permits pursuant to law. (Article I (1) (b)).

DEFINITION OF INVESTOR

Nationals

“National” of a Party means a natural person who is a national of a Party under its applicable law. (Article I (1) (c)).

Companies

“Company of a Party” means any kind of corporation, company, association, or other organization, legally constituted under the laws and regulations of a Party or a political subdivision thereof, whether or not organized for pecuniary gain, or privately or governmentally owned. (Article I (1) (a)).

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

Date of signature: May 2, 1986
Entry into force: March 3, 1989
Duration: 10 years.
Thereafter it shall remain in force until either Party notifies the other Party, a year in advance, of its decision to terminate the Treaty. The Treaty shall apply to investments existing at the time of entry into force, as well as to investments made or acquired thereafter.

Admission [Return to the top of the page]

There is no separate clause on admission. The issue is dealt with in the treatment provisions. See Section on Treatment.

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. Investment shall at all times be accorded fair and equitable treatment, and shall in no case be accorded treatment less than that required by international law. (Article II (2)).

Full Protection and Security

Yes. Investment shall enjoy full protection and security. (Article II (2)).

Non-Discrimination

Yes. Neither Party shall in any way impair by arbitrary and discriminatory measures the management, operation, maintenance, use, enjoyment, acquisition, expansion, or disposal of investments. (Article II (2)).

National Treatment

Yes. Article II on treatment requires the better of national treatment or most-favored nation treatment with respect to both pre-establishment and post-establishment investments.

Each Party shall permit and treat investment, and activities associated therewith, on a basis no less favorable than that accorded in like situations to investment or associated activities of its own nationals or companies, or of nationals or companies of any third country, whichever is the most favorable, subject to the right of each Party to make or maintain exceptions falling within one of the sectors or matters listed in the Annex to this Treaty. Each Party agrees to notify the other Party before or on the date of entry into force of this Treaty of all such laws and regulations of which it is aware concerning the sectors or matters listed in the Annex. Moreover, each Party agrees to notify the other of any future exception with respect to the sectors or matters listed in the Annex, and to limit such exceptions to a minimum. Any future exception by either Party shall not apply to investment existing in that sector or matter at the time the exception becomes effective. The treatment accorded pursuant to any exceptions shall not be less favorable than that accorded in like situations to investments and associated activities of nationals or companies of any third country, except with respect to ownership of real property. Rights to engage in mining on the public domain shall be dependent on reciprocity. (Article II (1)).

The treatment accorded by the United States to investments and associated activities under the provisions of Article II shall in any State, Territory or possession of the United States be the treatment accorded therein to companies legally constituted under the laws and regulations of other States, Territories or possessions of the United States. (Article II (8)).

Most-Favored Nation Treatment

Yes. Article II on treatment requires the better of national treatment or most-favored nation treatment with respect to both pre-establishment and post-establishment investments.

Each Party shall permit and treat investment, and activities associated therewith, on a basis no less favorable than that accorded in like situations to investment or associated activities of its own nationals or companies, or of nationals or companies of any third country, whichever is the most favorable, subject to the right of each Party to make or maintain exceptions falling within one of the sectors or matters listed in the Annex to this Treaty. Each Party agrees to notify the other Party before or on the date of entry into force of this Treaty of all such laws and regulations of which it is aware concerning the sectors or matters listed in the Annex. Moreover, each Party agrees to notify the other of any future exception with respect to the sectors or matters listed in the Annex, and to limit such exceptions to a minimum. Any future exception by either Party shall not apply to investment existing in that sector or matter at the time the exception becomes effective. The treatment accorded pursuant to any exceptions shall not be less favorable than that accorded in like situations to investments and associated activities of nationals or companies of any third country, except with respect to ownership of real property. Rights to engage in mining on the public domain shall be dependent on reciprocity. (Article II (1)).

EXCEPTIONS

Consistent with Article II (1), each Party reserves the right to maintain limited exceptions in the following sectors or matters:

Exceptions for the United States: air transportation; ocean and coastal shipping; banking; insurance; government grants; government insurance and loan programs; energy and power production; custom house brokers; ownership of real estate; ownership and operation of broadcast or common carrier radio and television stations; ownership of shares in the Communications Satellite Corporation; the provision of common carrier telephone and telegraph services; the provision of submarine cable services; and use of land and natural resources.

Exceptions for Grenada: air transportation; government grants; government insurance and loan programs; ownership of real estate; use of land and natural resources. (Annex) This Treaty shall not preclude the application by either Party of measures necessary in its jurisdiction for the maintenance of public order, the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests. (Article X (1)).

OTHER ASPECTS

Performance Requirements

Neither Party shall impose performance requirements as a condition of establishment, expansion or maintenance of investments, which require or enforce commitments to export goods produced, or which specify that goods or services must be purchased locally, or which impose any other similar requirements. (Article II (5)).

Others

Subject to the laws relating to the entry and sojourn of aliens, nationals of either Party shall be permitted to enter and to remain in the territory of the other Party for the purpose of establishing, developing, administering or advising on the operation of an investment to which they, or a company of the first Party that employs them, have committed or are in the process of committing a substantial amount of capital or other resources. (Article II (3)).

Companies which are legally constituted under the applicable laws or regulations of one Party, and which are investments, shall be permitted to engage top managerial personnel of their choice, regardless of nationality. (Article II (4)).

Each Party shall observe any obligation it may have entered into with regard to investments. (Article II (2)).

Nationals or companies of either Party whose investments suffer losses in the territory of the other Party owing to war or other armed conflict, revolution, state of national emergency, insurrection, civil disturbance or other similar events shall be accorded treatment by such other Party no less favorable than that accorded to its own nationals or companies or to nationals or companies of any third country, whichever is the most favorable treatment, as regards any measures it adopts in relation to such losses. (Article III (3)).

The Treaty shall not derogate from:

1. laws and regulations, administrative practices or procedures, or administrative or adjudicatory decisions of either Party;
2. international legal obligations; or
3. obligations assumed by either Party, including those contained in an investment agreement or an investment authorization, that entitle investments or associated activities to treatment more favorable than that accorded by the Treaty in like situations. (Article IX).

The 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 X (2)).

Each Party shall provide effective means of asserting claims and enforcing rights with respect to investment agreements, investment authorizations and properties. (Article II (6)).

Transfers [Return to the top of the page]

TYPES OF PAYMENT

Returns

Yes. Each Party shall permit all transfers related to an investment to be made freely and without delay into and out of its territory. Such transfers include:

1. returns;
2. compensation pursuant to Article III;
3. payments arising out of an investment dispute;
4. payments made under a contract, including amortization of principal and accrued interest payments made pursuant to a loan agreement;
5. proceeds from the sale or liquidation of all or any part of an investment; and
6. additional contributions to capital for the maintenance or development of an investment. (Article IV (1)).

Repayment of Loans

Yes. (Article IV (1) (d)).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article IV (1) (e)).

Licenses and Other Fees

---

Other Categories of Payment

Yes. (Article IV (1) (b), (c), (f)).

CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER

Currency

Except as provided in Article III (1), transfers shall be made in a freely convertible currency at the prevailing market rate of exchange on the date of transfer with respect to spot transactions in the currency to be transferred. (Article IV (2)).

Exchange Rates

Except as provided in Article III (1), transfers shall be made in a freely convertible currency at the prevailing market rate of exchange on the date of transfer with respect to spot transactions in the currency to be transferred. (Article IV (2)).

Time of Transfer

Each Party shall permit all transfers related to an investment to be made freely and without delay into and out of its territory. (Article IV (1)).

Notwithstanding the provisions of paragraphs 1 and 2 of Article IV, either Party may maintain laws and regulations

1. requiring reports of currency transfer; and
2. imposing income taxes by such means as a withholding tax applicable to dividends or other transfers.

Furthermore, either Party may protect the rights of creditors, or ensure the satisfaction of judgments in adjudicatory proceedings, through the equitable, nondiscriminatory and good faith application of its law. (Article IV (3)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Expropriation or nationalization (directly or indirectly through measures tantamount to expropriation or nationalization). (Article III (1)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. (Article III (1)).

Due Process of Law and Judicial Review

Yes. Review can be made by the appropriate judicial or administrative authorities of the expropriating host Party. (Article III (1) (2)).

Other

Expropriation has to be made in accordance with the general principles of treatment provided for in Article II (2). (Article III (1)). See supra.

Compensation Standard; Form and Time of Payment

“Prompt, adequate and effective compensation”

Compensation shall:

• be equivalent to the fair market value of the expropriated investment immediately before the expropriatory action was taken or became known;
• include interests at a commercially reasonable rate from the date of expropriation;
• be made without delay;
• be fully realizable and freely transferable at the prevailing market rate of exchange at the date of expropriation. (Article III (1)).

Settlement of Disputes between Contracting Parties
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PRE-ARBITRATION NEGOTIATIONS

Parties agree to consult promptly, on the request of either, to resolve any disputes in connection with the Treaty, or to discuss any matter relating to the interpretation or application of the Treaty. (Article V).

Any dispute which is not resolved through consultation or other diplomatic channels, shall be submitted, upon request of either Party, to an arbitral tribunal. (Article VII (1)).

ARBITRATION

Constitution of the Tribunal

• Within two months of receipt of a request, each Party shall appoint an arbitrator. The two arbitrators shall select a third arbitrator as Chairman, who is a national of a third State.
• Expenses incurred by the Chairman, the other arbitrators, and other costs of the proceedings shall be paid for equally by the Parties. (Article VII (2) (4)).

Procedural Rules of the Tribunal

Decisions of the tribunal shall be binding on both Parties. In the absence of agreement by the Parties to the contrary, the Model Rules on Arbitral Procedures adopted by the United Nations International Law Commission in 1958, shall govern. Unless otherwise agreed, all submissions shall be made and all hearings shall be completed within six months of the date of selection of the third arbitrator, and the Tribunal shall render its decisions within two months of the date of the final submissions or the date of the closing of the hearings, whichever is later. (Article VII (1) (3)).

Applicable Law

Disputes shall be decided “in accordance with the applicable rules of international law.” (Article VII (1)).

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

DEFINITION

An investment dispute is a dispute between a Party and a national or company of the other Party involving:

1. the interpretation or application of an investment agreement between that Party and such national or company;
2. the interpretation or application of any investment authorization granted by a Party’s foreign investment authority to such national or company; or,
3. an alleged breach of any right conferred or created by the Treaty with respect to an investment. (Article VI(1)).

PREARBITRAL CONSULTATIONS AND DISPUTE SETTLEMENT MECHANISMS

Parties to the dispute should initially seek resolution through consultation and negotiation, which may include the use of non-binding, third-party procedures.

If the dispute cannot be settled through consultation and negotiation, it shall be submitted for settlement in accordance with any applicable, previously agreed dispute settlement procedures. (Article VI(2)).

ARBITRAL SETTLEMENT OF DISPUTES

Conditions

Provided that the national or company has not submitted the dispute for resolution in accordance with any applicable previously agreed dispute settlement mechanism or before the courts of justice or administrative tribunals of the Party that is a party to the dispute, and six months have elapsed from the date on which the dispute arose, the national or company may choose to consent in writing to the submission of the dispute for settlement by conciliation or binding arbitration. (Article VI(3)(a)).

Consent

Consent set out explicitly in Article VI(3)(b).

Forms of Arbitration

The submission of the dispute for settlement by conciliation or binding arbitration may be made to ICSID or under the rules of the Additional Facility of the Centre. (Article VI(3)(a)).

Applicable Law

Conciliation or binding arbitration shall be done in accordance with the ICSID Convention and the Rules and Regulations of the Centre or, if the Convention is inapplicable, the Rules of the Additional Facility shall govern. (Article VI(3)).