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DEFINITION OF INVESTMENT
“Investment” refers to resources transferred to the national territory of one Party or reinvested therein by investors of the other Party, including:
Investment shall not include credit or debt transactions, such as:
DEFINITION OF INVESTOR
The term “investor” refers to any of the following persons owning an investment in the territory of the other Party:
Application in Time (Entry into Force and Duration: Applicability to Investments made Prior to Entry into Force)
The Free Trade Agreement of the Group of Three was signed by Mexico, Colombia, and Venezuela on June 13, 1994, and came into effect on January 1, 1995.
Nothing in Article 17-03 shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with the establishment of investments by investors of another Party, such as a requirement that investments be constituted under the laws and regulations of the Party, provided that such formalities do not materially impair the protections afforded by a Party in accordance with the provisions of this Chapter. (Article 17-09(1)).
There is no separate clause on admission. The issue is dealt with in the treatment provisions (see section on treatment).
Fair and Equitable Treatment
Full Protection and Security
Each Party shall accord to investors of another Party, and to their investments, treatment no less favorable than that it accords, in like circumstances, to its own investors and investments. (Article 17-03(1)).
Most-Favored Nation Treatment
Each Party shall grant investors of another Party, and to their investments, treatment no less favorable than that it accords, in like circumstances, to investors, and their investments, of another Party or of a non-Party. (Article 17-03(2)).
Exceptions and Reservations
Within eight months of the signature of the treaty, the Parties shall establish a Protocol containing four lists of the sectors and subsectors for which each Party may maintain measures not conforming with Articles 17-03 [National Treatment and MFN], 17-04 [Performance Requirements], and 17-05 [Employment and Enterprise Management], based on the following criteria:
In the negotiations to which list 2 in Article 17-06(1) refers, the Parties shall endeavor to reach agreements on the basis of reciprocity with a view to obtaining a comprehensive balance in the concessions granted. (Article 17-06(2)).
Denial of benefits
Subject to prior notification and consultation with the other Party, a Party may deny the benefits of this Chapter to an investor of another Party that is an enterprise of such Party and to the investments of such investor, if investors of a non-Party are majority shareholders in or control the enterprise, and the enterprise has no substantial business activities in the territory of the Party under whose law it is constituted or organized. (Article 17-11).
No Party shall impose performance requirements by adopting investment-related measures that are mandatory or required for the establishment or operation of an investment, or for which compliance is necessary in order to obtain or maintain an advantage or incentive, or which prohibit:
The provisions of:
Nothing in the provisions of this Article shall be construed as preventing a Party from imposing, with regard to any investment in its territory, requirements to locate production, generate jobs, train workers, or carry out research and development. (Article 17-04(3)).
If, in the judgment of a Party, another Party imposes a requirement not stipulated in paragraph 1 that adversely affects the flow of trade or that constitutes a significant barrier to investment, the matter shall be considered by the Commission. (Article 17-04(4)).
If the Commission finds that the requirement in question adversely affects the flow of trade or constitutes a significant barrier to investment, it shall recommend to the Party in question that it suspend the requirement. (Article 17-04(5)).
The provisions of paragraphs 1 and 2 shall extend to any measure adopted or maintained by a Party in relation to losses owing to armed conflict, civil strife, disturbances of the public order, acts of Gods or force majeure. (Article 17-03(3)).
Limits on the number or proportion of foreigners that may work in an enterprise or perform managerial or administrative duties under the laws of each Party may in no case prevent or hinder an investor from exercising control over its investment. (Article 17-05).
No Party shall eliminate domestic health, safety, or environmental measures, or shall undertake to waive the application thereof, 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 encouraged an investment in this way, it may request consultations with that other Party. (Article 17-13).
TYPES OF PAYMENT
Each Party shall permit all transfers relating to an investment of an investor of another Party in the territory of the Party to be made freely and without delay.
Such transfers include:
Each Party may maintain laws and regulations that impose income and additional taxes by such means as the withholding of taxes on dividends and other transfers, provided such measures are not discriminatory. (Article 17-07(5)).
CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER
Each Party shall permit transfers to be made in a freely convertible currency at the market rate of exchange prevailing on the date of transfer with respect to spot transactions in the currency to be transferred, without prejudice to the provisions of Article 17-07(6). (Article 17-07(2)).
Notwithstanding paragraphs 1 and 2, each Party may, to the extent and for such time as may be necessary, prevent transfers through the equitable and non-discriminatory application of its laws with respect to:
Moreover, each Party may, through the equitable and non-discriminatory application of its laws, request information and impose requirements concerning reports of transfers of currency or other instruments. (Article 17-07(4)).
The provisions of this Article notwithstanding, each Party shall be entitled, under circumstances of exceptional or serious balance-of-payments difficulties, to limit transfers temporarily in an equitable and non-discriminatory manner, in accordance with internationally accepted criteria. (Article 17-07(6)).
No party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take measures tantamount to nationalization or expropriation of such an investment, except: for a public purpose; on a non-discriminatory basis; in accordance with due process of law and in accordance with international law, including fair and equitable treatment and full protection and security; and, on payment of compensation. (Article 17-08(1)).
Compensation shall be equivalent to the fair market value of the investment at the time of expropriation, and shall not reflect any change in value owing to the fact that the intent to expropriate became known prior to the date of expropriation. Valuation criteria shall include declared tax value of tangible property and other criteria, as appropriate, to determine fair market value. (Article 17-08(2)).
Compensation shall be fully realizable and freely transferable under the terms of Article 17-07. (Article 17-08(3)).
Payment shall be made without delay. The time elapsing between the time the compensation is determined and the time payment is made shall not adversely affect the investor. As a result, the amount of compensation shall be sufficient to ensure that should the investor decide to transfer his payment, he can obtain, at the time of payment, an equal amount of the international currency normally used as a reference by the Party making the expropiation. Payment shall also include interest at the current market rate for the reference currency. (Article 17-08(4)).
Provisions of Chapter XIX relating to “Dispute Settlement”, are applicable.
The dispute settlement mechanism is applicable to investment claims made by an investor of a Party (disputing investor) against a Party (disputing Party) with respect to the breach of an obligation set forth in Chapter XVII (Investment), from the date of entry into force of the Treaty. This does not exclude the disputing investor and the disputing Party (disputing parties) from attempting to settle the dispute through consultation or negotiation. (Article 17-16(2)).
An investor of a Party may, on his own account or on behalf of an enterprise that it owns or effectively controls, submit to arbitration a claim that the other Party has breached an obligation under Chapter XVII (Investment), provided the investor has incurred loss or damage by reason of, or arising out of, such breach. (Article 17-17(1)).
An investor may not make a claim under this Section if more than three years have elapsed from the date on which it acquired, or should have acquired, knowledge of the alleged breach and of the loss or damage incurred. (Article 17-17(3)).
An enterprise that is an investment may not submit a claim to arbitration under this Section. (Article 17-17(2)).
An investor that initiates proceedings before any judicial tribunal with respect to the alleged breach of the provisions of this Chapter may not make a claim under this section, nor may it make a claim under this Section on behalf of an enterprise it owns or controls that has initiated a procedure before any judicial tribunal with respect to the same breach. This provision shall not apply to the exercise of administrative appeals, provided under the laws of the disputing Party, before the same authorities that implemented the measure allegedly in breach of the said provisions. (Article 17-17(4)).
An investor that makes a claim under this Section or an enterprise on whose behalf the claim is made may not initiate proceedings before any judicial tribunal with respect to the alleged breach. (Article 17-17(5)).
Each Party consents to the submission of a claim to arbitration in accordance with the procedures set out in the Agreement. (Article 17-18(4)).
Forms of Arbitration
Provided that 90 days have elapsed since the disputing investor notified the disputing Party of his intention to submit a claim to arbitration and six months have elapsed since the measures giving rise to the claim, a disputing investor may submit the claim to arbitration under:
Constitution of the Tribunal
Except in respect to a Tribunal established under Article 17-19 (Consolidation), and unless the disputing parties otherwise agree, the tribunal shall comprise three arbitrators. Each of the disputing parties shall appoint one arbitrator; the third, who shall be the presiding arbitrator, shall be appointed by agreement of the disputing parties. (Rule 3, Annex to Article 17-16).
When a Party fails to appoint an arbitrator or the disputing parties are unable to agree on a presiding arbitrator, the Secretary General [of ICSID] shall serve as appointing authority for an arbitration under this Section. (Rule 4(1), Annex to Article 17-16).
If a Tribunal, other than a Tribunal established under Article 1719 (Consolidation), has not been constituted within 90 days from the date that a claim is submitted to arbitration, the Secretary General [of ICSID], on the request of either disputing party, shall appoint, in his discretion, the arbitrator or arbitrators not yet appointed, except that the presiding arbitrator shall be appointed in accordance with paragraph 3. (Rule 4(2), Annex to Article 17-16).
The Secretary General [of ICSID] shall appoint the presiding arbitrator from the roster of presiding arbitrators referred to in paragraph 4, provided that the presiding arbitrator shall not be a national of the disputing Party or a national of the Party of the disputing investor. In the event that no such presiding arbitrator is available to serve, the Secretary General shall appoint, from the ICSID Panel of Arbitrators, a presiding arbitrator who is not a national of any of the Parties. (Rule 4(3), Annex to Article 17-16).
On the date of entry into force of the Agreement, the Parties shall establish, and thereafter maintain, a roster of 15 presiding arbitrators meeting the qualifications of the ICSID Convention. The roster members shall be appointed by consensus and without regard to nationality. (Rule 4(4), Annex to Article 17-16).
If a disputing party requests that claims arising out of the same event be accumulated, a Tribunal shall be established under the UNCITRAL Arbitration Rules and shall conduct its proceedings in accordance with those Rules, except as modified by this Section. The claims should be heard together, unless the Tribunal finds that the interests of a disputing party would be prejudiced thereby. (Article 17-19).
Where a Tribunal established under Article 17-19 (Consolidation) determines that claims have been submitted to arbitration under Article 17-17 that have a question of law or fact in common, the Tribunal may, in the interests of fair and efficient resolution of the claims, and after hearing the disputing parties, by order:
A disputing party that seeks an order under paragraph 1 shall request the Secretary General [of ICSID] to establish a Tribunal and shall specify in the request:
Numerals 4 to 6 contain provisions related to the constitution of the Tribunal as well as to the procedure and timing to settle the dispute. (Rule 6, Annex to Article 17-16).
Any tribunal constituted under Section B (Settlement of Disputes between a Party and an Investor of Another Party) shall decide the disputes submitted for its review in accordance with this Agreement and the applicable rules of international law. (Article 17-20 (1)).
An interpretation by the Commission of a provision of this Agreement shall be binding on a Tribunal constituted under Section B (Settlement of Disputes between a Party and an Investor of Another Party). (Article 17-20 (2)).
Where a Tribunal makes a final award against a Party, the Tribunal may award only:
In such case, the award shall provide that the disputing Party may pay monetary damages and any applicable interest in lieu of restitution, and shall indicate the sum to be paid. (Article 17-21(1)).
Where a claim is made by an investor on behalf of an enterprise:
The award shall provide that it is made without prejudice to any right that any person may have in the relief under applicable domestic law. (Article 17-21(3)).
Finality and Enforcement
An award made a Tribunal in accordance with this section shall have no binding force except between the disputing parties and in respect of the particular case. (Article 17-23(1)).
A disputing party shall abide by and comply with an award without delay and shall provide due execution. (Article 17-23(2)).
If the Party whose investor was a party in the arbitration proceedings considers that the disputing Party has failed to abide by or comply with a final award, it may resort to Chapter XIX dispute settlement procedures in order to obtain a recommendation to the effect that the Party shall adhere to and observe the final award. (Article 17-23(3)).
The disputant investor may resort to execution of an arbitration award in accordance with the ICSID Convention, the New York Convention or the Inter-American Convention, regardless of whether the proceedings envisaged in paragraph 3 have been initiated or not. (Article 17-23(4)).
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