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DEFINITION OF INVESTMENT
But investment does not mean:
Investment of an investor of a Party means an investment owned by an investor from a Party or controlled directly or indirectly by such an investor. (Article 16-01). (2)
DEFINITION OF INVESTOR
Investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of such Party, that seeks to make, is making or has made an investment. (Article 16-01).
Application in Time (Entry into Force and Duration: Applicability to Investments made Prior to Entry into Force)
The Free Trade Agreement between Mexico and Nicaragua was signed on December 18, 1997, and entered into force on July 1, 1998.
Nothing in Article 16-03 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 the other Party such as a requirement that investors be residents of the Party or that investments be legally constituted under the laws or regulations of the Party, provided that such formalities do not materially impair the protections afforded by a Party to investors of the other Party and investments of investors of the other Party pursuant to this Chapter. (Article 16-10(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 grant investors of the other Party and investments of investors of the other Party treatment no less favorable than that it grants, in like circumstances, to its own investors and to investments of these investors. (Article 16-03(1)).
Most-Favored Nation Treatment
Each Party shall grant investors of the other Party and investments of investors of the other Party treatment that is no less favorable than that it grants, in like circumstances, to investors and investments of investors of the other Party or those of a third country, except as provided in subsection 2. (Article 16-04(1)).
Exceptions and Reservations
If one Party has accorded special treatment to investors from a third Party or to their investments by virtue of agreements that establish free-trade zones, customs unions, common markets, economic or monetary unions and similar institutions, and arrangements to avoid double taxation, said Party is not obligated to extend such special treatment to the investors of the other Party nor to investments of investors of the other Party. (Article 16-04(2)).
Articles 16-03 to 16-06 [Most-Favored-Nation Treatment; Performance Requirements; Performance Requirements; Senior Management and Boards of Directors] do not apply to any inconsistent measure maintained by a Party, whatever the level or order of government. Each Party shall list these measures in the Annex to this Article within no more than one year from the entry into force of this Agreement. No measure adopted by a Party in the future may be more restrictive than those in force at the time this Agreement enters into effect. (Article 16-07(1)).
Articles 16-03, 16-04, and 16-07 do not apply to:
The provisions contained in:
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 from the other Party who is an enterprise of the Party and to investments of that investor, when investors from a non-Party country are majority owners or control the enterprise and it does not have substantial business activities in the territory of the Party under whose legislation it is established or organized. (Article 16-12).
No Party may impose or require compliance with the following requirements or commitments, with respect to any investment in its territory:
No Party may condition the receipt or continued receipt of an advantage in connection with an investor of the other Party in its territory on compliance with any of the following requirements:
Nothing in this Article shall be construed to prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory, upon requirements concerning geographic location of production units, employment generation or labor training or performance of research and development activities. (Article 16-05(3)).
Each Party shall grant to investors of the other Party, with respect to investments that have suffered losses in its territory due to armed conflicts or civil disturbances, accidentally or because of force majeure, non-discriminatory treatment with respect to any measure adopted or maintained in relation with these losses. (Article 16-03 (2)).
Limitations with respect to the number or share of foreigners that are allowed to work in a company or to perform administrative or management tasks in conformity with the laws of each Party may not hamper or prevent an investor from exercising control over his investment. (Article 16-06).
Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in observance of its environmental legislation. (Article 16-14(1)).
The Parties recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. Accordingly, a Party should not waive or otherwise derogate from, such measures as an encouragement for the establishment, acquisition, expansion or retention in its territory of an investment of an investor. If a Party considers that the other Party has offered such an encouragement, it may request consultations with the other Party and the two Parties shall consult with a view to avoiding any such encouragement. (Article 16-14(2)).
TYPES OF PAYMENT
Each Party shall permit all transfers relating to an investment of an investor of the other Party in the territory of the Party to be made freely and without delay. Such transfers include:
CONVERTIBILITY, EXCHANGE RATES, AND TIMES OF TRANSFER
Each Party shall permit transfers to be made in a freely convertible currency at the exchange rate prevailing on the market on the date of transfer, for spot transactions of the currency to be transferred, without prejudice to the provisions of Article 13-18 (balance of payments and safeguards). (Article 16-08(2)).
Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer through the equitable and non-discriminatory application of its laws relating to:
Neither Party may directly or indirectly nationalize or expropriate an investment of an investor of the other Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ("expropriation"), except:
Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place ("date of expropriation"), and shall not reflect any change in value occurring because the intended expropriation had become known earlier. Valuation criteria shall include the declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value. (Article 16-09(2)).
Compensation shall be paid without delay, be fully realizable and freely transferable. (Article 16-09(3)).
The sum paid shall not be less than the equivalent amount that would have been paid for compensation in a freely convertible currency in the international financial market on the date of expropriation, said currency being converted at the market rate on the valuation date, plus the interest that would have been generated at a reasonable commercial rate for that currency, chosen by the Party in accordance with international parameters, up to the date of payment. (Article 16-09(4)).
Chapter XX on Dispute Settlement is applicable.
The disputing parties should first attempt to settle a claim through consultation or negotiation. (Article 16-19).
In accordance with this section, only an investor from one Party, acting for his own account or on behalf of an enterprise of the other Party that is a juridical person owned by him or under his direct or indirect control, may submit to arbitration a complaint the basis for which is that the other Party or an enterprise directly or indirectly controlled by that Party has allegedly violated an obligation specified in this chapter, provided the enterprise has suffered losses or harm due to the violation or as a result of it. (Article 16-18(1)).
The investor may not submit a complaint in accordance with this section if more than three years have elapsed since the date on which he become aware of or should have been aware of the alleged violation against his investment, and of the losses or harm suffered. (Article 16-18(2)).
When an investor submits a complaint on behalf of an enterprise that is a juridical person owned by him or under his direct or indirect control, and at the same time an investor who does not control an enterprise submits a complaint for his own account as a result of the same acts, or two or more complaints are submitted to arbitration on account of the same measure adopted by a Party, a consolidation tribunal shall examine these complaints jointly, except when that tribunal determines that the interests of one disputing party would suffer thereby. (Article 16-18(3)).
An investment may not make a claim under this Section. (Article 16-18(4)).
An investor of a Party, on its own behalf or on behalf of an enterprise, may submit a claim to arbitration only if:
Each Party consents to the submission of a claim to arbitration in accordance with the procedures and requirements set out in this Section. (Article 16-23(1)). The submission by a disputing investor of a claim to arbitration shall satisfy the requirement of:
Forms of Arbitration
Provided that six months have elapsed since the events giving rise to a claim, a disputing investor may submit the claim to arbitration under:
Constitution of the Tribunal
With the exception of the provisions of Article 16-27 (Consolidation) and without prejudice to the disputing parties agreeing on something different, the tribunal shall be made up of three arbitrators. Each disputing party shall appoint one arbitrator; the third arbitrator, who shall be president of the arbitration tribunal, shall be appointed by the disputing parties in mutual agreement, but shall not be a national of either Party. (Article 16-24).
The Secretary-General [of ICSID] shall serve as appointing authority for an arbitration under this Section. (Art. 16-25(1)).
If a Tribunal, other than a Tribunal established under Article 16-27, 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, at his discretion, the arbitrator or arbitrators not yet appointed, except that the presiding arbitrator shall be appointed in accordance with paragraph 3. (Article 16-25(2))).
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 either of the Parties. (Article 16-25(3)).
On the date of entry into force of this Agreement, the Parties shall establish, and thereafter maintain, a roster of five presiding arbitrators, none of whom may be a national of a Party, meeting the qualifications of the Convention and rules referred to in Article 16-21 and experienced in international law and investment matters. The roster members shall be appointed by mutual agreement regardless of their nationality. (Article 16-25(4)).
A consolidation tribunal established under this Article shall be established under the UNCITRAL Arbitration Rules and shall conduct its proceedings in accordance with those Rules, except as modified by this Section. (Article 16-27(1)).
Where a Tribunal is satisfied that claims have been submitted to arbitration under Article 16-22 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 2 shall request the Secretary-General to establish a Tribunal and shall specify in the request:
Paragraphs 4-8 of Article 16-27 contain rules regarding the constitution of the consolidation tribunal and procedures for the settlement of the dispute by the tribunal. (Article 16-27).
Any Tribunal established under this Section shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law. (Article 16-33(1)).
An interpretation by the Commission of a provision of this Agreement shall be binding on a Tribunal established under this Section. (Article 16-33(2)).
Where a Tribunal established under this section makes a final award against a Party, the Tribunal may award only:
Where a claim is made on behalf of an enterprise:
The award shall provide that it is made without prejudice to any right that a third person holding a legal interest may have under applicable domestic law in the relief for damages suffered. (Article 16-36(3)).
Finality and Enforcement
An award made by a Tribunal established under this Section shall have no binding force except between the disputing parties and in respect of the particular case. (Article 16-37(1)).
Subject to paragraph 3 and the applicable review procedure for an interim award, a disputing party shall abide by and comply with an award without delay. (Article 16-37(2)).
A disputing party may seek enforcement of a final award only if:
Each Party shall provide for the enforcement of an award in its territory. (Article 16-37(4)).
If a disputing Party fails to abide by or comply with a final award, the Commission, on delivery of a request by a Party whose investor was a party to the arbitration, shall establish a panel under Article XX (Dispute Settlement). The requesting Party may seek in such proceedings:
A disputing investor may seek enforcement of an arbitration award under the ICSID Convention, the New York Convention or the Inter-American Convention regardless of whether proceedings have been taken under paragraph 5. (Article 16-37(6)).
A claim that is submitted to arbitration under this Section shall be considered to arise out of a commercial relationship or transaction for purposes of Article I of the New York Convention and Article I of the Inter-American Convention. (Article 16-37(7)).
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