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

DEFINITION OF INVESTMENT

The term “investment” comprises every kind of asset directly or indirectly owned by a national or a company of the other Contracting Party, invested by an investor of one Contracting Party in the territory of the other Contracting Party according to the latter’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;
• monetary claims and obligations directly related to a specific investment, contracted and documented in accordance with the prevailing laws and regulations of the country receiving the investment;
• intellectual property rights; and
• concessions and similar rights. (Article I (1)).

DEFINITION OF INVESTOR

Nationals

The term “investor” includes any natural person who is a national of one of the Contracting Parties under its law. (Article I (3)(a)).

The provisions of this Agreement do not apply to the investments of natural persons who are nationals of one Party in the territory of the other Party, if at the time of the investment such persons had been residing in the latter Part for more than two years, unless it is proved that the investment was admitted from abroad. (Article II (3)).

Companies

The term “investor” means any legal person constituted in accordance with the laws and regulations of a Contracting Party, and having its seat as well as effective economic activity in the territory of that Contracting Party. (Article I (3)(b)).

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

Date of signature: April 21, 1998
Entry into force: Thirty days following the exchange of the instruments of ratification.
Duration: 10 years; to be extended indefinitely thereafter. After 10 years, either Party may terminate the Agreement by giving the other Party twelve months’ advance notice of its intention.
The Agreement applies to all investments made before or after the date of its entry into force. However, the Agreement does not apply to disputes which pre-date the Agreement’s entry into force, or which are directly related to events that pre-date its entry into force.

Admission [Return to the top of the page]

Each Contracting Party, subject to its general policy with respect to foreign investments, shall stimulate in its territory investments of investors of the other Contracting Party and shall admit them in accordance with its legislation and regulation. (Article III (1)).

Treatment [Return to the top of the page]

STANDARDS

Fair and Equitable Treatment

Yes. Each Contracting Party shall ensure fair and equitable treatment, in its territory, to investments of investors of the other Contracting Party. (Article IV (1)).

Full Protection and Security

Yes. Each Contracting Party, once it has admitted investments in its territory by investors of the other Contracting Party, shall accord such investments full protection and security and treatment no less favorable than that accorded to its own investors or those of third States. (Article IV (2)).

Non-Discrimination

Yes. Each Contracting Party shall protect, in its territory, investments made in accordance with its laws and regulations and shall not impair the management, maintenance, use, enjoyment, extension, sale and liquidation of such investments through unjustified or discriminatory measures. (Article III (2)).

National Treatment

Yes. Each Contracting Party, once it has admitted investments in its territory by investors of the other Contracting Party, shall accord such investments full protection and security and treatment no less favorable than that accorded to its own investors or those of third States. (Article IV (2)).

Most-Favored Nation Treatment

Yes. Each Contracting Party, once it has admitted investments in its territory by investors of the other Contracting Party, shall accord such investments full protection and security and treatment no less favorable than that accorded to its own investors or those of third States. (Article IV (2)).

Exceptions

Notwithstanding the provisions of Article IV (1), MFN treatment shall not apply to privileges accorded by each Contracting Party to investors of any third State by virtue of its participation or association in a free trade agreement, customs union, common market, or regional agreement. (Article IV (3)).

The treatment referred to in Article IV (1) does not extend to benefits which the other Contracting Party receives from bilateral agreements providing concessional financing, such as the agreements subscribed by Argentina with Italy on December 10, 1987 and Spain on June 3, 1988. (Article IV (5)).

OTHER ASPECTS

Performance Requirements

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Others

If the provisions in the legislation of a Contracting Party, or if the existing or future obligations under international law between the two Contracting Parties, or if an agreement between an investor of a Contracting Party and the other Contracting Party include provisions granting investments of investors of the first Contracting Party a more favorable treatment, these provisions shall prevail (if they are more favorable). (Article VIII (1)).

Investors of a Contracting Party who suffer losses because their investments in the territory of the other Contracting Party are affected by war or other armed conflict, national emergency, civil disturbances and other similar events shall be accorded by such latter Contracting Party, in respect to restitution, indemnification, compensation or other settlement, treatment no less favorable than that it accords to its own investors or investors of any third State. (Article V (5)).

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 the unrestricted transfers of investments and returns and, in particular, but not exclusively:

1. capital and additional amounts necessary for the maintenance and the development of investments;
2. benefits, profits, interests, dividends, and other current incomes;
3. funds in repayment of loans, as defined in Article 1 (1) (c);
4. bonuses and honoraria;
5. proceeds of the total or partial liquidation or sale of any investment;
6. any indemnification or compensation as indicated in Article 4;
7. payments arising out of an investment dispute. (Article VI (1)).

Repayment of Loans

Yes. (Article VI (1) (c ).

Proceeds of the Total or Partial Liquidation of an Investment

Yes. (Article VI (1) (e).

Licenses and Other Fees

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Other categories of Payment

Yes. (Article VI (1) (a), (d) (f), (g)).

CONVERTIBILITY AND EXCHANGE RATES

Currency

Transfers shall be effected without delay in a freely convertible currency at the exchange rate applicable on the date of transfer, in accordance with the procedures established by the Contracting Party in which territory the investment was made, procedures which cannot affect the substance of the rights set forth in this Article. (Article VI (2)).

Exchange Rates

Transfers shall be effected without delay in a freely convertible currency at the exchange rate applicable on the date of transfer, in accordance with the procedures established by the Contracting Party in which territory the investment was made, procedures which cannot affect the substance of the rights set forth in this Article. (Article VI (2)).

Time of Transfer

Transfers shall be effected without delay in a freely convertible currency at the exchange rate applicable on the date of transfer, in accordance with the procedures established by the Contracting Party in which territory the investment was made, procedures which cannot affect the substance of the rights set forth in this Article. (Article VI (2)).

Expropriation [Return to the top of the page]

DEFINITION

Covered Expropriatory Measures

Expropriation, nationalization or measures which have a similar effect. (Article V(2)).

CONDITIONS

Public Purpose and Non-Discrimination

Yes. “Public use” (Article V(2)).

Due Process of Law and Judicial Review

Yes. (Article V(2)).

Other

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Compensation Standard; Form and Time of Payment

“Prompt, adequate and effective compensation”

Compensation shall:

• be made without delay;
• be effectively realizable and freely transferable;
• amount to the market value of the investment immediately before the date of expropriation or before the impending expropriation became publicly known;
• include interests at a normal commercial rate from the date of expropriation. (Article V(3)).

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, to the extent possible, be settled amicably by negotiations. (Article X (1)).
If it cannot be settled within six months, the dispute may, at the request of either Contracting Party, be submitted to an ad-hoc arbitral tribunal for decision. (Article X (2)).

ARBITRATION

Constitution of the Tribunal

The tribunal shall be constituted as follows:

• Within two months of the request of arbitration, each Contracting Party shall appoint an arbitrator.
• The two arbitrators are required to select, within one month, a national of a third State who serves as Chairman of the tribunal. When agreement cannot be reached within the designated time frame, the President of the International Court of Justice might be entrusted by either Contracting Party with the responsibility of making the appointment. There are also additional provisions to cover cases when the President is a national of either Contracting Party or is otherwise prevented from fulfilling this function.
• Regarding costs, each Contracting Party is required to bear the expenses of its own member of the tribunal and of its representation in the proceedings; the costs related to the Chairman and any other ancillary costs shall be borne equally by the Contracting Parties. (Article X (3)(4)(7)).

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 final and binding on both Contracting Parties. (Article X (6)(8)).

Applicable Law

The tribunal shall decide on the basis of the provisions of the Agreement, the general principles of international law and the legal principles recognized by the Contracting Parties. (Article X (6)).

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 investments between an investor of one Contracting Party and the other Contracting Party will, to the extent possible, be settled through amicable consultations. (Art. IX (1)).

If it was not possible to settle the dispute within a period of three months, it may be submitted:

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

Election by the investor of either one of these procedures shall be definitive. (Article IX (3)).

ARBITRAL SETTLEMENT OF DISPUTES

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Conditions

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Consent

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Forms of Arbitration

Consent is set out explicitly in Article IX (2)).

Applicable Law

When the case is referred to international arbitration, the dispute may be referred to ICSID. (Article IX (2)).