US-Czech BIT (2004)

Czech Republic Bilateral Investment Treaty

After the breakup of Czechoslovakia in 1993, this treaty continued in effect for the successor states, the Czech Republic and Slovakia.

Signed October 22, 1991; Entered into Force December 19, 1992; Amended May 1, 2004

Prior to the accession of the Czech Republic to the European Union, this treaty was amended to reduce the possibility of conflict with the laws of the European Union.[View Amending Protocol]

2nd Session

TREATY WITH THE CZECH AND SLOVAK FEDERAL REPUBLIC

CONCERNING THE RECIPROCAL ENCOURAGEMENT

AND PROTECTION OF INVESTMENT

MESSAGE FROM

THE PRESIDENT OF THE UNITED STATES

Transmitting

THE TREATY BETWEEN THE UNITED STATES OF AMERICA AND THE CZECH AND SLOVAK FEDERAL REPUBLIC CONCERNING THE RECIPROCAL ENCOURAGEMENT AND PROTECTION OF INVESTMENTS, WITH PROTOCOL AND THREE RELATED EXCHANGES OF LETTERS, SIGNED AT WASHINGTON ON OCTOBER 22 ,1991

June 2, 1992.-Treaty was read the first time and, together with the accompanying papers, referred to the Committee on Foreign Relations and ordered to be printed for the use of the Senate

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1992

LETTER OF TRANSMITTAL

THE WHITE HOUSE, June 2, 1992.

To the Senate of the United States:

With a view to receiving the advice and consent of the Senate to ratification, I transmit herewith the Treaty Between the United States of America and the Czech and Slovak Federal Republic Concerning the Encouragement and Reciprocal Protection of Investment, with Protocol and three related exchanges of letters, signed at Washington on October 22. 1991. I transmit also, for the information of the Senate, the report of the Department of State with respect to this Treaty.

The Treaty is an integral part my initiative to strengthen economic relations with Central and East European countries. The treaty is designed to aid the growth of the private sector in the Czech and Slovak Federal Republic by protecting and thereby encouraging U.S. private investment. The treaty is also fully consistent with U.S. policy toward international investment. A specific tenet, reflected in this treaty, is that U.S. direct investment abroad and foreign investment in the United States should receive fair, equitable, and non-discriminatory treatment. Under this treaty, the parties also agree to international law standards for expropriation and compensation; free transfers of funds associated with investments and the option of the investor to resolve disputes with the host government through international arbitration.

I recommend that the Senate consider this Treaty as soon as possible, and give its advice and consent to ratification of the Treaty, with Protocol and related exchange of letters, at an early date.

GEORGE BUSH.

LETTER OF SUBMITTAL

DEPARTMENT OF STATE,

Washington, DC, May 12, 1992.

The PRESIDENT, The White House.

THE PRESIDENT: I have the honor to submit to you the Treaty Between the United States of America and the Czech and Slovak Federal Republic Concerning the Encouragement and Reciprocal Protection of Investment, with Protocol and three related exchange of letters, signed at Washington on October 22, 1991. I recommend that this Treaty with Protocol, and exchange of letters, be transmitted to the Senate for its advice and consent to ratification.

This is the second U.S. treaty containing investment protections with a former Communist country of Central or East Europe, following the U.S.-Poland treaty concerning business and economic relations signed March 21, 1990. This Treaty will assist the Czech and Slovak Federal Republic (CSFR) in its transition to a market economy by creating favorable conditions for U.S. private investment, helping to attract such investment and, thus, strengthening the development of the private sector.

The Bilateral Investment Treaty (BIT) helps to encourage U.S. investment in the economies of its BIT partners. It is U.S. policy, however, to advise potential treaty partners during BIT negotiations that conclusion of a BIT does not necessarily result in immediate increases in private U.S. investment flows.

A number of West European countries, including Switzerland and Germany, have entered into BITs with the CSFR. The U.S. treaty, however, is more comprehensive than the European BITs.

The United States has also signed BITs with Argentina, Bangladesh, Cameroon, the Congo, Egypt, Grenada, Haiti, Morocco, Panama, Senegal, Sri Lanka, Tunisia, Turkey, and Zaire; and a treaty containing the BIT elements with Poland. The Office of the United States Trade Representative and the Department of State jointly lead BIT negotiations, with assistance from the Departments of Commerce and Treasury.

THE U.S.-CSFR TREATY

The CSFR Treaty satisfies the main BIT objectives, which are:

- Investments of nationals and companies of either Party in the territory of the other Party (Investments) receive the better of national treatment or most-favored-nation (MFN) treatment both on establishment and thereafter;

- Investments are guaranteed freedom from performance requirements, including requirements to use local products or to export local goods;

- Expropriation can occur only in accordance with international law standards; for a public purpose; in a nondiscriminatory manner; under due process of law; and upon payment of prompt, adequate, and effective compensation; Investments are guaranteed the unrestricted transfer of funds in a freely usable currency; and

- Nationals and companies of either Party, in investment disputes with the host government, have access to binding international arbitration, without first resorting to domestic courts.

As does the model BIT, the treaty with the CSFR allows sectoral exceptions to national and most-favored-nation (MFN) treatment, as set forth in the annex and a related exchange of letters to the treaty. The U.S. exceptions are designed to protect state regulatory interests and to accommodate the derogations from national treatment and, in some cases, MFN treatment in existing state or federal law. The U.S. exceptions from national treatment include among other sectors, 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 property; 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; use of land and natural resources; mining on the public domain; maritime services and maritime-related services. Except for ownership of property, MFN exceptions are based on reciprocity provisions in government laws and regulations.

The CSFR sectoral exceptions to national treatment are ownership of real property and insurance. The CSFR does not reserve any sectors from the obligation to accord MFN treatment to U.S. investment.

The CSFR is privatizing many of its state-owned companies and decided that it could not ensure national treatment with respect to the privatization process. Therefore, in a related exchange of letters to the treaty, the CSFR states that prior approvals may be required when (i) U.S. nationals or companies acquire majority ownership of state companies, or (ii) U.S. nationals or companies acquire the equity interest of the CSFR in companies. The CSFR further undertakes to apply the approval process in a way not discourage or prohibit U.S. investment, to accord U.S. investment MFN treatment in this process, and to consult with the U.S. within two years of the treaty’s entry into force with a view to phasing out this approval requirement.

This treaty, consistent with the model BIT, does not oblige a Party to extend to the other Party’s investments the advantages accorded to third country investments by virtue of binding obligations that derive from full membership in a free trade area or customs union. The Protocol confirms that such investment-related obligations may arise from economic relationships that include free trade areas and customs unions, notwithstanding that these relationships include trade obligations as well.

The BIT with the CSFR provides that an investment dispute between a Party and a national or company, including a dispute involving an investment authorization or the interpretation of an investment agreement, may be submitted to international arbitration six months after the dispute arose. Exhaustion of local remedies is not required. The treaty identifies several procedures for arbitration, at the investor’s option: the International Centre for the Settlement of Investment Disputes ("ICSID"), upon CSFR adherence to the ICSID Convention; the ICSID Additional Facility: or ad hoc arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).

The BIT with the CSFR, as does the U.S.-Poland treaty, contains several provisions designed to resolve problems that U.S. business traditionally has faced in the centrally-controlled, non-market economies of Central and East Europe, and which may continue to impede U.S. investments during the transition to a market economy.

One such provision is a guarantee that nationals and companies of either Party receive non-discriminatory treatment with respect to an expanded and detailed list of activities associated with their investments. These include: access to registrations, licenses, and permits; access to financial institutions and credit markets; access to their funds held in financial institutions; the importation and installation of business equipment; advertising and the conduct of market studies; the appointment of commercial representatives; direct marketing; access to public utilities; and access to raw materials. The right to non-discriminatory treatment in these activities requires that the CSFR grant U.S. nationals and companies treatment no less favorable than that granted to enterprises that remain under state ownership or control.

The treaty also provides, in a related exchange of letters, that the CSFR will designate an entity to assist U.S. nationals and companies overcome problems relating to bureaucracy and lack of knowledge. The entity’s tasks will include providing up-to-date information on business and investment regulations, collecting and disseminating information regarding investment projects and financing, and coordinating with the CSFR agencies, at all levels, to facilitate U.S. investment.

The other Government agencies which negotiated the treaty join with me in recommending that it be transmitted to the Senate at an early date.

Respectfully submitted.

JAMES A. BAKER III.

TREATY WITH THE CZECH AND SLOVAK FEDERAL REPUBLIC

CONCERNING THE RECIPROCAL ENCOURAGEMENT

AND PROTECTION OF INVESTMENT

The United States of America and the Czech and Slovak Federal Republic (hereinafter the "Parties");

Desiring to promote greater economic cooperation between them, with respect to investment by nationals and companies of one Party in the territory of the other Party;

Recognizing that agreement upon the treatment to be accorded such investment will stimulate the flow of private capital and the economic development of the Parties;

Agreeing that fair and equitable treatment of investment is desirable in order to maintain a stable framework for investment and maximum effective utilization of economic resources;

Reaffirming their desire to develop economic cooperation in accordance with the principles and provisions of the Final Act signed in Helsinki on the lst of August 1975, and other documents of the Conference on Security and Cooperation in Europe;

Convinced that private enterprise operating within free and open markets offers the best opportunities for raising living standards and the quality of life for the inhabitants of the Parties, improving the well-being of workers, and promoting overall respect for internationally recognized worker rights; and

Having resolved to conclude a Treaty concerning the encouragement and reciprocal protection of investment;

Have agreed as follows:

ARTICLE I

1. For the purposes of this Treaty,

(a) "investment" means every kind of investment in the territory of one Party owned or controlled directly or indirectly by nationals or companies of the other Party, such as equity, debt, and service and investment contracts; and includes:

(i) tangible and intangible property, including movable and immovable property, as well as rights, such as mortgages, liens and pledges;

(ii) a company or shares of stock or other interests in a company or interests in the assets thereof;

(iii) a claim to money or a claim to performance having economic value, and associated with an investment;

(iv) intellectual property which includes, inter alia, rights relating to: literary and artistic works, including sound recordings, inventions in all fields of human endeavor, industrial designs, semiconductor mask works, trade secrets, know-how, and confidential business information, and trademarks, service marks, and trade names;

and

(v) any right conferred by law or contract, and any licenses and permits pursuant to law;

(b) "company of a Party" means any kind of corporation, company, association, enterprise, partnership, 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;

(c) "national, of a Party means a natural person who is a national of a Party under its applicable law;

(d) "return" means an amount derived from or associated with an investment, including profit; dividend; interest; capital gain; royalty payment; management, technical assistance or other fee; or returns in kind;

(e) "associated activities" include the organization, control, operation, maintenance and disposition of companies, branches, agencies, offices, factories or other facilities for the conduct of business; the making, performance and enforcement of contracts; the acquisition, use, protection and disposition of property of all kinds including intellectual property rights; the borrowing of funds; the purchase, issuance, and sale of equity shares and other securities; and the purchase of foreign exchange for imports;

(f) "nondiscriminatory" means treatment that is at least as favorable as the better of national treatment or most-favored nation treatment;

(g) "national treatment" means treatment that is at least as favorable as the most favorable treatment accorded by a Party to companies or nationals of third Parties in like circumstances; and

(h) "most favored nation treatment" means treatment that is at least as favorable as that accorded by a Party to companies and nationals of third Parties in like circumstances.

2. Each Party reserves the right to deny to any company the advantages of this Treaty if nationals of any third country control such company and, in the case of a company of the other Party, that company has no substantial business activities in the territory of the other Party or is controlled by nationals of a third country with which the denying Party does not maintain normal economic relations.

3. Any alteration of the form in which assets are invested or reinvested shall not affect their character as investment.

ARTICLE II

1. 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, unless specified otherwise in the Annex, be not less favorable than that accorded in like situations to investments and associated activities of nationals or companies of any third country.

2. (a) Investment shall at all times be accorded fair and equitable treatment, shall enjoy full protection and security and shall in no case be accorded treatment less than that required by international law.

(b) Neither Party shall in any way impair by arbitrary or discriminatory measures the management, operation, maintenance, use, enjoyment, acquisition, expansion, or disposal of investments. For purposes of dispute resolution under Article 3 VI and VII, a measure may be arbitrary or discriminatory notwithstanding the fact that a Party has had or has exercised the opportunity to review such measure in the courts or administrative tribunals of a Party.

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

3. 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.

4. 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.

5. Neither Party shall impose performance requirements as 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 purchased locally, or which impose any other similar requirements.

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

7. Each Party shall make public all laws, regulations, administrative practices and procedures, and adjudicatory decisions that pertain to or affect investments.

8. The treatment accorded by the United States of America to investments and associated activities of nationals and companies of the Republic of CSFR under the provisions of this Article shall in any State, Territory or possession of the United States of America be no less favorable than the treatment accorded therein to investments and associated activities of nationals of the United States of America resident in, and companies legally constituted under the laws and regulations of other States, Territories or possessions of the United States of America.

9. The nondiscrimination and most favored nation provisions of this Treaty shall not apply to advantages accorded by either Party to nationals or companies of any third country by virtue of:

(a) that Party’s binding obligations that derive from full membership in a free trade area or customs union; or

(b) that Party’s binding obligations under any multilateral international agreement under the framework of the General Agreement on Tariffs and Trade that enters into force subsequent to the signature of this Treaty.

10. The Parties acknowledge and agree that "associated" activities, include without limitation, such activities as:

(a) the granting of franchises or rights under licenses;

(b) access to registrations, licenses, permits and other approvals (which shall in any event be issued expeditiously);

(c) access to financial institutions and credit markets;

(d) access to their funds held in financial institutions;

(e) the importation and installation of equipment necessary for the normal conduct of business affairs, including but not limited to, office equipment and automobiles, and the export of any equipment and automobiles so imported;

(f) the dissemination of commercial information;

(g) the conduct of market studies;

(h) the appointment of commercial representatives, including agents, consultants and distributors and their participation in trade fairs and promotion events;

(i) the marketing of goods and services, including through internal distribution and marketing systems, as well as by advertising and direct contact with individuals and companies;

(j) access to public utilities, public services and commercial rental space at nondiscriminatory prices, if the prices are set or controlled by the government; and

(k) access to raw materials, inputs-and services of all types at nondiscriminatory prices, if the prices are set or controlled by the government.

ARTICLE III

1. Investments shall not be expropriated or nationalized either directly or indirectly through measures tantamount to expropriation or nationalization ("expropriation") except: for public purpose; in a nondiscriminatory manner; upon payment of prompt, adequate and effective compensation; and in accordance with due process of law and the general principles of treatment provided for in Article II(2). Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriatory action was taken or became known, whichever is earlier; be calculated in a freely usable currency on the basis of the prevailing market rate of exchange at that time; be paid without delay; include interest at a commercially reasonable rate from the date of expropriation; be fully realizable; and be freely transferable.

2. A national, or company of either Party that asserts that all or part of its investment has been expropriated shall have a right to prompt review by the appropriate judicial or administrative authorities of the other Party to determine whether any such expropriation has occurred and, if so, whether such expropriation, and any associated compensation, conforms to the principles of international law.

ARTICLE IV

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 V

1. 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: (a) returns; (b) compensation pursuant to Article III; (c) payments arising out of an investment dispute; (d) payments made under a contract, including amortization of principal and accrued interest payments made pursuant to a loan agreement; (e) proceeds from the sale or liquidation of all or any part of an investment; and (f) additional contributions to capital for the maintenance or development of an investment.

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

3. Notwithstanding the provisions of paragraphs 1 and 2, either Party may maintain laws and regulations (a) requiring reports of currency transfer; and (b) 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 VI

1. For purposes of this Article, an investment dispute is a dispute between a Party and a national or company of the other Party arising out of or relating to (a) an investment agreement between that Party and such national or company; (b) an investment authorization granted by that Party’s foreign investment authority to such national or company; or (c) an alleged breach of any right conferred or created by this Treaty with respect to an investment.

2. In the event of an investment dispute between a Party and a national or company of the other Party, the parties to the dispute shall initially seek to resolve the dispute by consultation and negotiation, which may include the use of non-binding, third party procedures. Subject to paragraph 3 of this Article, if the dispute cannot be resolved through consultation and negotiation, the dispute shall be submitted for settlement in accordance with previously agreed, applicable dispute-settlement procedures; any dispute-settlement procedures, including those relating to expropriation, specified in the investment agreement shall remain binding and shall be enforceable in accordance with the terms of the investment agreement, relevant provisions of domestic laws and applicable international agreements regarding enforcement of arbitral awards.

3. (a) At any time after six months from the date on which the dispute arose, the national or company concerned may choose to consent in writing to the submission of the dispute for settlement by conciliation or binding arbitration to the International Centre for the Settlement of Investment Disputes ("Centre") or to the Additional Facility of the Centre of pursuant to the Arbitration Rules of the United Nationals Commission on International Trade Law ("UNICTRAL") or pursuant to the arbitration rules of any arbitral institution mutually agreed between the parties to the dispute. Once the national or company concerned has so consented, either party to the dispute may institute such proceeding provided:

(i) the dispute has not bee submitted by the national or company for resolution in accordance with any applicable previously agreed dispute-settlement procedures; and

(ii) the national or company concerned has not brought the dispute before the courts of justice or administrative tribunals or agencies of competent jurisdiction of the Party that is a party to the dispute. If the parties disagree over whether conciliation or binding arbitration is the more appropriate procedure to be employed, the opinion of the naitonal or company concerned shall prevail.

(b) Each Party hereby consents to the submission of an investment dispute for settlement by conciliation or binding arbitration.

(i) to the Centre, in the event that the Government of the Czech and Slovak Federal Republic becomes a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States done at Washington, March 18, 1965 ("Convention") and the Regulations and Rules of the Centre, and to the Additional Facility of the Centre, and

(ii) to an arbitral tribunal established under the UNCITRAL Rules, as those Rules may be modified by mutual agreement of the parties to the dispute (the Appointing Authority referenced therein to be the Secretary-General of the Centre).

(c) Conciliation or arbitration of disputes under (b)(i) shall be done applying the provisions of the Convention and the Regulations and Rules of the Centre, or of the Additional Facility as the case may be.

(d) The place of any arbitration conducted under this Article shall be a country which is a party to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards signed at New York in 1958.

(e) Each Party undertakes to carry out without delay the provisions of any award resulting from an arbitration held in accordance with this Article VI. Further, each Party shall provide for the enforcement in its territory of such arbitral awards. 4. In any proceeding involving an investment dispute, a Party shall not assert, as defense, counter-claim or otherwise, that the naitonal or company concerned has received or will receive, pursuant to an insurance of guarantee contract, indemnification or other compensation for all or part of its alleged damages. 5. In the event of an arbitration, for the purposes of this Article any company legally constituted under the applicable laws and regulations of either Party of a political subdivision thereof but that, immediately before the occurance of the event or events giving rise to the dispute, was an investment of nationals or companies of the other Party, shall be treated as a national or company of such other Party (in accordance with Article 25 (20)(b) of the Convention).

ARTICLE VII

1. Any dispute between the Parties concerning the interpretation or application of the Treaty which is not resolved through consultations or other diplomatic channels, shall be submitted, upon the request of either Party, to an arbitral tribunal for binding decision in accordance with the applicable rules of international law. In the absence of an agreement by the Parties to the contrary, the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL), except to the extent modified by the Parties or by the arbitrators, shall govern.

2. 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. The UNCITRAL Rules for appointing members of three member panels shall apply mutatis mutandis to the appointment of the arbitral panel except that the appointing authority referenced in those rules shall be the Secretary General of the Center.

3. 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.

4. (a) Each Party shall bear the costs of its own representation in the arbitral proceedings.

(b) Expenses incurred by the Chairman, the other arbitrators, and other costs of the proceedings shall be paid for equally by the Parties. The Tribunal may, however, at its discretion, direct that a higher proportion of the costs be paid by one of the Parties.

ARTICLE VIII

The provisions of Article VI and VII shall not apply to a dispute arising:

(a) under the export credit, guarantee or insurance programs of the Export-Import Bank of the United States

(b) under other official credit, guarantee or insurance arrangements pursuant to which the Parties have agreed to other means of settling disputes.

ARTICLE IX

This Treaty shall not derogate from:

(a) laws and regulations, administrative practices or procedures, or administrative or adjudicatory decisions of either Party;

(b) international legal obligations; or

(c) 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 this Treaty in like situations.

ARTICLE X

1. This Treaty shall not preclude the application by either Party of measures necessary 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.

2. 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 XI

1. With respect to its tax policies, each Party should strive to accord fairness and equity in the treatment of investment of nationals and companies of the other Party.

2. Nevertheless, the provisions of this Treaty, and in particular Article VI and VII, shall apply to matters of taxation only with respect to the following:

(a) expropriation, pursuant to Article III;

(b) transfers, pursuant to Article IV; or

(c) the observance and enforcement of terms of an investment agreement or authorization as referred to in Article VI (1) (a) or (b), to the extent they are not subject to the dispute settlement provisions of a Convention for the avoidance of double taxation between the two Parties, or have been raised under such settlement provisions and are not resolved within a reasonable period of time.

ARTICLE XII

The 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 XIII

This Treaty shall apply to the political subdivisions of the Parties.

ARTICLE XIV

1. This Treaty shall enter into force thirty days after the date of exchange of instruments of ratification. It shall remain in force for a period of ten years and shall continue in force unless terminated in accordance with paragraph 2 of this Article. It shall apply to investments existing at the time of entry into force as well as to investments made or acquired thereafter.

2. Either Party may, by giving one year’s written notice to the other Party, terminate this Treaty at the end of the initial ten year period or at any time thereafter.

3. With respect to investments made or acquired prior to the date of termination of this Treaty and to which this Treaty otherwise applies, the provisions of all of the other Articles of this Treaty shall thereafter continue to be effective for a further period of ten years from such date of termination.

4. The Annex, Protocol, and Side Letters shall form an integral part of the Treaty.

IN WITNESS WHEREOF, the respective plenipotentiaries have signed this Treaty.

DONE in duplicate at Washington, this twenty-second day of October, 1991 in the English anc Czech languages, both texts being equally authentic.

FOR THE UNITED STATES OF AMERICA:

FOR THE CZECH AND SLOVAK FEDERAL REPUBLIC:

ANNEX

1. Consistent with Article II Paragraph 1 the United States reserves the right to make or maintain limited exceptions to national treatment in the sectors or matters it has indicated below: 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 property; 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; use of land and natural resources; mining on the public domain; maritime services and maritime-related services.

2. Consistent with Article II paragraph 1, the United States reserves the right to make or maintain limited exceptions to most favored nation treatment in the sectors or matters it has indicated below:

ownership of real property; mining on the public domain; maritime services and maritime-related services; and primary dealership in United States government securities.

3. Consistent with Article II paragraph 1, the Czech and Slovak Federal Republic reserves the right to make or maintain limited exceptions to national treatment in the sectors or matters it has indicated below: ownership of real property; and insurance.

4. The Annex shall form an integral part of the Treaty.

PROTOCOL

1. The Parties agree that nothing in this Treaty shall be construed as pertaining to entities which are accredited as part of a diplomatic mission or consular post of a Party.

2. The Parties interpret the term "political subdivision" in Article I, paragraph (1)(b), Article VI, paragraph 5, and Article XIII of the Treaty to include: in respect of the Czech and Slovak Federal Republic, the Czech Republic and the Slovak Republic; and in respect of the United States of America, the states of the United States of America. 3. The Parties acknowledge that the terms of Article II, paragraph (9)(a) are satisfied if an economic relationship between a Party and a third country includes a free trade area or customs union.

4. The Protocol shall forma an integral part of the Treaty.

DEPUTY UNITED STATES TRADE REPRESENTATIVE EXECUTIVE OFFICE OF THE PRESIDENT WASHINGTON, DC 20506

October 22, 1991

His Excellency Vaclav Klaus Deputy Prime Minister and Minister of Finance Czech and Slovak Federal Republic

Dear Mr. Deputy Prime Minister:

In connection with the signing this day of the Treaty between the United States of America and the Czech and Slovak Federal Republic ("CSFR") concerning the Reciprocal Encouragement and Protection of Investment (the "Treaty"), I have the honor to confirm the following understanding reached by our governments relating to the Annex of the Treaty:

With respect to paragraphs 1 and 2 of the Annex to the Treaty, the United States confirms that the extent to exceptions to national treatment or most-favored nation treatment in each sector or matter listed is reflected in U.S. federal or state laws and regulations. Any exceptions to national treatment or by such laws and regulations as may now or hereafter be in force. Any future exceptions shall be limited to those sectors or matters listed in the annex and shall not apply to investments existing a the time the exception becomes effective.

With respect to paragraph 2 of the Annex, the United States confirms that exceptions to most-favored nation treatment in the following sectors result from the use of reciprocity criteria in governing laws and regulations: mining on the public domain; primary dealership in United States government securities; and maritime-related services.

I have the honor to confirm that this understanding shall be treated as an integral part of this Treaty.

Sincerely

Julius L. Katz

[TRANSLATION]

Deputy Prime Minister and Minister of Finance of the CSFR Vaclav Klaus

Washington, October 22, 1991

Dear Ms. Ambassador,

I have the honor to confirm receipt of your letter of October 22, 1991 which reads as follows:

[See text of Ambassador Katz’s letter immediately preceding.]

I have the honor to confirm that the Government of the Czech and Slovak Federal Republic agrees that this understanding be considered an integral part of the Treaty.

Respectfully, [s] Vaclav Klaus

Ms. Carla Hills Ambassador and Trade Representative of the United States of America

[TRANSLATION]

Deputy Prime Minister and Minister of Finance of the CSFR Vaclav Klaus

Washington, October 22, 1991

Dear Ms. Ambassador,

In connection with the signing this day of the Treaty between the United States of America and the Czech and Slovak Federal Republic ("CSFR") concerning the Reciprocal Encouragement and Protection of Investment (the "Treaty"), I have the honor to confirm the following understanding reached by our governments relating to Article II, paragraph 1, of the Treaty with respect to the entry of investments:

[The text of the understanding is contained in Ambassador Katz’s letter which follows.]

I would be grateful if you could confirm that your government agrees with this understanding.

Respectfully, [s] Vaclav Klaus

Ms. Carla Hills Ambassador and Trade Representative of the United States of America

DEPUTY UNITED STATES TRADE REPRESENTATIVE EXECUTIVE OFFICE OF THE PRESIDENT WASHINGTON, DC 20506

October 22, 1991

His Excellency Vaclav Klaus Deputy Prime Minister and Minister of Finance Czech and Slovak Federal Republic

Dear Mr. Deputy Prime Minister:

In connection with the signing this day of the Treaty between the United States of America and the Czech and Slovak Federal Republic ("CSFR") concerning the Reciprocal Encouragement and Protection of Investment (the "Treaty"), I have the honor to confirm the following understanding reached by our governments relating to Article II, paragraph 1, of the Treaty with respect to the entry of investments:

1. In the implementation of the provisions of Article II, paragraph 1, relating to the entry of investments, the CSFR may require approval for (a) investments of nationals or companies of the United States in or with companies the majority of the assets or ownership interests of which are owned by the CSFR, and (b) investments of nationals or companies of the United States through which such nationals or companies acquire, directly or indirectly, the equity interests of the CSFR in companies.

2. Any requisite approvals under paragraph 1 shall not be denied for the purpose of with the effect of limiting competition or discouraging or prohibiting investment by nationals or companies of the United States in particular sectors (except as set forth in the Annex). Further, the CSFR shall accord no less than most favored nation treatment to nationals and companies of the United States in determining whether to grant or deny such approval.

3. Within two years of the entry into force of the Treaty, the Parties shall consult with a view to narrowing the scope of investments subject to paragraph 1 and subsequently phasing out the requirement for such approval.

The CSFR will initiate ratification of this treaty immediately after a new commercial code, which is consistent with the provisions of this letter regarding the liberalization of government approval procedures, has been approved by parliament.

I have the honor to confirm that this understanding shall be treated as integral part of the Treaty.

Sincerely

Julius L. Katz.

DEPUTY UNITED STATES TRADE REPRESENTATIVE EXECUTIVE OFFICE OF THE PRESIDENT WASHINGTON, DC 20506

October 22, 1991

His Excellency Vaclav Klaus Deputy Prime Minister and Minister of Finance Czech and Slovak Federal Republic

Dear Mr. Deputy Prime Minister:

During the course of negotiations of the Treaty between the United States of America and the Czech and Slovak Federal Republic ("CSFR") concerning the Reciprocal Encouragement and Protection of Investment (the "Treaty"), the delegations took note of the economic transformations in the CSFR. In view of these rapid changes, we discussed the desirability of ensuring that nationals and companies of the United States receive timely information on these changes and other assistance so that they may derive the full benefits of the Treaty with respect to their investments and associated activities.

In this connection, the Government of the CSFR intends to accomplish this objective by designating an entity which would:

- provide up to date information regarding current national and local business and investment regulations, including authorization and registration procedures, taxation, labor regulation, accounting standards and access to credit;

- provide up to date and readily available information regarding proposed changes in the laws and regulations concerning investors;

- coordinate with CSFR government agencies on the national, regional and local levels to facilitate investment;

- assist investors who experience difficulties with registration, authorization, access to public services, regulatory and other matters which concern establishment and operation of investments; and

- collect and disseminate information regarding investment projects and sources of their financing. I have the honor to confirm that this understanding shall be treated as an integral part of this Treaty.

Sincerely,

Julius L. Katz

The TCC offers these agreements electronically as a public service for general reference. Every effort has been made to ensure that the text presented is complete and accurate. However, copies needed for legal purposes should be obtained from official archives maintained by the appropriate agency.

The TCC offers these agreements electronically as a public service for general reference. Every effort has been made to ensure that the text presented is complete and accurate. However, copies needed for legal purposes should be obtained from official archives maintained by the appropriate agency.