To date,
twenty-one BITs are in force for the United States--with Argentina,
Bangladesh, Bulgaria, Cameroon, the Congo, the Czech Republic, Egypt,
Grenada, Kazakhstan, Kyrgyzstan, Moldova, Morocco, Panama, Poland,
Romania, Senegal, Slovakia, Sri Lanka, Tunisia, Turkey, and Zaire. In
addition to the Treaty with Albania, the United States has signed, but
not yet brought into force, BITs with Armenia, Belarus, Ecuador,
Estonia, Georgia, Haiti, Jamaica, Latvia, Mongolia, Russia, Trinidad and
Tobago, Ukraine, and Uzbekistan.
The
Office of the United States Trade Representative and the Department of
State jointly led this BIT negotiation, with assistance from the
Departments of Commerce and Treasury.
THE
U.S.-ALBANIA TREATY
The
Treaty with Albania is based on the 1994 U.S. prototype BIT and
satisfies the United States' principal objectives in bilateral
investment treaty negotiations:
-All
forms of U.S. investment in the territory of Albania are covered.
-Covered
investments receive the better of national treatment or
most-favored-nation (MFN) treatment both on establishment and
thereafter, subject to certain specified exceptions.
-Performance requirements may not be imposed upon or enforced against
covered investments.
-Expropriation can occur only in accordance with international law
standards, that is, for a public purpose; in a nondiscriminatory manner;
in accordance with due process of law; and upon payment of prompt,
adequate, and effective compensation.
-The
unrestricted transfer, in a freely usable currency, of funds related to
a covered investment is guaranteed.
-Investment disputes with the host government may be brought by
investors, or by their subsidiaries, to binding international
arbitration as an alternative to domestic courts.
The
U.S.-Albania Treaty does not differ in any significant way from the 1994
prototype. It does, however, contain an additional Protocol clarifying
the Parties' understanding on safeguarding the exchange of proprietary
information during government-to-government consultations and clarifying
that the Treaty does not obligate either Party to accord national
treatment in taxation matters. The, following is an article-by-article
analysis of the provisions and of the Treaty:
Title
and Preamble
The Title
and Preamble state the goals of the Treaty. Foremost is the
encouragement and protection of investment. Other goals include economic
cooperation on investment issues; the stimulation of economic
development; higher living standards; promotion of respect for
internationally-recognized worker rights; and maintenance of health,
safety, and environmental measures. While the Preamble does not impose
binding obligations, its statement of goals may assist in interpreting
the Treaty and in defining the scope of Party-to-Party consultation
procedures pursuant to Article Vill. Similarly article titles have been
added to the Treaty. These do not change the Treaty in any way but were
added to facilitate its reading.
Article
I (Definitions)
Article I
defines terms used throughout the Treaty. In general, the definitions
are designed to be broad and inclusive in nature.
Company, Company of a Party
The
definition of "company" is broad, covering all types of legal
entities constituted or organized under applicable law, and includes
corporations, trusts, partnerships, sole proprietorships, branches,
joint ventures, and associations. The definition explicitly covers
charitable and not-for-profit entities, as well as entities that are
owned or controlled by the state. "Company of a Party" is
defined as a company constituted or organized under the laws of that
Party.
National
The
Treaty defines "national" as a natural person who is a
national of a Party under its own laws. Under U.S. law, the term "national"
is broader than the term "citizen." For example, a native of
America Samoa is a national of the United States, but not a citizen.
Investment, Covered Investment
The
Treaty's definition of investment is broad, recognizing that investment
can take a wide variety of forms. Every kind of investment is
specifically incorporated in the definition; moreover it is explicitly
noted that investment may consist or take the form of any of a number of
interests, claims, and rights. Establishing a subsidiary is a common way
of making an investment. Other forms that an investment might take
include equity and debt interests in a company; contractual rights;
tangible, intangible, and intellectual property; and rights conferred
pursuant to law. Investment as defined by the Treaty generally excludes
claims arising solely from trade transactions, such as a sale of good
across a border that does not otherwise involve an investment.
The
Treaty defines "covered investment" as an investment of a
national or company of a Party in the territory of the other Party. An
investment of a national or company is one that the national or company
owns or controls, either directly or indirectly. Indirect ownership or
control could be through other, intermediate companies or persons,
including those of third countries. Control is not specifically defined
in the Treaty; ownership of over fifty percent of the voting stock of a
company would normally convey control, but in many cases the requirement
could be satisfied by less than that proportion, or by other
arrangements.
The board
nature of the definitions of "covered investment," combined
with the definitions of "investment," "company," and
"company of a Party" means that investments can be covered by
the Treaty even if ultimate control lies with non-Party nationals. A
Party may, however, deny the benefits of the Treaty in the limited
circumstances described in Article XII.
State
Enterprise, Investment Authorization, Investment Agreement
The
Treaty defines "state enterprise" as a company owned, or
controlled through ownership interests, by a Party. Purely regulatory
control over a company does not qualify it as a state enterprise.
The
Treaty defines an "investment authorization" as an
authorization granted by the foreign investment authority of a Party to
a covered investment or a national or company of the other Party.
The
Treaty defines an "investment agreement" as a written
agreement between the national authorities of a Party and a covered
investment or a national or company of the other Party that (1) grants
rights with respect to natural resources or other assets controlled by
the national authorities; and (2) the investment, national, or company
relies upon in establishing or acquiring a covered investment. This
definition thus excludes agreements with subnational authorities
(including U.S. States) as well as agreements arising from various types
of regulatory activities of the national government, including, in the
tax area, rulings, closing agreements, and advance pricing agreements.
ICSID
Convention, Centre, UNCITRAL Arbitration Rules
The "ICSID
Convention," "Centre," and "UNCITRAL Arbitration
Rules" are explicitly defined to make the text brief and clear.
Article
II (Treatment of Investment)
Article
II contains the Treaty's major obligations with respect to the treatment
of covered investments.
Paragraph
I generally ensures the better of national or MFN treatment in both the
entry and post-entry phases of investment. It thus prohibits, outside of
exceptions listed in the Annex, "screening" on the basis of
nationality during the investment process, as well as nationality-based
post-establishment measures. For purposes of the Treaty, "national
treatment" means treatment no less favorable than that which a
Party accords, in like situations, to investments in its territory of
its own nationals or companies. For purposes of the Treaty, "MFN
treatment " means treatment no less favorable than that which a
Party accords, in like situations, to investments in its territory of
nationals or companies of a third country. "National and MFN
treatment" is defined as whichever of national treatment or MFN
treatment is the most favorable. Paragraph I explicitly states that the
national and MFN treatment obligation will extend to state enterprises
in their sale of goods and services.
Paragraph
2 states that the Parties may adopt or maintain exceptions to the
national and MFN treatment standard with respect to the sectors or
matters specified in the Annex. In principle, further restrictive
measures are permitted in each sector. The careful phrasing and narrow
drafting of these exceptions is therefore important. (The specific
exceptions are discussed in the section entitled "Annex"
below.) In the Annex, Parties may take exceptions only to the obligation
to provide national and MFN treatment; there are no sectoral exceptions
to the rest of the Treaty's obligations. Finally, in adopting any
exception under this provision, a Party may not require the divestment
of a preexisting covered investment.
Paragraph
2 also states that a Party is not required to extend to covered
investments national or MFN treatment with respect to procedures
provided for in multilateral agreements concluded under the auspices of
the World Intellectual Property Organization relating to the acquisition
or maintenance of intellectual property rights. This provision clarifies
that certain procedural preferences granted under existing conventions
such as the Patent Cooperation Treaty, fall outside the BIT. This
exception parallels one in the Uruguay Round's Trade-Related Aspects of
Intellectual Property Rights (TRIPS) agreement and the North American
Free Trade Agreement (NAFTA). This provision complements the more
specific IPR-related provisions contained in the U.S.-Albania Bilateral
Trade Agreement.
Paragraph
3 sets out a minimum standard of treatment based on standards found in
customary international law. The obligations to accord "fair and
equitable treatment" and "full protection and security"
are explicitly cited, as is the Parties' obligation not to impair,
through unreasonable and discriminatory means, the management, conduct,
operation, and sale or other disposition of covered investments. The
general reference to international law also implicitly incorporates
other fundamental rules of interrnational law: for example, that
sovereignty may not be grounds for unilateral revocation or amendment of
a Party's obligations to investors and investments (especially
contracts), and that an investor is entitled to have any expropriation
done in accordance with previous undertakings of a Party.
Paragraph
4 requires that each Party provide effective means of asserting claims
and enforcing rights with respect to covered investments.
Paragraph
5 ensures the transparency of each Party's regulation of covered
investments.
Article
III (Expropriation)
Article
III incorporates into the Treaty international law standards for
expropriation and compensation.
Paragraph
I describes the general rights of investors and obligations of the
Parties with respect to expropriation and nationalization. These rights
and obligations also apply to direct or indirect meas ures "tantamount
to expropriation or nationalization" and thus apply to "creeping
expropriations"--a series of measures which effectively amount to
an expropriation of a covered investment without taking title.
Paragraph
1 further bars all expropriations or nationalizations except those that
are for a public purpose; carried out in a non-discriminatory manner; in
accordance with due process of law; in accordance with the general
principles of treatment provided in Article 11(3); and subject to "prompt,
adequate, and effective compensation."
Paragraphs 2, 3, and 4 more fully describe the meaning of "prompt,
adequate, and effective compensation." The guiding principle is
that the investor should be made whole.
Article
IV (Compensation for Damages Due to War and Similar Events)
Paragraph
1 entitles investments covered by the Treaty to the better of national
or MFN treatment with respect to any measure relating to losses suffered
in a Party's territory owing to war or other armed conflict, civil
disturbances, or similar events. The unconditional obligation to pay
compensation for such losses only arises when the losses result from
requisitioning or from destruction not required by the necessity of the
situation.
Article V (Transfers)
Article V
protects investors from certain government exchange controls that limit
current and capital account transfers, as well as limits on inward
transfers made by screening authorities and limits on returns in kind.
In
paragraph 1, each Party agrees to permit "transfers relating a
covered investment to be made freely and without delay into and out of
its territory." Paragraph 1 also provides a list of transfers that
must be allowed. The list is non-exclusive, and is intended to protect
flows to both affiliated and non-affiliated entities.
Paragraph
2 provides that each Party must permit transfers to be made in a "freely
usable currency" at the market rate of exchange prevailing on the
date of transfer. "Freely usable" is a term used by the
International Monetary Fund; at present there are five such "freely
usable" currencies: the U.S. dollar, Japanese yen, German mark,
French franc and British pound sterling.
In
paragraph 3, each Party agrees to permit returns in kind to be made
where such returns have been authorized by an investment authorization
or written agreement between a Party and a covered investment.
Paragraph
4 recognizes that, notwithstanding the guarantees of paragraphs 1
through 3, a party may prevent a transfer through the equitable,
non-discriminatory and good faith enforcement of judicial orders and
judgments, or application of laws relating to such matters as
bankruptcy, securities, or criminal or penal offenses.
Article
VI (Performance Requirements)
Article
VI prohibits either Party from mandating or enforcing performance
requirements in connection with a covered *investment. The list of
prohibited requirements includes the use of local goods, the export of
goods or services, the "balancing" of imports and exports, the
transfer of technology, or the conduct of research in the host country.
Such requirements are major burdens on investors and impair their
competitiveness.
A Party
may, however, impose conditions for benefits and incentives e.g.,
eligibilitK for programs maintained by the U.S. Export-Import Bank and
other similar institutions.
Article
VII (Entry, Sojourn and Employment of Aliens)
Paragraph
1 requires each Party to allow, subject to its immigration and
employment laws and regulations, the entry into its territory of the
other Party's nationals for certain purposes related to a covered
investment and involving the commitment of a "substantial amount of
capital." This paragraph serves to render nationals of Albania
eligible for treaty-investor visas under U.S. immigration law. It also
guarantees similar treatment for U.S. nationals entering the Republic of
Albania. The requirement to commit a "substantial amount of capital"
is intended to prevent abuse of treaty investor status; it parallels the
requirements of U.S. immigration law.
In
addition, paragraph 1(b) prohibits labor certification requirements and
numerical restrictions on investor-visas.
Paragraph
2 requires that each Party allow covered investments to engage top
managerial personnel of their choice, regardless of nationality.
Article
VIII (State-State Consultations)
Article
VIII provides for prompt consultation between the Parties, at either
Party's request, on any matter relating to the interpretation of the
Treaty or to the realization of the Treaty's objectives. A Party may
thus request consultations for any matter reasonably related to the
encouragement or protection of covered investment, whether or not a
Party is alleging a violation of the Treaty.
Article IX (Settlement of Disputes Between One Party and a National or
Company of the Other Party)
Article
IX sets forth several means by which disputes between an investor and a
Party may be settled.
Article
IX procedures apply to an "investment dispute," which covers
any dispute arising out of or relating to an investment authorization,
an investment agreement, or an alleged breach of rights granted or
recognized by the Treaty with respect to a covered investment. In the
event that an investment dispute cannot be settled amicably, Paragraph 2
gives a national or company an exclusive (with the exception in
paragraph 3(b) concerning injunctive relief, explained below) choice
among three options to settle the dispute. Those three options are: (1)
submitting thedispute to the courts or administrative tribunals of the
Party that is a party to dispute; 1(2)
invoking dispute-relation procedures previously agreed upon by the
National or company and the host country government; or (3) invoking the
dispute-resolution mechanism provided for in paragraph 3 of Article IX.
Under
paragraph 3(a), the investor can submit an investment dispute to binding
arbitration three months after the dispute arises, provided that the
investor has not submitted the claim to a court or administrative
tribunal of the Party or invoked a dispute resolution procedure
previously agreed upon in an investment agreement. The investor may
choose among the International Centre for Settlement of Investment
Disputes (ICSID) (Convention Arbitration), the Additional Facility of
ICSID (if the Convention Arbitration is not available), ad hoc
arbitration using the Arbitration Rules of the United Nations Commission
on International Trade Law (UNCITRAL), or any other arbitration
institution or rules agreed upon by both parties to the dispute.
Before or
during such arbitral proceedings, however, paragraph 3(b) provides that
a national or company may seek, without affecting its right to pursue
arbitration under this Treaty, interim injunctive relief not involving
the payment of damages from local courts or administrative tribunals for
the preservation of its rights and interests. This paragraph does not
alter the power of the arbitral tribunals to recommend or order interim
measures they may deem appropriate.
Paragraph
4 constitutes each Party's consent to the submission of investment
disputes to binding arbitration in accordance with the choice of the
national or company.
Paragraph
5 provides that any non-ICSID arbitration shall take place in a country
that is a party to the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards. This provision expands the
ability of investors to obtain enforcement of arbitral awards.
In
addition, in paragraph 6, each Party commits to enforcing arbitral
awards rendered pursuant to this Article. The Federal Arbitration Act (9
U.S.C. 1 et seq.) satisfies the requirement for the enforcement of
non-ICSID awards in the United States.
Like the treaties of
Friendship, Commerce and Navigation (FCN), which preceded them (the BIT
program is a successor to the FCN program), BITs provide a basis for
nationals and companies of the other Party to allege Treaty violations
in actions in courts of the United States.
The
Convention on the Settlement of Investment Disputes Act of 1966 (22
U.S.C. 1650, 1650a) provides for the enforcement of ICSID awards.
Paragraph
7 ensures that a Party may not assert as a defense, or for any other
reason, that the company or national involved in the investment dispute
has received or will receive reimbursement for the same damages under an
insurance or guarantee contract.
Paragraph
8 ensures that for any arbitration, including ICSID Convention
Arbitration, the nationality of a company in the host country will be
determined by ownership or control, rather than by place of
incorporation. This ensures that a claim may be brought by an investor's
subsidiary in the host country.
Article
X (Settlement of Disputes Between the Parties)
Article X
provides for binding arbitration of disputes between the United States
and the Republic of Albania concerning the interpretation or application
of the Treaty that are not resolved through consultations or other
diplomatic channels, with time periods agreed to during these
negotiations. The article constitutes each Party's prior consent to
arbitration.
Article XI (Preservation of Rights)
Article
XI clarifies that the Treaty does not derogate from any obligation a
Party might have to provide better treatment to the covered investment
than is specified in the Treaty. Thus, the Treaty establishes a floor
for the treatment of covered investments. An investor may be entitled to
more favorable treatment through domestic legislation, other
international legal obligations, or a specific obligation (e.g., to
provide a tax holiday) assumed by a Party with respect to that investor.
Article
XII (Denial of Benefits)
Article
XII(a) preserves the right of each Party to deny the benefits of the
Treaty to firms owned or controlled by nationals of a non-Party country
with which the denying Party does not have normal economic relations;
e.g., a country to which it is applying economic sanctions. For example,
at this time the United States does not maintain normal economic
relations with, among other countries, Cuba or Libya.
Article
XII(b) permits each Party to deny the benefits of the Treaty to a
company of the other Party if the company is owned or controlled by
non-Party nationals and if the company has no substantial business
activities in the Party where it is established. Thus the United States
could deny benefits to a company which is a subsidiary of a shell
company organized under the laws of the Republic of Albania if
controlled by nationals of a third country. However, this provision
would not generally permit the United States to deny benefits to a
company of the Republic of Albania that maintains its central
administration or principal place of business in the territory of, or
has a real and continuous link with, the Republic of Albania.
Article XIII (Taxation)
Article
XIII excludes tax matters generally from the coverage of the BIT, on the
basis that tax matters should be dealt with in bilateral tax treaties.
However, Article XIII does not preclude a national or company from
bringing claims under Article IX that taxation provisions in an
investment agreement or authorization have been violated, or that tax
matters resulted in, or constituted, an expropriation of a covered
investment.
Under
paragraph 2, a national or company that asserts in a dispute that a tax
matter involves expropriation may submit that dispute to arbitration
pursuant to Article IX(3) only if (1) the investor has first referred to
the competent tax authorities of both Parties the issue of whether the
tax matter involves an expropriation, and (2) the tax authorities have
not both determined, within nine months from the time of referral, that
the matter does not involve expropriation. The "competent tax
authority" of the United States is the Assistant Secretary of the
Treasury for International Tax Policy, who will make this determination
only after consultation with the Inter-Agency Staff Coordinating Group
on Expropriations.
Article XIV (Measures Not Precluded)
The first
paragraph of Article XIV reserves the right of a Party to take measures
for the fulfillment of its international obligations with respect to
international peace and security, as well as those measures it regards
as necessary for the protection of its own essential security interests.
International obligations with respect to peace and security would
include, for example, obligations arising out of Chapter VII of the
United Nations Charter. Measures permitted by the provision on the
protection of a Party's essential security interests would include
security-related actions taken in time of war or national emergency.
Actions not arising from a state of war or national emergency must have
a dear and direct relationship to the essential security interest of the
Party involved. Measures to protect a Party's essential security
interests are self-judging in nature, although each Party would expect
the provisions to be applied by the other in good faith. These
provisions are common in international investment agreements.
The
second paragraph permits a Party to prescribe special formalities in
connection with covered investments, provided that these formalities do
not impair the substance of any Treaty rights. Such formalities could
include reporting requirements for covered investments or for transfers
of funds, or incorporation requirements.
Article
XV (Application to Political Subdivisions and State Enterprises of the
Parties)
Paragraph
1(a) makes clear that the obligations of the Treaty are applicable to
all political subdivisions of the Parties, such as provincial, State and
local governments.
Paragraph
1(b) recognizes that under the U.S. federal system, States of the United
States may, in some instances, treat out-of-State residents and
corporations in a different manner than they treat in-State residents
and corporations. The Treaty provides that the national treatment
commitment, with respect to the States, means treatment no less
favorable than that provided by a State to U.S. out-of-State residents
and corporations.
Paragraph
2 extends a Party's obligations under the Treaty to its state
enterprises in the exercise of any delegated authority. This paragraph
is designed to clarify that the exercise of governmental authority by a
state enterprise must be consistent with a Party's obligations under the
Treaty.
Article
XVI (Entry Into Force, Duration, and Termination)
Paragraph
1 stipulates that the Treaty enters into force thirty days after
exchange of instruments of ratification and continues in force for a
period of ten years. From the date of its entry into force, the Treaty
applies to all activities of both Parties with respect to preexisting
and newly established investments alike. After this ten-year term, the
Treaty will continue in force unless terminated in accordance with
paragraph 2.
Paragraph
3 provides that, if the Treaty is terminated, all investments that
qualified as covered investments on the date of termination (i.e., one
year after written notice) continue to be protected under the Treaty for
ten years from that date as long as these investments qualify as covered
investments. Such coverage would continue to extend fully to such an
investment as it grew--whether by reinvestment, expansion, or merger.
A Party's
obligations to accord the right to establish or acquire investments
would lapse immediately upon the date of termination of the Treaty.
Paragraph
4 stipulates that the Annex and Protocol shall form an integral part of
the Treaty.
Annex
U.S.
bilateral investment treaties allow for exceptions to national and MFN
treatment, because the Parties' domestic regimes may provide for
derogations from national and MFN treatment, and because treatment in
certain sectors and matters is negotiated in and governed by other
agreements. Future derogations from the national treatment obligations
of the Treaty are generally permitted only in the sectors or matters
listed in the Annex, pursuant to Article II, paragraph 2, and must be
made on an MFN basis unless otherwise specified therein.
Under a
number of statutes, many of which have a long historical background, the
U.S. federal government or States may not necessarily treat investments
of nationals or companies of Albania as they do U.S. investments or
investments from a third country. Paragraphs I through 3 of the Annex
list the sectors or matters affected by such statutes.
The U.S.
exceptions from its national treatment commitments are: atomic energy;
custom house brokers; licenses for broadcast, common carrier, or
aeronautical radio stations; COMSAT; subsidies or grants, including
government-supported loans, guarantees, and insurance; State and local
measures exempt from Article 1102 of the North American Free Trade
Agreement pursuant to Article 1108 thereof, and landing of submarine
cables.
The U.S.
exceptions from its most-favored-nation and national treatment
commitment are: fisheries; air and maritime transport, and related
activities; and banking, securities and other financial services.
During
negotiations, the United States informed Albania that if Albania
undertook acceptable commitments with respect to all or certain
financial services, the United States would consider limiting its
exceptions with respect to national and most-favored-nation treatment in
financial services.
Albania
offered to take no exce tions to the treaty's national or
most-favored-nation treatment obligations with respect to insurance.
Therefore, in Paragraph 3 of the Annex, the United States has limited
its exceptions with respect to insurance to afford treatment no less
favorable than that accorded with respect to Canada and Mexico in the
North American Free Trade Agreement.
Paragraph
4 lists Albania's exceptions to national treatment, which are: ownership
of land; banking and government subsidies. These exceptions were based
on provisions of investment measures currently in force or which the
Government of Albania reserved for other reasons.
The
Government of Albania has taken no exceptions to its obligation to
provide most-favored-nation treatment.
Paragraph
5 of the Annex ensures that reciprocal national treatment is granted in
leasing of minerals or pipeline rights-of-way on Government lands. In
creating this positive right to reciprocal national treatment, this
provision affects the implementation of the Mineral Lands Leasing Act
(MLLA) and 10 U.S.C. 7435, with respect to nationals and companies of
the Republic of Albania. The Treaty provides for resort to binding
international arbitration to resolve disputes, rather than denial of
mineral rights and rights to naval petroleum shares to investors of the
other Party, as is the current process under the statute. U.S. domestic
remedies would, however, remain available for use in conjunction with
the Treaty's provisions.
The MLLA
and 10 U.S.C. 7435 direct that if a foreign country does not grant
national treatment to U.S. investors in leases for minerals on on-shore
federal lands, leases of land within the Naval Petroleum and Oil Shale
Reserves, and rights-of-way for oil or gas pipelines across on-shore
federal lands, investors from that country may not be granted national
treatment.
Albania's
extension of national treatment in these sectors will fully meet the
objectives of the MLLA and 10 U.S.C. 7435. Albania was informed during
negotiations that, were it to include this sector in its list of
treatment exemptions, the United States would (consistent with the MLLA
and 10 U.S.C. 7435) exclude the leasing of minerals or pipeline
rights-of-way on Government lands from the national and MFN treatment
obligations of this Treaty.
The
listing of a sector does not necessarily signify that domestic laws have
entirely reserved it for nationals. And, pursuant to Article II(2)(a) of
the Treaty, any additional restrictions or limitations which a Party may
adopt with respect to listed sectors or matters may not compel the
divestiture of existing covered investments.
Finally,
listing a sector or matter in the Annex exempts a Party only from the
obligation to accord national or MFN treatment. Both
Parties
are obligated to accord to covered investments in all sectors--even
those listed in the Annex--all the other rights conferred by the Treaty.
Protocol
In
paragraph 1 of the Protocol, the Parties confirm their unde standing
regarding the treatment of proprietary or confidential information
exchanged in the course of consultations pursuant to Article VIII. Both
Parties agree to treat the information on the same basis as the Party
providing the information.
In
paragraph 2, the Parties confirm that, pursuant to Article XIII, neither
Party has an obligation to accord national treatment in tax matters,
except as otherwise provided for in an investment authorization or
investment agreement.
The other
U.S. Government agencies which negotiated the Treaty join me in
recommending that it be transmitted to the Senate at an early date.
Respectfully submitted,
PETER
TARNOFF.
TREATY
BETWEEN
THE
GOVERNMENT OF THE UNITED STATES OF AMERICA AND
THE
GOVERNMENT OF THE REPUBLIC OF ALBANIA
CONCERNING
THE ENCOURAGEMENT
AND
RECIPROCAL PROTECTION OF INVESTMENT
The
Government of the United States of America and the Government of the
Republic of Albania (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 a stable framework for investment will maximize effective
utilization of economic resources and improve living standards;
Recognizing that the development of economic and business ties can
promote respect for internationally recognized worker rights;
Agreeing
that these objectives can be achieved without relaxing health, safety
and environmental measures of general application; and
Having
resolved to conclude a treaty concerning the encouragement and
reciprocal protection of investment;
Have
agreed as follows:
ARTICLE
I
DEFINITIONS
1. For
the purposes of this Treaty,
(a) "company"
means any entity constituted or organized under applicable law, whether
or not for profit, and whether privately or governmentally owned or
controlled, and includes a corporation, trust, partnership, sole
proprietorship, branch, joint venture, association, or other
organization;
(b) "company
of a Party" means a company constituted or organized under the laws
of that Party;
(c) "national"
of a Party means a natural person who is a national of that Party under
its applicable law;
(d) "investment"
of a national or company means every kind of investment owned or
controlled directly or indirectly by that national or company, and
includes investment consisting or taking the form of:
(i) a
company;
(ii)
shares, stock, partnership interests, and other forms of equity
participation, and bonds, debentures, and other
forms of debt interests, in a company;
(iii)
contractual rights, such as under turnkey, construction or management
contracts, production or revenue-sharing
contracts, concessions, or other similar contracts;
(iv)
tangible property, including real property; and intangible property,
including rights, such as leases, mortgages, liens and pledges;
(v)
intellectual property, including:
copyrights and related rights,
patents,
rights in
plant varieties,
industrial designs,
rights in
semiconductor layout designs,
trade
secrets, including know-how and confidential business information,
trade and
service marks, and
trade
names; and
(vi)
rights conferred pursuant to law, such as licenses and permits;
(e) "covered
investment" means an investment of a national or company of a Party
in the territory of the other Party;
(f) "state
enterprise" means a company owned, or controlled through ownership
interests, by a Party;
(g) "investment
authorization" means an authorization granted by the foreign
investment authority of a Party to a covered investment or a national or
company of the other Party;
(h) "investment
agreement" means a written agreement between the national
authorities of a Party and a covered investment or a national or company
of the other Party that (i) grants rights with respect to natural
resources or other assets controlled by the national authorities and
(ii) the investment, national or company relies upon in establishing or
acquiring a covered investment.
(i) "ICSID
Convention" means the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States, done at
Washington, March 18, 1965;
(j) "Centre"
means the International Centre for Settlement of Investment Disputes
established by the ICSID Convention; and
(k) "UNCITRAL
Arbitration Rules" means the arbitration rules of the United
Nations Commission on International Trade Law.
ARTICLE
II
TREATMENT
OF INVESTMENT
1. With
respect to the establishment, acquisition, expansion, management,
conduct, operation and sale or other disposition of covered investments,
each Party shall accord treatment no less favorable than that it
accords, in like situations, to investments in its territory of its own
nationals or companies (hereinafter "national treatment") or
to investments in its territory of nationals or companies of a third
country (hereinafter "most favored nation treatment"),
whichever is most favorable (hereinafter "national and most favored
nation treatment"). Each Party shall ensure that its state
enterprises, in the provision of their goods or services, accord
national and most favored nation treatment to covered investments.
2. (a) A
Party may adopt or maintain exceptions to the obligations of paragraph
1
in the sectors or with respect to the matters specified in the Annex to
this Treaty. In adopting such an exception, a Party may not require the
divestment, in whole or in part, of covered investments existing at the
time the exception becomes effective.
(b) The
obligations of paragraph 1
do not apply to procedures provided in
multilateral agreements concluded under the auspices of the World
Intellectual Property Organization relating to the acquisition or
maintenance of intellectual property rights.
3. (a)
Each Party shall at all times accord to covered investments fair and
equitable treatment and full protection and security, and shall in no
case accord treatment less favorable than that required by international
law.
(b)
Neither Party shall in any way impair by unreasonable and discriminatory
measures the management, conduct, operation, and sale or other
disposition of covered investments.
4. Each
Party shall provide effective means of asserting claims and enforcing
rights with respect to covered investments.
5. Each
Party shall ensure that its laws, regulations, administrative practices
and procedures of general application, and adjudicatory decisions, that
pertain to or affect covered investments are promptly published or
otherwise made publicly available.
ARTICLE
III
EXPROPRIATION
1.
Neither Party shall expropriate or nationalize a covered investment
either directly or indirectly through measures tantamount to
expropriation or nationalization ("expropriation") except for
a public purpose; in a non-discriminatory 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(3).
2.
Compensation shall be paid without delay; be equivalent to the fair
market value of the expropriated investment immediately before the
expropriatory action was taken ("the date of expropriation");
and be fully realizable and freely transferable. The fair market value
shall not reflect any change in value occurring because the
expropriatory action had become known before the date of expropriation.
3. If the
fair market value is denominated in a freely usable currency, the
compensation paid shall be no less than the fair market value on the
date of expropriation, plus interest at a commercially reasonable rate
for that currency, accrued from the date of expropriation until the date
of payment.
4. If the
fair market value is denominated in a currency that is not freely
usable, the compensation paid
-- converted into the currency of payment at
the market rate of exchange prevailing on the date of payment -- shall be
no less than:
(a) the
fair market value on the date of expropriation, converted into a freely
usable currency at the market rate of exchange prevailing on that date,
plus
(b)
interest, at a commercially reasonable rate for that freely usable
currency, accrued from the date of expropriation until the date of
payment.
ARTICLE
IV
COMPENSATION
FOR DAMAGES DUE TO WAR AND SIMILAR EVENTS
1. Each
Party shall accord national and most favored nation treatment to covered
investments as regards any measure relating to losses that investments
suffer in its territory owing to war or other armed conflict,
revolution, state of national emergency, insurrection, civil
disturbance, or similar events.
2. Each
Party shall accord restitution, or pay compensation in accordance with
paragraphs 2 through 4 of Article III, in the event that covered
investments suffer losses in its territory, owing to war or other armed
conflict, revolution, state of national emergency, insurrection, civil
disturbance, or similar events, that result from:
(a)
requisitioning of all or part of such investments by the Party's forces
or authorities, or
(b)
destruction of all or part of such investments by the Party's forces or
authorities that was not required by the necessity of the situation.
ARTICLE
V
TRANSFERS
1. Each
Party shall permit all transfers relating to a covered investment to be
made freely and without delay into and out of its territory. Such
transfers include:
(a)
initial and additional contributions to capital relating to the
investment;
(b)
profits, dividends, capital gains, and proceeds from the sale of all or
any part of the investment or from the partial or complete liquidation
of the investment,
(c)
interest, royalty payments, management fees, and assistance and other
fees;
(d)
payments made under a contract, including a loan agreement
and
(e)
compensation pursuant to Articles III and IV, and payments arising out of
an investment dispute
2. Each
Party shall permit transfers to be made in a freely usable currency at
the market rate of exchange prevailing on the date of transfer.
3. Each
Party shall permit transfers in kind to be made as
authorized or specified
in an investment authorization, investment agreement, or other written
agreement between the Party and a covered investment or a national or
company of the other Party.
4.
Notwithstanding paragraphs 1 through 3, a Party may prevent a transfer
through the equitable, non-discriminatory and good faith application of
its laws relating to:
(a)
bankruptcy, insolvency or the protection of the rights of creditors;
(b)
issuing, trading or dealing in securities;
(c)
criminal or penal offenses; or
(d)
ensuring compliance with orders or judgments in adjudicatory
proceedings.
ARTICLE
VI
PERFORMANCE
REQUIREMENTS
Neither
Party shall mandate or enforce, as a condition for the establishment,
acquisition, expansion, management, conduct or operation of a covered
investment, any requirement (including any commitment or undertaking in
connection with the receipt of a governmental permission or
authorization) :
(a) to
achieve a particular level or percentage of local content, or to
purchase, use or otherwise give a preference to products or services of
domestic origin or from any domestic source;
(b) to
limit imports by the investment of products or services in relation to a
particular volume or value of production, exports or foreign exchange
earnings;
(c) to
export a particular type, level or percentage of
products or services,
either generally or to a specific market region;
(d) to
limit sales by the investment of products
or services in the Party's
territory in relation to a particular volume or value of production,
exports or foreign exchange earnings;
(e) to
transfer technology, a production process or other proprietary knowledge
to a national or company in the Party's territory, except pursuant to an
order, commitment or undertaking that is enforced by a court,
administrative tribunal or competition authority to remedy an alleged or
adjudicated violation of competition laws; or
(f) to
carry out a particular type, level or percentage of research and
development in the Party's territory.
Such
requirements do not include conditions for the receipt or continued
receipt of an advantage.
ARTICLE
VII
ENTRY,
SOJOURN AND EMPLOYMENT OF ALIENS
1. (a)
Subject to its laws relating to the entry and sojourn of aliens, each
Party shall permit to enter and to remain in its territory nationals 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 other Party that employs them, have committed
or are in the process of committing a substantial amount of capital or
other resources.
(b)
Neither Party shall, in granting entry under paragraph l(a), require a
labor certification test or other procedures of similar effect, or apply
any numerical restriction.
2. Each
Party shall permit covered investments to engage top managerial
personnel of their choice, regardless of nationality.
ARTICLE
VIII
CONSULTATIONS
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 or to the
realization of the objectives of the Treaty.
ARTICLE
IX
SETTLEMENT
OF DISPUTES BETWEEN ONE PARTY AND A NATIONAL OR COMPANY OF THE OTHER
PARTY
1. For
purposes of this Treaty, an investment dispute is a dispute between a
Party and a national or company of the other Party arising out of or
relating to an investment authorization, an investment agreement or an
alleged breach of any right conferred, created or recognized by this
Treaty with respect to a covered investment.
2. A
national or company that is a party to an investment dispute may submit
the dispute for resolution under one of the following alternatives:
(a) to
the courts or administrative tribunals of the Party that is a party to
the dispute; or
(b) in
accordance with any applicable, previously agreed dispute-settlement
procedures; or
(c) in
accordance with the terms of paragraph 3
3. (a)
Provided that the national or company concerned has not submitted the
dispute for resolution under paragraph 2(a) or (b), and that three
months have elapsed from the date on which the dispute arose, the
national or company concerned may submit the dispute for settlement by
binding arbitration:
(i) to
the Centre, if the Centre is available; or
(ii) to
the Additional Facility of the Centre, if the Centre is not available;
or
(iii) in
accordance with the UNCITRAL Arbitration Rules; or
(iv) if
agreed by both parties to the dispute, to any other arbitration
institution or in accordance with any other
arbitration rules.
(b) A
national or company, notwithstanding that it may have submitted a
dispute to binding arbitration under paragraph 3(a), may seek interim
injunctive relief, not involving the payment of damages, before the
judicial or administrative tribunals of the Party that is a party to the
dispute, prior to the institution of the arbitral proceeding or during
the proceeding, for the preservation of its rights and interests.
4. Each
Party hereby consents to the submission of any investment dispute for
settlement by binding arbitration in accordance with the choice of the
national or company under paragraph 3(a)(1), (ii), and (iii) or the
mutual agreement of both parties to the dispute under paragraph
3(a)(iv). This consent and the submission of the dispute by a national
or company under paragraph 3(a) shall satisfy the requirement of:
(a)
Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the
Additional Facility Rules for written consent of the parties to the
dispute; and
(b)
Article II of the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958,
for an "agreement in writing".
5. Any
arbitration under paragraph 3(a)(ii), (iii) or (iv) shall be held in a
state that is a party to the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, done at New
York, June 10, 1958.
6. Any
arbitral award rendered pursuant to this Article shall be final and
binding on the parties to the dispute. Each Party shall carry out
without delay the provisions of any such award and provide in its
territory for the enforcement of such award.
7. In any
proceeding involving an investment dispute, a Party shall not assert, as
a defense, counterclaim, right of set-off or for any other reason, that
indemnification or other compensation for all or part of the alleged
damages has been received or will be received pursuant to an insurance
or guarantee contract.
8. For
purposes of Article 25(2)(b) of the ICSID Convention and this Article, a
company of a Party that, immediately before the occurrence of the
event.or events giving rise to an investment dispute, was a covered
investment, shall be treated as a company of the other Party.
ARTICLE
X
SETTLEMENT
OF DISPUTES BETWEEN THE PARTIES
1. Any
dispute between the Parties concerning the interpretation or application
of the Treaty, that 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 UNCITRAL Arbitration Rules shall
govern, except to the extent these rules are (a) modified by the Parties
or (b) modified by the arbitrators unless either Party objects to the
proposed modification.
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 shall be a national of a third State. The UNCITRAL
Arbitration Rules applicable to 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 Centre.
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 arbitral panel 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.
Expenses incurred by the Chairman and other arbitrators, and other costs
of the proceedings, shall be paid for equally by the Parties. However,
the arbitral panel may, at its discretion, direct that a higher
proportion of the costs be paid by one of the Parties.
ARTICLE
XI
PRESERVATION
OF RIGHTS
This
Treaty shall not derogate from any of the following that entitle covered
investments to treatment more favorable than that accorded by this
Treaty:
(a) laws
and regulations, administrative practices or procedures, or
administrative or adjudicatory decisions of a Party;
(b)
international legal obligations; or
(c)
obligations assumed by a Party, including those contained in an
investment authorization or an investment agreement.
ARTICLE
XII
DENIAL
OF BENEFITS
Each
Party reserves the right to deny to a company of the other Party the
benefits of this Treaty if nationals of a third country own or control
the company and
(a) the
denying Party does not maintain normal economic relations with the third
country; or
(b) the
company has no substantial business activities in the territory of the
Party under whose laws it is constituted or organized.
ARTICLE
XIII
TAXATION
1. No
provision of this Treaty shall impose obligations with respect to tax
matters, except that:
(a)
Articles III,
IX and X will apply with respect to expropriation; and
(b)
Article IX will apply with respect to an investment agreement or an
investment authorization.
2. A
national or company, that asserts in an investment dispute that a tax
matter involves an expropriation, may submit that dispute to arbitration
pursuant to Article IX(3) only if:
(a) the
national or company concerned has first referred to the competent tax
authorities of both Parties the issue of whether the tax matter involves
an expropriation; and
(b) the
competent tax authorities have not both determined, within nine months
from the time the national or company referred the issue, that the
matter does not involve an expropriation.
ARTICLE
XIV
MEASURES
NOT PRECLUDED BY THIS TREATY
1. This
Treaty shall not preclude a Party from applying measures necessary for
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 a Party from prescribing special formalities
in connection with covered investments, such as a requirement that such
investments be legally constituted under the laws and regulations of
that Party, or a requirement that transfers of currency or other
monetary instruments be reported, provided that such formalities shall
not impair the substance of any of the rights set forth in this Treaty.
ARTICLE
XV
APPLICATION
OF THIS TREATY TO POLITICAL SUBDIVISIONS
AND
STATE ENTERPRISES OF THE PARTIES
1. (a)
The obligations of this Treaty shall apply to the political subdivisions
of the Parties.
(b) With
respect to the treatment accorded by a State, Territory or possession of
the United States of America, national treatment means treatment no less
favorable than the treatment accorded thereby, in like situations, to
investments 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.
2. A
Party's obligations under this Treaty shall apply to a state enterprise
in the exercise of any regulatory, administrative or other governmental
authority delegated to it by that Party.
ARTICLE
XVI
ENTRY
INTO FORCE, DURATION AND TERMINATION
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. It shall apply to covered investments existing at the
time of entry into force as well as to those established or acquired
thereafter.
2. A
Party may terminate this Treaty at the end of the initial ten year
period or at any time thereafter by giving one year's written notice to
the other Party.
3. For
ten years from the date of termination , all other Articles shall
continue to apply to covered investments established or acquired prior
to the date of termination, except insofar as those Articles extend to
the establishment or acquisition of covered investments.
4. The
Annex and Protocol shall form an integral part of the Treaty.
IN
WITNESS WHEREOF, the respective plenipotentiaries have signed this
Treaty.
DONE in
duplicate at Washington this eleventh day of January, 1995, in the
English language. An Albanian language text shall be prepared and shall
be considered equally authentic upon an exchange of diplomatic notes
confirming its conformity with the English language text.
FOR THE
GOVERNMENT OF THE UNITED STATES OF AMERICA:
FOR THE
GOVERNMENT OF THE REPUBLIC OF ALBANIA
[signature]
[signature]
ANNEX
1. The
Government of the United States of America may adopt or maintain
exceptions to the obligation to accord national treatment to covered
investments in the sectors or with respect to the matters specified
below:
atomic
energy; custom house brokers; licenses for broadcast, common carrier, or
aeronautical radio stations; COMSAT;
subsidies or grants, including government-supported loans, guarantees
and insurance; state and local measures exempt from Article 1102 of the
North American Free Trade Agreement pursuant to Article 1108 thereof;
landing of submarine cables.
Most
favored nation treatment shall be accorded if the sectors and matters
indicated above.
2. The
Government of the United States of America may adopt or maintain
exceptions to the obligation to accord national and most favored nation
treatment to covered investments in the sectors or with respect to the
matters specified below:
fisheries; air and maritime transport, and related activities; banking,
securities, and other financial services.
3. The
Government of the United States of America say adopt or maintain
exceptions to the obligation to accord national and most favored nation
treatment to covered investments, provided that the exceptions do not
result in treatment under this Treaty less favorable than the treatment
that the Government of the United States of America has undertaken to
accord in the North American Free Trade Agreement with respect to
another party to that Agreement, in the sectors or with respect to the
matters specified below:
insurance.
4. The
Government of the Republic of Albania may adopt or maintain exceptions
to the obligation to accord national treatment to covered investments in
the sectors or with respect to the matters specified below:
ownership or land; banking; government subsidies.
Most
favored nation treatment shall be accorded in the sectors and matters
indicated above.
5. Each
Party agrees to accord national treatment to covered investments in the
following sectors:
leasing
of minerals of pipeline rights-of-way on Government lands.
PROTOCOL
1. With
respect to Article VIII, the Parties confirm their mutual understanding
that each Party shall treat any confidential or proprietary information
exchanged in the course of consultations on the same basis as the Party
providing the information.
2. With
respect to Article XIII, the Parties confirm their mutual understanding
that neither Party has an obligation to accord
national treatment with respect to tax matters, except as otherwise
provided in an investment authorization or an investment
agreement.
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.