THE TREATY BETWEEN THE UNITED STATES OF AMERICA AND
THE REPUBLIC OF ZAIRE CONCERNING THE RECIPROCAL ENCOURAGEMENT AND
PROTECTION OF INVESTMENT, WITH PROTOCOL, SIGNED AT WASHINGTON,
AUGUST 3, 1984
MARCH 25, 1986 was read the first time and together with the
accompanying papers, referred to the Committee on Foreign Relations
and ordered to be printed for use of the Senate
THE,WHITE House, March 25,1986.
the Senate of the United States:
With a view of receiving the advice and consent of the Senate to
ratification, I transmit herewith the Treaty between the United States
of America and the Republic of Zaire concerning the Reciprocal
Encouragement and Protection of Investment, with Protocol, signed
August 3, 1984, at Washington. I transmit also, for the information of
the Senate, the report of the Department of State with respect to this
This treaty is among the first six treaties to be transmitted to the
Senate under the Bilateral Investment Treaty (BIT) program that I
initiated in 1981. The BIT program is designed to encourage and
protect U.S. investment in developing countries. The treaty is an
integral part of U.S. efforts to encourage Zaire and other governments
to adopt macroeconomic and structural policies that will promote
economic growth. It is also fully consistent with U.S. policy toward
international investment. That policy holds that an open international
investment system in which participants respond to market forces
provides the beat and moot efficient mechanism to promote global
economic development. 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 nondiscriminatory
treatment. Under this treaty, the parties also agree international law
standards for expropriation and compensation; free financial
transfers; and procedure including international arbitration, for the
settlement of investment disputes.
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, at an early date.
LETTER OF SUBMITTAL
DEPARTMENT OF STATE,
Washington, February 26,1986.
PRESIDENT, The White House.
The PRESIDENT: I have the honor to submit to you the Treaty between
the United States and the Republic of Zaire concerning the Reciprocal
Encouragement and Protection of Investment, with Protocol, signed at
Washington, August 3, 1984. This treaty is among the first six
treaties to be negotiated under the bilateral investment treaty (BIT)
program which you initiated in 1981. Development of the BIT program
and the negotiation of the individual treaties have been pursued by
the 0ffice of the United States Trade Representative and the
Department of State with the active participation of the Department of
Commerce and the U.S. Treasury, in conjunction with other interested
U.S. Government agencies. I recommend that this treaty, as well as the
others concluded with the Kingdom of Morocco, the Republic of Haiti,
the Republic of Panama, the Republic of Senegal, and the Republic of
Turkey, be transmitted to the Senate for its advice and consent to
In 1981 you initiated the global bilateral investment treaty (BIT)
program to encourage and protect U.S. investment in developing
countries. By providing certain mutual guarantees and protections, a
BIT creates a more stable and predictable legal framework for foreign
investors in each of the treaty Parties. The negotiation of a series
of bilateral treaties with interested countries establishes greater
international discipline in the investment area.
The six treaties which have been signed as well as other under
negotiation are an integral part of U.S. efforts to encourage other
governments to adopt macroeconomic and structural policies that will
promote economic growth. They are also fully consistent with your
policy statement on international investment of September 9, 1983,
which states that international direct investment flows should be
determined by private market forces and should receive fair,
equitable and non-discriminatory treatment.
Our experience to date has shown that interested countries are
willing to provide U.S. investors with significant investment
guarantees and assurances as a way of inducing additional foreign
investment. It is our policy to advise potential treaty partners that
conclusion of a BIT with the United States is an important and
favorable factor in the investment relationship, but does not in and
of itself result in immediate increases in U.S. investment flows.
Congressional support for the BIT program is reflected in Section
601(a) and (b) of the Foreign Assistance Act, as amended, in
particular at Section 601(b) which provides:
In order to encourage, and facilitate participation by private
enterprise to the maximum extent practicable in achieving any of the
purposes of this Act, the President shall...(3) accelerate a program
of negotiating treaties, for commerce and trade, including tax
treaties, which shall include provisions to encourage and facilitate
the flow of private investment to, and its equitable investment in,
friendly countries and areas participating in programs under this
BITs are consistent in purpose with the network of treaties of
Friendship, Commerce and Navigation (FCNs) which the United States
negotiated from the early years of the Republic until the last
successful negotiations with Thailand and Togo in the late 1960s. They
continue the U.S. policy of securing by agreement standards of
equitable treatment and protection of U.S. citizens carrying on
business abroad, and institutionalizing processes for the settlement
of disputes between investors and host countries and between
governments. We expect that a series of bilateral treaties with
interested countries will establish greater international discipline
the investment area.
The BIT, was designed to protect investment not only by treaty but
also by reinforcing traditional international legal principles and
practice regarding foreign direct private investment. In pursuit of
this objective, the model BIT adopts FCN language and concepts.
Traditional FCN provisions granting rights which are not important to
the typical U.S. investor were eliminated and replaced with more
specific language concerning investment protection. Perhaps most
significantly the BIT goes beyond the traditional FCN to provide
investor-country arbitration in instances where an investment dispute
Our BIT approach followed similar programs that had been undertaken
with considerable success by a number of European countries, including
the Federal Republic of Germany and the United Kingdom, since the
early 1960s. Indeed, our industrialized partners already have nearly
two hundred Bits in force, primarily with developing countries. Our
treaties, which draw upon language used in the U.S. FCN treaties as
well as European counterparts, are more comprehensive and far-reaching
than European Bits
The U.S. Zairian Treaty
The treaty with Zaire was negotiated by an interagency team led by
officials from the Office of the United States Trade Representative
and the Department of State. The treaty satisfies all four main BIT
-foreign investors are to be accorded treatment in accorded treatment
in accordance with international law and are to be treated no less
favorably than investors of the host country and no less favorably
than investors of third countries whichever is the most favorable
treatment, ("national" and "most-favored-nation
treatment") subject to certain specified exceptions.
-international law standards shall apply to the expropriation of
investment and and to the payment of compensation for expropriation;
-free transfers shall be afforded to funds associated with an
investment into and out of the host country; and
-procedures are to be established which allow an investor to
take a dispute with a Party directly to binding third-party
The provisions on treatment of foreign investment and arbitration,
and in particular Zaire's acceptance of international law as the
governing law, mark an important achievement for the BIT program and
our investment and international arbitration policies.
A technical memorandum explaining in detail the provisions of this
treaty will be transmitted separately to the Senate Committee on
Foreign Relations. That technical memorandum explains, clause by
clause, the provisions of the treaty with Zaire.
Some provisions of the treaty with Zaire differ in minor respects
from the U.S. model text. In general, however, the treaty closely
follows the language contained in the U.S. model text, the most
significant provisions of which are as follows.
The model BIT's definition section clarifies terms such as "company
of a Party" and "investment." The BIT concept of "investment"
is broad and designed to be flexible; although numerous types
of economic interests are enumerated, the intent is to include all
legitimate interests in the territory of either Party, whether
directly or indirectly controlled by nationals of the other, having
economic value or "associated" with an investment. Protected
"companies of a Party" are those incorporated or otherwise
organized under the laws of a Party in which nationals of that Party
have a substantial interest.
The model BIT accords the better of national or most (MFN) treatment
to foreign investment, subject to each Party's exceptions which are
listed in a separate Annex. The exceptions are designed to protect
state regulatory interests and for the United States to accommodate
the derogations from national treatment in state or federal law
relating to such areas as air transport shipping, banking,
telecommunications, energy and power production, insurance, and from
national and. MFN treatment in the case of ownership of real property.
Any future exception to these standards which a Party adopts are not
to affect existing investments. The BIT also includes general
treatment protection designed to a guide to interpretation and
application of the treaty. Thus, the Parties agree to accord
investments "fair and equitable treatment" and "full
protection and security" in no case "less than that required
by international law." It specifically grants nationals of a
Party the right to establish investments in the territory of the other
Party, restricts the right to impose performance requirements, and
obliges Parties to observe their contractual obligations with
investors. The U.S. model also provides that nationals and companies
of either Party shall in the territory of the other Party be permitted
to employ professional, technical and managerial personnel of their
choice regardless of nationality.
The model BIT also confers protection from unlawful interference of
property interests and assures compensation in accordance with
international law standards. It provides that any direct or in direct
taking must be: for a public purpose; nondiscriminatory; accompanied
by the payment of prompt, adequate and effective compensation and in
accordance with due process of law and the general standards of
treatment discussed above. The BIT's definition of "expropriation"
is broad and flexible; essentially "any measure" regardless
of form, which has the effect of depriving an investor of his
management, control or economic value in a project can constitute
expropriation requiring compensation equal to the fair market value."
Such compensation, which "shall not reflect any reduction in such
fair market value due to . . . the expropriatory action," must be
"without delay," "effectively realizable," "freely
transferable" and "bear current interest from the date of
the expropriation at a rate equal to current international rates."
The BIT grants the right to "prompt review" by the relevant
judicial or administrative authorities in order to determine whether
the compensation offered is consistent with these principles. It also
extends national and MFN treatment to investors in cases of loss due
to war or other civil disturbance. The BIT does not provide, however,
a specific valuation method for compensating such losses.
The model BIT provides for free transfers "related to an
investment," specifically of returns, compensation for
expropriation, contract payments, proceeds from sale, and
contributions to capital for maintenance or development of an
investment. Such transfers are to be made in a "freely
convertible currency at the prevailing market rate of exchange on the
date of transfer with respect to spot transactions in the currency to
be transferred." The model text recognizes that notwithstanding
this guarantee Parties can maintain certain laws and regulations
regarding transfers provided these are applied in a non-discriminatory
fashion. In particular, the model BIT provides that Parties can
require reports of currency transfers and inpose income taxes by such
means as a withholding tax on dividends.
The model BIT provides that where certain defined investment disputes
arise between a Party and a national or company of the other Party,
including disputes as to the interpretation of an investment agreement
and the dispute cannot be solved through negotiation it may be
submitted to arbitration in accordance with any dispute settlement
procedures to which the national or company and the host country have
previously agreed. Unless the national or company has submitted the
dispute to previously agreed dispute settlement procedures or to
adjudication by domestic courts or other tribunals of the host
country, the national or company may submit the dispute to the
International Centre for the Settlement of Investment Disputes ("ICSID").
Exhaustion of local remedies is not required. In a separate provision,
the BIT Parties also agree to grant nationals and companies of the
other Party access to their domestic courts in order to assert claims
and enforce rights with respect to investments.
The model BIT provides for state-to-state arbitration between the
Parties in case of a dispute regarding the interpretation or
application of the treaty. In the absence of an agreement that other
rules apply, the BIT refers the Parties to specific procedural rules
which must govern the arbitration. The BIT also outlines the
procedures for the creation of the arbitral panel.
The model BIT exhorts Parties to apply their tax policies fairly and
equitably. Because the United States specifically addresses tax
matters in tax treaties, the BIT generally excludes such matters. It
also specifically limits the arbitration provisions to only certain
taxation matters. Another BIT provision exempts disputes arising under
Export-Import Bank programs, or other credit guarantee insurance
arrangements providing for alternative dispute settlement
arrangements, from the standard BIT arbitration clauses. The model BIT
also states that the treaty shall not derogate from any obligations
that require more favorable treatment of investments and declares that
the treaty shall not preclude measures necessary for public order or
essential security interests. The model BIT enters into force 30 days
after exchange of ratifications and continues in force for at least
ten years. Thereafter, either Party may terminate the treaty, subject
to one year's written notice.
Each of these models was developed after lengthy and extensive
consultations within the U.S. Government and with the private sector.
Nonetheless, in negotiating a particular treaty, the U.S. Government
retains, of course, some flexibility to adopt modifications as
necessary and in light of experience. While the U.S. model text has
recently been simplified, the provisions summarized above have all
Some provisions of the Zaire text differ in some respects from the
U.S. model text. Except for transfers, we do not consider that any of
these modifications represent substantive departures from U.S.
objectives. The more significant of these are as follows:
(1) Definition of "own or control".-The definition, which
is included in the U.S. model text, was omitted from the Zaire text.
The reason for including such a definition was to highlight the fact
that investments which the treaty was meant to cover included those
made through subsidiaries of companies of a Party "wherever
located," that is, even in third countries. The Zaire text
satisfies this objective by defining investment in, Article 1,
paragraph (c) as "every kind of investment, owned. or controlled
directly or indirectly and we have obtained for the record a statement
from Zaire's negotiators that they understand this definition to cover
investments made through subsidiaries in third countries.
(2) Definition of "territory". -U.S. model text does not
define this term. At the insistence of Zaire, however, we have agreed
to a definition in the present treaty. This definition consists of two
parts, as follows:
(a) Article 1, pargraph (f) (Definitions) contains parallel
statements noting tha the territory of each Party is defined as "all
the territory of' the Party; and.
(b) Paragraph 7 of the Protocol specifies that these definitions
encompass "All Zairian territory within its geographical and
political boundaries where its sovereignty is exercised;" and,
for the United States, "the separate States, the District of
Columbia, and Guam, Puerto Rico, American Samoa, and the Virgin
The formulation for the United States avoids a general definition of
territory, which we consider to be problematic, while spelling out the
specific entities to be encompassed in the treaty references to the
territory of* the United States as a party.
(3) Competitive equality- Article II, paragraph six addresses the
issue of treatment of foreign investment in those sectors in which the
host government invests but does not keep out private investors. It
was not possible to obtain a Zairian commitment to language which
stipulates that privately owned or controlled investment "shall"
receive treatment which is equivalatent with respect to any special
economic advantages accorded governmentally owned or controlled
investment. The Zairians did concur with the general exhortation that
competitive equality "should" be maintained.
(4)Performance requirements. -It was not possible to obtain Zaire's
commitment not to impose performance requirements as:conditions for
investment, as called for by our model text. Zaire is one of many
developing countries which imposes requirements on foreign investors
to obtain certain development objectives. Therefore, we accepted
hortatory language (Article ll,.paragraph 7) to the effect that each
Party shall 'endeavor" within "the context of its national
economic policies and goals" to"'avoid" the imposition
of export or local purchase requirements. The last sentence of the
paragraph notes that this provision is not meant to preclude the right
of Parties to impose import restrictions. This sentence was included
at the request of Zaire.
5) Transfers -The most significant departure from the model text is
in respect to transfers. The treaty text itself (Article V) calls for
free transfers and incorporates all the essential provisions of the
prototype. However, in view of the current difficult economic
situation of Zaire, paragraph 1 of the Protocol was negotiated which
(a) allows Zaire to delay the full application of Article V, subject
to certain conditions, for up to three years from the date of ratification
of the treaty; (b) permits Zaire, if necessary, to delay transfers of
the proceeds of sale or liquidation of an investment for up to
three years from the date the transfer is requested; and (c) permits
Zaire some leeway in providing specific currencies for transfers by
acknowledging that all freely convertible currencies are always
available. (The United States is presently seeking clarification from
the Government of Zaire that for purposes of paragraph I of the
Protocol "the date of ratification" means the date of entry
into force.) The Protocol does not apply to transfer of compensation
in the event of expropriation, on the ground that an expropriation is
a discretionary act which should not be taken by a government unless
compensation can be paid. The Protocol also provides for consultations
between the two governments concerning the implementation of Article V
of the Protocol.
(6) Application of the treaty to existing investment. -As the model
text anticipates, this treaty applies to investments which already
exist at the time the treaty enters into force. At the request of
Zaire, Article XIII, paragraph 2 specifies that such application shall
be "in accordance with the provisions of Article IX ofTreaty."
Article IX, in turn, specifies that treatment of investment required
inter alia by national law, international legal obligations,
or, obligations assumed by a Party in an investment agreement or
authorization, which is more favorable than treatment accorded by the
treaty, shall prevail over the provisions of the treaty.
(7) Exceptions from coverage.- In the Annex to the treaty, Zaire
exempts from national treatment and the right of establishment
transportation infrastructure projects; railways; aviation and
airports; health and educational infrastructuture projects; energy and
water projects; telecommunications and other communications; soil and
sub-soil; banking; social security; and insurance.
None of these modifications from the U.S. model text represent
substantive departures from U.S. objectives.
Submission of this treaty, together with the other five noted above,
marks a significant development in our international investment
policy. I join with the United States Trade Representative and other
U.S. Government agencies in supporting these treaties and favor their
approval by the Senate at an early date.
GEORGE P. SHULTZ.
BETWEEN THE UNITED STATES OF AMERICA AND THE REPUBLIC OF ZAIRE
CONCERNING THE RECIPROCAL ENCOURAGEMENT AND PROTECTION OF INVESTMENT
United States of America and the Republic of Zaire,
Desiring to promote greater economic cooperation between the two
states, particularly with respect to investment by nationals and
companies of each 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 both Parties;
Recognizing that discrimination on the basis of nationality by either
Party against investment in its territory by nationals or companies of
the other Party is contrary to a stable framework for investment; and
Having resolved to conclude a treaty concerning the reciprocal
encouragement and protection of investment,
Have agreed as follows:
the purposes of this Treaty:
(a) "Company" means any kind of juridical entity, including
any corporation, company, association, or other organization, that is
duly incorporated, constituted, or otherwise duly organized,
regardless of whether or not the entity is organized for pecuniary
gain, privately or governmentally owned, or organized with limited or
(b) "Company of a Party" means a company duly incorporated,
constituted or otherwise duly organized under the applicable laws and
regulations of a Party or a political subdivision thereof in which
(i) natural persons who are nationals of such Party, or
(ii) such Party or a political subdivision thereof or their agencies
or instrumentalities have
a substantial interest as determined by such Party.
The juridical status of a company of a Party shall be recognized by
the other Party and its political subdivisions.
Each Party reserves the right to deny to any of its own companies or
to a company of the other Party the advantages of this Treaty, except
with respect to recognition of juridical status and access to courts,
if nationals of any third country control such company, provided that
whenever one Party concludes that the benefits of this Treaty should
not be extended to a company of the other Party for this reason, it
shall promptly consult with the other Party to seek a mutually
satisfactory resolution to this matter.
(c) "Investment" means every kind of investment, owned or
controlled directly or indirectly, including equity, debt, and service
and investment contracts; and includes:
(i) tangible and intangible property, including all property rights,
such as liens, mortgages pledges, and real security;
(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 and industrial property rights, including rights
with respect to copyrights, patents, trademarks, trade names,
industrial designs, trade secrets and know how, and goodwill;
(v) licenses and permits issued pursuant to law, including those
issued for manufacture and sale of products;
(vi) any right conferred by law or contract, including rights to
search for or utilize natural resources, and rights to manufacture,
use and sell products; and
returns which are reinvested.
Any alteration of the form in which assets are invested or reinvested
shall not affect their character as investment.
(d) "National" of a Party means any natural person who is a
national of that Party in conformity with its laws.
(e) "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.
(f) "Territory" means:
(i) For the Republic of Zaire: all the territory of the Republic of
(ii) For the United States of America: all the territory of the United
TREATMENT OF INVESTMENT
Each Party shall undertake to maintain a favorable environment for
investments in its territory by nationals and companies of the other
Party under its laws, regulations, and administrative practices and
procedures, and shall permit such investments to be established on
terms and conditions that accord treatment no less favorable than the
treatment it accords in like situations to investments of its own
nationals or companies or to nationals or companies of any third
country, whichever is the most favorable.
2. Each Party shall accord existing or new investments in its
territory of nationals or companies of the other Party, and associated
activities, treatment no less favorable than that which it accords to
investments and associated activities of its own nationals or
companies or of nationals or companies of any third country, whichever
is the most favorable. Associated activities include:
(a) the establishment, control and maintenance of branches, agencies,
offices, factories or other facilities for the conduct of business;
(b) the organization of companies under applicable national laws and
regulations; the acquisition of companies or interests in companies;
the management, control, maintenance, use, and expansion, and the
sale, liquidation, and dissolution of companies organized or acquired;
(c) the making, performance and enforcement of contracts;
(d) the acquisition, (whether by purchase, lease or otherwise),
possession with rights of ownership, and disposition (whether by sale,
testament or otherwise), of property, both tangible and intangible;
(e) the leasing of real property required for the conduct of business;
(f) the acquisition, maintenance, and protection of intellectual
property rights, patents, trademarks, trade secrets, trade names,
licenses and other approvals of products and manufacturing processes,
and other industrial property rights; and
(g) the borrowing of funds, the purchase and issuance of equity
shares, and the purchase of foreign exchange for imports.
3. (a) Notwithstanding the preceding provisions of this Article, each
Party reserves the right to introduce exceptions relating to one of
the sectors or matters listed in the Annex to this treaty. Each Party
agrees to notify the other Party of all sectors or matters of possible
exception at the time this Treaty enters into force, as well as of all
specific exceptions of which it is aware which are in effect on that
date. Moreover, each Party agrees to notify the other Party of any
future exceptions falling within the sectors or matters listed in the
Annex, and to maintain the number of such exceptions at a minimum.
Other than with respect to ownership of real property, the treatment
accorded pursuant to this subparagraph shall not be less favorable
than that accorded in like situations to investments and associated
activities of nationals or companies of any third country. However,
either Party may require that rights to engage in mining on the public
domain shall be dependent on reciprocity.
(b) No exception introduced after the date of entry into force of
this Treaty shall apply to investments of nationals or companies of
the other Party existing in that sector at the time the exception
4. Investments of nationals and companies of either Party shall at
all times be accorded fair and equitable treatment and shall enjoy
protection and security in the territory of the other Party. The
treatment, protection and security of investment shall be in
accordance with applicable national laws, and may not be less than
that recognized by international law. Neither Party shall in any way
impair by arbitrary and discriminatory measures the management,
operation, maintenance, use, enjoyment, acquisition, expansion, or
disposal of investment made by nationals or companies of the other
Party. Each Party shall observe any obligation it may have entered
into with regard to investment of nationals or companies of the other
5. (a) 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 or directing an investment or advising on the operation
of an investment to which they, or the aforesaid companies of the
first Party that employ them, have committed or are in the process of
committing a substantial amount of capital or other resources.
(b) Nationals and companies of either Party, and companies which they
own or control, shall be permitted to engage, within the territory of
the other Party, top managerial personnel of their choice, regardless
of nationality, for the planning and operation of their investments.
This provision shall not be construed to confer rights with respect to
the entry and sojourn of persons in the territory of either Party,
except as provided by national law.
6. The Parties recognize that, consistent with paragraphs 1 and 2 of
this Article, conditions of competitive equality should be maintained
where investments owned or controlled by a Party or its agencies or
instrumentalities are in competition, within the territory of such
Party, with privately owed or controlled investments of nationals or
companies of the other Party.
7. Within the context of its national economic policies and goals,
each Party shall endeavor to avoid imposing on the investments of
nationals or companies of the other Party conditions which require the
export of goods produced or the purchase of goods or services locally.
This provision shall not preclude the right of either Party to impose
restrictions on the importation of goods into their respective
8. In order to maintain a favorable environment for investments in
its territory by nationals or companies of the other Party, each Party
shall provide all necessary means to nationals or companies of the
other Party to permit them to assert their rights with respect to
investment agreements, investment authorizations, and properties, in
particular the right of access to its courts, tribunals and
administrative agencies, and the right to employ persons of their
choice, who otherwise qualify under applicable laws and regulations,
regardless of nationality, for the purpose of enforcing their rights.
9. Each Party shall make public all laws, regulations, and
administrative practices and procedures that pertain to or affect
investments in its territory of nationals or companies of the other
COMPENSATION FOR EXPROPRIATION
No investment or any part of an investment of a national or a company
of either Party shall be expropriated or nationalized by the other
Party or subjected to any other measure or series of measures, direct
or indirect, tantamount to expropriation, unless the expropriation:
(a) is done for a public purpose;
(b) is accomplished under due process of law;
(c) is not discriminatory;
(d) does not violate any specific provision on contractual stability
or expropriation contained in an investment agreement between the
national or company concerned and the Party making the expropriation;
(e) is accompanied by prompt, adequate and effectively realizable
Compensation shall be equivalent to the fair market value of the
expropriated investment. The calculation of such compensation shall
not result in any reduction in such fair market value due to either
prior public notice or announcement of the expropriatory action, or
the occurrence of the events that constituted or resulted in the
expropriatory action. Such compensation shall include interest at a
rate equivalent to current international rates from the date of
expropriation, and be freely transferable at the prevailing market
rate of exchange on the date of expropriation.
2. If either Party expropriates, the investment of any company duly
constituted in its territory, and if nationals or companies of the
other Party hold shares or any recognized right in the expropriated
company, then the expropriating Party shall ensure that such nationals
or companies of the other Party receive compensation in accordance
with the provisions of the preceding paragraph.
3. Subject to the dispute settlement provisions set forth in this
Treaty, a national or company of either Party asserting that its
investment was expropriated by the other Party shall have the right to
prompt review by the appropriate judicial or administrative
authorities of such other Party to determine whether any such
expropriation has occurred and, if so, whether such expropriation and
any compensation therefor conform to the principles of international
COMPENSATION FOR DAMAGES DUE TO WAR AND SIMILAR EVENTS
Nationals or companies of either Party whose investments in the
territory of the other Party suffer:
(a) damages due to war or other armed conflict between such other
Party and a third country, or
(b) damages due to revolution, state of national emergency, revolt,
insurrection, riot or act of violence in the territory of such other
be accorded treatment no less favorable than that which such other
Party accords to its own nationals or companies or to nationals or
companies of any third country, whichever is the most favorable
treatment, when making restitution, indemnification, compensation or
any other settlement with respect to such damages.
2. In the event that such damages result from:
(a) a requisitioning of property by the other Party's forces or
(b) destruction of property by the other Party's forces or
authorities which was not caused in combat action,
the national or company shall be accorded restitution or compensation
in accordance with Article III.
3. The payment of any indemnification, compensation or any other
settlement granted pursuant to this Article shall be freely
transferable in accordance with the provisions of Article V.
Each Party shall, with respect to investment by nationals or companies
of the other Party, grant such nationals and companies the free
royalties and other payments derived from patents, licenses, and other
similar grants or rights;
(c) payments relating to loan reimbursements;
(d) amounts expended for the management of the investment in the
territory of the other Party or of a third country, (including
expenses associated with management or technical assistance
(e) funds required for importation of capital equipment necessary to
the maintenance, the expansion or the modernization of the investment;
(f) proceeds from the sale of all or part of the investment or the
liquidation, thereof, including liquidation arising from a
circumstance described in Article IV; and
(g) compensation payments made pursuant to Article III.
2. To the extent that a national or company of either Party has not
made another arrangement with the appropriate authorities of the other
Party in whose territory the investment of such national or company is
situated, currency transfers made pursuant to paragraph 1 of this
Article shall be permitted in any freely convertible currency. Such
transfers shall be made at the prevailing rate of exchange on the date
of transfer with respect to ordinary transactions in the currency to
3. Notwithstanding the preceding paragraphs, either Party may
maintain laws and regulations: (a) prescribing procedures to be
followed with respect to the transfers permitted under this Article,
provided such procedures are carried out expeditiously and do not
impair the substance of the rights set forth above in paragraphs 1 and
2; (b) requiring reports of currency transfer; and (e) 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.
CONSULTATIONS AND EXCHANGE OF INFORMATION
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.
2. If one Party requests in writing that the other Party supply
information in its possession concerning investments in its territory
by nationals or companies of the Party making the request, then the
other Party shall, consistent with its applicable laws and regulations
and with due regard for business confidentiality, endeavor to
establish appropriate procedures and arrangements for the provision of
any such information.
SETTLEMENT OF INVESTMENT DISPUTES BETWEEN ONE PARTY AND A NATIONAL OR
COMPANY OF THE OTHER PARTY
For purposes of this Article, an investment dispute is defined as a
dispute involving (a) the interpretation or application of an
investment agreement between a Party and a national or company of the
other Party; (b) the interpretation or application of any investment
authorization granted by the competent foreign investment authorities;
or (c) an alleged breach of any right confirmed or created by this
Treaty with respect to an investment.
2. (a) Each Party hereby consents to submit investment disputes to
the International Centre for the Settlement of Investment Disputes ("Centre")
for settlement by conciliation or binding arbitration.
(b) Conciliation or binding arbitration of such disputes shall be
done in accordance with the provisions of the Convention on the
Settlement of Investment Disputes between the States and Nationals of
other States ("Convention") and the Regulations and Rules of
the Centre, or, if the Convention should, for any reason, be
inapplicable, the Rules of the Additional Facility of the
International Centre for the Settlement of Investment Disputes ("Additional
3. In the event of an investment dispute between a Party and a
national or company of the other Party with respect to an investment
of such national or company in the territory of such Party, the
parties to the dispute shall initially seek to resolve the dispute by
consultation and negotiation. The Parties to the dispute may, upon the
initiative of either of them and as a part of their consultation and
negotiation agree to rely upon non-binding, third party procedures,
such as the fact-finding facility available under the rules of the
Additional Facility. If the dispute cannot be resolved through
consultation and negotiation, then the dispute shall be submitted for
settlement in accordance with the applicable dispute-settlement
procedures upon which the Parties to the dispute may have previously
4. (a) The national or company concerned may consent in writing to
submit the dispute to the Centre or the Additional Facility for
settlement by conciliation or binding arbitration.
(b) Once the national or company concerned has so consented, either
party to the dispute may institute proceedings before the Centre or
Additional Facility at any time after six months from the date upon
which the dispute arose, provided,
the dispute has not, for any reason, been submitted by the national or
company for resolution in accordance with any applicable dispute
settlement procedures previously approved by the parties to the
(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 to the dispute disagree over whether conciliation or
binding arbitration is the more appropriate procedure to be employed,
the procedure desired by the national or company concerned shall be
5. In any proceeding, judicial, arbitral or otherwise, concerning an
investment dispute between a Party ("the first Party") and a
nation or company of the other Party ("the second Party"),
the first Party shall not assert as a means of defense, that the
national or company concerned has received or will receive, pursuant
to an insurance. contract, indemnification or other compensation for
all or part of its alleged damages from any third party whatsoever,
including the second Party.
6. For the purpose of any proceedings initiated before the Centre or
the Additional Facility in accordance with this Article, any company
duly constituted under the applicable laws and regulations of either
Party but that, before the occurrence of the event or events giving
rise to the dispute, was owned or controlled by nationals or a company
of the other Party shall be treated as a national or company of such
SETTLEMENT OF DISPUTES BETWEEN THE PARTIES CONCERNING INTERPRETATION
OR APPLICATION OF THIS TREATY
Any dispute between the Parties concerning the interpretation or
application of this Treaty should, if possible, be resolved through
consultations between representatives of the two Parties, and if this
should fail, through other diplomatic channels.
2. If the dispute between the Parties cannot be resolved through the
aforessaid means, and unless there is agreement between the Parties to
submit the dispute to the International Court of Justice, both Parties
hereby agree to submit it upon the request of either Party to an
arbitral tribunal for binding decision in accordance with the
applicable rules and principles of international law.
3. The tribunal shall be established for each case as follows. Within
two months of receipt of a request for arbitration, each Party shall
appoint an arbitrator. The two arbitrators so appointed shall select a
third arbitrator as Chairman, who is a national of a third State. The
Chairman shall be appointed within two months of the date of
appointment of the other two arbitrators.
4. If the required appointments have not been made within the time
specified in paragraph 3 of this Article, either of the Parties may,
in the absence of any other agreement, request that the President of
the International Court of Justice. make the required appointments. If
the President is a national of one of the Parties or if he is unable
to act, the Vice President shall be asked to make the required
appointments. If the Vice President is a national of one of the
Parties or if he is otherwise unable to act, the next most senior
member of the International Court of Justice who is not a national of
one of the Parties and is able to act shall be asked to make the
5. In the event that an arbitrator resigns or is for any reason
unable to perform his duties, a replacement shall be appointed within
thirty days, utilizing the same method by which the arbitrator being
replaced was appointed. If the replacement is not appointed within the
time limit specified above, either Party may invite the President of
the International Court of Justice to make the required appointment.
6. Unless otherwise agreed to by the Parties, all requests shall be
introduced and all hearings shall be held within six months of the
date of the appointment of the third arbitrator, and the Tribunal
shall render its decision within two months of the date of the final
introduction of the requests or the date of the closing of the
hearings, whichever is later.
7. The Tribunal shall decide in all matters by majority vote. Any
such decision shall be binding on both Parties. Each Party shall bear
the expenses of its own representation in the arbitration proceedings.
Expenses incurred by the Chairman, the other arbitrators, and other
costs associated with the proceedings shall be borne equally by both
Parties. The Tribunal may, however, at its discretion, decide that a
higher proportion of the costs be borne by one of the Parties. Such a
decision shall be binding.
8. The Parties may agree to special procedures that the arbitral
tribunal shall follow. In the absence of such agreement, the Model
Rules on Arbitral Procedure adopted by the United Nations
International Law Commission in 1958 ("Model Rules") and
commended to Member States by the United Nations General Assembly in
Resolution 1262 (XIII) shall govern.
9. This Article shall not be applicable to a dispute which has been
submitted to the Centre or Additional Facility pursuant to Article VII
(3). Recourse to the procedures set forth in this Article is not
precluded, however, in the event an award rendered in such dispute is
not honored by a Party; or an issue exists related to a dispute
submitted to the Centre or Additional Facility but not argued or
decided in that Facility.
PRESERVATION OF RIGHTS
Treaty shall not supersede, prejudice, or otherwise derogate from:
(a) laws and regulations, administrative practices or procedures, 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, whether extant
at the time of entry into force of this Treaty or thereafter, that
entitle investments, or associated activities, of nationals or
companies of the other Party to treatment more favorable than that
accorded by this Treaty in like situations.
MEASURES NOT PRECLUDED BY THIS TREATY
This Treaty shall not preclude the application by either Party of
measures necessary in its territory for the maintenance of public
order and morality, the fulfillment of its obligations with respect to
the maintenance and restoration of international peace and security,
or the, protection of its own essential security interests.
2. This Treaty shall, not prevent either Party from prescribing
special formalities. in connection with the establishment of
investments in its territory of nationals and companies of the other
Party, but such formalities may not impair the essential rights set
forth in this Party.
With respect to its tax policies, each Party should strive to accord
fairness, and equity in the treatment of the investments of nationals
companies of the other Party.
2. Nevertheless, the provisions of this Treaty, and in particular
Articles VII and VIII, shall apply to matters of taxation only with
respect to the following:
(a) expropriation, pursuant to Article III:
(b) transfers, pursuant to Article V; or
(c) the observance and enforcement of terms of an investment agreement
or authorization as referred to in Article (1) (a) or (b).
Matters covered by item 2(c) shall not be covered to the extent they
are subject to the dispute settlement provisions of a convention for
the avoidance of double taxation that may subsequently be concluded
between the two Parties, unless such matters are raised under such
settlement procedures but are not resolved within a reasonable period
APPLICATION OF THIS TREATY TO POLITICAL SUBDIVISIONS OF THE PARTIES
Treaty shall apply to political subdivisions of the Parties.
ENTRY INTO FORCE AND DURATION AND DENUNCIATION
Treaty shall be subject to ratification by each of the Parties, and
the instruments of ratification shall be exchanged as soon as
2. This Treaty shall enter into force thirty days after the date of
exchange of the instruments of ratification. It shall remain in force
for a period of ten years and shall continue in force unless denounced
in accordance with paragraph 3 of this Article. It shall apply to
investments existing at the time of entry into force in accordance
with the provisions of Article IX of this Treaty, as well as to
investments made or acquired thereafter.
3. Either Party may, by giving one year's written notice to the other
Party, denounce this Treaty at the end of the initial ten-year period
or at any time thereafter.
4. With respect to investments made or acquired prior to the date of
denunciation of this Treaty and to which this Treaty otherwise
applies, the provisions of all of the other Articles of this Treaty
shall continue to be effective for a further period of ten years from
such date of denunciation.
IN WITNESS WHEREOF, the respective plenipotentiaries have signed this
DONE in duplicate at Washington on the third day of August 1984 in
the English and French languages, both texts being equally authentic.
FOR THE UNITED STATES OF AMERICA:
WILLIAM E. BROCK.
THE REPUBLIC OF ZAIRE:
In accordance with Article II, paragraph 3, each Party reserves the
right to maintain limited exceptions in the sectors it has indicated
The United States of America
Air transportation; ocean and coastal shipping; banking; insurance;
government procurement; government grants; government insurance and
loan programs; energy and power production; custom house brokers;
ownership of real estate; 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.
The Republic of Zaire
infrastructure projects (roads, ports, waterways (ocean, river, and
lake); railways; aviation and airports); health infrastructure
projects (hospitals, health centers); educational infrastructure
projects (construction of educational facilities in general); energy
and water projects (water production, generation of electricity,
production and use of hydrocarbons); radio, television, postal,
telephone, and telecommunications projects (use of ultra-short, short,
and medium waves, and various frequencies; telegraph systems,
telegrams, money orders, stamps, and postal checks); soil and
sub-soil; establishment and operation of banks; social security and
The Parties recognize that general formalities imposed on transfers
abroad may, as far as investments are concerned, adversely affect
inflows of capital if such formalities are restrictive. Therefore, in
order to promote capital inflows the Parties undertake to ensure that
such formalities do not constitute an obstacle to the making of
investments. Therefore, the Parties, recognizing the current external
economic circumstances, agree as follows:
(a) The Republic of Zaire may delay the application of paragraphs 1
and 2 of Article V for a period not to exceed three years from the
date of ratification of the present Treaty. During that period, the
following provisions will be applicable:
(i) With respect to all transfers relating to investments, the
Republic of Zaire shall treat nationals or companies of the United
States no less favorably than it treats nationals and companies of
Zaire, and no less favorably than it treats nationals or companies of
any third country.
(ii) The Republic of Zaire shall make available to nationals and
companies of the United States for the purposes specified in Article
V(1), reasonable amounts of foreign exchange. With respect to any
investment of a national or company of the United States, the amounts
of foreign exchange made available each year for such purposes shall
be no less than one third of the amount of profits attributable to the
investment since its establishment or acquisition, that have not
previously been transferred.
(iii) The Republic of Zaire shall ensure that the national or company
concerned has an opportunity to invest any unconverted currency
intended to be transferred in a manner that will preserve its value
until the transfer occurs.
(iv) All such transfers shall be made at the market rate of exchange
prevailing on the date on which application for transfer is made.
(b) If the foreign exchange reserves of the Republic of Zaire do not
permit the transfer of the proceeds of the sale or of the liquidation
of all or part of an investment, the Republic of Zaire shall allow the
transfer of such proceeds to take place over a period not to exceed
three years from the date the transfer is requested.
(i) With respect to such transfers, the Republic of Zaire shall treat
nationals and companies of the United States no less favorably than it
treats nationals or companies of any third country.
(ii) The Republic of Zaire shall ensure that the national or company
has an opportunity to invest the proceeds of sale or liquidation in a
manner that will preserve its value until the transfer occurs.
(c) Notwithstanding any of the provisions of this paragraph, payments
of compensation for expropriation pursuant to Article III shall in all
cases be paid without delay in a form that is effectively realizable
and freely and promptly transferable at the prevailing rate of
exchange on the date of the expropriation. Moreover, consistent with
Article II(4), nothing in this paragraph shall relieve either Party
of its obligations resulting from international law from its own
national laws or from any investment agreement, authorization, or
Regarding the currency or currencies in which a transfer authorized
under Article V may be made, the Parties acknowledge that not all
freely convertible currencies are always available to the Republic of
Zaire. The Republic of Zaire shall respect to the extent possible the
choice of the investor, provided that the currency chosen is
(e) Pursuant to Article VI(l) of this Treaty, and without prejudice to
the procedures set forth in Articles VII and VIII, the two Governments
agree to consult at the request of either one of them concerning the
implementation of Article V and of this paragraph.
In accordance with Article XI(l), each Party shall strive to accord
treatment in the tax area that is fair and equitable. "Fair and
equitable treatment" within the meaning of Article XI(l) shall
not necessarily be construed to mean the same treatment that is
accorded in similar situations to a Party's own nationals or
The provisions of Articles VII and VIII shall not apply to any dispute
arising (a) under programs of the Export-Import Bank of the United
States regarding export credit, guaranties, or insurance, or (b) under
other official credit, guaranty, or insurance arrangements pursuant to
which the Parties have agreed to other means of settling disputes.
4. The treatment accorded by the United States of America to
nationals or companies of the Republic of Zaire under the provisions
of Article II(l) and (2) shall be that accorded in any state,
territory or possession of the United States of America to companies
constituted, incorporated, or otherwise duly organized in other
states, territories or possessions of the United States of America.
"Direct or indirect measures tantamount to expropriation" as
used in Article III(l) may include the levying of taxes equivalent to
indirect expropriation, the compulsory sale of all or part of an
investment, or the impairment or deprivation of the management,
control, or economic value of an investment.
The term "top managerial personnel" within the meaning of
Article II(5)(b), shall include executive personnel who are
responsible, singly or jointly, for making major decisions concerning
the establishment or operation of an investment.
"Territory" within the meaning of Article I(f)(ii)
(a) For the Republic of Zaire: All Zairian territory within its
geographical and political boundaries where its sovereignty is
(b) For the United States of America: the separate States, the
District of Columbia, and Guam, Puerto Rico, American Samoa and the
The definition of company used in Article I paragraph (a) is limited
to the purposes of this Treaty, and is without prejudice to the
distinction among juridical entities under the laws of the United
States and Zaire.
IN WITNESS WHEREOF, the respective plenipotentiaries have signed this
in duplicate at Washington on the third day of August 1984 in the
English and French languages, both texts being equally authentic.
FOR THE UNITED STATES OF AMERICA:
WILLIAM E. BROCK.
FOR THE REPUBLIC OF ZAIRE: