-Investments are guaranteed the unrestricted transfer of funds in a
freely usable currency; and
-Nationals
and companies of either Party, in investment disputes with the host
government, have access to binding international arbitration, without
first restoring to domestic courts.
The
following is an article-by-article analysis of the provisions of the
Treaty:
Preamble
The
preamble states the goals of the Treaty. The Treaty is premised on the
view that an open investment policy leads to economic growth. These
goals include economic cooperation, increased flow of capital, a stable
framework for investment, development of respect for internationally
recognized worker rights, and maximum efficiency in the use of economic
resources. While the Preamble does not impose binding obligations, its
statement of goals may serve to assist in the interpretation of the
Treaty.
ARTICLE
I (DEFINITIONS)
ARTICLE I
sets out definitions for terms used throughout the Treaty. As a general
matter, they are designed to be broad and inclusive in nature.
Investment
The
treaty's definition of investment is broad, recognizing that investment
can take a wide variety of forms. It covers investments that are owned
or controlled by nationals or companies of one of the Treaty partners
made in the territory of the other. Investments can be made either
directly or indirectly through one or more subsidiaries, including those
of third countries. Control is not specifically defined in the Treaty.
Ownership of over 50 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.
The
definition provides a non-exclusive list of assets, claims and rights
that constitute investment. These include both tangible and intangible
property, interests in a company or its assets, a claim to money or
performance having economic value, and associated with an investment,
intellectual property rights, and any right conferred by law or contract
(such as government-issued licenses and permits). The requirement that a
claim to money be associated with an investment excludes claims arising
solely from trade transactions, such as a simple movement of goods
across a border, from being considered investments covered by the
Treaty.
Under
paragraph 2 of Article I, either country may deny the benefits of the
Treaty to investments by companies established in the other that are
owned or controlled by nationals of a third country if 1) the company is
a mere shell, without substantial business activities in the home
country, or 2) the third country is one with which the denying party
does not maintain normal economic relations. For example, at this time
the United States does not maintain normal economic relations with,
inter alia, Cuba or Libya.
Paragraph
3 confirms that "any alteration m the form in which an asset is
invested or reinvested shall not affect its character as investment."
For example, a decision to alter the corporate form of an investment
will not deprive it of protection under the Treaty.
Company
The
definition of "company" is broad in order to cover virtually
any type of legal entity, including any corporation, company,
association, or other entity that is organized under the laws and
regulations of a Party. It ensures that companies of a Party that
establish investments in the territory of the other Party have their
investments covered by the Treaty, even if the parent company is
ultimately owned by non-Party nationals, although the other Party may
deny the benefits of the Treaty in the limited circumstances set forth
in Article I paragraph 2. Likewise, a company of a third Party will also
be covered. The definition also covers charitable and non-profit
entities, as well as entities that are owned or controlled by the state.
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
American Samoa is a national of the United States, but not a citizen.
Return
"Return"
is defined as "any amount derived from or associated with an
investment," and the Treaty provides a non-exclusive list of
examples, including: profits; dividends; interest; capital gains;
royalty payments; management, technical assistance or other fees; and
returns in kind. The scope of this definition provides breadth to the
Treaty's transfer provisions in Article IV.
Associated
Activities
The
Treaty recognizes that the operation of an investment requires
protections extending beyond the investment to numerous related
activities. This definition provides an illustrative list of such
investor activities including operating a business facility, borrowing
money, disposing of property, issuing stock and purchasing foreign
exchange for imports. These activities are covered by Article II,
paragraph 1 which guarantees the better of national or MFN treatment for
investments and associated activities. (Article II, paragraph 10,
discussed below, provides an expanded, detailed list of the "associated
activities" protected by the Treaty.)
ARTICLE
II (Treatment)
Article
II contains the Treaty's major obligations with respect to the treatment
of investment.
Paragraph
1 generally ensures the better of MFN or national treatment in both the
entry and post-entry phases of investment. It thus prohibits both the
screening of proposed foreign investment on the basis of nationality and
discriminatory measures once the investment has been made, subject to
specific exceptions provided for in a separate Annex. As previously
noted, the Government of Kyrgyzstan decided not to include any such
exceptions to national or most-favored-nation treatment. The U.S.
exceptions are discussed in the section entitled "Annex."
Paragraph
2 further guarantees that investment shall be granted "fair and
equitable" treatment in accordance with international law. It also
prohibits Parties from impairing, throughout arbitrary or discriminatory
means, the management, operation, maintenance, use, enjoyment,
acquisition, expansion or disposal of investment. This paragraph sets
out a minimum standard of treatment based on customary international
law.
In
paragraph 2(c), each Party pledges to respect any obligations it may
have entered into with respect to investments. Thus, in dispute
settlement under Articles VI or VII, a Party would be foreclosed from
arguing, on the basis of sovereignty, that it may unilaterly ignore its
obligations to such investments.
Paragraph
3 allows, subject to each Party's immigration laws and regulations, the
entry of each Party's nationals into the territory of the other for
purposes linked to investment and involving the commitment of a "substantial
amount of capital." This Paragraph serves to render nationals of a
BIT partner eligible for treaty-investor visas under U.S. immigration
law and guarantees similar treatment for U.S. investors.
Paragraph
4 guarantees companies the right to engage top managerial personnel of
their choice, regardless of nationality.
Under
paragraph 5, neither Party may impose performace requirements such as
those conditioning investment on the export of goods produced or the
local purchase of goods or services. Such requirements are major burdens
on investors.
Paragraph
6 provides that each Party must provide effective means of asserting
rights and claims with respect to investment, investment agreements and
any investment authorizations. Under paragraph 7, each Party must make
publicly available all laws, administrative practices and adjudicatory
procedures pertaining to or affecting investments.
Paragraph
8 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 to U.S. out of-State residents and
corporations.
Paragraph
9 limits the Article's MFN obligation by providing that it will not
apply to advantages (i.e., future preferences) accorded by either Party
to third countries by virtue of a Party's membership in a free trade
area or customs union or a future multilateral agreement on Tariffs and
Trade (GATT). The free trade area exception in this treaty is analogous
to the exception provided for with respect to trade in the GATT.
Article
II, paragraph 10 of the BIT with Kyrgyzstan is designed to resolve
problems that U.S. businesses may face in emerging market economies.
This provision spells out that nationals and companies of either Party
receive the better of national or MFN treatment with respect to a
detailed list of activities associated with their investments. These
include: access to registrations, licenses, and permits; access to
financial institutions and credit markets; access to their funds held in
financial institutions; the importation and installation of business
equipment; advertising and the conduct of market studies; the
appointment of commercial representatives; direct marketing; access to
public utilities; and, access to raw materials. The right to the better
of national or MFN treatment in these activities requires that
Kyrgyzstan grant U.S. nationals and companies treatment no less
favorable than that granted to its own or third country nationals and
companies.
ARTICLE
III (EXPROPRIATION)
Article
III incorporates into the Treaty the international law standards for
expropriation and compensation.
Paragraph
1 describes the general rights of investors and obligations of the
Parties with respect to expropriation and nationalization. These rights
also apply to direct or indirect state measures "tantamount to
expropriation or nationalization," and thus apply to "creeping
expropriations" that result in a substantial deprivation of the
benefit of an investment without taking of the title to the investment.
Five
requirements are listed. Expropriation must be for a public purpose; be
carried out in a non-discriminatory manner; be subject to "prompt,
adequate, and effective compensation"; be subject to due process;
and be accorded the treatment provided in the standards of Article II
(2). (These standards guarantee fair and equitable treatment and
prohibit the arbitrary and discriminatory impairment of investment in
its broadest sense.)
The
second sentence of paragraph 1 clarifies the meaning of "prompt,
adequate, and effective compensation." Compensation must be
equivalent to the fair market value of the expropriated investment
immediately before the expropriatory action was taken or became known
(whichever is earlier); be paid without delay; include interest at a
commercially reasonable rate from the date of expropriation; be fully
realizable; be freely transferable; and be calculated in a freely usable
currency on the basis of the prevailing market rate of exchange.
Paragraph
2 entitles an investor claiming that an expropriation has occurred to
prompt judicial or administrative review of the claim in the host
country, including a determination of whether the expropriation and any
compensation conform to international law.
Paragraph
3 entitles investors to the better of national or MFN treatment with
respect to losses related to war or civil disturbances, but, unlike
paragraph 1, does not specify an absolute standard for determining
compensation for such losses.
ARTICLE
IV (TRANSFERS)
Article
IV protects investors from certain government exchange controls limiting
current account and capital account transfers.
In
paragraph 1, the Parties agree to permit "all inward and outward
transfers related to an investment to be made freely and without delay."
Paragraph 1 also provides a non-exclusive list of transfers that must be
allowed, including returns (as defined in Article I); payments made in
compensation for expropriation (as defined in Article III); payments
arising out of an investment dispute; payments made under a contract,
including the amortization of principal and interest payments on a loan;
proceeds from the liquidation or sale of all or part of an investment;
and additional contributions to capital for the maintenance or
development of an investment.
Paragraph
2 provides that transfers are to be made in a "freely usable
currency" at the prevailing market rate of exchange on the date of
transfer with respect to spot transactions in the currency to be
transferred. "Freely usable" is a standard of the
International Monetary Fund; at present there are five such "Freely
usable" is a standard of 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.
Paragraph
3 recognizes that notwithstanding these guarantees, Parties may maintain
certain laws or obligations that could affect transfers with respect to
investments. It provides that the Parties may require reports of
currency transfers and impose income taxes by such means as a
withholding tax on dividends. It also recognizes that Parties may take
measures to protect the rights of creditors and ensure the satisfaction
of judgments in adjudicatory proceedings through their laws, even if
such measures interfere with transfers. Such laws must be applied in an
equitable, nondiscriminatory and good faith manner.
ARTICLE
V (STATE-STATE CONSULTATIONS)
Article V
provides for prompt consultation between the Parties, at either Party's
request, on any matter relating to the interpretation or application of
the Treaty.
ARTICLE
VI (STATE- INVESTOR DISPUTE RESOLUTION)
Article
VI sets forth several means by which disputes between an investor and
the host country may be settled.
Article
VI procedures apply to an "investment dispute." a term which
covers any dispute arising out of or relating to rights granted by the
Treaty with respect to an investment, an investment authorization, or an
agreement between the investor and the host government.
When a
dispute arises, Article VI contemplates that the disputants will
initially seek to resolve the dispute by consultation and negotiation,
which may include non-binding third party procedures. Should such
consultations fail, paragraphs 2 and 3 set forth the investor's range of
choices of, dispute settlement.
The investor may make an exclusive and irrevocable choice to: (1) employ
one of the several arbitration procedures outlined in the Treaty; (2)
submit the dispute to procedures previously agreed upon by the investor
and the host country government in an investment agreement or otherwise;
or (3) submit the dispute to the local courts or administrative
tribunals of the host country.
Under the
Treaty, the investor can take an investment dispute to binding
arbitration after six months from the date that the dispute arises. The
investor may choose between the International Centre for the Settlement
of Investment Disputes (ICSID) (if the host country has joined the
Centre-otherwise the Additional Facility is available) and ad hoc
arbitration using the Arbitration Rules of the United Nations Commission
on International Trade Law (UNCITRAL). The Treaty also recognizes that,
by mutual agreement, the parties to the dispute may choose another
arbitral institution or set of arbitral rules.
Paragraph
4 contains the consent of the United States and Kyrgyzstan to the
submission of investment disputes to binding arbitration in accordance
with the choice of the investor.
Paragraph
5 provides that a non-ICSID arbitration shall take place in a country
that is a Party to the United Nations Convention on the Recognition and
Enforcement of Arbitral Awards. This requirement enhances the ability of
investors to enforce their arbitral awards. In addition, paragraph 6
includes a separate commitment by each Party to enforce arbitral awards,
rendered pursuant to article VI Procedures.
Paragraph
7 provides that in any dispute settlement procedure, a Party may not
invoke as a defense, counterclaim, set-off or in any other manner the
fact that the company or national has received or will be reimbursed for
the same damages under an insurance or guarantee contract.
Paragraph
8 is included in the Treaty to ensure that ICSID arbitration will be
available for investors making investments in the form of companies
created under the laws of the Party with which there is a dispute.
ARTICLE
VII (STATE-STATE ARBITRATION)
Article
VII Provides for binding arbitration of disputes between the United
States and Kyrgyzstan that are not resolved through consultations or
other diplomatic channels. The article constitutes each Party's prior
consent to arbitration.
ARTICLE
VIII (Exclusions for Dispute Settlement)
Article
VIII excludes from the coverage of Article VI and VII any disputeds
arising under the export credit, guarantee or insurance programs of the
Export-Import Bank of the United States, as well as those of any other
such official programs pursuant to which the Parties have agreed to
other means of settling disputes.
ARTICLE
IX (PRESERVATION OF RIGHTS)
Article
IX clarifies that the Treaty is meant only to establish a floor for the
treatment of foreign investment. An investor may be entitled to more
favorable treatment through domestic legislation, other international
legal obligations, or a specific obligation assumed by a Party with
respect to that investor. This provision ensures that the Treaty will
not be interpreted to derogate from any entitlement to such more
favorable treatment.
ARTICLE
X (MEASURES NOT PRECLUDED)
The first
paragraph of Article X reserves the right of a Party to take measures as
necessary for the maintenance of public order, the fulfillment of its
international obligations with respect to international peace and
security, or the protection of its own essential security interests.
These provisions are common in international investment agreements.
The
maintenance of public order would include measures taken pursuant to a
Party's police powers to ensure public health and safety. 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 clear and direct
relationship to the essential security interest of the Party involved.
The
second paragraph allows a Party to promulgate special formalities in
connection with the establishment of investment, provided that the
formalities do not impair the substance of any Treaty rights. Such
formalities would include, for example, U.S. reporting requirements for
certain inward investment.
ARTICLE
XI (TAX POLICIES)
The
Treaty exhorts both countries to provide fair and equitable treatment to
investors with respect to tax policies. However, tax matters are
generally excluded from the coverage of the prototype BIT, based on the
assumption that tax matters are properly covered in bilateral tax
treaties.
The
Treaty, and particularly the dispute settlement provisions, do apply to
tax matters in three areas, to the extent they are not subject to the
dispute settlement provisions of a tax treaty, or, if so subject, have
been raised under a tax treaty's dispute settlement procedures and are
not resolved in a reasonable period of time.
The three
areas where the Treaty could apply to tax matters are expropriation
(Article III), transfers (Article IV) and the observance and enforcement
of terms of an investment agreement or authorization (Article VI (1) (a)
or (b)). These three areas are important for investors, and two of the
three-expropriatory taxation and tax provisions contained in an
investment agreement or authorization are not typically addressed in tax
treaties.
ARTICLE XII
(APPLICATION TO POLITICAL SUBDIVISIONS)
Article
XII makes clear that the obligations of the Treaty are applicable to all
political subdivisions of the Parties, such as State and local
governments.
ARTICLE
XII (ENTRY INTO FORCE, DURATION AND TERMINATION)
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 existing and future
investments. After the ten-year term, the Treaty will continue in force
unless terminated by either Party upon one year's notice. If terminated,
all existing investments would continue to be protected under the Treaty
for ten years thereafter.
Annex
U.S.
bilateral investment treaties allow for sectoral exceptions to national
and MFN treatment. The U.S. exceptions are designed to protect
governmental regulatory interests and to accommodate the derogations
from national treatment and, in some cases, MFN treatment in existing
federal law.
The U.S.
portion of the Annex contains a list of sectors and matters in which,
for various legal and historical reasons, the federal government or the
States may not necessarily treat investments of nationals or companies
of the other Party as they do U.S. investments or investments from a
third country. The U.S. exceptions from national treatment are: air
transportation; ocean and coastal shipping; banking; insurance;
government grants; government insurance and loan programs energy and
power production; customs house brokers; ownership of real property;
ownership and operation of broadcast or common carrier radio and
television stations; ownership of shares in the Communications Satellite
Corporation; the provision of common carrier telephone or telegraph
services; the provision of submarine cable services; use of land and
natural resources; mining on the public domain; maritime ans maritime
related services; and, primary dealership in U.S. government securities.
Ownership
of real property, mining on the public domain, maritime-related
services, and primary dealers in U.S. government securities are also
excluded from the MFN treatment commitments. The last three of the
sectors in the Annex are exempted by the United States from MFN
treatment obligations because of U.S. laws that require reciprocity.
Enforcement of reciprocity provisions would deny both national and MFN
treatment.
The
listing of a sector does not necessarily signify that domestic laws have
entirely reserved it for nationals. Future restrictions or limitations
on foreign investment are only permitted in the sectors listed; must be
made on an MFN basis, unless otherwise specified in the Annex; and, must
be appropriately notified. Any additional restrictions or limitations
which a Party may adapt with respect to listed sectors may not affect
existing investments.
Because
the U.S. exceptions to national and MFN treatment are based on existing
U.S. law, they are not altered during negotiations.
Kyrgyzstan reserved no sectoral exceptions to national or MFN treatment.
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,
WARREN
CHRISTOPHER
TREATY
BETWEEN UNITED STATES OF AMERICA AND THE REPUBLIC OF KYRGYZSTAN
CONCERNING THE ENCOURAGEMENT AND RECIPROCAL PROTECTION OF INVESTMENT
The United
States of America and the Republic of Kyrgyzstan (hereinafter the "Parties");
Desiring
to promote greater economic cooperation between them, with respect to
investment by nationals and companies of one Party in the territory of
the other Party;
Recognizing that agreement upon the treatment to be accorded such
investment will stimulate the flow of private capital and the economic
development of the Parties;
Agreeing
that fair and equitable treatment of investment is desirable in order to
maintain a stable framework for investment and maximum effective
utilization of economic resources;
Recognizing that the development of economic and business ties can
contribute to the well-being of workers in both Parties and promote
respect for internationally recognized worker rights; and
Having
resolved to conclude a Treaty concerning the encouragement and
reciprocal protection of investment;
Have
agreed as follows:
ARTICLE I
1. For the
purposes of this Treaty,
(a) "investment"
means every kind of investment in the territory of one Party owned or
controlled directly or indirectly by nationals or companies of the other
Party, such as equity, debt, and service and investment contracts; and
includes:
(i)
tangible and intangible property, including movable and immovable
property, as well as rights, such as mortgages, liens and pledges;
(ii) a
company or shares of stock or other interests in a company or interests
in the assets thereof;
(iii) a
claim to money or a claim to performance having economic value, and
associated with an investment;
(iv)
intellectual property which includes, inter alia, rights relating to:
literary
and artistic works, including sound recordings, inventions in all fields
of human endeavor, industrial designs, semiconductor mask works, trade
secrets, know-how, and confidential business information, and
trademarks, service marks, and trade names; and
(v) any
right conferred by law or contract, and any licenses and permits
pursuant to law;
(b) "company"
of a Party means any kind of corporation, company, association,
enterprise, partnership, or other organization, legally constituted
under the laws and regulations of a Party or a political subdivision
thereof whether or not organized for pecuniary gain, or privately or
governmentally owned or controlled;
(c) "national"
of a Party means a natural person who is a national of a Party under its
applicable law;
(d) "return"
means an amount derived from or associated with an investment, including
profit; dividend; interest; capital gain; royalty payment; management,
technical assistance or other fee; or returns in kind;
(e) "associated
activities" include the organization, control, operation,
maintenance and disposition of companies, branches, agencies, offices,
factories or other facilities for the conduct of business; the making,
performance and enforcement of contracts; the acquisition, use,
protection and disposition of property of all kinds including
intellectual property rights; the borrowing of funds; the purchase,
issuance, and sale of equity shares and other securities; and the
purchase of foreign exchange for imports;
2. Each
Party reserves the right to deny to any company the advantages of this
Treaty if nationals of any third country control such company and, in
the case of a company of the other Party, that company has no
substantial business activities in the territory of the other Party or
is controlled by nationals of a third country with which the denying
Party does not maintain normal economic relations.
3. Any
alteration of the form in which assets are invested or reinvested shall
not affect their character as investment.
ARTICLE II
1. Each
Party shall permit and treat investment, and activities associated
therewith, on a basis no less favorable than that accorded in like
situations to investment or associated activities of its own nationals
or companies, or of nationals or companies of any third country,
whichever is the most favorable, subject to the right of each Party to
make or maintain exceptions falling within one of the sectors or matters
listed in the Annex to this Treaty. Each Party agrees to notify the
other Party before or on the date of entry into force of this Treaty of
all such laws and regulations of which it is aware concerning the
sectors or matters listed in the Annex. Moreover, each Party agrees to
notify the other of any future exception with respect to the sectors or
matters listed in the Annex, and to limit such exceptions to a minimum.
Any future exception by either Party shall not apply to investment
existing in that sector or matter at the time the exception becomes
effective. The treatment accorded pursuant to any exceptions shall,
unless specified otherwise in the Annex, be not less favorable than that
accorded in like situations to investments and associated activities of
nationals or companies of any third country.
2. (a)
Investment shall at all times be accorded fair and equitable treatment,
shall enjoy full protection and security and shall in no case be
accorded treatment less than that required by international law.
(b)
Neither Party shall in any way impair by arbitrary or discriminatory
measures the management, operation, maintenance, use, enjoyment,
acquisition, expansion, or disposal of investments. For purposes of
dispute resolution under Articles VI and VII, a measure may be arbitrary
or discriminatory notwithstanding the fact that a Party has had or has
exercised the opportunity to review such measure in the courts or
administrative tribunals of a Party.
(c) Each
Party shall observe any obligation it may have entered into with regard
to investments.
3. Subject
to the laws relating to the entry and sojourn of aliens, nationals of
either Party shall be permitted to enter and to remain in the territory
of the other Party for the purpose of establishing, developing,
administering or advising on the operation of an investment to which
they, or a company of the first Party that, employs them, have committed
or are in the process of committing a substantial amount of capital or
other resources.
4.
Companies which are legally constituted under the applicable laws or
regulations of one Party, and which are investments, shall be permitted
to engage top managerial personnel of their choice, regardless of
nationality.
5. Neither
Party shall impose performance requirements as condition of,
establishment, expansion or maintenance of investments, which require or
enforce commitments to export goods produced, or which specify that
goods or services must purchased locally, or which impose any other
similar requirements.
6. Each
Party shall provide effective means of asserting claims and enforcing
rights with respect to investment, investment agreements, and investment
authorizations.
7. Each
Party shall make public all laws, regulations, administrative practices
and procedures, and adjudicatory decisions that pertain to or affect
investments.
8. The
treatment accorded by the United States of America to investments and
associated activities of nationals and companies of the Republic of
Kyrgyzstan under the provisions of this Article shall in any State,
Territory or possession of the United States of America be no less
favorable than the treatment accorded therein to investments and
associated activities of nationals of the United States of America
resident in, and companies legally constituted under the laws and
regulations of other States, Territories or possessions of the United
States of America.
9. The
most favored nation provisions of this Article shall not apply to
advantages accorded by either Party to nationals or companies of any
third country by virtue of:
(a) that
Party's binding obligations that derive from full membership in a free
trade area or customs union; or (b) that Party's binding obligations
under any multilateral international agreement under the framework of
the General Agreement on Tariffs and Trade that enters into force
subsequent to the signature of this Treaty.
10. The
Parties acknowledge and agree that "associated" activities,
include without limitation, such activities as:
(a) the
granting of franchises or rights under licenses;
(b) access
to registrations, licenses, permits and other approvals (which shall in
any event be issued expeditiously);
(c)
access to financial institutions and credit markets;
(d)
access to their funds held in financial institutions;
(e) the
importation and installation of equipment necessary for the normal
conduct of business affairs, including but not limited to, office
equipment and automobiles, and the export of any equipment and
automobiles so imported;
(f) the
dissemination of commercial information;
(g) the
conduct of market studies;
(h) the
appointment of commercial representatives, including agents, consultants
and distributors and their participation in trade fairs and promotion
events;
(i) the
marketing of goods and services, including through internal distribution
and marketing systems, as well as by advertising and direct contact with
individuals and companies;
(j) access
to public utilities, public services and commercial rental space at
nondiscriminatory prices, if the prices are set or controlled by the
government; and
(k) access
to raw materials, inputs and services of all types at nondiscriminatory
prices, if the prices are set or controlled by the government.
ARTICLE
III
1.
Investments shall not be expropriated or nationalized either directly or
indirectly through measures tantamount to expropriation or
nationalization ("expropriation") except: for a public
purpose; in a nondiscriminatory manner; upon payment of prompt, adequate
and effective compensation; and in accordance with due process of law
and the general principles of treatment provided for in Article II(2).
Compensation shall be equivalent to the fair market value of the
expropriated investment immediately before the expropriatory action was
taken or became known, whichever is earlier; be calculated in a freely
usable currency on the basis of the prevailing market rate of exchange
at that time; be paid without delay; include interest at a commercially
reasonable rate from the date of expropriation; be fully realizable; and
be freely transferable.
2. A
national, or company of either Party that asserts that all or part of
its investment has been expropriated shall have a right to prompt review
by the appropriate judicial or administrative authorities of the other
Party to determine whether any such expropriation has occurred and, if
so, whether such expropriation, and any associated compensation,
conforms to the principles of international law.
3.
Nationals or companies of either Party whose investments suffer losses
in the territory of the other Party owing to war or other armed
conflict, revolution, state of national emergency, insurrection, civil
disturbance or other similar events shall be accorded treatment by such
other Party no less favorable than that accorded to its own nationals or
companies or to nationals or companies of any third country, whichever
is the most favorable treatment, as regards any measures it adopts in
relation to such losses.
ARTICLE IV
1. Each
Party shall permit all transfers related to an investment to be made
freely and without delay into and out of its territory. Such transfers
include: (a) returns; (b) compensation pursuant to Article III; (c)
payments arising out of an investment dispute; (d) payments made under a
contract, including amortization of principal and accrued interest
payments made pursuant to a loan agreement; (e) proceeds from the sale
or liquidation of all or any part of an investment; and (f) additional
contributions to capital for the maintenance or development of an
investment.
2.
Transfers shall be made in a freely usable currency at the prevailing
market rate of exchange on the date of transfer with respect to spot
transactions in the currency to be transferred.
3.
Notwithstanding the provisions of paragraphs I and 2, either Party may
maintain laws and regulations (a) requiring reports of currency
transfer; and (b) imposing income taxes by such means as a withholding
tax applicable to dividends or other transfers. Furthermore, either
Party may protect the rights of creditors, or ensure the satisfaction of
judgments in adjudicatory proceedings, through the equitable,
nondiscriminatory and good faith application of its law.
ARTICLE V
The
Parties agree to consult promptly, on the request of either, to resolve
any disputes in connection with the Treaty, or to discuss any matter
relating to the interpretation or application of the Treaty.
ARTICLE VI
1. For
purposes of this Article, an investment dispute is a dispute between a
Party and a national or company of the other Party arising out of or
relating to (a) an investment agreement between that Party and such
national or company; (b) an investment authorization granted by that
Party's foreign investment authority to such national or company; or (c)
an alleged breach of any right conferred or created by this Treaty with
respect to an investment.
2. In the
event of an investment dispute, the parties to the dispute should
initially seek a resolution through consultation and negotiation. If the
dispute cannot be settled amicably, the national or company concerned
may choose to submit the dispute for resolution:
(a) to the
courts or administrative tribunals of the Party that in 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 six months
have elapsed from the date on which the dispute arose, the national or
company concerned may choose to consent in writing to the submission of
the dispute for settlement by binding arbitration:
(i) to
the International Centre for the Settlement of Investment Disputes ("Centre")
established by the Convention on the Settlement of Investment Disputes
between States and Nationals of other States, done at Washington, March
18, 1965 ("ICSID Convention"), provided that the Party is a
Party to such Convention; or
(ii) to
the Additional Facility of the Centre, if the Centre is not available;
or
(iii) in
accordance with the Arbitration Rules of the United Nations Commission
on International Trade Law (UNCITRAL); or
(iv) to
any other arbitration institution, or in accordance with any other
arbitration rules, as may be mutually agreed between the parties to the
dispute.
(b) Once
the national or company concerned has so consented, either Party to the
dispute may initiate arbitration in accordance with the choice so
specified in the consent.
4. Each
Party hereby consents to the submission of any investment dispute for
settlement by binding arbitration in accordance with the choice
specified in the written consent of the national or company under
paragraph 3. Such consent, together with the written consent of the
national or company when given under paragraph 3 shall satisfy the
requirement for:
(a)
written consent of the parties to the dispute for purposes of Chapter II
of the ICSID Convention (Jurisdiction of the Center) and for purposes of
the Additional Facility Rules; and
(b) an "agreement
in writing," for purposes of Article II of the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, done at New York, June 10, 1958 ("New York Convention").
5. Any
arbitration under paragraph 3(a)(ii), (iii) or (iv) of this Article
shall be held in a state that is a Party to the New York Convention.
6. Any
arbitral award rendered pursuant to this Article shall be final and
binding on the parties to the dispute. Each Party undertakes to carry
out without delay the provisions of any such award and to provide in its
territory for its enforcement.
7. In any
proceeding involving an investment dispute, a Party shall not assert, as
a defense, counterclaim, right of set-off or otherwise, that the
national or company concern ad has received or will receive, pursuant to
an insurance or guarantee contract, indemnification or other
compensation for all or part of its alleged damages.
8. For
purposes of an arbitration held under paragraph 3 of this Article, any
company legally constituted under the applicable laws and regulations of
a Party or a political subdivision thereof but that, immediately before
the occurrence of the event or events giving rise to the dispute, was an
investment of nationals or companies of the other Party, shall be
treated as a national or company of such other Party in accordance with
Article 25(2)(b) of the ICSID Convention.
ARTICLE
VII
1. Any
dispute between the Parties concerning the interpretation or application
of the Treaty which is not resolved through consultations or other
diplomatic channels, shall be submitted, upon the request of either
Party, to an arbitral tribunal for binding decision in accordance with
the applicable rules of international law. In the absence of an
agreement by the Parties to the contrary, the arbitration rules of the
United Nations Commission on International Trade Law (UNCITRAL), except
to the extent modified by the Parties or by the arbitrators, shall
govern.
2. Within
two months of receipt of a request, each Party shall appoint an
arbitrator. The two arbitrators shall select a third arbitrator as
Chairman, who is a national of a third State. The UNCITRAL Rules for
appointing members of three member panels shall apply mutatis
mutandis to the appointment of the arbitral panel except that the
appointing authority referenced in those rules shall be the Secretary
General of the Center.
3. Unless
otherwise agreed, all submissions shall be made and all hearings shall
be completed within six months of the date of selection of the third
arbitrator, and the Tribunal shall render its decisions within two
months of the date of the final submissions or the date of the closing
of the hearings, whichever is later.
4.
Expenses incurred by the Chairman, the other arbitrators, and other
costs of the proceedings shall be paid for equally by the Parties. The
Tribunal may, however, at its discretion, direct that a higher
proportion of the costs be paid by one of the Parties.
ARTICLE
VIII
The
provisions of Articles VI and VII shall not apply to a dispute arising
(a) under the export credit, guarantee or insurance programs of the
Export-Import Bank of the United States or (b) under other offical
credit, guarantee or insurance arrangements pursuant to which the
Parties have agreed to other means of settling disputes.
ARTICLE IX
This
Treaty shall not derogate from:
(a) laws
and regulations, administrative practices or procedures, or
administrative or adjudicatory decisions of either Party;
(b)
international legal obligations; or
(c)
obligations assumed by either Party, including those contained in an
investment agreement or an investment authorization, that entitle
investments or associated activities to treatment more favorable than
that accorded by this Treaty in like situations.
ARTICLE X
1. This
Treaty shall not preclude the application by either Party of measures
necessary for the maintenance of public order, the fulfillment of its
obligations with respect to the maintenance or restoration of
international peace or security, or the protection of its own essential
security interests.
2. This
Treaty shall not preclude either Party from prescribing special
formalities in connection with the establishment of investments, but
such formalities shall not impair the substance of any of the rights set
forth in this Treaty.
ARTICLE XI
1. With
respect to its tax policies, each Party should strive to accord fairness
and equity in the treatment of investment of nationals and companies of
the other Party.
2.
Nevertheless, the provisions of this Treaty, and in particular Article
VI and VII, shall apply to matters of taxation only with respect to the
following:
(a)
expropriation, pursuant to Article III;
(b)
transfers, pursuant to Article IV; or
(c) the
observance and enforcement of terms of an investment agreement or
authorization as referred to in Article VI (1) (a) or (b), to the extent
they are not subject to the dispute settlement provisions of a
Convention for the avoidance of double taxation between the two Parties,
or have been raised under such settlement provisions and are not
resolved within a reasonable period of time.
ARTICLE
XII
This
Treaty shall apply to the political subdivisions of the Parties.
ARTICLE
XIII
1. This
Treaty shall enter into force thirty days after the date of exchange of
instruments of ratification. It shall remain in force for a period of
ten years and shall continue in force unless terminated in accordance
with paragraph 2 of this Article. It shall apply to investments existing
at the time of entry into force as well as to investments made or
acquired thereafter.
2. Either
Party may, by giving one year's written notice to the other Party,
terminate this Treaty at the end of the initial ten year period or at
any time thereafter.
3. With
respect to investments made or acquired prior to the date of termination
of this Treaty and to which this Treaty otherwise applies, the
provisions of all of the other Articles of this Treaty shall thereafter
continue to be effective for a further period of ten years from such
date of termination.
4. The
Annex, Protocol, and Side Letter shall form an integral part of the
Treaty.
IN WITNESS
WHEREOF, the respective plenipotentiaries have signed this Treaty.
DONE in
duplicate at Washington, this ninteenth day of January, 1993 in the
English and Russian languages, both texts being equally authentic. A
Kyrgyz language text shall be prepared which shall be considered equally
authentic upon an exchange of diplomatic notes confirming its conformity
with the English language text.
FOR THE
UNITED STATES AMERICA:
FOR THE
REPUBLIC OF OF KYRGYZSTAN:
ANNEX
1. The
United States reserves the right to make or maintain limited exceptions
to national treatment, as provided in Article II, paragraph 1, in the
sectors or matters it has indicated below:
air
transportation; ocean and coastal shipping; banking; insurance;
government grants; government insurance and loan programs; energy and
power production; custom house brokers; ownership of real property;
ownership and operation of broadcast or common carrier radio and
television stations; ownership of shares in the Communications Satellite
Corporation; the provision of common carrier telephone and telegraph
services; the provision of submarine cable services; use of land and
natural resources; mining on the public domain; maritime services and
maritime-related services; and primary dealership in United States
government securities.
2. The
United States reserves the right to make or maintain limited exceptions
to most favored nation treatment, as provided in Article II, paragraph
1, in the sectors or matters it has indicated below:
ownership
of real property; mining on the public domain; maritime services and
maritime-related services; and primary dealership in United States
government securities.
3. The
Republic of Kyrgyzstan does not reserve the right to make or maintain
limited exceptions to national treatment, as provided in Article II,
paragraph 1.
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.
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