the term “investment” means every kind of asset owned or controlled, directly or indirectly, by an investor, including:
(i)
an enterprise and a branch of an enterprise;
(ii)
shares, stocks or other forms of equity participation in an enterprise;
(iii)
bonds, debentures, loans and other forms of debt;
(iv)
futures, options and other derivatives;
(v)
rights under contracts, including turnkey, construction, management, production or revenue-sharing contracts;
(vi)
claims to money and to any performance under contract having a financial value;
(vii)
intellectual property rights, including copyrights and related rights, patent rights and rights relating to utility models, trademarks, industrial designs, layout-designs of integrated circuits, new varieties of plants, trade names, indications of source or geographical indications and undisclosed information, and goodwill;
(viii)
rights conferred pursuant to laws and regulations or contracts such as concessions, licences, authorisations and permits, including those for the exploration and exploitation of natural resources; and
(ix)
any other tangible and intangible, movable and immovable property, and any related property rights, such as leases, mortgages, liens and pledges;
An investment includes the amounts yielded by an investment, in particular, profit, interest, capital gains, dividends, royalties and fees. A change in the form in which assets are invested does not affect their character as an investment;
but an investment does not mean claims to money that arise solely from commercial contracts for the sale of goods or services by a national or enterprise in the Area of a Contracting Party to an enterprise in the Area of the other Contracting Party.
b)
the term “investor of a Contracting Party” means:
(i)
a natural person having the nationality of a Contracting Party in accordance with its laws and regulations; or
Note: This Agreement shall not apply to investments of natural persons who are nationals of both Contracting Parties unless such natural persons have at the time of the investment and ever since been domiciled outside the Area of the Contracting Party in which they made such investments.
(ii)
an enterprise of a Contracting Party,
that is making or has made an investment in the Area of the other Contracting Party;
c)
the term “enterprise” means any legal person or any other entity duly constituted or organised under the applicable laws and regulations, whether or not for profit, and whether private or government owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association, organisation or company;
d)
the term “enterprise of a Contracting Party” means an enterprise duly constituted or organised under the applicable laws and regulations of a Contracting Party;
e)
the term “investment activities” means operation, management, maintenance, use, enjoyment and sale or other disposal of investments;
f)
the term “Area” means:
(i)
with respect to Japan, the territory of Japan, and the exclusive economic zone and the continental shelf with respect to which Japan exercises sovereign rights or jurisdiction in accordance with international law; and
(ii)
with respect to the Republic of Serbia, the territory of the Republic of Serbia;
g)
the term “freely usable currency” means freely usable currency as defined under the Articles of Agreement of the International Monetary Fund;
h)
the term “WTO Agreement” means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh, April 15, 1994;
i)
the term “TRIPS Agreement” means the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreement;
j)
the term “claimant” means an investor of a Contracting Party that is a party to an investment dispute with the other Contracting Party;
k)
the term “respondent” means the Contracting Party that is a party to an investment dispute;
l)
the term “disputing party” means either the claimant or the respondent;
m)
the term “disputing parties” means the claimant and the respondent;
n)
the term “non-disputing Party” means the Contracting Party that is not a party to an investment dispute;
o)
the term “ICSID” means the International Centre for Settlement of Investment Disputes;
” means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes;
1. Each Contracting Party shall encourage and create favourable conditions for investors of the other Contracting Party to make investments in its Area.
2. Each Contracting Party shall, subject to its rights to exercise powers in accordance with its applicable laws and regulations, including those with regard to foreign ownership and control, admit investment of investors of the other Contracting Party.
1. Each Contracting Party shall in its Area accord to investors of the other Contracting Party and to their investments treatment no less favourable than the treatment it accords in like circumstances to its own investors and to their investments with respect to investment activities.
shall not be construed to prevent a Contracting Party from adopting or maintaining a measure that prescribes special formalities in connection with investment activities of investors of the other Contracting Party in its Area, provided that such special formalities do not impair the substance of the rights of such investors under this Agreement.
1. Each Contracting Party shall in its Area accord to investors of the other Contracting Party and to their investments treatment no less favourable than the treatment it accords in like circumstances to investors of a non-Contracting Party and to their investments with respect to investment activities.
shall not be construed to oblige a Contracting Party to extend to investors of the other Contracting Party and to their investments any preferential treatment by virtue of any existing or future regional economic integration union to which the former Contracting Party is a party.
1. Each Contracting Party shall in its Area accord to investments of investors of the other Contracting Party treatment in accordance with customary international law, including fair and equitable treatment and full protection and security. For greater certainty, the concepts of “fair and equitable treatment” and “full protection and security” do not require treatment in addition to, or beyond that which is required by the customary international law minimum standard of treatment of aliens, and do not create additional substantive rights.
2. For greater certainty:
a)
“fair and equitable treatment” includes the obligation of each Contracting Party not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process of law; and
b)
“full protection and security” requires each Contracting Party to provide the level of police protection required under customary international law.
Each Contracting Party shall in its Area accord to investors of the other Contracting Party treatment no less favourable than the treatment it accords in like circumstances to its own investors or to investors of a non-Contracting Party with respect to access to the courts of justice and administrative tribunals and agencies in all degrees of jurisdiction, both in pursuit and in defence of the rights of the investors of the other Contracting Party.
1. Neither Contracting Party may impose or enforce any of the following requirements, or enforce any commitment or undertaking, in connection with investment activities of an investor of a Contracting Party or of a non-Contracting Party in its Area:
a)
to export a given level or percentage of goods or services;
b)
to achieve a given level or percentage of domestic content;
c)
to purchase, use or accord a preference to goods produced or services provided in its Area, or to purchase goods or services from a natural person or an enterprise in its Area;
d)
to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with an investment of the investor;
e)
to restrict sales of goods or services in its Area that an investment of the investor produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
f)
to restrict the exportation or sale for export;
g)
to transfer technology, a production process or other proprietary knowledge to a natural person or an enterprise in its Area;
h)
to locate the headquarters of the investor for a specific region or the world market in its Area;
i)
to hire a given number or percentage of its nationals;
j)
to achieve a given level or value of research and development in its Area; or
k)
to supply one or more of the goods that the investor produces or the services that the investor provides to a specific region or the world market, exclusively from its Area.
2. Neither Contracting Party may condition the receipt or continued receipt of an advantage, in connection with investment activities of an investor of a Contracting Party or of a non-Contracting Party in its Area, on compliance with any of the following requirements:
a)
to achieve a given level or percentage of domestic content;
b)
to purchase, use or accord a preference to goods produced in its Area, or to purchase goods from a natural person or an enterprise in its Area;
c)
to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with an investment of the investor;
d)
to restrict sales of goods or services in its Area that an investment of the investor produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings; or
shall be construed to prevent a Contracting Party from conditioning the receipt or continued receipt of an advantage, in connection with investment activities of an investor of a Contracting Party or of a non-Contracting Party in its Area, on compliance with a requirement to locate production, supply a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its Area.
b)
Subparagraph 1(g) shall not apply when the requirement is imposed or the commitment or undertaking is enforced by a court of justice, administrative tribunal or competition authority to remedy an alleged violation of competition laws.
c)
Subparagraph 1(g) shall not apply when the requirement concerns the transfer of intellectual property rights which is undertaken in a manner not inconsistent with the TRIPS Agreement.
d)
Subparagraphs 2(a) and 2(b) shall not apply to requirements imposed by an importing Contracting Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas.
4. shall not apply to any requirement other than the requirements set out in those paragraphs.
1. Each Contracting Party shall promptly publish, or otherwise make publicly available, its laws, regulations, administrative procedures and administrative rulings and judicial decisions of general application as well as international agreements which pertain to or affect the implementation and operation of this Agreement.
2. Each Contracting Party shall, upon request by the other Contracting Party, promptly respond to specific questions and provide that other Contracting Party with information on matters set out in
3. shall not be construed to oblige either Contracting Party to disclose confidential information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest, or which would prejudice privacy or legitimate commercial interests.
Each Contracting Party shall, in accordance with its laws and regulations, endeavour to provide, except in cases of emergency or of purely minor nature, a reasonable opportunity for comments by the public before the adoption, amendment or repeal of regulations of general application that affect any matter covered by this Agreement.
Each Contracting Party shall ensure that measures and efforts are undertaken to prevent and combat corruption regarding matters covered by this Agreement in accordance with its laws and regulations.
Each Contracting Party shall, in accordance with its laws and regulations, give sympathetic consideration to applications for entry, sojourn and residence of a natural person having the nationality of the other Contracting Party as well as personnel employed by, and an executive, a manager and a member of the board of directors of, an enterprise of the other Contracting Party, who wish to enter the territory of the former Contracting Party and remain therein for the purpose of investment activities.
1. Neither Contracting Party shall expropriate or nationalise an investment in its Area of an investor of the other Contracting Party or take any measure equivalent to expropriation or nationalisation (hereinafter referred to as “expropriation”) except:
a)
for a public purpose;
b)
in a non-discriminatory manner;
c)
upon payment of prompt, adequate and effective compensation in accordance with
2. The compensation shall be equivalent to the fair market value of the expropriated investments at the time when the expropriation was publicly announced or when the expropriation occurred, whichever is earlier. The fair market value shall not reflect any change in value occurring because the expropriation had become publicly known earlier.
3. The compensation shall be paid without delay, shall include interest at a commercially reasonable rate accrued from the date of expropriation until the date of payment and shall be effectively realisable and freely transferable.
4. If payment is made in a freely usable currency, the compensation paid shall include interest, at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
5. If a Contracting Party elects to pay in a currency other than a freely usable currency, the compensation paid shall be no less than the sum of the following converted into the currency of payment at the market rate of exchange prevailing on the date of payment:
a)
the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date; and
b)
interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.
6. This Article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights in accordance with the TRIPS Agreement, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with the TRIPS Agreement.
1. Each Contracting Party shall accord to investors of the other Contracting Party that have suffered loss or damage relating to their investments in the Area of the former Contracting Party due to armed conflict or a state of emergency such as revolution, insurrection, civil disturbance or any other similar event in the Area of that former Contracting Party, treatment, as regards restitution, indemnification, compensation or any other settlement, that is no less favourable than the treatment it accords to its own investors or to investors of a non-Contracting Party, whichever is more favourable to the investors of the other Contracting Party.
2. Any payment as a means of settlement referred to in
If a Contracting Party or its designated agency makes a payment to any investor of that Contracting Party under an indemnity, guarantee or insurance contract, pertaining to an investment of such investor in the Area of the other Contracting Party, the latter Contracting Party shall recognise the assignment to the former Contracting Party or its designated agency of any right or claim of such investor on account of which such payment is made and shall recognise the right of the former Contracting Party or its designated agency to exercise by virtue of subrogation any such right or claim to the same extent as the original right or claim of the investor. As regards payment to be made to that former Contracting Party or its designated agency by virtue of such assignment of right or claim and the transfer of such payment, the provisions of shall apply mutatis mutandis.
1. Each Contracting Party shall ensure that all transfers relating to investments in its Area of an investor of the other Contracting Party may be freely made into and out of its Area without delay. Such transfers shall include, in particular, though not exclusively:
a)
the initial capital and additional amounts to maintain or increase investments;
b)
profits, interest, capital gains, dividends, royalties, fees or other current incomes accruing from investments;
c)
payments made under a contract including loan payments in connection with investments;
d)
proceeds of the total or partial sale or liquidation of investments;
e)
earnings and remuneration of personnel from abroad who work in connection with investments in the Area of the former Contracting Party;
f)
payments made in accordance with ; and
g)
payments arising out of a dispute.
2. Each Contracting Party shall further ensure that such transfers may be made without delay in freely usable currencies at the market exchange rate prevailing on the date of the transfer.
3. Notwithstanding , a Contracting Party may delay or prevent a transfer through the equitable, non-discriminatory and good-faith application of its laws and regulations relating to:
a)
payment of taxes;
b)
bankruptcy, insolvency or the protection of the rights of creditors;
c)
issuing, trading or dealing in securities, futures, options or derivatives;
d)
criminal or penal offences;
e)
reporting or record keeping of transfers of currency or other monetary instruments when necessary to assist law enforcement or financial regulatory authorities; or
f)
ensuring compliance with orders or judgements in adjudicatory proceedings.
1. Subject to the requirement that such measures are not applied by a Contracting Party in a manner which would constitute a means of arbitrary or unjustifiable discrimination against, or a disguised restriction on investors of the other Contracting Party and their investments in the Area of the former Contracting Party, nothing in this Agreement shall be construed to prevent the former Contracting Party from adopting or enforcing measures:
a)
necessary to protect human, animal or plant life or health;
b)
necessary to protect public morals or to maintain public order, provided that the public order exception may only be invoked where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society;
c)
necessary to secure compliance with the laws or regulations which are not inconsistent with the provisions of this Agreement including those relating to:
(i)
the prevention of deceptive and fraudulent practices or to deal with the effects of a default on contract;
(ii)
the protection of the privacy of the individual in relation to the processing and dissemination of personal data and the protection of confidentiality of personal records and accounts; or
(iii)
safety; or
d)
imposed for the protection of national treasures of artistic, historic or archaeological value.
, nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or enforcing measures:
a)
which it considers necessary for the protection of its essential security interests, including measures:
(i)
taken in time of war, armed conflict, or other emergency in that Contracting Party or in international relations; or
(ii)
relating to the implementation of national policies or international agreements respecting the non-proliferation of weapons; or
b)
in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
3. Nothing in this Agreement shall be construed to require a Contracting Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests.
4. In cases where a Contracting Party takes any measure, pursuant to
, that does not conform with the obligations of the provisions of this Agreement, that Contracting Party shall not use such measure as a means of avoiding its obligations.
1. A Contracting Party may adopt or maintain restrictive measures with regard to cross-border capital transactions as well as payments or transfers including transfers referred to in
in the event of serious balance-of-payments and external financial difficulties or threat thereof; or
b)
in exceptional cases where movements of capital cause or threaten to cause serious difficulties for macroeconomic management, in particular monetary and exchange rate policies.
shall, upon request, commence consultations with the other Contracting Party in order to review the restrictions adopted by the former Contracting Party.
1. Notwithstanding any other provisions of this Agreement, a Contracting Party shall not be prevented from taking measures relating to financial services for prudential reasons, including measures for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by an enterprise supplying financial services, or to ensure the integrity and stability of its financial system.
2. Where the measures taken by a Contracting Party pursuant to
1. The Contracting Parties shall grant and ensure the adequate and effective protection of intellectual property rights, and promote efficiency and transparency in intellectual property protection system. For this purpose, the Contracting Parties shall promptly consult with each other at the request of either Contracting Party. Depending on the results of the consultation, each Contracting Party shall, in accordance with its laws and regulations, take appropriate measures to remove the factors which are recognised as having adverse effects to the investments of investors of the other Contracting Party.
2. Nothing in this Agreement shall affect the rights and obligations of the Contracting Parties under multilateral agreements in respect of protection of intellectual property rights to which the Contracting Parties are parties.
3. Nothing in this Agreement shall be construed to oblige either Contracting Party to extend to investors of the other Contracting Party and to their investments treatment accorded to investors of a non-Contracting Party and to their investments by virtue of multilateral agreements in respect of protection of intellectual property rights, to which the former Contracting Party is a party.
1. Nothing in this Agreement shall affect the rights and obligations of either Contracting Party under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency.
Each Contracting Party recognises that it is inappropriate to encourage investment by investors of the other Contracting Party and of a non-Contracting Party by relaxing its health, safety or environmental measures, or by lowering its labour standards. To this effect, each Contracting Party should not waive or otherwise derogate from such measures or standards as an encouragement for the establishment, acquisition or expansion of investments in its Area by investors of the other Contracting Party and of a non-Contracting Party.
1. A Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is an enterprise of the other Contracting Party and to its investments if the enterprise is owned or controlled by an investor of a non- Contracting Party and the denying Contracting Party:
a)
does not maintain diplomatic relations with the non-Contracting Party; or
b)
adopts or maintains measures with respect to the non-Contracting Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Agreement were accorded to the enterprise or to its investments.
2. A Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is an enterprise of the other Contracting Party and to its investments if the enterprise is owned or controlled by an investor of a non- Contracting Party or of the denying Contracting Party and the enterprise has no substantial business activities in the Area of the other Contracting Party.
3. For the purposes of this Article, an enterprise is:
a)
“owned” by an investor if more than fifty percent of the equity interest in it is beneficially owned by the investor; and
b)
“controlled” by an investor if the investor has the power to name a majority of its directors or otherwise to legally direct its actions.