Consolidated CETA Text

10. Investment

Section 1: Scope and Definitions

Article X.1: Scope of Application

1. This Chapter shall apply to measures adopted or maintained by a Party in its territory Footnote 1 relating to:

  • (a) investors of the other Party;
  • (b) covered investments; and
  • (c) with respect to Articles X.5 (Performance Requirements), all investments in the territory of the Party.

2. The Section on Establishment of Investments, and the Section on Non-Discriminatory Treatment with regard to the establishment or acquisition of a covered investment, do not apply to measures relating to:

  • (a) air services, related services in support of air services and other services supplied by means of air transport Footnote 2, other than:
    • (i) Aircraft repair and maintenance services;
    • (ii) The selling and marketing of air transport services;
    • (iii) Computer reservation system (CRS) services;
    • (iv) Ground handling services;
    • (v) Airport operation services.
  • (b) Activities carried out in the exercise of governmental authority.

3. For the EU, the Section on Establishment of Investments and Section on Non-Discriminatory Treatment do not apply to measures with respect to Audiovisual services.

For Canada, the Section on Establishment of Investments and Section on Non-Discriminatory Treatment do not apply to measures with respect to cultural industries.

4. Claims may be submitted by an investor under this Chapter only in accordance with Section 6 Article 17 (Scope of a Claim to Arbitration), and in compliance with the procedures otherwise set out in that Section. Claims in respect of Section 2 (Establishment of Investments) are excluded from the scope of Section 6. Claims in respect of the establishment or acquisition of a covered investment under Section 3 (Non-Discriminatory Treatment) are excluded from the scope of Section 6. Section 4 (Investment Protection) applies only to covered investments and to investors in respect of their covered investments.

5. Nothing in this Chapter shall affect the Parties' rights and obligations under the Agreement on Air Transport between Canada and the European Community and its Member States.

Article X.2: Relation to Other Chapters

1. This Chapter does not apply to measures adopted or maintained by a Party to the extent that the measures apply to investors or to their investments covered by Chapter [XY] (Financial Services).

2. A requirement by a Party that a service provider of the other Party post a bond or other form of financial security as a condition of providing a service into its territory does not of itself make this Chapter applicable to measures adopted or maintained by the Party relating to the provision of that cross-border service. This Chapter shall apply to measures adopted or maintained by the Party relating to the posted bond or financial security, to the extent that such bond or financial security is a covered investment.

Article X.3:  Definitions

For the purpose of this Chapter:

activities carried out in the exercise of governmental authority means an activity carried out neither on a commercial basis nor in competition with one or more economic operators.

aircraft repair and maintenance service means such activities when undertaken on an aircraft or a part thereof while it is withdrawn from service and do not include so-called line maintenance.

airport operation services means the operation and/or management, on a fee or contract basis, of airport infrastructure, including terminals, runways, taxiways and aprons, parking facilities, and intra-airport transportation systems.
For greater certainty, airport operation services do not include the ownership of, or investment in, airports or airport lands, or any of the functions carried out by a board of directors.
Airport operation services do not include air navigation services.

attachment means the seizure of the property of a disputing party to secure or ensure the satisfaction of an award.

computer reservation system service means services supplied by computerised systems that contain information about air carriers' schedules, availability, fares and fare rules, through which reservations can be made or tickets may be issued.

confidential or protected information means:

  • (a) confidential business information; or
  • (b) information which is protected against being made available to the public, in the case of the information of the respondent, under the law of the respondent and in the case of other information, under any law or rules determined to be applicable to the disclosure of such information by the tribunal.

covered investment means, with respect to a Party, an investment:

  • (a) in its territory;
  • (b) made in accordance with the applicable law at that time;
  • (c) directly or indirectly owned or controlled by an investor of the other Party; and
  • (d) existing on the date of entry into force of this Agreement, as well as investments made or acquired thereafter.

disputing party means either the investor that initiates proceedings pursuant to Section 6 or the respondent. For the purpose of Section 6 and without prejudice to Article x-13 (Subrogation), an investor does not include a Party.

disputing parties means both the investor and the respondent.

enjoin means an order to prohibit or restrain an action.

enterprise means any entity duly constituted or otherwise organized under applicable law, whether for profit or otherwise, and whether privately-owned or controlled or governmentally-owned or controlled, including any corporation, trust, partnership, joint venture, sole proprietorship or association and a branch or representative office of any such entity.

ground handling services means the provision, on a fee or contract basis, of the following services: ground administration and supervision, including load control and communications; passenger handling; baggage handling; cargo and mail handling; ramp handling and aircraft services; fuel and oil handling; aircraft line maintenance, flight operations and crew administration; surface transport; and catering services.  Ground handling services do not include security services and the operation or management of centralised airport infrastructures, such as baggage handling systems, de-icing facilities, fuel distribution systems, and intra-airport transport systems.

ICSID means the International Centre for Settlement of Investment Disputes established by the ICSID Convention.

ICSID Additional Facility Rules means the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes.

ICSID Convention means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington, 18 March 1965.

intellectual property rights means copyright and related rights, trademark rights, rights in geographical indications, rights in industrial designs, patent rights, rights in layout designs of integrated circuits, rights in relation to protection of undisclosed information, and plant breeders’ rights; and, where such rights are provided by domestic law, utility model rights. The Joint Committee may, by decision, add other categories of intellectual property to this definition.

'investment' means:

Every kind of asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, which includes a certain duration and other characteristics such as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk. Forms that an investment may take include:

  • (a) an enterprise;
  • (b) shares, stocks and other forms of equity participation in an enterprise;
  • (c) bonds, debentures and other debt instruments of an enterprise;
  • (d) a loan to an enterprise;
  • (e) any other kinds of interest in an enterprise;
  • (f) an interest arising from:
    • (i) a concession conferred pursuant to domestic law or under a contract, including to search for, cultivate, extract or exploit natural resources,
    • (ii) a turnkey, construction, production, or revenue-sharing contract, or
    • (iii) other similar contracts;
  • (g) intellectual property rights;
  • (h) any other moveable property, tangible or intangible, or immovable property and related rights;
  • (i) claims to money or claims to performance under a contract;

For greater certainty, 'claims to money' does not include claims to money that arise solely from commercial contracts for the sale of goods or services by a natural person or enterprise in the territory of a Party to a natural person or enterprise in the territory of the other Party, domestic financing of such contracts, or any related order, judgment, or arbitral award. 

Returns that are invested shall be treated as investments. Any alteration of the form in which assets are invested or reinvested does not affect their qualification as investment.

investor means a Party, a natural person or an enterprise of a Party, other than a branch or a representative office, that seeks to make, is making or has made an investment in the territory of the other Party.

For the purposes of this definition an ‘enterprise of a Party’ is:

  • (a) an enterprise that is constituted or organised under the laws of that Party and has substantial business activities in the territory of that Party; or
  • (b) an enterprise that is constituted or organised under the laws of that Party and is directly or indirectly owned or controlled by a natural person of that Party or by an enterprise mentioned under a).

locally established enterprise means a juridical person which has the nationality of the respondent and which is owned or controlled, directly or indirectly, by an investor of the other Party.

measure includes a law, regulation, rule, procedure, decision, administrative action, requirement, practice or any other form of measure by a Party.

natural person means:

  • (a) in the case of Canada, a natural person who is a citizen or permanent resident of Canada, and
  • (b) in the case of the EU, a natural person having the nationality of one of the Member States of the EU according to their respective legislation, and, for Latvia, also a natural person permanently residing in the Republic of Latvia who is not a citizen of the Republic of Latvia or any other state but who is entitled, under laws and regulations of the Republic of Latvia, to receive a non-citizen’s passport.

A natural person who is a citizen of Canada and has the nationality of one of the Member States of the EU shall be deemed to be exclusively a natural person of the Party of his or her dominant and effective nationality.

 A natural person who has the nationality of one of the Member States of the European Union or is a citizen of Canada, and is also a permanent resident of the other Party, shall be deemed to be exclusively a natural person of the Party of his or her nationality or citizenship, as applicable. 

New York Convention means the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, 10 June 1958.

non-disputing Party means either Canada, where the European Union or a Member State is the respondent, or the European Union, where Canada is the respondent.

respondent means either Canada or, in the case of the European Union, either the Member State or the European Union pursuant to Article x-20 (Determination of the respondent for disputes with the European Union or its Member States).

returns means all amounts yielded by an investment or reinvestment, including profits, royalties and interest or other fees and payments in kind.

selling and marketing of air transport service means opportunities for the air carrier  concerned to sell and market freely its air transport services including all aspects of marketing such as market research, advertising and distribution.  These activities do not include the pricing of air transport services or the applicable conditions.

Tribunal means an arbitration tribunal established under Article x-22 (Submission of a Claim to Arbitration) or x-41 (Consolidation).

UNCITRAL Arbitration Rules means the arbitration rules of the United Nations Commission on International Trade Law.

UNCITRAL Transparency Rules means the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration.

Section 2: Establishment of Investments

Article X.4: Market Access

1. Neither Party shall adopt or maintain with regard to market access through establishment by an investor of a Party, either on the basis of its entire territory or on the basis of the territory of a national, provincial, territorial, regional or local level of government, measures that:

  • (a) impose limitations on:
    • (i) the number of enterprises that may carry out a specific economic activity whether in the form of numerical quotas, monopolies, exclusive suppliers or the requirement of an economic needs test;
    • (ii) the total value of transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
    • (iii) the total number of operations or the total quantity of output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test; Footnote 3
    •  (iv) the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment;
    • (v) the total number of natural persons that may be employed in a particular sector or that an enterprise may employ and who are necessary for, and directly related to, the performance of economic activity in the form of numerical quotas or the requirement of an economic needs test.
  • (b) restrict or require specific types of legal entity or joint venture through which  an enterprise may carry out an economic activity.

2. For greater certainty, the following are consistent with paragraph 1 of this article;

  • (a) Measures concerning zoning and planning regulations affecting the development or use of land, or other analogous measures.
  • (b) Measures requiring the separation of the ownership of infrastructure from the ownership of the goods or services provided through that infrastructure to ensure fair competition, for example in the fields of energy, transportation and telecommunications.
  • (c) Measures restricting the concentration of ownership to ensure fair competition.
  • (d) Measures seeking to ensure the conservation and protection of natural resources and the environment, including limitations on the availability, number and scope of concessions granted, and the imposition of moratoria or bans.  
  • (e) Measures limiting the number of authorizations granted because of technical or physical constraints, for example telecommunications spectrum and frequencies.
  • (f) Measures requiring that a certain percentage of the shareholders, owners, partners, or directors of an enterprise be qualified or practice a certain profession such as lawyers or accountants.

Article X.5: Performance Requirements

1. Neither Party may impose, or enforce any of the following requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, conduct or operation of all investments in its territory to:

  • (a) export a given level or percentage of goods or services;
  • (b) achieve a given level or percentage of domestic content;
  • (c) purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from natural persons or enterprises in its territory;
  • (d) 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 such investment;
  • (e) restrict sales of goods or services in its territory that such investment produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
  • (f) transfer technology, a production process or other proprietary knowledge to a natural person or enterprises in its territory; or
  • (g) supply exclusively from the territory of the Party a good produced or a service provided  by the investment to a specific regional or world market.

2. Neither Party may condition the receipt or continued receipt of an advantage, in connection with the establishment, acquisition, expansion, management, conduct or operation of all investments in its territory, 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 territory, or to purchase goods from producers in its territory;
  • (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 such investment; or
  • (d) to restrict sales of goods or services in its territory that such investment produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings.

3.

  • (a) Nothing in paragraph 2 shall be construed to prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory, on compliance with a  requirement to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development in its territory.
  • (b) Subparagraph 1(f) does not apply when the requirement is imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority to remedy a violation of competition laws.

4. The provisions of:

  • (a) subparagraphs 1(a), (b) and (c), and 2(a) and (b), do not apply to qualification requirements for goods or services with respect to participation in export promotion and foreign aid programs;
  • (b) this article does not apply to procurement by a Party for goods and services purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of goods and services for commercial sale, whether or not that procurement is "covered procurement" within the meaning of Article II of (Chapter XX - Public procurement).
  • (c) For greater certainty, subparagraphs 2(a) and (b) do not apply to requirements imposed by an importing Party relating to the content of goods necessary to qualify for preferential tariffs or preferential quotas.

5. This article is without prejudice to WTO commitments of a Party.

Section 3: Non-Discriminatory Treatment

Article X.6: National Treatment

1. Each Party shall accord to investors of the other Party and to covered investments, treatment no less favourable than the treatment it accords, in like situations to its own investors and to their investments with respect to the establishment, acquisition, expansion, conduct, operation, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

2. The treatment accorded by a Party under paragraph 1 means, with respect to a government in Canada other than at the federal level, or, with respect to a government of or in a European Member State, treatment no less favourable than the most favourable treatment accorded, in like situations, by that government to investors of that Party in its territory and to investments of such investors.

Article X.7: Most-Favoured-Nation Treatment

1. Each Party shall accord to investors of the other Party and to covered investments, treatment no less favourable than the treatment it accords in like situations, to investors and to their investments of any third country with respect to the establishment, acquisition, expansion, conduct, the operation, management, maintenance, use, enjoyment and sale or disposal of their investments in its territory.

2. For greater certainty, the treatment accorded by a Party under paragraph 1 means, with respect to a government in Canada other than at the federal level, or, with respect to a government of or in a European Member State, treatment accorded, in like situations, by that government to investors in its territory, and to investments of such investors, of any third country.

3. Paragraph 1 shall not apply to treatment accorded by a Party providing for recognition, including through arrangements or agreements with third parties recognising accreditation of testing and analysis services and service suppliers or repair and maintenance services and service suppliers, as well as the certification of the qualifications of or the results or work done by such accredited services and service suppliers.

4. For greater certainty, the “treatment” referred to in Paragraph 1 and 2 does not include investor-to-state dispute settlement procedures provided for in other international investment treaties and other trade agreements. Substantive obligations in other international investment treaties and other trade agreements do not in themselves constitute “treatment”, and thus cannot give rise to a breach of this article, absent measures adopted by a Party pursuant to such obligations.

Article X.8: Senior Management and Boards of Directors

Neither Party may require that an enterprise of that Party that is a covered investment appoint to senior management or the board of directors positions natural persons of any particular nationality.

Section 4: Investment Protection

Article X.9: Treatment of Investors and of Covered Investments

1. Each Party shall accord in its territory to covered investments of the other Party and to investors with respect to their covered investments fair and equitable treatment and full protection and security in accordance with paragraphs 2 to 6.

2. A Party breaches the obligation of fair and equitable treatment referenced in paragraph 1 where a measure or series of measures constitutes:

  • (a)Denial of justice in criminal, civil or administrative proceedings;
  • (b)Fundamental breach of due process, including a fundamental breach of transparency, in judicial and administrative proceedings.
  • (c)Manifest arbitrariness;
  • (d)Targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief; 
  • (e)Abusive treatment of investors,  such as coercion, duress and harassment; or
  • (f)A breach of any further elements of the fair and equitable treatment obligation adopted by the Parties in accordance with paragraph 3 of this Article.

3. The Parties shall regularly, or upon request of a Party, review the content of the obligation to provide fair and equitable treatment. The Committee on Services and Investment may develop recommendations in this regard and submit them to the Trade Committee for decision.

4. When applying the above fair and equitable treatment obligation, a tribunal may take into account whether a Party made a specific representation to an investor to induce a covered investment, that created a legitimate expectation, and upon which the investor relied in deciding to make or maintain the covered investment, but that the Party subsequently frustrated.

5. For greater certainty, ‘full protection and security’ refers to the Party’s obligations relating to physical security of investors and covered investments.

6. For greater certainty, a breach of another provision of this Agreement, or of a separate international Agreement, does not establish that there has been a breach of this Article.

Article X.10: Compensation for Losses

Notwithstanding paragraph 5(b) of Article X.14 (Reservations and Exceptions), each Party shall accord to investors of the other Party, whose covered investments suffer losses owing to armed conflict, civil strife, a state of emergency or natural disaster in its territory, treatment no less favourable than that it accords to its own investors or to the investors of any third country, whichever is more favourable to the investor concerned, as regards restitution, indemnification, compensation or other settlement.

Article X.11: Expropriation

1. Neither Party may nationalize or expropriate a covered investment either directly, or indirectly through measures having an effect equivalent to nationalization or expropriation (hereinafter referred to as “expropriation”), except:

  • (a) for a public purpose;
  • (b) under due process of law;
  • (c) in a non-discriminatory manner; and
  • (d) against payment of prompt, adequate and effective compensation.

For greater certainty, this paragraph shall be interpreted in accordance with Annex X.11 on the clarification of expropriation.

2. Such compensation shall amount to the fair market value of the investment at the time immediately before the expropriation or the impending expropriation became known, whichever is earlier. Valuation criteria shall include going concern value, asset value including the declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value.

3. The compensation shall also include interest at a normal commercial rate from the date of expropriation until the date of payment and shall, in order to be effective for the investor, be paid and made transferable, without delay, to the country designated by the investor and in the currency of the country of which the investor is a national or in any freely convertible currency accepted by the investor.

4. The investor affected shall have a right, under the law of the expropriating Party, to prompt review of its claim and of the valuation of its investment, by a judicial or other independent authority of that Party, in accordance with the principles set out in this Article.

5. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, to the extent that such issuance is consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreements ('TRIPS Agreement').

6. For greater certainty, the revocation, limitation or creation of intellectual property rights to the extent that these measures are consistent with TRIPS and Chapter X (Intellectual Property) of this Agreement, do not constitute expropriation. Moreover, a determination that these actions are inconsistent with the TRIPS Agreement or Chapter X (Intellectual Property) of this Agreement does not establish that there has been an expropriation.

Article X.12: Transfers

1. Each Party shall permit all transfers relating to a covered investment to be made without restriction or delay and in a freely convertible currency. Such transfers include:

  • (a) contributions to capital, such as principal and additional funds to maintain, develop or increase the investment;
  • (b) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, or other forms of returns or amounts derived from the covered investment;
  • (c) proceeds from the sale or liquidation of the whole or any part of the covered investment;
  • (d) payments made under a contract entered into by the investor or the covered investment, including payments made pursuant to a loan agreement;
  • (e) payments made pursuant to Articles X.10 (Compensation for Losses) and X.11 (Expropriation);
  • (f) earnings and other remuneration of foreign personnel and working in connection with an investment;
  • (g) payments of damages pursuant to an award issued by a tribunal under Section 6 (Investor to State Dispute Settlement).

2. Transfers shall be made at the market rate of exchange applicable on the date of transfer.

3. Neither Party may require its investors to transfer, or penalize its investors for failing to transfer, the income, earnings, profits or other amounts derived from, or attributable to, investments in the territory of the other Party.

4. Notwithstanding paragraphs 1, 2 or 3, nothing in this article shall be construed to prevent a Party from applying in an equitable and non-discriminatory manner and not in a way that would constitute a disguised restriction on transfers, its laws relating to:

  • (a) bankruptcy, insolvency or the protection of the rights of creditors;
  • (b) issuing, trading or dealing in securities;
  • (c) criminal or penal offences;
  • (d)  financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
  • (e) ensuring the satisfaction of judgments in adjudicatory proceedings.

Article X.13: Subrogation

If a Party, or an agency thereof, makes a payment under an indemnity, guarantee or contract of insurance it has entered into in respect of an investment made by one of its investors in the territory of the other Party, the other Party shall recognize that the Party or its agency shall be entitled in all circumstances to the same rights as those of the investor in respect of the investment. Such rights may be exercised by the Party or an agency thereof, or by the investor if the Party or an agency thereof so authorizes.

Section 5: Reservations and Exceptions

Article X.14: Reservations and Exceptions

1. Articles X.4 (Market Access), X.5 (Performance Requirements), X.6 (National Treatment), X.7 (Most-Favoured-Nation Treatment), and X.8 (Senior Management and Boards of Directors) do not apply to:

  • (a) an existing non-conforming measure that is maintained by a Party at the level of:
    • (i) the European Union, as set out in its Schedule to Annex I;
    • (ii) a national government, as set out by that Party in its Schedule to Annex I;
    • (iii) a provincial, territorial, or regional government, as set out by that Party in its Schedule to Annex I; or
    • (iv) a local government.
  • (b) the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or
  • (c) an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with X.4 (Market Access), X.5 (Performance Requirements), Articles X.6 (National Treatment), X.7 (Most-Favoured-Nation Treatment), , and X.8 (Senior Management and Boards of Directors).

2. Articles X.4 (Market Access), X.5 (Performance Requirements), X.6 (National Treatment), X.7 (Most-Favoured-Nation Treatment),  and X.8 (Senior Management and Boards of Directors) do not apply to measures that a Party adopts or maintains with respect to sectors, subsectors or activities, as set out in its Schedule to Annex II.

3. Without prejudice to Article X.9 (Treatment of Investors and Covered Investments) and Article X.11 (Expropriation), no Party may adopt any measure or series of measures after the date of entry into force of this Agreement and covered by its schedule to Annex II, that require, directly or indirectly, an investor of the other Party, by reason of nationality, to sell or otherwise dispose of an investment existing at the time the measure or series of measures becomes effective.

4. In respect of intellectual property rights, a Party may derogate from Article X.6 (National Treatment), Article X.7 (Most-Favoured-Nation Treatment) and subparagraph 1(f) of Article X.8 (Performance Requirements) where permitted by the TRIPS Agreement, including any amendments to the TRIPS Agreement in force for both Parties, and waivers to the TRIPS Agreement adopted pursuant to Article IX of the WTO Agreement.

5. Article X.4 (Market Access), Articles X.6 (National Treatment), X.7 (Most-Favoured-Nation Treatment) and X.8 (Senior Management and Board of Directors) do not apply to:

  • (a) procurement by a Party for goods and services purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of goods and services for commercial sale, whether or not that procurement is "covered procurement" within the meaning of Article II of (Chapter XX - Public procurement); or
  • (b) subsidies, or government support relating to trade in services, provided by a Party.

Article X.15: Denial of Benefits

1. A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of that Party and to investments of that investor if:

  • (a) investors of a non-Party own or control the enterprise; and
  • (b) the denying Party adopts or maintains measures with respect to the non-Party that:
    • (i) are related to maintenance of international peace and security; and
    • (ii) prohibit transactions with the enterprise or would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to its investments.

Article X.16: Formal Requirements

Notwithstanding Articles X.6 (National Treatment) and X.7 (Most-Favoured-Nation Treatment), a Party may require an investor of the other Party, or its covered investment, to provide routine information concerning that investment solely for informational or statistical purposes, provided that such requests are reasonable and not unduly burdensome.  The Party shall protect any confidential or protected information from any disclosure that would prejudice the competitive position of the investor or the covered investment. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its laws.

Section 6: Investor-State Dispute Settlement

Article X.17: Scope of a Claim to Arbitration

1. Without prejudice to the rights and obligations of the Parties under Chapter [XY](Dispute Settlement), an investor of a Party may submit to arbitration under this Section a claim that the respondent has breached an obligation under:

  • (a) Section 3 (Non-Discriminatory Treatment) of this Chapter, with respect to the expansion, conduct, operation, management, maintenance, use, enjoyment and sale or disposal of its covered investment; or
  • (b) Section 4 (Investment Protection) of this Chapter; and

where the investor claims to have suffered loss or damage as a result of the alleged breach.

2. Claims under subparagraph 1(a) with respect to the expansion of a covered investment may be submitted only to the extent the measure relates to the existing business operations of a covered investment and the investor has, as a result, incurred loss or damage with respect to the covered investment.

3. For greater certainty, an investor may not submit a claim to arbitration under this Section where the investment has been made through fraudulent misrepresentation, concealment, corruption, or conduct amounting to an abuse of process.

4. This Section shall apply to the restructuring of debt issued by a Party in accordance with Annex X (Public Debt).

5. A tribunal constituted under this Section may not decide claims that fall outside of the scope of this Article.

Article X.18: Consultations

1. Any dispute should as far as possible be settled amicably. Such a settlement may be agreed at any time, including after the arbitration has been commenced. Unless the disputing parties agree to a longer period, consultations shall be held within 60 days of the submission of the request for consultations pursuant to paragraph 3.

2. Unless the disputing parties agree otherwise, the place of consultation shall be:

  • (a) Ottawa, where the measures challenged are measures of Canada;
  • (b) Brussels, where the measures challenged include a measure of the European Union; or
  • (c) the capital of the Member State of the European Union, where the measures challenged are exclusively measures of that Member State.

3. The investor shall submit to the other Party a request for consultations containing:

  • (a) the following information:
    • (i) the name and address of the investor and, where such request is submitted on behalf of a locally established enterprise, the name, address and place of incorporation of the locally established enterprise;
    • (ii) where there is more than one investor, the name and address of each investor and, where there is more than one locally established enterprise, the name, address and place of incorporation of each locally established enterprise;
    • (iii) the provisions of this Agreement alleged to have been breached;
    • (iv) the legal and the factual basis for the claim, including the measures at issue; and
    • (v) the relief sought and the estimated amount of damages claimed; and
  • (b) evidence establishing that the investor is an investor of the other Party and that it owns or controls the investment, including the locally established enterprise where applicable, in respect of which it has submitted a request.

4. The requirements of the request for consultations set out in paragraph 3 shall be met in a manner that does not materially affect the ability of the respondent to effectively engage in consultations or to prepare its defence.

5. A request for consultations must be submitted within:

  • (a) 3 years after the date on which the investor or, as applicable, the locally established enterprise, first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor or, as applicable, the locally established enterprise, has incurred loss or damage thereby; or
  • (b) two years after the investor or, as applicable, the locally established enterprise, exhausts or ceases to pursue claims or proceedings before a tribunal or court under the law of a Party and, in any event, no later than 10 years after the date on which the investor or, as applicable, the locally established enterprise, first acquired, or should have first acquired knowledge of the alleged breach and knowledge that the investor has incurred loss or damage thereby

6. In the event that the request for consultations concerns an alleged breach by the European Union, or a Member State of the European Union, it shall be sent to the European Union.

7. In the event that the investor has not submitted a claim to arbitration pursuant to Article X.22 (Submission of a claim to arbitration) within 18 months of submitting the request for consultations, the investor shall be deemed to have withdrawn its request for consultations and any notice requesting a determination of the respondent and may not submit a claim under this Section. This period may be extended by agreement between the disputing parties.

Article X.19: Mediation

1. The disputing parties may at any time agree to have recourse to mediation.

2. Recourse to mediation is without prejudice to the legal position or rights of either disputing party under this Chapter and shall be governed by the rules agreed to by the disputing parties including, if available, the rules established by the Services and Investment Committee pursuant to Article X.42(3)(c).

3. The mediator is appointed by agreement of the disputing parties. Such appointment may include appointing a mediator from the roster established pursuant to Article X.25 (Constitution of the Tribunal) or requesting the Secretary-General of ICSID to appoint a mediator from the list of chairpersons established pursuant to Article X.25 (Constitution of the Tribunal).

4. Disputing parties shall endeavour to reach a resolution to the dispute within 60 days from the appointment of the mediator.

5. If the disputing parties agree to have recourse to mediation, Articles X.18(5) and X.18(7) (Consultations) shall not apply from the date on which the disputing parties agreed to have recourse to mediation to the date on which either disputing party decides to terminate the mediation, by way of a letter to the mediator and the other disputing party.

Article X.20: Determination of the respondent for disputes with the European Union or its Member States

1. If the dispute cannot be settled within 90 days of the submission of the request for consultations, the request concerns an alleged breach of the Agreement by the European Union or a Member State of the European Union and the investor intends to initiate arbitration proceedings pursuant to Article X.22 (Submission of a claim to arbitration), the investor shall deliver to the European Union a notice requesting a determination of the respondent.

2. The notice shall identify the measures in respect of which the investor intends to initiate arbitration proceedings.

3. The European Union shall, after having made a determination, inform the investor as to whether the European Union or a Member State of the European Union shall be the respondent.

4. If the investor has not been informed of the determination within 50 days of the notice referred to in paragraph 1:

  • (a) where the measures identified in the notice are exclusively measures of a Member State of the European Union, the Member State shall be respondent.
  • (b) where the measures identified in the notice include measures of the European Union, the European Union shall be respondent.

5. The investor may submit a claim to arbitration on the basis of the determination made pursuant to paragraph 3, and, if no such determination has been communicated, on the basis of the application of paragraph 4.

6. Where either the European Union or the Member State is the respondent, pursuant to paragraph 3 or 4, neither the European Union, nor the Member State may assert the inadmissibility of the claim, lack of jurisdiction of the tribunal or otherwise object to the claim or award on the ground that the respondent was not properly determined pursuant to paragraph 3 or identified on the basis of the application of paragraph 4.

7. The tribunal shall be bound by the determination made pursuant to paragraph 3 and, if no such determination has been communicated, the application of paragraph 4.

Article X.21: Procedural and Other Requirements for the Submission of a Claim to Arbitration

1. An investor may submit a claim to arbitration under Article X.22 (Submission of a Claim to Arbitration) only if the investor:

  • (a) delivers to the respondent, with the submission of a claim to arbitration, its consent to arbitration in accordance with the procedures set out in this Chapter;
  • (b) allows at least 180 days to elapse from the submission of the request for consultations and, where applicable, at least 90 days to elapse from the submission of the notice requesting a determination of the respondent;
  • (c) fulfils the requirements of the notice requesting a determination of the respondent;
  • (d) fulfils the requirements related to the request for consultations;
  • (e) does not identify measures in its claim to arbitration that were not identified in its request for consultations;
  • (f) where it has initiated a claim or proceeding seeking compensation or damages before a tribunal or court under domestic or international law with respect to any measure alleged to constitute a breach referred to in its claim to arbitration, provides a declaration that:
    • (i) a final award, judgment or decision has been made; or
    • (ii) it has withdrawn any such claim or proceeding;
  • The declaration shall contain, as applicable, proof that a final award, judgment or decision has been made or proof of the withdrawal of any such claim or proceeding; and
  • (g) waives its right to initiate any claim or proceeding seeking compensation or damages before a tribunal or court under domestic or international law with respect to any measure alleged to constitute a breach referred to in its claim to arbitration.

2. Where the submission of a claim to arbitration is for loss or damage to a locally established enterprise or to an interest in a locally established enterprise that the investor owns or controls directly or indirectly, both the investor and the locally established enterprise shall provide a declaration pursuant to subparagraph 1(f) and a waiver pursuant to subparagraph 1(g).

3. The requirements of subparagraphs 1(f), (g) and paragraph 2 do not apply in respect of a locally established enterprise where the respondent or the investor's host State has deprived an investor of control of the locally established enterprise, or has otherwise prevented the locally established enterprise from fulfilling such requirements.

4. Upon request of the respondent, the Tribunal shall decline jurisdiction where the investor or, as applicable, the locally established enterprise fails to fulfil any of the requirements of paragraphs 1 and 2.

5. The waiver provided pursuant to subparagraph 1(g) or paragraph 2 as applicable shall cease to apply:

  • (a) where the Tribunal rejects the claim on the basis of a failure to meet the requirements of paragraphs 1 or 2 or on any other procedural or jurisdictional grounds;
  • (b) where the Tribunal dismisses the claim pursuant to Article X.29 (Claim manifestly without legal merit) or Article X.30 (Claims Unfounded as a Matter of Law); or
  • (c) where the investor withdraws its claim, in conformity with applicable arbitration rules, within 12 months of the constitution of the tribunal.

Article X.22: Submission of a Claim to Arbitration

1. If a dispute has not been resolved through consultations, a claim may be submitted to arbitration under this Section by:

  • (a) an investor of the other Party on its own behalf; or
  • (b) an investor of the other Party, on behalf of a locally established enterprise which it owns or controls directly or indirectly.

2. A claim may be submitted under the following arbitration rules:

  • (a) the ICSID Convention;
  • (b) the ICSID Additional Facility Rules where the conditions for proceedings pursuant to paragraph (a) do not apply;
  • (c) the UNCITRAL Arbitration Rules; or
  • (d) any other arbitration rules on agreement of the disputing parties.

3. In the event that the investor proposes arbitration rules pursuant to sub-paragraph 2(d), the respondent shall reply to the investor's proposal within 20 days of receipt. If the disputing parties have not agreed on such arbitration rules within 30 days of receipt, the investor may submit a claim under the arbitration rules provided for in subparagraphs 2(a), (b) or (c).

4. For greater certainty, a claim submitted under subparagraph 1(b) shall satisfy the requirements of Article 25(1) of the ICSID Convention.

5. The investor may, when submitting its claim, propose that a sole arbitrator should hear the claim. The respondent shall give sympathetic consideration to such a request, in particular where the investor is a small or medium-sized enterprise or the compensation or damages claimed are relatively low.

6. The arbitration is governed by the arbitration rules applicable under paragraph 2 that are in effect on the date that the claim or claims are submitted to arbitration under this Section, subject to the specific rules set out in this Section and supplemented by rules adopted pursuant to Article X.42(3)(b) (Committee).

7. A claim is submitted to arbitration under this Section when:

  • (a) the request for arbitration under Article 36(1) of the ICSID Convention is received by the Secretary-General of ICSID;
  • (b) the request for arbitration under Article 2 of Schedule C of the ICSID Additional Facility Rules is received by the Secretariat of ICSID;
  • (c) the notice of arbitration under Article 3 of the UNCITRAL Arbitration Rules is received by the respondent; or
  • (d) the request or notice of arbitration pursuant to other arbitration rules is received by the respondent in accordance with subparagraph 2(d).

8. Each Party shall notify the other Party of the place of delivery of notices and other documents by the investors relating to this Section. Each Party shall ensure this information is made publicly available.

Article X.23: Proceedings under different international agreements

Where claims are brought both pursuant to this Section and another international agreement and:

  • (a) there is a potential for overlapping compensation; or
  • (b) the other international claim could have a significant impact on the resolution of the claim brought pursuant to this Section,
  • a Tribunal constituted under this Section shall, as soon as possible after hearing the disputing parties, stay its proceedings or otherwise ensure that proceedings pursuant to another international agreement are taken into account in its decision, order or award.

Article X.24: Consent to Arbitration

1. The respondent consents to the submission of a claim to arbitration under this Section in accordance with the procedures set out under this Agreement.

2. The consent under paragraph 1 and the submission of a claim to arbitration under this Chapter shall satisfy the requirements of:

  • (a) Article 25 of the ICSID Convention and Chapter II (Institution of Proceedings) of the ICSID Additional Facility Rules for written consent of the disputing parties; and,
  • (b) Article II of the New York Convention for an agreement in writing.

Article X.25: Constitution of the Tribunal

1. Unless the disputing parties have agreed to appoint a sole arbitrator, the Tribunal shall comprise three arbitrators. One arbitrator shall be appointed by each of the disputing parties and the third, who will be the presiding arbitrator, shall be appointed by agreement of the disputing parties. If the disputing parties agree to appoint a sole arbitrator, the disputing parties shall seek to agree on the sole arbitrator.

2. If a Tribunal has not been constituted within 90 days from the date that a claim is submitted to arbitration, or where the disputing parties have agreed to appoint a sole arbitrator and have failed to do so within 90 days from the date the respondent agreed to submit the dispute to a sole arbitrator, the Secretary-General of ICSID shall appoint the arbitrator or arbitrators not yet appointed in accordance with paragraph 3.

3. The Secretary-General of ICSID shall, upon request of a disputing party, appoint the remaining arbitrators from the list established pursuant to paragraph 4. In the event that such list has not been established on the date a claim is submitted to arbitration, the Secretary-General of ICSID shall make the appointment at his or her discretion taking into consideration nominations made by either Party and, to the extent practicable, in consultation with the disputing parties. The Secretary-General of ICSID may not appoint as presiding arbitrator a national of either Canada or a Member State of the European Union unless all disputing parties agree otherwise.

4. Pursuant to Article X.42(2)(a), the Committee on Services and Investment shall establish, and thereafter maintain, a list of individuals who are willing and able to serve as arbitrators and who meet the qualifications set out in paragraph 5. It shall ensure that the list includes at least 15 individuals but may agree to increase the number of individuals. The list shall be composed of three sub-lists each comprising at least five individuals: one sub-list for each Party, and one sub-list of individuals who are neither nationals of Canada nor the Member States of the European Union to act as presiding arbitrators.

5. Arbitrators appointed pursuant to this Section shall have expertise or experience in public international law, in particular international investment law. It is desirable that they have expertise or experience in international trade law and the resolution of disputes arising under international investment or international trade agreements.

6. Arbitrators shall be independent of, and not be affiliated with or take instructions from, a disputing party or the government of a Party with regard to trade and investment matters. Arbitrators shall not take instructions from any organisation, government or disputing party with regard to matters related to the dispute. Arbitrators shall comply with the International Bar Association Guidelines on Conflicts of Interest in International Arbitration or any supplemental rules adopted pursuant to Article X.42(2)(b) (Committee on Services and Investment). Arbitrators who serve on the list established pursuant to paragraph 3 shall not, for that reason alone, be deemed to be affiliated with the government of a Party.

7. If a disputing party considers that an arbitrator does not meet the requirements set out in paragraph 6, it shall send a notice of its intent to challenge the arbitrator within 15 days after:

  • (a) the appointment of the arbitrator has been notified to the challenging party; or,
  • (b) the disputing party became aware of the facts giving rise to the alleged failure to meet such requirements.

8. The notice of an intention to challenge shall be promptly communicated to the other disputing party, to the arbitrator or arbitrators, as applicable, and to the Secretary-General of ICSID. The notice of challenge shall state the reasons for the challenge.

9. When an arbitrator has been challenged by a disputing party, the disputing parties may agree to the challenge, in which case the disputing parties may request the challenged arbitrator to resign. The arbitrator may, after the challenge, elect to resign. A decision to resign does not imply acceptance of the validity of the grounds for the challenge.

10. If, within 15 days from the date of the notice of challenge, the challenged arbitrator has elected not to resign, the Secretary-General of ICSID shall, after hearing the disputing parties and after providing the arbitrator an opportunity to submit any observations, issue a decision within 45 days of receipt of the notice of challenge and forthwith notify the disputing parties and other arbitrators, as applicable.

11. A vacancy resulting from the disqualification or resignation of an arbitrator shall be filled promptly pursuant to the procedure provided for in this Article.

Article X.26: Agreement to the Appointment of Arbitrators

1. For purposes of Article 39 of the ICSID Convention and Article 7 of Schedule C to the ICSID Additional Facility Rules, and without prejudice to an objection to an arbitrator based on a ground other than nationality:

  • (a) the respondent agrees to the appointment of each individual member of a Tribunal established under the ICSID Convention or the ICSID Additional Facility Rules; and
  • (b) an investor may submit a claim to arbitration or continue a claim under the ICSID Convention or, as the case may be, the ICSID Additional Facility Rules only if the investor agrees in writing to the appointment of each member of the Tribunal.

Article X.27: Applicable Law and Interpretation

1. A Tribunal established under this Chapter shall render its decision consistent with this Agreement as interpreted in accordance with the Vienna Convention on the Law of Treaties, and other rules and principles of international law applicable between the Parties.

2. Where serious concerns arise as regards matters of interpretation that may affect investment, the Committee on Services and Investment may, pursuant to Article X.42(3)(a), recommend to the Trade Committee the adoption of interpretations of the Agreement. An interpretation adopted by the Trade Committee shall be binding on a Tribunal established under this Chapter. The Trade Committee may decide that an interpretation shall have binding effect from a specific date.

Article X.28: Place of Arbitration

The disputing parties may agree on the place of arbitration under the applicable arbitration rules provided it is in the territory of a party to the New York Convention.  If the disputing parties fail to agree on the place of arbitration, the Tribunal shall determine the place of arbitration in accordance with the applicable arbitration rules, provided that it shall be in the territory of either Party or of a third state that is a party to the New York Convention.

Article X.29: Claims Manifestly Without Legal Merit

1. The respondent may, no later than 30 days after the constitution of the tribunal, and in any event before the first session of the Tribunal, file an objection that a claim is manifestly without legal merit.

2. An objection may not be submitted under paragraph 1 if the respondent has filed an objection pursuant to Article X.30 (Claims Unfounded as a Matter of Law).

3. The respondent shall specify as precisely as possible the basis for the objection.

4. On receipt of an objection pursuant to this Article, the Tribunal shall suspend the proceedings on the merits and establish a schedule for considering any objections consistent with its schedule for considering any other preliminary question.

5. The Tribunal, after giving the disputing parties an opportunity to present their observations, shall at its first session or promptly thereafter, issue a decision or award, stating the grounds therefor. In doing so, the Tribunal shall assume the alleged facts to be true.

6. This Article shall be without prejudice to the Tribunal's authority to address other objections as a preliminary question or to the right of the respondent to object, in the course of the proceeding, that a claim lacks legal merit.

Article X.30: Claims Unfounded as a Matter of Law

1. Without prejudice to a tribunal's authority to address other objections as a preliminary question or to a respondent's right to raise any such objections at any appropriate time, the Tribunal shall address and decide as a preliminary question any objection by the respondent that, as a matter of law, a claim, or any part thereof, submitted pursuant to Article X.22 (Submission of a Claim to Arbitration) is not a claim for which an award in favour of the claimant may be made under this Section, even if the facts alleged were assumed to be true.

2. An objection under paragraph 1 shall be submitted to the Tribunal no later than the date the Tribunal fixes for the respondent to submit its counter-memorial.

3. If an objection has been submitted pursuant to Article X.29 (Claims Manifestly Without Legal Merit), the Tribunal may, taking into account the circumstances of that objection, decline to address, under the procedures set out in this Article, an objection submitted pursuant to paragraph 1.

4. On receipt of an objection under paragraph 1, and, where appropriate, after having taken a decision pursuant to paragraph 3, the Tribunal shall suspend any proceedings on the merits, establish a schedule for considering the objection consistent with any schedule it has established for considering any other preliminary question, and issue a decision or award on the objection, stating the grounds therefor.

Article X.31: Interim Measures of Protection

A Tribunal may order an interim measure of protection to preserve the rights of a disputing party or to ensure that the Tribunal's jurisdiction is made fully effective, including an order to preserve evidence in the possession or control of a disputing party or to protect the Tribunal's jurisdiction.  A Tribunal may not order attachment nor may it enjoin the application of the measure alleged to constitute a breach referred to in Article X.22 (Submission of a Claim to Arbitration).  For the purposes of this Article, an order includes a recommendation.

Article X.32: Discontinuance

If, following the submission of a claim to arbitration under this Section, the investor fails to take any steps in the proceeding during 180 consecutive days or such periods as the disputing parties may agree, the investor shall be deemed to have withdrawn its claim and to have discontinued the proceedings. The Tribunal, or if no tribunal has been established, the Secretary-General of ICSID shall, at the request of the respondent, and after notice to the disputing parties, in an order take note of the discontinuance. After such an order has been rendered the authority of the tribunal shall lapse.

Article X.33: Transparency of Proceedings

1. The UNCITRAL Transparency Rules shall apply to the disclosure of information to the public concerning disputes under this Section as modified by this Chapter.

2. The request for consultations, the notice requesting a determination of the respondent, the notice of determination of the respondent, the agreement to mediate, the notice of intent to challenge, the decision on an arbitrator challenge and the request for consolidation shall be included in the list of documents referred to in Article 3(1) of the UNCITRAL Transparency Rules.

3. Exhibits shall be included in the list of documents mentioned in Article 3(2) of the UNCITRAL Transparency Rules.

4. Notwithstanding Article 2 of the UNCITRAL Transparency Rules, prior to the constitution of the tribunal, Canada or the European Union as the case may be shall make publicly available in a timely manner relevant documents pursuant to paragraph 2, subject to the redaction of confidential or protected information. Such documents may be made publicly available by communication to the repository.

5. Hearings shall be open to the public. The tribunal shall determine, in consultation with the disputing parties, the appropriate logistical arrangements to facilitate public access to such hearings. Where the tribunal determines that there is a need to protect confidential or protected information, it shall make the appropriate arrangements to hold in private that part of the hearing requiring such protection.

6. Nothing in this Chapter requires a respondent to withhold from the public information required to be disclosed by its laws. The respondent should endeavour to apply such laws in a manner sensitive to protecting from disclosure information that has been designated as confidential or protected information.

Article X.34: Sharing of Information

1. A disputing party may disclose to other persons in connection with proceedings, including witnesses and experts, such unredacted documents as it considers necessary in the course of proceedings under this Section. However, the disputing party shall ensure that those persons protect the confidential or protected information contained in those documents.

2. Nothing in this agreement shall be construed to prevent a respondent from disclosing to officials of, as applicable, the European Union, Member States of the European Union and sub-national governments, such unredacted documents as it considers necessary in the course of proceedings under this Section. However, the respondent shall ensure that those officials protect the confidential or protected information contained in those documents.

Article X.35: The non-disputing Party to the Agreement

1. The respondent shall, within 30 days after receipt or promptly after any dispute concerning confidential or protected information has been resolved, deliver to the non-disputing Party:

  • (a) a request for consultations, a notice requesting a determination of the respondent, a notice of determination of the respondent, a claim to arbitration, a request for consolidation, and any other documents that are appended to such documents;
  • (b) on request:
    • (i) pleadings, memorials, briefs, requests and other submissions made to the tribunal by a disputing party;
    • (ii) written submissions made to the tribunal pursuant to Article 4 (Submission by a third person) of the UNCITRAL Transparency Rules;
    • (iii) minutes or transcripts of hearings of the tribunal, where available; and
    • (iv) orders, awards and decisions of the tribunal.
  • (c) on request and at the cost of the non-disputing Party, all or part of the evidence that has been tendered to the Tribunal unless publicly available.

2. The Tribunal shall accept or, after consultation with the disputing parties, may invite, oral or written submissions from the non-disputing Party regarding the interpretation of the Agreement. The non-disputing Party may attend a hearing held under this Section.

3. The Tribunal shall not draw any inference from the absence of a submission pursuant to paragraph 2.

4. The Tribunal shall ensure that the disputing parties are given a reasonable opportunity to present their observations on a submission by the non-disputing Party to the Agreement.

Article X.36: Final Award

1. Where a Tribunal makes a final award against the respondent the Tribunal may award, separately or in combination, only:

  • (a) monetary damages and any applicable interest;
  • (b) restitution of property, in which case the award shall provide that the respondent may pay monetary damages representing the fair market value of the property at the time immediately before the expropriation, or impending expropriation became known, whichever is earlier and any applicable interest in lieu of restitution, determined in a manner consistent with Article X.11 (Expropriation).

2. Subject to paragraphs 1 and 5, where a claim is made under paragraph 1(b) of Article X.22 (Submission of a Claim to Arbitration):

  • (a) an award of monetary damages and any applicable interest shall provide that the sum be paid to the locally established enterprise;
  • (b) an award of restitution of property shall provide that restitution be made to the locally established enterprise;
  • (c) an award of costs in favour of the investor shall provide that it is to be made to the investor; and
  • (d) the award shall provide that it is made without prejudice to a right that a person, other than a person which has provided a waiver pursuant to Article X.21 (Procedural and Other Requirements for the Submission of a Claim to Arbitration), may have in monetary damages or property awarded under a Party's domestic law.

3. Monetary damages shall not be greater than the loss suffered by the investor or, as applicable, the locally established enterprise, reduced by any prior damages or compensation already provided. For the calculation of monetary damages, the Tribunal shall also reduce the damages to take into account any restitution of property or repeal or modification of the measure.

4. A Tribunal may not award punitive damages.

5. A tribunal shall order that the costs of arbitration be borne by the unsuccessful disputing party. In exceptional circumstances, a tribunal may apportion costs between the disputing parties if it determines that apportionment is appropriate in the circumstances of the claim. Other reasonable costs, including costs of legal representation and assistance, shall be borne by the unsuccessful disputing party, unless the tribunal determines that such apportionment is unreasonable in the circumstances of the claim. Where only parts of the claims have been successful the costs shall be adjusted, proportionately, to the number or extent of the successful parts of the claims.

Article X.37: Indemnification or Other Compensation

A respondent shall not assert, and a tribunal shall not accept a defence, counterclaim, right of setoff, or similar assertion, that an investor or, as applicable, the locally established enterprise, has received, or will receive, indemnification or other compensation pursuant to an insurance or guarantee contract in respect of all or part of the compensation sought in a dispute initiated pursuant to this Section.

Article X.38: Fees and Expenses of the Arbitrators

The fees and expenses of the arbitrators pursuant to Regulation 14(1) of the Administrative and Financial Regulations of the ICSID Convention in force on the date of initiation of the arbitration shall apply.

Article X.39: Enforcement of Awards

1. An award issued by a Tribunal pursuant to this Section shall be binding between the disputing parties and in respect of that particular case.

2. Subject to paragraph 3 and the applicable review procedure for an interim award, a disputing party shall recognize and comply with an award without delay.

3. A disputing party may not seek enforcement of a final award until:

  • (a) in the case of a final award made under the ICSID Convention:
    • (i) 120 days have elapsed from the date the award was rendered and no disputing party has requested revision or annulment of the award, or
    • (ii) enforcement of the award has been stayed and revision or annulment proceedings have been completed; and
  • (b) in the case of a final award under the ICSID Additional Facility Rules the UNCITRAL Arbitration Rules, or any other rules applicable pursuant to Article X. 22(2)(d) (Submission of a Claim to Arbitration):
    • (i) 90 days have elapsed from the date the award was rendered and no disputing party has commenced a proceeding to revise, set aside or annul the award, or
    • (ii) enforcement of the award has been stayed and a court has dismissed or allowed an application to revise, set aside or annul the award and there is no further appeal.

4. Execution of the award shall be governed by the laws concerning the execution of judgments in force where such execution is sought.

5. A claim that is submitted to arbitration under this Chapter shall be deemed to arise out of a commercial relationship or transaction for the purposes of Article I of the New York Convention.

Article X.40: Role of the Parties to the Agreement

1. No Party shall bring an international claim, in respect of a dispute submitted pursuant to Article X.22 (Submission of a Claim to Arbitration), unless the other Party has failed to abide by and comply with the award rendered in such dispute. This shall not exclude the possibility of dispute settlement under the Dispute Settlement Chapter in respect of a measure of general application even if that measure is alleged to have violated the agreement as regards a specific investment in respect of which a dispute has been initiated pursuant to Article X.22 (Submission of a Claim to Arbitration) and is without prejudice to Article X.35 (The non-disputing Party to the Agreement).

2. Paragraph 1 does not preclude informal exchanges for the sole purpose of facilitating a settlement of the dispute.

Article X.41: Consolidation

1. When two or more claims that have been submitted separately to arbitration under Article X.22 (Submission of a Claim to Arbitration) have a question of law or fact in common and arise out of the same events or circumstances, a disputing party or the disputing parties, jointly, may seek the establishment of a separate Tribunal pursuant to this Article and request that such Tribunal issue a consolidation order.

2. The disputing party seeking a consolidation order shall first deliver a notice to the disputing parties it seeks to be covered by this order.

3. Where the disputing parties which have been notified pursuant to paragraph 2 have reached an agreement on the consolidation order to be sought, they may make a joint request for the establishment of a separate Tribunal and a consolidation order pursuant to this Article. Where the disputing parties which have been notified pursuant to paragraph 2 have not reached agreement on the consolidation order to be sought within 30 days of the notice, a disputing party may make a request for the establishment of a separate Tribunal and a consolidation order pursuant to this Article. The request shall be delivered, in writing, to the Secretary-General of ICSID and to all the disputing parties sought to be covered by the order, and shall specify:

  • (a) the names and addresses of the disputing parties sought to be covered by the order;
  • (b) the claims, or parts thereof, sought to be covered by the order; and
  • (c) the grounds for the order sought.

A request for consolidation involving more than one respondent shall require the agreement of all such respondents.

4. The arbitration rules applicable to the proceedings under this Article shall be determined as follows:

  • (a) when all of the claims for which a consolidation order is sought have been submitted to arbitration under the same arbitration rules pursuant to Article X.22 (Submission of a Claim to Arbitration), these arbitration rules shall apply;
  • (b) when the claims for which a consolidation order is sought have not been submitted to arbitration under the same arbitration rules:
    • (i) the investors may collectively agree on the arbitration rules pursuant to paragraph 2 of Article X.22 (Submission of a Claim to Arbitration); or
    • (ii) if the investors cannot agree on the arbitration rules within 30 days of the Secretary -General of ICSID receiving the request for consolidation, the UNCITRAL Arbitration Rules shall apply.

5. A Tribunal established under this Article shall comprise three arbitrators: one arbitrator appointed by the respondent, one arbitrator appointed by agreement of the investors, and the third, who shall be the presiding arbitrator, appointed by agreement of the disputing parties. If the respondent or the investors fail to appoint an arbitrator within 45 days after the Secretary-General of ICSID receives a request for consolidation, or if the disputing parties have not agreed to a presiding arbitrator within 60 days after the Secretary-General of ICSID receives a request for consolidation, a disputing party may request the Secretary-General of ICSID to appoint the arbitrator or arbitrators not yet appointed in accordance with paragraph 3 of Article X.25 (Constitution of the Tribunal).

6. If, after hearing the disputing parties, a Tribunal established under this Article is satisfied that claims submitted to arbitration under Article X.22 (Submission of a Claim to Arbitration) have a question of law or fact in common and arise out of the same events or circumstances, and consolidation would best serve the interests of fair and efficient resolution of the claims including the interest of consistency of arbitral awards, the tribunal may, by order, assume jurisdiction over some or all of the claims, in whole or in part.

7. Where a Tribunal has been established under this Article and has assumed jurisdiction pursuant to paragraph 6, an investor that has submitted a claim to arbitration under Article X.22 (Submission of a Claim to Arbitration) and whose claim has not been consolidated may make a written request to the Tribunal that it be included in such order provided that the request complies with the requirements set out in paragraph 3. The Tribunal shall grant such order where it is satisfied that the conditions of paragraph 6 are met and that granting such a request would not unduly burden or unfairly prejudice the disputing parties or unduly disrupt the proceedings. Before a Tribunal issues such an order, it shall consult with the disputing parties.

8. On application of a disputing party, a Tribunal established under this Article, pending its decision under paragraph 6, may order that the proceedings of a Tribunal established under Article X.22 (Submission of a Claim to Arbitration) be stayed unless the latter Tribunal has already adjourned its proceedings.

9. A Tribunal established under Article X.22 (Submission of a Claim to Arbitration) shall cede jurisdiction in relation to the claims, or parts thereof, over which a tribunal established under this Article has assumed jurisdiction.

10. The award of the Tribunal established under this Article in relation to those claims, or parts thereof, over which it has assumed jurisdiction shall become binding on the tribunals established pursuant to Article X.22 (Submission of a Claim to Arbitration) as regards those claims, or parts thereof, once the conditions of Article 39(3) (Enforcement of Awards) have been fulfilled.

11. An investor may withdraw a claim from arbitration under this Section that is subject to consolidation and such claim may not be resubmitted to arbitration under Article X.22 (Submission of a Claim to Arbitration). If it does so no later than 15 days after receipt of the notice of consolidation, its earlier submission of the claim to arbitration shall not prevent the investor's recourse to dispute settlement other than under this Chapter.

12. At the request of an investor, the Tribunal established under this Article may take such measures as it sees fit in order to preserve the confidential or protected information of that investor vis-à-vis other investors. Such measures may include the submission of redacted versions of documents containing confidential or protected information to the other investors or arrangements to hold parts of the hearing in private.

Article X.42: Committee

1. The Committee on Services and Investment shall provide a forum for the Parties to consult on issues related to this Section, including:

  • (a) difficulties which may arise in the implementation of this Chapter;
  • (b) possible improvements of this Chapter, in particular in the light of experience and developments in other international fora; and,
  • (c) whether, and if so, under what conditions, an appellate mechanism could be created under the Agreement to review, on points of law, awards rendered by a tribunal under this Section, or whether awards rendered under this Section could be subject to such an appellate mechanism developed pursuant to other institutional arrangements. Such consultations shall take into account the following issues, among others:
    • (i) the nature and composition of an appellate mechanism;
    • (ii) the applicable scope and standard of review;
    • (iii) transparency of proceedings of an appellate mechanism;
    • (iv) the effect of decisions by an appellate mechanism;
    • (v) the relationship of review by an appellate mechanism to the arbitration rules that may be selected under Article X.22 (Submission of a Claim to Arbitration); and
    • (vi) the relationship of review by an appellate mechanism to domestic laws and international law on the enforcement of arbitral awards.

2. The Committee shall, on agreement of the Parties, and after completion of the respective legal requirements and procedures of the Parties:

  • (a) establish and maintain the list of arbitrators pursuant to Article X.25(3)(Constitution of the Tribunal);
  • (b) adopt a code of conduct for arbitrators to be applied in disputes arising out of this Chapter, which may replace or supplement the rules in application, and that may address topics including:
    • (i) disclosure obligations;
    • (ii) the independence and impartiality of arbitrators; and
    • (iii) confidentiality.

The Parties shall make best efforts to ensure that the list of arbitrators is established and the code of conduct adopted no later than the entry into force of the Agreement, and in any event no later than two years after the entry into force of the Agreement.

3. The Committee may, on agreement of the Parties, and after completion of the respective legal requirements and procedures of the Parties:

  • (a) recommend to the Trade Committee the adoption of interpretations of the agreement pursuant to Article X.27(2) (Applicable Law and Interpretation);
  • (b) adopt and amend rules supplementing the applicable arbitration rules, and amend the applicable rules on transparency. Such rules and amendments are binding on the members of a Tribunal established under this Section;
  • (c) adopt rules for mediation for use by disputing parties as referred to in Article X.19 (Mediation); and
  • (d) recommend to the Trade Committee the adoption of any further elements of the fair and equitable treatment obligation pursuant to Section 5, Article X.9(4) (Treatment of Investors and of Covered Investments).

Article X.43: Exclusion

The dispute settlement provisions of this Section and of Chapter x (Dispute Settlement) do not apply to the matters referred to in Annex X. 43.1 (Exclusions from Dispute Settlement).

Annex X.43.1 - Exclusions from Dispute Settlement

A decision by Canada following a review under the Investment Canada Act, with respect to whether or not to permit an investment that is subject to review, is not subject to the dispute settlement provisions under Sections 6 (Investor-to-State Dispute Settlement) of this Chapter, or to Chapter X (Dispute Settlement) of this Agreement.  For greater certainty, this exclusion is without prejudice to the right of any Party to have recourse to Chapter X (Dispute Settlement) with respect to the consistency of a measure with a Party’s reservations.

Annex X.11: Expropriation

The Parties confirm their shared understanding that:

1. Expropriation may be either direct or indirect:

  • (a) direct expropriation occurs when an investment is nationalised or otherwise directly expropriated through formal transfer of title or outright seizure; and
  • (b) indirect expropriation occurs where a measure or series of measures of a Party has an effect equivalent to direct expropriation, in that it substantially deprives the investor of the fundamental attributes of property in its investment, including the right to use, enjoy and dispose of its investment, without formal transfer of title or outright seizure.

2. The determination of whether a measure or series of measures of a Party, in a specific fact situation, constitutes an indirect expropriation requires a case-by-case, fact-based inquiry that considers, among other factors:

  • (a) the economic impact of the measure or series of measures, although the sole fact that a measure or series of measures of a Party has an adverse effect on the economic value of an investment does not establish that an indirect expropriation has occurred;
  • (b) the duration of the measure or series of measures by a Party;
  • (c) the extent to which the measure or series of measures interferes with distinct, reasonable investment-backed expectations; and
  • (d) the character of the measure or series of measures, notably their object, context and intent.

3. For greater certainty, except in the rare circumstance where the impact of the measure or series of measures is so severe in light of its purpose that it appears manifestly excessive, non-discriminatory measures of a Party that are designed and applied to protect legitimate public welfare objectives, such as health, safety and the environment, do not constitute indirect expropriations.

Annex X: Public Debt

1. No claim that a restructuring of debt issued by a Party breaches an obligation under Sections [Non-Discriminatory Treatment, Investment Protection] may be submitted to, or if already submitted continue in, arbitration under Section 6 [Investor-State Dispute Settlement] if the restructuring is a negotiated restructuring at the time of submission, or becomes a negotiated restructuring after such submission, except for a claim that the restructuring violates Article X.6 [National Treatment] or Article X.7 [Most-Favoured Nation].

2. Notwithstanding [ISDS: Article X.22 Submission of a Claim to Arbitration, para 4], and subject to paragraph 1 of this Annex, an investor of another Party may not submit a claim under Section 6 [Investor-State Dispute Settlement] that a restructuring of debt issued by a Party breaches an obligation under Sections [ Non-Discriminatory Treatment, Investment Protection] (other than Article X.6 [National Treatment] or Article X.7 [Most-Favoured Nation]) unless 270 days have elapsed from the date of receipt by the respondent of the written request for consultations pursuant to [Article X.18 Consultations].

3. For the purposes of this Annex,  ‘negotiated restructuring’ means the restructuring or rescheduling of a debt instrument that has been effected through (i) a modification or amendment of such debt instrument, as provided for under its terms, or (ii) a comprehensive debt exchange or other similar process in which the holders of no less than 75 percent of the aggregate principal amount of the outstanding debt under such debt instrument have consented to such debt exchange or other process.

Declaration to Investment Chapter Article X.11 Paragraph 6

Mindful that investor state dispute settlement tribunals are meant to enforce the obligations referred to in Article X.17(1): Scope of a Claim to Arbitration of Chapter x (yyy), and are not an appeal mechanism for the decisions of domestic courts, the Parties recall that the domestic courts of each Party are responsible for the determination of the existence and validity of intellectual property rights. The Parties further recognize that each Party shall be free to determine the appropriate method of implementing the provisions of this Agreement regarding intellectual property within their own legal system and practice.  The Parties agree to review the relation between intellectual property rights and investment disciplines within 3 years after entry into force of the agreement or at the request of a Party.  Further to this review and to the extent required, the Parties may issue binding interpretations to ensure the proper interpretation of the scope of investment protection under this Agreement in accordance with the provisions of Article X.27: Applicable Law and Rules of Interpretation of Chapter x (Investment)."

Joint Declaration

With respect to Article X.15 (Denial of Benefits - Investment), Article Y (Denial of Benefits - CBTS) and Article XX (National Security Exception - Exceptions), the Parties confirm their understanding that measures that are ‘related to the maintenance of international peace and security’ include the protection of human rights.

Footnotes

Footnote 1

For greater certainty, the obligations of this chapter apply to the Exclusive Economic Zones and Continental Shelves, as provided in the United Nations Convention on the Law of the Sea of 10 December 1982,:

  • (a)  of Canada as referred to in Article X.02 (Country-specific definitions - Geographical scope of Application (a)); and
  • (b)  in which the Treaty on the European Union and the Treaty on the Functioning of the European Union Treaty are applied as referred to in Article X.02 (Country-specific definitions - Geographical scope of Application (b)).

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Footnote 2

These services include services where an aircraft is being used to carry out specialised activities in sectors including agriculture, construction, photography, surveying, mapping, forestry, observation and patrol, and advertising, where this specialised activity is provided by the person that is responsible for the operation of the aircraft.

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Footnote 3

Subparagraphs 1(a) (i), (ii) and (iii) do not cover measures taken in order to limit the production of an agricultural product.

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Disclaimer:

The complete text of the CETA agreement is presented here for information purposes. The text presented in this document is as it stands at the end of the negotiations between Canada and the EU. It will be subject to legal review, a process that will also involve formatting. Subsequent to the legal review and formatting, the complete text will become binding upon the completion of the ratification process by both Canada and the EU.