VI. EXCEPTIONS
[1. This Article shall not apply to Articles -- (on expropriation
and compensation and protection from strife).]
2. Nothing in this Agreement shall be construed:
a. to prevent any Contracting Party from taking any action [which
it considers] necessary for the protection of its essential
security interests [including those:]
(i) taken in time of war, [or] armed conflict, [or other emergency
in international relationsl:
(ii) relating to the implementation of national policies or
international agreements respecting the non-proliferation [inter
alia] of nuclear weapons or other nuclear explosive devices;
[(iii) relating to the production of arms and ammunition;]
b. to require any Contracting Party to furnish or allow access to
any information the disclosure of which [it considers] [would be]
contrary to its essential security interests;
c. to prevent any Contracting Party from taking any action 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 prevent any
Contracting Party from taking any action necessary for the
maintenance of public order.]
[4. Paragraphs 2 and 3 may not be invoked by a Contracting Party
as a means to evade its obligations under this Agreement.]
[5. Actions taken pursuant to this Article shall be notified to
the Parties Group in accordance with Article -- of this
Agreement.]
[6. If a Contracting Party (the "requesting Party") has reason to believe that actions taken by another Contracting Party (the "other Party") are not in conformity with [Article] [paragraphs --], it may request consultations with that other Party. That other Party shall promptly enter into consultations with the requesting Party and shall provide information to the requesting Party regarding the actions taken and the reasons therefor.]
VII. RELATIONSHIP TO OTHER INTERNATIONAL AGREEMENTS l
If the provisions of law of a Contracting Party or obligation of a Contracting Party under an international agreement or customary international law, existing at present or established hereafter, contain a rule, whether general or specific, entitling investors of other Contracting Parties or their investments to a treatment more favourable than is provided for by the present agreement, nothing in this agreement shall be construed to derogate therefrom to the extent that it is more favourable.]1
begin footnote
1Some delegations think that this provision is unnecessary and believe that it might create legal uncertainty. Other delegations agree that the provision is not legally necessary, but stress its political value, in that it makes it clear to investors that they will have the benefit of the most favourable provision.
end footnote
VIII. IMPLEMENTATION AND OPERATION
1. There shall be a Preparatory Group comprised of the Signatories
to [this Final Act] [the Agreement].
2. The Preparatory Group shall:
(a) prepare for entry into force of the Agreement and the
establishment of the Parties Group;
(b) conduct discussions with non-signatories to the Final Act;
(c) conduct negotiations with interested non-signatories to the
Final Act and make decisions on their eligibility to become a
Contracting Party; and
(d) ...2
3. The Preparatory Group shall elect a Chair, who shall serve in a
personal capacity. Meetings shall be held at intervals to be
determined by the Preparatory Group. The Preparatory Group shall
establish its rules and procedures.
4. [Subject to paragraph 5,] the Preparatory Group shall make
decisions by consensus. Such decisions may include a decision to
adopt a different voting rule for a particular question or
category of questions. A Signatory may abstain and express a
differing view without barring consensus.
5. [However, where a decision cannot be reached by consensus, the
decision shall be made by a majority comprising [two-thirds] of
the Signatories.]3
1. There shall be a Parties Group comprised of the Contracting Parties.
begin footnote
1The Preparatory Group text would be contained in the Final Act.
2This and any subsequent subparagraphs would be necessary only if
there is business that remains unfinished at the conclusion of the
negotiations that the negotiators consider should be completed by
the Preparatory Group; the further subparagraphs would itemise the
clean-up tasks to be undertaken by the Preparatory Group.
3See footnote 7.
end footnote
2. The Parties Group shall facilitate the operation of this
Agreement. To this end, it shall:
(a) carry out the functions assigned to it under this Agreement;4
(b) [at the request of a Contracting Party, clarify the
interpretation or application of this Agreement]5;
(c) consider any matter that may affect the operation of this
Agreement; and
(d) take such other actions as it deems necessary to fulfil its
mandate.
3. In carrying out the functions specified in paragraph 2, the
Parties Group may consult governmental and non-governmental
organisations or persons.
4. The Parties Group shall elect a Chair, who shall serve in a
personal capacity. Meetings shall be held at intervals to be
determined by the Parties Group. The Parties Group shall establish
its rules and procedures.
5. [Subject to paragraph 6,] the Parties Group shall make
decisions by consensus. Such decisions may include a decision to
adopt a different voting rule for a particular question or
category of questions. A Contracting Party may abstain and express
a differing view without barring consensus.6
6. [However, where a decision cannot be reached by consensus:
(a) [decisions on budgetary matters shall be made by a
[two-thirds] majority of Contracting Parties whose assessed
contributions represent, in combination, at least [two-thirds] of
the total assessed contributions specified therein]; and
(b) [decisions on accession and other matters shall be made by a
[two-thirds] majority of the Contracting Parties.]7
7. The Parties Group shall be assisted by a Secretariat.
begin footnote
4This subparagraph refers to any operational functions and any
future work as may be specified elsewhere in the MAI.
5Expert Group 1 is considering the role of the Parties Group with
respect to Dispute Settlement; this sub-paragraph would address
clarification of interpretation and application outside the
Dispute Settlement context. Within Expert Group 4, there is a
debate on the question of whether it is appropriate that the
Parties Group expressly be given a formal role in clarifying the
interpretation or application of the MAI. On a point of detail.
one delegation has expressed the view that the Parties Group
should have such authority, but only if more than one Contracting
Party makes a request.
6Consideration needs to be given to the question of whether failure
to pay budgetary contributions should lead to suspension of the
right of a Contracting Party to participate in making decisions.
7Further work needs to be done on paragraph 6. This work would include consideration of whether the MAI should draw a line between substantive and procedural questions and whether it should include an appropriate rule for voting by the European Communities. If all decisions were required to be made by consensus, paragraph 6 would be deleted.
end footnote
8. [Parties Group and Secretariat costs shall be borne by the Contracting Parties as approved and apportioned by the Parties Group.]8
begin footnote
8Further work is required on paragraphs 7 and 8. If it is decided that the MAI itself should contain provisions on the initial budgetary principles and formula and on the structure and functions of a Secretariat, it is proposed that Expert Group 4 or another Group be invited to make proposals, including proposals for text where appropriate, on these matters.
end footnote
SIGNATURE
This Agreement shall be open for signature at the Depositary,
until [date], by Signatories of the Final Act1 and thereafter until
entry into force by any State, or separate customs territory which
possesses full autonomy on the matters covered by this Agreement,
which is willing and able to take on its obligations on terms
agreed between it and the Signatories of [the Final Act] [this
Agreement] acting through the Preparatory Group.
RATIFICATION AND ENTRY INTO FORCE
Option 12
This Agreement shall enter into force on [date] or on the deposit
of the [xxth] instrument of ratification by a Signatory to the
Agreement, whichever is later.
Option 23
1. The Signatories to this Final Act agree to submit the Agreement
for the consideration of their respective competent authorities
with a view to seeking approval of the Agreement in accordance
with their procedures.
2. The Signatories to this Final Act agree on the desirability of
acceptance of the Agreement by all signatories with a view to its
entry into force by [date] or as early as possible thereafter.
3. Not later than [date], the Signatories to this Agreement will
meet to determine the date for entry into force and related
matters. Decisions shall be made by [consensus] [a [two-thirds]
majority of the Signatories].
4. This Agreement shall enter into force on the date determined by
the Signatories to this Agreement in accordance with paragraph 3.
1. This Agreement shall be open for accession by any State, regional economic integration organisation4, and any separate customs territory which possesses full autonomy in the conduct of matters covered by this agreement, which is willing and able to undertake its obligations on terms agreed between it and the Parties acting through the Parties Group.
begin footnote
1Belgium is considering whether there will need to be a provision in the MAI contemplating that the MAI would be signed, for Belgium. by representatives of its various regions and communities.
2The text of this option would be contained in the MAI.
3Paragraphs 1 and 2 would be contained in the Final Act; paragraphs
3 and 4 would be in the MAI.
4This term may need to be defined, here or elsewhere in the Agreement.
end footnote
2. Decisions on accession shall be taken by the Parties Group.5
3. Accession shall take effect thirty days from the date of
deposit of the instruments of accession with the Depositary.
This Agreement shall not apply as between any Contracting Party
and any acceding Party or group of countries if, at the time of
accession, either does not consent to such application.]6
1. The Parties Group may review this Agreement as and when it
determines.7
2. Any Contracting Party may propose to the Parties Group an
amendment to this Agreement. Any amendment adopted by the Parties
Groups8 shall enter into force on the deposit of an instrument of
ratification by all of the Contracting Parties9, or at such later
date as may be specified by the Parties Group at the time of
adoption of the amendment.
1. At any time after five years from the date on which this
Agreement has entered into force for a Contracting Party, that
Contracting Party may give written notice to the Depositary of its
withdrawal from this Agreement.
2. Any such withdrawal shall take effect on the expiry of [six
months] from the date of the receipt of the notice by the
Depositary, or on such later date as may be specified in the
notice of withdrawal. If a Contracting Party withdraws, the
Agreement shall remain in force for the remaining Contracting
Parties.
3. The provisions of this Agreement shall continue to apply for a
period of [fifteen years] from the date of notification of
withdrawal to an investment existing at that date.
DEPOSITARY
The [.....] shall be the Depositary of this Agreement.
begin footnote
5The decision on accession would be taken in accordance with the
voting provision for the Parties Group set out in paragraphs I. C.
5 and I. C. 6 above.
6Some delegations wish to reflect further on this provision. If the
MAI provides that consensus of all the Contracting Parties is
necessary for accession, this provision could facilitate accession
where there is a particular problem between a Contracting Party
and an acceding state. One delegation expressed the view that a
non-application clause would be essential if consensus were not
required for accession.
7Some delegations wish to study this paragraph further.
8There may be a need for a provision that would enable a
Contracting Party to take a reservation to an amendment adopted by
the Parties Group.
9One delegation wants to consider whether an amendment should come into force upon ratification by fewer than all of the Contracting Parties. In that case, it may be necessary to provide that an amendment shall be in force only as between those Contracting Parties that have ratified the amendment.
end footnote
STATUS OF ANNEXES
The Annexes to this Agreement are [an integral part of the
Agreement].10
The English and French [and....] texts of this Agreement are
equally authentic.11
a. [Subject to prior notification to and consultation with the
Contracting Party of the investor,] a Contracting Party may deny
the benefits of the Agreement to an investor [as defined in 1
(ii)] and to its investments if investors of a non-Party own or
control the first mentioned investor and that investor has no
substantial business activities in the territory of the
Contracting Party under whose law it is constituted or organised.
or
b. [Subject to prior notification and consultation in accordance with Articles XXX (Transparency) and XXX (Consultations), a Contracting Party may deny the benefits of this Agreement to an investor of another Contracting Party that is an enterprise of such Contracting Party and to investments of such investors if investors of a non-Contracting Party own or control the enterprise and the enterprise has no substantial business activities in the territory of the Contracting Party under whose law it is constituted or organised.]12
begin footnote
10This provision will need to be revisited when the content of the
Annexes is known.
11The question arises as to whether the MAI text should be in a
language or languages additional to English and French. It should
be noted that this question has budgetary implications.
12Possible additional text not discussed by DG3
[A Contracting Party may deny the benefits of the Agreement to an
investor of another Contracting Party that is an enterprise of
such Contracting Party and to investment of such investor if
investors of a non-Contracting Party own or control the enterprise
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 Chapter were accorded to the enterprise or to its
investments.]
Some delegations also proposed a wider denial of benefits clause, in particular, to allow denial in cases where the parent was a national or enterprise of a country with which the investment host state lacked diplomatic relations. DG3 agreed that this matter should be considered in the wider context of "general exceptions".
end footnote
TAXATION
1. Nothing in this Agreement shall apply to taxation measures
except as expressly provided in paragraphs 2 to ... below:
2. Article ... (Expropriation) shall apply to taxation measures,
except that no claim that a tax measure involves an expropriation
shall be submitted to dispute settlement by an investor of a
contracting party pursuant to Article ... (Investor-State Dispute
Settlement)1:
a) Unless the investor concerned has first referred to the Competent Tax Authorities of both Contracting Parties involved in the dispute the issue of whether the tax measure involves an expropriation, nor shall the claim be submitted to dispute settlement within the [24] month period immediately following such referral; and
b) If, within [24] months of the date of referral, the Competent Tax Authorities of both Contracting Parties concerned determine that the tax measure does not involve an expropriation.
3.Article ... (Transparency) shall apply to taxation measures2, except that nothing in this Agreement shall require a Contracting Party to furnish or allow access to information covered by tax secrecy or any other domestic laws protecting confidentiality, in particular and including:
a) any agreement or arrangement between a tax authority and an investor;
b) any agreement with a foreign government concerning the application or interpretation of a tax treaty in the case of an individual investor;
c) information concerning the identity of an investor or other
information which would disclose any trade, business, industrial,
commercial or professional secret or trade process;
d) information pertaining to individual taxpayers received from
another government; or
e) information the disclosure of which would impede the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, taxation, or any information the disclosure of which would aid or assist in the avoidance or evasion of taxes.
begin footnote
1Australia reserves its position on MAI dispute settlement
procedures.
2The United States would have preferred a separate article on transparency for taxes.
end footnote
4. National Treatment
Alternative 1
No carve-in provision on National Treatment with respect to
taxation measures.
Alternative 2
Article XX paragraph 1.1 (National Treatment) shall apply to
taxation measures [if a convention for the avoidance of double
taxation is not in effect between the Contracting Parties
concerned.] However, nothing in the above-mentioned Article shall:
1. prevent the adoption or enforcement by the Contracting Parties
of any measure which:
a) differentiates treatment between taxpayers who are not in the
same circumstances, in particular with respect to residence; or
b) is aimed at ensuring the equitable or effective imposition,
payment or collection of taxes; or
c) is aimed at preventing the avoidance or evasion of taxes;
provided that the measure does not arbitrarily discriminate
between investors or investments of Contracting Parties or
arbitrarily restrict benefits accorded under the provisions of
this Agreement.
[2. have the effect of extending fiscal advantages granted by any
Party on the basis of any international agreement or arrangement
by which it is or may become bound, or its membership of any
Regional Economic Integration Organisation.]
Alternative Approach
France put forward the following text:
"Nothing in this Agreement shall impose any obligation on any
Party, or create rights, with respect to taxation measures,
provided that the existing or future differences of treatment
operated by a Party for tax purposes, which are established
between a foreign investor and an investor of this Party, or
between an investment performed abroad and investment performed on
its territory, are justified on one of the following grounds:
- a difference between investors with respect or their tax
residence;
- differences between investors or investments with respect to
their tax compliance situations:
- differences between investors or investments with respect to the
capacity of the tax administration to perform effective tax
control and measures aimed at combating tax fraud and evasion and
tax competition, and tax collection;
- a provision in a tax Treaty concluded between two Parties.
It is understood that the term "foreign investor" includes an enterprise of a Party the capital of which is partly or totally owned by a national of another Party, or a permanent establishment of an enterprise of another Party; the term "investment performed abroad" includes an investment made in relation with an enterprise of a Party the capital of which is owned partly or totally by a national of another Party, or with a permanent establishment of an enterprise of another Party."
The following extract from pages 27-30 of the OECD publication entitled Revenue statistics of OECD Member Countries (1965-1994) is relevant for the definition of taxes in the MAI. The definitions found therein have been agreed to by the OECD, International Monetary Fund and the United Nations System of National Accounts (SNA).
I. General criteria
1. In the OECD classification, the term "taxes" is confined to
compulsory, unrequited payments to general government. Taxes are
unrequited in the sense that benefits provided by government to
taxpayers are not normally in proportion to their payments.
2. The term "tax" does not include fines unrelated to tax offences
and compulsory loans paid to government. Borderline cases between
tax and non-taxes revenues in relation to certain fees and charges
are discussed in paragraphs 9 and 13.
3. General government consists of supra-national authorities, the
central administration and the agencies whose operations are under
its effective control, state and local governments and their
administrations, social security schemes and autonomous
governmental entities, excluding public enterprises. Apart from
the reference to supra-national authorities, this definition of
government follows that of the "System of National Accounts"
(SNA), United Nations 1968 (page 79, Table 54.1)1.
4. Compulsory payments to supra-national bodies, such as the Commission of the European Communities and their agencies are included as taxes and are treated as part of the tax revenues of the country in which they are collected. They are separately identified in the data on subsectors of government. In countries where the church forms part of general government church taxes are included, provided they meet the criteria set out in paragraph 1 above. As the data refer to receipts of general government, levies paid to non-government bodies, welfare agencies or social insurance schemes outside general government, trade unions or trade associations, even where such levies are compulsory, are excluded. Compulsory payments to general government earmarked for such bodies are, however, included provided that the government is not simply acting in an agency capacity2. Profits from fiscal monopolies are distinguished from those of other public enterprises and are treated as taxes because they reflect the exercise of the taxing power of the state by the use of monopoly powers (see paragraphs 63-65), as are profits received by the government from the purchase and sale of foreign exchange at different rates (see paragraph 71).
begin footnote
1All references to the SNA are to the 1968 edition.
2See Annex 1 for a discussion of the concept of agency capacity.
end footnote
5. Taxes paid by governments (e.g., social security contributions
and payroll taxes paid by governments in their capacity as an
employer, consumption taxes on their purchases or taxes on their
property) are not excluded from the data provided. However, where
it is possible to identify the amounts of revenue involved3, they
are shown in a memorandum item.
6. The relationship between this classification and that of SNA is
set out in Section E. Because of the differences between the two
classifications, the data shown in national accounts are sometimes
calculated or classified differently from the practice set out in
this guide. These and other differences are mentioned where
appropriate (e.g. paragraph 17) but it is not possible to refer to
all of them. There may also be some differences between this
classification and that employed domestically by certain national
administrations (e.g., see paragraph 9 below), so that OECD and
national statistics data may not always be consistent; any such
differences, however, are likely to be very slight in terms of
amounts of revenues involved.
II. Social security contributions
7. Compulsory social security contributions, as defined in
paragraph 36, paid to general government are treated as tax
revenues. Being compulsory payments to general government they
clearly resemble taxes. They may, however, differ from taxes in
that the receipt of social security benefits depends, in most
countries, upon appropriate contributions having been made,
although the size of the benefits is not necessarily related to
the amount of the contributions. Better comparability between
countries is obtained by treating social security contributions as
taxes, but they are listed under a separate heading so that they
can be distinguished in any analysis.
8. Social security contributions which are either voluntary or not
payable to general government (see paragraph 1) are not treated as
taxes, though in some countries, as indicated in the country
footnotes, there are difficulties in eliminating voluntary
contributions and compulsory payments to the private sector.
III. Fees, user charges and licence fees
9. Apart from vehicle licence fees, which are universally regarded
as taxes, it is not easy to distinguish between those fees and
user charges which are to be treated as taxes and those which are
not, since, whilst a fee or charge is levied in connection with a
specific service or activity, the strength of the link between the
fee and the service provided may vary considerably, as may the
relation between the amount of levy and the cost of providing the
service. Where the recipient of a service pays a fee clearly
related to the cost of providing the service, the levy may be
regarded as requited and under the definition of paragraph 1 would
not be considered as a tax. In the following cases, however, a
levy could be considered as "unrequited":
a) Where the charge greatly exceeds the cost of providing the
service;
b) where the payer of the levy is not the receiver of the benefit (e.g., a fee collected from slaughterhouses to finance a service which is provided to farmers);
begin footnote
3It is usually possible to identify amount of social security contributions and payroll taxes, but not other taxes paid by government.
end footnote
c) where the government is not providing a specific service in
return for the levy which it receives even though a licence may be
issued to the payer (e.g., where the government grants a hunting,
fishing or shooting licence which is not accompanied by the right
to use a specific area of government land);
d) where benefits are received only by those paying the levy but
the benefits received by each individual are not necessary in
proportion to his payments (e.g., a milk marketing levy paid by
dairy farmers and used to promote the consumption of milk).
10. In marginal cases, however, the application of the criteria
set out in paragraph 1 can be particularly difficult. The solution
adopted -- given the desirability of international uniformity and
the relatively small amounts of revenue usually involved -- is to
follow the predominant practice among tax administrations rather
than to allow each country to adopt its own view as to whether
such levies are regarded as taxes or as non-tax revenue.4
11. A list of the main fees and charges in question and their
normal5 treatment in this bulletin is as follows:
Non-tax revenues: court fees; driving licence fees; harbour fees:
passport fees: radio and television licence fees where public
authorities provide the service.
Taxes of 5200: permission to perform such activities as
distributing fllms; hunting, fishing and shooting; providing
entertainment or gambling facilities; selling alcohol or tobacco;
permission to own dogs or to use or own motor vehicles or guns;
severance taxes.
12. In practice it may not always be possible to isolate tax
receipts from non-tax revenue receipts when they are recorded
together. If it is estimated that the bulk of the receipts derive
from non-tax revenues, the whole is treated as a non-tax revenue;
otherwise they are included and classified according to the rules
provided in paragraph 28.
13. Two differences between the OECD classification and SNA
regarding the borderline between tax and non-tax revenues are:
a) SNA classifies a number of levies as indirect taxes if paid by enterprises, but as non-tax revenues if paid by households, a distinction which is regarded as irrelevant in this classification for distinguishing between tax and non-tax revenues6.
begin footnote
4If, however, a levy which is considered as non-tax revenue by most
countries is regarded as a tax, or raises substantial revenue, in
one or more countries, the amounts collected are footnoted at the
end of the relevant country tables, even though the amounts are
not included in total tax revenues.
5Names, however, can frequently be misleading. For example, though
a passport fee would normally be considered a non-tax revenue if a
supplementary levy on passports (as is the case in Portugal) were
imposed in order to raise substantial amounts of revenue relative
to the cost of providing the passport, the levy would be regarded
as a tax of 5200.
6There are often practical difficulties in operating the distinction made by SNA.
end footnote
b) Predominant practice among most OECD tax administrations, which
is occasionally used in this classification for distinguishing
between tax and non-tax revenues, is not a relevant criterion for
SNA purposes.
Royalties
14. Royalty payments for the right to extract oil and gas or to
exploit other mineral resources are normally regarded as non-tax
revenues since they are property income from government-owned land
or resources.
Fines and penalties
15. Receipts from fines and penalties paid for infringement of regulations identified as relating to a particular tax and interest on payments overdue in respect of a particular tax are recorded together with receipts from that tax. Other kinds of fines identifiable as relating to tax offences are classified in the residual heading 6000. Fines not relating to tax offences (e.g., for parking offences), or not identifiable as relating to tax offences, are not treated as taxes.
Recognition arrangements3
1. A Contracting Party may recognise prudential measures of any
other Contracting Party or non-Contracting Party in determining
how the Contracting Party's measures relating to financial
services shall be applied. Such recognition, which may be achieved
through harmonisation or otherwise, may be based on an agreement
or arrangement with the other Contracting Party or non-Contracting
Party concerned or may be accorded autonomously.
2. A Contracting Party that is a party to such an agreement or
arrangement referred to in paragraph 1, whether future or
existing, shall afford adequate opportunity for other interested
Contracting Parties to negotiate their accession to such
agreements or arrangements, or to negotiate comparable ones with
it, under circumstances in which there would be equivalent
regulation, oversight, implementation of such regulation, and, if
appropriate, procedures concerning the sharing of information
between the parties to the agreement or arrangement. Where a
Contracting Party accords recognition autonomously, it shall
afford adequate opportunity for any other Contracting Party to
demonstrate that such circumstances exist.
Transparency
The Group considered the following text as a basis for discussion:
"1. Each Contracting Party's regulatory authorities shall make
available to interested persons their requirements for completing
applications relating to the provision of financial services.
2. On the request of an applicant, the regulatory authority shall inform the applicant of the status of its application. If,such authority requires additional information from the applicant, it shall notify the applicant without undue delay.
begin footnote
1Placement of Financial Services Texts is to be decided. See also
Commentary on the status of text in each case.
2It was agreed that the financial services sector, which is highly
regulated for prudential reasons, is unique in some respects and
to some extent calls for specific treatment. However, a number of
delegations considered that the general provisions of the MAI are
sufficient to meet the needs of the financial services sector in a
number of potential areas. In some cases, proposals for text on
financial services were considered to have more general
application in the MAI. It was suggested that such text could be
useful in the development of general disciplines in the MAI.
3Austria reserved its position on this provision.
end footnote
3. A regulatory authority shall make an administrative decision on
a completed application of an investor in a financial services
enterprise or a financial services enterprise that is an
investment of an investor of another Contracting Party relating to
the provision of a financial service within [120][180] days, and
shall promptly notify the applicant of the decision. An
application shall not be considered complete until (all relevant
hearings are held and) all necessary information is received.
Where it is not practicable for a decision to be made within
[120][180] days, the regulatory authority shall notify the
applicant without undue delay and shall endeavour to make the
decision within a reasonable time thereafter.
[4. Nothing in this Agreement requires a Contracting Party to
furnish or allow access to:
a) information related to the financial affairs and accounts of
individual customers of financial services enterprises; or
b) any confidential or proprietary information, the disclosure of
which would impede law enforcement or otherwise be contrary to the
public interest or prejudice legitimate commercial interests of
particular enterprises.]"
New financial services
EG5 considered two options for text:
Option 1:
"A Contracting Party shall permit financial services enterprises
of any other Contracting Party established in its territory to
offer any new financial services."
Option 2:
"A Contracting Party shall permit a financial services enterprise
that is an investment of an investor of any other Contracting
Party to offer in its territory any financial service that is not
offered in the territory of the Contracting Party but which is
offered in the territory of another Contracting Party, and which
is of a type similar to those services that the Contracting Party
permits, or would permit if requested, its own financial services
enterprises, in like circumstances, to provide under its domestic
law. A Contracting Party may determine the institutional and
juridical form through which the service may be provided and may
require authorisation for the provision of the service. Where such
authorisation is required, a decision shall be made within a
reasonable time and the authorisation may only be refused for
prudential reasons."
Information transfer and data processing
Some delegations considered that limitations on the ability of investors to transfer and processing financial information can in certain circumstances act as a deterrent to foreign investors and favored preparation of specific text The following text was proposed, based on language drawing on the GATS:
"1. No Contracting Party shall take measures that prevent
transfers of information or the processing of financial
information outside the territory of a Contracting Party,
including transfers of data by electronic means, where such
transfer of information or processing of financial information is:
a) necessary for the conduct of the ordinary business of a
financial services enterprise located in a Contracting Party that
is the investment of an investor of another Contracting Party; or
b) in connection with the purchase or sale by a financial services
enterprise located in a Contracting Party that is the investment
of an investor of another Contracting Party of:
i) financial data processing services; or
ii) financial information, including information provided to or by
third parties.
2. Nothing in paragraph 1:
a) affects the financial service enterprise's obligation to comply
with any record keeping and reporting requirements; or
b) restricts the right of a Contracting Party to protect personal
data, personal privacy, and the confidentiality of individual
records and accounts so long as such right is not used to
circumvent the provisions of the Agreement."
Membership of self-regulatory bodies and associations
The Group agreed to recommend that, in the absence of a broader
provision in the MAI, the following text along the lines of the
WTO Understanding on Commitments in Financial Services be adopted4:
"When membership or participation in, or access to, any self-regulatory body, securities or futures exchange or market, clearing agency, or any other organisation or association is required by a Contracting Party in order for financial services enterprises of any other Contracting Party to provide financial services on an equal basis with financial services enterprises of the Contracting Party, or when the Contracting Party provides directly or indirectly such entities, privileges or advantages in providing financial services, the Contracting Party shall ensure that such entities accord national treatment to investors of any other Contracting Party, or the investments of such investors, in a financial services enterprise resident in the territory of the Contracting Party."
begin footnote
1Australia reserved its position on this provision.
end footnote
Payments and clearing systems/Lender of last resort
The following text was proposed for consideration by EG5:
"Under terms and conditions that accord national treatment, each Contracting Party shall grant to financial services enterprises that are investments of investors of any other Contracting Party established in its territory access to payment and clearing systems operated by public entities, and to official funding and refinancing facilities available in the normal course of ordinary business. This paragraph is not intended to confer access to the Contracting Party's lender of last resort facilities."
DEFINITION OF FINANCIAL SERVICES
I. Text
"Financial services include all insurance and insurance-related
services, and all banking and other financial services (excluding
insurance). Financial services include the following activities:
Insurance and insurance-related services
(i) Direct insurance (including co-insurance):
(A) life
(B) non-life
(ii) Reinsurance and retrocession;
(iii) Insurance intermediation, such as brokerage and agency;
(iv) Services auxiliary to insurance, such as consultancy,
actuarial, risk assessment and claim settlement services.
Banking and other financial services (excluding insurance)
(v) Acceptance of deposits and other repayable funds from the
public;
(vi) Lending of all types, including consumer credit, mortgage
credit, factoring and financing of commercial transaction;
(vii) Financial leasing;
(viii) All payment and money transmission services, including
credit, charge and debit cards, travellers cheques and bankers
drafts;
(ix) Guarantees and commitments;
(x) Trading for own account or for account of customers, whether
on an exchange, in an over-the-counter market or otherwise, the
following:
(A) money market instruments (including cheques, bills,
certificates of deposits);
(B) foreign exchange;
(C) derivative products including, but not limited to, futures and options;
(D) exchange rate and interest rate instruments, including
products such as swaps, forward rate agreements;
(E) transferable securities;
(F) other negotiable instruments and financial assets, including
bullion.
(xi) Participation in issues of all kinds of securities, including
underwriting and placement as agent (whether publicly or
privately) and provision of services related to such issues;
(xii) Money broking;
(xiii) Asset management, such as cash or portfolio management, all
forms of collective investment management, pension fund
management, custodial, depository and trust services;
(xiv) Settlement and clearing services for financial assets,
including securities, derivative products, and other negotiable
instruments:
(xv) Provision and transfer of financial information, and
financial data processing and related software by suppliers of
other financial services;
(xvi) Advisory, intermediation and other auxiliary financial
services on all the activities listed in subparagraphs (v) through
(xv), including credit reference and analysis, investment and
portfolio research and advice, advice on acquisitions and on
corporate restructuring and strategy.
II. Commentary
1. This definition is the same as that used in the GATS.
2. One delegation asked whether transfer of credit risks (for instance, credit swaps) and the provision of stored value cards were considered as financial services. The Group understood the proposed list of financial services as an open-ended one. Therefore, it was considered that, unless otherwise specified, the services in question should be regarded as financial services.
NAFTA Texts on standing of investments and consolidation
Article 1117: Claim by an Investor of a Party on Behalf of an
Enterprise
1. As investor of a Party, on behalf of an enterprise of another
Party that is a juridical person that the investor owns or
controls directly or indirectly, may submit to arbitration under
this Section a claim that the other Party has breached an
obligation under:
a. Section A or Article 1503(2) (State Enterprises), or
b. Article 1502(3)(a) (Monopolies and State Enterprises) where the
monopoly has acted manner inconsistent with the Party's
obligations under Section A,
and that the enterprise has incurred loss or damage by reason of,
or arising out of, that breach.
2. An investor may not make a claim on behalf of an enterprise
described in paragraph 1 if more than three years have elapsed
from the date on which the enterprise first acquired, or should
have first acquired, knowledge of the alleged breach and knowledge
that the enterprise has incurred loss or damage.
3. Where an investor makes a claim under this Article and the
investor or a non-controlling investor in the enterprise makes a
claim under Article 1116 arising out of the same events that gave
rise to the claim under this Article, and two or more of the
claims are submitted to arbitration under Article 1120, the claims
should be heard together by a Tribunal established under Article
1126, unless the Tribunal finds that the interests of a disputing
party would be prejudiced thereby.
4. An investment may not make a claim under this Section.
Article 1121: Conditions Precedent to Submission of a Claim to
Arbitration
2. A disputing investor may submit a claim under Article 1117 to
arbitration only if both the investor and the enterprise:
a. consent to arbitration in accordance with the procedures set
out in this Agreement; and
b. waive their right to initiate or continue before any administrative tribunal or court under the law of any Party, or other dispute settlement procedures, any proceedings with respect to the measure of the disputing Party that is alleged to be a breach referred to in Article 1117, except for proceedings for injunctive, declaratory or other extraordinary relief, not involving the payment of damages, before an administrative tribunal or court under the law of the disputing Party.
Article 1126: Consolidation
1. A Tribunal established under this Article shall be established
under the UNCITRAL Arbitration Rules and shall conduct its
proceedings in accordance with those Rules, except as modified by
this Section.
2. Where a Tribunal established under this Article is satisfied
that claims have been submitted to arbitration under Article 1120
that have a question of law of fact in common, the Tribunal may,
in the interests of fair and efficient resolution of the claims.
and after hearing the disputing parties, by order:
a. assume jurisdiction over, and hear and determine together, all
or part of the claims; or
b. assume jurisdiction over, and hear and determine one or more of
the claims, the determination of which it believes would assist in
the resolution of the others.
3. A disputing party that seeks an order under paragraph 2 shall
request the Secretary-General to establish a Tribunal and shall
specify in the request:
a. the name of the disputing Party or disputing investors against
which the order is sought;
b. the nature of the order sought; and
c. the grounds on which the order is sought.
4. The disputing party shall deliver to the disputing Party or
disputing investors against which the order is sought a copy of
the request.
5. Within 60 days of receipt of the request, the Secretary-General
shall establish a Tribunal comprising three arbitrators. The
Secretary-General shall appoint the presiding arbitrator from the
roster referred to in Article 1124(4). In the event that no such
presiding arbitrator is available to serve, the Secretary-General
shall appoint, from the ICSID Panel of Arbitrators, a presiding
arbitrator who is not a national of any of the Parties. The
Secretary-General shall appoint the two other members from the
roster referred to in Article 1124(4) and to the extent not
available from that roster, from the ICSID Panel of Arbitrators,
and to the extent not available from that Panel, in the discretion
of the Secretary-General. One member shall be a national of the
disputing Party and one member shall be a national of a Party of
the disputing investors.
6. Where a Tribunal has been established under this Article, a
disputing investor that has submitted a claim to arbitration under
Article 1116 or 1117 and that has not been named in a request made
under paragraph 3 may make a written request to the Tribunal that
it be included in an order made under paragraph 2, and shall
specify in the request:
a. the name and address of the disputing investor;
b. the nature of the order sought; and
c. the grounds on which the order is sought.
7. A disputing investor referred to in paragraph 6 shall deliver a copy of its request to the disputing parties named in a request made under paragraph 3.
8. A Tribunal established under Article 1120 shall not have
jurisdiction to decide a claim, or a part of a claim, over which a
Tribunal established under this Article has assumed jurisdiction.
9. On application of a disputing party, a Tribunal established
under this Article, pending its decision under paragraph 2, may
order that the proceedings of a Tribunal established under Article
1120 be stayed, unless the latter Tribunal has already adjourned
its proceedings.
10. A disputing Party shall deliver to the Secretariat, within 15
days of receipt by the disputing Party, a copy of:
a. a request for arbitration made under paragraph (1) of Article
36 of the ICSID Convention;
b. a notice of arbitration made under Article 2 of the Schedule C
of the ICSID Additional Facility Rules; or
c. a notice of arbitration given under the UNCITRAL Arbitration
Rules.
11. A disputing Party shall deliver to the Secretariat a copy of a
request made under paragraph 3:
a. within 15 days of receipt of the request, in the case of a
request made by a disputing investor;
b. within 15 days of making the request, in the case of a request
made by the disputing Party.
12. A disputing Party shall deliver to the Secretariat a copy of a
request made under paragraph 6 within 15 days of receipt of the
request.
13. The Secretariat shall maintain a public register of the
documents referred to in paragraphs 10, 11 and 12.
Article 1135: Final Award
2. Subject to paragraph 1, where a claim is made under Article
1117(1):
a. an award of restitution of property shall provide that
restitution be made to the enterprise;
b. an award of monetary damages and any applicable interest shall
provide that the sum be paid to the enterprise; and
c. the award shall provide that it is made without prejudice to any right that any person may have in the relief under applicable domestic law.