Bangladesh Bilateral Investment Treaty
Signed
March 12, 1986; Entered into Force July 25, 1989
99TH
SENATE 1st Session
{Treaty
Doc.99-23 Congress}
INVESTMENT TREATY WITH BANGLADESH
THE
PRESIDENT OF THE UNITED STATES
Transmitting
THE TREATY
BETWEEN THE UNITED STATES OF AMERICA AND THE PEOPLE'S REPUBLIC OF
BANGLADESH CONCERNING THE RECIPROCAL ENCOURAGEMENT AND PROTECTION OF
INVESTMENT, SIGNED AT WASHINGTON ON MARCH 12 ,1986
June
2, 1986.-Treaty was read the first time and, together with the
accompanying papers, referred to the Committee on Foreign Relations and
ordered to be printed for the use of the Senate
U.S.
GOVERNMENT PRINTING OFFICE
WASHINGTON
: 1986
LETTER
OF TRANSMITTAL
THE
WHITE HOUSE, May
30, 1986.
To
the Senate of the United States:
With a view to receiving
the advice and consent of the Senate to ratification, I transmit
herewith the Treaty Between the United States of America and the
People's Republic of Bangladesh Concerning the Reciprocal
Encouragement and Protection of Investment, with Protocol and related
exchange of letters, signed at Washington on March 12, 1986. I
transmit also, for the information of the Senate is the report of the
Department of State with respect to this Treaty.
The
Bilateral Investment Treaty (BIT) program; initiated in 1981, is
designated to encourage and protect- U.S. investment in developing
countries. This Treaty is an integral part to encourage Bangladesh and
other governments to adopt macroeconomic and structural policies that
will promote economic growth. It is also fully consistent with U.S.
policy toward international investment. That policy holds that an open
international investment system in which participants respond to market
forces provides the best and most efficient mechanism to promote global
economic development A specific tenet, reflected in this treaty, is that
U.S. direct investment abroad and foreign investment in the United
States should receive fair, equitable, and non-discriminatory treatment.
Under this treaty, the parties also agree to international law standards
for expropriation and compensation; free financial transfers; and
procedures, including international arbitration, for the settlement of
investment disputes.
I recommend that the Senate consider this Treaty as soon as possible,
and give its advice and consent to ratification of the Treaty, with
Protocol and related exchange of letters, at an early date.
RONALD
REAGAN.
LETTER
OF SUBMITTAL
DEPARTMENT OF STATE,
Washington, May
9, 1986.
The
PRESIDENT,
The
White House.
THE PRESIDENT: I have the honor to submit to you the Treaty Between the
United States of America and the People's Republic of Bangladesh
Concerning the Reciprocal Encouragement and Protection of Investment,
with Protocol and a related exchange of letters, signed at Washington on
March 12, 1986. This treaty was negotiated under the bilateral
investment treaty (BIT) program which you initiated in 1981. Development
of the BIT program and the negotiation of the individual treaties have
been pursued by the Office of the United States Trade Representative and
the Department of State with the active participation of the Departments
of Commerce and Treasury, in conjunction with other interested U.S.
Government agencies. On March 25 this year, the first six BITs-with
Haiti, Morocco, Panama, Senegal, Turkey, and Zaire-were submitted to the
Senate for its advice and consent to ratification. Additional BITs with
Cameroon and Egypt, are being prepared for submission to the Senate. I
recommend that this treaty, with protocol and related exchange of
letters, be transmitted to the Senate for its advice and consent to
ratification.
In 1981 you initiated the global bilateral investment treaty (BIT)
program to encourage and protect U.S. investment in developing
countries. By providing certain mutual guarantees and protections, a BIT
creates a more stable and predictable legal framework for foreign
investors in the territory of each of the treaty Parties. The
negotiation of a series of bilateral treaties with interested countries
establishes greater international discipline in the investment area. The BIT's which have been signed as well as others under negotiation are
an integral part of U.S. efforts to encourage other governments to adopt
macroeconomic and structural policies that will promote economic growth.
They are also fully consistent with your policy statement on
international investment of September 9, 1983, which states that
international direct investment flows should be determined by private
market forces and should receive fair, equitable and non-discriminatory
treatment.
Our experience to date has shown that interested countries are willing
to provide U.S. investors with significant investment guarantees and
assurances as a way of inducing additional foreign investment. It is
U.S. policy to advise potential treaty partners that conclusion of a BIT
with the United States is an important and favorable factor in the
investment relationship, but does not in of itself result in immediate
increases in U.S. investment flows.
Congressional support for the BIT program is reflected in Section 601(a)
and (b) of the Foreign Assistance Act, as amended, in particular at
Section 601(b) which provides:
In order
to encourage and facilitate participation by private enterprise to the
maximum extent practicable in achieving any of the purposes of this Act,
the President shall...(3) accelerate a program of negotiating treaties
for commerce and trade, including tax treaties, which shall include
provisions to encourage and facilitate the flow of private investment
to, and its equitable investment in, friendly countries and areas
participating in programs under this Act.
BIT's
are consistent in purpose with the network of treaties of Friendship,
Commerce and Navigation (FCNs) which the United States negotiated from
the early years of the Republic until the last successful negotiations
with Thailand and Togo in the late 1960's. They continue the U.S. policy
of securing by agreement standards of equitable treatment and protection
of U.S. citizens carrying on business abroad, and institutionalizing
processes for the settlement of disputes between investors and host
countries, and between governments. We expect that a series of bilateral
treaties with interested countries will establish greater international
discipline in the investment area.
The BIT was designed to protect investment not only by treaty but also
by reinforcing traditional international legal principles and practice
regarding foreign direct private investment. In pursuit of this
objective, the model BIT adopts FCN language and concepts. Traditional
FCN provisions granting rights which are not important to the typical
U.S. investor were eliminated and replaced with more specific language
concerning investment protection. Perhaps most significantly, the BIT
goes beyond the traditional FCN to provide investor-host country
arbitration in instances where an investment dispute arises.
Our BIT approach followed similar programs that had been undertaken with
considerable success by a number of European counties, including the
Federal Republic of Germany and the United Kingdom, since the early
1960s. Indeed, our industrialized partners already have nearly two
hundred BITs in force, primarily with developing countries. Our
treaties, which draw upon language used in the U.S. FCN treaties as well
as European counterparts, are more comprehensive and far-reaching than
European BITs.
THE
U.S.-BANGLADESH TREATY
The Treaty with Bangladesh was negotiated by an inter-agency team led by
officials from the Office of the United States Trade Representative and
the Department of State. The Treaty satisfies all four main BIT
objectives:
-foreign
investors are to be accorded treatment in accordance with international
law and are to be treated no less favorable than investors of the host
country or no less favorably than investors of third countries,
whichever is the most favorable treatment ("national" or "most-favored-nation"
treatment) subject to certain specified exemptions;
-international
law standards shall apply to the expropriation of investments and to the
payment of compensation for expropriation;
-free
transfers shall be afforded to funds associated with an investment into
and out of the host country; and
-procedures
are to be established which allow an investor to take a dispute with a
Party directly to binding third-party arbitration.
The
provisions on treatment of foreign investment and arbitration, and in
particular Bangladesh's acceptance of international law as the governing
law, mark an important achievement for the BIT program and our
investment and international arbitration policies.
A technical memorandum explaining in detail the provisions of this
treaty will be transmitted separately to the Senate Committee on
Foreign Relations. That technical memorandum explains, clause by
clause, the provisions of the treaty with Bangladesh.
Some provisions of the
treaty with Bangladesh differ in minor respects from the U.S. model
text. In general, however, the treaty closely follows the language
contained in the U.S. model text, the most significant provisions of
which are as follows.
The model BIT's definition section clarified terms such as "company
of a Party" and ;"investment"; The BIT concept of "investment"
is broad and designed to be flexible; although numerous types of
economic interests are enumerated, the intent is to include all
legitimate interests in the territory of either Party, whether directly
or indirectly controlled by nationals of the other, having economic
value or "associated" with an investment. Protected "companies
of a Party" are those incorporated or otherwise organized under the
laws of a Party in which nationals of that Party have a substantial
interest.
The model BIT accords the better of national or most-favored-nation
(MFN) treatment of foreign investment, subject to each Party's
exceptions which are listed in a separate Annex. The exceptions are
designed to protect state regulatory interests and for the United
States to accommodate the derogations from national treatment in state
or federal law relating to such areas as air transport, shipping,
banking, telecommunications, energy and power production, insurance,
and from national and MFN treatment in the case of ownership of real
property. Any additional restrictions or limitations which a Party may
adopt with respect to those matters or sectors excepted from the
standards are not to affect existing investments. The BIT also
includes general treatment protections designed to be a guide to
interpretation and application of the treaty. Thus, the Parties agree
to accord investments "fair and equitable treatment" and "full
protection and security" in no case "less than that required
by international law." It specifically grants nationals of a
Party the right to establish investments in the territory of the other
Party, restricts the right to impose performance requirements, and
obliges Parties to observe their contractual obligations with
investors. The U.S. model also provides that companies legally
constituted under the laws of the other Party (i.e., subsidiaries of
companies of a Party) with investments in that country shall be
permitted to engage "top managerial personnel of their choice,
regardless of nationality."
The model BIT also confers protection from unlawful interference with
property interests and assures compensation in accordance with
international law standards. It provides that any direct or indirect
taking must be: for a public purpose; nondiscriminatory; accompanied by
the payment of prompt, adequate and effective compensation; and in
accordance with due process of law and the general standards of
treatment discussed above. The BIT's definition of "expropriation"
is broad and flexible; essentially "any measure" regardless of
form, which has the effect of depriving an investor of his management,
control or economic value in a project may constitute an expropriation
requiring compensation equal to the "fair market value." Such
compensation, which shall not reflect any reduction in such fair market
value due to... the expropriatory action,: must be "without delay,"
"effectively realizable," "freely transferable" and "bear
current interest from the date of the expropriation ..." The BIT
grants the right to "prompt review" by the relevant judicial
or administrative authorities in order to determine whether the
compensation offered is consistent with these principles. It also
extends national and MFN treatment to investors in cases of loss due to
war or other civil disturbance. The BIT does not provide, however, a
specific valuation method for compensating such losses.
The model BIT provides for free transfers "related to an investment",
specifically of returns, compensation for expropriation, contract
payments, proceeds from sale, and contributions to capital for
maintenance or development of an investment. Such transfers are to be
made in a "freely convertible currency at the prevailing market
rate of exchange on the date of transfer with respect to spot
transactions in the currency to be transferred." The model text
recognizes that notwithstanding this guarantee, Parties can maintain
certain laws and regulations regarding transfers provided these are
applied in a non-discriminatory fashion. In particular, the model text
provides that Parties can require reports of currency transfers and
impose income taxes by such means as a withholding tax on dividends. The
model text also recognizes that Parties retain the right to protect the
rights of creditors and ensure the satisfaction of judgments in
adjudicatory proceedings.
The model BIT provides that where certain defined investment disputes
arise between a Party and a national or company of the other party,
including disputes as to the interpretation of an investment agreement,
and the dispute cannot be solved through negotiation, it may be
submitted to arbitration in accordance with any dispute-settlement
procedures to which the national or company and the host country have
previously agreed. Unless the national or company has submitted the
dispute to previously agreed dispute settlement procedures or to
adjudication by domestic courts or other tribunals of the host country,
the national or company may submit the dispute to the International
Centre for the Settlement of Investment Disputes ("ICSID") for
binding arbitration. Exhaustion of local remedies is not required. In a
separate provision, the BIT Parties also agree to grant nationals and
companies of the other Party access to their domestic courts in order to
assert claims and enforce rights with respect to investment.
The model BIT provides for state-to-state arbitration between the
Parties in case of a dispute regarding the interpretation or application
of the treaty. In the absence of an agreement that other rules apply,
the BIT refers the Parties to specific procedural rules which must
govern the arbitration. The BIT also outlines the procedures for the
creation of the arbitral panel. The model BIT exhorts Parties to apply
their tax policies fairly and equitably, Because the United States
specifically addresses tax matters in tax treaties, the BIT generally
excludes such matters. Another BIT provision exempts disputes arising
under Export-Import Bank programs, or other credit guarantee or
insurance arrangements providing for alternative dispute settlement
arrangements, from the standard BIT arbitration clauses. The model BIT
also states that the treaty shall not derogate from any obligations that
require more favorable treatment of investments and declares that the
treaty shall not preclude measures necessary for public order or
essential security interests. The model BIT enters into force 30 days
after exchange of ratifications and continues in force for at least ten
years. Thereafter, either Party may terminate the treaty, subject to on
year's written notice.
Each of these model provisions was developed after lengthy and extensive
consultations within the U.S. Government and with the private sector.
Nonetheless, in negotiating a particular treaty, the U.S. Government
retains, of course, some flexibility to adopt modifications as necessary
and in light of experience. While the U.S. model text has recently been
simplified, the provisions summarized above have all been retained. Some
of the provisions of the U.S.-Bangladesh treaty differ in minor respects
from the U.S. negotiating text, although none of the changes represent
substantive departures from U.S. objectives. The more significant
modifications are as follows:
Transfers
(Article V): This treaty's transfers provisions, consistent with the
model text, generally provide an investor with the right to transfer
freely funds associated with an investment in freely convertible
currency, without delay, at prevailing market exchange rates.
However, Paragraph 4 of the Protocol accompanying this treaty allows
Bangladesh to restrict transfers if "foreign exchange reserves
[are] at a very low level." In such case, the Government of
Bangladesh may temporarily delay transfers of sales or liquidation
proceeds, but only (i) in an manner not less favorable than that
accorded to comparable transfers to investors of third countries; (ii)
to the extent and for the time period necessary to restore its reserves
to a minimally acceptable level, but in no case for a period of more
than five years, during each year of which an amount of no less than 20%
of the value of the proceeds shall be permitted to be transferred; and
(iii) after providing the investor an opportunity to invest the sales or
liquidation proceeds in a manner which will preserve its value until
transfer occurs.
During
negotiations, Bangladesh officials were particularly concerned with the
effect that the liquidation of a substantial investment could have on
the country's foreign exchange reserves. Transfer provisions have been
qualified in similar respects in the treaties with Egypt, Morocco,
Turkey, and Zaire.
(2) State-to-State Arbitration (Article VIII): Like the model text, the
treaty with Bangladesh provides for state-to-state arbitration between
the parties in case of a dispute regarding the interpretation or
application of the treaty. The model text requires that all hearing and
submissions must be completed within six months of the formation of the
tribunal, and a final decision must be rendered within two months of the
date of final submissions or the closing of hearings, whichever is
later. The treaty with Bangladesh requires that an arbitral tribunal for
state-to-state arbitration must render a final decision within one year
of the formation of the tribunal; no time limitations for hearings or
submission of evidence are specified. This change resulted from the
United States accepting, in the spirit of compromise, Bangladesh's text
on this provision, since it was essentially similar to the model text.
In addition, the treaty with Bangladesh does not include a reference to
the United Nations International Law Commission's Model Rules on
Arbitral Procedure, to be used in the absence of an agreement between
the Parties. In such instances, the United States and Bangladesh have
agreed that the arbitral tribunal should determine its own rules of
procedure.
(3) Customs Union Exemption (Protocol, Paragraph 2): Paragraph 2 of the
Protocol exempts from MFN treatment advantages extended to other
countries by virtue of membership in a regional customs union or free
trade area. While the model text contains no similar provision, a "customs
union exemption" has been included in U.S. BITs with Egypt, Haiti
and Morocco.
(4) Employment (Article II (4)(b) of the treaty with Bangladesh gives
investors the right to hire the top managerial personnel of their
choice; and allows them to engage technical and professional personnel
of their choice, subject to local employment laws. This provision, while
similar to the model text, differs in two minor respects:
(a) The model text provides that the choice of employment may be made "regardless
of nationality." The intent of the qualification is to assure
compliance with U.S. anti-discrimination laws. Although the treaty with
Bangladesh does not contain this qualification, the parties have
exchanged side letters which clarify that investors may choose employees
"on the basis of nationality." These letters were signed and
exchanged at the time the treaty was signed in Washington on March 12,
1986. It is understood that the phrase "on the basis of nationality"
serves the same function. The Bangladesh negotiators would not accept "regardless
of nationality" since there are certain nationalities ineligible
for entry into Bangladesh.
(b) The treaty's employment provision is also limited by paragraph 3 of
the Protocol. That paragraph: (1) subjects the right of nationals or
companies to employ personnel to Article X, which provides that Parties
are not precluded from, inter alia, adopting measures necessary to
maintain public order, protecting essential security interests, or
prescribing special formalities for the establishment of investments;
and (2) recognizes that laws exist which require employment of local
nationals, but the Parties agree to administer such laws flexibly,
taking into account the nature of the investment, the requirements of
the positions in question, and the availability of qualified nationals.
The first qualification was already implicit in the model text. The
second was included because of strong Bangladesh insistence that one of
the principal benefits of foreign investment is the development of local
employee skills.
(5) Performance Requirements (Article II (6)): Unlike the model text,
which states that "neither Party shall impose" performance
requirements the treaty with Bangladesh uses the horatory language "shall
seek to avoid." This language was adopted because Bangladesh
strongly holds the position that two of the main purposes of attractive
foreign investment are to generate foreign exchange and to utilize local
resources. Similar horatory language concerning performance requirements
is found in U.S. BITs with Haiti, Morocco, Senegal and Turkey.
(6) Losses Concerning War Damage (Article IV): Paragraph 5 of the
Protocol states that "the provisions of this treaty are not
intended to apply to any claims concerning losses incurred prior to the
entry into force of this treaty by nationals or companies of either
Party." The Bangladesh negotiators requested this provision to
exclude claims for damage sustained by investors in the 1971 war leading
to Bangladesh's independence, and related civil disturbances.
Submission of this treaty makes a significant development in our
international investment policy. I join with the United States Trade
Representative and other U.S. Government agencies in supporting the
treaty and favor its transmission to the Senate at an early date.
Respectfully
submitted.
MICHAEL H. ARMACOST.
TREATY
BETWEEN THE UNITED STATES OF AMERICA AND THE PEOPLE'S REPUBLIC OF
BANGLADESH CONCERNING THE RECIPROCAL ENCOURAGEMENT AND PROTECTION OF
INVESTMENT
The
Government of the United States of America and the People's Republic of
Bangladesh (hereinafter referred to as a "Party";
Desiring
to promote greater economic cooperation between them, with respect to
investment by nationals and companies of one Party in the territory of
the other Party; and
Recognizing
that agreement upon the treatment to be accorded such investment will
stimulate the flow of private capital and the economic development of
the Parties;
Agreeing
that discrimination on the basis of nationality by either Party against
investment in its territory by nationals or companies of the other Party
is not consistent with either a stable framework for investment or a
maximum effective utilization of economic resources,
Having
resolved to conclude a treaty concerning the Encouragement and
Reciprocal Protection of investment
HAVE
AGREED AS FOLLOWS:
ARTICLE
I
DEFINITIONS
FOR
THE PURPOSES OF THIS TREATY,
(a)
"Company" means any kind of juridical entity, including any
corporation, company association, or other organization, that is duly
incorporated, constituted, or otherwise duly organized, regardless of
whether or not the entity is organized for pecuniary gain, privately or
governmentally owned, or organized with limited or unlimited liability.
(b) "Company of a Party" means a company duly incorporated,
constituted or otherwise duly organized under the applicable laws and
regulations of a Party or a political subdivision thereof in which
(i) natural persons who are nationals of such Party, or
(ii) such Party or a political subdivision thereof or their agencies or
instrumentalities have a substantial interest as determines by such
Party.
Each Party reserves the right to deny to any of its own companies or to
a company of the other Party the advantages of this Treaty, if nationals
or any third country control such company, provided that whenever one
Party concludes that the benefits of this Treaty should not be extended
to a company of the other Party for this reason, it shall promptly
consult with the other Party to seek a mutually satisfactory resolution
to this matter.
In any event, the juridical status of a company of a Party shall be
recognized by the other Party and its political subdivisions
(c) "Investment" means every kind of investment owned or
controlled directly or indirectly, including equity, debt; and service
and investment contracts; and includes;
(i) tangible and intangible property, including rights, such as
mortgages, liens and pledges;
(ii) a company or shares, stock, or other interests in a company or
interests in the assets thereof;
(iii) a claim to money or a claim to performance having economic value,
and associated with an investment;
(iv) Intellectual property, including rights with respect copyrights and
related patents, trade marks and trade names, industrial designs, trade
secrets and know-how, and goodwill.
(v) Licenses and permits issued pursuant to law, including those issued
for manufacture and sale of products.
(vi) any right conferred by law or contract, including rights to search
for or utilize natural resources, and rights to manufacture, use and
sell products; and
(vii) returns which are reinvested.
Any alteration of the form in which assets are invested or reinvested
shall not affect their character as investment.
(d) "own or control" means ownership or control that is direct
of indirect, including ownership or control exercised through
subsidiaries or affiliates, wherever located.
(e) "national" or a Party means a natural person who is a
national of a Party under its applicable law.
(f) "return" means an amount derived from or associated with
an investment, including profit; dividend; interest; capital gain;
royalty payment; management, technical assistance or other fee; and
payment in kind.
ARTICLE
II - TREATMENT OF INVESTMENT
1. Each Party shall maintain favorable conditions for investment in its
territory by nationals and companies of the other Party. Each Party
shall permit and treat such investment, and activities related
therewith, on a basis no less favorable than accorded in like situations
to investment or related activities of its own nationals or companies,
or of nationals or companies of any third country, whichever is the more
favorable.
2. (a) Notwithstanding the preceding provisions of this Article, each
Party reserves the right to maintain limited exceptions to the standard
of treatment otherwise required if such exceptions fall within one of
the sectors or matters listed in the Annex to this Treaty. Each Party
agrees to notify the other Party of all such exceptions at the time this
Treaty enters into force. Moreover, each Party agrees to notify the
other Party of any future exceptions falling within the sectors or
matters listed in the Annex, and to maintain the number of such
exceptions at a minimum. Other than with respect to ownership) of real
property, the treatment accorded pursuant to this subparagraph shall not
be less favorable than that accorded in like situations to investments
and associated activities of nationals or companies of any third
country. However, either Party may require that rights to engage in
mining on the public domain shall be dependent on reciprocity.
(b) No exception introduced after the date of entry into force of this
Treaty shall apply to investments of nationals or companies of the other
Party existing in that sector at the time the exception becomes
effective.
3. Investment of nationals and companies of either Party shall at all
times be accorded fair and equitable treatment and shall enjoy full
protection and security in the territory of the other Party. The
treatment, protection and security of investment shall be in accordance
with applicable. national laws, and shall in no case be less than that
required by international law. Neither Party shall in any way impair by
arbitrary and discriminatory measures the management, operation,
maintenance, use, enjoyment, acquisition, expansion, or disposal of
investment made by nationals or companies of the other Party. Each Party
shall observe any obligation it may have entered into with regard to
investment of nationals or companies of the other Party.
4. (a) Subject to the laws relating to the entry and sojourn of aliens,
nationals of either Party shall be permitted to enter and to remain in
the territory of the other Party for the purpose of establishing,
developing, directing, administering or advising on the operation of an
investment to which they, or a company of the first Party that employs
them, have committed or are in the process of committing a substantial
amount of capital or other resources.
(b) Nationals and companies of either Party, and companies which they
own or control, shall be permitted to engage, within the territory of
the other Party, top managerial personnel of their choice. Further,
subject to laws and administrative regulations concerning the employment
of foreign nationals, nationals and companies of either Party shall be
permitted to engage, within the territory of the other Party,
professional and technical personnel of their choice, for the particular
purpose of rendering professional, technical and managerial assistance
necessary for the planning and operation of their investment.
5. The Parties recognize that, consistent with paragraph I of this
Article, conditions of competitive equality should be maintained where
investments owned or controlled by a Party or its agencies or
instrumentalities are in competition, within the territory of such
Party, with privately owned or controlled investments of nationals or
companies of the other Party. In such situations, the privately owned or
controlled investments shall receive treatment which is equivalent with
regard to any special economic advantage accorded the governmentally
owned or controlled investments.
6. In the context of its national economic policies and objectives, each
Party shall seek to avoid the imposition of performance requirements on
the investments of nationals and companies of the other Party.
7. In order to maintain a favorable environment for investments in its
territory by nationals or companies of the other Party, each Party shall
provide effective means of asserting claims and enforcing rights With
respect to investment agreements, investment authorizations and
properties. Each Party shall grant to nationals or companies of the
other Party, on terms and conditions no less favorable than those which
it grants in like situations to its own nationals or companies or to
nationals or companies of any third country, whichever is the most
favorable treatment, the right of access to its courts of justice,
administrative tribunals and agencies, and all other bodies exercising
adjudicatory authority, and the right to employ persons of their choice,
who otherwise qualify under applicable laws and regulations of the forum
regardless of nationality, for the purpose of asserting claims, and
enforcing rights, with respect to their investments.
8. Each Party shall make public all laws, regulations, administrative
practices and procedures, and adjudicatory decisions that pertain to or
affect investments in its territory of nationals or companies of the
other Party.
9. The treatment accorded by a Party to nationals or companies of the
other Party under the provisions of paragraph 1 of this Article shall in
any State, Territory, possession, or political or administrative
subdivision of the Party be the treatment accorded therein to companies
incorporated, constituted or otherwise duly organized in other States,
Territories, possessions, or political or administrative subdivisions of
the Party.
ARTICLE
III - COMPENSATION FOR EXPROPRIATION
1. No investment or any Part of an investment of a national or a company
of either Party shall be expropriated or nationalized by the other Party
or subjected to any other measure or series of measures, direct or
indirect tantamount to expropriation (including the levying of taxation,
the compulsory sale of all or part of an investment, or the impairment
or deprivation of its management, control or economic value), all such
actions hereinafter referred to as "expropriation", unless the
expropriation:
(a) is done for a public purpose;
(b) is accomplished under due process of law;
(c) is not discriminatory;
(d) does not violate any specific provision on contractual stability or
expropriation contained in an investment agreement between the national
or company concerned and the Party making the expropriation; and
(e) is accompanied by prompt, adequate and effective compensation.
Compensation
shall be equivalent to the fair market value of the investment. The
calculation of such compensation shall not reflect any reduction in such
fair market value due to either prior public notice or announcement of
the expropriatory action, or the occurrence of the events that
constituted or resulted in the expropriatory action. Such compensation
shall be paid promptly, shall be effectively realizable, shall bear
current interest from the date of the expropriation at a rate equivalent
to current international rates, and shall be freely transferable, in
accordance with the provisions of Article V, at the prevailing market
rate of exchange on the date of expropriation.
2. If either Party expropriates the investment of any company duly
incorporated, constituted or otherwise duly organized in its territory,
and if nationals or companies of the other Party, directly or indirectly
own, hold or have other rights with respect to the equity of such
company, then the Party within whose territory the expropriation occurs
shall ensure that such nationals or companies of the other Party receive
compensation in accordance with the provisions of the preceding
paragraph.
3. Subject to the dispute settlement provisions of any applicable
agreement, a national or company of either Party that asserts that all
or part of its investment in the territory of the other Party has been
expropriated shall have a right to prompt review by the appropriate
judicial or administrative authorities of such other Party to determine
whether any such expropriation has occurred and, so, whether such
expropriation, and any compensation therefor, conforms to the principles
of international law as set forth in this Article.
ARTICLE
IV - COMPENSATION FOR DAMAGES DUE TO WAR AND SIMILAR EVENTS
1. Nationals or companies of either Party whose investments in the
territory of the other Party suffer
(a) damages due to war or other armed conflict between such other Party
and a third country, or
(b) damages due to revolution, state of national emergency, revolt,
insurrection, riot or act of terrorism in the territory of such other
Party, shall be accorded treatment no less favorable than that which
such other Party accords to its own nationals or companies or to
nationals or companies of any third country, whichever is the most
favorable treatment, when making restitution, indemnification,
compensation or other appropriate settlement with respect to such
damages.
2. In the event that such damages result from:
(a) a requisitioning of property by the other Party's forces or
authorities, or
(b) destruction of property by the other Party's forces or authorities
which was not caused in combat action or was not required by the
necessity of the situation, the national or company shall be accorded
restitution or compensation consistent with Article III.
3. The payment of any indemnification, compensation or other appropriate
settlement pursuant to this Article shall be freely transferable, in
accordance with the provisions of Article V.
ARTICLE
V-TRANSFERS
1. Each Party shall permit all transfers related to an investment in its
territory of a national or company of the other Party to be made freely
and without delay into and out of its territory. Such transfers include
the following: returns; payments made arising out of a dispute
concerning an investment; payments made under a contract, including
amortization of principal and accrued interest payments made pursuant to
a loan agreement; amounts to cover expenses relating to the management
of the investment; royalties and other payments derived from licensed
franchises or other grants of rights or from administrative or technical
assistance agreements, including management fees; proceeds from the sale
of all or part of an investment and from the partial or complete
liquidation of the company concerned, including any incremental value;
additional contributions to capital necessary or appropriate for the
maintenance or development of an investment.
2. To the extent that a national or company of either Party has not made
another arrangement with the appropriate authorities of the other Party
in whose territory the investment of such national or company is
situated, currency transfers made pursuant to Paragraph 1 of this
Article shall be permitted in a currency or currencies to be selected by
such national or company. Except as provided in Article III, such
transfers shall be made at the prevailing market rate of exchange on the
date of transfer with respect to spot transactions in the currency or
currencies to be transferred.
3. Notwithstanding the preceding paragraphs, either Party may maintain
laws and regulations: (a) requiring reports of currency transfer; and
(b) imposing income taxes by such means as a withholding tax applicable
to dividends or other transfers. Furthermore, either Party may protect
the rights of creditors, or ensure the satisfaction of judgments in
adjudicatory proceedings, through the equitable, nondiscriminatory and
good faith application of its law.
ARTICLE
VI - CONSULTATIONS AND EXCHANGE OF INFORMATION
1. The Parties agree to consult promptly, on the request of either, to
resolve any disputes in connection with the Treaty, or to discuss any
matter relating to the interpretation or application of the Treaty,
including any matter relating to the laws, regulations, administrative
practices, adjudicatory decisions, or policies of one Party that pertain
or affect investments of the other Party.
2. If one Party requests in writing that the other Party supply
information in its possession concerning investments in its territory by
nationals or companies of the Party making the request, then the other
Party shall, consistent with its applicable laws and regulations and
with regard for business confidentiality, endeavor to establish
appropriate procedures and arrangements for the provision of any such
information.
ARTICLE
VII - SETTLEMENT OF INVESTMENT DISPUTES BETWEEN ONE PARTY AND A NATIONAL
OR COMPANY OF THE OTHER PARTY
1. For purposes of this Article, an investment dispute is defined as a
dispute involving (a) the interpretation or application of an investment
agreement between a Party and a national or company of the other Party;
(b) the interpretation or application of any investment authorization
granted by its foreign investment authority to such national or company;
or (c) an alleged breach of any right conferred or created by this
Treaty with respect to an investment.
2. In the event of an investment dispute between a Party and a national
or company of the other Party with respect to an investment of such
national or company in the territory of such Party, the parties to the
dispute shall initially seek to resolve the dispute by consultation and
negotiation. The parties may, upon the initiative of either of them and
as a part of their consultation and negotiation, agree to rely upon
non-binding, third-party procedures, such as the fact-finding facility
available under the Rules of the "Additional Facility ("Facility")
of the International Centre for the Settlement of Investment Disputes ("Centre").
If the dispute cannot be resolved through consultation and negotiation,
then the dispute shall be submitted for settlement in accordance with
the applicable dispute-settlement procedures upon which they have
previously agrees. With respect to expropriation by either Party, and
dispute-settlement procedures specified in an investment agreement
between such Party and such national or company shall remain binding and
shall be enforceable in accordance with the terms of the investment
agreement and relevant provisions of domestic laws of such Party and
treaties and other international agreements regarding enforcement of
arbitral awards to which such Party has subscribed.
3. (a) The national or company concerned may choose to consent in
writing to the submission of the dispute to the Centre or the Additional
Facility, for settlement by conciliation or binding arbitration, at any
time after six months from the date upon which the dispute arose,
provided:
(i) the dispute has not, for any reason, been submitted by the national
or company for resolution in accordance with any applicable dispute
settlement procedures previously agreed to by the Parties to the
dispute; and
(ii) the national or company concerned has not brought the dispute
before the courts of justice or administrative tribunals or agencies of
competent jurisdiction of the Party that is party to the dispute.
Once
the national or company concerned has so consented, either party to the
dispute may institute proceedings before the Centre or the Additional
Facility. If the parties disagree over whether conciliation or binding
arbitration is the more appropriate procedure to be employed, the
opinion of the national or company concerned shall prevail.
(b) Each Party hereby consents to the submission of an investment
dispute to the Centre for settlement by conciliation or binding
arbitration.
(c) Conciliation or binding arbitration of such disputes shall be done
in accordance with the provisions of the Convention on the Settlement of
Investment Disputes Between States and Nationals of other States ("Convention")
and the Regulations and Rules of the Centre, or, if the Convention
should, for any reason, be inapplicable, the Rules of the Additional
Facility.
4. In any proceeding, judicial, arbitral or otherwise, concerning an
investment dispute between it and a national or company of the other
Party, a Party shall not assert, as a defense, counter-claim, right of
set-off or otherwise, that the national or company concerned has
received or will receive, pursuant to an insurance contract,
indemnification or other compensation for all or part of its alleged
damages from any source whatsoever, including such other Party and its
political subdivisions, agencies and instrumentalities.
5. For the purposes of this Article, any company legally constituted
under the applicable laws and regulations of either Party or political
subdivision thereof but that, immediately before the occurrence of the
event or events giving rise to the dispute, was an investment of
nationals or companies of the other Party, shall, in accordance with
Article 25 (2)(b) of the Convention, be treated as a national or company
of such other Party. This Article shall not apply to an investment
dispute between a Party and a national of that Party.
6. The provisions of this Article shall not apply to a dispute arising
(a) under the export credit, guarantee or insurance programs of f the
United States or (b) under other of insurance agreements pursuant to
which the Parties have agreed to other means of settling disputes.
ARTICLE
VIII - SETTLEMENT OF DISPUTES BETWEEN THE PARTIES CONCERNING
INTERPRETATION OR APPLICATION OF THIS TREATY
1. Any dispute between the Parties arising out of or in connection with
the interpretation or application of this Treaty should, if possible, be
settled through diplomatic channels.
2. If a dispute between the Parties cannot thus be settled it shall
upon, the request of either Party be submitted to an arbitral tribunal.
3. The-Tribunal shall be established for each case as follows: Within
two months of receipt of a request for arbitration, each Party, shall
appoint an arbitrator. The two arbitrators so appointed shall, select a
third arbitrator as Chairman, who is a national of a third State. The
Chairman shall be appointed within two months of the date of appointment
of the other two arbitrators.
4. If within the periods specified in paragraph (3) of this Article the
necessary appointments have not been made, either Party may, in the
absence of any other agreement, invite the President of the
International Court of Justice to make any necessary appointment. If the
President is a national of either Party or he is unable to discharge the
said function, the Vice-President shall be invited to make the necessary
appointments. If the Vice-President is a national of either Party or if
he too is unable to discharge the said function, the Member of the
International Court of Justice next in seniority who is not a national
of either Contracting Party shall be invited to make the necessary
appointments.
5. In the event that an arbitrator resigns or is for any reason unable
to perform his duties, a replacement shall be appointed within thirty
days, utilizing the same method by which the arbitrator being replaced
was appointed. If the replacement is not appointed within the time limit
specified above, either Party may invite the President of the
International Court of Justice to make the necessary appointment. If the
President is a national of either of the Parties or is unable to act for
any reason, either Party may invite the Vice-President, or if he is also
a national of either of the Parties or is unable to act for any reason,
the next most senior member of the International Court of Justice who is
not a national of one of the Parties and is able to perform said duties,
to make the appointment.
6. The arbitral tribunal shall reach its decision in accordance with
international law by a majority of votes. Such decision shall be binding
on both Parties. Each Party shall bear the cost of its representation in
the arbitral proceedings; the cost of the arbitrator and the remaining
costs shall be borne in equal parts by the Parties. The Tribunal may,
however, in its decision direct that a higher proportion of costs shall
be borne by one of the two Parties, and this award shall be binding on
both Parties. The Tribunal shall determine its own procedure to the
extent the Parties have been unable to agree upon applicable principles.
The Tribunal shall arrange for submissions from the Parties, any
necessary hearings, and a final decision on the dispute within one year
from the date of the formation of the Tribunal.
7. The provisions of this article shall not apply to a dispute arising
(a) under the export credit, guarantee or insurance programs of the
United States, or (b) under other or insurance arrangements pursuant to
other means of settling disputes.
ARTICLE
IX - PRESERVATION OF RIGHTS
This
Treaty shall not supersede, prejudice, or otherwise derogate from:
(a) laws and regulations, administrative practices or procedures, or
administrative or adjudicatory decisions of either Party;
(b) international legal obligations; or
(c) obligations assumed by either Party, including those contained in an
investment agreement or an investment authorization,
whether
extant at the time of entry into force of this Treaty or thereafter,
that entitle investments, or associated activities, of nationals or
companies of the other Party to treatment more favorable than that
accorded by this Treaty in like situations.
ARTICLE
X - MEASURES NOT PRECLUDED BY THIS TREATY
1. This Treaty shall not preclude the application by either Party of any
and all measures necessary for the maintenance of public order, the
fulfillment of its obligations with respect to the maintenance or
restoration of international peace or security, or the protection of its
own essential security interests.
2. This Treaty shall not preclude either Party from prescribing special
formalities in connection with the establishment of investments in its
territory of nationals and companies of the other Party, but such
formalities shall not impair the substance of any of the rights set
forth in this Treaty.
ARTICLE
XI-TAXATION
1. With respect to its tax policies, each Party should strive to accord
fairness and equity in the treatment of investment of nationals and
companies of the other Party.
2. Nevertheless, the provisions of this Treaty, and in particular
Articles VII and VIII, shall apply to matters of taxation only with
respect to the following:
(a) expropriation, pursuant to Article III;
(b) transfers, pursuant to Article V; or
(c) the observance and enforcement of terms of an investment agreement
or authorization as referred to in Article VII (1)(a) or (b).
Matters
covered by item 2(c) shall not be covered to the extent they are subject
to the dispute settlement provisions of a convention for the avoidance
of double taxation between the two Parties, unless such matters are
raised under such settlement provisions and are not resolved within a
reasonable period of time.
ARTICLE
XII - APPLICATION OF THIS TREATY TO POLITICAL SUB-DIVISIONS
OF
THE PARTIES
This
Treaty shall apply to Political subdivisions of the Parties
ARTICLE
XIII - ENTRY INTO FORCE AND DURATION AND TERMINATION
1. This Treaty shall be ratified by each of the Parties and the
ratifications thereof shall be exchanged as soon as possible.
2. This treaty shall enter into force thirty days after the date of
exchange of ratifications. It shall remain in force for a period of ten
years and shall continue in force unless terminated in accordance with
Paragraph 3 of this Article. It shall apply to investments existing at
the time of entry into force as well as to investments made or acquired
thereafter.
3. Either Party may, by giving one year's written notice to the other
Party, terminate this Treaty at the end of the initial ten year period
or at any time thereafter.
4. With respect to investments made or acquired prior to the date of
termination of this Treaty and to which this Treaty otherwise applies,
the provisions of all of the other Articles of this Treaty shall
thereafter continue to be effective for a further period of ten years
from such date of termination. In
Witness Thereof, the respective plenipotentiaries have signed this
Treaty.
Done
in duplicate at Washington on the 12th day of March 1986 in the English
and Bangla languages, both texts being equally authentic.
For
the Government of the United States of America:
CLAYTON
YEUTTER.
For
the Government of the People's Republic of Bangladesh:
KHORSHED
ALAM.
Consistent
with Article II paragraph 3, each Party reserves the right to maintain
limited exceptions in the sectors or matters it has indicated below:
THE
UNITED STATES OF AMERICA
Air
transportation; ocean and coastal shipping; banking; insurance;
government grants; government insurance and loan programs; energy and
power production; custom house brokers; ownership of real estate;
ownership and operation of broadcast or common earner radio and
television stations; ownership of shares in the Communications Satellite
Corporation; the provision of common carrier telephone and telegraph
services; the provision of submarine cable services; use of land and
natural resources.
THE
PEOPLE'S REPUBLIC OF BANGLADESH
Arms
and ammunition and allied defense equipment; atomic energy; air
transport; telecommunication (common carrier services); generation
(excluding stand-by generation) and distribution of electricity; forest
extraction (mechanised); sea trawling, commercial trading; insurance;
indenting; public utilities; shipping-, oil and gas (except for
hydrocarbon exploration through production contract/joint venture); oil
refining and products marketing (except under joint venture);
communication satellite; housing and ownership of real estate.
PROTOCOL
The duly authorized Plenipotentiaries of the Parties have agreed upon
the following provisions clarifying their intent in respect to certain
Articles of the Treaty Concerning Treatment and Protection of Investment
signed this date, which shall be considered integral parts of the
Treaty:
1. Each Party shall accord, under its laws and regulations, to
investments and associated activities in its territory of nationals or
companies of the other Party, treatment no less favorable than that
which it accords in like situations to investments and related
activities of its own nationals or companies or of nationals or
companies of any third country, whichever is the most favorable.
Application of laws and regulations shall not impair the substance of
rights guaranteed by this Treaty. Associated activities include:
(a) the establishment, control and maintenance of branches, agencies,
offices, factories or other facilities for the conduct of business;
(b) the organization of companies under applicable laws and regulations;
the acquisition of companies or interests in companies or in their
property; and the management, control, maintenance, use, enjoyment and
expansion, and time sale, liquidation, dissolution or other disposition,
of companies organized or acquired.
(c) the making, performance and enforcement of contracts;
(d) the acquisition (whether by purchase, lease or otherwise), ownership
and disposition (whether by age, testament or otherwise), of personal
property of all kinds, both tangible and intangible;
(e) the leasing of real property appropriate for the conduct of
business;
(f) the acquisition, maintenance and protection of copyrights, patents,
trademarks, trade secrets, trade names, licenses and other approvals of
products and manufacturing processes, and other industrial property
rights; and,
(g) the borrowing of funds, the purchase and issuance of equity shares,
and the purchase of foreign exchange for imports.
2. The most favored nation provisions of Article II, paragraph 2, shall
not apply to advantages accorded by either Party to nationals or
companies of any third country by virtue of that Party's binding
obligations that derive from full membership in a regional customs union
or free trade area.
3. The provisions of Article II, paragraph 4(b), concerning the right of
nationals and companies to employ personnel of their choice, shall be
subject to the provision of Article X. Furthermore, as for any laws
concerning the employment of foreign nationals which require the
employment of a Party's own nationals in certain positions or the
employment of a certain percentage of its own nationals in positions in
connection with investment made in its territory by nationals or
companies of the other Part, each Party agrees to administer such laws
flexibly, taking into account inter alia, the nature of the investment,
the requirements of the positions in question, and the availability of
qualified nationals.
4. The parties recognize that restrictions on transfers abroad of sales
or liquidation proceeds of an investment will adversely affect future,
capital inflows, contrary to the spirit of this Treaty and the interests
of the Party imposing those restrictions. Nevertheless, the Parties
recognize that Bangladesh may find its foreign exchange reserves at a
very low level. In these circumstances, the Government of Bangladesh may
temporarily delay transfers of sales or liquidation proceeds, but only
(i) in a manner not less favorable than that accorded to comparable
transfers to investors of third countries, (ii) to the extent and for
the time period necessary to restore its reserves to a minimally
acceptable level, but in no case for a period of more than five years,
during each year of which an amount of no less than 20% of the value of
the proceeds shall be permitted to be transferred; and (iii) after
providing the investor an opportunity to invest the sales or liquidation
proceeds in a manner which will-preserve its value until transfer
occurs.
5. The provisions of this Treaty are not intended to apply to any claims
concerning losses incurred prior to the entry into force of this Treaty
by nationals or companies of either Party.
U.S.
TRADE REPRESENTATIVE,
Washington,
March 12,1986.
His
Excellency KHORSHED ALAM,
Secretary,
Ministry of Industries, The People's Republic of Bangladesh.
YOUR EXCELLENCY: I have the honor to refer to the Treaty between the
United States of America and the People's Republic of Bangladesh
concerning the Reciprocal Encouragement and Protection of Investment,
and wish to inform that as per discussions during the course of
negotiations on the question of employment under Article II, paragraph
4(b), our intent is that with respect to the United States and
Bangladesh this paragraph accords nationals and companies of either
Contracting State the right to engage top managerial personnel of their
choice on the basis of nationality and to engage professional and
technical personnel of their choice subject to the employment laws and
regulations of each Contracting State. I would appreciate confirmation
that your Government shares this understanding.
With
compliments of my highest esteem.
Sincerely,
CLAYTON
YEUTTER,
For
and on behalf
of the Government
of
the United States of America.
[Translation]
DEPARTMENT
OF STATE,
DIVISION
OF LANGUAGE SERVICES,
March
12, 1986.
His
Excellency CLAYTON YEUTTER,
US-
Trade Representative, Government of the United States of America.
EXCELLENCY: I have the honor to acknowledge receipt of your letter which
reads as follows:
"I
have the honor to refer to the Treaty between the United States of
America and the People's Republic of Bangladesh concerning the
Reciprocal Encouragement and Protection of Investment, and wish to
inform that as per discussions during the course of
negotiations
on the question of employment under Article II, paragraph 4(b), our
intent is that with respect to the United States and Bangladesh this
paragraph accords nationals and companies of either Contracting State
the right to engage top managerial personnel of their choice on the
basis of nationality and to engage professional and technical
personnel their choice subject to the employment laws and regulations
of each Contracting State. I would appreciate confirmation that your
Government shares this understanding.
I
confirm the above understanding between the two parties.
With
compliments of my highest esteem.
Yours
sincerely,
(Signed)
KHORSHED ALAM,
For
and on behalf of the Government
of
the People's Republic of Bangladesh.
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