Signing of the Japan-Ukraine Investment Agreement
METI/MOFA | 5 Feb 2015
Signing of the Japan-Ukraine Investment Agreement
On February 5, 2015, H.E. Mr. Shigeki Sumi, Ambassador Extraordinary and Plenipotentiary of Japan to Ukraine, and H.E. Mr. Aivaras Abromavičius, Minister of Economic Development and Trade of Ukraine, signed an Agreement between Japan and Ukraine for the Promotion and Protection of Investment (Japan-Ukraine Investment Agreement) in Kiev, Ukraine.
1. Purpose and effects of the Agreement
The Agreement stipulates rules for investment protection and development of an investment environment. Ukraine is a mineral-rich country with broad agricultural areas, and it is considered to have potential for foreign investment opportunities. Conclusion of the Agreement is expected to help improve the legal stability of the investment environment in Ukraine and also to contribute to facilitating investment activities by Japanese enterprises in the country as well as enhancing the Japan-Ukraine economic relationship.
2. Key points of the Agreement
The Agreement includes the following provisions in order to improve the legal stability of the investment environment:
1) National treatment (only concerning the post-investment process)
The Agreement stipulates an obligation under which a contracting country should treat an investor of the other contracting country and such investor’s investments no less favorably than the contracting country’s own investors and their investments.
2) Most-favored-nation treatment (an obligation concerning the post-investment process; an obligation to make best efforts concerning the process for obtaining permission for investment)
The Agreement stipulates an obligation or an obligation to make best efforts under which a contracting country should treat an investor of the other contracting country and such investor’s investments no less favorably than investors of a third country and their investments.
(This provision is not applied to treatments under certain international agreements.)
3) Extensive prohibition of the performance requirements
As a condition for investment activities of an investor of the other contracting country, this provision prohibits the contracting country from requiring the investor to provide the former with certain performance, including local-content requirements, export requirements, and technology transfer requirements.
4) An obligation to observe any commitments made by the contracting countries with investors (known as “Umbrella Clause”)
When an investment contract, such as those related to resource development and infrastructure projects, is cancelled without reasonable cause, investors may lodge a complaint due to violation of the Agreement against the counter parties with an international arbitration procedure.
5) Investment protection provisions, including compensation in expropriation, protection from strife, and free transfers
6) Settlement of investment disputes between the contracting countries and investors
When an investor suffers damage from the contracting country that the investor has invested in due to such country’s breaching of its obligation under the Agreement, the investor may submit a dispute with the country to an international arbitration procedure for settlement.
References:
1: Background of the negotiations
– January 2011: Agreed with Ukraine at Japan-Ukraine Summit Meeting to start negotiations on an investment agreement
– November 2014: Substantially concluded the Agreement, following the three rounds of negotiations
2: The text of the Agreement is scheduled to be publicized on the METI and MOFA websites:
METI website for Economic Partnership Agreement (EPA)/Free Trade Agreement (FTA) /Investment Agreements:
http://www.meti.go.jp/policy/trade_policy/epa/english.html
