```

[Senate Executive Report 106-23]
[From the U.S. Government Publishing Office]

106th Congress                                              Exec. Rept.
                                 SENATE
 2d Session                                                      106-23

======================================================================

 
BILATERAL INVESTMENT TREATIES WITH AZERBAIJAN, BAHRAIN, BOLIVIA, 
  CROATIA, EL SALVADOR, HONDURAS, JORDAN, LITHUANIA, MOZAMBIQUE, 
  UZBEKISTAN AND A PROTOCOL AMENDING THE BILATERAL INVESTMENT TREATY WITH 
  PANAMA

                                _______
                                

October 4 (legislative day, September 22), 2000.--Ordered to be printed

                                _______
                                

          Mr. Helms, from the Committee on Foreign Relations,
                        submitted the following

                              R E P O R T

[To accompany Treaty Docs. 106-47; 106-25; 106-26; 106-29; 106-28; 106-
            27; 106-30; 106-42; 106-31; 104-25; and 106-46]

    The Committee on Foreign Relations, to which were referred 
the Treaty Between the Government of the United States of 
America and the Government of the Republic of Azerbaijan 
Concerning the Encouragement and Reciprocal Protection of 
Investment, with Annex, signed at Washington on August 1, 1997, 
together with an Amendment to the Treaty set Forth in an 
Exchange of Diplomatic Notes Dated August 8, 2000, and August 
25, 2000, (Treaty Doc. 106-47), the Treaty Between the 
Government of the United States of America and the Government 
of the the State of Bahrain Concerning the Encouragement and 
Reciprocal Protection of Investment, with Annex, signed at 
Washington on September 29, 1999 (Treaty Doc. 106-25), the 
Treaty Between the Government of the United States of America 
and the Government of the Republic of Bolivia Concerning the 
Encouragement and Reciprocal Protection of Investment, with 
Annex and Protocol, signed at Santiago, Chile, on April 17, 
1998 (Treaty Doc. 106-26), the Treaty Between the Government of 
the United States of America and the Government of the Republic 
of Croatia Concerning the Encouragement and Reciprocal 
Protection of Investment, with Annex and Protocol, signed at 
Zagreb on July 13, 1996 (Treaty Doc. 106-29), the Treaty 
Between the Government of the United States of America and the 
Government of the Republic of El Salvador Concerning the 
Encouragement and Reciprocal Protection of Investment, with 
Annex and Protocol, signed at San Salvador on March 10, 1999 
(Treaty Doc. 106-28), the Treaty Between the Government of the 
United States of America and the Government of the Republic of 
Honduras Concerning the Encouragement and Reciprocal Protection 
of Investment, with Annex and Protocol, signed at Denver on 
July 1, 1995 (Treaty Doc. 106-27), the Treaty Between the 
Government of the United States of America and the Government 
of the Hashemite Kingdom of Jordan Concerning the Encouragement 
and Reciprocal Protection of Investment, with Annex and 
Protocol, signed at Amman on July 2, 1997 (Treaty Doc. 106-30), 
the Treaty Between the Government of the United States of 
America and the Government of the Republic of Lithuania for the 
Encouragement and Reciprocal Protection of Investment, with 
Annex and Protocol, signed at Washington on January 14, 1998 
(Treaty Doc. 106-42), the Treaty Between the Government of the 
United States of America and the Government of Mozambique 
Concerning the Encouragement and Reciprocal Protection of 
Investment, with Annex and Protocol, signed at Washington on 
December 1, 1998 (Treaty Doc. 106-31), the Treaty Between the 
Government of the United States of America and the Government 
of the Republic of Uzbekistan Concerning the Encouragement and 
Reciprocal Protection of Investment, with Annex, signed at 
Washington on December 16, 1994 (Treaty Doc. 104-25) and the 
Protocol Between the Government of the United States of America 
and the Government of the Republic of Panama Amending the 
Treaty Concerning the Treatment and Protection of Investments 
of October 27, 1982, signed at Panama City on June 1, 2000, 
(Treaty Doc. 106-46), having considered the same, reports 
favorably thereon with the understandings, declarations and 
provisos noted below, and recommends that the Senate give its 
advice and consent to the ratification thereof as set forth in 
this report and the accompanying resolutions of ratification.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................2
 II. Background.......................................................3
III. Summary..........................................................3
 IV. Entry Into Force and Termination................................20
  V. Committee Action................................................20
 VI. Committee Recommendation and Comments...........................20
VII. Text of the Resolutions of Ratification.........................22

                               I. Purpose

    These proposed treaties are part of a series of bilateral 
investment treaties being negotiated by the United States. The 
principal purposes of bilateral investment treaties are to 
promote the free flow of international investment, and to 
encourage and protect United States investment in developing 
countries.
    The purpose of the protocol of amendment to the existing 
bilateral investment Treaty with Panama is to allow investors 
to use binding investor-state arbitration under the Treaty, a 
key protection sought in U.S. bilateral investment treaties. As 
explained below, this option was lost when Panama became a 
party to the International Convention on the Settlement of 
Investment Disputes.

                             II. Background

    Ten bilateral investment treaties (BITs) were ordered 
reported by the Committee. Those concluded with Uzbekistan, 
Honduras, Croatia, Jordan, Bolivia, Mozambique, El Salvador, 
Bahrain and Azerbaijan are all based on the 1994 model BIT 
developed by the State Department. The treaty with Lithuania is 
based on the 1992 prototype model BIT, and is discussed 
separately below. A protocol of amendment to improve the 
existing BIT with Panama was also ordered reported.
    The BITs before the Senate represent a continuation of the 
BIT program begun by the United States in the early 1980's. 
These are based on the State Department's model BIT, which has 
been revised and updated a number of times over the last two 
decades. The current model, dated 1994, incorporates the 
principles established earlier, but makes changes in language 
and format in order to capture best practices, reflect the 
legal and regulatory changes, and improve readability.

                              III. Summary

                               A. GENERAL

    The United States has concluded 45 BITs around the world. 
Thirty-one are in force. Overall, BIT program objectives are to 
protect U.S. investment abroad, to encourage the adoption of 
market-oriented economic policies and to support the 
development of international law standards.
    BITs entitle U.S. companies to operate under the best 
conditions available to other foreign and domestic investors. 
They also establish clear limits on the expropriation of 
investments, and provide U.S. investors the right to transfer 
funds into and out of the treaty partner's territory using a 
market rate of exchange.
    BITs also limit the treaty partner's ability to require 
U.S. investors to adopt inefficient and trade distorting 
practices. They give U.S. investors the right to engage the top 
managerial personnel of their choice regardless of nationality, 
and the right to submit disputes with the treaty partner's 
government to international arbitration. Disputes with treaty 
partners may also be raised by the U.S. Government, both 
through consultations and through arbitration.
    All of these advantages supplement existing U.S. Government 
mechanisms and procedures for resolution of business disputes, 
such as dispute settlement at the World Trade Organization 
(WTO), consultations with foreign governments, and actions 
under Section 301 of the Trade Act of 1974.
    The ``model'' BIT format has retained its fundamental 
appearance over time, but it has been reviewed and revised 
periodically in order to take account of operational experience 
and to make sure it is kept current with other agreements, 
customary international law, and the needs of investors. The 
last review was undertaken in 1994. Another review is planned 
for 2001.
    BITs serve important U.S. general economic interests by 
bringing countries into the world trading system as 
comprehensively as possible. They are one element within a 
network of trade and investment obligations sought by the 
United States with other countries. Most important among these 
relationships is WTO membership.
    The investment and trade regimes of aspiring WTO members 
are reviewed for compatibility with the WTO framework. BITs 
pave the way for WTO commitments and foreclose opportunities to 
circumvent WTO rules. Jordan joined the WTO in 1999, and 
Croatia has been approved for membership. Lithuania, Azerbaijan 
and Uzbekistan are in varying stages of negotiation for WTO 
membership. Overall, BITs supplement the broader WTO trade and 
investment framework.

                           B. KEY PROVISIONS

    The following discussion refers mainly to the proposed BITs 
with Azerbaijan, Bahrain, Bolivia, Croatia, El Salvador, 
Honduras, Jordan, Mozambique and Uzbekistan. Lithuania and the 
Protocol to the existing BIT with Panama are discussed 
separately below.
    Definitions (Article I). The BITs under consideration 
generally define investment to include all forms of investment 
activity. BIT obligations apply to a ``covered investment,'' 
defined as ``an investment of a national or company of a Party 
in the territory of the other Party.'' A company is defined to 
include, inter alia, non-profit as well as commercial entities 
and both private and governmentally owned or controlled firms. 
A ``company of a Party'' is defined as a ``company constituted 
or organized under the laws of that Party.'' Because the 
definition does not require that the company be owned or 
controlled by nationals of a Party, the term ``covered 
investment'' may include firms that are owned or controlled by 
nationals or companies of countries that are not Party to the 
BIT. While these investments would appear generally to be 
entitled to the protections of the BIT, a BIT Party may, 
however, deny the company of the other Party to the treaty if 
third country nationals own or control the company and either 
(1) the denying Party does not maintain normal economic 
relations with the third country or (2) the company has no 
substantial business activities in the country in which it is 
organized or established (or in other words, is a shell 
company) (see Article XII of the BITs). The term ``normal 
economic relations'' is not defined in the BIT, but would 
appear to exclude at least those countries with which an 
embargo is maintained.
    In addition, all of the BITs contain six basic commitments 
that the United States has viewed as critical to ensuring a 
favorable climate for its investors:
    Treatment (Article II). Each treaty ensures covered 
investments the better of national or most-favored-nation (MFN) 
treatment. This obligation applies to the establishment, 
acquisition, expansion, management, conduct, operation, and 
sale or other disposition of covered investments. By covering 
the establishment of an investment, it prevents a Party from 
limiting entry on the basis of nationality. ``National 
treatment'' is defined as ``treatment no less favorable than 
that it accords, in like situations, to investments in its 
territory of its own nationals or companies.'' MFN treatment is 
defined as ``treatment no less favorable than that it accords, 
in like situations, to investments in its territory of 
nationals or companies of a third country.'' Parties may, 
however, enter exceptions to these obligation in sectors or 
with regard to matters listed in the treaty Annex. In addition, 
the national and MFN treatment obligations do not apply to 
procedures provided for in multilateral agreements concluded 
under the auspices of the World Intellectual Property 
Organization (WIPO), with respect to the acquisition or 
maintenance of intellectual property rights.
    The Parties also agree to accord covered investments ``fair 
and equitable treatment and full protection and security'' and 
no less than the minimum treatment required by international 
law. In addition, Parties may not ``impair in any way by 
unreasonable and discriminatory measures the management, 
conduct, operation, and sale or other disposition of covered 
investments.''
    Expropriation (Article III). Each BIT provides that Parties 
may not nationalize or expropriate a covered investment, either 
directly or through measures ``tantamount'' to an expropriation 
or nationalization, except for a public purpose, in a non-
discriminatory manner, upon payment of prompt, adequate and 
effective compensation, and in accordance with due process of 
law and the general principles of treatment provided for in the 
BIT's treatment article (described above). The BIT thus 
provides that a taking includes both an expropriation and a 
nationalization and, by referring to actions that are 
``tantamount'' to an expropriation or nationalization, covers 
not only transfers of title to the state but also so-called 
``creeping'' expropriations--that is, taxation or regulatory 
action that effectively amounts to an expropriation of a 
covered investment without taking title. Standards for 
compensation are also set out, under which payment is to be 
made without delay, must be equivalent to the fair market value 
of the investment immediately before the expropriatory action 
was taken, and be fully realizable and fully transferable.
    Transfers (Article V). The BIT requires each Party to 
permit all transfers relating to a covered investment to be 
made freely and without delay into and out of its territory, 
thus ensuring that an investor may repatriate funds associated 
with investment activities. Transfers are expressly deemed to 
include contributions to capital; profits, dividends, capital 
gains, and proceeds from the sale or liquidation (or any 
partial sale or liquidation) of the investment; interest, 
royalty payments, and various fees; contract payments; 
compensation from expropriations; restitution for losses 
resulting from war or armed conflict, states of emergency, or 
other such political events; and payments arising out of an 
investment dispute. Transfers must be allowed to be made in a 
freely usable currency at the market rate of exchange 
prevailing on the date of transfer. According to the State 
Department, the term ``freely usable currency'' refers to 
International Monetary Fund terminology and currently includes 
the U.S. dollar, Japanese yen, German mark, French franc, and 
British pound sterling. Returns in kind must also be allowed as 
authorized in a written investment agreement or authorization 
between the BIT Party and a covered investment or national or 
company of the other Party. A Party may limit transfers, 
however, through the ``equitable, nondiscriminatory and good 
faith application'' of laws relating to bankruptcy, securities, 
criminal or penal offenses, or ensuring compliance with orders 
or judgments in adjudicatory proceedings.
    Performance requirements (Article VI). The BITs prohibit 
Parties from imposing requirements on the establishment, 
acquisition, expansion, management, conduct, or operation of a 
covered investment that may impair the profitability and 
competitiveness of an investment. BIT Parties may not require a 
covered investment: (1) to achieve a particular level or 
percentage of local content, or to purchase, use or grant a 
preference to domestic products or services; (2) to limit 
imports of products or services in relation to a particular 
volume or value of production, exports, or foreign exchange 
earnings; (3) to export a particular type, level or percentage 
of products or services; (4) to limit sales of products or 
services in the host country territory to a particular volume 
or value of production, exports, or foreign exchange earnings; 
(5) to transfer technology, a production process, or other 
proprietary knowledge to a national or company in the host 
country except as an officially enforced remedy for a violation 
of competition laws; and (6) to carry out a particular type, 
level or percentage of research and development in the host 
country's territory. A Party may, however, impose conditions 
for the receipt or continued receipt of an advantage in its 
territory.
    Entry, sojourn, and employment of aliens (Article VII). 
Each Party is required, subject to its laws relating to the 
entry and sojourn of aliens, to permit nationals of the other 
Party to enter and remain in order to establish, develop, 
administer, or advise on the operation of an investment to 
which they or their company has committed (or is about to 
commit) a substantial amount of capital or other resources. 
With regard to U.S. law, this provision allows foreign 
investors to obtain so-called ``treaty investor'' visas (see 8 
U.S.C. Sec. 1101(a)(15)(E)), which requires an applicant to 
have invested, or to be ``actively in the process of investing, 
a substantial amount of capital'' to the U.S. enterprise that 
he or she intends to develop or direct. In addition, the BIT 
expressly requires covered investments to be allowed to engage 
top management personnel of their choice, regardless of 
nationality. This provision does not, however, exempt a Party 
national or third country national from host country 
immigration laws; nor does it provide for treatment of 
nationals of a third country that are so chosen.
    Dispute settlement (Articles IX and X). In order to enforce 
treaty obligations, each BIT provides for both investor-state 
and state-state dispute settlement through binding third-party 
arbitration. Since such third-party dispute settlement may not 
take place without the consent of the state involved, the BIT 
Parties grant such consent before the fact in the treaty. With 
regard to investor-state dispute settlement, the consent 
granted in the BIT will satisfy the requirement for an 
agreement in writing under the Convention on the Settlement of 
Investment Disputes (ICSID Convention); the ICSID Additional 
Facility Rules, and the U.N. Convention on the Recognition and 
Enforcement of Foreign Arbitral Awards (New York Convention).
    Investor-state dispute settlement (Article IX). Under each 
BIT, a national or a party to an investment dispute with the 
host state may submit the dispute for resolution under one of 
three options: (1) to a local court or administrative tribunal; 
(2) in accordance with any applicable, previously-agreed 
dispute settlement procedure; or (3) in accordance with the 
binding arbitral process provided for in the BIT. The investor 
thus is not required to exhaust local remedies before 
submitting a request to binding arbitration, but may not choose 
this option if he or she has submitted a dispute for resolution 
under either of the other two alternatives. An ``investment 
dispute'' is defined as ``a dispute between a Party and a 
national or company of the other Party arising out of or 
relating to an investment authorization, an investment 
agreement or an alleged breach of any right conferred, created, 
or recognized by this treaty with respect to a covered 
investment.''
    Once three months have elapsed from the date the dispute 
arose, the disputing national or company may submit the dispute 
for settlement by binding arbitration to the International 
Center for the Settlement of Investment Disputes (ICSID); the 
ICSID Additional Facility, if ICSID itself is unavailable; in 
accordance with the UNCITRAL Arbitration Rules; or if both 
parties agree, to any other arbitration institution or in 
accordance with any other arbitration rules. Even though a 
national or company may have submitted the dispute for binding 
arbitration, it may nonetheless seek interim injunctive relief, 
not involving the payment of damages, before a host country 
judicial or administrative tribunal, before or during arbitral 
proceedings, to preserve its rights and interests. Two of the 
BITs (Croatia and Jordan) exhort the disputing parties 
initially to seek to resolve their dispute through 
consultations and negotiations.
    Binding arbitration under any of these options is to be 
held in a country that is a party to the New York Convention 
(21 U.S.T 2517). An arbitral award is final and binding on the 
disputing parties, and the BIT Party involved must, without 
delay, carry out the provisions of the awards and provide for 
enforcement of the award in its territory.
    In any investment proceeding, a BIT Party may not assert as 
a defense, counterclaim, right of set-off, or for any other 
reason, that indemnification has or will be received under an 
insurance or guarantee contract.
    State-state dispute settlement (Article X). Any dispute 
concerning the interpretation or application of the BIT, that 
is not resolved through consultations or other diplomatic 
channels, is to be submitted, if either Party so requests, to a 
third-party arbitral panel for a binding decision in accordance 
with applicable rules of international law. Unless the Parties 
agree otherwise, the dispute is to be conducted according to 
United Nations Commission for International Trade Law 
(UNCITRAL) Arbitration Rules, except where modified by the 
Parties or by the arbitrator, without objection of the Parties. 
Each Party is to appoint an arbitrator within two months of the 
request; the two arbitrators then select a third arbitrator, 
who must be a third country national, as chairman. Submissions 
and hearings are generally to be completed within six months 
and the decision rendered within two months of the date of the 
final submission or close of hearings, whichever is later.
    Other provisions. Covered investments are entitled to any 
treatment that is more favorable than that provided by the 
treaty if it is based on laws and regulations or administrative 
measures of a Party; international legal obligations; or 
obligations assumed by a Party, including those in an 
investment agreement (Article XI). Generally, the BIT does not 
apply to tax matters (Article XIII). Treaty obligations apply 
to political subdivisions of a Party and to a state enterprise 
of a Party in the exercise of any regulatory, administrative or 
other governmental authority delegated to it by the Party 
(Article XV).
    Measures not precluded (Article XIV). The 1994 model 
provides, at Article XVI:1, that the BIT ``shall not preclude a 
Party from applying measures necessary for the fulfilment of 
its obligations with respect to the maintenance or restoration 
of international peace or security, or the protection of its 
own essential security interests.'' Some BITs, namely those 
with El Salvador, Mozambique, and Bahrain contain a variation 
of this language, stating that the BIT ``shall not preclude a 
Party applying measures that it considers necessary'' to 
achieve these objectives. The United States views language 
regarding ``essential security interests'' as requiring that 
``[a]ctions not arising from a state of war or national 
emergency * * * have a clear and direct relationship to the 
essential security interests of the Party involved.'' At the 
same time, the United States considers this language to be 
self-judging, though, in the words of the State Department, 
``each Party would expect the provisions to be applied by the 
other in good faith.'' Where the alternative language is used, 
the Department has stated that the BIT ``makes explicit the 
implicit understanding'' that the provision is self-judging.
    In addition, at Article XIV:2, Parties may prescribe 
special formalities applicable to covered investments, for 
example, a requirement investments be legally constituted under 
the Party's laws and regulations or that transfers or currency 
or other monetary instruments be reported. Such formalities may 
not, however, impair the substance of other treaty rights.
    Duration (Article XVI). The BITs will remain in force for 
10 years and will continue after that period unless a Party 
terminates it at the end of the 10-year period, or any time 
thereafter upon one year's written notice. The BITs apply to 
covered investments existing at the time the BIT enters into 
force as well as to those established or acquired after that 
time. As indicated below, however, the BITs do not apply to 
actions taken by the States prior to entry into force. Some of 
the Protocols state this expressly; even where they do not, the 
customary international law rule is that they do not apply 
retroactively. If the BIT is terminated, all other BIT articles 
will continue to apply to covered investments established or 
acquired before termination for 10 years after termination, 
except as those Articles apply to establishing or acquiring 
covered investments.
    Annexes and Protocols. Each BIT contains an Annex listing 
exceptions that Parties may take to MFN and national treatment 
obligations and, in some cases, a Protocol with provisions 
clarifying or otherwise amplifying BIT provisions. These are 
considered integral parts of the BIT (see Article XVI:4 of the 
BITs).
    U.S. exceptions. Exceptions taken by the United States 
generally reflect U.S. legislative requirements, some of them 
long-standing. Each BIT Annex contains a standard provision 
allowing the U.S. to adopt or maintain exceptions to its 
national treatment obligation toward covered investments in the 
following sectors or regarding the following matters: atomic 
energy; customhouse brokers; licenses for broadcast, common 
carrier, or aeronautical radio stations; COMSAT; subsidies or 
grants, including government-supported loans, guarantees and 
insurance; state and local measures exempt from the national 
treatment obligation in the NAFTA investment chapter; and 
landing of submarine cables. The Annex also states that MFN 
treatment will be accorded in these areas.
    Each BIT Annex also contains a provision allowing the U.S. 
to adopt or maintain exceptions to its MFN and national 
treatment obligations toward covered investments in certain 
sectors or regarding listed matters. Each BIT contains a U.S. 
exception for fisheries and air and maritime transport, and 
related activities. Financial services are also included, but 
coverage varies from treaty to treaty; in some cases the United 
States has reserved the right to adopt or maintain exceptions 
to its national treatment/MFN obligations with regard to 
specific financial services sectors, provided that the 
exceptions do not result in treatment under the BIT that is 
less favorable that the treatment that the United States 
accords under the NAFTA to other NAFTA Parties. The full NAFTA 
financial services exception applies with regard to Honduras, 
Nicaragua, Croatia, and Uzbekistan; an insurance-related NAFTA 
exception applies to Azerbaijan, Bolivia. The standard 
financial services exception applies to El Salvador, Jordan, 
Bahrain, Mozambique and, except for insurance, to Bolivia. The 
United States has also taken MFN exceptions with regard to one-
way satellite transmissions of DTH (direct-to-home) and DBS 
(direct broadcast satellite) television services and of digital 
audio services in its BIT with Azerbaijan, Bolivia, El 
Salvador, Bahrain, and Mozambique. These financial services 
exceptions (along with recent insurance sector developments 
involving the BIT with Azerbaijan) and telecommunications 
exceptions will also be identified below.
    Most of the treaties also include a specific provision in 
the Annex under which each Party agrees to grant national 
treatment to covered investment or investments with regard to 
leasing of minerals and pipeline rights-of-way on government 
lands. Variations with regard to this provision are contained 
in the treaties with Jordan and Uzbekistan and will be 
discussed below. The BIT with Croatia adds a national treatment 
obligation with regard to concession rights for exploration and 
exploitation of mineral resources on government lands. The BIT 
with Azerbaijan does not contain an explicit grant of national 
treatment in its Annex related to such rights-of-way on 
government lands; nor have the parties taken an exception from 
their national treatment obligations.

                      Comments on Individual BITs

    The following list discusses individual treaties, matters 
that are not identified above, the particulars of each treaty 
partner's exceptions, and attached Protocols.

Azerbaijan

    This BIT follows the 1994 model treaty in Articles I 
through XVI.
    Annex. As in the BIT with Bolivia (below), the United 
States had originally taken exceptions to its national 
treatment and MFN obligations with regard to banking, 
securities, and non-insurance financial services; and for one-
way satellite transmission of direct-to-home (DTH) and direct 
broadcast satellite (DBS) television services and of digital 
audio services. It had also taken the earlier-described NAFTA-
related exception for the insurance sector.
    Azerbaijan has taken a national treatment exception for the 
ownership of land, its subsoil, water, plant and animal life, 
and other natural resources; ownership of real estate (during 
the transition period to a market economy); ownership or 
control of television and radio broadcasting and other forms of 
mass media; air transportation; preparation of stocks and bond 
notes issued by the Government of the Republic of Azerbaijan; 
fisheries; and construction of pipelines for transportation of 
hydrocarbons. It will accord MFN treatment to covered 
investments in these sectors.
    Azerbaijan has also taken a national treatment/MFN 
exception with regard to banking, securities, and other 
financial services.
    Subsequent to negotiation of the Annex, the Parties 
considered that there was ambiguity in Annex language regarding 
the application of the national treatment and MFN obligations 
of each Party to the insurance sector, particularly whether 
Azerbaijan had taken an exception for insurance services. 
Pursuant to an exchange of letters between the Parties, the 
above-described U.S. exception has been changed to include 
``insurance and other financial services'' and the NAFTA-
related exception has been removed. In addition, Azerbaijan's 
financial services exception has been revised to read 
``banking, securities, insurance, and other financial 
services.''

Bahrain

    This BIT follows the 1994 model in Articles I through XVI.
    Annex. The United States has taken exceptions to its 
national treatment and MFN obligations with regard to banking, 
insurance, securities, and other financial services; and for 
one-way satellite transmission of direct-to-home (DTH) and 
direct broadcast satellite (DBS) television services and of 
digital audio services.
    Bahrain has taken a national treatment exception with 
respect to the ownership or control of television and radio 
broadcasting and other forms of mass media: fisheries; and the 
initial privatization of exploration or drilling for crude oil. 
MFN treatment will be accorded to covered investments in these 
sectors.
    Bahrain has also taken a national treatment/MFN exception 
with regard to air transportation; the purchase or ownership of 
land; and until January 1, 2005, the purchase or ownership of 
shares quoted on the Bahrain Stock Exchange.

Bolivia

    This BIT follows the 1994 model.
    Annex. As in the BIT with Azerbaijan, the United States has 
taken exceptions to its national treatment and MFN obligations 
with regard to banking, securities, and non-insurance financial 
services; and for one-way satellite transmission of direct-to-
home (DTH) and direct broadcast satellite (DBS) television 
services and of digital audio services. It has taken the above-
described NAFTA-related exception for insurance.
    Bolivia has taken a national treatment exception in the 
Annex regarding the acquisition and/or possession by foreigners 
of land or subsoil within 50 kilometers of Bolivia's borders, 
insofar as required under Article 25 of the Bolivian 
Constitution; subsidies or grants; and the obligations of 
foreign construction and consulting companies participating in 
public sector tenders to associate with one or more Bolivian 
companies. Bolivia agrees to accord MFN treatment in these 
areas.
    Bolivia has taken a national treatment/MFN exception with 
regard to air transport; transportation on interior navigable 
waterways; and limitations on foreign equity ownership of 
international passenger and freight land transportation 
companies to a maximum of 49 percent.
    With regard to leasing of minerals and pipeline rights of 
way on government lands, each Party agrees to accord covered 
investments national treatment; for Bolivia, the obligation is 
subject to Article 25 of its Constitution; for the United 
States, the obligation is subject to the Mineral Lands Leasing 
Act.
    Protocol. The BIT Protocol contains provisions under which: 
(1) the Parties confirm their understanding that advantages 
given to national suppliers in government procurement programs 
are not precluded by the prohibition on performance 
requirements in Article VI; (2) Bolivia confirms that Article 3 
of the Bolivian Labor Law does not apply to top managerial 
personnel; (3) the Parties confirm that investor-state dispute 
provisions do not apply to government contract disputes unless 
they are investment-related; (4) the United States confirms the 
protections against burdens on interstate commerce by states 
under its federal system; and (5) Bolivia confirms that joint 
ventures may be established in Bolivia, including in the 50-
mile perimeter described above, without any limitation on the 
respective capital contributions or proportionate shares of the 
joint venture partners.

Croatia

    This BIT follows the 1994 model with at least four 
modifications.
    First, it adds to the definition of the term ``investment'' 
a sentence stating that ``any change in form of an investment 
does not affect its character as an investment.'' Second, it 
adds a definition for the term ``territory,'' which states that 
the term means:

        the territory of the United States or the Republic of 
        Croatia, including the territorial sea established in 
        accordance with international law as reflected in the 
        1982 United Nations Convention on the Law of the Sea. 
        This Treaty also applies in the seas, subsoil and 
        seabed adjacent to the territorial sea in which the 
        United States or the Republic of Croatia has sovereign 
        rights or jurisdiction in accordance with international 
        law as reflected in the 1982 United Nations Convention 
        on the Law of the Sea (Article I(l)).

    Third, it provides that in the event of an investment 
dispute between a Party and a national or company of another 
Party, the disputing parties should initially seek a resolution 
through consultation and negotiation.
    Fourth, and unique to this treaty, the BIT contains a 
separate article dealing with subrogation (Article V).
    If a Party or its designated agency makes a payment under 
an indemnity, guarantee, or contract of insurance given in 
respect of a covered investment, the other Party must recognize 
the assignment to the first Party or its designated agency of 
any right or claim of the indemnified national or company. The 
first party or its designated agency is entitled to exercise 
such rights and enforce such claims by virtue of subrogation to 
the same extent as the national or company (Article V:1).
    Second, the first Party or its designated agency shall be 
entitled in all circumstances to the same treatment in respect 
of the rights or claims acquired by it by virtue of the 
assignment. The first Party or its designate agency will also 
be entitled to any payments received in pursuit of those rights 
or claims as the indemnified national or company was entitled 
to receive by virtue of the BIT regarding concerned covered 
investment (Article V:2). Provisions of this type are generally 
included in separate OPIC agreements. The Committee understands 
that Croatia requested such a provision so as to have a mutual 
agreement in place were Croatia to establish its own investment 
guarantee agency.
    Annex. In the BIT Annex, the United States has taken the 
North American Free Trade Agreement (NAFTA) related exception 
for banking, insurance, securities, and other financial 
services.
    Croatia has taken a national treatment exception with 
regard to the ownership and operation of broadcast or common 
carrier radio and television stations; the provision of common 
carrier telephone and telegraph services; the provision of 
submarine cable services; and subsidies or grants, including 
government supported loans. It will accord MFN treatment in 
these sectors.
    Croatia has also taken a national treatment/MFN exception 
with regard to fisheries, air and maritime transport, and 
related activities (including maritime services).
    Protocol. As in the BITs with El Salvador, Mozambique, and 
Bahrain, the Protocol states that the BIT provisions ``do not 
bind either party in relation to any act or fact which took 
place or any situation which ceased to exist before'' the BIT 
enters into force.

El Salvador

    This BIT follows the 1994 model, with a variation in the 
Article XIV security exception and another under Article VII, 
regarding the appointment of top management personnel (Article 
VII:2). Instead of model language, which requires Parties to 
permit covered investments to engage to engage top management 
personnel, regardless of nationality, the BIT with El Salvador 
contains a negative formulation providing that ``[no] Party may 
require that a covered investment appoint to senior management 
positions individuals of any particular nationality.'' The 
Committee understands that this provision, which follows 
language contained in the investment chapter of the NAFTA, was 
requested by El Salvador.
    Annex. The United States has taken exceptions to its 
national treatment and MFN obligations with regard to banking, 
insurance, securities, and other financial services; and for 
one-way satellite transmission of direct-to-home (DTH) and 
direct broadcast satellite (DBS) television services and of 
digital audio services.
    El Salvador has taken national treatment exceptions for 
small commerce, small industry, and small service providers, as 
defined in its law; traditional (artisan) fishing; and 
commercial fishing, and has stated that it will accord MFN 
status in these areas. It has taken a national treatment/MFN 
exception for notary public services.
    Protocol. The Protocol contains: (1) an understanding 
regarding what may constitute a ``commercially reasonable 
rate'' for freely usable currency used to denominate fair 
market value in compensation for an expropriation; and (2) an 
understanding that the BIT provisions ``do not bind either 
party in relation to any act or fact which took place or any 
situation which ceased to exist before'' the BIT enters into 
force. The State Department has stated that this provision, 
which also appears in the treaties with Nicaragua, Croatian, 
Mozambique, and Bahrain, ``explicitly states the standard under 
customary international law that applies in the absence of the 
Parties' express intent to apply the treaty retroactively.''

Honduras

    This BIT follows the 1994 model in Articles I through XVI.
    Annex. In the BIT Annex, the United States has taken the 
NAFTA-related exception for banking, insurance, securities, and 
other financial services.
    Honduras has taken a national treatment exception regarding 
properties on cays, reefs, rocks, shoals, or sandbanks or on 
islands or on any property located within 40 km of the 
coastline or land borders of Honduras; small scale industry and 
commerce with total invested capital of no more than $40,000; 
ownership, operation, and editorial control of broadcast radio 
and television; and ownership, operation, and editorial control 
of general interest periodicals and newspapers published in 
Honduras. It will grant MFN treatment in these areas.
    Protocol. The Parties confirm their understanding that 
parties may prevent transfers under Article V:4(a) through the 
application of labor laws relating to the protection of 
preferential creditors' rights. Honduras confirms that, with 
regard to its Article II treatment obligations and the 
exception noted above, it will not reject or unduly delay 
decisions on applications on grounds of nationality with regard 
to U.S. investor applications to possess or acquire real 
property in urban zones or in the above-described 40 km 
perimeter. Further, the Parties understand that with regard to 
rights reserved in the BIT's Article XIV:1 security exception, 
the phrase ``obligations with respect to the maintenance or 
restoration of international peace or security'' means 
obligations under the U.N. Charter. Finally, the Protocol 
states that the understanding that nothing in the just-cited 
paragraph authorizes or has the intention of authorizing either 
Party to the BIT to take measures in the territory of the other 
Party with regard to taking action under either prong of the 
Article.

Jordan

    The BIT with Jordan follows the 1994 model with two 
changes. As in the BIT with Croatia, it adds to the definition 
of investment the statement that ``any change in the form of an 
investment does not affect its character as an investment'' and 
provides that, in the event of an investment dispute between a 
Party and a national or company of another Party, the disputing 
parties should initially seek a resolution through consultation 
and negotiation. Also, the BIT with Jordan uses the term 
``Contracting Party'' instead of ``Party.''
    Annex. The United States has taken the standard national 
treatment/MFN exception for financial services and, unique to 
this group of treaties, for mineral leases on government land. 
Each Party agrees, however, to accord national treatment with 
regard to leasing of pipeline rights-of-way on government land. 
This result for mineral and pipeline leases was seemingly 
dictated by reciprocity requirements in the Mineral Lands 
Leasing Act and 10 U.S.C. Sec. 435 (regarding the Naval 
Petroleum and Oil Shale Reserve).
    Jordan has taken national treatment exceptions for what 
would appear to be significant areas of investment: air 
transport; ownership of bus transport companies, ownership of 
construction contracting companies, but not including cross-
border provision of construction services; small scale commerce 
with total invested capital of not more than $50,000, as 
annually adjusted according to treaty provisions; ownership of 
banks and insurance companies; ownership of companies engaged 
in telecommunications systems operations, but not including 
telecommunications-related services; extraction concessions for 
minerals, including oil, natural gas, and oil shale; farming 
(not including animal husbandry) on large tracts of land; 
ownership of agricultural land; ownership of land in the Jordan 
valley; and ownership of land for non-business related 
purposes. MFN treatment will be accorded in these sectors.
    Protocol. The Parties confirm their mutual understanding 
that, with regard to the language regarding change in form of 
an investment, either Party may require approvals or impose 
formal requirements in connection with such a change in form, 
provided that such approvals or formal requirements are 
otherwise consistent with the treaty. The Protocol also states 
that the requirement in the expropriation article that 
compensation be paid without delay (Article III:2) ``does not 
necessarily mean instantaneous,'' but rather indicates an 
intent that the Contracting Party ``diligently and 
expeditiously carry out necessary formalities.''

Mozambique

    This BIT generally follows the 1994 model, except for the 
variation in the language of the Article XIV security exception 
described above. Also, in an exchange of letters, as summarized 
by the State Department (see Treaty Doc. 106-31), ``the Parties 
confirmed their mutual understanding that Mozambique will 
implement the provisions of its Law No. 19/97 of October 1 
(Land Use and Development Law) and any other provision of law 
that relates to the same or substantially the same subject 
matter, in a manner that provides national treatment to covered 
investments.''
    Annex. In the BIT Annex, the United States has taken the 
standard exception to its national treatment and MFN 
obligations with regard to banking, securities, insurance, and 
other financial services; and for one-way satellite 
transmission of direct-to-home (DTH) and direct broadcast 
satellite (DBS) television services and of digital audio 
services. Mozambique has not taken any national treatment or 
MFN exceptions.
    Protocol. In the only provision in this group of treaties 
that directly addresses environmental and public health issues, 
the Parties confirm a mutual understanding that the prohibition 
on performance requirements is not to be construed so as to 
prohibit them from requiring environmental impact statements, 
environmental management plans, or other such measures of 
public health and safety, provided all such measures are 
otherwise consistent with BIT provisions. With regard to the 
Article VII provision on the appointment of top managers, 
Mozambique confirms that the ``the Treaty shall serve to 
satisfy the requirements for any and all authorizations 
necessary under its laws for engagement of foreign nationals as 
top managers.'' The State Department notes that this provision 
was requested by the United States to satisfy requirements 
under the employment laws of Mozambique. Finally, the Protocol 
contains the provision regarding the non-retroactive 
application of the Treaty contained in the treaties with 
Croatia, El Salvador, and Bahrain, namely, that the that the 
Treaty provisions ``do not bind either party in relation to any 
act or fact which took place or any situation which ceased to 
exist before'' the BIT enters into force.

Uzbekistan

    This BIT follows the 1994 model in Articles I through VI.
    Annex. Unique to this group of treaties, the United States 
has taken a national treatment/MFN exemption for leasing of 
pipeline rights-of-way. Each Party agrees, however, to accord 
national treatment with regard to the leasing of minerals on 
government lands. This outcome was apparently required because 
of the reciprocity requirements of the Mineral Lands Leasing 
Act and 10 U.S.C Sec. 7435, regarding Naval Petroleum and Oil 
Shale Reserves.
    In the BIT Annex, the United States has taken the NAFTA-
related exception for banking, insurance, securities, and other 
financial services.
    Uzbekistan has taken an national treatment exception for 
production, processing, sale and storage of uranium and other 
fissionable materials; air and railway transport, and related 
activities; pipelines and related activities; customhouse 
brokers; subsidies or grants; broadcasting, including radio and 
television. It will accord MFN treatment in these sectors.
    Uzbekistan has also taken a national treatment/MFN 
exception for the production and sale of hardware, ammunition, 
poisonous substances and toxic substances, for military use; 
and for the planting, cultivation, processing, production and 
sale of crops containing narcotic substances.

Lithuania

    This BIT, which is the third signed between the United 
State and a Baltic country, is based on the 1992 model BIT 
developed by the State Department. The BITs with Estonia and 
Latvia, each of which is currently in force, are also based on 
the 1992 model.
    The 1992 model contains broad definitions intended to 
capture all forms of investment and incorporates the six basic 
guarantees that have historically been key in the U.S. BIT 
program: (1) the better of national or most-favored-nation 
(MFN) treatment; (2) restrictions on and remedies for 
expropriation; (3) free transfer of investment-related funds 
into and out of the host country; (4) prohibitions on trade-
distorting performance requirements; (5) investor-state dispute 
settlement, without a requirement that local remedies first be 
exhausted; and (6) the right to engage top managerial personnel 
of choice, regardless of nationality. All of these provisions 
are contained in the BIT with Lithuania.
    The U.S.-Lithuania BIT differs from the 1992 model in 
several ways. First, it eliminates Article VIII of the model, 
which had excluded from the investor-state and state-state 
dispute settlement those disputes that arise under the export 
credit, guarantee or insurance programs of the U.S. Export-
Import Bank, the Overseas Private Investment Corporation (OPIC) 
and other official programs. This exception, which was 
apparently intended to avoid potential duplication with respect 
to programs that may have their own dispute settlement 
mechanism, does not appear in the 1994 model. According to the 
State Department, the agencies involved indicated prior to the 
negotiation with Lithuania that the provision was not needed.
    Second, the BIT with Lithuania includes definitions for the 
terms ``state enterprise'' and ``delegation'' (Article I:1 (f) 
and (g)), intended to clarify the scope of a provision in the 
treatment article. The provision in question, Article II:2(b), 
states that ``[each Party shall ensure that any state 
enterprise that it maintains or establishes acts in a manner 
that is not inconsistent with the Party's obligations under 
this Treaty whenever such enterprise exercises any regulatory, 
administrative or other governmental authority that the Party 
has delegated to it. . . .'' The term ``delegation'' is defined 
as ``a legislative grant and a government order, directive or 
other act transferring to a state enterprise or monopoly, or 
authorizing the exercise by a state enterprise or monopoly of, 
governmental authority.''
    Third, the BIT includes a list of activities to be deemed 
associated with an investment at Article II:11, in addition to 
the model definition of ``associated activities'' contained in 
Article I:1(e). This provision makes clear that the former are 
entitled to the better of MFN or national treatment.
    Unlike the 1994 model, the security/public policy exception 
in the 1992 model and the BIT with Lithuania (Article IX) 
includes among the rights reserved by the Parties the right to 
take ``measures necessary for the maintenance of public 
order.'' The State Department has noted that this language 
would include ``measures taken taken pursuant to a Party's 
police powers to ensure public health and safety.'' Unlike the 
portion of the clause that reserves the right of each Party to 
take ``those measures it regards as necessary for the 
protection of its own essential security interests,'' the State 
Department does not appear to consider the public order 
exception to be self-judging.
    The BIT applies to investments existing at the time the 
treaty enters into force. As in various other BITs currently 
before the Committee, the Protocol to the BIT confirms the 
Parties' mutual understanding that BIT provisions ``do not bind 
either party in relation to any act or fact which took place or 
any situation which ceased to exist before the date'' the BIT 
enters into force--that is, that the BIT does not apply 
retroactively.
    Annex. The United States has taken broader national 
treatment exceptions in the treaty Annex than it has with 
regard to the other BITs currently before the Committee. This 
exception applies to air transportation; ocean and coastal 
shipping; banking, insurance, securities, and other financial 
services; government grants; government insurance and loan 
programs; energy and power production; customhouse brokers; 
ownership of real property; ownership and operation of 
broadcast or common carrier radio and television stations; 
ownership of shares in COMSAT; the provision of common carrier 
telephone and telegraph services; the provision of submarine 
cable services; use of land or natural resources; mining on the 
public domain; maritime services and maritime-related services; 
and primary dealership in the U.S. government securities.
    The United States has taken an MFN exception for mining on 
the public domain; maritime services and maritime-related 
services; one-way satellite transmission of direct-to-home 
(DTH) and direct broadcast satellite (DBS) television services 
and of digital audio services; and primary dealership in U.S. 
government securities.
    Lithuania has taken a national treatment exception with 
regard to ownership of land and resources that, in light of the 
other BITs currently before the Committee, is unique in its 
scope and detail. The exception applies to ownership of land 
under the objects belonging to the Republic of Lithuania by the 
right of exclusive ownership; land of national parks, national 
reservations, reserves, protective areas of the territory of 
biosphere monitoring; agricultural land; forestry land, with 
the exception of plots necessary for the operation of buildings 
and facilities designated for economic activities which have 
been provided for in approved planning documents; recreational 
forests and forest shelter belts, rivers and other water bodies 
exceeding one hectare in size as well as their protective bank 
area; land of resorts and communal recreational territories, 
separate communal recreational areas and objects; land of 
state-protected national geographical formations; monuments of 
nature, history, archaeology and culture as well as the 
surrounding protective areas; land of territories reserved, 
according to design projects, under communal roads and 
engineering service lines; objects of infrastructure of 
communal use in towns or other localities, and for other common 
needs of the community; land under public roads, railway lines, 
airports, sea and river ports, main pipelines and other 
engineering service lines of communal use as well as land 
necessary for their operation; land allotted, in accordance 
with the procedure established by law, under the free trade 
(economic) zones territory; land of protected territories where 
deposits of mineral resources and other natural resources have 
been found, with the exception of land which, according to 
planning documents, has been directly allotted for the 
construction of buildings and facilities required for the 
mining or use of said mineral resources; land of the Curonian 
Spit, the 15 km wide strip of coastal land of the Baltic Sea 
and the Curonian Lagoon; land assigned to the frontier; and 
land of the territories assigned or reserved for the needs of 
the national defense as well as territories where land 
acquisition restrictions are established by laws or Government 
decrees for safety reasons.
    Lithuania has also taken a national treatment exception 
with regard to the production and sale of narcotic drugs and 
psychotropic substances which are not used for legitimate 
medicinal purposes; the growth, reproduction and sale of 
cultures containing narcotic drugs or psychotropic substances 
which are not used for legitimate medicinal purposes; and the 
organization of lotteries. Lithuania has taken no MFN 
exceptions.

Protocol of Amendment to Panama BIT

    The International Center for the Settlement of Investment 
Disputes (ICSID) was established in the 1965 Convention on the 
Settlement of Investment Disputes Between States and Nationals 
of Other States (the Convention). The United States is a party 
to the Convention (17 U.S.T. 1270). ICSID provides a forum for 
binding arbitration of disputes between private investors and 
host governments, where the disputants consent in writing to 
submit the dispute to ICSID.
    ICSID's jurisdiction is restricted, however, to investment-
related disputes arising between Convention parties or their 
nationals. To accommodate others, however, ICSID's 
Administrative Council created a so-called ``Additional 
Facility'' to deal with disputes where one or both disputants 
are unable to overcome the Convention's restrictions on ICSID 
jurisdiction.
    The United States was a party to the ICSID Convention at 
the time the U.S.-Panama BIT (entered into force May 30, 1991, 
21 I.L.M. 127, 1982) was concluded, but Panama was not. This 
state of affairs is reflected in the BIT, which provides for 
submission of investor-state disputes only to the ICSID 
Additional Facility.
    When Panama became a party to the ICSID Convention in 1996, 
however, at that point, both the U.S. and Panama enjoyed status 
as ICSID Contracting States. Thus, the Additional Facility was 
no longer available as a forum for investor-state disputes. The 
BIT text, however, does not include the option of using ICSID 
facilities available to Contracting States. The proposed 
Protocol of amendment before the Committee is intended to 
introduce that option into the Treaty.

Existing U.S.-Panama BIT Provisions

    Article VII(3) of the U.S.-Panama BIT is the provision that 
currently provides for the use of the ICSID Additional Facility 
for investor-state disputes. Article VII(3)(a) of the BIT as 
concluded generally provides that a national or company may 
submit a dispute to the ICSID Additional Facility for 
conciliation or arbitration once six months have passed since 
the date the dispute arose. Under Article VII(3)(b), each Party 
consents to submission of an investment dispute to the 
Additional Facility for settlement by conciliation or binding 
arbitration. Article VII(3)(c) provides that conciliation or 
binding arbitration of such disputes is to be carried out in 
accordance with the Regulations and Rules of the Additional 
Facility. Article VII(3)(d) requires each Party to provide for 
the enforcement within its territory of Additional Facility 
arbitral awards.

Changes Proposed under the Protocol

    Article I of the Protocol amends the text of Article VII(3) 
to provide for the ICSID and other possible fora in investor-
state disputes arising under the BIT if the investor so 
chooses, and makes other changes to the BIT related to the use 
of ICSID and the enforcement of arbitral agreements and awards.
    BIT Article VII(3)(a) is amended to provide that at any 
time after six months from the date the dispute arose, the 
national or company may choose to consent in writing to the 
submission of the dispute to ICSID, for settlement either by 
conciliation or binding arbitration; the Additional Facility, 
if ICSID is not available, for settlement either by 
conciliation or binding arbitration; or in accordance with the 
UNCITRAL Rules, for settlement by binding arbitration.
    Once the disputing national or company has so consented, 
either disputing party may institute proceedings before ICSID, 
the Additional Facility, or in accordance with UNCITRAL Rules, 
provided that the dispute has not, for any reason, been 
submitted for resolution in accordance with any applicable 
dispute settlement procedure previously agreed to by the 
parties to the disputes, and the disputing investor has not 
brought the dispute before the courts, administrative tribunals 
or agencies of the competent jurisdiction of either Party. This 
language regarding previous submission of the dispute to 
another forum parallels language in the BIT.
    Article VII(3)(b) of the BIT is amended to provide that 
each Party consents to the submission of an investment dispute 
in accordance with the choice of fora (listed above) of the 
company or national concerned. In addition, the amended 
paragraph provides that: (1) submission of the dispute under 
amended paragraph (3)(a) will satisfy the requirements of the 
ICSID Convention and the Additional Facility rules for written 
consent of the parties to the dispute; and (2) Article II of 
the New York Convention for an agreement in writing.
    Article VII(3)(c) is amended to add a requirement that the 
Rules and Regulations of ICSID be used if the dispute is 
submitted to the Center in accordance with paragraph (3)(a). 
Article VII(3)(d) is expanded to require each Party to provide 
for enforcement within its territory of arbitral awards 
rendered under Article VII (as opposed to Additional Facility 
awards only). Enforcement of international arbitral awards in 
the United States is generally subject to federal law, namely, 
the New York Convention, as implement by the Federal 
Arbitration Act (FAA), 9 U.S.C. sections 201-210 (the Act). The 
Act also generally applies to arbitral agreements and awards 
involving interstate and foreign commerce.
    A new Article VII(3)(e) provides that an arbitration 
submitted under the Additional Facility or under UNCITRAL Rules 
is to be held in a state that is a party to the New York 
Convention. This provision would appear to facilitate the use 
of Convention-based enforcement in the United States, since the 
United States has agreed to implement the Convention on the 
basis of reciprocity, that is, with respect to awards made only 
in the territory of other Contracting States.
    Article VII(5) is amended to account for an ICSID 
Convention provision that allows the Parties to consider a 
company organized under one Party's laws to be a national of 
the other Party if it is controlled by nationals of the latter. 
This provision would allow, for example, a U.S. subsidiary in 
Panama controlled by U.S. nationals or a U.S. firm to bring an 
investment dispute against Panama in its own name rather than 
requiring it to rely on the U.S. parent to do so.
    Finally, Article II of the Protocol provides that the 
Protocol will form an integral part of the BIT, and will enter 
into force upon an exchange of notes confirming that the 
Parties have completed their domestic legal requirements for 
entry into force of the Protocol. It also provides that the 
Protocol will remain in force as long as the BIT is in force. 
If the BIT is terminated, the Protocol will continue to be 
effective for ten additional years, as provided in Article 
XIII(4) of the BIT.

                  IV. Entry Into Force and Termination

                          A. ENTRY INTO FORCE

    In general, the BITs enter into force thirty days after the 
date of exchange of instruments of ratification. They remain in 
force for a period of ten years, and continue in force 
thereafter unless terminated. The Protocol to the BIT with 
Panama would enter into force upon an exchange of notes 
confirming that the Parties have completed their respective 
domestic legal requirements, and remain in force as long as the 
BIT is in force.

                             B. TERMINATION

    In general, a BIT party may terminate the treaty at the end 
of the initial ten year period or at any time thereafter by 
giving one year's written notice to the other party. For ten 
years thereafter, treaty provisions shall continue to apply, 
except insofar as the establishment or acquisition of covered 
investments is concerned. The Protocol amending the BIT with 
Panama contains similar provisions in the event of BIT 
termination.

                          V. Committee Action

    The Committee on Foreign Relations held a public hearing on 
the Treaties on September 13, 2000 (a transcript of the hearing 
and questions for the record may be found in Senate hearing 
106-660 entitled, ``Consideration of Pending Treaties''). The 
Committee considered the Treaties on September 27, 2000, and 
ordered them favorably reported by voice vote, with the 
recommendation that the Senate give its advice and consent to 
the ratification of the proposed Treaties subject to the 
declarations and provisos indicated below in the resolutions of 
ratification.

               VI. Committee Recommendation and Comments

    The Committee on Foreign Relations recommends favorably the 
proposed Treaties. On balance, the Committee believes that the 
proposed Treaties are in the interest of the United States and 
urges the Senate to act promptly to give its advice and consent 
to ratification.

                   A. SCOPE OF CONSENT TO ARBITRATION

    Some members of the Committee have expressed concern over 
the possibility that recent developments in international 
trade, such as the North American Free Trade Agreement may make 
it more difficult for the United States to protect itself from 
exposure to unforeseen claims under investor-state dispute 
resolution provisions.
    Specifically, in the NAFTA context, claims have been made 
which test the limits of United States consent to arbitration. 
In three of the four NAFTA Chapter 11 arbitrations commenced 
against the United States to date, the United States has 
objected to the jurisdiction of the arbitration tribunal on 
various grounds, including that the claims presented fall 
outside the scope of the United States' consent to arbitration 
as set forth in NAFTA Chapter 11, that the claims presented are 
inadmissible, and that the claimant's allegations, even if 
true, could not give rise to liability under the provisions of 
NAFTA Chapter 11.
    To defend itself from such claims in NAFTA Chapter 11 
arbitration cases, the United States has the right under the 
agreement to raise objections in accordance with the procedural 
rules that govern the arbitration. Under NAFTA, claimants may 
choose from among three sets of arbitration rules: the 
Convention on the Settlement of Investment Disputes between 
States and Nationals of Other States (the ICSID Convention); 
the Additional Facility Rules of the International Centre for 
Settlement of Investment Disputes (ICSID); and the UNCITRAL 
Arbitration Rules. Each of these sets of rules allows for 
objections to the jurisdiction or competence of the tribunal.
    The Committee understands that, in the event that a claim 
were brought against the United States pursuant to the dispute 
settlement provisions of any of the Bilateral Investment 
Treaties now under consideration, the United States would be 
free to object to the tribunal's jurisdiction and competence in 
the same manner as it is now able to do in arbitrations brought 
under NAFTA Chapter 11. In addition, the same three sets of 
arbitration rules which may be used in the NAFTA context would 
also be available for arbitrations which may be brought under 
investor-state dispute settlement provisions of the Bilateral 
Investment Treaties now under consideration by the Committee. 
The Committee understands that, unlike the situation with 
NAFTA, to date no claim has been brought against the United 
States under any Bilateral Investment Treaty. (The Committee 
also has been informed that U.S. firms have brought at least 12 
cases against foreign states under existing Bilateral 
Investment Treaties).
    Because the United States will have the right, pursuant to 
its Bilateral Investment Treaties, to raise objections to 
investor-state claims which are outside the scope of the United 
States' consent to arbitration and to excessive claims of 
jurisdiction or competence by arbitral tribunals which may be 
asked to hear them, the Committee currently believes that, on 
balance, United States interests are adequately protected by 
these Treaties.

                        B. SITUATION IN CROATIA

    The Committee expresses its concern over reports that more 
than 30 United States citizens are encountering discrimination 
in Croatia because of Croatian laws and regulations which bar 
restitution or payment of compensation for wrongfully 
expropriated properties to persons who are not Croatian 
citizens or residents of Croatia. The Committee has been 
assured by the Executive Branch that such cases will be 
resolved both through revisions to domestic Croatian law 
ordered by Croatia's Constitutional Court, and within the 
context of Croatia's preparations to become a member state of 
the European Union.
    Even after taking due note of these assurances, the 
Committee will remain concerned about and attentive to 
developments with regard to this problem until it is resolved. 
The Committee urges the Executive Branch to employ all 
appropriate measures to ensure that the rights of United States 
citizens in Croatia are safeguarded, and that the Croatian 
Sabor acts by the end of 2000 to conform its Law on 
Compensation for Property Taken During Yugoslav Communist Rule 
to the requirements of the Croatian Constitutional Court.

              VII. Text of the Resolutions of Ratification

Agreement with Azerbaijan

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of the Republic of 
Azerbaijan Concerning the Encouragement and Reciprocal 
Protection of Investment, with Annex, signed at Washington on 
August 1, 1997, together with an Amendment to the Treaty set 
Forth in an Exchange of Diplomatic Notes Dated August 8, 2000, 
and August 25, 2000 (Treaty Doc. 106-47), subject to the 
declaration of subsection (a) and the proviso of subsection 
(b).
      (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
            Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Agreement with Bahrain

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of the State of Bahrain 
Concerning the Encouragement and Reciprocal Protection of 
Investment, with Annex, signed at Washington on September 29, 
1999 (Treaty Doc. 106-25), subject to the declaration of 
subsection (a) and the proviso of subsection (b).
      (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
          Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Agreement with Bolivia

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of the Republic of Bolivia 
Concerning the Encouragement and Reciprocal Protection of 
Investment, with Annex and Protocol, signed at Santiago, Chile, 
on April 17, 1998 (Treaty Doc. 106-26), subject to the 
declaration of subsection (a) and the proviso of subsection 
(b).
      (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
            Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Agreement with Croatia

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of the Republic of Croatia 
Concerning the Encouragement and Reciprocal Protection of 
Investment, with Annex and Protocol, signed at Zagreb on July 
13, 1996 (Treaty Doc. 106-29), subject to the declaration of 
subsection (a) and the proviso of subsection (b).
      (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
            Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Agreement with El Salvador

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of the Republic of El 
Salvador Concerning the Encouragement and Reciprocal Protection 
of Investment, with Annex and Protocol, signed at San Salvador 
on March 10, 1999 (Treaty Doc. 106-28), subject to the 
declaration of subsection (a) and the proviso of subsection 
(b).
    (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
            Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Agreement with Honduras

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of the Republic of 
Honduras Concerning the Encouragement and Reciprocal Protection 
of Investment, with Annex and Protocol, signed at Denver on 
July 1, 1995 (Treaty Doc. 106-27), subject to the declaration 
of subsection (a) and the proviso of subsection (b).
      (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
            Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Agreement with Jordan

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of the Hashemite Kingdom 
of Jordan Concerning the Encouragement and Reciprocal 
Protection of Investment, with Annex and Protocol, signed at 
Amman on July 2, 1997 (Treaty Doc. 106-30), subject to the 
declaration of subsection (a) and the proviso of subsection 
(b).
      (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
            Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Agreement with Lithuania

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of the Republic of 
Lithuania for the Encouragement and Reciprocal Protection of 
Investment, with Annex and Protocol, signed at Washington on 
January 14, 1998 (Treaty Doc. 106-42), subject to the 
declaration of subsection (a) and the proviso of subsection 
(b).
      (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
            Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Agreement with Mozambique

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of Mozambique Concerning 
the Encouragement and Reciprocal Protection of Investment, with 
Annex, and a related exchange of letters, and Protocol, signed 
at Washington on December 1, 1998 (Treaty Doc. 106-31), subject 
to the declaration of subsection (a) and the proviso of 
subsection (b).
      (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
            Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Agreement with Uzbekistan

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Treaty Between the Government of the United 
States of America and the Government of the Republic of 
Uzbekistan Concerning the Encouragement and Reciprocal 
Protection of Investment, with Annex, signed at Washington on 
December 16, 1994 (Treaty Doc. 104-25), subject to the 
declaration of subsection (a) and the proviso of subsection 
(b).
      (a) Declaration.--The Senate's advice and consent is 
subject to the following declaration, which shall be binding 
upon the President:
            Treaty Interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the States Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (b) Proviso.--The resolution of ratification is subject 
to the following proviso, which shall not be included in the 
instrument of ratification:
            Supremacy of the Constitution.--Nothing in this 
        Treaty requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.

Protocol Amending Agreement with Panama

      Resolved (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Protocol Between the Government of the 
United States of America and the Government of the Republic of 
Panama Amending the Treaty Concerning the Treatment and 
Protection of Investments of October 27, 1982, signed at Panama 
City on June 1, 2000, (Treaty Doc. 106-46).

                                  

```