TREATIES AND OTHER INTERNATIONAL ACTS SERIES 13065 

________________________________________________________________________ 

INVESTMENT 

 Treaty Between the 

UNITED STATES OF AMERICA 

and BAHRAIN 

Signed at Washington September 29, 1999 

 with 

 Annex 
 

NOTE BY THE DEPARTMENT OF STATE 

 Pursuant to Public Law 89—497, approved July 8, 1966 

(80 Stat. 271; 1 U.S.C. 113)—

“. . .the Treaties and Other International Acts Series issued 

under the authority of the Secretary of State shall be competent 

 evidence . . . of the treaties, international agreements other than 

treaties, and proclamations by the President of such treaties and 

international agreements other than treaties, as the case may be, 

therein contained, in all the courts of law and equity and of maritime 

jurisdiction, and in all the tribunals and public offices of the 

United States, and of the several States, without any further proof 

or authentication thereof.” 
 

 BAHRAIN 

 Investment 

Treaty signed at Washington September 29, 1999; 

Transmitted by the President of the United States of America 

 to the Senate May 23, 2000 (Treaty Doc. 106-25, 

 106th Congress, 2d Session); 

Reported favorably by the Senate Committee on Foreign Relations 

 September 27, 2000 (Senate Executive Report No. 106-23, 

 106th Congress, 2d Session); 

Advice and consent to ratification by the Senate 

 October 18, 2000; 

Ratified by the President February 7, 2001; 

Ratified by Bahrain April 29, 2001; 

Ratifications exchanged at Manama April 30, 2001; 

Entered into force May 30, 2001. 
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

The Government of the United States of America and the

Government of the State of Bahrain (hereinafter the

"Parties");

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;

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 a stable framework for investment will

maximize effective utilization of economic resources and

improve living standards;

Recognizing that the development of economic and

business ties can promote respect for internationally

recognized worker rights;

Agreeing that these objectives can be achieved without

relaxing health, safety and environmental measures of

general application; and

Having resolved to conclude a Treaty concerning the

encouragement and reciprocal protection of investment;

Have agreed as follows:
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ARTICLE 1

For the purposes of this Treaty,

(a) "company" means any entity constituted or organized

under applicable law, whether or not for profit,

and whether privately or governmentally owned or

controlled, and includes, but is not limited to, a

corporation, trust, partnership, sole

proprietorship, branch, joint venture,

association, or other organization;

(b) "company of a Party" means a company constituted or

organized under the laws of that Party;

(c) "national" of a Party means a natural person who is

a national of that Party under its applicable law;

(d) "investment" of a national or company means every

kind of investment owned or controlled directly or

indirectly by that national or company, and

includes, but is not limited to, investment

consisting or taking the form of:

(1) a company;

(2) shares, stock, and other forms of equity

participation, and bonds, debentures, and

other forms of debt interests, in a company;

(3) contractual rights, such as under turnkey,

construction or management contracts,

production or revenue-sharing contracts,

concessions, or other similar contracts;

(4) moveable and immovable property; and

intangible property, including, but not

limited to, rights, such as leases,

mortgages, liens and pledges;

(5) intellectual property, including, but not

limited to:

copyrights and related rights,

patents,

rights in plant varieties,

industrial designs,

rights in semiconductor layout designs,
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trade secrets, including, but not limited to,

know-how and confidential business

information,

trade and service marks, and

trade names; and

(6) rights conferred pursuant to law, such as

licenses and permits;

(e) "covered investment" means an investment of a

national or company of a Party in the territory of

the other Party;

(f) "state enterprise" means a company owned, or

controlled, through ownership interests, by a

Party;

(g) "investment authorization" means an authorization

granted by the foreign investment authority of a

Party to a covered investment or a national or

company of the other Party;

(h) "investment agreement" means a written agreement

between the national authorities of a Party and a

covered investment or a national or company of the

other Party that (1) grants rights with respect to

natural resources or other assets controlled by

the national authorities and (2) the investment,

national or company relies upon in establishing or

acquiring a covered investment;

(i) "ICSID Convention" means the Convention on the

Settlement of Investment Disputes between States

and Nationals of Other States, done at Washington,

March 18, 1965;

(j) "Centre" means the International Centre for

Settlement of Investment Disputes Established by

the ICSID Convention; and

(k) "UNCITRAL Arbitration Rules" means the arbitration

rules of the United Nations Commission on

International Trade Law.

ARTICLE 2

1.	With respect to the establishment, acquisition,

expansion, management, conduct, operation and sale or other

disposition of covered investments, each Party shall accord

treatment no less favorable than that it accords, in like

situations, to investments in its territory of its own

nationals or companies (hereinafter "national treatment") or
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to investments in its territory of nationals or companies of

a third country (hereinafter "most favored nation

treatment"), whichever is most favorable (hereinafter

"national and most favored nation treatment"). Each Party

shall ensure that its state enterprises, in the provision of

their goods or services, accord national and most favored

nation treatment to covered investments.

2. (a) A Party may adopt or maintain exceptions to

the obligations of paragraph 1 in the sectors or with

respect to the matters specified in the Annex to this

Treaty. In adopting such an exception, a Party may not

require the divestment, in whole or in part, of covered

investments existing at the time the exception becomes

effective.

(b) The obligations of paragraph 1 do not apply to

procedures provided in multilateral agreements concluded

under the auspices of the World Intellectual Property

Organization relating to the acquisition or maintenance of

intellectual property rights.

3. (a) Each Party shall at all times accord to

covered investments fair and equitable treatment and full

protection and security, and shall in no case accord

treatment less favorable than that required by international

law.

(b) Neither Party shall in any way impair by

unreasonable and discriminatory measures the management,

conduct, operation, and sale or other disposition of covered

investments.

4. Each Party shall provide effective means of

asserting claims and enforcing rights with respect to

covered investments.

5. Each Party shall ensure that its laws,

regulations, administrative practices and procedures of

general application, and adjudicatory decisions, that

pertain to or affect covered investments are promptly

published or otherwise made publicly available.

ARTICLE 3

1.	Neither Party shall expropriate or nationalize a

covered investment either directly or indirectly through

measures tantamount to expropriation or nationalization

("expropriation") 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 Article 2, paragraph 3.
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2. Compensation shall be paid without delay; be

equivalent to the fair market value of the expropriated

investment immediately before the expropriatory action was

taken ("the date of expropriation"); and be fully realizable

and freely transferable. The fair market value shall not

reflect any change in value occurring because the

expropriatory action had become known before the date of

expropriation.

3. If the fair market value is denominated in a

freely usable currency, the compensation paid shall be no

less than the fair market value on the date of

expropriation, plus interest at a commercially reasonable

rate for that currency, accrued from the date of

expropriation until the date of payment.

4. If the fair market value is denominated in a

currency that is not freely usable, the compensation paid --

converted into the currency of payment at the market rate of

exchange prevailing on the date of payment -- shall be no

less than:

(a) the fair market value on the date of

expropriation, converted into a freely usable

currency at the market rate of exchange

prevailing on that date, plus

(b) interest, at a commercially reasonable rate

for that freely usable currency, accrued from

the date of expropriation until the date of

payment.

ARTICLE 4

1. Each Party shall accord national and most favored

nation treatment to covered investments as regards any

measure relating to losses that investments suffer in its

territory owing to war or other armed conflict, revolution,

state of national emergency, insurrection, civil

disturbance, or similar events.

2. Each Party shall accord restitution, or pay

compensation in accordance with paragraphs 2 through 4 of

Article 3, in the event that covered investments suffer

losses in its territcry, owing to war or other armed

conflict, revolution, state of national emergency,

insurrection, civil disturbance, or similar events, that

result from:

(a) requisitioning of all or part of such

investments by the Party's forces or

authorities, or
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(b) destruction of all or part of such investments

by the Party's forces or authorities that was

not required by the necessity of the

situation.

ARTICLE 5

1.	Each Party shall permit all transfers relating to

a covered investment to be made freely and without delay

into and out of its territory. Such transfers include, but

are not limited to:

(a) contributions to capital;

(b) profits, dividends, capital gains, and

proceeds from the sale of all or any part of

the investment or from the partial or

complete liquidation of the investment;

(c) interest, royalty payments, management fees,

and technical assistance and other fees;

(d) payments made under a contract, including, but

not limited to, a loan agreement; and

(e) compensation pursuant to Articles 3 and 4, and

payments arising out of an investment

dispute.

2.	Each Party shall permit transfers to be made in a

freely usable currency at the market rate of exchange

prevailing on the date of transfer.

3.	Each Party shall permit returns in kind to be made

as authorized or specified in an investment authorization,

investment agreement, or other written agreement between the

Party and a covered investment or a national or company of

the other Party.

4.	Notwithstanding paragraphs 1 through 3, a Party

may prevent a transfer through the equitable,

non-discriminatory and good faith application of its laws

relating to:

(a) bankruptcy, insolvency or the protection of

the rights of creditors;

(b) issuing, trading or dealing in securities;

(c) criminal or penal offenses; or

(d) ensuring compliance with orders or judgments

in adjudicatory proceedings.
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ARTICLE 6

Neither Party shall mandate or enforce, as a condition

for the establishment, acquisition, expansion, management,

conduct or operation of a covered investment, any

requirement (including, but not limited to, any commitment

or undertaking in cornection with the receipt of a

governmental permission or authorization):

(a) to achieve a particular level or percentage of

local content, or to purchase, use or

otherwise give a preference to products or

services of domestic origin or from any

domestic source;

(b) to limit imports by the investment of products

or services in relation to a particular

volume or value of production, exports or

foreign exchange earnings;

(c) to export a particular type, level or

percentage of products or services, either

generally or to a specific market region;

(d) to limit sales by the investment of products

or services in the Party's territory in

relation to a particular volume or value of

production, exports or foreign exchange

earnings;

(e) to transfer technology, a production process

or other proprietary knowledge to a national

or company in the Party's territory, except

pursuant to an order, commitment or

undertaking that is enforced by a court,

administrative tribunal or competition

authority to remedy an alleged or adjudicated

violation of competition laws; or

(f) to carry out a particular type, level or

percentage of research and development in the

Party's territory.

Such requirements do not include conditions for the receipt

or continued receipt of an advantage.

ARTICLE 7

1.	(a) Subject to its laws relating to the entry and

sojourn of aliens, each Party shall permit to enter and to

remain in its territory nationals of the other Party for the

purpose of establishing, developing, administering or

advising on the operation of an investment to which they, or
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a company of the other Party that employs them, have

committed or are in the process of committing a substantial

amount of capital or other resources.

(b) Neither Party shall, in granting entry under

paragraph 1 (a), require a labor certification test or other

procedures of similar effect, or apply any numerical

restriction.

2.	Each Party shall permit covered investments to

engage top managerial personnel of their choice, regardless

of nationality.

ARTICLE 8

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 or to the

realization of the objectives of the Treaty.

ARTICLE 9

1.	For purposes of this Treaty, an investment dispute

is 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.

2.	A national or company that is a party to an

investment dispute may submit the dispute for resolution

under one of the following alternatives:

(a) to the courts or administrative tribunals of

the Party that is a party to the dispute; or

(b) in acccrdance with any applicable, previously

agreed dispute-settlement procedures; or

(c) in accordance with the terms of paragraph 3.

3.	(a) Provided that the national or company

concerned has not submitted the dispute for resolution under

paragraph 2 (a) or (b), and that ninety days have elapsed

from the date on which the dispute arose, the national or

company concerned may submit the dispute for settlement by

binding arbitration:

(1) to the Centre, if the Centre is

available; or
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(2) to the Additional Facility of the Centre,

if the Centre is not available; or

(3) in accordance with the UNCITRAL

Arbitration Rules; or

(4) if agreed by both parties to the dispute,

to any other arbitration institution or

in accordance with any other arbitration

rules.

(b) A national or company, notwithstanding that it

may have submitted a dispute to binding arbitration under

paragraph 3 (a), may seek interim injunctive relief, not

involving the payment of damages, before the judicial or

administrative tribunals of the Party that is a party to the

dispute, prior to the institution of the arbitral proceeding

or during the proceeding, for the preservation of its rights

and interests.

4.	Each Party hereby consents to the submission of

any investment dispute for settlement by binding arbitration

in accordance with the choice of the national or company

under paragraph 3 (a) (1), (2), and (3) or the mutual

agreement of both parties to the dispute under paragraph 3

(a) (4). This consent and the submission of the dispute by

a national or company under paragraph 3 (a) shall satisfy

the requirement of:

(a) Chapter II of the ICSID Convention

(Jurisdiction of the Centre) and the

Additional Facility Rules for written consent

of the parties to the dispute; and

(b) Article II of the United Nations Convention on

the Recognition and Enforcement of Foreign

Arbitral Awards, done at New York, June 10,

1958, for an "agreement in writing."

5.	Any arbitration under paragraph 3 (a) (2), (3) or

(4) shall be held in a state that is a party to the United

Nations Convention or the Recognition and Enforcement of

Foreign Arbitral Awards, done at New York, June 10, 1958.

6.	Any arbitral award rendered pursuant to this

Article shall be final and binding on the parties to the

dispute. Each Party shall carry out without delay the

provisions of any such award and provide in its territory

for the enforcement of such award.

7.	In any proceeding involving an investment dispute,

a Party shall not assert, as a defense, counterclaim, right

of set-off or for any other reason, that indemnification or

other compensation for all or part of the alleged damages
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has been received or will be received pursuant to an

insurance or guarantee contract.

8.	For purposes of Article 25 (2) (b) of the ICSID

Convention and this Article, a company of a Party that,

immediately before the occurrence of the event or events

giving rise to an investment dispute, was a covered

investment, shall be treated as a company of the other

Party.

ARTICLE 10

1. Any dispute between the Parties concerning the

interpretation or application of the Treaty, that is not

resolved through consultations or other diplomatic channels,

shall be submitted upon the request of either Party to an

arbitral tribunal for binding decision in accordance with

the applicable rules of international law. In the absence

of an agreement by the Parties to the contrary, the UNCITRAL

Arbitration Rules shall govern, except to the extent these

rules are (a) modified by the Parties or (b) modified by the

arbitrators unless either Party objects to the proposed

modification.

2. Within two months of receipt of a request, each

Party shall appoint an arbitrator. The two arbitrators

shall select a third arbitrator as chairman, who shall be a

national of a third state. The UNCITRAL Arbitration Rules

applicable to appointing members of three-member panels

shall apply mutatis mutandis to the appointment of the

arbitral panel except that the appointing authority

referenced in those rules shall be the Secretary General of

the Centre.

3. Unless otherwise agreed, all submissions shall be

made and all hearings shall be completed within six months

of the date of selection of the third arbitrator, and the

arbitral panel shall render its decisions within two months

of the date of the final submissions or the date of the

closing of the hearings, whichever is later.

4. Expenses incurred by the Chairman and other

arbitrators, and other costs of the proceedings, shall be

paid for equally by the Parties. However, the arbitral

panel may, at its discretion, direct that a higher

proportion of the costs be paid by one of the Parties.

ARTICLE 11

This Treaty shall not derogate from any of the

following that entitle covered investments to treatment more

favorable than that accorded by this Treaty:
(a) laws and regulations, administrative practices

or procedures, or administrative or

adjudicatory decisions of a Party;

(b) international legal obligations; or

(c) obligations assumed by a Party, including, but

not limited to, those contained in an

investment authorization or an investment

agreement.

ARTICLE 12

Each Party reserves the right to deny to a company of

the other Party the benefits of this Treaty if nationals of

a third country own or control the company and

(a) the denying Party does not maintain normal

economic relations with the third country; or

(b) the company has no substantial business

activities in the territory of the Party

under whose laws it is constituted or

organized.

ARTICLE 13

1.	No provision of this Treaty shall impose

obligations with respect to tax matters, except that:

(a) Articles 3, 9 and 10 will apply with respect

to expropriation; and

(b) Article 9 will apply with respect to an

investment agreement or an investment

authorization.

2.	With respect to the application of Article 3, an

investor that asserts that a tax measure involves an

expropriation may submit that dispute to arbitration

pursuant to Article 9, paragraph 3, provided that the

investor concerned has first referred to the competent tax

authorities of both Parties the issue of whether that tax

measure involves an expropriation.

3.	However, the investor cannot submit the dispute to

arbitration if, within nine months after the date of

referral, the competent tax authorities of both Parties

determine that the tax measure does not involve an

expropriation.
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ARTICLE 14

1. This Treaty shall not preclude a Party from

applying measures which it considers necessary for 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 a Party from

prescribing special formalities in connection with covered

investments, such as a requirement that such investments be

legally constituted under the laws and regulations of that

Party, or a requirement that transfers of currency or other

monetary instruments be reported, provided that such

formalities shall not impair the substance of any of the

rights set forth in this Treaty.

ARTICLE 15

1. (a) The obligations of this Treaty shall apply to

the political subdivisions of the Parties.

(b) With respect to the treatment accorded by a

State, Territory or possession of the United States of

America, national treatment means treatment no less

favorable than the treatment accorded thereby, in like

situations, to investments of nationals of the United States

of America resident in, and companies legally constituted

under the laws and regulations of, other States, Territories

or possessions of the United States of America.

2. A Party's obligations under this Treaty shall

apply to a state enterprise in the exercise of any

regulatory, administrative or other governmental authority

delegated to it by that Party.

ARTICLE 16

1. This Treaty shall enter into force thirty days

after the date of exchange of instruments of ratification.

It shall remain in force for a period of ten years and shall

continue in force unless terminated in accordance with

paragraph 2. It shall apply to covered investments existing

at the time of entry into force as well as to those

established or acquired thereafter.

2. A Party may terminate this 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.

3. For ten years from the date of termination, all

other Articles shall continue to apply to covered
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investments established or acquired prior to the date of

termination, except insofar as those Articles extend to the

establishment or acquisition of covered investments.

4. The Annex shall form an integral part of the

Treaty.

5. All dates and periods mentioned in this Treaty

shall be reckoned according to the Gregorian calendar.

IN WITNESS WHEREOF, the respective plenipotentiaries have

signed this Treaty.

DONE at Washington, this twenty-ninth day of September,

1999, in duplicate in the English and Arabic languages, each

text being authentic; however, in the case of divergence,

the English text shall prevail.

FOR THE GOVERNMENT OF

THE UNITED STATES

OF AMERICA:

FOR THE GOVERNMENT OF

THE STATE OF BAHRAIN:
ANNEX

1. The Government of the United States of America may

adopt or maintain exceptions to the obligation to accord

national treatment to covered investments in the sectors or

with respect to the matters specified below:

atomic energy; customhouse brokers; licenses for

broadcast, common carrier, or aeronautical radio

stations; COMSAT; subsidies or grants, including, but

not limited to, government-supported loans, guarantees

and insurance; state and local measures exempt from

Article 1102 of the North American Free Trade Agreement

pursuant to Article 1108 thereof; and landing of

submarine cables.

Most favored nation treatment shall be accorded in the

sectors and matters indicated above.

2. The Government cf the United States of America may

adopt or maintain exceptions to the obligation to accord

national and most favored nation treatment to covered

investments in the sectors or with respect to the matters

specified below:

fisheries; air and maritime transport, and related

activities; banking, insurance, securities, and other

financial services; and one-way satellite transmissions

of direct-to-home (DTH) and direct broadcast satellite

(DBS) television services and of digital audio

services.

3. The Government of the State of Bahrain may adopt or

maintain exceptions to the obligation to accord national

treatment to covered investments in the sectors or with

respect to the matters specified below:

ownership or control of television and radio

broadcasting and other forms of mass media; fisheries;

initial privatization of exploration or drilling for

crude oil.

Most favored nation treatment shall be accorded in the

sectors and matters indicated above.

4. The Government of the State of Bahrain may adopt or

maintain exceptions to the obligation to accord national and

most favored nation treatment to covered investments in the

sectors or with respect to the matters specified below:

air transportation; purchase or ownership of land; and

until 1 January 2005, purchase or ownership of shares

quoted on the Bahrain Stock Exchange.
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5.	Each Party agrees to accord national treatment to

covered investments in the following sectors:

leasing of minerals and pipeline rights-of-way on

government lands.