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[Senate Treaty Document 106-46]
[From the U.S. Government Publishing Office]

106th Congress                                              Treaty Doc.
                                  SENATE                     
 2d Session                                                    106-46
_______________________________________________________________________

                                     

 
           PROTOCOL AMENDING INVESTMENT TREATY WITH PANAMA

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

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. 
  PROTOCOL WAS SIGNED AT PANAMA CITY, ON JUNE 1, 2000

September 12, 2000.--Protocol was read the first time, and together 
  with the accompanying papers, referred to the Committee on Foreign 
  Relations and ordered to be printed for the use of the Senate

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
79-118                     WASHINGTON : 2000

                         LETTER OF TRANSMITTAL

                              ----------                              

                               The White House, September 12, 2000.
To the Senate of the United States:
    With a view to receiving the advice and consent of the 
Senate to ratification, I transmit herewith the 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. This Protocol was signed at Panama City, on 
June 1, 2000. I transmit also, for the information of the 
Senate, the report of the Department of State with respect to 
this Protocol.
    The 1982 bilateral investment treaty with Panama (the 
``1982 Treaty'') was the second treaty to be signed under the 
U.S. bilateral investment treaty (BIT) program. The 1982 Treaty 
protects U.S. investment and assists Panama in its efforts to 
develop its economy by creating conditions more favorable for 
U.S. private investment and thereby strengthening the 
development of its private sector.
    As explained in the Department of State's report, the 
Protocol is needed in order to ensure that investors continue 
to have access to binding international arbitration following 
Panama's 1996 accession to the Convention on the Settlement of 
Investment Disputes Between States and Nationals of Other 
States, done at Washington, March 18, 1965 (the ``ICSID 
Convention''). The Protocol provides each Party's consent to 
international arbitration of investment disputes under the 1982 
Treaty before the International Centre for the Settlement of 
Investment Disputes, established under the ICSID Convention. 
The Protocol also provides for arbitration in accordance with 
the Arbitration Rules of the United Nations Commission on 
International Trade Law. The Protocol thus facilitates the use 
of such procedures by investors of the Parties to resolve 
investment disputes under the 1982 Treaty. The Protocol also 
sets forth each Party's consent to ICSID Additional Facility 
arbitration, if Convention Arbitration is not available. 
Convention Arbitration would not be available, for example, if 
either Party subsequently ceased to be a party to the ICSID 
Convention.
    I recommend that the Senate consider this Protocol as soon 
as possible, and give its advice and consent to ratification of 
the Protocol at an early date.
                                                William J. Clinton.
                          LETTER OF SUBMITTAL

                              ----------                              

                                       Department of State,
                                       Washington, August 11, 2000.
The President,
The White House.
    The President: I have the honor to submit to you 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. The Protocol was signed at Panama City, on 
June 1, 2000. I recommend that this Protocol be transmitted to 
the Senate for its advice and consent to ratification.
    The 1982 bilateral investment treaty with Panama (``1982 
Treaty'') was the second treaty to be signed under the U.S. 
bilateral investment treaty (``BIT'') program. To date, 31 BITs 
are in force for the United States--with Albania, Argentina, 
Armenia, Bangladesh, Bulgaria, Cameroon, the Republic of the 
Congo, the Democratic Republic of the Congo (formerly Zaire), 
the Czech Republic, Ecuador, Egypt, Estonia, Georgia, Grenada, 
Jamaica, Kazakhstan, Kyrgyzstan, Latvia, Moldova, Mongolia, 
Morocco, Panama, Poland, Romania, Senegal, Slovakia, Sri Lanka, 
Trinidad & Tobago, Tunisia, Turkey, and Ukraine. The United 
States has also signed, but not yet brought into force, BITs 
with Azerbaijan, Bahrain, Belarus, Bolivia, Croatia, El 
Salvador, Honduras, Jordan, Lithuania, Mozambique, Nicaragua, 
Russia, and Uzbekistan.
    One of the important objectives of the 1982 Treaty was to 
ensure that investors could arbitrate investment disputes with 
a Party in at least one forum, specified in the Treaty, by 
providing the prior consent of each Party to arbitrate 
investment disputes in that forum. This important investment 
protection was lost when the forum specified in the 1982 Treaty 
subsequently ceased to be available to the Parties. The 
Protocol restores this investment protection by providing the 
prior consent of the Parties to the use of specified 
alternative fora or arbitration rules to resolve investment 
disputes.
    The forum specified in the 1982 Treaty was the Additional 
Facility of the International Centre for the Settlement of 
Investment Disputes (``ICSID''). ICSID was established by the 
Convention on the Settlement of Investment Disputes between 
States and Nationals of Other States, done at Washington, March 
18, 1965 (``ICSID Convention'') as a forum for international 
arbitration of investment disputes between Contracting States 
and nationals of other Contracting States (``Convention 
Arbitration''). The United States has been a Party to the ICSID 
Convention since its entry into force on October 14, 1966.
    When the 1982 Treaty was signed, Panama was not a party to 
the ICSID Convention. Convention Arbitration therefore was not 
available for disputes involving Panama or its nationals. The 
ICSID Additional Facility, however, does provide a forum for 
arbitration of international investment disputes arising 
between parties where one party is not an ICSID Contracting 
State or a national of a Contracting State. The 1982 Treaty 
therefore specifies the ICSID Additional Facility as the 
primary forum for international arbitration, and under Article 
VII of the 1982 Treaty provides the prior consent of the 
Parties to the use of the Additional Facility. Under the 1982 
Treaty, the parties may also mutually agree to use other 
dispute resolution procedures to resolve their investment 
dispute.
    The ICSID Convention entered into force with respect to 
Panama on May 8, 1996. As of that date, the Additional Facility 
ceased to be available for the settlement of investment 
disputes under the 1982 Treaty. The 1982 Treaty does not 
provide each Party's prior consent to the use of any other 
procedures for the resolution of investment disputes. Although 
an investor may still request a Party's consent to use any 
other dispute settlement procedures for the resolution of their 
investment dispute, the Party may withhold its consent.
    The Parties negotiated the Protocol to restore assured 
investor access to dispute settlement by providing each Party's 
prior consent to Convention Arbitration as well as arbitration 
in accordance with the Arbitration Rules of the United Nations 
Commission on International Trade Law (``UNCITRAL Rules''). The 
Protocol thus facilities the use of such procedures by 
investors of the Parties to resolve investment disputes under 
the 1982 Treaty. The Protocol also sets forth each Party's 
consent to ICSID Additional Facility arbitration, if Convention 
Arbitration is notavailable. Convention Arbitration would not 
be available, for example, if either Party subsequently ceased to be a 
party to the ICSID Convention.
    The terms of the Protocol are described below.

Article I (Amending Article VII of the 1982 Treaty)

    Paragraph 1 amends Article VII(3) of the 1982 Treaty by 
replacing that paragraph with the text set forth in Article 
I(1) of the Protocol.
    Under amended Article VII(3)(a), at any time after 6 months 
from the date upon which an investment dispute has arisen, the 
national or company concerned (``investor'') may consent in 
writing to the submission of the dispute to binding 
arbitration. In providing its consent, the investor may choose 
among convention Arbitration, the Additional Facility of ICSID 
(if Convention Arbitration is not available), or ad hoc 
arbitration using the UNCITRAL Rules. Once the investor has so 
consented, either party to the dispute may institute 
proceedings, provided that the dispute has not, for any reason, 
been submitted for resolution in accordance with any applicable 
dispute resolution procedure previously agreed upon and the 
investor has not brought the dispute before a judicial, 
administrative or agency tribunal of competent jurisdiction of 
either Party.
    Amended Article VII(3)(b) constitutes each Party's consent 
to the submission of investment disputes to binding arbitration 
in accordance with the choice of the investor under amended 
Article VII(3)(a).
    Amended Article VII(3)(c) provides that if the parties 
elect conciliation or arbitration using Convention Arbitration 
or the Additional Facility, the regulations and rules of ICSID 
or the Additional Facility, as applicable, will govern.
    Under amended Article VII(3)(d), each Party commits to 
enforcing arbitral awards rendered pursuant to Article VII. The 
Federal Arbitration Act (9 U.S.C. 1 et seq.) satisfies the 
requirement for the enforcement of non-ICSID Convention awards 
in the United States. The Convention on the Settlement of 
Investment Disputes Act of 1966 (22 U.S.C. 1650-1650a) provides 
for the enforcement of ICSID Convention awards.
    Amended Article VII(3)(e) provides that any non-Convention 
Arbitration shall take place in a country that is a party to 
the United Nations Convention on the Recognition and 
Enforcement of Arbitral Awards done at New York, June 10, 1958. 
This provision facilitates enforcement of arbitral awards.
    Paragraph 2 amends Article VII(5) of the 1982 Treaty by 
replacing that paragraph with the text set forth in Article 
I(2) of the Protocol. Amended Article VII(5) provides that, for 
the purposes of Article 25(2)(b) of the ICSID convention and 
Article VII of the 1982 Treaty, the nationality of a company in 
the host country will be determined by ownership or control, 
rather than by place of incorporation. This provision allows a 
company that is an investment covered by the 1982 Treaty to 
bring a claim in its own name.

Article II (Entry into Force and Duration)

    Article II provides that the Protocol forms an integral 
part of the 1982 Treaty. The Protocol 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. The Protocol will remain in force for so 
long as the 1982 Treaty is in force. If the 1982 Treaty is 
terminated, the Protocol will continue to be effective (as will 
the other Articles of the 1982 Treaty) for an additional 10 
years as provided in Article XIII(4) of the 1982 Treaty.
    The 1982 Treaty was negotiated jointly by the Department of 
State and the Office of the United States Trade Representative, 
with the active participation of the Departments of Commerce 
and the Treasury. These agencies join me in recommending that 
it be transmitted to the Senate at an early date.
    Respectfully submitted.
                                                    Strobe Talbott.

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