U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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79–118

" ! SENATE 106TH CONGRESS

2d Session

TREATY DOC.

2000

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

(III)

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.

(V)

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.

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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 not available. 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 accordVerDate 11-MAY-2000 16:06 Sep 13, 2000 Jkt 079118 PO 00000 Frm 00006 Fmt 7633 Sfmt 6602 E:\HR\OC\TD046.XXX pfrm02 PsN: TD046
VII

ance 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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