U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

79–118 

" ! SENATE 110TH CONGRESS

2d Session 

TREATY DOC. 

2008

110–23 

INVESTMENT TREATY WITH RWANDA 

MESSAGE 

FROM

THE PRESIDENT OF THE UNITED STATES 

TRANSMITTING

TREATY BETWEEN THE GOVERNMENT OF THE UNITED STATES 

OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF 

RWANDA CONCERNING THE ENCOURAGEMENT AND RECIPROCAL PROTECTION OF INVESTMENT, SIGNED AT KIGALI ON 

FEBRUARY 19, 2008 

NOVEMBER 20, 2008.—Treaty 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 Senate 


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LETTER OF TRANSMITTAL 

THE WHITE HOUSE, November 20, 2008. 

To the Senate of the United States: 

I transmit herewith, with a view to receiving the advice and consent of the Senate to ratification, the Treaty between the Government of the United States of America and the Government of the 

Republic of Rwanda Concerning the Encouragement and Reciprocal 

Protection of Investment, signed at Kigali on February 19, 2008. I 

transmit also, for the information of the Senate, the report prepared by the Department of State with respect to the Treaty. 

This is the first bilateral investment treaty (BIT) concluded between the United States and a sub-Saharan African country since 

1998. The Treaty will help to promote cross-border investment by 

providing legal protections for investors of each country for their 

investments in the other country. The Treaty underscores the 

shared commitment of both countries to open investment and trade 

policies. 

Rwanda has opened its economy, improved its business climate, 

and embraced trade and investment as a means to boost economic 

development and help alleviate poverty. The U.S.-Rwanda BIT will 

reinforce these efforts. 

The Treaty is fully consistent with U.S. policy to secure protections for U.S. investment abroad and to welcome foreign investment in the United States. Under this Treaty, the Parties agree to 

accord national treatment and most-favored-nation treatment to investments. They also agree to customary international law standards for expropriation and for the minimum standard of treatment. 

The Treaty includes detailed provisions regarding the payment of 

prompt, adequate, and effective compensation in the event of expropriation; free transfer of funds related to investment; freedom of investment from specified performance requirements; prohibitions on 

nationality based restrictions for the hiring of senior managers; 

and the opportunity for investors to resolve disputes with a host 

government through international arbitration. The Treaty also includes extensive transparency obligations with respect to national 

laws and regulations and commitments to transparency in dispute 

settlement. The Parties also recognize that it is inappropriate to 

encourage investment by weakening or reducing the protections afforded in domestic environmental and labor laws. 

I recommend that the Senate give early and favorable consideration to the Treaty and give its advice and consent to ratification. 

GEORGE W. BUSH. 


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LETTER OF SUBMITTAL 

DEPARTMENT OF STATE, Washington, October 31, 2008. 

THE PRESIDENT, 

The White House. 

THE PRESIDENT: I have the honor to submit to you the Treaty between the Government of the United States of America and the 

Government of the Republic of Rwanda Concerning the Encouragement and Reciprocal Protection of Investment, signed at Kigali on 

February 19, 2008. I recommend that this Treaty, with Annexes, 

be transmitted to the Senate for its advice and consent to ratification. 

This is the first bilateral investment treaty (BIT) concluded between the United States and a sub-Saharan African country since 

1998 (when a BIT was signed with Mozambique). The Treaty will 

provide legal protections for investors that underscore the shared 

commitment of both countries to open investment and trade policies. 

Rwanda has opened its economy, improved its business climate, 

and embraced trade and investment as a means to boost economic 

development and help alleviate poverty. The U.S.-Rwanda BIT will 

reinforce these efforts. 

The protections afforded by the Treaty include nondiscriminatory 

treatment; the free transfer of investment-related funds; prompt, 

adequate, and effective compensation in the event of an expropriation; a minimum standard of treatment grounded in customary 

international law; freedom of investment from specified performance requirements; prohibitions on nationality-based restrictions 

for the hiring of senior managers; and transparency in governance. 

The BIT also provides investors the opportunity to resolve investment disputes with a host government through international arbitration. Although there are 40 BITs in force to which the United 

States is a party, this Treaty with Rwanda is only the second concluded on the basis of the 2004 U.S. model BIT. 

An overview of key provisions of the U.S.-Rwanda BIT is enclosed. 

The Department of State and the Office of the U.S. Trade Representative jointly led the negotiation of this BIT, with the 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. 

CONDOLEEZZA RICE. 

Enclosure: As stated. 


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OVERVIEW OF THE UNITED STATES-RWANDA TREATY

The Bilateral Investment Treaty (BIT) with Rwanda was signed 

by the United States and Rwanda on February 19, 2008. The following overview summarizes key provisions of the Treaty, and 

identifies provisions that vary materially from the 2004 U.S. Model 

BIT (Model). 

SECTION A—GENERAL PROVISIONS

Definitions, Scope and Coverage (Articles 1, 2) 

The Treaty defines an ‘‘investment’’ in broad terms as an asset 

that is directly or indirectly controlled by an investor and has characteristics such as the expectation of profit, the assumption of risk 

by the investor, or the commitment of capital. The definition of investment provides an illustrative list of different types of investments. In addition, in a footnote to the definition of ‘‘investment’’ 

not present in the Model, the United States and Rwanda agreed to 

clarify that, where an enterprise does not have the characteristics 

of an investment, that enterprise is not an investment regardless 

of the form it may take. The Treaty applies generally to measures 

of either the United States or Rwanda, hereinafter referred to as 

the ‘‘Parties’’ or, individually, as a ‘‘Party,’’ relating to investors of 

one Party and to their investments in the territory of the other 

Party (defined as ‘‘covered investments’’). A ‘‘covered investment’’ 

includes investments that exist on the date the Treaty enters into 

force and those that are established, acquired, or expanded thereafter. 

National and Most-Favored-Nation Treatment (Articles 3, 4) 

The Treaty protects investors of a Party and their covered investments from discriminatory measures by the other Party during the 

full life-cycle of an investment, including the establishment phase, 

when investors are attempting to make an investment. Each Party 

commits to provide to investors of the other Party and to their covered investments treatment no less favorable than that which it 

provides, in like circumstances, to its own investors or to investors 

from any third country and their investments. 

Minimum Standard of Treatment (Article 5, Annex A) 

Article 5 of the Treaty establishes a minimum standard of treatment that each Party owes to covered investments. The minimum 

standard of treatment is defined as ‘‘treatment in accordance with 

customary international law, including fair and equitable treatment and full protection and security.’’ ‘‘Fair and equitable treatment’’ includes the obligation not to deny justice in criminal, civil, 

or administrative adjudicatory proceedings in accordance with the 

principle of due process embodied in the principal legal systems of 

the world. The obligation to provide ‘‘full protection and security’’ 

requires a host country to provide the level of police protection required under customary international law. Article 5 also states 

that a determination that there has been a breach of another provision of the Treaty or of a separate international agreement does 

not establish that there has been a breach of the Treaty’s minimum 

standard of treatment obligation. The Article further requires that 


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each Party must accord to covered investments and to investors of 

the other Party non-discriminatory treatment with respect to measures adopted in relation to losses suffered by investments due to 

armed conflict or civil strife. Finally, in the event that an investor 

suffers losses as a result of a Party’s requisition or unnecessary destruction of its covered investment, restitution and/or compensation 

must be paid. Annex A sets forth the shared understanding of the 

Parties regarding the meaning of ‘‘customary international law’’ in 

Article 5 (and in Annex B on Expropriation) and clarifies that the 

customary international law minimum standard of treatment of 

aliens owed under Article 5 refers to all customary international 

law principles that protect the economic rights and interests of 

aliens. 

Expropriation and Compensation (Article 6, Annexes A and B) 

Article 6 incorporates into the Treaty the customary international law standard for lawful expropriation, providing that neither Party may expropriate property unless it does so for a public 

purpose, in a non-discriminatory manner, in accordance with due 

process of law, and accompanied by prompt, adequate, and effective 

compensation. Article 6 addresses both direct expropriation, when 

a government actually transfers title or seizes an investment, and 

indirect expropriation, when a governmental action or series of actions has an effect equivalent to direct expropriation. 

Annex B clarifies the shared understanding of the Parties with 

respect to Article 6 as to how to determine whether an expropriation has occurred. The Annex states that a Party’s actions can only 

be considered an expropriation if they interfere with a tangible or 

intangible property interest or right in an investment. With respect 

to indirect expropriation, the Annex endorses a case-by-case, factbased approach, and lists three factors, among others, that tribunals must consider in determining whether an indirect expropriation has occurred: (1) the adverse economic impact of the government action, (2) the extent of government interference with reasonable investment-backed expectations, and (3) the character of the 

government action. The analytical approach adopted in Annex B is 

adapted from the seminal U.S. Supreme Court case relating to regulatory taking, Penn Central Transportation Co. v. New York City, 

438 U.S. 104 (1978), and is consistent with customary international 

law. Finally, Annex B observes that, except in rare circumstances, 

non-discriminatory regulatory actions designed and applied to protect legitimate public welfare objectives do not constitute indirect 

expropriations. 

Transfers (Article 7) 

The Treaty’s free transfers obligation requires that a Party permit capital and other transfers related to a covered investment to 

be made freely and without delay both into and out of its territory. 

Additionally, a Party must permit transfers to be made in a ‘‘freely 

usable currency,’’ as designated by the International Monetary 

Fund, at the market rate prevailing at the time of the transfer. 

Parties may prevent transfers through the equitable and non-discriminatory application of certain laws, including those relating to 

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ance with orders or judgments in judicial or administrative proceedings. 

Performance Requirements (Article 8) 

Article 8 prohibits the imposition by Parties of several requirements relating to the performance of investments, including a requirement to achieve a given level of exports or domestic content 

or a requirement linking the value of imports or domestic sales by 

an investment to the level of its export or foreign exchange earnings. The Article also prohibits Parties from offering advantages, 

such as a tax holiday, in exchange for a more limited set of performance requirements. In addition, so as not to place U.S. and 

Rwandan investors at a competitive disadvantage, the disciplines 

that Article 8 imposes upon performance requirements also apply 

to all investments in the territory of a Party, including those owned 

or controlled by host-country investors or by investors of a nonParty. The Article also clarifies that the prohibitions in paragraphs 

1 and 2 only apply to the requirements specifically enumerated in 

those paragraphs. 

In addition, the Parties agreed to two footnotes not present in 

the Model. First, the Parties agreed to clarify that the enforcement 

of a commitment or undertaking to use a particular technology, a 

production process, or other proprietary knowledge is not, by itself, 

inconsistent with the performance requirement relating to transfers of technology, a production process, or other proprietary knowledge. Second, the Parties agreed to clarify that nothing in the paragraph disciplining performance requirements shall be construed to 

prevent a Party from imposing or enforcing a requirement or enforcing a commitment or undertaking to train workers in its territory, provided that such training does not require the transfer of 

a particular technology, a production process, or other proprietary 

knowledge to a person in its territory. 

Senior Management and Boards of Directors (Article 9) 

The Treaty prohibits measures requiring that persons of any particular nationality be appointed to senior management positions in 

a covered investment. A country may require that a majority of the 

board of directors of a covered investment be of a particular nationality, however, or that a director be a resident of the host country, 

so long as such requirements do not materially impair an investor’s 

control over its investment. 

Publication of Laws and Decisions Respecting Investment (Article 

10) 

Article 10 seeks to promote transparency in the legal framework 

governing investment. It requires the Parties to ensure that laws, 

regulations, procedures, administrative rulings of general application, and adjudicatory decisions that relate to any matter covered 

by the Treaty are promptly published or otherwise made publicly 

available. 


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Transparency in Lawmaking and Administrative Proceedings (Article 11) 

Under Article 11, each Party is obligated, to the extent possible, 

to publish in advance any laws, regulations, procedures, or administrative rulings of general application with respect to matters covered by the Treaty that the Party proposes to adopt, and to provide 

interested persons and the other Party a reasonable opportunity to 

comment on the proposed measures. Article 11 includes detailed 

provisions concerning the notification of information about government actions and the character of administrative proceedings, including review and appeal processes. 

Environment and Labor (Articles 12, 13) 

In Articles 12 and 13, the Parties acknowledge that it would be 

inappropriate to encourage investment by weakening or reducing 

the protections afforded in domestic environmental and labor laws, 

respectively. Both Articles also provide that a Party may request 

consultations with the other Party if it considers that the other 

Party has offered such an encouragement. Article 12 provides that 

nothing in the Treaty shall be construed to prevent a Party from 

adopting, maintaining, or enforcing any measure otherwise consistent with the Treaty that it considers appropriate to ensure that 

investment activity in its territory is conducted in a manner sensitive to environmental concerns. 

Non-Conforming Measures (Article 14, Annexes I, II and III) 

Article 14 establishes the framework for the Treaty’s Annexes of 

non-conforming measures (NCMs). In these Annexes, each Party 

lists existing measures to which any or all of four key obligations 

of the Treaty do not apply, and sectors or activities in which each 

Party reserves the right to adopt future measures to which any or 

all of those obligations will not apply. The Article specifies that a 

Party may list measures that do not conform to the following four 

obligations: National Treatment (Article 3), Most-Favored-Nation 

Treatment (Article 4), Performance Requirements (Article 8), and 

Senior Management and Boards of Directors (Article 9). The Parties list existing NCMs maintained at either the central or regional 

level of government in Annexes I and III. Annex III is reserved for 

existing financial services NCMs. The Parties list the sectors or activities in which they reserve the right to adopt future NCMs in 

Annex II. The Parties negotiated the content of the Annexes in conjunction with the negotiation of the Treaty text, and the Annexes 

are an integral part of the Treaty. 

Article 14 includes several other provisions. It makes clear that 

the four obligations noted above do not apply to existing NCMs 

maintained at local levels of government. The Article also prohibits 

a Party from adopting, in a sector or activity covered by Annex II, 

any future measure that requires an investor of the other Party, 

by reason of its nationality, to sell or otherwise dispose of an investment. It exempts application of the national treatment and 

most-favored nation treatment obligations to measures covered by 

an exception to, or derogation from, the obligations of the World 

Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights. It also specifies that Articles 3 (National 


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Treatment), 4 (Most-Favored-Nation Treatment), and 9 (Senior 

Management and Boards of Directors) do not apply to government 

procurement or to grants or subsidies provided by a Party. 

Because the Parties’ NCMs are set out in detail in Annexes I, II 

and III, the following list merely identifies the sectors, subsectors 

or activities listed in each Party’s Annex entries. The Annexes 

should be consulted for a complete description of each NCM. 

Annex I 

Rwanda: Differential minimum capital requirements for investment registration; and registration requirements for non-profit enterprises. 

United States: Atomic Energy; Mining; Air Transportation; Customs Brokers; Radiocommunications Licenses; and restrictions on 

securities registration and OPIC insurance eligibility. 

Annex II 

Rwanda: Preferences for socially or economically disadvantaged 

communities and differential treatment pursuant to existing international treaties. 

United States: Radio/Satellite Communications, Cable Television, 

Social Services, Minority Affairs, measures relating to U.S.-flagged 

maritime vessels, and differential treatment pursuant to existing 

international treaties. 

Annex III 

Rwanda: Insurance. 

United States: Financial Services/Banking, Insurance, and general Financial Services. 

Special Formalities and Information Requirements (Article 15) 

Article 15 allows a Party to adopt or maintain measures that 

prescribe special formalities in connection with covered investments, such as investor residency or incorporation requirements, so 

long as such formalities do not materially impair the Treaty’s protections. The Article also provides that, notwithstanding the Treaty’s non-discrimination obligations (Articles 3 and 4), a Party may 

require an investor of the other Party, or its covered investment, 

to provide information relating to the investment solely for informational or statistical purposes, so long as the Party imposing the 

requirement protects confidential business information from disclosure. 

Non-Derogation (Article 16) 

Article 16 stipulates that the Treaty does not derogate from other 

obligations or laws of a Party that entitle an investor to more favorable treatment than that accorded by the Treaty. 

Denial of Benefits (Article 17) 

Article 17 establishes that a Party may deny the benefits of the 

Treaty to an investor of the other Party that is an enterprise of the 

other Party, and to its investments, if persons of a third country 

own or control the enterprise and the denying Party either (1) has 

no diplomatic relations with the third country; or (2) adopts or 


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maintains measures, such as foreign policy sanctions, with respect 

to the third country or to a person of the third country that prohibit transactions with the enterprise or that would be violated or 

circumvented if the benefits of the Treaty were accorded to the enterprise or to its investments. Article 17 also establishes that a 

Party may deny the benefits of the Treaty to an investor of the 

other Party that is an enterprise of the other Party, and to its investments, if the enterprise has no substantial business activities 

in the territory of the other Party and persons of a third country, 

or of the denying Party, own or control the enterprise. 

Essential Security (Article 18) 

Article 18 states that nothing in the Treaty may be construed to 

preclude a Party from applying measures that it considers necessary either to protect its own essential security interests or to 

fulfill its obligations with respect to the maintenance or restoration 

of international peace and security. The Treaty makes explicit the 

implicit understanding that measures to protect a Party’s essential 

security interests are self-judging in nature, although each Party 

would expect the provisions to be applied by the other in good 

faith. Article 18 also states that the Treaty does not require a 

Party to provide access to information if it determines that such 

disclosure would be contrary to its essential security interests. 

Disclosure of Information (Article 19) 

Article 19 establishes that nothing in the Treaty may be construed to require a Party to provide access to confidential information, the disclosure of which would impede law enforcement, would 

otherwise be contrary to the public interest, or would prejudice the 

legitimate commercial interests of particular enterprises. 

Financial Services (Article 20) 

Article 20 includes two provisions that relate to the regulation of 

financial markets. Paragraph 1, the prudential exception, specifies 

that the Treaty does not prohibit a Party from adopting or maintaining measures relating to financial services for prudential reasons, including for the protection of depositors, investors, policy 

holders, or persons to whom a fiduciary duty is owed by a financial 

services supplier, or to ensure the integrity and stability of the financial system. Paragraph 2, the monetary and exchange rate policy exception, establishes that no provision of the Treaty applies to 

non-discriminatory measures of general application that may be 

taken by a Party’s central bank or monetary authority pursuant to 

monetary and related credit policies or exchange rate policies. 

Article 20 modifies the standard investor-State dispute-settlement provisions of the Treaty for disputes in which a Party invokes 

one of the exceptions in paragraphs 1 or 2 as a defense against an 

investor claim. In the event that a Party invokes one of the exceptions, it must within 120 days of the date the investor’s claim is 

submitted to arbitration submit to the competent financial authorities of both Parties a written request for a joint determination on 

the issue of whether and to what extent one of the exceptions is 

a valid defense to the investor’s claim. If the competent financial 

authorities agree that the defense is valid, the investor’s claim will 


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be barred from arbitration. If the competent financial authorities 

fail to reach a determination by the end of the 120–day period, the 

tribunal will decide the issue. Article 20 also includes special procedures for the selection of arbitrators with expertise on financial 

matters. The Article also provides that the Party that is not a 

party to the dispute may make oral or written submissions to the 

tribunal regarding the issue of whether and to what extent paragraph 1 or 2 is a valid defense to the claim. If it fails to make such 

a submission, the non-disputing Party shall be presumed, for purposes of the arbitration, to take a position not inconsistent with 

that of the respondent. 

Paragraph 4 of Article 20 modifies the State-State dispute-settlement provisions of Section C of the Treaty for disputes in which the 

competent financial authorities of one Party provide written notice 

to their counterparts in the other Party that the dispute involves 

financial services. In the event that such notice is provided, the 

competent financial authorities of both Parties must conduct consultations regarding the dispute, and report the result of their consultations to the Parties, which either Party may transmit to the 

tribunal. 

Article 20 also contains changes that reflect an evolution in U.S. 

practice regarding the Financial Services Article since the U.S. 

model was last updated in 2004. In paragraph 3, provisions on the 

financial services expertise of arbitrators have been modified to 

clarify that they refer to the particular sector of financial services 

in which the dispute arises. New subparagraph 3(c)(iii) clarifies 

that the tribunal shall draw no inference regarding the application 

of paragraph 1 or 2 from the fact that the competent financial authorities have not made a determination as described in subparagraph (a). New subparagraph 3(e) enables the respondent, within 

a specified period of time, to request that the tribunal ‘‘address and 

decide the issue or issues left unresolved by the competent financial authorities as referred to in subparagraph (c) prior to deciding 

the merits of the claim for which paragraph 1 or 2 has been invoked by the respondent as a defense.’’ Further, it provides that 

failure to make such a request ‘‘is without prejudice to the right 

of the respondent to invoke paragraph 1 or 2 as a defense at any 

appropriate phase of the arbitration.’’ New paragraph 8 clarifies 

that the Treaty does not prevent a Party from taking measures relating to financial institutions that are necessary to secure compliance with laws or regulations that are not inconsistent with the 

Treaty, such as measures relating to the prevention of deceptive 

and fraudulent practices. 

The Rwanda BIT provides significant added protection to the financial services industry when compared to the U.S.-Uruguay BIT 

by ensuring that financial services films, like all other films, can 

bring discrimination-based claims in investor-state arbitration. 

Taxation (Article 21) 

Article 21 provides that nothing in the Treaty, other than what 

is provided in the Article, applies to taxation measures. In a departure from the Model, the Parties agreed that Articles 3 (National 

Treatment) and 4 (Most-Favored-Nation Treatment) shall apply to 

all taxation measures, other than those relating to direct taxes 


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(such as taxes on income, capital gains, and inheritances). This provision, which employs language used in U.S. Free Trade Agreements and the U.S.-Uruguay BIT, further restricts the coverage of 

Articles 3 and 4 with respect to several other taxation-related 

measures, including any non-conforming aspects of existing taxation measures. 

Article 21 also provides that a claimant that asserts that a tax 

matter involves expropriation may submit that claim to arbitration 

under Section B only if (1) the claimant has first referred to the 

competent tax authorities of both Parties the issue of whether the 

tax matter involves an expropriation, and (2) the tax authorities 

have not both determined, within 180 days from the time of referral, that the matter does not involve an expropriation. Furthermore, Article 21 specifies that the obligation in Article 8, not to 

condition the receipt of an advantage on certain performance requirements, will apply to the use of a taxation measure as an advantage. Finally, Article 21 establishes that nothing in the Treaty 

will affect the rights and obligations of either Party under a tax 

convention, and that in the event of any inconsistency between the 

Treaty and a tax convention, the convention shall prevail to the extent of the inconsistency. 

Entry into Force, Duration, and Termination (Article 22) 

Article 22 specifies that the Treaty will remain in force for ten 

years after its entry into force and will continue in force unless terminated by a Party. A Party can terminate the Treaty anytime 

after ten years, so long as it provides one year’s advance notice to 

the other Party. If the Treaty is terminated, all obligations will 

continue to apply for a period of ten years to covered investments 

established or acquired prior to the date of termination. 

Paragraph 4, a departure from the Model, provides that, on the 

request of either Party, the Parties shall consult promptly to discuss any matters relating to the interpretation or application of 

this Treaty or to the realization of the objectives of this Treaty. 

Paragraph 4 further clarifies that the Parties may agree, in writing, to amend this Treaty, and that any such amendment shall 

enter into force 30 days after the date the Parties exchange instruments of ratification, and shall remain in force so long as this Treaty remains in force. 

SECTION B—INVESTOR-STATE DISPUTE SETTLEMENT

Submitting Investor Claims to Arbitration (Articles 23–27) 

Article 24 provides a mechanism for investors to submit to arbitration a claim that a Party has breached an obligation under Articles 3 through 10 of the Treaty, an investment agreement, or an 

investment authorization. An ‘‘investment agreement’’ is defined in 

the Treaty as a written agreement between a national authority of 

a Party and a covered investment or an investor of the other Party, 

on which the investment or the investor relies in establishing or acquiring a covered investment other than the written agreement 

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tion’’ as an authorization that the foreign investment authority of 

a Party grants to a covered investment or to an investor of the 

other Party. 

Article 24 specifies that an investor of a Party may submit two 

types of claims: a claim on behalf of itself and a claim on behalf 

of an enterprise of the other Party that the investor owns or controls directly or indirectly. In both cases, the claimant must prove 

a breach of an obligation under Articles 3 through 10 of Section A, 

of an investment agreement, or of an investment authorization and 

that the claimant or the enterprise, as the case may be, has incurred loss or damage as a result of the breach. 

Under paragraph 3 of Article 24, an investor may seek arbitration of a claim under several potential mechanisms, including the 

Convention on the Settlement of Investment Disputes Between 

States and Nationals of Other States (known as the ‘‘ICSID Convention,’’ after the International Centre for Settlement of Investment Disputes), the Additional Facility of ICSID, the arbitration 

rules of the United Nations Commission on International Trade 

Law (UNCITRAL), or any other mutually agreed arbitral institution or rules. The rules of the chosen arbitral mechanism will govern the arbitration except to the extent modified by the Treaty. Article 24 also establishes that a claim may not be submitted to arbitration until six months have elapsed since the events giving rise 

to the claim. In addition, a claimant must deliver to the respondent 

Party a written notice of its intent to submit the claim at least 90 

days before submitting a claim to arbitration. The notice of intent 

must identify the provision or provisions of the Treaty or investment agreement or investment authorization alleged to have been 

breached and the approximate amount of damages claimed. 

To ensure that a Party cannot block arbitration by withholding 

its consent, Article 25 expressly states that the Parties consent to 

the submission of a claim to arbitration and that this consent will 

satisfy the consent requirements of the principal conventions relating to the arbitration of investment disputes. 

Article 26 establishes a statute of limitations on arbitral claims 

by requiring that they be submitted no more than three years after 

the date that a claimant first acquired, or should have acquired, 

knowledge of an alleged breach and knowledge that the claimant 

has incurred loss or damage. Article 26 also specifies that no claim 

may be submitted to arbitration under Section B unless the claimant or, in the event a claimant makes a claim on behalf of an enterprise that it owns or controls, the enterprise waives in writing 

the right to initiate or continue any proceedings relating to the disputed measure in a court or administrative tribunal of either Party 

or in other dispute-settlement mechanisms. This Article thus generally permits investors to pursue other legal remedies during the 

three-year limitations period. After arbitration is initiated under 

Section B of the Treaty, however, all other legal action must be discontinued (except for actions for interim injunctive relief that do 

not involve monetary damages and that are brought for the sole 

purpose of preserving a claimant’s rights during arbitration). 

Article 27 provides for the establishment of three-member arbitral tribunals, with one member appointed by each disputing party 

and a presiding arbitrator appointed by agreement between them. 


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If, within 75 days of the submission of a claim to arbitration, one 

of the disputing parties has failed to appoint an arbitrator, or the 

two disputing parties have failed to agree on a presiding arbitrator, 

arbitrators may be named by the ICSID Secretary-General. 

Conduct of Investor-State Arbitration (Articles 28–33) 

Article 28 includes a number of important provisions relating to 

the conduct of arbitral proceedings. To ensure the enforceability of 

arbitral awards, Article 28 provides that, unless otherwise agreed, 

arbitrations must take place in a country that is a party to the 

United Nations Convention on the Recognition and Enforcement of 

Foreign Arbitral Awards, known as the ‘‘New York Convention.’’ 

The Article authorizes a Party that is not involved in a dispute to 

make oral or written submissions to the tribunal on questions of 

interpretation of the Treaty, and authorizes tribunals to accept 

amicus curiae submissions from persons or entities that are not involved in the dispute. Article 28 also includes provisions that permit a tribunal to decide as a preliminary question whether an investor has made a claim that, as a matter of law, falls within the 

scope of the Treaty and whether the tribunal has jurisdiction. Upon 

written request of the respondent Party, the Tribunal shall answer 

these questions on an expedited basis within 150 days or, if a hearing is requested, within 180 days of receipt of the request. Tribunals are also authorized to award costs and attorneys’ fees in connection with the submission of a frivolous claim or objection. 

In addition, Article 28 authorizes tribunals to order interim 

measures of protection to preserve the rights of a disputing party 

or to ensure that the tribunal’s jurisdiction is made fully effective. 

Such measures may include an order to preserve evidence in the 

control of a disputing party. A tribunal cannot, however, order attachment of assets or enjoin a Party from applying any measure 

that is the subject of a dispute. 

Finally, Article 28 requires a tribunal, at the request of a disputing party, to issue an interim decision or award to the disputing 

parties and to the non-disputing Party, after which the disputing 

parties will have 60 days within which they may submit to the tribunal written comments on the interim decision or award. The tribunal must issue a final decision or award no later than 45 days 

after the expiration of the 60-day comment period. The Parties also 

agreed in Article 28 that, if a separate multilateral agreement enters into force between the Parties that establishes an appellate 

body for purposes of reviewing awards by investor-State arbitral 

tribunals, the Parties will seek to reach an agreement under which 

that appellate body would review awards rendered under Section 

B of the Treaty. In Annex D, the Parties have agreed to consider 

within three years after the Treaty’s entry into force the possibility 

of establishing a bilateral appellate body or similar mechanism to 

review arbitral awards rendered under the Treaty. 

Article 29 specifies that all substantive documents submitted to 

or issued by a tribunal, with the exception of certain proprietary 

or other confidential information, shall be made available to the 

public. This Article also requires that arbitral proceedings be open 

to the public, subject to logistical arrangements agreed to by a tribunal in consultation with the disputing parties, and sets out deVerDate Aug 31 2005 04:12 Nov 25, 2008 Jkt 079118 PO 00000 Frm 00015 Fmt 7633 Sfmt 7633 E:\HR\OC\TD023.XXX TD023

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XVI

tailed procedures for the protection from disclosure of any protected 

information that is submitted to a tribunal. Article 29 also provides 

that nothing in Section B of the Treaty requires a respondent Party 

to withhold from the public information required to be disclosed by 

its laws. 

Article 30 provides that, in the case of a claim of a breach of an 

obligation of Section A of the Treaty, an arbitral tribunal must decide the dispute in accordance with the Treaty and applicable rules 

of international law. In the case of an alleged breach of an investment agreement or investment authorization, the tribunal must 

apply the rules of law specified in the agreement or authorization 

or other rules to which the disputing parties have otherwise 

agreed. If no rules of law have been specified or agreed to in the 

investment agreement or investment authorization, the tribunal is 

instructed to apply the domestic law of the respondent Party and 

applicable rules of international law. Article 30 further provides 

that a joint declaration by the Parties concerning the interpretation 

of a provision of the Treaty will be binding on a tribunal, and any 

decision or award issued by a tribunal must be consistent with the 

joint declaration. Under Article 31, a respondent Party’s defense 

that an alleged breach falls within the scope of a reservation set 

forth in one of its Annexes of non-conforming measures must, at 

the Party’s request, be referred to the Parties for their consideration. Any decision the Parties make on the issue will be binding 

on a tribunal. If the Parties fail to issue such a decision within 60 

days, the question is referred back to the tribunal. 

Article 32 permits tribunals, on their own initiative or at the request of a disputing party, to seek advice from experts on environmental, health, safety, or other scientific matters at issue in a dispute. Article 33 sets out detailed procedures for the consolidation 

of investor claims that have a question of law or fact in common 

and arise out of the same events or circumstances. The Article provides for the establishment of a special three-member tribunal to 

consider whether it may assume jurisdiction over, or refer to a previously constituted tribunal, all or part of one or more such claims. 

Awards (Article 34) 

Article 34 authorizes a tribunal, when it makes a final award 

against a respondent Party, to award money damages, restitution 

of property, or a combination of the two. Awards of restitution 

must offer a respondent the alternative of paying damages. No punitive damages may be awarded. In the event of an award in response to a claim submitted by an investor on behalf of an enterprise that it owns or controls, restitution of property or monetary 

damages must be provided to the enterprise and the award must 

specify that it is made without prejudice to any right that a person 

may have in the award under applicable domestic law. Article 34 

also stipulates that a tribunal award will have no binding force except between the disputing parties and in respect of the particular 

case. 

Article 34 also addresses the enforcement of arbitral awards. It 

requires disputing parties to comply with awards without delay. 

Enforcement proceedings may be delayed in the event that a disputing party initiates revision or annulment proceedings under the 


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XVII

ICSID Convention or revision, set aside, or annulment proceedings 

under ICSID Additional Facility Rules or UNCITRAL Arbitration 

Rules. If a respondent fails to comply with a final award, the nondisputing Party may ask a State-State arbitral panel to determine 

whether the respondent’s failure to comply with the award is inconsistent with the Treaty and to recommend that the respondent 

comply. Such a State-State proceeding would be without prejudice 

to other available remedies. 

SECTION C—STATE-STATE DISPUTE SETTLEMENT

Article 37 provides that any dispute between the Parties concerning the interpretation or application of the Treaty not resolved 

through consultations or other diplomatic channels shall be submitted on the request of either Party to binding arbitration. Unless 

the Parties otherwise agree, the arbitration shall be governed by 

UNCITRAL Arbitration Rules. State-State arbitration cannot be established for matters arising under Articles 12 (Environment) and 

13 (Labor). 


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