(ii) The arbitral tribunal shall base its
decision on the applicable principles and rules of public
international law. The arbitra} tribunal shall decide by
majority vote. Its decision shall be final and binding.

(iii) Each of the Governments shall pay the
expense of its arbitrator and of its representation in the
proceedings before the arbitral tribunal; the expenses of
the president and the other costs shall be paid in equal
parts by the two Governments. The arbitral tribunal may
adopt regulations concerning the costs, consistent with the
foregoing.

(iv) In all other matters, the arbitral tribunal
shall regulate its own procedures,

Article 7

This Agreement shall continue in force until six months
from the date of receipt of a note by which one Government
informs the other of an intent no longer to be party to the
Agreement. In such event, the provisions of the Agreement
with respect to Coverage issued while the Agreement was in
force shall remain in force for the duration of such
Coverage, but in no case longer than twenty years after the
denunciation of the Agreement.

Upon receipt of a note from Your Excellency indicating that the
foregoing provisions are acceptable to the Government of the :
Federated States of Micronesia, the Government of the United States
of America will consider that this note and the reply note of the
Government of the Federated States of Micronesia constitute an

Agreement between our two Governments on this subject, to enter into

force on the date of Your Excellency's reply note.


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Micronesia no less favorable as to use and conversion than
the treatment to which such funds would be entitled in the
hands of the party under Coverage. Such amounts and
credits may be transferred by the Issuer to any person or
entity and upon such transfer shall be freely available for
use by such person or entity in the territory of the
Federated States of Micronesia.

Article 6

(a) Any dispute between the Government of the United
States of America and the Government of the Federated
States of Micronesia regarding. the interpretation of this
Agreement or which, in the opinion of one of the
Governments, involves a question of public international
law arising out of any project or activity for which °
Coverage has been issued shall be resolved, insofar as
possible, through negotiations between the two
Governments, If, at the end of three months following the
Tequest for negotiations, the two Governments have not
Tesolved the dispute by agreement, the dispute, including
the question of whether such a dispute presents a question
of public international law, shall be submitted, at the
initiative of either Government, to an arbitral tribunal
for resolution in accordance with Article 6 (b).

(b) The arbitral tribunal for resolution of disputes
pursuant to Article 6(a) shall be established and function
as follows:

(i) Each Government shall appoint one arbitrator;
these two arbitrators shall designate a president by common
agreement who shall be a citizen of a third state and be
appointed by the two Governments. The arbitrators shall be
appointed within two months and the president within three
months of the date of Teceipt of either Government's
request for arbitration. If the appointments are not made
within the foregoing time limits, either Government may, in
the absence of any other agreement, request the Secretary
General of the International Centre for the Settlement of
Investment Disputes to make the necessary appointment or
appointments, and both Governments agree to accept such
appointment or appointments.


Institution of this Agreement is an important step in
furtherance of economic cooperation between our two Governments.
Within the framework of the OPIC program, the Government of the
United States of America will encourage US private investment in the

Federated States of Micronesia.

Accept, Excellency, the renewed assurances of my highest

consideration.

Ve

Certified as a true copy of the original. May 20, 1988

Edward J. MtChal
American Consul



oe

Office of the United States Representative
Kolonia, February 13, 1988

Excellency:

I have the honor to refer to conversations which have
recently taken place between representatives of our two
Governments relating to economic activities in the Federated
States of Micronesia which promote the development of the
economic resources and productive capacities of the
Federated States of Micronesia and to investment insurance
(including reinsurance) and guaranties which are backed in
whole or in part by the the credit or public monies of the
United States of America and are administered either
directly by the Overseas Private Investment Corporation
(“OPIC"), an independent government corporation organized
under the laws of the United States of America, or pursuant
to arrangements between OPIC and commercial insurance,
reinsurance and other companies. I also have the honor to
confirm the following understandings reached as a result of

those conversations:

His Excellency
Andon L. Amaraich
Secretary of External Affairs of

The Federated States of Micronesia


Department of External Affairs
Kolonia, Pohnpei
Federated States of Micronesia
03 March 1988
Ref: DEA/011-88

@ Excellency:

I have the honor to acknowledge receipt of your note
dated 13 February 1988, setting out the Proposed
understandings between your Government and the Government of
the Federated States of Micronesia with respect to
investment insurance (including reinsurance) and guaranties
administered either directly by the Overseas Private
Investment Corporation ("OPIC"), or pursuant to arrangements
between OPIC and commercial insurance, reinsurance and other
companies,

I have the further honor to inform you that the |
) understandings. stated in your note are acceptable to the
Government of the Federated States of Micronesia, Tt is
agreed that this exchange of notes consisting of your note
dated 13 February 1988 and this reply note constitutes an rb
agreement between our two Governments, which shall enter [
i

@ into force on the date of this note. :
i

T have the further honor to inform you that the !
President of the Federated States of Micronesia has i
designated the Secretary of Resources and Development to
serve in the Capacity set forth in Article 2 of the [

understandings contained in your note. Should a change be
Proposed in this respect, the Government of the Federated t
States of Micronesia will Promptly notify your Government. i

Accept, Excellency, the renewed assurances of my
highest consideration.

Secretary oe External Affairs |

His Excellency,
r The Honorable Michael Wygant
: Ambassador of the United States of America

Kolonia, Pohnpei


Article 1

As used herein, the term "Coverage" shall refer to any
investment insurance, reinsurance or guaranty which is
issued in accordance with this Agreement by OPIC, by any
successor agency of the United States of America or by any
other entity or group of entities, pursuant to arrangements
with OPIC or any successor agency, all of whom are
hereinafter deemed included in the term "Issuer" to the
extent of their interest as insurer, reinsurer, or
guarantor in any Coverage, whether as a party or successor
to a contract providing Coverage or as an agent for the
administration of Coverage.

Article 2

The procedures set forth in this Agreement shall apply
only with respect to Coverage relating to projects or
activities, including contracts involving the provision of
goods or services, registered with or otherwise approved by
the Government of the Federated States of Micronesia
through the President of the Federated States of Micronesia
or his designee, whose identity shall be specified in
writing, or to Coverage relating to projects with respect
to which the Government of the Federated States of
Micronesia, or any agency or political subdivision thereof,
has entered into a contract involving the provision of
goods or services.

Article 3

(a) If the Issuer makes payment to any party under
Coverage, the Government of the Federated States of
Micronesia shall, subject to the provisions of Article 4
hereof, recognize the transfer to the Issuer of any
currency, credits, assets, or investment on account of
which payment under such coverage is made as well as the
succession of the Issuer to any right, title, claim,
privilege, or cause of action existing, or which may arise,
in connection therewith.


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(b) The Issuer shall assert no greater rights than
those of the transferring party under Coverage with respect
to any interests transferred or succeeded to under this
Article. Nothing in this Agreement shall limit the right
of the Government of the United States of America to assert
a claim under international law in its sovereign capacity,
as distinct from any Tights it may have as Issuer.

(c) The issuance of Coverage outside of the Federated
States of Micronesia with respect to a project or activity
in the Federated States of Micronesia shall not subject the
Issuer to regulation under the laws of the Federated States
of Micronesia applicable to insurance or financial
organizations.

(d) Funds introduced or acquired in the Federated
States of Micronesia or withdrawn from the Federated States
of Micronesia by the Issuer shall be exempt from all taxes
upon income, real property or sales, from customs duties,
and from any other similar taxes or levies in the Federated
States of Micronesia.

Article 4

To the extent that the laws of the Federated States of
Micronesia partially or wholly invalidate or prohibit the
acquisition from a party under Coverage of any interest in
any property within the territory of the Federated States
of Micronesia by the Issuer, the Government of the
Federated States of Micronesia shall permit such party and
the Issuer to make appropriate arrangements pursuant to
which such interests are transferred to an entity permitted
to own such interests under the laws of the Federated
States of Micronesia.

Article 5

Amounts in the lawful currency of the Federated States
of Micronesia, including credits thereof, acquired by the
Issuer by virtue of such Coverage shall be accorded
treatment by the Government of the Federated States of