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4

Governments on this subject, and enter into force on the date of
your reply. 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 a request for the termination of 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.

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

Leonagp Woopcock

Leonard Woodcock
Ambassador of the United States
to the People’s Republic
of Ohina
His Excellency
Zane WENSIN
Vice Minister of Foreign Affairs

Beijing, People’s Republic of China

TIAS 9924


Ww

STATEMENT OF PAUL R. GILBERT, VICE PRESIDENT AND GENERAL

COUNSEL, OVERSEAS PRIVATE INVESTMENT CORPORATION, REGARDING

0.8. - CHINA INVESTMENT INCENTIVE AGREEMENT, MADE ORALLY TO .

CHINESE DELEGATION ON OCTOBER 4, 1980 AND DELIVERED BY HAND OR
OCTOBER 7, 1980

With respect to Article 7 of the Agreement, the

Government of the United States of America wishes to informs

the Government of the People's Republic of China that
the United States Government interprets Article 7 to mean
that an exchange of notes taking action contemplated by

Article 7 will be subject to the legal requirements in the

United States of America for taking such action, including

any necessary inplementing legislation.

bit Milla —~

Paul R. Gilbert
Vice President and General
Counsel

Overseas Private Investeent
Corporation

TIAS 9924

U.S. GOVERNMENT PRINTING OFFICE : 1981 0 = 78-223



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TIAS 9924


A O}

TREATIES AND OTHER

INTERNATIONAL ACTS SERIES 9924

FINANCE

Investment Guaranties

Agreement Between the
Unitep States or AMERICA
and the Peopie’s Repusuic
oF CHINA

Effected by Exchange of Notes
Signed at Beijing October 30, 1980

with
Related Notes
and

Related Letter and Statement
Signed at Beijing October 7, 1980


ll
[RELATED NOTES}

EMBASSY OF THE
UNITED STATES OF AMERICA

October $0, 1980

Excewencr:

I have the honor to refer to the Investment Incentive Agreement
between the Government of the United States of America and the
Government of the People’s Republic of China, effected by an ex-
change of notes on October 30, 1980 (the “Agreement”), relating
to investment insurance and investment guaranties which are admin.
istered by the Overseas Private Investment Corporation (“OPIC”).

Article 2 of the Agreement states that the procedures set forth in
the Agreement shall apply only with Tespect to coverage of invest-
ments relating to projects or activities approved by the Govern-
ment of the People’s Republic of Chins. I wish to confirm my under-
standing that for purposes of Article 2 of the Agreement, the procedure
for approval by the Government of the People’s Republic of China
shall be as follows:

(1) Approval of a project or activity by the Foreign Investment
Commission (“FIC”) shall constitute approval by the Government

A)
of the People’s Republic of China for purposes of Article 2 of then gu

Agreement. After a project or activity has received such approval,
investment insurance or guaranties issued by OPIC for investments
which are related to such project or activity shall be governed by the
Procedures set forth in the Agreement. Such related investments
include the following:

(a) equity investments and loans by investors in projects or
activities approved by FIC;

(b) loans from financial institutions to projects or activities
approved by FIC; and

(c) transfer of technology, service and Management agreements
with projects or activities approved by FIC.

(2) For purposes of Article 2 of the Agreement, any project or
activity approved by the Administrative Commissions for Special
Economic Zones of concerned provinces in accordance with Chinese
legislation shall be deemed as approval by the Chinese Government.

(3) In case of a project or activity which does not require the
approval set forth in (1) or (2) above, upon request by the Govern-
ment of the United States of America, FIC shall as soon as possible
advise it of the appropriate agency or instrumentality of the Govern-
ment of the People’s Republic of China to issue such approval on
behalf of the Chinese Government and shall inform the United States

TIAS 9924


eo. .

TRANSLATION

Ministry of Foreign Affairs
People's Republic of China

Beijing October 30, 1980
Note No. (80) Bu Meida 1149

His Excellency

Leonard Woodcock

Ambassador Extraordinary and
Minister Plenipotentiary of
the United States of America
to the People's Republic of
China

Beijing, People's Republic of
China

Excellency:
I have the honor to acknowledge the receipt of your

- note of October 30, 1980, which reads:

[For the English language text, see pp. 1-4 a

On behalf of the Government of the People’s Republic

@ of China, I have the honor to confirm our agreement to the
contents of the above note.

Please accept, Excellency, the renewed assurances of

my highest consideration.

Zhang Wenjin
Vice Minister of Foreign Affairs
People's Republic of China

TIAS 9924


1

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TIAS 9924


3

of one of the Governments, involves a question of public international
law arising out of any investment or project or activity relating to
such investment 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 request for negotiations
the two Governments have not resolved the dispute by agreement, the
dispute, including the question of whether such dispute presents a
question of public international law, shall be submitted, at the initia-
tive 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 Govern-
ments. The arbitrators shall be appointed within two months and the
President within three months of the date of receipt of either Govern-
ment’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
United Nations to make the necessary appointment or appointments,
and both Governments agree to accept such appointment or
appointments.

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

(iii) Each Government 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 cost 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

The two Governments, desiring reciprocity, agree that, in the event
the Government of the People’s Republic of China is authorized under
its laws to issue coverage for investments in any project or activity
within the United States of America under a program similar to the
investment incentive program to which this Agreement relates, there
shall be, upon the request of either Government, an exchange of
notes to make applicable, with respect to such investments made in
the United States of America, provisions equivalent to those of this
Agreement.

ARTICLE 8

Upon receipt of a note of confirmation from Your Excellency on
behalf of the Government of the People’s Republic of China indi-
cating that the foregoing provisions are acceptable, this note and
your reply thereto shall constitute an Agreement between our two

TIAS 9924


4
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TIAS 9924


16

[RELATED LETTER]

October 7 , 1980

Mr. Chen Shuzhi
Vice President

Chinese International Trust
and Inveetwent Corporation
Beijing, China

Dear Mr. Chen:

In connection with our discussions relating to the Investment
Incentive Agreement covering the procedures for the operation
of the investment insurance progrems of the Overseas Private
Investment Corporation ("OPIC"), you have inquired as to

. Whether the issuance by OPIC of investment insurance covering

losses resulting from war, revolution, and insurrection

would create an obligation for the Government of the People's
Republic of China. I wish to infora you that the issuance of
Such coverage would not obligate the Government of the People's
Republic of China to reimburse the ineured investor or OPIC
for losses resulting from var, Fevolution, or insurrection.

Sincerely yours,

Poe LE Mg —

ul R. Gilbere
Vice President and General Counsel
Overseas Private Investwent Corporation

TIAS 9924


2

ARTICLE 2

The procedures set forth in this Agreement shall apply only with ‘ ats

respect to Coverage of investments relating to projects or activities
approved by the Government of the People’s Republic of China.

ARTICLE 3

(a) If the Issuer makes payment to any investor under Coverage,
the Government of the People’s Republic of China 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, or cause of action existing, or
which may arise, in connection therewith, subject to existing legal
obligations.

(b) The Issuer shall assert no greater rights than those of the
transferring investor with respect to any interests transferred or suc-
ceeded to under this paragraph. The Government of the United States
of America does, however, reserve its rights to assert a claim in its
sovereign capacity under international law.

ARTICLE 4

To the extent that the laws of the People’s Republic of China
partially or wholly invalidate or prohibit the acquisition from «

covered investor of any interest in any property within the territory *

of the People’s Republic of China by the Issuer, the Government of
the People’s Republic of China shall permit such investor 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 People’s Republic of China.

ARTICLE 5

Amounts in the lawful currency of the People’s Republic of China,
including credits thereof, acquired by the Issuer by virtue of such
Coverage shall be accorded treatment by the Government of the
People’s Republic of China no less favorable as to use and conversion
then the treatment to which such funds would be entitled in the hands
of the covered investor. Such amounts and credits shall be freely
available for use by the Government of the United States of America
to meet its expenditures in the territory of the People’s Republic of
China. Such amounts and credits may also be transferred by the
Issuer to any person or entity agreed by the Government of the Peo-
ple’s Republic of China for use by such person or entity in the territory
of the People’s Republic of China.

ARTICLE 6

(a) Any dispute between the Government of the United States of \
America and the Government of the People’s Republic of China re-
garding the interpretation of this Agreement or which, in the opinion

TIAS 9924


PEOPLE’S REPUBLIC OF CHINA

Finance: Investment Guaranties

Agreement effected by exchange of notes
Signed at Beijing October 30, 1980;
Entered into force October 30, 1980.

With related notes.

And related letter and statement

Signed at Beijing October 7, 1980.

The American Ambassador to the Chinese Vice Minister of Foreign
Affairs

EMBASSY OF THE

UNITED STATES OF AMERICA .

Note No. 438. Berne, October $0, 1980

Exce.iency:

I have the honor to refer to conversations which have recently
teken place on the basis of equality and mutual benefit between
representatives of the Government of the United States of America
and of the Government of the People’s Republic of China relating
to investments in the People’s Republic of China and to investment
insurance (including reinsurance) and investment guaranties which
are administered by the Overseas Private Investment Corporation
(“OPIC”), an independent government corporation organized under
the laws of the United States of America. On behalf of the Govern-
ment of the United States of America, I also have the honor to
confirm the following understandings reached as a result of those
conversations:

ARTICLE 1

As used herein, the term “Coverage” shall refer to any invest-
ment insurance (including reinsurance) against loss from political
risk or to any investment guaranty which is issued in accordance
with this Agreement by OPIC or by any successor United States
Government agency, OPIC and any such successor being herein-
after referred to as the “Issuer” to the extent of its interest as in-
surer or reinsurer in any Coverage.

78-123 O—81 qa TIAS 9924


\

12

Government of the decision of such agency or instrumentality for
purposes of Article 2 of the Agreement.

I would be grateful for your confirmation that this is also your
understanding.

Accept, Excellency, the renewed assurances of my highest con-
sideration.

Lgonarp Woopcock

Leonard Woodcock
Ambassador of the United States
to the People's Republic
of China
His Excellency
Zaane WENJIN

Vice Minister of Foreign Affairs
Beijing, People’s Republic of China

TIAS 9924


15

TRANSLATION

Beijing October 30, 1960

Ambassador Extra‘ and
Minister Plenipotenciaty of
the United States of America

to the les lic of
Peop: Repub:
Beijing, People's Republic of

Excellency:

I have the honor to refer to the Investment Incentive
Agreement between our two Governments and to your letter
of today’s date which reads:

(For the English language text, see pp. 11-12.)

On behalf of the Government of the People's Republic
of China, I have the honor to confirm our agreement to the
contents of the above letter.

Please accept, Excellency, the renewed assurances of

my highest consideration.

thang Wenjin
Vice Minister of Foreign Affairs
People's Republic of China

TIAS 9924