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13065 Bahrain - Treaty Concerning the Encouragement and Reciprocal Protection of Investment


   
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TREATIES AND OTHER INTERNATIONAL ACTS SERIES 13065

 

 

INVESTMENT

 

 

 

Treaty Between the
UNITED STATES OF AMERICA
and BAHRAIN


Signed at Washington September 29, 1999


with


Annex

 

 

 


NOTE BY THE DEPARTMENT OF STATE

Pursuant to Public Law 89—497, approved July 8, 1966
(80 Stat. 271; 1 U.S.C. 113)—

“. . .the Treaties and Other International Acts Series issued
under the authority of the Secretary of State shall be competent
evidence . . . of the treaties, international agreements other than
treaties, and proclamations by the President of such treaties and
international agreements other than treaties, as the case may be,
therein contained, in all the courts of law and equity and of maritime
jurisdiction, and in all the tribunals and public offices of the
United States, and of the several States, without any further proof
or authentication thereof.”


 

 

 

 


BAHRAIN

Investment

Treaty signed at Washington September 29, 1999;
Transmitted by the President of the United States of America
to the Senate May 23, 2000 (Treaty Doc. 106-25,
106th Congress, 2d Session);
Reported favorably by the Senate Committee on Foreign Relations
September 27, 2000 (Senate Executive Report No. 106-23,
106th Congress, 2d Session);
Advice and consent to ratification by the Senate
October 18, 2000;
Ratified by the President February 7, 2001;
Ratified by Bahrain April 29, 2001;
Ratifications exchanged at Manama April 30, 2001;
Entered into force May 30, 2001.

 

 

 

 

 

 

 

 

 

 

TREATY BETWEEN
THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND
THE GOVERNMENT OF THE STATE OF BAHRAIN
CONCERNING THE ENCOURAGEMENT
AND RECIPROCAL PROTECTION OF INVESTMENT
The Government of the United States of America and the
Government of the State of Bahrain (hereinafter the
"Parties");
Desiring to promote greater economic cooperation
between them, with respect to investment by nationals and
companies of one Party in the territory of the other Party;
Recognizing that agreement upon the treatment to be
accorded such investment will stimulate the flow of private
capital and the economic development of the Parties;
Agreeing that a stable framework for investment will
maximize effective utilization of economic resources and
improve living standards;
Recognizing that the development of economic and
business ties can promote respect for internationally
recognized worker rights;
Agreeing that these objectives can be achieved without
relaxing health, safety and environmental measures of
general application; and
Having resolved to conclude a Treaty concerning the
encouragement and reciprocal protection of investment;
Have agreed as follows:
-2-
ARTICLE 1
For the purposes of this Treaty,
(a) "company" means any entity constituted or organized
under applicable law, whether or not for profit,
and whether privately or governmentally owned or
controlled, and includes, but is not limited to, a
corporation, trust, partnership, sole
proprietorship, branch, joint venture,
association, or other organization;
(b) "company of a Party" means a company constituted or
organized under the laws of that Party;
(c) "national" of a Party means a natural person who is
a national of that Party under its applicable law;
(d) "investment" of a national or company means every
kind of investment owned or controlled directly or
indirectly by that national or company, and
includes, but is not limited to, investment
consisting or taking the form of:
(1) a company;
(2) shares, stock, and other forms of equity
participation, and bonds, debentures, and
other forms of debt interests, in a company;
(3) contractual rights, such as under turnkey,
construction or management contracts,
production or revenue-sharing contracts,
concessions, or other similar contracts;
(4) moveable and immovable property; and
intangible property, including, but not
limited to, rights, such as leases,
mortgages, liens and pledges;
(5) intellectual property, including, but not
limited to:
copyrights and related rights,
patents,
rights in plant varieties,
industrial designs,
rights in semiconductor layout designs,
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trade secrets, including, but not limited to,
know-how and confidential business
information,
trade and service marks, and
trade names; and
(6) rights conferred pursuant to law, such as
licenses and permits;
(e) "covered investment" means an investment of a
national or company of a Party in the territory of
the other Party;
(f) "state enterprise" means a company owned, or
controlled, through ownership interests, by a
Party;
(g) "investment authorization" means an authorization
granted by the foreign investment authority of a
Party to a covered investment or a national or
company of the other Party;
(h) "investment agreement" means a written agreement
between the national authorities of a Party and a
covered investment or a national or company of the
other Party that (1) grants rights with respect to
natural resources or other assets controlled by
the national authorities and (2) the investment,
national or company relies upon in establishing or
acquiring a covered investment;
(i) "ICSID Convention" means the Convention on the
Settlement of Investment Disputes between States
and Nationals of Other States, done at Washington,
March 18, 1965;
(j) "Centre" means the International Centre for
Settlement of Investment Disputes Established by
the ICSID Convention; and
(k) "UNCITRAL Arbitration Rules" means the arbitration
rules of the United Nations Commission on
International Trade Law.
ARTICLE 2
1. With respect to the establishment, acquisition,
expansion, management, conduct, operation and sale or other
disposition of covered investments, each Party shall accord
treatment no less favorable than that it accords, in like
situations, to investments in its territory of its own
nationals or companies (hereinafter "national treatment") or
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to investments in its territory of nationals or companies of
a third country (hereinafter "most favored nation
treatment"), whichever is most favorable (hereinafter
"national and most favored nation treatment"). Each Party
shall ensure that its state enterprises, in the provision of
their goods or services, accord national and most favored
nation treatment to covered investments.
2. (a) A Party may adopt or maintain exceptions to
the obligations of paragraph 1 in the sectors or with
respect to the matters specified in the Annex to this
Treaty. In adopting such an exception, a Party may not
require the divestment, in whole or in part, of covered
investments existing at the time the exception becomes
effective.
(b) The obligations of paragraph 1 do not apply to
procedures provided in multilateral agreements concluded
under the auspices of the World Intellectual Property
Organization relating to the acquisition or maintenance of
intellectual property rights.
3. (a) Each Party shall at all times accord to
covered investments fair and equitable treatment and full
protection and security, and shall in no case accord
treatment less favorable than that required by international
law.
(b) Neither Party shall in any way impair by
unreasonable and discriminatory measures the management,
conduct, operation, and sale or other disposition of covered
investments.
4. Each Party shall provide effective means of
asserting claims and enforcing rights with respect to
covered investments.
5. Each Party shall ensure that its laws,
regulations, administrative practices and procedures of
general application, and adjudicatory decisions, that
pertain to or affect covered investments are promptly
published or otherwise made publicly available.
ARTICLE 3
1. Neither Party shall expropriate or nationalize a
covered investment either directly or indirectly through
measures tantamount to expropriation or nationalization
("expropriation") except for a public purpose; in a
non-discriminatory manner; upon payment of prompt, adequate
and effective compensation; and in accordance with due
process of law and the general principles of treatment
provided for in Article 2, paragraph 3.
-5-
2. Compensation shall be paid without delay; be
equivalent to the fair market value of the expropriated
investment immediately before the expropriatory action was
taken ("the date of expropriation"); and be fully realizable
and freely transferable. The fair market value shall not
reflect any change in value occurring because the
expropriatory action had become known before the date of
expropriation.
3. If the fair market value is denominated in a
freely usable currency, the compensation paid shall be no
less than the fair market value on the date of
expropriation, plus interest at a commercially reasonable
rate for that currency, accrued from the date of
expropriation until the date of payment.
4. If the fair market value is denominated in a
currency that is not freely usable, the compensation paid --
converted into the currency of payment at the market rate of
exchange prevailing on the date of payment -- shall be no
less than:
(a) the fair market value on the date of
expropriation, converted into a freely usable
currency at the market rate of exchange
prevailing on that date, plus
(b) interest, at a commercially reasonable rate
for that freely usable currency, accrued from
the date of expropriation until the date of
payment.
ARTICLE 4
1. Each Party shall accord national and most favored
nation treatment to covered investments as regards any
measure relating to losses that investments suffer in its
territory owing to war or other armed conflict, revolution,
state of national emergency, insurrection, civil
disturbance, or similar events.
2. Each Party shall accord restitution, or pay
compensation in accordance with paragraphs 2 through 4 of
Article 3, in the event that covered investments suffer
losses in its territcry, owing to war or other armed
conflict, revolution, state of national emergency,
insurrection, civil disturbance, or similar events, that
result from:
(a) requisitioning of all or part of such
investments by the Party's forces or
authorities, or
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(b) destruction of all or part of such investments
by the Party's forces or authorities that was
not required by the necessity of the
situation.
ARTICLE 5
1. Each Party shall permit all transfers relating to
a covered investment to be made freely and without delay
into and out of its territory. Such transfers include, but
are not limited to:
(a) contributions to capital;
(b) profits, dividends, capital gains, and
proceeds from the sale of all or any part of
the investment or from the partial or
complete liquidation of the investment;
(c) interest, royalty payments, management fees,
and technical assistance and other fees;
(d) payments made under a contract, including, but
not limited to, a loan agreement; and
(e) compensation pursuant to Articles 3 and 4, and
payments arising out of an investment
dispute.
2. Each Party shall permit transfers to be made in a
freely usable currency at the market rate of exchange
prevailing on the date of transfer.
3. Each Party shall permit returns in kind to be made
as authorized or specified in an investment authorization,
investment agreement, or other written agreement between the
Party and a covered investment or a national or company of
the other Party.
4. Notwithstanding paragraphs 1 through 3, a Party
may prevent a transfer through the equitable,
non-discriminatory and good faith application of its laws
relating to:
(a) bankruptcy, insolvency or the protection of
the rights of creditors;
(b) issuing, trading or dealing in securities;
(c) criminal or penal offenses; or
(d) ensuring compliance with orders or judgments
in adjudicatory proceedings.
-7-
ARTICLE 6
Neither Party shall mandate or enforce, as a condition
for the establishment, acquisition, expansion, management,
conduct or operation of a covered investment, any
requirement (including, but not limited to, any commitment
or undertaking in cornection with the receipt of a
governmental permission or authorization):
(a) to achieve a particular level or percentage of
local content, or to purchase, use or
otherwise give a preference to products or
services of domestic origin or from any
domestic source;
(b) to limit imports by the investment of products
or services in relation to a particular
volume or value of production, exports or
foreign exchange earnings;
(c) to export a particular type, level or
percentage of products or services, either
generally or to a specific market region;
(d) to limit sales by the investment of products
or services in the Party's territory in
relation to a particular volume or value of
production, exports or foreign exchange
earnings;
(e) to transfer technology, a production process
or other proprietary knowledge to a national
or company in the Party's territory, except
pursuant to an order, commitment or
undertaking that is enforced by a court,
administrative tribunal or competition
authority to remedy an alleged or adjudicated
violation of competition laws; or
(f) to carry out a particular type, level or
percentage of research and development in the
Party's territory.
Such requirements do not include conditions for the receipt
or continued receipt of an advantage.
ARTICLE 7
1. (a) Subject to its laws relating to the entry and
sojourn of aliens, each Party shall permit to enter and to
remain in its territory nationals of the other Party for the
purpose of establishing, developing, administering or
advising on the operation of an investment to which they, or
-8-
a
company of the other Party that employs them, have
committed or are in the process of committing a substantial
amount of capital or other resources.
(b) Neither Party shall, in granting entry under
paragraph 1 (a), require a labor certification test or other
procedures of similar effect, or apply any numerical
restriction.
2. Each Party shall permit covered investments to
engage top managerial personnel of their choice, regardless
of nationality.
ARTICLE 8
The Parties agree to consult promptly, on the request
of either, to resolve any disputes in connection with the
Treaty, or to discuss any matter relating to the
interpretation or application of the Treaty or to the
realization of the objectives of the Treaty.
ARTICLE 9
1. For purposes of this Treaty, an investment dispute
is a dispute between a Party and a national or company of
the other Party arising out of or relating to an investment
authorization, an investment agreement or an alleged breach
of any right conferred, created or recognized by this Treaty
with respect to a covered investment.
2. A national or company that is a party to an
investment dispute may submit the dispute for resolution
under one of the following alternatives:
(a) to the courts or administrative tribunals of
the Party that is a party to the dispute; or
(b) in acccrdance with any applicable, previously
agreed dispute-settlement procedures; or
(c) in accordance with the terms of paragraph 3.
3. (a) Provided that the national or company
concerned has not submitted the dispute for resolution under
paragraph 2 (a) or (b), and that ninety days have elapsed
from the date on which the dispute arose, the national or
company concerned may submit the dispute for settlement by
binding arbitration:
(1) to the Centre, if the Centre is
available; or
-9-
(2) to the Additional Facility of the Centre,
if the Centre is not available; or
(3) in accordance with the UNCITRAL
Arbitration Rules; or
(4) if agreed by both parties to the dispute,
to any other arbitration institution or
in accordance with any other arbitration
rules.
(b) A national or company, notwithstanding that it
may have submitted a dispute to binding arbitration under
paragraph 3 (a), may seek interim injunctive relief, not
involving the payment of damages, before the judicial or
administrative tribunals of the Party that is a party to the
dispute, prior to the institution of the arbitral proceeding
or during the proceeding, for the preservation of its rights
and interests.
4. Each Party hereby consents to the submission of
any investment dispute for settlement by binding arbitration
in accordance with the choice of the national or company
under paragraph 3 (a) (1), (2), and (3) or the mutual
agreement of both parties to the dispute under paragraph 3
(a) (4). This consent and the submission of the dispute by
a national or company under paragraph 3 (a) shall satisfy
the requirement of:
(a) Chapter II of the ICSID Convention
(Jurisdiction of the Centre) and the
Additional Facility Rules for written consent
of the parties to the dispute; and
(b) Article II of the United Nations Convention on
the Recognition and Enforcement of Foreign
Arbitral Awards, done at New York, June 10,
1958, for an "agreement in writing."
5. Any arbitration under paragraph 3 (a) (2), (3) or
(4) shall be held in a state that is a party to the United
Nations Convention or the Recognition and Enforcement of
Foreign Arbitral Awards, done at New York, June 10, 1958.
6. Any arbitral award rendered pursuant to this
Article shall be final and binding on the parties to the
dispute. Each Party shall carry out without delay the
provisions of any such award and provide in its territory
for the enforcement of such award.
7. In any proceeding involving an investment dispute,
a Party shall not assert, as a defense, counterclaim, right
of set-off or for any other reason, that indemnification or
other compensation for all or part of the alleged damages
-10-
has been received or will be received pursuant to an
insurance or guarantee contract.
8. For purposes of Article 25 (2) (b) of the ICSID
Convention and this Article, a company of a Party that,
immediately before the occurrence of the event or events
giving rise to an investment dispute, was a covered
investment, shall be treated as a company of the other
Party.
ARTICLE 10
1. Any dispute between the Parties concerning the
interpretation or application of the Treaty, that is not
resolved through consultations or other diplomatic channels,
shall be submitted upon the request of either Party to an
arbitral tribunal for binding decision in accordance with
the applicable rules of international law. In the absence
of an agreement by the Parties to the contrary, the UNCITRAL
Arbitration Rules shall govern, except to the extent these
rules are (a) modified by the Parties or (b) modified by the
arbitrators unless either Party objects to the proposed
modification.
2. Within two months of receipt of a request, each
Party shall appoint an arbitrator. The two arbitrators
shall select a third arbitrator as chairman, who shall be a
national of a third state. The UNCITRAL Arbitration Rules
applicable to appointing members of three-member panels
shall apply mutatis mutandis to the appointment of the
arbitral panel except that the appointing authority
referenced in those rules shall be the Secretary General of
the Centre.
3. Unless otherwise agreed, all submissions shall be
made and all hearings shall be completed within six months
of the date of selection of the third arbitrator, and the
arbitral panel shall render its decisions within two months
of the date of the final submissions or the date of the
closing of the hearings, whichever is later.
4. Expenses incurred by the Chairman and other
arbitrators, and other costs of the proceedings, shall be
paid for equally by the Parties. However, the arbitral
panel may, at its discretion, direct that a higher
proportion of the costs be paid by one of the Parties.
ARTICLE 11
This Treaty shall not derogate from any of the
following that entitle covered investments to treatment more
favorable than that accorded by this Treaty:
(a) laws and regulations, administrative practices
or procedures, or administrative or
adjudicatory decisions of a Party;
(b) international legal obligations; or
(c) obligations assumed by a Party, including, but
not limited to, those contained in an
investment authorization or an investment
agreement.
ARTICLE 12
Each Party reserves the right to deny to a company of
the other Party the benefits of this Treaty if nationals of
a third country own or control the company and
(a) the denying Party does not maintain normal
economic relations with the third country; or
(b) the company has no substantial business
activities in the territory of the Party
under whose laws it is constituted or
organized.
ARTICLE 13
1. No provision of this Treaty shall impose
obligations with respect to tax matters, except that:
(a) Articles 3, 9 and 10 will apply with respect
to expropriation; and
(b) Article 9 will apply with respect to an
investment agreement or an investment
authorization.
2. With respect to the application of Article 3, an
investor that asserts that a tax measure involves an
expropriation may submit that dispute to arbitration
pursuant to Article 9, paragraph 3, provided that the
investor concerned has first referred to the competent tax
authorities of both Parties the issue of whether that tax
measure involves an expropriation.
3. However, the investor cannot submit the dispute to
arbitration if, within nine months after the date of
referral, the competent tax authorities of both Parties
determine that the tax measure does not involve an
expropriation.
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ARTICLE 14
1. This Treaty shall not preclude a Party from
applying measures which it considers necessary for the
fulfillment of its obligations with respect to the
maintenance or restoration of international peace or
security, or the protection of its own essential security
interests.
2. This Treaty shall not preclude a Party from
prescribing special formalities in connection with covered
investments, such as a requirement that such investments be
legally constituted under the laws and regulations of that
Party, or a requirement that transfers of currency or other
monetary instruments be reported, provided that such
formalities shall not impair the substance of any of the
rights set forth in this Treaty.
ARTICLE 15
1. (a) The obligations of this Treaty shall apply to
the political subdivisions of the Parties.
(b) With respect to the treatment accorded by a
State, Territory or possession of the United States of
America, national treatment means treatment no less
favorable than the treatment accorded thereby, in like
situations, to investments of nationals of the United States
of America resident in, and companies legally constituted
under the laws and regulations of, other States, Territories
or possessions of the United States of America.
2. A Party's obligations under this Treaty shall
apply to a state enterprise in the exercise of any
regulatory, administrative or other governmental authority
delegated to it by that Party.
ARTICLE 16
1. This Treaty shall enter into force thirty days
after the date of exchange of instruments of ratification.
It shall remain in force for a period of ten years and shall
continue in force unless terminated in accordance with
paragraph 2. It shall apply to covered investments existing
at the time of entry into force as well as to those
established or acquired thereafter.
2. A Party may terminate this Treaty at the end of
the initial ten year period or at any time thereafter by
giving one year's written notice to the other Party.
3. For ten years from the date of termination, all
other Articles shall continue to apply to covered
-13-
investments established or acquired prior to the date of
termination, except insofar as those Articles extend to the
establishment or acquisition of covered investments.
4. The Annex shall form an integral part of the
Treaty.

5. All dates and periods mentioned in this Treaty
shall be reckoned according to the Gregorian calendar.
IN WITNESS WHEREOF, the respective plenipotentiaries have
signed this Treaty.
DONE at Washington, this twenty-ninth day of September,
1999, in duplicate in the English and Arabic languages, each
text being authentic; however, in the case of divergence,
the English text shall prevail.
FOR THE GOVERNMENT OF
THE UNITED STATES
OF AMERICA:
FOR THE GOVERNMENT OF
THE STATE OF BAHRAIN:
ANNEX
1. The Government of the United States of America may
adopt or maintain exceptions to the obligation to accord
national treatment to covered investments in the sectors or
with respect to the matters specified below:
atomic energy; customhouse brokers; licenses for
broadcast, common carrier, or aeronautical radio
stations; COMSAT; subsidies or grants, including, but
not limited to, government-supported loans, guarantees
and insurance; state and local measures exempt from
Article 1102 of the North American Free Trade Agreement
pursuant to Article 1108 thereof; and landing of
submarine cables.
Most favored nation treatment shall be accorded in the
sectors and matters indicated above.
2. The Government cf the United States of America may
adopt or maintain exceptions to the obligation to accord
national and most favored nation treatment to covered
investments in the sectors or with respect to the matters
specified below:
fisheries; air and maritime transport, and related
activities; banking, insurance, securities, and other
financial services; and one-way satellite transmissions
of direct-to-home (DTH) and direct broadcast satellite
(DBS) television services and of digital audio
services.
3. The Government of the State of Bahrain may adopt or
maintain exceptions to the obligation to accord national
treatment to covered investments in the sectors or with
respect to the matters specified below:
ownership or control of television and radio
broadcasting and other forms of mass media; fisheries;
initial privatization of exploration or drilling for
crude oil.
Most favored nation treatment shall be accorded in the
sectors and matters indicated above.
4. The Government of the State of Bahrain may adopt or
maintain exceptions to the obligation to accord national and
most favored nation treatment to covered investments in the
sectors or with respect to the matters specified below:
air transportation; purchase or ownership of land; and
until 1 January 2005, purchase or ownership of shares
quoted on the Bahrain Stock Exchange.
-2-
5. Each Party agrees to accord national treatment to
covered investments in the following sectors:
leasing of minerals and pipeline rights-of-way on
government lands.



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