AGREEMENT
BETWEEN THE GOVERNMENT OF THE RUSSIAN FEDERATION
AND THE GOVERNMENT OF THE PEOPLE`S REPUBLIC OF CHINA
ON THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS
(Beijing, 9.XI.2006)
The Government of the Russian Federation and the Government of the People`s Republic of China (hereinafter referred to as the Contracting Parties), Intending to create favorable conditions for investments by
investors of one Contracting Party in the territory of the other
Contracting Party;
Recognizing that the reciprocal encouragement, promotion and
protection of such investments will be conducive to stimulating
business initiative of the investors and will increase prosperity in
both States;
Desiring to intensify the cooperation of both States on the basis
of equality and mutual benefits;
Have agreed as follows:
Article 1
Definitions
For the purpose of this Agreement,
1. The term "investment" means every kind of asset invested by
investors of one Contracting Party in accordance with the laws and
regulations of the other Contracting Party in the territory of the
latter, and in particularly, though not exclusively, includes:
a) movable and immovable property as well as any property rights;
b) shares, stocks and any other kind of participation in the
capital of commercial organizations;
c) claims to money or to any other performance having an economic
value associated with an investment;
d) intellectual property rights, in particularly copyrights,
patents, trade-marks, trade-names, technology and technical process,
know-how and good-will;
e) business concessions conferred by law or under contract
permitted by law, including concessions to search for, cultivate,
extract or exploit natural resources.
Any change in the form in which assets are invested does not
affect their character as investments if such change does not
contradict the laws and regulations of the Contracting Party in which
territory the investments were made.
2. The term "investor" means:
a) natural persons who have nationality of the State of either
Contracting Party in accordance with the laws and regulations of that
Contracting Party;
b) legal entities, including companies, associations,
partnerships and other organizations, established or constituted under
the laws and regulations of either Contracting Party and having their
seats in the territory of that Contracting Party.
3. The term "return" means the amounts yielded from investments,
in particular though not exclusive including profits, dividends,
interests, capital gains, royalties and other fees related to
investments.
4. The term "activities" means the management, maintenance, use,
enjoyment and disposal of admitted investment.
5. The term "territory of the Contracting Party" means:
- the territory of the Russian Federation and the territory of
the People`s Republic of China respectively;
- maritime areas, beyond the external boundaries of the
territorial sea of each of the above territories over which the
respective Contracting Party exercises in accordance with
international law its sovereign rights or jurisdiction for the purpose
of exploration, extraction, exploitation and preservation of natural
resources of such areas.
6. The term "laws and regulations of the Contracting Party" means
the laws and other regulations of the Russian Federation or the laws
and other regulations of the People`s Republic of China.
Article 2
Promotion and protection of investment
1. Each Contracting Party shall aspire to create favorable
conditions to investors of the other Contracting Party to make
investments in its territory and admit such investments in accordance
with its laws and regulations.
2. Each Contracting Party shall, in accordance with its laws and
regulations, provide full protection on in its territory to
investments of investors of the other Contracting Party.
3. Without prejudice to its laws and regulations, each
Contracting Party shall favorably consider granting visas and working
permits to nationals of the other Contracting Party engaging engaged
in activities associated with investments made in the territory of the
former Contracting Party.
Article 3
Treatment of investment
1. Each Contracting Party shall ensure in its territory fair and
equitable treatment of the investments made by investors of the other
Contracting Party and activities in connection with such investments.
Without prejudice to its laws and regulations, neither
Contracting Party shall take any discriminatory measures that might
hinder management and disposal activities in connection with of
investments.
2. Without prejudice to its laws and regulations, each
Contracting Party shall accord to investments and activities connected
in connection with such investments by investors of the other
Contracting Party treatment not less favourable than that accorded to
the investments and activity activities connected with such
investments by its own investors.
3. Neither Contracting Party shall subject investments and
activities connected with such investments by the investors of the
other Contracting Party to treatment less favorable than that accorded
to the investments and activities in connection with such investments
by the investors of any third State.
4. The provisions of Paragraphs 3 of this Article shall not be
construed so as to oblige one Contracting Party to extend to
investments by the investors of the other Contracting Party the
benefit of any treatment, preference or privilege by virtue of:
a) agreements establishing free trade area, customs unions,
economic unions, monetary unions or similar institutions, or on the
basis of interim agreements leading to such unions or institutions;
b) international agreements or international arrangements
relating to taxation;
c) agreements between the Russian Federation and the states,
which had earlier formed part of the Union of Soviet Socialist
Republics, related to the investment in term of this Agreement.
The Agreements mentioned in this paragraph 4 of this Article
shall be compatible with the WTO commitments of either the former of
the Contracting Parties Party in respect of the issues covered by the
WTO Agreements.
5. Without prejudice to the provisions of the Articles 4, 5 and 9
of this Agreement the Contracting Parties may accord the treatment no
more favourable than the treatment granted by the Contracting Parties
in accordance with the multilateral arrangements concerning the
treatment of investments in which both Contracting Parties
participate.
Article 4
Expropriation
1. Neither Contracting Party shall expropriate, nationalize or
take other similar measures (hereinafter referred to as
"expropriation") against the investments of the investors of the other
Contracting Party in its territory, unless the measures are taken for
the public interests and meet all of the following conditions:
(a) under domestic legal procedure;
(b) without discrimination;
(c) against compensation.
2. The compensation mentioned in paragraph 1 of this Article
shall be equivalent to the market value of the expropriated
investments immediately before the expropriation is taken or the
impending expropriation becomes public knowledge, whichever is
earlier. The value shall be determined in accordance with generally
recognized principles of valuation. The compensation shall include
interest calculated from the date of expropriation until the date of
payment at the LIBOR rate for six months US dollar credits. The
compensation shall be paid without delay in any freely convertible
currency.
Article 5
Compensation for losses
Investors of one Contracting Party whose investments suffer
losses in the territory of the other Contracting Party as a result of
war, civil disturbance, a state of national emergence or other similar
events shall be accorded by the latter Contracting Party treatment, as
regards restitution, indemnification, compensation and other
settlements in relation to such losses no less favorable than that
accorded in like circumstances to the investors of its own or any
third State, whichever is more favorable.
Article 6
Transfer of payments
1. Each Contracting Party shall, subject to its own laws and
regulations, guarantee to the investors of the other Contracting Party
upon fulfillment by them of all tax obligations a free transfer abroad
of payments related to their investments made in its territory, and in
particular:
(a) returns as defined in Article 1 of this Agreement;
(b) proceeds obtained from the total or partial sale or
liquidation of investments;
(c) payments on loans and credits;
(d) earnings of nationals of the State of other Contracting Party
who work in connection with an investment in the territory of the
former Contracting Party;
(e) payments arising out of the settlement of an investment
dispute under Article 9 of this Agreement;
(f) compensation stipulated in Article 4 and Article 5 of this
Agreement.
2. The payments, mentioned in paragraph 1 of the present Article,
could be, freely converted in any freely convertible currency pursuant
to the laws and regulations of the Contracting Party in the territory
of which the investments were made at the market rate of exchange
applicable on the date of conversion.
3. The payments shall be remitted without delay in a freely
convertible currency pursuant to the existing foreign exchange laws
and regulations of the Contracting Party in the territory of which the
investments were made.
Article 7
Subrogation
1. If one Contracting Party provides financial indemnity against
non-commercial risks to its investor with regard to the investment
made in the territory of the other Contracting Party and makes a
payment to such investor under indemnity, the other Contracting Party
shall recognize acquirement of all the rights and claims of such
investor by the former Contracting Party by law or by legal
transactions by virtue of subrogation.
2. However, the rights or claims shall not exceed the original
rights or claims of such investor by virtue of subrogation, neither
prejudice all the original rights or claims of such investor the other
Contracting Party has acquired.
Article 8
Settlement of disputes between Contracting Parties
1. Any dispute between the Contracting Parties concerning the
interpretation or application of this Agreement shall, as far as
possible, be settled with consultation through diplomatic channel.
2. If a dispute cannot thus be settled within six months, it
shall, upon the request of either Contracting Party, be submitted to
an ad hoc arbitral tribunal.
3. Such arbitral tribunal comprises of three arbitrators. Within
two months of the receipt of the written notice requesting
arbitration, each Contracting Party shall appoint one arbitrator.
Those two arbitrators shall, within further two months, together
select a national of a third State agreed by both Contracting Parties
as Chairman of the arbitral tribunal.
4. If the arbitral tribunal has not been constituted within four
months from the receipt of the written notice requesting arbitration,
either Contracting Party may, in the absence of any other agreement,
invite the President of the International Court of Justice to make any
necessary appointments. If the President is a national of either
Contracting Party or is otherwise prevented from discharging the said
functions, the Member of the International Court of Justice next in
seniority who is not a national of either Contracting Party or is not
otherwise prevented from discharging the said functions shall be
invited to make such necessary appointments.
5. The arbitral tribunal shall determine its own procedure. The
arbitral tribunal shall reach its award in accordance with the
provisions of this Agreement and the principles of international law
recognized by both Contracting Parties.
6. The arbitral tribunal shall reach its award by a majority of
votes. Such award shall be final and binding upon both Contracting
Parties. The arbitral tribunal shall, upon the request of either
Contracting Party, explain the reasons of its award.
7. Each Contracting Party shall bear the costs of its appointed
arbitrator and of its representation in arbitral proceedings. The
relevant costs of the Chairman and tribunal shall be borne in equal
parts by the Contracting Parties.
Article 9
Settlement of disputes between one Contracting Party and
an investor of the other Contracting Party
1. Any dispute between a Contracting Party and an investor of the
other Contracting Party, related to an investment, shall be as far as
possible settled amicably through negotiations.
2. If the dispute cannot be settled amicably through negotiations
within six months from the date it has been raised by either party to
the dispute, it shall be submitted:
a) to the competent court of the Contracting Party that is a
party to the dispute; or
b) to the International Center Centre for Settlement of
Investment Disputes (the Centre) under the Convention on the
Settlement of Investment Disputes between States and Nationals of
Other States, done at Washington on March 18, 1965 (subject to it
entered into force for both Contracting Parties) or Additional
Facility Rules of International Centre for Settlement of Investment
Disputes (provided that the Convention has not entered into force for
either Contracting Party); or
c) to an ad hoc arbitration court in accordance with the
Arbitration Rules of the United Nations Commission on International
Trade Law (UNCITRAL).
3. Once the investor has submitted the dispute to the competent
court of the concerned Contracting Party or to the Centre or to the ad
hoc arbitration court, the choice of one of the three procedures shall
be final.
4. The arbitration award shall be based on:
- the provisions of this Agreement;
- the laws and other regulations of the Contracting Party in
whose territory the investment has been made including the rules
relative to conflict of laws; and
- the rules and universally accepted principles of international
law.
5. The arbitration award shall be final and binding on both
parties to the dispute. Each Contracting Party ensures enforcement of
this award in accordance with its legislation laws and other
regulations.
Article 10
Other obligations
If the provisions of laws and regulations of either Contracting
Party or obligations under international treaties existing at present
or established hereafter between the Contracting Parties in addition
to this Agreement contain the provisions entitling investments by
investors of the other Contracting Party to a treatment more favorable
than is provided for by the Agreement, such provisions shall, to the
extent that they are more favourable to the investor, prevail over
this Agreement.
Article 11
Application
1. This Agreement shall apply to all investments made by
investors of one of the Contracting Parties in the territory of the
other Contracting Party beginning from January 1st 1985, but shall not
apply to the disputes that arose before the entry into force of this
Agreement.
2. Each Contracting Party shall observe commitments it may have
entered into with the investors of the other Contracting Party under
this Agreement as regards to their investments.
Article 12
Consultations
The Contracting Parties shall consult, at the request of either
of them, on the matter concerning the interpretation or application of
this Agreement. Where either Contracting Party requests such
consultation, the other Contracting Party shall give prompt response.
Article 13
Entry into force, duration and termination
1. This Agreement shall enter into force on the first day of the
following month after the date on which both Contracting Parties have
notified each other in writing that their respective internal legal
procedures necessary therefore have been fulfilled and remain in force
for a period of ten years.
2. This Agreement shall remain in force for a period of ten
years. Upon expiration of this period it shall automatically extend
for subsequent periods of five years unless one of the Contracting
Party Parties notifies the other Contracting Party in writing at least
twelve months in advance of the expiration of the respective five year
period of its intention to terminate this Agreement.
3. With respect to investments made prior to the date of
termination of this Agreement, the provisions of Article 1 to 12 of
this Agreement shall continue to be effective for a further period of
ten years from such date of termination.
4. The Agreement between the Government of the People`s Republic
of China and the Government of the Union of Soviet Socialist Republics
on the Promotion and Protection of Investments between the People`s
Republic of China and the Union of Soviet Socialist Republics signed
on the 21st of July, 1990, shall be automatically terminated in the
relations between the Russian Federation and the People`s Republic of
China on the date of entry into force of the this Agreement.
5. This Agreement is supplemented by a Protocol of to this
Agreement and constituting an integral part of this Agreement.
In witness whereof the undersigned, duly authorized thereto by
respective Governments, have signed this Agreement.
Done in duplicate at Beijing on November 9, 2006 in the Russian,
Chinese and English languages, all texts being equally authentic. In
case of divergent interpretation, the English text shall prevail.
PROTOCOL
TO THE AGREEMENT BETWEEN THE GOVERNMENT
OF THE RUSSIAN FEDERATION AND THE GOVERNMENT
OF THE PEOPLE`S REPUBLIC OF CHINA ON THE PROMOTION
AND RECIPROCAL PROTECTION OF INVESTMENTS
(Beijing, 9.XI.2006)
On the signing of the Agreement on Promotion and Reciprocal
Protection of Investments between the Government of the Russian
Federation and the Government of the People`s Republic of China
(hereinafter referred to as the Agreement), the undersigned
representatives have agreed on the following provisions which
constitute an integral part of the Agreement:
1. Unless otherwise agreed by both Contracting Parties, the
Agreement does not apply to the Hong Kong Special Administrative
Region of the People`s Republic of China and the Macao Special
Administrative Region of People`s Republic of China.
2. Ad Article 3
The Chinese side takes the note that, with reference of Paragraph
5 in Article 3 of the Agreement, the Russian Federation considers the
WTO General Agreement on Trade in Services falling within the scope of
multilateral arrangements concerning the treatment of investments.
3. Ad Article 9
Before the submission of a dispute mentioned in Article 9 of the
Agreement to instances stipulated in paragraphs 2b and 2c of the said
Article the Contracting Party involved in the dispute may require the
investor concerned to go through domestic administrative review
procedures specified by the laws and regulations of that Contracting
Party. Such domestic administrative review procedures:
1. shall be applied on the most favoured nation treatment basis;
2. shall not in any case take a period of more than 90 days from
the date when the administrative review body accepts the investor`s
application for administrative review procedures. In any case when the
administrative review body does not accept the said application or
fails to reply within the said 90-day period after it accepts the
application, the investor concerned is entitled to submit the dispute
to the instances mentioned in paragraph 2b and 2c of Article 9 of the
Agreement;
3. shall not prevent the investor from submitting the dispute for
resolution to the Center Centre or ad hoc arbitration court in
accordance with the provisions of paragraph 2b and 2c of Article 9 of
the Agreement;
4. shall not substitute any arbitration procedure or instance
mentioned in paragraph 2b and 2c of Article 9 of the Agreement.
Done in duplicate at Beijing on November 9, 2006 in the Russian,
Chinese and English languages, all texts being equally authentic. In
case of divergent interpretation, the English text shall prevail.
