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Foreign Investment Insurance Agreement between Canada and the Republic of Indonesia [1973] CATSer 12 (24 October 1973)

E101487 - CTS 1973 No. 32

FOREIGN INVESTMENT INSURANCE AGREEMENT BETWEEN CANADA AND THE REPUBLIC OF INDONESIA

I

The Ambassador of Canada to the Minister of Foreign Affairs of the Republic of Indonesia

JAKARTA, March 16, 1973

Note No. 29

His Excellency Adam Malik,
Minister of Foreign Affairs,
Republic of Indonesia,
Jakarta

Excellency,

I have the honour to refer to discussions which have recently taken place between representatives of our two Governments relating to promoting investments of Canadian private capital in Indonesia which will strengthen and further the development of economic relations between the Republic of Indonesia and Canada, and to insurance of such investments by the Government of Canada, through its agent the Export Development Corporation. I also have the honour to confirm the following understandings reached as a result of those discussions:

1. In the event of payment by the Export Development Corporation, as the agency of the Government of Canada for investment insurance purposes, under a contract of insurance with Canadian private investors operating in the territory of the Republic of Indonesia for any loss or damage sustained in connection with such Canadian investments, for which a document of admission has been issued by the Government of the Republic of Indonesia, by reason of:

(a) any action by the Government of the Republic of Indonesia, that prohibits or restricts transfer of any money to which a Canadian investor is entitled pursuant to the prevailing laws and regulations of the Republic of Indonesia;

(b) nationalization/revocation of ownership rights of Canadian investors, restrictions of the rights of control and/or management of the investments concerned by the Government of the Republic of Indonesia or its agency thereof;

(c) war, riot, insurrection, revolution or rebellion in the territory of the Republic of Indonesia, notwithstanding the right of the Republic of Indonesia to limit its liability in such circumstances and responsibilities thereof are accepted by the Government of the Republic of Indonesia;

the said Corporation, hereinafter called the “INSURING AGENCY”, shall be authorized by the Government of the Republic of Indonesia to exercise the rights having been lawfully devolved on it, or having been assigned to it by the predecessor in title.

2. To the extent that the laws and regulations of the Republic of Indonesia partially or wholly invalidate the acquisition of any interest in any property within its national territory by the Insuring Agency, the Government of the Republic of Indonesia shall permit the Canadian investor and the Insuring Agency to make appropriate arrangements pursuant to which such interests are transferred to an entity permitted to own such interests under the laws and regulations of the Republic of Indonesia.

3. The Insuring Agency shall assert no greater rights than those of the transferring Canadian investor under the laws and regulations of the Republic of Indonesia with respect to any interest transferred or succeeded to as contemplated in paragraph 1 of this Agreement.

The Government of Canada does, however, reserve its right to assert a claim in its sovereign capacity in the event of denial of justice or other question of state responsibility as defined in international law.

4. Should the said Insuring Agency acquire, under investment insurance contracts, amounts and credits in the lawful currency of the Republic of Indonesia, the Government hereof shall accord to those funds treatment no different than that which it would accord if such funds were to remain with the Canadian investor, and such funds shall be freely available to the Government of Canada to meet its expenditures in the national territory of the Republic of Indonesia.

5. This Agreement shall apply only with respect to insured Canadian private capital investments in projects or activities approved in writing by a document of admission issued by the Government of the Republic of Indonesia pursuant to the Foreign Capital Investment Law of 1967 (Law No. 1 of 1967) as amended by Law No. 11 of 1970.

6. (a) Disputes concerning the interpretation or implementation and application of provisions of this Agreement or any claim arising out of investments insured in accordance with this Agreement, against either of the two Governments, which in the opinion of the other presents a question of public international law shall be settled, insofar as possible, by means of diplomatic channels between the two Governments;

(b) If such disputes cannot be resolved within a period of three months following the request for such negotiations, the question shall be submitted, at the request of either Government, to an ad hoc tribunal for settlement in accordance with applicable principles and rules of public international law; only the respective Governments may request arbitral procedure and participate in it;

(c) The arbitral tribunal shall be composed of three members, and shall be established as follows: each Government shall appoint one arbitrator and these two arbitrators shall nominate a third arbitrator as chairman who shall be a national of a third state;

(d) If either Government has not appointed its arbitrator and has not followed the invitation of the other Government to make such an appointment within two months, the arbitrator shall be appointed upon the request of that Government by the President of the International Court of Justice;

(e) If the two arbitrators are unable to reach an agreement on the choice of the third arbitrator within two months after their appointment, the latter shall be appointed upon the request of either Government by the President of the International Court of Justice;

(f) If, in the cases specified under points (d) and (e) of this paragraph the President of the International Court of Justice is prevented from carrying out the said function or if he is a national of either Government, the appointment shall be made by the Vice-President, and if the latter is prevented from carrying out the said function or if he is a national of either Government, the appointment shall be made by the next senior Judge of the Court who is not a national of either Government;

(g) Unless the two Governments decide otherwise the arbitral tribunal shall determine its own procedure;

(h) The tribunal shall reach its decision by a majority of votes and such decision shall be final and binding on both Governments;

(i) Each of the Governments shall pay the expense of its member and its representation in the proceedings before the arbitral tribunal; expenses of the chairman and other costs shall be paid in equal parts by the two Governments. The arbitral tribunal may adopt other regulations concerning costs.

7. (a) If either Government considers it desirable to modify the provisions of this Agreement, this procedure may be carried out through a request for consultations and/or by correspondence and shall begin not later than 60 days from the date of the request;

(b) The modifications of the Agreement agreed between the two Governments shall enter into force upon their confirmation on the date which shall be mutually agreed upon by an Exchange of Notes.

If the foregoing proposals are acceptable to your Government, I have the honour to propose that this Note, in English and French, and your reply shall constitute an Agreement between the Government of Canada and the Government of the Republic of Indonesia, the English and French versions of which shall be equally authentic.

This Agreement shall enter into force thirty days after the date of the exchange of notes by which the Government of Canada and the Government of the Republic of Indonesia notify each other that all the formalities relating to this Agreement have been fulfilled.

This Agreement shall continue in force until terminated by either Government on six months’ notice in writing to each other.

In the event of termination, the provisions of this Agreement shall continue to apply, in respect of insurance contracts concluded between the Government of Canada and Canadian investors operating in the territory of the Republic of Indonesia while the Agreement was in force, for the duration of such contracts; provided that in no case shall the Agreement continue to apply to those contracts for a period longer than fifteen (15) years from the date of termination of this Agreement.

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

William T. Delworth

Ambassador of Canada

II

The Minister of Foreign Affairs of the Republic of Indonesia to the Ambassador of Canada

JAKARTA, March 16, 1973

His Excellency W. T. Delworth
Ambassador of Canada,
Jakarta

Excellency,

I have the honour to acknowledge of your note dated March 16, 1973, which reads as follows:

(See Canadian Note No. 29 dated March 16, 1973)

I confirm that the foregoing provisions are acceptable to the Government of the Republic of Indonesia and that your note of March 16, 1973, and this reply thereto constitute an Agreement between our two Governments on this subject.

Accept, Excellency, the assurances of my highest consideration.

Adam Malik

Minister of Foreign Affairs
Republic of Indonesia