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Exchange of Notes between the Government of Canada and the Government of the Republic of Sri Lanka constituting an Agreement relating to Investment Insurance [1982] CATSer 15 (17 June 1982)

E101502 - CTS 1982 No. 24

EXCHANGE OF NOTES BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF SRI LANKA CONSTITUTING AN AGREEMENT RELATING TO INVESTMENT INSURANCE

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The High Commissioner of Canada to the Secretary to the President of Sri Lanka

COLOMBO, June 17, 1982

Mr. W.M.P.B. Menikdiwela,
Secretary to the President,
Colombo

Sir,

I have the honour to refer to discussions which have recently taken place between representatives of our two Governments relating to the conclusion of an agree­ment for the promotion and protection of investments in the Republic of Sri Lanka which would further the development of economic relations between the Republic of Sri Lanka 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 undertakings which shall apply only to insured investments in projects or activities which are approved by the Government of the Republic of Sri Lanka reached as a result of those discussions.

1. In the event of a payment by the Export Development Corporation under a contract of insurance for any loss by reason of:

(a) war, riot, insurrection, revolution or rebellion in the Republic of Sri Lanka;

(b) nationalization, expropriations, or any other restriction by the Government of Sri Lanka or an agency thereof, which would make the operation of an investment impractical;

(c) any action by the Government of the Republic of Sri Lanka or an agency thereof that prohibits or restricts the transfer of any money or the removal of any property from that country;

the said Corporation, hereinafter called the "Insuring Agency" shall be authorized by the Government of the Republic of Sri Lanka to exercise the rights having devolved on it by law or having been assigned to it by the predecessor in title.

Provided, however, that to the extent that the laws of the Republic of Sri Lanka partially or wholly invalidate the acquisition of any interests in any property connected with an investment within its national territory by the Insuring Agency, the Republic of Sri Lanka shall permit the 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 of the Republic of Sri Lanka.

2. The Insuring Agency shall assert no greater rights than those of the transferring investor under the laws of the Republic of Sri Lanka with respect to any interest transferred or succeeded to as contemplated in paragraph 1. The Government of Canada does, however, reserve its right to assert a claim in its sovereign capacity in the event of a denial of justice or other question of state responsibility as defined in international law.

3. Should the said Insuring Agency acquire, under investment insurance contracts amounts and credits of the lawful currency of the Government of the Republic of Sri Lanka, the said Government of the Republic of Sri Lanka shall accord to those funds treatment no different than that which it would accord if such funds were to remain with the 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 Sri Lanka.

4. (a) Differences between the two Governments, concerning the interpretation and application of provisions of this Agreement or any claims arising out of investments insured in accordance with this Agreement against either of the two Governments which, in the opinion of the other, present a question of public international law, shall be settled, insofar as possible, through negotiations between the Governments. If such differences cannot be resolved within a period of three months following the request for such negotiations, they 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.

(b) The arbitral tribunal shall consist of three members and shall be established as follows: each Government shall appoint one arbitrator; a third member, who shall act as Chairman, shall be appointed by the other two members. The Chairman shall not be a national of either country. The arbitrators shall be appointed within two months and the Chairman within three months of the date of receipt of either Government's request for arbitration.

(c) If the foregoing time limits are not met, either Government may, in the absence of any other agreement, request the President of the International Court of Justice to make the necessary appointment or appointments and both Governments agree to accept such appointment or appointments.

(d) If the President of the International Court of Justice is prevented from car­rying out the said function or if he is a national of either country, the ap­pointment or appointments 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 country, the appointment or appointments shall be made by the next senior judge of this Court who is not a national of either country.

(e) The arbitral tribunal shall decide by a majority vote. Its decision shall be final and binding on both Governments. Each of the Governments shall pay the expenses 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. In all other matters, the arbitral tribunal shall regulate its own procedures. Only the respective Governments may request arbitral procedure and participate in it.

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

(b) Modification of the present Agreement shall take place through a further exchange of notes between the two Governments.

I have the honour to propose that, if the foregoing is acceptable to your Government, this Note in English and French, and your reply to that effect in English and Sinhala, shall constitute an Agreement between our two Governments which shall enter into force on the date of your reply. All language versions shall be equally authen­tic. In case of any inconsistency, the English text shall prevail. This Agreement shall continue in force until terminated by either Government on six months notice in writing to the other. In the event of termination, the provisions of the Agreement shall continue to apply, in respect of insurance contracts issued by the Government of Canada while the Agreement was in force, for the duration of these contracts; provided that in no case shall the Agreement continue to apply to such contracts for a period longer than 15 years after the termination of this Agreement.

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

R. W. Clark

High Commissioner

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The Secretary to the President of Sri Lanka to the High Commissioner of Canada

COLOMBO, June 17, 1982

His Excellency Mr. R.W. Clark,
High Commissioner for Canada in Sri Lanka,
Colombo

Excellency,

I have the honour to refer to your letter of 17 June 1982, which reads as follows:

"(See Canadian letter of June 17, 1982)"

I have the honour to state that the foregoing is acceptable to the Government of the Democratic Socialist Republic of Sri Lanka and that Your Excellency's Note and my reply thereto, shall constitute an Agreement between our two Governments, which shall enter into force, on the date of this reply.

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

W. M. P. B. Menikdiwela

Secretary to the President