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Exchange of Notes between the Government of Canada and the Government of the Republic of Chile constituting an Agreement concerning Investment Insurance [1988] CATSer 13 (21 April 1988)

E101475 - CTS 1988 No. 6

EXCHANGE OF NOTES BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF CHILE CONSTITUTING AN AGREEMENT CONCERNING INVESTMENT INSURANCE

I

The Ambassador of Canada to the Minister of Foreign Affairs of Chile

Santiago, 26 March 1987

His Excellency Sr. Jaime del Valle Alliende,
Minister of Foreign Affairs,
Santiago

Excellency:

I have the honour to refer to discussions which have recently taken place between representatives of our two Governments relating to investments in the Republic of Chile which will promote the development of economic relations between Canada and the Republic of Chile, and to the insurance of such investments by the Government of Canada through its agent, the “Export Development Corporation”, or any successor thereto, hereinafter referred to as the “Insuring Agency”. I also have the honour to confirm the following understandings reached as a result of those discussions:

ARTICLE ONE

For purposes of this Agreement, the term “Coverage” shall refer to any insurance, reinsurance, or guarantee issued in accordance with this Agreement by the Insuring Agency, whether as one of the parties providing Coverage or as successor to a contract providing Coverage, or as an agent for the administration of the Coverage.

The Coverage issued in accordance with this Agreement shall refer to the following political risks:

The expropriation, confiscation, arbitrary seizure, or deprivation of use of any property, or any other action by the Government of Chile or agency thereof, that deprives the investor of any right in, or in connection with, an investment in the Republic of Chile.

ARTICLE TWO

The procedures set forth in this Agreement shall apply only with respect to coverage relating to investments in projects or activities approved in writing by, and registered with, the Government of Chile after the date of the present Exchange of Notes.

ARTICLE THREE

(a) If the Insuring Agency makes a payment to any party under Coverage, the Government of Chile shall recognize, subject to the provisions of Article Four hereof, the subrogation of the Insuring Agency to any right, title, claim, privilege, or cause of action existing, or which may arise in connection with such payment, which implies an effective right in favour of the Insuring Agency over all the currency, credits, assets, or investments on account of which payment under such Coverage was made.

(b) The Insuring Agency shall assert no greater rights than those of the transferring party under the laws of Chile with respect to any interest succeeded to or transferred.

ARTICLE FOUR

To the extent that the laws of Chile partially or wholly invalidate or prohibit the acquisition from a party under Coverage of any interest in any property within the territory of Chile by the Insuring Agency, the Government of Chile shall permit such party and the Insuring Agency to make appropriate arrangements pursuant to which such interests may be transferred to an entity permitted to own such interests under the laws of Chile.

ARTICLE FIVE

Amounts in the lawful currency of Chile acquired through subrogations by the Insuring Agency by virtue of such Coverage shall be accorded treatment by the Government of Chile no less favourable, as to use and conversion thereof, than that which would be accorded if they were to remain in the possession of the party under Coverage. Such funds shall be freely available to the Government of Canada to meet its expenditures in the national territory of Chile.

ARTICLE SIX

(a) Nothing in this Agreement shall limit the right of the Government of Canada to assert a claim under international law in its sovereign capacity, as distinct from the rights of the Insuring Agency.

(b) Any dispute between the Government of Canada and the Government of Chile regarding the interpretation of this Agreement or which, in the opinion of either Government, involves a question of public international law arising out of any project or activity 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 request of either Government, to an arbitration tribunal for resolution in accordance with Article Six, paragraph c). Submission of the dispute to an arbitration tribunal shall be subject to the principle of prior exhaustion of administrative and judicial remedies available in Chile.

(c) The arbitration tribunal for resolution of disputes pursuant to Article 6 b) shall be established and function as follows:

(i) Each Government shall appoint one arbitrator; these arbitrators shall designate a Chairman by common agreement who shall be a citizen of a third state and be appointed by the two Governments. 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. If the appointments are not made within the periods stipulated above, 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.

(ii) 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.

(iii) The arbitration tribunal, upon assuming jurisdiction, shall rule on any issue of the prior exhaustion of effective local administrative and judicial remedies. The tribunal shall base its decision on the applicable principles and rules of public international law. The tribunal shall decide by majority vote. Its decision shall be final and binding.

(iv) Each of the Governments shall pay the expenses of its arbitrator and its representation in the proceedings before the arbitration tribunal; the expenses of the Chairman and the other costs incurred shall be paid in equal parts by the two Governments. The arbitration tribunal may adopt regulations relating to costs, consistent with the foregoing.

(v) In all other matters, the arbitration tribunal shall regulate its own procedures. Only the respective Governments may request arbitration procedures and participate in them.

ARTICLE SEVEN

The provisions of this Agreement shall apply upon its entry into force to all Coverage issued by the Insuring Agency and in accordance with Article Two, after the date of the present Exchange of Notes.

ARTICLE EIGHT

Any amendment of this Agreement agreed between the two Governments shall enter into force upon its confirmation on a date which shall be mutually agreed upon by an Exchange of Notes.

ARTICLE NINE

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 Insuring Agency 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 20 years after the termination of this Agreement.

I have the honour to propose that if the foregoing provisions are acceptable to the Government of Chile, this Note, which is authentic in English and French, and your reply to that effect in Spanish shall constitute an Agreement between our two Governments which shall enter into force on the date on which the Government of Chile notifies the Government of Canada that this Exchange of Notes has been approved in accordance with its constitutional provisions.

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

Michel de Goumois

Canadian Ambassador

II

The Minister of Foreign Affairs of Chile to the Ambassador of Canada

(Translation)

His Excellency the Ambassador of Canada,
Michel de Goumois,
Santiago

Excellency:

I have the honour to refer to your Note dated 26 March 1987 which states as follows:

“(See Canadian Note March 26, 1987)”

I have the further honour to accept the above stipulations on behalf of the Republic of Chile and to acknowledge that your Note together with the present communication shall constitute an Agreement between our two Governments, to enter into force upon the date on which my Government notifies the Government of Canada that it has duly ratified this exchange of notes in accordance with the provisions of our Constitution.

Please accept expressions of my highest esteem and consideration.

Jaime del Valle Alliende

Minister of Foreign Affairs