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Agreement between the Government of Canada and the Government of the Republic of Hungary concerning the Guarantee of a Loan [1992] CATSer 24 (6 October 1992)

E101416 - CTS 1992 No. 24

AGREEMENT BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF HUNGARY CONCERNING THE GUARANTEE OF A LOAN

THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF HUNGARY,

CONSIDERING that by an agreement dated 5^th October, 1992 between the Government of the Republic of Hungary and the Royal Bank of Canada (hereinafter called the "Bank"), the Bank has agreed to lend the Government of the Republic of Hungary up to CDN $13,500,000 for balance of payment purposes, on the terms and conditions set forth in the loan agreement, but only on the condition that the Government of Canada agrees to guarantee the fulfilment of the obligations of the Government of the Republic of Hungary in respect of such loan;

CONSIDERING further that by an agreement between the Bank and the Government of Canada, the Government of Canada provided to the Bank full guarantees for the payment of all indebtedness of the Government of the Republic of Hungary outstanding from time to time under the above mentioned loan agreement;

MINDFUL that the Group of 24 industrial countries under the chairmanship of the Commission of the European Community has pledged to support the aforesaid programme;

RECOGNIZING that the Government of the Republic of Hungary is undertaking fundamental political and economic reforms and has decided to adopt a market economy model;

CONSCIOUS that the Government of the Republic of Hungary has entered into an agreement with the International Monetary Fund on its programme to stabilize and modernize its economy and has the intention to make its currency convertible;

HAVE AGREED as follows:

ARTICLE 1

In the event of default on the part of the Government of the Republic of Hungary, as defined by the above loan agreement between the Government of the Republic of Hungary and the Bank, the Government of Canada shall fulfil the obligations of the Government of the Republic of Hungary, as provided by the agreement between the Government of Canada and the Bank, and:

a) the Government of Canada shall become subrogated to the rights of the Bank with respect to the Government of the Republic of Hungary; and

b) the Government of the Republic of Hungary shall accept this subrogation and reimburse the Government of Canada pursuant to the loan agreement with respect to the repayment of the principal, all interest as well as for any costs, losses or other expenses of any kind that the Government of Canada might incur in connection with ensuring repayment of the loan.

ARTICLE 2

The Government of the Republic of Hungary shall provide concurrently the Government of Canada with copies of all materials, reports and statements delivered to the Bank in connection with the loan.

ARTICLE 3

The Government of the Republic of Hungary agrees that the Government of Canada shall be entitled to share with the Bank any relevant financial information possessed by it regarding the Government of the Republic of Hungary.

ARTICLE 4

(a) Differences concerning the interpretation and application of provisions of this Agreement shall be settled, insofar as possible, through negotiations between the Governments. If any difference cannot be resolved within two months following the submission of a request for negotiation, it may be submitted at the request of either Government to an ad hoc tribunal, the decision of which shall be final and binding on both Governments.

(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 or, in his absence, the Vice-president to make the necessary appointment or appointments and both Governments agree to accept such appointment or appointments.

(d) The arbitral tribunal shall decide by majority vote. Each Government shall bear the costs of the member of the arbitral tribunal appointed by it as well as the costs incidental to its own representation in the proceedings. The two countries shall bear other expenses in equal proportion.

ARTICLE 5

(a) This Agreement shall enter into force on the date of its signature and shall remain in force as long as the aforesaid loan made to the Government of the Republic of Hungary is not completely reimbursed.

(b) The present Agreement may be amended at any time by mutual consent.

IN WITNESS WHEREOF, the undersigned, being duly authorized thereto by their respective government, have signed this Agreement.

DONE in Budapest, this 6^th day of Oct., 1992, in duplicate in the English, French and Hungarian languages, each version being equally authentic.

Thomas Hockin

FOR THE GOVERNMENT OF CANADA

Mihaly Kupa

FOR THE GOVERNMENT OF THE REPUBLIC OF HUNGARY