21994A1231(52)

21994A1231(52) 21994A1231(52) Final Act of the Conference on the European Energy Charter - Annex 1: The Energy Charter Treaty - Annex 2: Decisions with respect to the Energy Charter Treaty Official Journal L 380 , 31/12/1994 p. 0024 - 0090 Finnish special edition....: Chapter 12 Volume 3 p. 75 Swedish special edition...: Chapter 12 Volume 3 p. 75 L 069 09/03/1998 P. 0026  Dates: OF DOCUMENT:   17/12/1994 OF EFFECT:   16/04/1998; ENTRY INTO FORCE SEE ART 44.1 AND OJ L 69/98 P. 116 OF SIGNATURE:   17/12/1994; Lisbon OF END OF VALIDITY:   99/99/9999 Authentic language: GERMAN ; ENGLISH ; SPANISH ; FRENCH ; ITALIAN ; RUSSIAN Author: EUROPEAN COMMUNITY ; EUROPEAN ATOMIC ENERGY COMMUNITY ; THE 15 MEMBER STATES ; BELGIUM ; DENMARK ; FEDERAL REPUBLIC OF GERMANY ; GREECE ; SPAIN ; FRANCE ; IRELAND ; ITALY ; LUXEMBOURG ; NETHERLANDS ; PORTUGAL ; UNITED KINGDOM ; FINLAND ; SWEDEN ; AUSTRIA ; Conference on the European Energy Charter Subject matter: EXTERNAL RELATIONS ; ENERGY ; ENVIRONMENT ; COMMERCIAL POLICY ; PROVISIONS UNDER ARTICLE 235 EEC ; INTERNAL MARKET ; FREEDOM OF ESTABLISHMENT AND SERVICES ; TAXATION Directory code: 12101000 EUROVOC descriptor: accession ; energy policy ; environmental policy ; European charter ; EAEC ; ECSC Legal basis: 192E054-P2................ ADOPTION 192E057-P2F3.............. ADOPTION 192E066................... ADOPTION 192E073C-P2............... ADOPTION 192E087................... ADOPTION 192E099................... ADOPTION 192E100A.................. ADOPTION 192E113................... ADOPTION 192E130S-P1............... ADOPTION 192E235................... ADOPTION 192E228-P2F2.............. ADOPTION 192E228-P3L1.............. ADOPTION 157A101-L2................ ADOPTION 151K095................... ADOPTION Instruments cited: 294A1223(01).............. Amended by: AMENDED-BY.... 298A0912(01)...... ANN 10 BECOMES ANN 13 AMENDED-BY.... 298A0912(01)...... ANN 11 BECOMES ANN 16 AMENDED-BY.... 298A0912(01)...... ANN 12 BECOMES ANN 17 AMENDED-BY.... 298A0912(01)...... ANN 13 BECOMES ANN 18 AMENDED-BY.... 298A0912(01)...... ANN 14 BECOMES ANN 19 AMENDED-BY.... 298A0912(01)...... ANN 2 BECOMES ANN 5 AMENDED-BY.... 298A0912(01)...... ANN 3 BECOMES ANN 6 AMENDED-BY.... 298A0912(01)...... ANN 4 BECOMES ANN 7 AMENDED-BY.... 298A0912(01)...... ANN 5 BECOMES ANN 8 AMENDED-BY.... 298A0912(01)...... ANN 6 BECOMES ANN 9 AMENDED-BY.... 298A0912(01)...... ANN 7 BECOMES ANN 10 AMENDED-BY.... 298A0912(01)...... ANN 8 BECOMES ANN 11 AMENDED-BY.... 298A0912(01)...... ANN 9 BECOMES ANN 12 AMENDED-BY.... 298A0912(01)...... COMPLETION ART.20.1 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... COMPLETION ART.3 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... COMPLETION ART.34.3 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... COMPLETION ART.36.1 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... COMPLETION ART.5.1 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... ADDITION.. ANN 14 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... ADDITION.. ANN 15 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... ADDITION.. ANN 2 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... ADDITION.. ANN 3 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... ADDITION.. ANN 4 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... ADDITION.. ART.1.4BIS FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. ANN 13 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. ANN 16 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. ANN 6 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. ART.14.6 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. ART.21.4 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. ART.25.3 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. ART.36.4 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. ART.4 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. RECITAL FR 23/7/98 AMENDED-BY.... 298A0912(01)...... AMENDMENT. TITLE ANN 1 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... REPLACEMNT ANN 12 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... REPLACEMNT ART.1.11 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... REPLACEMNT ART.1.4 FR 23/7/98 AMENDED-BY.... 298A0912(01)...... REPLACEMNT ART.29 FR 23/7/98 IMPLEMENTED-BY 299A0116(01)...... IMPLEMENT. ART.7.7 FR 3/12/98 AMENDED-BY.... 394D0998.......... PROVISIONAL APPLICATION FR 15/12/94 LINKED-TO..... 394D1067.......... PROVISIONAL APPLICATION FR 15/12/94 ADOPTED-BY.... 398D0181.......... FR 23/9/97 ANNEX 1 THE ENERGY CHARTER TREATY Preamble THE CONTRACTING PARTIES TO THIS TREATY, Having regard to the Charter of Paris for a New Europe signed on 21 November 1990, Having regard to the European Energy Charter adopted in the Concluding Document of the Hague Conference on the European Energy Charter signed at The Hague on 17 December 1991, Recalling that all signatories to the Concluding Document of the Hague Conference undertook to pursue the objectives and principles of the European Energy Charter and implement and broaden their cooperation as soon as possible by negotiating in good faith an Energy Charter Treaty and Protocols, and desiring to place the commitments contained in that Charter on a secure and binding international legal basis; Desiring also to establish the structural framework required to implement the principles enunciated in the European Energy Charter; Wishing to implement the basic concept of the European Energy Charter initiative which is to catalyse economic growth by means of measures to liberalize investment and trade in energy; Affirming that Contracting Parties attach the utmost importance to the effective implementation of full national treatment and most favoured nation treatment, and that these commitments will be applied to the making of investments pursuant to a supplementary treaty, Having regard to the objective of progressive liberalization of international trade and to the principle of avoidance of discrimination in international trade as enunciated in the General Agreement on Tariffs and Trade and its Related Instruments and as otherwise provided for in this Treaty; Determined progressively to remove technical, administrative and other barriers to trade in energy materials and products and related equipment, technologies and services; Looking to the eventual membership in the General Agreement on Tariffs and Trade of those Contracting Parties which are not currently parties thereto and concerned to provide interim trade arrangements which will assist those Contracting Parties and not impede their preparation for such membership; Mindful of the rights and obligations of certain Contracting Parties which are also parties to the General Agreement on Tariffs and Trade and its Related Instruments; Having regard to competition rules concerning mergers, monopolies, anti-competitive practices and abuse of dominant position, Having regard also to the Treaty on the Non-Proliferation of Nuclear Weapons, the Nuclear Suppliers Guidelines and other international nuclear non-proliferation obligations or understandings, Recognizing the necessity for the most efficient exploration, production, conversion, storage, transport, distribution and use of energy; Recalling the United Nations Framework Convention on Climate Change, the Convention on Long-Range Transboundary Air Pollution and its protocols, and other international environmental agreements with energy-related aspects; and Recognizing the increasingly urgent need for measures to protect the environment, including the decommissioning of energy installations and waste disposal, and for internationally-agreed objectives and criteria for these purposes, HAVE AGREED AS FOLLOWS: PART I DEFINITIONS AND PURPOSE Article 1 Definitions As used in this Treaty: 1. 'Charter` means the European Energy Charter adopted in the Concluding Document of the Hague Conference on the European Energy Charter signed at The Hague on 17 December 1991; signature of the Concluding Document is considered to be signature of the Charter. 2. 'Contracting Party` means a State or Regional Economic Integration Organization which has consented to be bound by this Treaty and for which the Treaty is in force. 3. 'Regional Economic Integration Organization` means an organization constituted by States to which they have transferred competence over certain matters a number of which are governed by this Treaty, including the authority to take decisions binding on them in respect of those matters. 4. 'Energy materials and products`, based on the Harmonized System of the Customs Cooperation Council and the combined nomenclature of the European Communities, means the items included in Annex EM. 5. 'Economic activity in the energy sector` means an economic activity concerning the exploration, extraction, refining, production, storage, land transport, transmission, distribution, trade, marketing, or sale of energy materials and products except those included in Annex NI, or concerning the distribution of heat to multiple premises. 6. 'Investment` means every kind of asset, owned or controlled directly or indirectly by an investor and includes: (a) tangible and intangible, and movable and immovable, property, and any property rights such as leases, mortgages, liens, and pledges; (b) a company or business enterprise, or shares, stock, or other forms of equity participation in a company or business enterprise, and bonds and other debt of a company or business enterprise; (c) claims to money and claims to performance pursuant to contract having an economic value and associated with an investment; (d) intellectual property; (e) returns; (f) any right conferred by law or contract or by virtue of any licences and permits granted pursuant to law to undertake any economic activity in the energy sector. A change in the form in which assets are invested does not affect their character as investments and the term 'investment` includes all investments, whether existing at or made after the later of the date of entry into force of this Treaty for the Contracting Party of the investor making the investment and that for the Contracting Party in the area of which the investment is made (hereinafter referred to as the 'effective date`) provided that the Treaty shall only apply to matters affecting such investments after the effective date. 'Investment` refers to any investment associated with an economic activity in the energy sector and to investments or classes of investments designated by a Contracting Party in its area as 'Charter efficiency projects` and so notified to the Secretariat. 7. 'Investor` means: (a) with respect to a Contracting Party: (i) a natural person having the citizenship or nationality of or who is permanently residing in that Contracting Party in accordance with its applicable law; (ii) a company or other organization organized in accordance with the law applicable in that Contracting Party; (b) with respect to a 'third State`, a natural person, company or other organization which fulfils, mutatis mutandis, the conditions specified in subparagraph (a) for a Contracting Party. 8. 'Make investments` or 'making of investments` means establishing new investments, acquiring all or part of existing investments or moving into different fields of investment activity. 9. 'Returns` means the amounts derived from or associated with an investment, irrespective of the form in which they are paid, including profits, dividends, interest, capital gains, royalty payments, management, technical assistance or other fees and payments in kind. 10. 'Area` means with respect to a State that is a Contracting Party: (a) the territory under its sovereignty, it being understood that territory includes land, internal waters and the territorial sea; and (b) subject to and in accordance with the international law of the sea: the sea, sea-bed and its subsoil with regard to which that Contracting Party exercises sovereign rights and jurisdiction. With respect to a Regional Economic Integration Organization which is a Contracting Party, area means the areas of the Member States of such Organization, under the provisions contained in the agreement establishing that Organization. 11. (a) 'GATT` means 'GATT 1947` or 'GATT 1994`, or both of them where both are applicable. (b) 'GATT 1947` means the General Agreement on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act Adopted at the Conclusion of the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment, as subsequently rectified, amended or modified. (c) 'GATT 1994` means the General Agreement on Tariffs and Trade as specified in Annex 1A of the Agreement Establishing the World Trade Organization, as subsequently rectified, amended or modified. A party to the Agreement Establishing the World Trade Organization is considered to be a party to GATT 1994. (d) 'Related Instruments` means, as appropriate: (i) agreements, arrangements or other legal instruments, including decisions, declarations and understandings, concluded under the auspices of GATT 1947 as subsequently rectified, amended or modified; or (ii) the Agreement Establishing the World Trade Organization including its Annex 1 (except GATT 1994), its Annexes 2, 3 and 4, and the decisions, declarations and understandings related thereto, as subsequently rectified, amended or modified. 12. 'Intellectual property` includes copyrights and related rights, trademarks, geographical indications, industrial designs, patents, layout designs of integrated circuits and the protection of undisclosed information. 13. (a) 'Energy Charter Protocol` or 'Protocol` means a treaty, the negotiation of which is authorized and the text of which is adopted by the Charter Conference, which is entered into by two or more Contracting Parties in order to complement, supplement, extend or amplify the provisions of this Treaty with respect to any specific sector or category of activity within the scope of this Treaty, or to areas of cooperation pursuant to Title III of the Charter. (b) 'Energy Charter Declaration` or 'Declaration` means a non-binding instrument, the negotiation of which is authorized and the text of which is approved by the Charter Conference, which is entered into by two or more Contracting Parties to complement or supplement the provisions of this Treaty. 14. 'Freely convertible currency` means a currency which is widely traded in international foreign exchange markets and widely used in international transactions. Article 2 Purpose of the Treaty This Treaty establishes a legal framework in order to promote long-term cooperation in the energy field, based on complementarities and mutual benefits, in accordance with the objectives and principles of the Charter. PART II COMMERCE Article 3 International markets The Contracting Parties shall work to promote access to international markets on commercial terms, and generally to develop an open and competitive market, for energy materials and products. Article 4 Non-derogation from GATT and Related Instruments Nothing in this Treaty shall derogate, as between particular Contracting Parties which are parties to the GATT, from the provisions of the GATT and Related Instruments as they are applied between those Contracting Parties. Article 5 Trade-related investment measures 1. A Contracting Party shall not apply any trade- related investment measure that is inconsistent with the provisions of Article III or XI of the GATT; this shall be without prejudice to the Contracting Party's rights and obligations under the GATT and Related Instruments and Article 29. 2. Such measures include any investment measure which is mandatory or enforceable under domestic law or under any administrative ruling, or compliance with which is necessary to obtain an advantage, and which requires: (a) the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production; or (b) that an enterprise's purchase or use of imported products be limited to an amount related to the volume or value of local products that it exports; or which restricts: (c) the importation by an enterprise of products used in or related to its local production, generally or to an amount related to the volume or value of local production that it exports; (d) the importation by an enterprise of products used in or related to its local production by restricting its access to foreign exchange to an amount related to the foreign exchange inflows attributable to the enterprise; or (e) the exportation or sale for export by an enterprise of products, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production. 3. Nothing in paragraph 1 shall be construed to prevent a Contracting Party from applying the trade- related investment measures described in subparagraphs 2 (a) and (c) as a condition of eligibility for export promotion, foreign aid, government procurement or preferential tariff or quota programmes. 4. Notwithstanding paragraph 1, a Contracting Party may temporarily continue to maintain trade-related investment measures which were in effect more than 180 days before its signature of this Treaty, subject to the notification and phase-out provisions set out in Annex TRM. Article 6 Competition 1. Each Contracting Party shall work to alleviate market distortions and barriers to competition in economic activity in the energy sector. 2. Each Contracting Party shall ensure that within its jurisdiction it has and enforces such laws as are necessary and appropriate to address unilateral and concerted anti-competitive conduct in economic activity in the energy sector. 3. Contracting Parties with experience in applying competition rules shall give full consideration to providing, upon request and within available resources, technical assistance on the development and implementation of competition rules to other Contracting Parties. 4. Contracting Parties may cooperate in the enforcement of their competition rules by consulting and exchanging information. 5. If a Contracting Party considers that any specified anti-competitive conduct carried out within the area of another Contracting Party is adversely affecting an important interest relevant to the purposes identified in this Article, the Contracting Party may notify the other Contracting Party and may request that its competition authorities initiate appropriate enforcement action. The notifying Contracting Party shall include in such notification sufficient information to permit the notified Contracting Party to identify the anti-competitive conduct that is the subject of the notification and shall include an offer of such further information and cooperation as the notifying Contracting Party is able to provide. The notified Contracting Party or, as the case may be, the relevant competition authorities may consult with the competition authorities of the notifying Contracting Party and shall accord full consideration to the request of the notifying Contracting Party in deciding whether or not to initiate enforcement action with respect to the alleged anti-competitive conduct identified in the notification. The notified Contracting Party shall inform the notifying Contracting Party of its decision or the decision of the relevant competition authorities and may if it wishes inform the notifying Contracting Party of the grounds for the decision. If enforcement action is initiated, the notified Contracting Party shall advise the notifying Contracting Party of its outcome and, to the extent possible, of any significant interim development. 6. Nothing in this Article shall require the provision of information by a Contracting Party contrary to its laws regarding disclosure of information, confidentiality or business secrecy. 7. The procedures set forth in paragraph 5 and Article 27 (1) shall be the exclusive means within this Treaty of resolving any disputes that may arise over the implementation or interpretation of this Article. Article 7 Transit 1. Each Contracting Party shall take the necessary measures to facilitate the transit of energy materials and products consistent with the principle of freedom of transit and without distinction as to the origin, destination or ownership of such energy materials and products or discrimination as to pricing on the basis of such distinctions, and without imposing any unreasonable delays, restrictions or charges. 2. Contracting Parties shall encourage relevant entities to cooperate in: (a) modernizing energy transport facilities necessary to the transit of energy materials and products; (b) the development and operation of energy transport facilities serving the areas of more than one Contracting Party; (c) measures to mitigate the effects of interruptions in the supply of energy materials and products; (d) facilitating the interconnection of energy transport facilities. 3. Each Contracting Party undertakes that its provisions relating to transport of energy materials and products and the use of energy transport facilities shall treat energy materials and products in transit in no less favourable a manner than its provisions treat such materials and products originating in or destined for its own area, unless an existing international agreement provides otherwise. 4. In the event that transit of energy materials and products cannot be achieved on commercial terms by means of energy transport facilities the Contracting Parties shall not place obstacles in the way of new capacity being established, except as may be otherwise provided in applicable legislation which is consistent with paragraph 1. 5. A Contracting Party through whose area energy materials and products may transit shall not be obliged to (a) permit the construction or modification of energy transport facilities; or (b) permit new or additional transit through existing energy transport facilities, which it demonstrates to the other Contracting Parties concerned would endanger the security or efficiency of its energy systems, including the security of supply. Contracting Parties shall, subject to paragraphs 6 and 7, secure established flows of energy materials and products to, from or between the areas of other Contracting Parties. 6. A Contracting Party through whose area energy materials and products transit shall not, in the event of a dispute over any matter arising from that transit, interrupt or reduce, permit any entity subject to its control to interrupt or reduce, or require any entity subject to its jurisdiction to interrupt or reduce the existing flow of energy materials and products prior to the conclusion of the dispute resolution procedures set out in paragraph 7, except where this is specifically provided for in a contract or other agreement governing such transit or permitted in accordance with the conciliator's decision. 7. The following provisions shall apply to a dispute described in paragraph 6, but only following the exhaustion of all relevant contractual or other dispute resolution remedies previously agreed between the Contracting Parties party to the dispute or between any entity referred to in paragraph 6 and an entity of another Contracting Party party to the dispute: (a) A Contracting Party party to the dispute may refer it to the Secretary-General by a notification summarizing the matters in dispute. The Secretary-General shall notify all Contracting Parties of any such referral. (b) Within 30 days of receipt of such a notification, the Secretary-General, in consultation with the parties to the dispute and the other Contracting Parties concerned, shall appoint a conciliator. Such a conciliator shall have experience in the matters subject to dispute and shall not be a national or citizen of or permanently resident in a party to the dispute or one of the other Contracting Parties concerned. (c) The conciliator shall seek the agreement of the parties to the dispute to a resolution thereof or upon a procedure to achieve such resolution. If within 90 days of his appointment he has failed to secure such agreement, he shall recommend a resolution to the dispute or a procedure to achieve such resolution and shall decide the interim tariffs and other terms and conditions to be observed for transit from a date which he shall specify until the dispute is resolved. (d) The Contracting Parties undertake to observe and ensure that the entities under their control or jurisdiction observe any interim decision under subparagraph (c) on tariffs, terms and conditions for 12 months following the conciliator's decision or until resolution of the dispute, whichever is earlier. (e) Notwithstanding subparagraph (b) the Secretary-General may elect not to appoint a conciliator if in his judgement the dispute concerns transit that is or has been the subject of the dispute resolution procedures set out in subparagraphs (a) to (d) and those proceedings have not resulted in a resolution of the dispute. (f) The Charter Conference shall adopt standard provisions concerning the conduct of conciliation and the compensation of conciliators. 8. Nothing in this Article shall derogate from a Contracting Party's rights and obligations under international law including customary international law, existing bilateral or multilateral agreements, including rules concerning submarine cables and pipelines. 9. This Article shall not be so interpreted as to oblige any Contracting Party which does not have a certain type of energy transport facilities used for transit to take any measure under this Article with respect to that type of energy transport facilities. Such a Contracting Party is, however, obliged to comply with paragraph 4. 10. For the purposes of this Article: (a) 'Transit` means: (i) the carriage through the area of a Contracting Party, or to or from port facilities in its area for loading or unloading, of energy materials and products originating in the area of another State and destined for the area of a third State, so long as either the other State or the third State is a Contracting Party; or (ii) the carriage through the area of a Contracting Party of energy materials and products originating in the area of another Contracting Party and destined for the area of that other Contracting Party, unless the two Contracting Parties concerned decide otherwise and record their decision by a joint entry in Annex N. The two Contracting Parties may delete their listing in Annex N by delivering a joint written notification of their intentions to the Secretariat, which shall transmit that notification to all other Contracting Parties. The deletion shall take effect four weeks after such former notification. (b) 'Energy transport facilities` consist of high-pressure gas transmission pipelines, high-voltage electricity transmission grids and lines, crude oil transmission pipelines, coal slurry pipelines, oil product pipelines, and other fixed facilities specifically for handling energy materials and products. Article 8 Transfer of technology 1. The Contracting Parties agree to promote access to and transfer of energy technology on a commercial and non-discriminatory basis to assist effective trade in energy materials and products and investment and to implement the objectives of the Charter subject to their laws and regulations, and to the protection of intellectual property rights. 2. Accordingly, to the extent necessary to give effect to paragraph 1 the Contracting Parties shall eliminate existing and create no new obstacles to the transfer of technology in the field of energy materials and products and related equipment and services, subject to non-proliferation and other international obligations. Article 9 Access to capital 1. The Contracting Parties acknowledge the importance of open capital markets in encouraging the flow of capital to finance trade in energy materials and products and for the making of and assisting with regard to investments in economic activity in the energy sector in the areas of other Contracting Parties, particularly those with economies in transition. Each Contracting Party shall accordingly endeavour to promote conditions for access to its capital market by companies and nationals of other Contracting Parties, for the purpose of financing trade in energy materials and products and for the purpose of investment in economic activity in the energy sector in the areas of those other Contracting Parties, on a basis no less favourable than that which it accords in like circumstances to its own companies and nationals or companies and nationals of any other Contracting Party or any third State, whichever is the most favourable. 2. A Contracting Party may adopt and maintain programmes providing for access to public loans, grants, guarantees or insurance for facilitating trade or investment abroad. It shall make such facilities available, consistent with the objectives, constraints and criteria of such programmes (including any objectives, constraints or criteria relating to the place of business of an applicant for any such facility or the place of delivery of goods or services supplied with the support of any such facility) for investments in the economic activity in the energy sector of other Contracting Parties or for financing trade in energy materials and products with other Contracting Parties. 3. Contracting Parties shall, in implementing programmes in economic activity in the energy sector to improve the economic stability and investment climates of the Contracting Parties, seek as appropriate to encourage the operations and take advantage of the expertise of relevant international financial institutions. 4. Nothing in this Article shall prevent: (a) financial institutions from applying their own lending or underwriting practices based on market principles and prudential considerations; or (b) a Contracting Party from taking measures: (i) for prudential reasons, including the protection of investors, consumers, depositors, policy- holders or persons to whom a fiduciary duty is owed by a financial service supplier; or (ii) to ensure the integrity and stability of its financial system and capital markets. PART III INVESTMENT PROMOTION AND PROTECTION Article 10 Promotion, protection and treatment of investments 1. Each Contracting Party shall, in accordance with the provisions of this Treaty, encourage and create stable, equitable, favourable and transparent conditions for investors of other Contracting Parties to make investments in its area. Such conditions shall include a commitment to accord at all times to investments of investors of other Contracting Parties fair and equitable treatment. Such investments shall also enjoy the most constant protection and security and no Contracting Party shall in any way impair by unreasonable or discriminatory measures their management, maintenance, use, enjoyment or disposal. In no case shall such investments be accorded treatment less favourable than that required by international law, including treaty obligations. Each Contracting Party shall observe any obligations it has entered into with an investor or an investment of an investor of any other Contracting Party. 2. Each Contracting Party shall endeavour to accord to investors of other Contracting Parties, as regards the making of investments in its area, the treatment described in paragraph 3. 3. For the purposes of this Article, 'treatment` means treatment accorded by a Contracting Party which is no less favourable than that which it accords to its own investors or to investors of any other Contracting Party or any third State, whichever is the most favourable. 4. A supplementary treaty shall, subject to conditions to be laid down therein, oblige each party thereto to accord to investors of other parties, as regards the making of investments in its area, the treatment described in paragraph 3. That treaty shall be open for signature by the States and Regional Economic Integration Organizations which have signed or acceded to this Treaty. Negotiations towards the supplementary treaty shall commence not later than 1 January 1995, with a view to concluding it by 1 January 1998. 5. Each Contracting Party shall, as regards the making of investments in its area, endeavour to: (a) limit to the minimum the exceptions to the Treatment described in paragraph 3; (b) progressively remove existing restrictions affecting investors of other Contracting Parties. 6. (a) A Contracting Party may, as regards the making of investments in its area, at any time declare voluntarily to the Charter Conference, through the Secretariat, its intention not to introduce new exceptions to the treatment described in paragraph 3. (b) A Contracting Party may, furthermore, at any time make a voluntary commitment to accord to investors of other Contracting Parties, as regards the making of investments in some or all economic activities in the energy sector in its area, the treatment described in paragraph 3. Such commitments shall be notified to the Secretariat and listed in Annex VC and shall be binding under this Treaty. 7. Each Contracting Party shall accord to investments in its area of investors of other Contracting Parties, and their related activities including management, maintenance, use, enjoyment or disposal, treatment no less favourable than that which it accords to investments of its own investors or of the investors of any other Contracting Party or any third State and their related activities including management, maintenance, use, enjoyment or disposal, whichever is the most favourable. 8. The modalities of application of paragraph 7 in relation to programmes under which a Contracting Party provides grants or other financial assistance, or enters into contracts, for energy technology research and development, shall be reserved for the supplementary treaty described in paragraph 4. Each Contracting Party shall through the Secretariat keep the Charter Conference informed of the modalities it applies to the programmes described in this paragraph. 9. Each State or Regional Economic Integration Organization which signs or accedes to this Treaty shall, on the date it signs the Treaty or deposits its instrument of accession, submit to the Secretariat a report summarizing all laws, regulations or other measures relevant to: (a) exceptions to paragraph 2; or (b) the programmes referred to in paragraph 8. A Contracting Party shall keep its report up to date by promptly submitting amendments to the Secretariat. The Charter Conference shall review these reports periodically. In respect of subparagraph (a) the report may designate parts of the energy sector in which a Contracting Party accords to investors of other Contracting Parties the treatment described in paragraph 3. In respect of subparagraph (b) the review by the Charter Conference may consider the effects of such programmes on competition and investments. 10. Notwithstanding any other provision of this Article, the treatment described in paragraphs 3 and 7 shall not apply to the protection of intellectual property; instead, the treatment shall be as specified in the corresponding provisions of the applicable international agreements for the protection of intellectual property rights to which the respective Contracting Parties are parties. 11. For the purposes of Article 26, the application by a Contracting Party of a trade-related investment measure as described in Article 5 (1) and (2) to an investment of an investor of another Contracting Party existing at the time of such application shall, subject to Article 5 (3) and (4), be considered a breach of an obligation of the former Contracting Party under this part. 12. Each Contracting Party shall ensure that its domestic law provides effective means for the assertion of claims and the enforcement of rights with respect to investments, investment agreements, and investment authorizations. Article 11 Key personnel 1. A Contracting Party shall, subject to its laws and regulations relating to the entry, stay and work of natural persons, examine in good faith requests by investors of another Contracting Party, and key personnel who are employed by such investors or by investments of such investors, to enter and remain temporarily in its area to engage in activities connected with the making or the development, management, maintenance, use, enjoyment or disposal of relevant investments, including the provision of advice or key technical services. 2. A Contracting Party shall permit investors of another Contracting Party which have investments in its area, and investments of such investors, to employ any key person of the investor's or the investment's choice regardless of nationality and citizenship provided that such key person has been permitted to enter, stay and work in the area of the former Contracting Party and that the employment concerned conforms to the terms, conditions and time limits of the permission granted to such key person. Article 12 Compensation for losses 1. Except where Article 13 applies, an investor of any Contracting Party which suffers a loss with respect to any investment in the area of another Contracting Party owing to war or other armed conflict, state of national emergency, civil disturbance, or other similar event in that area, shall be accorded by the latter Contracting Party, as regards restitution, indemnification, compensation or other settlement, treatment which is the most favourable of that which that Contracting Party accords to any other investor, whether its own investor, the investor of any other Contracting Party, or the investor of any third State. 2. Without prejudice to paragraph 1, an investor of a Contracting Party which, in any of the situations referred to in that paragraph, suffers a loss in the area of another Contracting Party resulting from: (a) requisitioning of its investment or part thereof by the latter's forces or authorities; or (b) destruction of its investment or part thereof by the latter's forces or authorities, which was not required by the necessity of the situation; shall be accorded restitution or compensation which in either case shall be prompt, adequate and effective. Article 13 Expropriation 1. Investments of investors of a Contracting Party in the area of any other Contracting Party shall not be nationalized, expropriated or subjected to a measure or measures having effect equivalent to nationalization or expropriation (hereinafter referred to as 'expropriation`) except where such expropriation is: (a) for a purpose which is in the public interest; (b) not discriminatory; (c) carried out under due process of law; and (d) accompanied by the payment of prompt, adequate and effective compensation. Such compensation shall amount to the fair market value of the investment expropriated at the time immediately before the expropriation or impending expropriation became known in such a way as to affect the value of the investment (hereinafter referred to as the 'valuation date`). Such fair market value shall at the request of the investor be expressed in a freely convertible currency on the basis of the market rate of exchange existing for that currency on the valuation date. Compensation shall also include interest at a commercial rate established on a market basis from the date of expropriation until the date of payment. 2. The investor affected shall have a right to prompt review, under the law of the Contracting Party making the expropriation, by a judicial or other competent and independent authority of that Contracting Party, of its case, of the valuation of its investment, and of the payment of compensation, in accordance with the principles set out in paragraph 1. 3. For the avoidance of doubt, expropriation shall include situations where a Contracting Party expropriates the assets of a company or enterprise in its area in which an investor of any other Contracting Party has an investment, including through the ownership of shares. Article 14 Transfers related to investments 1. Each Contracting Party shall with respect to investments in its area of investors of any other Contracting Party guarantee the freedom of transfer into and out of its area, including the transfer of: (a) the initial capital plus any additional capital for the maintenance and development of an investment; (b) returns; (c) payments under a contract, including amortization of principal and accrued interest payments pursuant to a loan agreement; (d) unspent earnings and other remuneration of personnel engaged from abroad in connection with that investment; (e) proceeds from the sale or liquidation of all or any part of an investment; (f) payments arising out of the settlement of a dispute; (g) payments of compensation pursuant to Articles 12 and 13. 2. Transfers pursuant to paragraph 1 shall be effected without delay and (except in case of a return in kind) in a freely convertible currency. 3. Transfers shall be made at the market rate of exchange existing on the date of transfer with respect to spot transactions in the currency to be transferred. In the absence of a market for foreign exchange, the rate to be used will be the most recent rate applied to inward investments or the most recent exchange rate for conversion of currencies into special drawing rights, whichever is more favourable to the investor. 4. Notwithstanding paragraphs 1 to 3, a Contracting Party may protect the rights of creditors, or ensure compliance with laws on the issuing, trading and dealing in securities and the satisfaction of judgements in civil, administrative and criminal adjudicatory proceedings, through the equitable, non-discriminatory, and good faith application of its laws and regulations. 5. Notwithstanding paragraph 2, Contracting Parties which are States that were constituent parts of the former Union of Soviet Socialist Republics may provide in agreements concluded between them that transfers of payments shall be made in the currencies of such Contracting Parties, provided that such agreements do not treat investments in their areas of investors of other Contracting Parties less favourably than either investments of investors of the Contracting Parties which have entered into such agreements or investments of investors of any third State. 6. Notwithstanding subparagraph 1 (b), a Contracting Party may restrict the transfer of a return in kind in circumstances where the Contracting Party is permitted pursuant to Article 29 (2) (a) or the GATT and Related Instruments to restrict or prohibit the exportation or the sale for export of the product constituting the return in kind; provided that a Contracting Party shall permit transfers of returns in kind to be effected as authorized or specified in an investment agreement, investment authorization, or other written agreement between the Contracting Party and either an investor of another Contracting Party or its investment. Article 15 Subrogation 1. If a Contracting Party or its designated agency (hereinafter referred to as the 'Indemnifying Party`) makes a payment under an indemnity or guarantee given in respect of an investment of an investor (hereinafter referred to as the 'Party Indemnified`) in the area of another Contracting Party (hereinafter referred to as the 'Host Party`), the Host Party shall recognize: (a) the assignment to the Indemnifying Party of all the rights and claims in respect of such investment; and (b) the right of the Indemnifying Party to exercise all such rights and enforce such claims by virtue of subrogation. 2. The Indemnifying Party shall be entitled in all circumstances to: (a) the same treatment in respect of the rights and claims acquired by it by virtue of the assignment referred to in paragraph 1; and (b) the same payments due pursuant to those rights and claims, as the Party Indemnified was entitled to receive by virtue of this Treaty in respect of the investment concerned. 3. In any proceeding pursuant to Article 26, a Contracting Party shall not assert as a defence, counterclaim, right of set-off or for any other reason, that indemnification or other compensation for all or part of the alleged damages has been received or will be received pursuant to an insurance or guarantee contract. Article 16 Relation to other agreements Where two or more Contracting Parties have entered into a prior international agreement, or enter into a subsequent international agreement, whose terms in either case concern the subject matter of Part III or V of this Treaty; 1. nothing in Part III or V of this Treaty shall be construed to derogate from any provision of such terms of the other agreement or from any right to dispute resolution with respect thereto under that agreement; and 2. nothing in such terms of the other agreement shall be construed to derogate from any provision of Part III or V of this Treaty or from any right to dispute resolution with respect thereto under this Treaty; where any such provision is more favourable to the investor or investment. Article 17 Non-application of Part III in certain circumstances Each Contracting Party reserves the right to deny the advantages of this part to: 1. a legal entity if citizens or nationals of a third State own or control such entity and if that entity has no substantial business activities in the area of the Contracting Party in which it is organized; or 2. an investment, if the denying Contracting Party establishes that such investment is an investment of an investor of a third State with or as to which the denying Contracting Party: (a) does not maintain a diplomatic relationship; or (b) adopts or maintains measures that: (i) prohibit transactions with investors of that State; or (ii) would be violated or circumvented if the benefits of this part were accorded to investors of that State or to their investments. PART IV MISCELLANEOUS PROVISIONS Article 18 Sovereignty over energy resources 1. The Contracting Parties recognize State sovereignty and sovereign rights over energy resources. They reaffirm that these must be exercised in accordance with and subject to the rules of international law. 2. Without affecting the objectives of promoting access to energy resources, and exploration and development thereof on a commercial basis, the Treaty shall in no way prejudice the rules in Contracting Parties governing the system of property ownership of energy resources. 3. Each State continues to hold in particular the rights to decide the geographical areas within its area to be made available for exploration and development of its energy resources, the optimalization of their recovery and the rate at which they may be depleted or otherwise exploited, to specify and enjoy any taxes, royalties or other financial payments payable by virtue of such exploration and exploitation, and to regulate the environmental and safety aspects of such exploration, development and reclamation within its area, and to participate in such exploration and exploitation, inter alia, through direct participation by the government or through State enterprises. 4. The Contracting Parties undertake to facilitate access to energy resources, inter alia, by allocating in a non-discriminatory manner on the basis of published criteria authorizations, licences, concessions and contracts to prospect and explore for or to exploit or extract energy resources. Article 19 Environmental aspects 1. In pursuit of sustainable development and taking into account its obligations under those international agreements concerning the environment to which it is party, each Contracting Party shall strive to minimize in an economically efficient manner harmful environmental impacts occurring either within or outside its area from all operations within the energy cycle in its area, taking proper account of safety. In doing so each Contracting Party shall act in a cost-effective manner. In its policies and actions each Contracting Party shall strive to take precautionary measures to prevent or minimize environmental degradation. The Contracting Parties agree that the polluter in the areas of Contracting Parties, should, in principle, bear the cost of pollution, including transboundary pollution, with due regard to the public interest and without distorting investment in the energy cycle or international trade. Contracting Parties shall accordingly:(a) take account of environmental considerations throughout the formulation and implementation of their energy policies; (b) promote market-oriented price formation and a fuller reflection of environmental costs and benefits throughout the energy cycle; (c) having regard to Article 34 (4), encourage cooperation in the attainment of the environmental objectives of the Charter and cooperation in the field of international environmental standards for the energy cycle, taking into account differences in adverse effects and abatement costs between Contracting Parties; (d) have particular regard to improving energy efficiency, to developing and using renewable energy sources, to promoting the use of cleaner fuels and to employing technologies and technological means that reduce pollution; (e) promote the collection and sharing among Contracting Parties of information on environmentally sound and economically efficient energy policies and cost-effective practices and technologies; (f) promote public awareness of the environmental impacts of energy systems, of the scope for the prevention or abatement of their adverse environmental impacts, and of the costs associated with various prevention or abatement measures; (g) promote and cooperate in the research, development and application of energy efficient and environmentally sound technologies, practices and processes which will minimize harmful environmental impacts of all aspects of the energy cycle in an economically efficient manner; (h) encourage favourable conditions for the transfer and dissemination of such technologies consistent with the adequate and effective protection of intellectual property rights; (i) promote the transparent assessment at an early stage and prior to decision, and subsequent monitoring, of environmental impacts of environmentally significant energy investment projects; (j) promote international awareness and information exchange on Contracting Parties' relevant environmental programmes and standards and on the implementation of those programmes and standards; (k) participate, upon request, and within their available resources, in the development and implementation of appropriate environmental programmes in the Contracting Parties. 2. At the request of one or more Contracting Parties, disputes concerning the application or interpretation of provisions of this Article shall, to the extent that arrangements for the consideration of such disputes do not exist in other appropriate international fora, be reviewed by the Charter Conference aiming at a solution. 3. For the purposes of this Article: (a) 'energy cycle` means the entire energy chain, including activities related to prospecting for, exploration, production, conversion, storage, transport, distribution and consumption of the various forms of energy, and the treatment and disposal of wastes, as well as the decommissioning, cessation or closure of these activities, minimizing harmful environmental impacts; (b) 'environmental impact` means any effect caused by a given activity on the environment, including human health and safety, flora, fauna, soil, air, water, climate, landscape and historical monuments or other physical structures or the interactions among these factors; it also includes effects on cultural heritage or socio-economic conditions resulting from alterations to those factors; (c) 'improving energy efficiency` means acting to maintain the same unit of output (of a good or service) without reducing the quality or performance of the output, while reducing the amount of energy required to produce that output; (d) 'cost-effective` means to achieve a defined objective at the lowest cost or to achieve the greatest benefit at a given cost. Article 20 Transparency 1. Laws, regulations, judicial decisions and administrative rulings of general application which affect trade in energy materials and products are, in accordance with Article 29 (2) (a), among the measures subject to the transparency disciplines of the GATT and relevant Related Instruments. 2. Laws, regulations, judicial decisions and administrative rulings of general application made effective by any Contracting Party, and agreements in force between Contracting Parties, which affect other matters covered by this Treaty shall also be published promptly in such a manner as to enable Contracting Parties and investors to become acquainted with them. The provisions of this paragraph shall not require any Contracting Party to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of any investor. 3. Each Contracting Party shall designate one or more enquiry points to which requests for information about the abovementioned laws, regulations, judicial decisions and administrative rulings may be addressed and shall communicate promptly such designation to the Secretariat which shall make it available on request. Article 21 Taxation 1. Except as otherwise provided in this Article, nothing in this Treaty shall create rights or impose obligations with respect to taxation measures of the Contracting Parties. In the event of any inconsistency between this Article and any other provision of the Treaty, this Article shall prevail to the extent of the inconsistency. 2. Article 7 (3) shall apply to taxation measures other than those on income or on capital, except that such provision shall not apply to: (a) an advantage accorded by a Contracting Party pursuant to the tax provisions of any convention, agreement or arrangement described in subparagraph (7) (a) (ii); or (b) any taxation measure aimed at ensuring the effective collection of taxes, except where the measure of a Contracting Party arbitrarily discriminates against energy materials and products originating in, or destined for the area of another Contracting Party or arbitrarily restricts benefits accorded pursuant to Article 7 (3). 3. Article 10 (2) and (7) shall apply to taxation measures of the Contracting Parties other than those on income or on capital, except that such provisions shall not apply to: (a) impose most favoured nation obligations with respect to advantages accorded by a Contracting Party pursuant to the tax provisions of any convention, agreement or arrangement described in subparagraph (7) (a) (ii) or resulting from membership of any Regional Economic Integration Organization; or (b) any taxation measure aimed at ensuring the effective collection of taxes, except where the measure arbitrarily discriminates against an investor of another Contracting Party or arbitrarily restricts benefits accorded under the investment provisions of this Treaty. 4. Article 29 (2) to (6) shall apply to taxation measures other than those on income or on capital. 5. (a) Article 13 shall apply to taxes. (b) Whenever an issue arises pursuant to Article 13, to the extent it pertains to whether a tax constitutes an expropriation or whether a tax alleged to constitute an expropriation is discriminatory, the following provisions shall apply: (i) the investor or the Contracting Party alleging expropriation shall refer the issue of whether the tax is an expropriation or whether the tax is discriminatory to the relevant competent tax authority. Failing such referral by the investor or the Contracting Party, bodies called upon to settle disputes pursuant to Article 26 (2) (c) or 27 (2) shall make a referral to the relevant competent tax authorities; (ii) the competent tax authorities shall, within a period of six months of such referral, strive to resolve the issues so referred. Where non-discrimination issues are concerned, the competent tax authorities shall apply the non-discrimination provisions of the relevant tax convention or, if there is no non-discrimination provision in the relevant tax convention applicable to the tax or no such tax convention is in force between the Contracting Parties concerned, they shall apply the non-discrimination principles pursuant to the Model Tax Convention on Income and Capital of the Organization for Economic Cooperation and Development; (iii) bodies called upon to settle disputes pursuant to Article 26 (2) (c) or 27 (2) may take into account any conclusions arrived at by the competent tax authorities regarding whether the tax is an expropriation. Such bodies shall take into account any conclusions arrived at within the six-month period prescribed in subparagraph (b) (ii) by the competent tax authorities regarding whether the tax is discriminatory. Such bodies may also take into account any conclusions arrived at by the competent tax authorities after the expiry of the six-month period; (iv) under no circumstances shall involvement of the competent tax authorities, beyond the end of the six-month period referred to in subparagraph (b) (ii), lead to a delay of proceedings pursuant to Articles 26 and 27. 6. For the avoidance of doubt, Article 14 shall not limit the right of a Contracting Party to impose or collect a tax by withholding or other means. 7. For the purposes of this Article: (a) The term 'taxation measure` includes: (i) any provision relating to taxes of the domestic law of the Contracting Party or of a political subdivision thereof or a local authority therein; and (ii) any provision relating to taxes of any convention for the avoidance of double taxation or of any other international agreement or arrangement by which the Contracting Party is bound. (b) There shall be regarded as taxes on …