European Energy Charter 8

European Energy Charter




(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’sor 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.



(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.



(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

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 theInvestment (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.



(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

(f) payments arising out of the settlement of a dispute;

(g) payments of compensation pursuant to Articles 12 and 13.

(2) Transfers under 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 under 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.



(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 the 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 under 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




See Also

References and Further Reading

About the Author/s and Reviewer/s

Author: international

Mentioned in these Entries

Due Process, European Energy Charter.



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