The
Republic of Latvia and the Republic of Hungary (hereinafter
referred to as the "Contracting Parties"),
Desiring
to intensify economic cooperation to the mutual benefit of both
countries,
Intending to create and maintain favourable conditions
for investments of investors of one Contracting Party in the
territory of the other Contracting Party, and
Conscious that the promotion and reciprocal protection
of investments, according to the present Agreement, stimulates
the business initiatives in this field,
Have
agreed as follows:
Article 1
Definitions
For the
purposes of this Agreement:
1. The
term "investment" shall comprise every kind of
asset invested in connection with economic activities by an
investor of one Contracting Party in the territory of the other
Contracting Party in accordance with the laws of the latter and
shall include, in particular, though not
exclusively:
/a/
movable and immovable property (including land property etc.)
as well as any other property rights in rem such as
mortgages, liens, pledges, and similar rights;
/b/
shares, stocks and debentures of a company or any other form of
participation in a company;
/c/
claims to money or to any performance having an economic value
associated with an investment;
/d/
intellectual property rights, including copyrights, trade
marks, patents, industrial designs, technical processes,
know-how, trade secrets, trade names and goodwill associated
with an investment;
/e/ any
right conferred by laws or under contract and any licenses and
permits pursuant to laws, including the concessions to search
for, extract, cultivate or exploit natural
resources.
Any
alteration of the form in which assets are invested shall not
affect their character as investment.
2. The
term "investor" shall mean any natural or
legal person who invests in the territory of the other
Contracting Party.
/a/ The
term "natural person" shall mean any natural
person having the nationality of either Contracting Party in
accordance with its laws.
/b/ The
term "legal person" shall mean with respect to
either Contracting Party, any entity - with or without legal
personality - incorporated or constituted in accordance with
its laws.
3. The
term "returns" shall mean amounts yielded by
an investment and in particular, though not exclusively,
includes profits, interests, capital gains, dividends,
royalties or fees.
4. The
term "territory" shall mean:
/a/ in
the case of the Republic of Latvia the territory of the
Republic of Latvia including the territorial sea, as well as
any maritime area beyond that where the Republic of Latvia in
conformity with international law exercises sovereign rights
with regard to the seabed and subsoil and the natural resources
of such areas.
/b/ in
the case of the Republic of Hungary, when used in a
geographical sense, the territory of the Republic of
Hungary.
5. The
term "freely convertible currency" means the
currency that is widely used to make payments for international
transactions and widely exchanged in principal international
exchange markets provided it is not contrary to the regulations
of either of the Contracting Parties.
Article 2
Promotion and Protection of Investments
1. Each
Contracting Party shall encourage and create favourable
conditions for investors of the other Contracting Party to make
investments in its territory and shall admit such investments
in accordance with its laws.
2.
Investments of investors of either Contracting Party shall at
all times be accorded fair and equitable treatment and shall
enjoy full protection and security in the territory of the
other Contracting Party.
Article 3
National and Most-Favoured-Nation
Treatment
1. Each
Contracting Party shall in its territory accord investments and
returns of investors of the other Contracting Party treatment
which is fair and equitable and not less favourable than that
which it accords to investments and returns of its own
investors or to investments and returns of investors of any
third State, whichever is more favourable.
2. Each
Contracting Party shall in its territory accord to investors of
the other Contracting Party, as regards management,
maintenance, use, enjoyment or disposal of their investment,
treatment which is fair and equitable and not less favourable
than that which it accords to its own investors or investors of
any third State, whichever is more favourable.
3. The
provisions of paragraph 1 and 2 of this Article shall not be
construed so as to oblige one Contracting Party to extend to
the investors of the other the benefit of any treatment,
preference or privilege which may be extended by the former
Contracting Party by virtue of:
/a/ any
customs union or free trade area or a monetary union or similar
international agreements leading to such unions or institutions
or other forms of regional co-operation to which either of the
Contracting Party is or may become a party;
/b/ any
international agreement or arrangement relating wholly or
mainly to taxation.
/c/ any
multilateral agreements on investments to which either of the
Contracting Party is or may become a party.
Article 4
Compensation for Losses
1. When
investments of investors of either Contracting Party suffer
losses owing to war, armed conflict, a state of national
emergency, revolt, insurrection, riot or other similar events
in the territory of the other Contracting Party, they shall be
accorded by the latter Contracting Party treatment, as regards
restitution, indemnification, compensation or other settlement,
not less favourable than that which the latter Contracting
Party accords to its own investors or to investors of any third
State. Resulting payments shall be freely transferable in a
freely convertible currency without delay.
2.
Without prejudice to paragraph 1 of this Article, investors of
one Contracting Party who in any of the events referred to in
that paragraph suffer losses in the territory of the other
Contracting Party resulting from:
/a/
requisitioning of their property by its forces or
authorities,
/b/
destruction of their property by its forces or authorities
which was not caused in combat action or was not required by
the necessity of the situation,
shall be
accorded just and adequate compensation for the losses
sustained during the period of the requisitioning or as a
result of the destruction of the property. Resulting payments
shall be freely transferable in a freely convertible currency
without delay.
Article 5
Expropriation
1.
Investments of investors of either Contracting Party shall not
be nationalized, expropriated or subjected to measures having
effect equivalent to nationalisation or expropriation
(hereinafter referred to as " expropriation ") in the
territory of the other Contracting Party except for a public
purpose. The expropriation shall be carried out under due
process of law, on a non-discriminatory basis and shall be
accompanied by provisions for the payment of prompt, adequate
and effective compensation. Such compensation shall amount to
the market value of the investment expropriated immediately
before expropriation or impending expropriation became public
knowledge, shall include interest at a commercial rate from the
date of expropriation, shall be made without delay, be
effectively realizable and be freely transferable in a freely
convertible currency.
2. The
investor affected shall have a right, to prompt review, by a
judicial or other independent authority of the Contracting
Party making the expropriation, of his or its case and of the
valuation, of his or its investment in accordance with the
principles set out in this Article.
3. The
provisions of paragraph 1 of this Article shall accordingly
apply where a Contracting Party expropriates the assets of a
company which is incorporated or constituted under the law in
force in any part of its own territory, and in which investors
of the other Contracting Party own shares. The compensation is
due to the company and may be paid in local currency as
well.
Article 6
Transfers
1. The
Contracting Parties shall guarantee the transfer of payments
related to investments and returns of investors of the other
Contracting Party. The transfers shall be made in a freely
convertible currency, without any restriction and undue delay.
Such transfers shall include in particular, though not
exclusively:
/a/
capital and additional amounts to maintain or increase the
investment;
/b/
profits, interest, dividends and other current
income;
/c/
funds in repayment of loans;
/d/
royalties or fees;
/e/
proceeds of the total or partial sale or liquidation of the
investment;
/f/
earnings of natural persons of one Contracting Party working in
connection with an investment in the territory of the other
Contracting Party in which the investment has been
made.
2. For
the purpose of this Agreement, exchange rates shall be the rate
generally applied and published by the financial institution
effecting the transfer unless otherwise agreed. Should such
rate not exist the official rate has to be applied unless
otherwise agreed.
Article 7
Subrogation
1. If a
Contracting Party or its designated agency makes payment to its
own investors under an insurance contract or guarantee it has
accorded in respect of an investment in the territory of the
other Contracting Party, the latter Contracting Party shall
recognize:
/a/ the
assignment, whether under the law or pursuant to a legal
transaction in that country, of any right or claim by the
investor to the former Contracting Party or its designated
agency, as well as,
/b/ that
the former Contracting Party or its designated agency is
entitled by virtue of subrogation to exercise the rights and
enforce the claims of that investor and shall assume the
obligations related to the investment.
2. The
subrogated rights or claims shall not exceed the original
rights or claims of the investor.
Article 8
Settlement of Investment Disputes between a Contracting
Party and an Investor of the Other Contracting
Party
1. Any
dispute which may arise between an investor of one Contracting
Party and the other Contracting Party in connection with an
investment on the territory of that other Contracting Party
shall be subject to negotiations between the parties in
dispute.
2. If
any dispute between an investor of one Contracting Party and
the other Contracting Party can not be thus settled within a
period of six months, the investor shall be entitled to submit
the case either to:
/a/ the
competent court of the Contracting Party in the territory of
which the investment has been made; or
/b/ the
International Center for Settlement of Investment Disputes
(ICSID) having regard to the applicable provisions of the
Convention on the Settlement of Investment Disputes between
States and Nationals of other States opened for signature at
Washington D.C. on 18 March 1965, in the event both Contracting
Parties shall have become a party to this Convention,
or
/c/ an
arbitrator or international ad hoc arbitral tribunal
established under the Arbitration Rules of the United Nations
Commission on International Trade Law (UNCITRAL). The parties
to the dispute may agree in writing to modify these Rules. The
arbitral awards shall be final and binding on both parties to
the dispute.
Article 9
Settlement of Disputes between the Contracting
Parties
1.
Disputes between the Contracting Parties concerning the
interpretation or application of this Agreement shall if
possible be settled through consultation or
negotiation.
2. If
the dispute cannot be thus settled within six months, it shall
upon the request of either Contracting Party, be submitted to
an Arbitral Tribunal in accordance with the provisions of this
Article.
3. The
Arbitral Tribunal shall be constituted for each individual case
in the following way. Within two months of the receipt of the
request for arbitration, each Contracting Party shall appoint
one member of the Tribunal. These two members shall then select
a national of a third State who on approval of the two
Contracting Parties shall be appointed Chairman of the Tribunal
(hereinafter referred to as the "Chairman"). The
Chairman shall be appointed within three months from the date
of appointment of the other two members.
4. If
within the periods specified in paragraph 3 of this Article the
necessary appointments have not been made, a request may be
made to the President of the International Court of Justice to
make the appointments. If he happens to be a national of either
Contracting Party, or if he is otherwise prevented from
discharging the said function, the Vice-President shall be
invited to make the appointments. If the Vice-President also
happens to be a national of either Contracting Party or is
prevented from discharging the said function, the member of the
International Court of Justice next in seniority who is not a
national of either Contracting Party shall be invited to make
the appointments.
5. The
Arbitral Tribunal shall reach its decision by a majority of
votes. Such decision shall be binding. Each Contracting Party
shall bear the cost of its own arbitrator and its
representation in the arbitral proceedings; the cost of the
Chairman and the remaining costs shall be borne in equal parts
by the both Contracting Parties. The Arbitral Tribunal shall
determine its own procedure.
Article 10
Application of Other Rules and Special
Commitments
1. Where
a matter is governed simultaneously both by this Agreement and
by another international agreement to which both Contracting
Parties are parties, nothing in this Agreement shall prevent
either Contracting Party or any of its investors who own
investments in the territory of the other Contracting Party
from taking advantage of whichever rules are more favourable to
his case.
2. If
the treatment to be accorded by one Contracting Party to
investors or investments of investors of the other Contracting
Party in accordance with its laws or other specific provisions
of contract is more favourable than that accorded by this
Agreement, the more favourable shall be accorded.
Article 11
Applicability of this Agreement
This
Agreement shall apply to investments made in the territory of
one of the Contracting Parties in accordance with its laws by
investors of the other Contracting Party prior to as well as
after the entry into force of this Agreement, but shall not
apply to any dispute concerning an investment which arose, or
any claim which was settled before its entry into
force.
Article 12
Entry
into Force, Duration and Termination
1. Each
Contracting Party shall notify each other in writing through
diplomatic channels that their constitutional requirements for
the entry into force of this Agreement have been complied with.
This Agreement shall enter into force on the date of the
receipt of the second notification.
2. This
Agreement shall remain in force for a period of ten years.
Thereafter, it shall continue in force until the expiration of
12 months from the date on which either Contracting Party shall
have given written notice of termination to the
other.
3. In
respect of investments made prior to the termination of this
Agreement, the provisions of this Agreement shall continue to
be effective for a period of ten years from the date of
termination.
IN
WITNESS WHEREOF, the undersigned duly authorized thereto have
signed this Agreement.
Done in
duplicate at Budapest, this 10 day of June, 1999, in the
Latvian, Hungarian and English languages, all texts being
equally authentic. In case of any divergence of interpretation,
the English text shall prevail.
|
For the Republic of
Latvia
|
For the
Republic of Hungary |
|
Māris
Riekstiņš |
Järai
Zsigmond |
