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 |
