AGREEMENT BETWEEN THE GOVERNMENT OF THE ISLAMIC REPUBLIC OF AFGHANISTAN AND THE GOVERNMENT OF THE REPUBLIC OF AZERBAIJAN ON THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS
of Afghanistan ana the of the Islamic Republic The Government of the Republic of Azerbaijan, hereinafter referred to as the Government “Contracting Parties’,
DESIRING to intensify economic cooperation to the mutual benefit of both countries,
RECOGNISING that the promotion of international investment flows and the protection of investments of one Contracting Party in the territory of the State of the other Contracting Party on the basis of this Agreement will be conducive to stimulation of business initiatives, transfer of technology, job creation and human resources development arising from such investmenis,
ACKNOWLEDGING that each Contracting Party maintains the right to regulate foreign investment established in the territory of its State, and to activities are to ensure that investment take the necessary measures consistent with its national laws, policies and development strategies,
DESIRING to reciprocally promote and protect foreign invesiments consistently with the pursuance of the sustainable development goals, and , the combating of climate change, SECURING an overall balance of rights and obligations between host as and home (originating investments) countries (accepting investments) well as between investors and host countries, —— - in a manner consistent-with DESIRING to achieve these objectives of of health, safety, and the environment and the promotion the protection sustainable development,
HAVE AGREED AS FOLLOWS:
Article 1Definitions
For the purpose of this Agreement:
or of asset established
4. The term “Investment” means every kind wholly or Party of one Contracting by an investor acquired directly Party in of the other Contracting of the State in the territory exclusively accordance with the national legislation of the latter Contracting Party, that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, an expectation of gain or profit, or an assumption of risk and includes, in particular, though not exclusively:
a. movable and immovable property or any property rights such as mortgages, liens, pledges, leases, usufruct and similar substantial laws;
in a of participation or shares, stocks or other form b. a company, company;
c. money, claims to money or claims to performance under contract having a financial value; rights to rights, - copyright, related rights property d. intellectual topologies of integrated circuits and databases and industrial property rights trademarks, geographical industrial designs, utility models, to inventions, indications, technical processes, trade names, “know-how” and “business by the national rights recognized other relevant well as as reputation”, legislations of both Contracting Parties: or under a act by administrative by law, e. concessions conferred search for, to concessions including a competent authority, by contract develop, extract or exploit natural resources.
Investment does not include: to payment that are immediately due and result from the
4. Claims sale of goods or services;
b. Public debt operations.
A change in the form in which assets are invested does not affect their character as investments as long as they are covered by the definition of investment in this Article.
2. The term “Returns” means the amounts yielded by an investment dividends, shall include profits, not exclusively, in particular, though and to an kind related in any payments gains or capital royalties, interest, investment.
3. The term “Investor” means:
a. Any natural person having the nationality of a Contracting Party in accordance with its national legislation; in cases of double nationality, a person shall be considered to be a national exclusively of the State in which it has a dominant and effective nationality; dominant and effective nationality refers to the place in which the physical person pays its taxes, receives its social security, exercises its voting rights and/or can hold public office, b. A legal entity incorporated or duly constituted for profit in accordance with applicable national legislation of one Contracting Party and having its seat and conducting substantial business activities within the territory of the State of that Contracting Party, who makes an investment in the territory of the State of the other Contracting Party according to national legislation of that Contracting Party.
4. The term “Territory” means in respect to:
a. The Islamic Republic of Afghanistan: all land territory, internal waters and the airspace over them in which the Islamic Republic of Afghanistan has sovereignty in conformity with international law:
b. The Republic of Azerbaijan: the territory of the Republic of Azerbaijan, including the respective Caspian Sea sector over which the Republic of Azerbaijan exercises, in accordance with its national law and international law, sovereign rights and jurisdiction.
Article 2Promotion and protection of investments
1. Each Contracting Party shall encourage and create favorable conditions in the territory of its State for an investment by an investor of the other Contracting Party and in exercise of powers conferred by its national legislation shall admit such investments.
2. Each Contracting Party shall accord to investments of investors of the other Contracting Party in the territory of its State fair and equitable treatment and full physical protection and security in accordance with international law minimum standard of treatment of aliens. The concepts of “fair and equitable treatment” and “full physical protection and security” do not require treatment in addition to or beyond that which is required by that standard, and do not create additional substantive rights.
3. Each Contracting Party shall abstain from treating investors and their investment in a manner that is manifestly arbitrary, discriminatory or abusive. Neither Contracting Party shall deny justice in any legal or administrative proceedings or otherwise flagrantly violate due process.
4. A determination that there has been a breach of another provision of a separate international agreement, does not of this Agreement, or establish that there has been a breach of fair and equitable treatment.
5. The investor's conduct and accepted business risk in the territory of the host State shall be taken into account when determining a breach of the fair and equitable treatment standard.
6. Neither Contracting Party shall impair by unreasonable, arbitrary or maintenance, use, enjoyment, the management, discriminatory measures disposal of investments in the territory of its State of investors of the other Contracting Party.
Party shall impose mandatory measures on
7. Neither Contracting investments by investors of the other Contracting Party concerning purchase marketing of its operation, transport, means of production, of materials, it is provided for by the applicable national legislation of the products unless Contracting Party.
8. Each Contracting Party shall, within the framework of its national in in good faith all applications for necessary permits legislation, consider its State, including the territory of investments in connection with authorizations for engaging executives, managers, specialists and technical personnel of the investors’ choice.
Article 3Access to investor information and transparency
a to seek information from Host Contracting Party has the right
1. potential investor or its home State about its corporate governance history and its practices as an investor, including in its home State. Host Contracting public in the available to the the information provided Party may make community where the investment may be located, subject to the protection of confidential business information and to other applicable national laws.
2. Each Contracting Party shall ensure that, to the extent possible, its laws, regulations, procedures, administrative rulings and judicial decisions of general application, as well as international agreements after their entry into force, which may affect the investments of investors of the other Contracting Party in the territory of its State, are promptly published, or otherwise made publicly available.
Article 4Treatment of investments
an investor of one Contracting Party in the
1. Investments made by ontracting Party, or returns related thereto, territory of the State of the other C less favorable than the Host Contracting no be accorded treatment shall Party accords to the investments and returns made by its own investor or by investors of any third State, whichever is the most favorable to the investor.
2. Investors of one Contracting Party shall be accorded by the other Contracting Party, as regards the management, maintenance, use, enjoyment or disposal of their investments, treatment no less favorable than the latter Contracting Party accords to its own investors or to investors of any third State, whichever is the most favorable to the investor.
3. The present Article shall apply only in respect of the kinds of treatment offered in Articles 2 to 8 of this Agreement, and shall not apply in respect of an investor's right to submit a dispute arising under this Agreement to any dispute settlement procedure.
4. The obligation referred to in paragraph 1 of this Article above shall not apply to treatment accorded under all treaties, whether bilateral or multilateral, in force or signed prior to the date of entry into force of this Agreement.
5. Notwithstanding paragraphs 1 and 2 of this Article, the Contracting Parties reserve the right to adopt or maintain any measure that accords differential treatment to socially or economically disadvantaged rural populations and marginalized communities.
Article 5General exceptions
1. The provisions of this Agreement shall not be construed so as to oblige one Contracting Party to extend to the investors or investments of the other Contracting Party the benefits of any treatment, preference or privilege by virtue of:
a. any existing or future free trade area, customs union, common market or regional labor market agreement to which one of the Contracting Parties is or may become a party;
b. any international agreement or arrangement relating wholly or partly to taxation to which one of the Contracting Parties is or may become a party; or c. any multilateral convention or treaty relating to investments, of which one of the Contracting Parties is or may become a party.
2. Nothing in this Agreement shall be construed to prevent a Contracting Party from taking any action that is considered as necessary for the protection of national security, public order or public health, morality, or protection of environment, provided that such measures are not applied in a manner which would constitute a means of arbitrary or unjustified discrimination.
Article 6Expropriation
1. Investments by investors of a Contracting Party in the territory of the State of the other Contracting Party shall not be expropriated, nationalized or subjected to any other measures having the effect, either directly or indirectly, equivalent to expropriation or nationalization (hereinafter referred to as “expropriation”) except for a public and state interest, on a non-discriminatory basis, under due process of law and against the payment of prompt, adequate and effective compensation.
2. Such compensation shall amount to the fair market value of the expropriated investment at the time immediately before the expropriation was taken or became public knowledge, whichever is earlier.
3. Taking into account paragraph 2 of this Article, such fair market value shall be expressed in a freely convertible currency on the basis of the market rate of exchange applicable for that currency on the day of transfer.
Compensation shall also include interest at a commercial rate established on a market basis for the currency in question from the date of expropriation until the date of actual payment.
4. The investor, whose investments are expropriated, shall have the right to prompt review by a State judicial or other competent authority of the Host Contracting Party of its case.
5. The non-discriminatory regulatory actions or measures taken by a Contracting Party that are designed and applied to protect legitimate public welfare objectives, such as environment, public health, safety and labor rights, do not constitute an “indirect expropriation” within the meaning of this Article.
Article 7Compensation for losses
1. Investors of one Contracting Party whose investments in the territory of the State of the other Contracting Party suffer losses owing to war or other armed conflict, a state of emergency, revolt, insurrection or a natural disaster in the territory of the State of the latter Contracting Party, shall be accorded by the latter Contracting Party treatment, as regards restitution, indemnification, compensation or other settlement no less favorable than that which the latter Contracting Party accords to its own investors or investors of any third State, whichever is the most favorable to the investor.
2. Without prejudice to paragraph 1 of this Article, an investor of one Contracting Party, who in any of the situations referred to in that paragraph, suffers a loss in the territory of the State of the other Contracting Party resulting from: a part thereof by the latter’ a. requisitioning of its investment or y atter's
F armed forces or authorities. or b. destruction of its investment or a part thereof by the latter's armed forces or authorities, which was not required by the necessity of situation shall be accorded adequate compensation in the light of the particular circumstances.
Article 8Free transfer
1. In accordance with its national legislation, each Contracting Party shall in good faith ensure to investor of the other Contracting Party the free transfer, into and out of the territory of its State, of payments in connection after all taxes are paid and obligations are fulfilled with an investment to the legislation of the Contracting Party in the territory of the according is made. Such payments shall include in State of which an investment particular, though not exclusively:
amounts to maintain, develop or a. the principal and additional increase the investments;
b. returns:
of an c, proceeds obtained from the total or partial sale or disposal investment;
d. amounts required for payment of expenses which arise from the operation of the investment, such as payment of royalties and license fees or other similar expenses; 6 and 7 of this pursuant to Articles e. compensation payable Agreement;
f. payments in respect of management fees;
g. payments arising out of the settlement of a dispute;
h. payments in connection with contracts, including loan agreements;
of personnel engaged from net earnings and other remuneration i. abroad working in connection with an investment.
of this Article shall be made
2. Transfers referred to in paragraph 1 in a freely convertible currency and at the without any restriction or delay, applicable market rate of exchange applicable on the date of transfer in the If a market rate is unavailable, the applicable rate currency to be transferred. of exchange shall be the most recent rate of exchange for conversion of currencies into Special Drawing Rights.
2 of this Article, a Contracting 1 and 3, Notwithstanding paragraphs equitable, non- through the prevent a_ transfer may delay or Party of measures ensuring investor's faith application discriminatory and good compliance with the Host Contracting Party's national legislation including relating to:
a. the payment of taxes and dues;
b. bankruptcy or insolvency proceedings, or the protection of the rights of creditors; of the proceeds of or penal offences and the recovery c. criminal crime; an order or judgment of the court or d. ensuring compliance with tribunal of the Host Contracting Party; options or futures, in securities, or dealing issuing, trading, e. derivatives;
f. financial reporting or record keeping of transfers when necessary to assist law enforcement or financial regulatory authorities;
g. social security, public retirement, or compulsory saving schemes, h. severance entitlements of employees; and i, requirement to register and satisfy other formalities imposed by the Central Bank and other relevant authorities of a Contracting Party.
In case of a serious balance of payments difficulty or of a threat
4. thereof, a Contracting Party may temporarily restrict transfers provided that such a Contracting Party implements measures OF a program in accordance an with international standards. These restrictions should be imposed on equitable, non-discriminatory and in good faith basis.
Article 9Subrogation agency (guarantor) or Its designated Party a Contracting Where
of non- in respect it has accorded a guarantee a payment under makes in the territory of the State of the other of an investment commercial risks Contracting Party, the Host Contracting Party shall recognize the assignment such an from claims resulting rights and of all the to the guarantor to exercise \s entitled that the guarantor shall recognize and investment, the same extent as the original to and enforce such claims such rights investor
Article 10Consultations
The Contracting Parties agree to consult promptly, on the request of in connection with this either, to resolve any dispute arising between them implementation or relating to the to review any matter Agreement, or application of this Agreement or to study any other issue that may arise from this Agreement. Such consultations shall be held between the competent authorities of the Contracting Parties at a place and at a time agreed upon by the Contracting Parties through diplomatic channels.
Article 11Denial of benefits
of this Agreement,
1. A Contracting Party may deny the benefits dispute settlement or to continue the right to commence including Party and to the of the other Contracting to an investor proceedings, investments of that investor, if:
a. the investor is owned or controlled by persons having the nationality or of the denying a Contracting Party not a State of a State that is of or that has no diplomatic relations with the Contracting Contracting Party Party in the territory of the State of which the investment is made;
b. the investor is a physical person having the dominant and effective is not a State of a Contracting Party or of the nationality of a State that denying Contracting Party;
activities in the no substantial business c. the investor conducts territory of the State of the other Contracting Party.
2 For the avoidance of doubt, once exercised, such denial may apply all or only specified investors or investments of investors, and whether to existing or future investors or investments.
Article 12Settlement of disputes between an investor and the Host Contracting Party
Any disputes between an investor of one Contracting Party and the
1. other Contracting Party concerning an alleged violation of one or more of the in respect of an investment in the territory of the provisions of this Agreement State of the latter Contracting Party shall, it possible, be settled amicably. an investor may submit a dispute to arbitration under this Article, the Before hold negotiations. The place of the disputing parties shall, in good faith, shall be the capital city of the State of the Contracting Party to negotiations the dispute unless the disputing parties otherwise agree. An investor's right to submit a dispute to dispute settlement procedures set out in paragraph 2 of this Article, shall not be frustrated or denied merely by the refusal of the Contracting Party to the dispute to participate in negotiations.
2. If a dispute referred to in paragraph 1 of this Article, cannot be settled amicably within six (6) months from the date of request for amicable settlement, the investor concerned may submit the dispute to international arbitration. Unless any other mechanism is agreed for the resolution of the dispute, which shall prevail, the investor has the choice of submitting the case either to:
a. the competent state courts of the Contracting Party in the territory of the State of which the investment is made;
for Settlement of Investment Disputes b. The International Centre Convention on the Settlement of established pursuant to the (ICSID), Investment Disputes between States and Nationals of Other States, opened for signature at Washington on 18 March 1965 (hereinafter referred to as the “Centre”);
if any one of the Contracting c. The Additional Facility of the Centre, is a signatory to the Convention set out in subparagraph (b) of this Parties Article: or d. an ad hoc arbitration tribunal to be established under the Arbitration on International Trade Law of the United Nations Commission Rules (UNCITRAL).
is for loss or damage to an
3. An investor and, where the claim Party that is a juridical of the other Contracting interest in an enterprise person that the investor owns or controls directly or indirectly, the enterprise who have already submitted a claim concerning the conduct or measure of to the dispute to the is alleged to give rise the Contracting Party that Party or to any other of the State of the Contracting competent courts not be entitled to previously agreed dispute settlement procedures, shall submit the dispute to international arbitration as offered in paragraph 2 of this declaratory or other for injunctive, except for proceedings Article, before an payment of damages, not involving the extraordinary relief, of the disputing Contracting or court under the law administrative tribunal Party.
4. Neither of the Contracting Parties, which is a party to a dispute, can or of the arbitration procedure at any phase of the raise an objection, execution of an arbitral award, on account of the fact that the investor, which received an indemnification the dispute, had party of is the opposing covering a part or the whole of its losses by virtue of an insurance.
law, applying the be resolved in accordance with
5. Dispute shall terms of this Agreement, the national legislation of the Contracting Party to dispute, and principles of public international law.
6. The arbitration award shall be final and binding for the parties to the dispute. Each Contracting Party shall provide for the enforcement of an award in the territory of its State.
Article 13Settlement of disputes between the Contracting Parties
Parties concerning the Disputes between the Contracting
1. interpretation and application of this Agreement shall, as far as possible, be settled through negotiations.
If the dispute cannot thus be settled within six (6) months, following
2. the date on which such negotiations were requested by either Contracting it shall at the request of either Contracting Party be submitted to an Party, Arbitral Tribunal constituted in accordance with this Article.
3. Such an Arbitral Tribunal shall be constituted for each individual case in the following way. Within two (2) months of the receipt of the request of the Party shall appoint one member for arbitration, each Contracting Tribunal. Those two members shall then select a national of a third State who on approval by the two Contracting Parties shall be appointed Chairman of the Tribunal. The Chairman shall be appointed within four (4) months from the date of appointment of the other two members.
3 of this Article the |f within the periods specified in paragraph
4. necessary appointments have not been made, either Contracting Party may, President of the invite the of any other agreement, in the absence If the to make any necessary appointments.
International Court of Justice President is a national of the State of either Contracting Party or is otherwise member of the function, the the said from discharging prevented is not a national of the International Court of Justice next in seniority who prevented from or is not otherwise Contracting Party State of either make the necessary be invited to function, shall the said discharging appointments.
5. The Arbitral Tribunal shall determine its own rules of procedure.
the basis of this its decision on shall reach The Arbitral Tribunal in accordance with international law applicable between the Agreement and Contracting Parties. a majority of votes. its decision by The Arbitral Tribunal shall reach The decisions of the Tribunal shall be final and binding on both Contracting Parties
. Each Contracting Party shall bear the costs of the member appointed at the arbitral of its representation Party and that Contracting by proceedings. Both Contracting Parties shall assume an equal share of the cost of the Chairman, as well as other common costs.
Article 14Application of other rules
lf the provisions of national legislation of either Contracting Party or obligations between the Contracting Parties under international law existing at present or established hereafter between the Contracting Parties, in addition to this Agreement contain a regulation, whether general or specific, entitling investments made by investors of the other Contracting Party to a treatment more favorable than is provided for by this Agreement, such provisions shall, to the extent that they are more favorable to the investor, prevail over this Agreement.
Article 15Application of the Agreement
1. This Agreement shall not be interpreted in the sense of obliging a Contracting Party to protect investments made with capitals or assets of illicit origin.
2. The provisions of this Agreement shall apply to investments made by investors of one Contracting Party prior to as well as after the date of entry into force of this Agreement, and shall be applicable from the date of its to any dispute concerning an into force, but it shall not apply entry or any claim, which was settled before entry into investment which arose, force of this Agreement.
3. The provisions of this Agreement shall not apply to:
a. public procurement;
b. matters of taxation, except for Articles 6 (Expropriation) and 8 (Free transfer);
c. measures adopted in the financial sector for prudential reasons;
d. subsidies or grants provided by a Contracting Party in the territory of the State of either Contracting Party.
4. This Agreement is without prejudice to any measures that may be to the financial sector for Party with respect adopted by a Contracting aimed at protecting investors, reasons, including measures prudential or to safeguard the integrity and depositors, insurance takers or trustees, stability of the financial system;
5. The competent authorities for the application of this Agreement are:
a. For the Government of the Islamic Republic of Afghanistan - the Ministry of Commerce and Industries. - the Ministry of b. For the Government of the Republic of Azerbaijan Economy.
Article 16Additions and amendments
Any additions and amendments may be made to this Agreement by mutual consent of the Contracting Parties. Such additions and amendments in a form of separate Protocols being an integral part of this shall be made Agreement and shall enter into force in accordance with the procedures set forth in Article 17 of this Agreement.
Article 17Entry into force, duration and termination
1. This Agreement shall enter into force on the thirtieth day following the date of receipt by the Contracting Parties of the last written notification of their respective through diplomatic channels confirming the completion internal procedures required for the entry into force of this Agreement.
of ten (10) years and for a period is concluded
2. This Agreement shall remain in force thereafter for similar periods unless at least one (1) year before the expiry of the initial or any subsequent period, either Contracting Party in notifies through diplomatic channels the other Contracting Party writing of its intention to terminate this Agreement.
3. In respect of investment made prior to the date of termination of this 1 to 16 shall remain in force for a further Agreement the provisions of Articles period of ten (10) years from the date of termination of this Agreement.
the undersigned duly authorized thereto, IN WITNESS WHEREOF, : have signed this Agreement.
... * uf ‘ in the in two originals, each 1'* December, 2017, Done in Baku on texts being equally languages, all and English Azerbaijani Dari/Pashto, In case of any divergence in interpretation, the English text shall authentic. prevail.
For the Government of For the Government of the Republic of the Islamic Republic of Azerbaijan Afghanistan Shahin Mustafayev ;
Eklil Ahmad Hakimi Minister of Economy A” 4 Minister of Finapce,