mrl.n"\n 07n, 1o.1"~
The Agr~ment was previously
published as CzeCh and Slovak
Federal Republic No.1 (1990)
em 1306.
CZECH AND SLOVAK
FEDERAL REPUBLIC
Treaty Series No. 42 (1993)
Agreement
between the Government of the
United Kingdom of Great Britain and Northern Ireland
and. the Government of the Czech and Slovak Federal Republic
for the Promotion and Protection of Investments
with Protocol
Cm2277
Prague, 10 July 1990
with an amending Exchange of Notes
Prague, 23 August 1991
and 24 October 1991
[rhe Exchange of Note. entered into force on 24 October 1991 and
the Agreement entered into force on 26 October 1992]
Presented to Parliament
by the Secretary ofState for Foreign and Commonwealth Affairs
by Command ofHer Majesty
July 1993
LONDON : HMSO
£3·55 net
ar;; cro ' 01 1~1Ij;\ I a: all r K U u~u
AGREEMENT
BETWEEN THE GOVERNMENT OF
THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
AND THE GOVER1'IMENT OF THE CZECH AND SLOVAK FEDERAL REPUBLIC
FOR THE PROMOTION AND PROTECTION OF INVESTMENTS
The Government of the United Kingdom ofGreat Britain and Northern Ireland and
the Government of the Czech and Slovak Federal Republic;
Desiring to create favourable conditions for greater investment by investors of one
State in the territory of the other State;
Recognising that the encouragement and reciprocal protection under international
agreement of such investments will be conducive to the stimulation of business initiative
and will contribute to the development of economic relations between the two States;
Acting in the spirit of the principles of the Final Act ofthe Conference ofSecurity and
Co-operation in Europe signed at Helsinki on I August 1975[;
Have agreed as follows:
ARTICLE I
Definitions
For the purposes of this Agreement:
(a) the term" investment" means every kind of asset belonging to an investor of one
ContractingParty in the territory ofthe other Contracting Party under the law inforce
of the latter Contracting Party in any sector of economic activity and in particular,
though not exclusively, includes:
(i) movable and immovable property and any other related property rights including
mortgages, liens or pledges;
(ii) shares in and stock and debentures of a company and any other form of
participation in a company;
(iii) claims to money or to any performance under contract having a financial value;
(iv) intellectual property rights, goodwill, know-how and technical processes;
(v) business concessions conferred by law or, where appropriate under the law ofthe
Contracting Party concerned, under contract, including concessions to search for,
cultivate, extract or exploit natural resources.
A change in the form in which assets are invested does not affect their character as
investments within the meaning of this Agreement. The term "investment" includes all
investments, whether made before or after the date ofentry into force of this Agreement;
(b) the term" returns" means the amounts yielded by an investment and in particular,
though not exclusively, includes profit, interest, capital gains, dividends, royalties and
fees;
(c) the tern" investors" means:
(i) in respect of the Czech and Slovak Federal Republic:
(aa) all legal entities established under Czechoslovak law;
(bb) all natural persons Who, according to Czechoslovak law, are Czechoslovak
citizens and have the right to act as investors;
(ii) in respect of the United Kingdom;
(aa) physical persons deriving their status as United Kingdom nationals from the
law in force in the United Kingdom;
(bb) corporations, firms and associations incorporated or constituted under the
law in force in any part of the United Kingdom or in any territory to which
this Agreement is extended in accordance with the provisions of Article 12;
A2 3
(d) the term "territory" means: .
(i) in respect ofthe Czech and SlovakFederal Republic: the territory ofthe Czech and
Slovak Federal Republic;
(ii) in respect ofthe United Kingdom: Great Britain and Northern Ireland, including
the territorial sea and any maritime area situated beyond the territorial sea of the
United Kingdom which has been or might in the future be designated under the
national law of the United Kingdom in accordance with international law as an
area within which the United Kingdom may exercise rights with regard to the
seabed and subsoil and the natural resources and any territory to which this
Agreement is extended in accordance with the provisions of Article 12.
ARTICLE 2
Promotion and Protection of Investment
(I) Each Contracting Party shall encourage and create favourable conditions for
investors of the other Contracting Party to invest capital in its territory, and, subject to its
right to exercise powers conferred by its laws, shall admit such capital.
(2) Investments ofinvestors ofeach 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. Neither Contracting Party shall in any way impair by
unreasonable or discriminatory measures the management, maintenance, use, enjoyment
or disposal ofinvestments in its territory ofinvestors of the other Contracting Party.
(3) Investors of one Contracting Party may conclude with the other Contracting Party
specific agreements, the provisions and effect of which, unless more beneficial to the
investor, shall not be at variance with this Agreement. Each Contracting Party shall, with
regard to investments of investors of the other Contracting Party, observe the provisions
of these specific agreements, as well as the provisions ofthis Agreement.
ARTICLE 3
National Treatment and Most-favoured-nation Provisions
(1) Each Contracting Party shall ensure that under its law investments or returns of
investors of the other Contracting Party are granted treatment not less favourable than
that which it accords to investments or returns of its. own investors or to investments or
returns ofinvestors of any third State.
(2) Each Contracting Party shall ensure that under its law investors of the other
Contracting Party, as regards their management, maintenance, use, enjoyment or disposal
of their investments, are granted treatment not less favourable than that which it accords
to its own investors or to investors ofany third State.
ARTICLE 4
Compensation for Losses
Investors of one Contracting Party whose investments in the territory of the other
Contracting Party suffer losses owing to any armed conflict, a state ofnational emergency,
orcivil disturbances in the territory ofthe latter Contracting Party shall be accorded by the
latter Contracting Party treatment, as regards restitution, indemnification, compensation
orother settlement, no 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.
ARTICLE 5
Expropriation
(1) Investments of investors of either Contracting Party shall not be nationalised,
expropriated or subjected to measures having effect equivalent to nationalisation or
expropriation (hereinafter referred to as "expropriation") in the territory of the other
4
Contracting Party except for a public purpose related to the internal needs ofthat Party on
a non-descriminatory basis and against prompt, adequate and effective compensation.
Such compensation shall amount to the genuine value of the investment expropriated
immediately before the expropriation or before the impending expropriation became
public knowledge, 'whichever is the earlier, shall include interest at a normal.commercial
rate until the date of payment, shall be made without delay, be effectively realisable and be
freely transferable. The investor affected shall have a right, under the law of the
Contracting Party making the expropriation, to prompt review, by a judicial or other
independent authority of that Party, of his or its case and of the valuation of his or its
investment in accordance with the principles set out in this paragraph.
(2) The provisions of paragraph (I) shall also apply where a Contracting Party
expropriates the assets ofa company which is incorporated or constituted under the law in
force in any part ofits own territory, and in which investors ofthe other Contracting Party
own shares.
ARTICLE 6
Repatriation of Investment and Returns
Each Contracting Party shall in respect of investments guarantee to investors of the
other Contracting Party the unrestricted transfer of their investments and returns.
Transfers shall be effected without delay in the convertible currency in which the capita!
was originally invested or in any other convertible currency agreed by the investor and the
Contracting Party concerned. Unless otherwise agreed by the investor transfers shall be
made at the rate ofexchange applicable on the date of transfer pursuant to the exchange
regulations in force.
ARTICLE 7
Exceptions
The provisions ofthis Agreement relative to the grant of treatment not less favourable
than that accorded to the investors ofeither Contracting Party or of any third State 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 resulting from:
(a) any exisiting or future customs or economic union or similar international agreement
to which either of the Contracting Parties is or may become a Party, or
(b) any international agreement or arrangement, or any domestic legislation, relating
wholly or mainly to taxation.
ARTICLE 8
Settlement of Disputes between an Investor and a Host State
(I) Disputes between an investor of one Contracting Party and the other Contracting
Party concerning an obligation of the latter under Articles 2(3), 4, 5 and 6 of this
Agreement in relation to an investment ofthe former which have not been amicably settled
shall, after a period of four months from written notification of a claim, be submitted to
arbitration under paragraph (2) below ifeither party to the dispute so wishes.
(2) Where the dispute is referred to arbitration, the investorconcerned in the dispute shall
have the right to refer the dispute either to:
(a) an arbitrator or ad hoc arbitral tribunal to be appointed by a special agreement or
established and conducted under the Arbitration Rules of the United Nations
Commission on International Trade Law; the parties to the dispute may agree in
writing to modify these Rules, or
(b) the Institute of Arbitration of the Chamber of Commerce of Stockholm, or
(c) the Court of Arbitration of the Federal Chamber of Commerce and Industry in
Vienna.
(3) The arbitrator or arbitral tribunal to which the dispute is referred
under paragraph (2) shall, in particular, base its decision on the provisions of this
Agreement.
5
ARTICLE 9
Disputes between the Contracting Parties
(I) Disputes between the Contracting Parties concerning the interpretation or
application of this Agreement should, if possible, be settled amicably.
(2) If a dispute between the Contracting Parties cannot thus be settled, it shall Upon the
request of either Contracting Party be submitted to an arbitral tribunal.
(3) Such an 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. Those two members shall then select a
national ofa third Statewho onapproval by the two ContractingParties shall beappointed
Chairman of the tribunal. The Chairman shall be appointed within two 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, either Contracting Party may, in the absence of any
other agreement, invite the President of the International Court of Justice to make any
necessary appointments. If the President is a national ofeither Contracting Party or if he
is otherwise prevented from disCharging the said function, the Vice-President shall be
invited to make the necessary appointments. If the Vice-President is a national of either
Contracting Party or ifhe too 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 necessary appointments.
(5) The tribunal shall determine its own procedure. The arbitral tribunal shal1 reach its
decision by a majority ofvotes. Such decision shall be binding on both Contracting Parties.
(6) Each Contracting Party shal1 bear the cost ofits own member of the tribunal and of
its representation in the arbitral proceedings; the cost of the Chairman and the remaining
costs shall be borne in equal parts by the Contracting Parties. The tribunal may, however,
in its decision direct that a higher proportion of costs shal1 be borne by one of the two
Contracting Parties, and this award shall be binding on both Contracting Parties.
ARTICLE \0
Subrogation
(1) If one Contracting Party or its designated Agency (" the first Contracting Party")
makes a payment under an indemnity given in respect ofan investment in the territory of
the other Contracting Party (" the second Contracting Party"), the second Contracting
Party shal1 recognise: .
(a) the assignment to the first Contracting Party by law or by legal transaction of al1 the
rights and claims of the party indemnified, and
(b) that the first Contracting Party is entitled to exercise such rights and enforce such
claims by virtue of subrogation, to the same extent as the party indemnified.
(2) The first Contracting 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, and
(b) any payments received in pursuance of those rights and claims,
as the party indemnified was entitled to receive by virtue ofthis Agreement in respect ofthe
investment concerned and its related returns.
(3) Any payments received in non-convertible currency by the first Contracting Party in
pursuance of the rights and claims acquired shall be freely available to the first Contracting
Party for the purpose of meeting any expenditure incurred in the territory of the second
Contracting Party.
6
Mro • I)' I'T" ,):' \ IJ1·lIn
ARTICLE II
Application of Other Rules
If the provision oflaw of either Contracting Party or obligations under international
law existing at present or established hereafter between the Contracting Parties in addition
to the present Agreement contain rules, whether general or specific, entitling investments
by investors of the other Contracting Party to a treatment more favourable than is
provided for by the present Agreement, such rules shall to the extent that they are more
favourable prevail over the present Agreement.
ARTICLE 12
Territorial Extension
At the time of entry into force of this Agreement, or at any time thereafter, the
provisions of this Agreement may be extended to such territories for whose international
relations the Government of the United Kingdom are responsible as may be agreed
between the Contracting Parties in an Exchange of Notes.
ARTICLE 13
Entry into Force
Each Contracting Party shall notify the other in writing of the completion of the
constitutional formalities required in its territoryfor the entryinto force ofthis Agreement.
This Agreement shall enter into force on the date of the latter ofthe two notifications.
ARTICLE 14
Duration and Determination
This Agreement shall remain in force for a period of ten years. Thereafter it shall
continue in force until the expiration of twelve months from the date on which either
ContractingParty shall have given written notice oftennination to the other. Provided that
in respect of investments made whilst the Agreement is in force, its provisions shall
continue in effect with respect to suchinvestments for a period offifteen years after the date
of termination and without prejudice to the application thereafter of the rules ofgeneral
international law.
In witness whereof the undersigned, duly authorised thereto by their respective
Governments, have signed this Agreement.
Done at Prague this Tenth day of July 1990 in duplicate in the English and Czech
languages, both texts being equally authoritative.
For the Government of the United
Kingdom of Great Britain and
Northern Ireland:
NICHOLAS RIDLEY
For the Government of the Czech and
Slovak Federal Republic:
VACLAV KLAUS
7
PROTOCOL
RELATING ,{O THE AGREEMENT BETWEEN
THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN
AND NORTHERN IRELAND
AND THE GOVERNMENT OF THE CZECH AND SLOVAK FEDERAL REPUBLIC
FOR THE PROMOTION AND PROTECTION OF INVESTMENTS
On the signature oftheAgreement between the Government ofthe United Kingdom of
Great Britain and Northern Ireland and the Government ofthe Czech and Slovak Federal
Republic for the Promotion and Protection of Investments the signatories below being
duly authorised thereto by their respective Governments, have agreed as follows:
" The provisions ofArticle 6 ofthe Agreement shall be applied, in respect of the Czech
and Slovak Federal Republic, so that unrestricted transfer ofpayments relating to returns
and loan repayments, shall only be pennitted in anyone year up to a maximum of20% of
the value of the investment of the investor of the United Kingdom, that value being the
value of the investment at the date of the admission of the investment to the Czech and
Slovak Federal Republic.
All transfers effected from the convertible currency account ofa company in which an
investor owns shares are excluded from the above mentioned restriction."
This Protocol shall fonn an integral part ofthe above mentioned Agreement. Unless
the Contracting Parties agree in writing on an earlier tenn, the validity ofthis Protocolwill
be tenninated on 31 December 1994.
Done at Prague this Tenth day of July in duplicate in the English and the Czech
languages, both texts being equally authoritative.
For the Government of the United
Kingdom of Great Britain and
Northern Ireland:
NICHOLAS RIDLEY
8
For the Government of the Czech and
Slovak Federal Republic:
VACLAVKLAUS