Agreement on encouragement and reciprocal protection of investments between the Kingdom
of the Netherlands and the State of Eritrea
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The Kingdom of the Netherlands,
and
The State of Eritrea
hereinafter referred to as the Contracting Parties,
Desiring to strengthen their traditional ties of friendship and to extend and intensify
the economic relations between them, particularly with respect to investments by the
nationals of one Contracting Party in the territory of the other Contracting Party,
Recognising that agreement upon the treatment to be accorded to such investments will
stimulate the flow of capital and technology and the economic development of the Contracting
Parties and that fair and equitable treatment of investments is desirable,
Have agreed as follows:
Artikel 1. Definitions
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For the purposes of this Agreement:
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a) the term ``investments" means every kind of asset and more particularly, though not
exclusively:
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(i) movable and immovable property as well as any other rights in remin respect of every kind of asset;
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(ii) rights derived from shares, bonds and other kinds of interests in companies and joint
ventures;
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(iii) claims to money, to other assets or to any performance having an economic value;
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(iv) rights in the field of intellectual property, technical processes, goodwill and know-how;
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(v) rights granted under public law or under contract, including rights to prospect, explore,
extract and win natural resources.
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b) the term ``nationals" shall comprise with regard to either Contracting Party:
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(i) natural persons having the nationality of that Contracting Party;
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(ii) legal persons constituted under the law of that Contracting Party;
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(iii) legal persons not constituted under the law of that Contracting Party but controlled,
directly or indirectly, by natural persons as defined in (i) or by legal persons as
defined in (ii).
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c) the term ``investor" shall mean a national of the one Contracting Party investing
in the territory of the other Contracting Party.
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d) the term ``territory" means:
the land territory of the Contracting Party concerned, including the airspace above
and all sub-soil resources, and any area adjacent to the territorial sea which, under
the laws applicable in the Contracting Party concerned, and in accordance with international
law, is the exclusive economic zone or continental shelf of the Contracting Party
concerned, in which that Contracting Party exercises jurisdiction or sovereign rights.
Article 2. Promotion and Admission
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Either Contracting Party shall, within the framework of its laws and regulations,
promote economic cooperation through the protection in its territory of investments
of investors of the other Contracting Party. Subject to its right to exercise powers
conferred by its laws or regulations, each Contracting Party shall admit such investments.
Article 3. Protection
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1 Each Contracting Party shall ensure fair and equitable treatment of the investments
of investors of the other Contracting Party and shall not impair, by unreasonable
or discriminatory measures, the operation, management, maintenance, use, enjoyment
or disposal thereof by those investors. Each Contracting Party shall accord to such
investments full physical security and protection.
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3 If a Contracting Party has accorded special advantages to investors of any third
State by virtue of agreements establishing customs unions, economic unions, monetary
unions or similar institutions, or on the basis of interim agreements leading to such
unions or institutions, that Contracting Party shall not be obliged to accord such
advantages to investors of the other Contracting Party.
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5 If the provisions of law 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 a regulation, 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 regulation shall, to
the extent that it is more favourable, prevail over the present Agreement.
Article 4. Taxation
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With respect to taxes, fees, charges and to fiscal deductions and exemptions, each
Contracting Party shall accord to investors of the other Contracting Party who are
engaged in any economic activity in its territory, treatment not less favourable than
that accorded to its own investors or to those of any third State who are in the same
circumstances, whichever is more favourable to the investors concerned. For this purpose,
however, any special fiscal advantages accorded by that Party, shall not be taken
into account:
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a) under an agreement for the avoidance of double taxation; or any other fiscal arrangement;
or
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b) by virtue of its participation in a customs union, economic union or similar institution.
Article 5. Transfers
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The Contracting Parties shall guarantee that payments relating to an investment may
be transferred. The transfers shall be made in a freely convertible currency, without
restriction or delay. Such transfers include in particular though not exclusively:
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a) profits, interests, dividends and other current income;
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b) funds in repayment of loans;
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c) royalties or fees;
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d) earnings of natural persons;
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e) the proceeds of sale or liquidation of the investment;
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f) payments arising under Article 7.
Article 6. Expropriation
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Neither Contracting Party shall take any measures depriving, directly or indirectly,
investors of the other Contracting Party of their investments unless the following
conditions are complied with:
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a) the measures are taken in the public interest and under due process of law;
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b) the measures are not discriminatory or contrary to any undertaking which the Contracting
Party which takes such measures may have given;
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c) the measures are taken against just compensation. Such compensation shall represent
the fair market value of the investments affected, shall include interest at a normal
commercial rate until the date of payment and shall, in order to be effective for
the claimants, be paid and made transferable, without delay, to the country designated
by the claimants concerned and in the currency of the country of which the claimants
are investors or in any freely convertible currency accepted by the claimants.
Article 7. Compensation for Loss or Damage
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Investors of the one Contracting Party who suffer losses in respect of their investments
in the territory of the other Contracting Party owing to war or other armed conflict,
revolution, a state of national emergency, revolt, insurrection or riot shall be accorded
by the latter Contracting Party treatment, as regards restitution, indemnification,
compensation or other settlement, no less favourable than that which that Contracting
Party accords to its own investors or to investors of any third State, whichever is
more favourable to the investors concerned.
Article 8. Subrogation
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1 If the investments of an investor of the one Contracting Party are insured against
non-commercial risks or otherwise give rise to payment of indemnification in respect
of such investments under a system established by law, regulation or government contract,
any subrogation of the insurer or re-insurer or Agency designated by the one Contracting
Party to the rights of the said investor pursuant to the terms of such insurance or
under any other indemnity given shall be recognised by the other Contracting Party.
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2 Any payment by the insurer or re-insurer or Agency designated by the one Contracting
Party to its investors, shall not affect the right of such investors to make their
claims against the other Contracting Party in accordance with Article 9, provided
that the exercise of such a right does not overlap, or is not in conflict, with the
exercise of a right by virtue of subrogation under paragraph 1) above.
Article 9. Settlement of Disputes between an Investor and a Contracting Party
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1 Any dispute which may arise between an investor of one Contracting Party and the
other Contracting Party in connection with an investment in the territory of that
other Contracting Party shall, if possible, be settled amicably.
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2 If the dispute referred to in paragraph 1 of this Article cannot be settled within
three months from the date on which either party to the dispute requested in writing
an amicable settlement, the investor shall be entitled to submit the dispute, at his
choice, for settlement to:
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a. the International Centre for Settlement of Investment Disputes, for settlement by
arbitration or conciliation under the Convention on the Settlement of Investment Disputes
between States and Nationals of other States, opened for signature at Washington on
18 March 1965, when both Contracting Parties have become a party to the said Convention;
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b. the International Centre for Settlement of Investment Disputes under the Rules Governing
the Additional Facility for the Administration of Proceedings by the Secretariat of
the Centre (Additional Facility Rules), when one of the Contracting Parties is not
a party to the Convention mentioned under a;
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c. a sole arbitrator or an international ad hoc arbitral tribunal under the Arbitration
Rules of the United Nations Commission on International Trade Law (UNCITRAL);
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d. the Court of Arbitration of the International Chamber of Commerce (ICC).
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5 A legal person which is a national of one Contracting Party and which before such
a dispute arises is controlled by nationals of the other Contracting Party shall,
in accordance with Article 25 (2) (b) of the Convention mentioned under paragraph
2 a) above, for the purpose of the Convention be treated as a national of the other
Contracting Party.
Article 10. Scope of the Agreement
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The provisions of this Agreement shall, from the date of entry into force thereof,
also apply to investments, which have been made before that date.
Article 11. Settlement of Disputes between the Contracting Parties
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1 Any dispute between the Contracting Parties concerning the interpretation or application
of this Agreement shall, if possible, be settled by negotiations between the Governments
of the Contracting Parties.
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2 Any dispute between the Contracting Parties concerning the interpretation or application
of the present Agreement, which cannot be settled within six months by means of diplomatic
negotiations, shall, unless the Parties have otherwise agreed, be submitted, at the
request of either Party, to an arbitral tribunal, composed of three members. Each
Party shall appoint one arbitrator and the two arbitrators thus appointed shall together
appoint a third arbitrator as their chairman who is not a national of either Party.
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4 If the two arbitrators are unable to reach agreement, in the two months following
their appointment, on the choice of the third arbitrator, either Party may invite
the President of the International Court of Justice to make the necessary appointment.
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5 If, in the cases provided for in the paragraphs (2) and (3) of this Article, the
President of the International Court of Justice is prevented from discharging the
said function or is a national of either Contracting Party, the Vice-President shall
be invited to make the necessary appointments. If the Vice-President is prevented
from discharging the said function or is a national of either Party the most senior
member of the Court available who is not a national of either Party shall be invited
to make the necessary appointments.
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6 The tribunal shall decide on the basis of respect for the law. Before the tribunal
decides, it may at any stage of the proceedings propose to the Parties that the dispute
be settled amicably. The foregoing provisions shall not prejudice settlement of the
disputeex aequo et bono if the Parties so agree.ex aequo et bono if the Parties so agree.
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9 Each Contracting Party shall bear the costs of its own member of the tribunal and
of its representation in the arbitration proceedings and half of the costs of the
chairman and the remaining costs. The tribunal may, however, in its decision direct
that a higher proportion of the costs shall be borne by one of the two Parties, and
this award shall be binding on both Parties.
Article 12. Territorial Application
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As regards the Kingdom of the Netherlands, the present Agreement shall apply to the
part of the Kingdom in Europe, to the Netherlands Antilles and to Aruba, unless the
notification provided for in Article 13, paragraph (1) provides otherwise.
As regards to the State of Eritrea the present Agreement shall apply to the territory
of the State of Eritrea.
Article 13. Entry into Force, Duration and Termination
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1 The present Agreement shall enter into force on the first day of the second month
following the date on which the Contracting Parties have notified each other in writing
that their constitutionally required procedures have been complied with, and shall
remain in force for a period of fifteen years.
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2 Unless notice of termination has been given by either Contracting Party at least
six months before the date of the expiry of its validity, the present Agreement shall
be extended tacitly for periods of ten years, whereby each Contracting Party reserves
the right to terminate the Agreement upon notice of at least six months before the
date of expiry of the current period of validity.