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MULTILATERAL INVESTMENT GUARANTEE AGENCY ACT 1997 No. 126, 1997 - SCHEDULE 1
Schedule 1�Convention establishing the Multilateral
Investment Guarantee Agency
CONVENTION ESTABLISHING THE MULTILATERAL
INVESTMENT GUARANTEE AGENCY List of Chapters and Articles Preamble
I. Establishment, Status, Purposes and Definitions
1. Establishment and Status of the Agency
2. Objective and Purposes
3. Definitions
II. Membership and Capital
4. Membership
5. Capital
6. Subscription of Shares
7. Division and Calls of Subscribed Capital
8. Payment of Subscription of Shares
9. Valuation of Currencies
10. Refunds
III. Operations
11. Covered Risks
12. Eligible Investments
13. Eligible Investors
14. Eligible Host Countries
15. Host Country Approval
16. Terms and Conditions
17. Payment of Claims
18. Subrogation
19. Relationship to National and Regional Entities
20. Reinsurance of National and Regional Entities
21. Cooperation with Private Insurers and with Reinsurers
22. Limits of Guarantee
23. Investment Promotion
24. Guarantees of Sponsored Investment
IV. Financial Provisions
25. Financial Management
26. Premiums and Fees
27. Allocation of Net Income
28. Budget
29. Accounts
V. Organization and Management
30. Structure of the Agency
31. The Council
32. The Board
33. President and Staff
34. Political Activity Prohibited
35. Relations with International Organizations
36. Location of Principal Office
37. Depositories for Assets
38. Channel of Communication
VI. Voting, Adjustments of Subscriptions and Representation
39. Voting and Adjustments of Subscriptions
40. Voting in the Council
41. Election of Directors
42. Voting in the Board
VII. Privileges and Immunities
43. Purposes of Chapter
44. Legal Process
45. Assets
46. Archives and Communications
47. Taxes
48. Officials of the Agency
49. Application of this Chapter
50. Waiver
VIII. Withdrawal, Suspension of Membership and Cessation
of Operations
51. Withdrawal
52. Suspension of Membership
53. Rights and Duties of States Ceasing to be Members
54. Suspension of Operations
55. Liquidation
IX. Settlement of Disputes
56. Interpretation and Application of the Convention
57. Disputes between the Agency and Members
58. Disputes Involving Holders of a Guarantee or Reinsurance
X. Amendments
59. Amendment by Council
60. Procedure
XI. Final Provisions
61. Entry into Force
62. Inaugural Meeting
63. Depository
64. Registration
65. Notification
66. Territorial Application
67. Periodic Reviews
Annex I: Guarantees of Sponsored Investments
Under Article 24
1. Sponsorship
2. Sponsorship Trust Fund
3. Calls on Sponsoring Members
4. Valuation of Currencies and Refunds
5. Reinsurance
6. Operational Principles
7. Voting
Annex II: Settlement of Disputes Between A Member and the
Agency under Article 57
1. Application of the Annex
2. Negotiation
3. Conciliation
4. Arbitration
5. Service of Process
Schedule A: Membership and Subscriptions
Schedule B: Election of Directors
CONVENTION ESTABLISHING THE MULTILATERAL
INVESTMENT GUARANTEE AGENCY
PREAMBLE The Contracting States
Considering the need to strengthen international cooperation for economic
development and to foster the contribution to such development of foreign
investment in general and private foreign investment in particular;
Recognising that the flow of foreign investment to developing countries would
be facilitated and further encouraged by alleviating concerns related to
non-commercial risks;
Desiring to enhance the flow to developing countries of capital and technology
for productive purposes under conditions consistent with their development
needs, policies and objectives, on the basis of fair and stable standards for
the treatment of foreign investment;
Convinced that the Multilateral Investment Guarantee Agency can play an
important role in the encouragement of foreign investment complementing
national and regional investment guarantee programs and private insurers of
non-commercial risk; and
Realizing that such Agency should, to the extent possible, meet its
obligations without resort to its callable capital and that such an objective
would be served by continued improvement in investment conditions,
Have Agreed as follows:
CHAPTER I
Establishment, Status, Purposes and Definitions Article 1. Establishment and
Status of the Agency
(a) There is hereby established the Multilateral Investment Guarantee
Agency (hereinafter called the Agency).
(b) The Agency shall possess full juridical personality and, in
particular, the capacity to:
(i) contract;
(ii) acquire and dispose of movable and immovable property; and
(iii) institute legal proceedings. Article 2. Objective and Purposes
The objective of the Agency shall be to encourage the flow of investments for
productive purposes among member countries, and in particular to developing
member countries, thus supplementing the activities of the International Bank
for Reconstruction and Development (hereinafter referred to as the Bank), the
International Finance Corporation and other international development finance
institutions.
To serve its objective, the Agency shall:
(a) issue guarantees, including coinsurance and reinsurance, against
non-commercial risks in respect of investments in a member country
which flow from other member countries;
(b) carry out appropriate complementary activities to promote the flow of
investments to and among developing member countries; and
(c) exercise such other incidental powers as shall be necessary or
desirable in the furtherance of its objective.
The Agency shall be guided in all its decisions by the provisions of this
Article. Article 3. Definitions
For the purposes of this Convention:
(a) "Member" means a State with respect to which this Convention has
entered into force in accordance with Article 61.
(b) "Host country" or "host government" means a member, its government, or
any public authority of a member in whose territories, as defined in
Article 66, an investment which has been guaranteed or reinsured, or
is considered for guarantee or reinsurance, by the Agency is to be
located.
(c) A "developing member country" means a member which is listed as such
in Schedule A hereto as this Schedule may be amended from time to time
by the Council of Governors referred to in Article 30 (hereinafter
called the Council).
(d) A "special majority" means an affirmative vote of not less than
two-thirds of the total voting power representing not less than
fifty-five percent of the subscribed shares of the capital stock of
the Agency.
(e) A "freely usable currency" means (i) any currency designated as such
by the International Monetary Fund from time to time and (ii) any
other freely available and effectively usable currency which the Board
of Directors referred to in Article 30 (hereinafter called the Board)
may designate for the purposes of this Convention after consultation
with the International Monetary Fund and with the approval of the
country of such currency.
CHAPTER II
Membership and Capital Article 4. Membership
(a) Membership in the Agency shall be open to all members of the Bank and
to Switzerland.
(b) Original members shall be the States which are listed in Schedule A
hereto and become parties to this Convention on or before October 30,
1987. Article 5. Capital
(a) The authorized capital stock of the Agency shall be one billion
Special Drawing Rights (SDR 1,000,000,000). The capital stock shall be
divided into 100,000 shares having a par value of SDR 10,000 each,
which shall be available for subscription by members. All payment
obligations of members with respect to capital stock shall be settled
on the basis of the average value of the SDR in terms of United States
dollars for the period January 1, 1981 to June 30, 1985, such value
being 1.082 United States dollars per SDR.
(b) The capital stock shall increase on the admission of a new member to
the extent that the then authorized shares are insufficient to provide
the shares to be subscribed by such member pursuant to Article 6.
(c) The Council, by special majority, may at any time increase the capital
stock of the Agency. Article 6. Subscription of Shares
Each original member of the Agency shall subscribe at par to the number of
shares of capital stock set forth opposite its name in Schedule A hereto. Each
other member shall subscribe to such number of shares of capital stock on such
terms and conditions as may be determined by the Council, but in no event at
an issue price of less than par. No member shall subscribe to less that fifty
shares. The Council may prescribe rules by which members may subscribe to
additional shares of the authorized capital stock. Article 7. Division and
Calls of Subscribed Capital
The initial subscription of each member shall be paid as follows:
(i) Within ninety days from the date on which this Convention
enters into force with respect to such member, ten percent of
the price of each share shall be paid in cash as stipulated in
Section (a) of Article 8 and an additional ten percent in the
form of non- negotiable, non-interest-bearing promissory notes
or similar obligations to be encashed pursuant to a decision of
the Board in order to meet the Agency's obligations.
(ii) The remainder shall be subject to call by the Agency when
required to meet its obligations. Article 8. Payment of
Subscription of Shares
(a) Payments of subscriptions shall be made in freely usable currencies
except that payments by developing member countries may be made in
their own currencies up to twenty-five percent of the paid-in cash
portion of their subscriptions payable under Article 7 (i).
(b) Calls on any portion of unpaid subscriptions shall be uniform on all
shares.
(c) If the amount received by the Agency on a call shall be insufficient
to meet the obligations which have necessitated the call, the Agency
may make further successive calls on unpaid subscriptions until the
aggregate amount received by it shall be sufficient to meet such
obligations.
(d) Liability on shares shall be limited to the unpaid portion of the
issue price. Article 9. Valuation of Currencies
Whenever it shall be necessary for the purposes of this Convention to
determine the value of one currency in terms of another, such value shall be
as reasonably determined by the Agency, after consultation with the
International Monetary Fund. Article 10. Refunds
(a) The Agency shall, as soon as practicable, return to members amounts
paid on calls on subscribed capital if and to the extent that:
(i) the call shall have been made to pay a claim resulting from a
guarantee or reinsurance contract and thereafter the Agency
shall have recovered its payment, in whole or in part, in a
freely usable currency; or
(ii) the call shall have been made because of a default in payment
by a member and thereafter such member shall have made good
such default in whole or in part; or
(iii) the Council, by special majority, determines that the financial
position of the Agency permits all or part of such amounts to
be returned out of the Agency's revenues.
(b) Any refund effected under this Article to a member shall be made in
freely usable currency in the proportion of the payments made by that
member to the total amount paid pursuant to calls made prior to such
refund.
(c) The equivalent of amounts refunded under this Article to a member
shall become part of the callable capital obligations of the member
under Article 7 (ii).
CHAPTER III
Operations Article 11. Covered Risks
(a) Subject to the provisions of Sections (b) and (c) below, the Agency
may guarantee eligible investments against a loss resulting from one
or more of the following types of risk:
(i) Currency Transfer
any introduction attributable to the host government of restrictions on the
transfer outside the host country of its currency into a freely usable
currency or another currency acceptable to the holder of the guarantee,
including a failure of the host government to act within a reasonable period
of time on an application by such holder for such transfer;
(ii) Expropriation and Similar Measures
any legislative action or administrative action or omission attributable to
the host government which has the effect of depriving the holder of a
guarantee of his ownership or control of, or a substantial benefit from, his
investment, with the exception of non-discriminatory measures of general
application which governments normally take for the purpose of regulating
economic activity in their territories;
(iii) Breach of Contract
any repudiation or breach by the host government of a contract with the holder
of a guarantee, when (a) the holder of a guarantee does not have recourse to a
judicial or arbitral forum to determine the claim of repudiation or breach, or
(b) a decision by such forum is not rendered within such reasonable period of
time as shall be prescribed in the contracts of guarantee pursuant to the
Agency's regulations, or (c) such a decision cannot be enforced; and
(iv) War and Civil Disturbance
any military action or civil disturbance in any territory of the host country
to which this Convention shall be applicable as provided in Article 66.
(b) Upon the joint application of the investor and the host country, the
Board, by special majority, may approve the extension of coverage
under this Article to specific non-commercial risks other than those
referred to in Section (a) above, but in no case to the risk of
devaluation or depreciation of currency.
(c) Losses resulting from the following shall not be covered:
(i) any host government action or omission to which the holder of
the guarantee has agreed or for which he has been responsible;
and
(ii) any host government action or omission or any other event
occurring before the conclusion of the contract of guarantee.
Article 12. Eligible Investments
(a) Eligible investments shall include equity interests, including medium-
or long-term loans made or guaranteed by holders of equity in the
enterprise concerned, and such forms of direct investment as may be
determined by the Board.
(b) The Board, by special majority, may extend eligibility to any other
medium- or long-term form of investment, except that loans other than
those mentioned in Section (a) above may be eligible only if they are
related to a specific investment covered or to be covered by the
Agency.
(c) Guarantees shall be restricted to investments the implementation of
which begins subsequent to the registration of the application for the
guarantee by the Agency. Such investments may include:
(i) any transfer of foreign exchange made to modernize, expand, or
develop an existing investment; and
(ii) the use of earnings from existing investments which could
otherwise be transferred outside the host country.
(d) In guaranteeing an investment, the Agency shall satisfy itself as to:
(i) the economic soundness of the investment and its contribution
to the development of the host country;
(ii) compliance of the investment with the host country's laws and
regulations;
(iii) consistency of the investment with the declared development
objectives and priorities of the host country; and
(iv) the investment conditions in the host country, including the
availability of fair and equitable treatment and legal
protection for the investment. Article 13. Eligible Investors
(a) Any natural person and any juridical person may be eligible to receive
the Agency's guarantee provided that:
(i) such natural person is a national of a member other than the
host country;
(ii) such juridical person is incorporated and has its principal
place of business in a member or the majority of its capital is
owned by a member or members or nationals thereof, provided
that such member is not the host country in any of the above
cases; and
(iii) such juridical person, whether or not it is privately owned,
operates on a commercial basis.
(b) In case the investor has more than one nationality, for the purposes
of Section (a) above the nationality of a member shall prevail over
the nationality of a non-member, and the nationality of the host
country shall prevail over the nationality of any other member.
(c) Upon the joint application of the investor and the host country, the
Board, by special majority, may extend eligibility to a natural person
who is a national of the host country or a juridical person which is
incorporated in the host country or the majority of whose capital is
owned by its nationals, provided that the assets invested are
transferred from outside the host country. Article 14. Eligible Host
Countries
Investments shall be guaranteed under this Chapter only if they are to be made
in the territory of a developing member country. Article 15. Host Country
Approval
The Agency shall not conclude any contract of guarantee before the host
government has approved the issuance of the guarantee by the Agency against
the risks designated for cover. Article 16. Terms and Conditions
The terms and conditions of each contract of guarantee shall be determined by
the Agency subject to such rules and regulations as the Board shall issue,
provided that the Agency shall not cover the total loss of the guaranteed
investment. Contracts of guarantee shall be approved by the President under
the direction of the Board. Article 17. Payment of Claims
The President under the direction of the Board shall decide on the payment of
claims to a holder of a guarantee in accordance with the contract of guarantee
and such policies as the Board may adopt. Contracts of guarantee shall require
holders of guarantees to seek, before a payment is made by the Agency, such
administrative remedies as may be appropriate under the circumstances,
provided that they are readily available to them under the laws of the host
country. Such contracts may require the lapse of certain reasonable periods
between the occurrence of events giving rise to claims and payments of claims.
Article 18. Subrogation
(a) Upon paying or agreeing to pay compensation to a holder of a
guarantee, the Agency shall be subrogated to such rights or claims
related to the guaranteed investment as the holder of a guarantee may
have had against the host country and other obligors. The contract of
guarantee shall provide the terms and conditions of such subrogation.
(b) The rights of the Agency pursuant to Section (a) above shall be
recognized by all members.
(c) Amounts in the currency of the host country acquired by the Agency as
subrogee pursuant to Section (a) above shall be accorded, with respect
to use and conversion, treatment by the host country as favorable as
the treatment to which such funds would be entitled in the hands of
the holder of the guarantee. In any case, such amounts may be used by
the Agency for the payment of its administrative expenditures and
other costs. The Agency shall also seek to enter into arrangements
with host countries on other uses of such currencies to the extent
that they are not freely usable. Article 19. Relationship to National
and Regional Entities
The Agency shall cooperate with, and seek to complement the operations of,
national entities of members and regional entities the majority of whose
capital is owned by members, which carry out activities similar to those of
the Agency, with a view to maximizing both the efficiency of their respective
services and their contribution to increased flows of foreign investment. To
this end, the Agency may enter into arrangements with such entities on the
details of such cooperation, including in particular the modalities of
reinsurance and coinsurance. Article 20. Reinsurance of National and Regional
Entities
(a) The Agency may issue reinsurance in respect of a specific investment
against a loss resulting from one or more of the non- commercial risks
underwritten by a member or agency thereof or by a regional investment
guarantee agency the majority of whose capital is owned by members.
The Board, by special majority, shall from time to time prescribe
maximum amounts of contingent liability which may be assumed by the
Agency with respect to reinsurance contracts. In respect of specific
investments which have been completed more than twelve months prior to
receipt of the application for reinsurance by the Agency, the maximum
amount shall initially be set at ten percent of the aggregate
contingent liability of the Agency under this Chapter. The conditions
of eligibility specified in Articles 11 to 14 shall apply to
reinsurance operations, except that the reinsured investments need not
be implemented subsequent to the application for reinsurance.
(b) The mutual rights and obligations of the Agency and a reinsured member
or agency shall be stated in contracts of reinsurance subject to such
rules and regulations as the Board shall issue. The Board shall
approve each contract for reinsurance covering an investment which has
been made prior to receipt of the application for reinsurance by the
Agency, with a view to minimizing risks, assuring that the Agency
receives premiums commensurate with its risk, and assuring that the
reinsured entity is appropriately committed toward promoting new
investment in developing member countries.
(c) The Agency shall, to the extent possible, assure that it or the
reinsured entity shall have the rights of subrogation and arbitration
equivalent to those the Agency would have if it were the primary
guarantor. The terms and conditions of reinsurance shall require that
administrative remedies are sought in accordance with Article 17
before a payment is made by the Agency. Subrogation shall be effective
with respect to the host country concerned only after its approval of
the reinsurance by the Agency. The Agency shall include in the
contracts of reinsurance provisions requiring the reinsured to pursue
with due diligence the rights or claims related to the reinsured
investment. Article 21. Cooperation with Private Insurers and with
Reinsurers
(a) The Agency may enter into arrangements with private insurers in member
countries to enhance its own operations and encourage such insurers to
provide coverage of non-commercial risks in developing member
countries on conditions similar to those applied by the Agency. Such
arrangements may include the provision of reinsurance by the Agency
under the conditions and procedures specified in Article 20.
(b) The Agency may reinsure with any appropriate reinsurance entity, in
whole or in part, any guarantee or guarantees issued by it.
(c) The Agency will in particular seek to guarantee investments for which
comparable coverage on reasonable terms is not available from private
insurers and reinsurers. Article 22. Limits of Guarantee
(a) Unless determined otherwise by the Council by special majority, the
aggregate amount of contingent liabilities which may be assumed by the
Agency under this Chapter shall not exceed one hundred and fifty
percent of the amount of the Agency's unimpaired subscribed capital
and its reserves plus such portion of its reinsurance cover as the
Board may determine. The Board shall from time to time review the risk
profile of the Agency's portfolio in the light of its experience with
claims, degree of risk diversification, reinsurance cover and other
relevant factors with a view to ascertaining whether changes in the
maximum aggregate amount of contingent liabilities should be
recommended to the Council. The maximum amount determined by the
Council shall not under any circumstances exceed five times the amount
of the Agency's unimpaired subscribed capital, its reserves and such
portion of its reinsurance cover as may be deemed appropriate.
(b) Without prejudice to the general limit of guarantee referred to in
Section (a) above, the Board may prescribe:
(i) maximum aggregate amounts of contingent liability which may be
assumed by the Agency under this Chapter for all guarantees
issued to investors of each individual member. In determining
such maximum amounts, the Board shall give due consideration to
the share of the respective member in the capital of the Agency
and the need to apply more liberal limitations in respect of
investments originating in developing member countries; and
(ii) maximum aggregate amounts of contingent liability which may be
assumed by the Agency with respect to such risk diversification
factors as individual projects, individual host countries and
types of investment or risk. Article 23. Investment Promotion
(a) The Agency shall carry out research, undertake activities to promote
investment flows and disseminate information on investment
opportunities in developing member countries, with a view to improving
the environment for foreign investment flows to such countries. The
Agency may, upon the request of a member, provide technical advice and
assistance to improve the investment conditions in the territories of
that member. In performing these activities, the Agency shall:
(i) be guided by relevant investment agreements among member
countries;
(ii) seek to remove impediments, in both developed and developing
member countries, to the flow of investment to developing
member countries; and
(iii) coordinate with other agencies concerned with the promotion of
foreign investment, and in particular the International Finance
Corporation.
(b) The Agency also shall:
(i) encourage the amicable settlement of disputes between investors
and host countries;
(ii) endeavor to conclude agreements with developing member
countries, and in particular with prospective host countries,
which will assure that the Agency, with respect to investment
guaranteed by it, has treatment at least as favorable as that
agreed by the member concerned for the most favored investment
guarantee agency or State in an agreement relating to
investment, such agreements to be approved by special majority
of the Board; and
(iii) promote and facilitate the conclusion of agreements, among its
members, on the promotion and protection of investments.
(c) The Agency shall give particular attention in its promotional efforts
to the importance of increasing the flow of investments among
developing member countries. Article 24. Guarantees of Sponsored
Investments
In addition to the guarantee operations undertaken by the Agency under this
Chapter, the Agency may guarantee investments under the sponsorship
arrangements provided for in Annex I to this Convention.
CHAPTER IV
Financial Provisions Article 25. Financial Management
The Agency shall carry out its activities in accordance with sound business
and prudent financial management practices with a view to maintaining under
all circumstances its ability to meet its financial obligations. Article 26.
Premiums and Fees
The Agency shall establish and periodically review the rates of premiums, fees
and other charges, if any, applicable to each type of risk. Article 27.
Allocation of Net Income
(a) Without prejudice to the provisions of Section (a) (iii) of Article
10, the Agency shall allocate net income to reserves until such
reserves reach five times the subscribed capital of the Agency.
(b) After the reserves of the Agency have reached the level prescribed in
Section (a) above, the Council shall decide whether, and to what
extent, the Agency's net income shall be allocated to reserves, be
distributed to the Agency's members or be used otherwise. Any
distribution of net income to the Agency's members shall be made in
proportion to the share of each member in the capital of the Agency in
accordance with a decision of the Council acting by special majority.
Article 28. Budget
The President shall prepare an annual budget of revenues and expenditures of
the Agency for approval by the Board. Article 29. Accounts
The Agency shall publish an Annual Report which shall include statements of
its accounts and of the accounts of the Sponsorship Trust Fund referred to in
Annex I to this Convention, as audited by independent auditors. The Agency
shall circulate to members at appropriate intervals a summary statement of its
financial position and a profit and loss statement showing the results of its
operations.
CHAPTER V
Organization and Management Article 30. Structure of the Agency
The Agency shall have a Council of Governors, a Board of Directors, a
President and staff to perform such duties as the Agency may determine.
Article 31. The Council
(a) All the powers of the Agency shall be vested in the Council, except
such powers as are, by the terms of this Convention, specifically
conferred upon another organ of the Agency. The Council may delegate
to the Board the exercise of any of its powers, except the power to:
(i) admit new members and determine the conditions of their
admission;
(ii) suspend a member;
(iii) decide on any increase or decrease in the capital;
(iv) increase the limit of the aggregate amount of contingent
liabilities pursuant to Section (a) of Article 22;
(v) designate a member as a developing member country pursuant to
Section (c) of Article 3;
(vi) classify a new member as belonging to Category One or Category
Two for voting purposes pursuant to Section (a) of Article 39
or reclassify an existing member for the same purposes;
(vii) determine the compensation of Directors and their Alternates;
(viii) cease operations and liquidate the Agency;
(ix) distribute assets to members upon liquidation; and
(x) amend this Convention, its Annexes and Schedules.
(b) The Council shall be composed of one Governor and one Alternate
appointed by each member in such manner as it may determine. No
Alternate may vote except in the absence of his principal. The Council
shall select one of the Governors as Chairman.
(c) The Council shall hold an annual meeting and such other meetings as
may be determined by the Council or called by the Board. The Board
shall call a meeting of the Council whenever requested by five members
or by members having twenty-five percent of the total voting power.
Article 32. The Board
(a) The Board shall be responsible for the general operations of the
Agency and shall take, in the fulfillment of this responsibility, any
action required or permitted under this Convention.
(b) The Board shall consist of not less than twelve Directors. The number
of Directors may be adjusted by the Council to take into account
changes in membership. Each Director may appoint an Alternate with
full power to act for him in case of the Director's absence or
inability to act. The President of the Bank shall be ex officio
Chairman of the Board, but shall have no vote except a deciding vote
in case of an equal division.
(c) The Council shall determine the term of office of the Directors. The
first Board shall be constituted by the Council at its inaugural
meeting.
(d) The Board shall meet at the call of its Chairman acting on his own
initiative or upon request of three Directors.
(e) Until such time as the Council may decide that the Agency shall have a
resident Board which functions in continuous session, the Directors
and Alternates shall receive compensation only for the cost of
attendance at the meetings of the Board and the discharge of other
official functions on behalf of the Agency. Upon the establishment of
a Board in continuous session, the Directors and Alternates shall
receive such remuneration as may be determined by the Council. Article
33. President and Staff
(a) The President shall, under the general control of the Board, conduct
the ordinary business of the Agency. He shall be responsible for the
organization, appointment and dismissal of the staff.
(b) The President shall be appointed by the Board on the nomination of its
Chairman. The Council shall determine the salary and terms of the
contract of service of the President.
(c) In the discharge of their offices, the President and the staff owe
their duty entirely to the Agency and to no other authority. Each
member of the Agency shall respect the international character of this
duty and shall refrain from all attempts to influence the President or
the staff in the discharge of their duties.
(d) In appointing the staff, the President shall, subject to the paramount
importance of securing the highest standards of efficiency and of
technical competence, pay due regard to the importance of recruiting
personnel on as wide a geographical basis as possible.
(e) The President and staff shall maintain at all times the
confidentiality of information obtained in carrying out the Agency's
operations. Article 34. Political Activity Prohibited
The Agency, its President and staff shall not interfere in the political
affairs of any member. Without prejudice to the right of the Agency to take
into account all the circumstances surrounding an investment, they shall not
be influenced in their decisions by the political character of the member or
members concerned. Considerations relevant to their decisions shall be weighed
impartially in order to achieve the purposes stated in Article 2. Article 35.
Relations with International Organizations
The Agency shall, within the terms of this Convention, cooperate with the
United Nations and with other inter-governmental organizations having
specialized responsibilities in related fields, including in particular the
Bank and the International Finance Corporation. Article 36. Location of
Principal Office
(a) The principal office of the Agency shall be located in Washington,
D.C., unless the Council, by special majority, decides to establish it
in another location.
(b) The Agency may establish other offices as may be necessary for its
work. Article 37. Depositories for Assets
Each member shall designate its central bank as a depository in which the
Agency may keep holdings of such member's currency or other assets of the
Agency or, if it has no central bank, it shall designate for such purpose such
other institution as may be acceptable to the Agency. Article 38. Channel of
Communication
(a) Each member shall designate an appropriate authority with which the
Agency may communicate in connection with any matter arising under
this Convention. The Agency may rely on statements of such authority
as being statements of the member. The Agency, upon the request of a
member, shall consult with that member with respect to matters dealt
with in Articles 19 to 21 and related to entities or insurers of that
member.
(b) Whenever the approval of any member is required before any act may be
done by the Agency, approval shall be deemed to have been given unless
the member presents an objection within such reasonable period as the
Agency may fix in notifying the member of the proposed act.
CHAPTER VI
Voting, Adjustments of Subscriptions and Representation Article 39. Voting and
Adjustments of Subscriptions
(a) In order to provide for voting arrangements that reflect the equal
interest in the Agency of the two Categories of States listed in
Schedule A of this Convention, as well as the importance of each
member's financial participation, each member shall have 177
membership votes plus one subscription vote for each share of stock
held by that member.
(b) If at any time within three years after the entry into force of this
Convention the aggregate sum of membership and subscription votes of
members which belong to either of the two Categories of States listed
in Schedule A of this Convention is less than forty percent of the
total voting power, members from such a Category shall have such
number of supplementary votes as shall be necessary for the aggregate
voting power of the Category to equal such a percentage of the total
voting power. Such supplementary votes shall be distributed among the
members of such Category in the proportion that the subscription votes
of each bears to the aggregate of subscription votes of the Category.
Such supplementary votes shall be subject to automatic adjustment to
ensure that such percentage is maintained and shall be cancelled at
the end of the above-mentioned three-year period.
(c) During the third year following the entry into force of this
Convention, the Council shall review the allocation of shares and
shall be guided in its decision by the following principles:
(i) the votes of members shall reflect actual subscriptions to the
Agency's capital and the membership votes as set out in Section
(a) of this Article;
(ii) shares allocated to countries which shall not have signed the
Convention shall be made available for reallocation to such
members and in such manner as to make possible voting parity
between the above-mentioned Categories; and
(iii) the Council will take measures that will facilitate members'
ability to subscribe to shares allocated to them.
(d) Within the three-year period provided for in Section (b) of this
Article, all decisions of the Council and Board shall be taken by
special majority, except that decisions requiring a higher majority
under this Convention shall be taken by such higher majority.
(e) In case the capital stock of the Agency is increased pursuant to
Section (c) of Article 5, each member which so requests shall be
authorized to subscribe a proportion of the increase equivalent to the
proportion which its stock theretofore subscribed bears to the total
capital stock of the Agency, but no member shall be obligated to
subscribe any part of the increased capital.
(f) The Council shall issue regulations regarding the making of additional
subscriptions under Section (e) of this Article. Such regulations
shall prescribe reasonable time limits for the submission by members
of requests to make such subscriptions. Article 40. Voting in the
Council
(a) Each Governor shall be entitled to cast the votes of the member he
represents. Except as otherwise specified in this Convention,
decisions of the Council shall be taken by a majority of the votes
cast.
(b) A quorum for any meeting of the Council shall be constituted by a
majority of the Governors exercising not less than two-thirds of the
total voting power.
(c) The Council may by regulation establish a procedure whereby the Board,
when it deems such action to be in the best interests of the Agency,
may request a decision of the Council on a specific question without
calling a meeting of the Council. Article 41. Election of Directors
(a) Directors shall be elected in accordance with Schedule B.
(b) Directors shall continue in office until their successors are elected.
If the office of a Director becomes vacant more than ninety days
before the end of his term, another Director shall be elected for the
remainder of the term by the Governors who elected the former
Director. A majority of the votes cast shall be required for election.
While the office remains vacant, the Alternate of the former Director
shall exercise his powers, except that of appointing an Alternate.
Article 42. Voting in the Board
(a) Each Director shall be entitled to cast the number of votes of the
members whose votes counted towards his election. All the votes which
a Director is entitled to cast shall be cast as a unit. Except as
otherwise specified in this Convention, decisions of the Board shall
be taken by a majority of the votes cast.
(b) A quorum for a meeting of the Board shall be constituted by a majority
of the Directors exercising not less than one-half of the total voting
power.
(c) The Board may by regulation establish a procedure whereby its
Chairman, when he deems such action to be in the best interests of the
Agency, may request a decision of the Board on a specific question
without calling a meeting of the Board.
CHAPTER VII
Privileges and Immunities Article 43. Purposes of Chapter
To enable the Agency to fulfill its functions, the immunities and privileges
set forth in this Chapter shall be accorded to the Agency in the territories
of each member. Article 44. Legal Process
Actions other than those within the scope of Articles 57 and 58 may be brought
against the Agency only in a court of competent jurisdiction in the
territories of a member in which the Agency has an office or has appointed an
agent for the purpose of accepting service or notice of process. No such
action against the Agency shall be brought (i) by members or persons acting
for or deriving claims from members or (ii) in respect of personnel matters.
The property and assets of the Agency shall, wherever located and by
whomsoever held, be immune from all forms of seizure, attachment or execution
before the delivery of the final judgment or award against the Agency. Article
45. Assets
(a) The property and assets of the Agency, wherever located and by
whomsoever held, shall be immune from search, requisition,
confiscation, expropriation or any other form of seizure by executive
or legislative action.
(b) To the extent necessary to carry out its operations under this
Convention, all property and assets of the Agency shall be free from
restrictions, regulations, controls and moratoria of any nature;
provided that property and assets acquired by the Agency as successor
to or subrogee of a holder of a guarantee, a reinsured entity or an
investor insured by a reinsured entity shall be free from applicable
foreign exchange restrictions, regulations and controls in force in
the territories of the member concerned to the extent that the holder,
entity or investor to whom the Agency was subrogated was entitled to
such treatment.
(c) For purposes of this Chapter, the term "assets" shall include the
assets of the Sponsorship Trust Fund referred to in Annex I to this
Convention and other assets administered by the Agency in furtherance
of its objective. Article 46. Archives and Communications
(a) The archives of the Agency shall be inviolable, wherever they may be.
(b) The official communications of the Agency shall be accorded by each
member the same treatment that is accorded to the official
communications of the Bank. Article 47. Taxes
(a) The Agency, its assets, property and income, and its operations and
transactions authorized by this Convention, shall be immune from all
taxes and customs duties. The Agency shall also be immune from
liability for the collection or payment of any tax or duty.
(b) Except in the case of local nationals, no tax shall be levied on or in
respect of expense allowances paid by the Agency to Governors and
their Alternates or on or in respect of salaries, expense allowances
or other emoluments paid by the Agency to the Chairman of the Board,
Directors, their Alternates, the President or staff of the Agency.
(c) No taxation of any kind shall be levied on any investment guaranteed
or reinsured by the Agency (including any earnings therefrom) or any
insurance policies reinsured by the Agency (including any premiums and
other revenues therefrom) by whomsoever held: (i) which discriminates
against such investment or insurance policy solely because it is
guaranteed or reinsured by the Agency; or (ii) if the sole
jurisdictional basis for such taxation is the location of any office
or place of business maintained by the Agency. Article 48. Officials
of the Agency
All Governors, Directors, Alternates, the President and staff of the Agency:
(i) shall be immune from legal process with respect to acts
performed by them in their official capacity;
(ii) not being local nationals, shall be accorded the same
immunities from immigration restrictions, alien registration
requirements and national service obligations, and the same
facilities as regards exchange restrictions as are accorded by
the members concerned to the representatives, officials and
employees of comparable rank of other members; and
(iii) shall be granted the same treatment in respect of travelling
facilities as is accorded by the members concerned to
representatives, officials and employees of comparable rank of
other members. Article 49. Application of this Chapter
Each member shall take such action as is necessary in its own territories for
the purpose of making effective in terms of its own law the principles set
forth in this Chapter and shall inform the Agency of the detailed action which
it has taken. Article 50. Waiver
The immunities, exemptions and privileges provided in this Chapter are granted
in the interests of the Agency and may be waived, to such extent and upon such
conditions as the Agency may determine, in cases where such a waiver would not
prejudice its interests. The Agency shall waive the immunity of any of its
staff in cases where, in its opinion, the immunity would impede the course of
justice and can be waived without prejudice to the interests of the Agency.
CHAPTER VIII
Withdrawal, Suspension of Membership and Cessation of Operations Article 51.
Withdrawal
Any member may, after the expiration of three years following the date upon
which this Convention has entered into force with respect to such member,
withdraw from the Agency at any time by giving notice in writing to the Agency
at its principal office. The Agency shall notify the Bank, as depository of
this Convention, of the receipt of such notice. Any withdrawal shall become
effective ninety days following the date of the receipt of such notice by the
Agency. A member may revoke such notice as long as it has not become
effective. Article 52. Suspension of Membership
(a) If a member fails to fulfill any of its obligations under this
Convention, the Council may, by a majority of its members exercising a
majority of the total voting power, suspend its membership.
(b) While under suspension a member shall have no rights under this
Convention, except for the right of withdrawal and other rights
provided in this Chapter and Chapter IX, but shall remain subject to
all its obligations.
(c) For purposes of determining eligibility for a guarantee or reinsurance
to be issued under Chapter III or Annex I to this Convention, a
suspended member shall not be treated as a member of the Agency.
(d) The suspended member shall automatically cease to be a member one year
from the date of its suspension unless the Council decides to extend
the period of suspension or to restore the member to good standing.
Article 53. Rights and Duties of States Ceasing to be Members
(a) When a State ceases to be a member, it shall remain liable for all its
obligations, including its contingent obligations, under this
Convention which shall have been in effect before the cessation of its
membership.
(b) Without prejudice to Section (a) above, the Agency shall enter into an
arrangement with such State for the settlement of their respective
claims and obligations. Any such arrangement shall be approved by the
Board. Article 54. Suspension of Operations
(a) The Board may, whenever it deems it justified, suspend the issuance of
new guarantees for a specified period.
(b) In an emergency, the Board may suspend all activities of the Agency
for a period not exceeding the duration of such emergency, provided
that necessary arrangements shall be made for the protection of the
interests of the Agency and of third parties.
(c) The decision to suspend operations shall have no effect on the
obligations of the members under this Convention or on the obligations
of the Agency towards holders of a guarantee or reinsurance policy or
towards third parties. Article 55. Liquidation
(a) The Council, by special majority, may decide to cease operations and
to liquidate the Agency. Thereupon the Agency shall forthwith cease
all activities, except those incident to the orderly realization,
conservation and preservation of assets and settlement of obligations.
Until final settlement and distribution of assets, the Agency shall
remain in existence and all rights and obligations of members under
this Convention shall continue unimpaired.
(b) No distribution of assets shall be made to members until all
liabilities to holders of guarantees and other creditors shall have
been discharged or provided for and until the Council shall have
decided to make such distribution.
(c) Subject to the foregoing, the Agency shall distribute its remaining
assets to members in proportion to each member's share in the
subscribed capital. The Agency shall also distribute any remaining
assets of the Sponsorship Trust Fund referred to in Annex I to this
Convention to sponsoring members in the proportion which the
investments sponsored by each bears to the total of sponsored
investments. No member shall be entitled to its share in the assets of
the Agency or the Sponsorship Trust Fund unless that member has
settled all outstanding claims by the Agency against it. Every
distribution of assets shall be made at such times as the Council
shall determine and in such manner as it shall deem fair and
equitable.
CHAPTER IX
Settlement of Disputes Article 56. Interpretation and Application of the
Convention
(a) Any question of interpretation or application of the provisions of
this Convention arising between any member of the Agency and the
Agency or among members of the Agency shall be submitted to the Board
for its decision. Any member which is particularly affected by the
question and which is not otherwise represented by a national in the
Board may send a representative to attend any meeting of the Board at
which such question is considered.
(b) In any case where the Board has given a decision under Section (a)
above, any member may require that the question be referred to the
Council, whose decision shall be final. Pending the result of the
referral to the Council, the Agency may, so far as it deems necessary,
act on the basis of the decision of the Board. Article 57. Disputes
between the Agency and Members
(a) Without prejudice to the provisions of Article 56 and of Section (b)
of this Article, any dispute between the Agency and a member or an
agency thereof and any dispute between the Agency and a country (or
agency thereof) which has ceased to be a member, shall be settled in
accordance with the procedure set out in Annex II to this Convention.
(b) Disputes concerning claims of the Agency acting as subrogee of an
investor shall be settled in accordance with either (i) the procedure
set out in Annex II to this Convention, or (ii) an agreement to be
entered into between the Agency and the member concerned on an
alternative method or methods for the settlement of such disputes. In
the latter case, Annex II to this Convention shall serve as a basis
for such an agreement which shall, in each case, be approved by the
Board by special majority prior to the undertaking by the Agency of
operations in the territories of the member concerned. Article 58.
Disputes Involving Holders of a Guarantee or Reinsurance
Any dispute arising under a contract of guarantee or reinsurance between the
parties thereto shall be submitted to arbitration for final determination in
accordance with such rules as shall be provided for or referred to in the
contract of guarantee or reinsurance.
CHAPTER X
Amendments Article 59. Amendment by Council
(a) This Convention and its Annexes may be amended by vote of three-fifths
of the Governors exercising four-fifths of the total voting power,
provided that:
(i) any amendment modifying the right to withdraw from the Agency
provided in Article 51 or the limitation on liability provided
in Section (d) of Article 8 shall require the affirmative vote
of all Governors; and
(ii) any amendment modifying the loss-sharing arrangement provided
in Articles 1 and 3 of Annex I to this Convention which will
result in an increase in any member's liability thereunder
shall require the affirmative vote of the Governor of each such
member.
(b) Schedules A and B to this Convention may be amended by the Council by
special majority.
(c) If an amendment affects any provision of Annex I to this Convention,
total votes shall include the additional votes alloted under Article 7
of such Annex to sponsoring members and countries hosting sponsored
investments. Article 60. Procedure
Any proposal to amend this Convention, whether emanating from a member or a
Governor or a Director, shall be communicated to the Chairman of the Board who
shall bring the proposal before the Board. If the proposed amendment is
recommended by the Board, it shall be submitted to the Council for approval in
accordance with Article 59. When an amendment has been duly approved by the
Council, the Agency shall so certify by formal communication addressed to all
members. Amendments shall enter into force for all members ninety days after
the date of the formal communication unless the Council shall specify a
different date.
CHAPTER XI
Final Provisions Article 61. Entry into Force
(a) This Convention shall be open for signature on behalf of all members
of the Bank and Switzerland and shall be subject to ratification,
acceptance or approval by the signatory States in accordance with
their constitutional procedures.
(b) This Convention shall enter into force on the day when not less than
five instruments of ratification, acceptance or approval shall have
been deposited on behalf of signatory States in Category One, and not
less that fifteen such instruments shall have been deposited on behalf
of signatory States in Category Two; provided that total subscriptions
of these States amount to not less than one-third of the authorized
capital of the Agency as prescribed in Article 5.
(c) For each State which deposits its instrument of ratification,
acceptance or approval after this Convention shall have entered into
force, this Convention shall enter into force on the date of such
deposit.
(d) If this Convention shall not have entered into force within two years
after its opening for signature, the President of the Bank shall
convene a conference of interested countries to determine the future
course of action. Article 62. Inaugural Meeting
Upon entry into force of this Convention, the President of the Bank shall call
the inaugural meeting of the Council. This meeting shall be held at the
principal office of the Agency within sixty days from the date on which this
Convention has entered into force or as soon as practicable thereafter.
Article 63. Depository
Instruments of ratification, acceptance or approval of this Convention and
amendments thereto shall be deposited with the Bank which shall act as the
depository of this Convention. The depository shall transmit certified copies
of this Convention to States members of the Bank and to Switzerland. Article
64. Registration
The depository shall register this Convention with the Secretariat of the
United Nations in accordance with Article 102 of the Charter of the United
Nations and the Regulations thereunder adopted by the General Assembly.
Article 65. Notification
The depository shall notify all signatory States and, upon the entry into
force of this Convention, the Agency of the following:
(a) signatures of this Convention;
(b) deposits of instruments of ratification, acceptance and approval in
accordance with Article 63;
(c) the date on which this Convention enters into force in accordance with
Article 61;
(d) exclusions from territorial application pursuant to Article 66; and
(e) withdrawal of a member from the Agency pursuant to Article 51. Article
66. Territorial Application
This Convention shall apply to all territories under the jurisdiction of a
member including the territories for whose international relations a member is
responsible, except those which are excluded by such member by written notice
to the depository of this Convention either at the time of ratification,
acceptance or approval or subsequently. Article 67. Periodic Reviews
(a) The Council shall periodically undertake comprehensive reviews of the
activities of the Agency as well as the results achieved with a view
to introducing any changes required to enhance the Agency's ability to
serve its objectives.
(b) The first such review shall take place five years after the entry into
force of this Convention. The dates of subsequent reviews shall be
determined by the Council.
DONE at Seoul, in a single copy which shall remain deposited in the archives
of the International Bank for Reconstruction and Development, which has
indicated by its signature below its agreement to fulfill the functions with
which it is charged under this Convention.
ANNEX I
Guarantees of Sponsored Investments Under Article 24 Article 1. Sponsorship
(a) Any member may sponsor for guarantee an investment to be made by an
investor of any nationality or by investors of any or several
nationalities.
(b) Subject to the provisions of Sections (b) and (c) of Article 3 of this
Annex, each sponsoring member shall share with the other sponsoring
members in losses under guarantees of sponsored investments, when and
to the extent that such losses cannot be covered out of the
Sponsorship Trust Fund referred to in Article 2 of this Annex, in the
proportion which the amount of maximum contingent liability under the
guarantees of investments sponsored by it bears to the total amount of
maximum contingent liability under the guarantees of investments
sponsored by all members.
(c) In its decisions on the issuance of guarantees under this Annex, the
Agency shall pay due regard to the prospects that the sponsoring
member will be in a position to meet its obligations under this Annex
and shall give priority to investments which are co-sponsored by the
host countries concerned.
(d) The Agency shall periodically consult with sponsoring members with
respect to its operations under this Annex. Article 2. Sponsorship
Trust Fund
(a) Premiums and other revenues attributable to guarantees of sponsored
investments, including returns on the investment of such premiums and
revenues, shall be held in a separate account which shall be called
the Sponsorship Trust Fund.
(b) All administrative expenses and payments on claims attributable to
guarantees issued under this Annex shall be paid out of the
Sponsorship Trust Fund.
(c) The assets of the Sponsorship Trust Fund shall be held and
administered for the joint account of sponsoring members and shall be
kept separate and apart from the assets of the Agency. Article 3.
Calls on Sponsoring Members
(a) To the extent that any amount is payable by the Agency on account of a
loss under a sponsored guarantee and such amount cannot be paid out of
assets of the Sponsorship Trust Fund, the Agency shall call on each
sponsoring member to pay into such Fund its share of such amount as
shall be determined in accordance with Section (b) of Article 1 of
this Annex.
(b) No member shall be liable to pay any amount on a call pursuant to the
provisions of this Article if as a result total payments made by that
member will exceed the total amount of guarantees covering investments
sponsored by it.
(c) Upon the expiry of any guarantee covering an investment sponsored by a
member, the liability of that member shall be decreased by an amount
equivalent to the amount of such guarantee; such liability shall also
be decreased on a pro rata basis upon payment by the Agency of any
claim related to a sponsored investment and shall otherwise continue
in effect until the expiry of all guarantees of sponsored investments
outstanding at the time of such payment.
(d) If any sponsoring member shall not be liable for an amount of a call
pursuant to the provisions of this Article because of the limitation
contained in Sections (b) and (c) above, or if any sponsoring member
shall default in payment of an amount due in response to any such
call, the liability for payment of such amount shall be shared pro
rata by the other sponsoring members. Liability of members pursuant to
this Section shall be subject to the limitation set forth in Sections
(b) and (c) above.
(e) Any payment by a sponsoring member pursuant to a call in accordance
with this Article shall be made promptly and in freely usable
currency. Article 4. Valuation of Currencies and Refunds
The provisions on valuation of currencies and refunds contained in this
Convention with respect to capital subscriptions shall be applied mutatis
mutandis to funds paid by members on account of sponsored investments. Article
5. Reinsurance
(a) The Agency may, under the conditions set forth in Article 1 of this
Annex, provide reinsurance to a member, an agency thereof, a regional
agency as defined in Section (a) of Article 20 of this Convention or a
private insurer in a member country. The provisions of this Annex
concerning guarantees and of Articles 20 and 21 of this Convention
shall be applied mutatis mutandis to reinsurance provided under this
Section.
(b) The Agency may obtain reinsurance for investments guaranteed by it
under this Annex and shall meet the cost of such reinsurance out of
the Sponsorship Trust Fund. The Board may decide whether and to what
extent the loss-sharing obligation of sponsoring members referred to
in Section (b) of Article 1 of this Annex may be reduced on account of
the reinsurance cover obtained. Article 6. Operational Principles
Without prejudice to the provisions of this Annex, the provisions with respect
to guarantee operations under Chapter III of this Convention and to financial
management under Chapter IV of this Convention shall be applied mutatis
mutandis to guarantees of sponsored investments except that (i) such
investments shall qualify for sponsorship if made in the territories of any
member, and in particular of any developing member, by an investor or
investors eligible under Section (a) of Article 1 of this Annex, and (ii) the
Agency shall not be liable with respect to its own assets for any guarantee or
reinsurance issued under this Annex and each contract of guarantee or
reinsurance concluded pursuant to this Annex shall expressly so provide.
Article 7. Voting
For decisions relating to sponsored investments, each sponsoring member shall
have one additional vote for each 10,000 Special Drawing Rights equivalent of
the amount guaranteed or reinsured on the basis of its sponsorship, and each
member hosting a sponsored investment shall have one additional vote for each
10,000 Special Drawing Rights equivalent of the amount guaranteed or reinsured
with respect to any sponsored investment hosted by it. Such additional votes
shall be cast only for decisions related to sponsored investments and shall
otherwise be disregarded in determining the voting power of members.
ANNEX II
Settlement of Disputes Between A Member and the Agency
Under Article 57 Article 1. Application of the Annex
All disputes within the scope of Article 57 of this Convention shall be
settled in accordance with the procedure set out in this Annex, except in the
cases where the Agency has entered into an agreement with a member pursuant to
Section (b) (ii) of Article 57. Article 2. Negotiation
The parties to a dispute within the scope of this Annex shall attempt to
settle such dispute by negotiation before seeking conciliation or arbitration.
Negotiations shall be deemed to have been exhausted if the parties fail to
reach a settlement within a period of one hundred and twenty days from the
date of the request to enter into negotiation. Article 3. Conciliation
(a) If the dispute is not resolved through negotiation, either party may
submit the dispute to arbitration in accordance with the provisions of
Article 4 of this Annex, unless the parties, by mutual consent, have
decided to resort first to the conciliation procedure provided for in
this Article.
(b) The agreement for recourse to conciliation shall specify the matter in
dispute, the claims of the parties in respect thereof and, if
available, the name of the conciliator agreed upon by the parties. In
the absence of agreement on the conciliator, the parties may jointly
request either the Secretary-General of the International Centre for
Settlement of Investment Disputes (hereinafter called ICSID) or the
President of the International Court of Justice to appoint a
conciliator. The conciliation procedure shall terminate if the
conciliator has not been appointed within ninety days after the
agreement for recourse to conciliation.
(c) Unless otherwise provided in this Annex or agreed upon by the parties,
the conciliator shall determine the rules governing the conciliation
procedure and shall be guided in this regard by the conciliation rules
adopted pursuant to the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States.
(d) The parties shall cooperate in good faith with the conciliator and
shall, in particular, provide him with all information and
documentation which would assist him in the discharge of his
functions; they shall give their most serious consideration to his
recommendations.
(e) Unless otherwise agreed upon by the parties, the conciliator shall,
within a period not exceeding one hundred and eighty days from the
date of his appointment, submit to the parties a report recording the
results of his efforts and setting out the issues controversial
between the parties and his proposals for their settlement.
(f) Each party shall, within sixty days from the date of the receipt of
the report, express in writing its views on the report to the other
party.
(g) Neither party to a conciliation proceeding shall be entitled to have
recourse to arbitration unless:
(i) the conciliator shall have failed to submit his report within
the period established in Section (e) above; or
(ii) the parties shall have failed to accept all of the proposals
contained in the report within sixty days after its receipt; or
(iii) the parties, after an exchange of views on the report, shall
have failed to agree on a settlement of all controversial
issues within sixty days after receipt of the conciliator's
report; or
(iv) a party shall have failed to express its views on the report as
prescribed in Section (f) above.
(h) Unless the parties agree otherwise, the fees of the conciliator shall
be determined on the basis of the rates applicable to ICSID
conciliation. These fees and the other costs of the conciliation
proceedings shall be borne equally by the parties. Each party shall
defray its own expenses. Article 4. Arbitration
(a) Arbitration proceedings shall be instituted by means of a notice by
the party seeking arbitration (the claimant) addressed to the other
party or parties to the dispute (the respondent). The notice shall
specify the nature of the dispute, the relief sought and the name of
the arbitrator appointed by the claimant. The respondent shall, within
thirty days after the date of receipt of the notice, notify the
claimant of the name of the arbitrator appointed by it. The two
parties shall, within a period of thirty days from the date of
appointment of the second arbitrator, select a third arbitrator, who
shall act as President of the Arbitral Tribunal (the Tribunal).
(b) If the Tribunal shall not have been constituted within sixty days from
the date of the notice, the arbitrator not yet appointed or the
President not yet selected shall be appointed, at the joint request of
the parties, by the Secretary-General of ICSID. If there is no such
joint request, or if the Secretary-General shall fail to make the
appointment within thirty days of the request, either party may
request the President of the International Court of Justice to make
the appointment.
(c) No party shall have the right to change the arbitrator appointed by it
once the hearing of the dispute has commenced. In case any arbitrator
(including the President of the Tribunal) shall resign, die, or become
incapacitated, a successor shall be appointed in the manner followed
in the appointment of his predecessor and such successor shall have
the same powers and duties of the arbitrator he succeeds.
(d) The Tribunal shall convene first at such time and place as shall be
determined by the President. Thereafter, the Tribunal shall determine
the place and dates of its meetings.
(e) Unless otherwise provided in this Annex or agreed upon by the parties,
the Tribunal shall determine its procedure and shall be guided in this
regard by the arbitration rules adopted pursuant to the Convention on
the Settlement of Investment Disputes between States and Nationals of
Other States.
(f) The Tribunal shall be the judge of its own competence except that, if
an objection is raised before the Tribunal to the effect that the
dispute falls within the jurisdiction of the Board or the Council
under Article 56 or within the jurisdiction of a judicial or arbitral
body designated in an agreement under Article 1 of this Annex and the
Tribunal is satisfied that the objection is genuine, the objection
shall be referred by the Tribunal to the Board or the Council or the
designated body, as the case may be, and the arbitration proceedings
shall be stayed until a decision has been reached on the matter, which
shall be binding upon the Tribunal.
(g) The Tribunal shall, in any dispute within the scope of this Annex,
apply the provisions of this Convention, any relevant agreement
between the parties to the dispute, the Agency's by-laws and
regulations, the applicable rules of international law, the domestic
law of the member concerned as well as the applicable provisions of
the investment contract, if any. Without prejudice to the provisions
of this Convention, the Tribunal may decide a dispute ex aequo et bono
if the Agency and the member concerned so agree. The Tribunal may not
bring a finding of non liquet on the ground of silence or obscurity of
the law.
(h) The Tribunal shall afford a fair hearing to all the parties. All
decisions of the Tribunal shall be taken by a majority vote and shall
state the reasons on which they are based. The award of the Tribunal
shall be in writing, and shall be signed by at least two arbitrators
and a copy thereof shall be transmitted to each party. The award shall
be final and binding upon the parties and shall not be subject to
appeal, annulment or revision.
(i) If any dispute shall arise between the parties as to the meaning or
scope of an award, either party may, within sixty days after the award
was rendered, request interpretation of the award by an application in
writing to the President of the Tribunal which rendered the award. The
President shall, if possible, submit the request to the Tribunal which
rendered the award and shall convene such Tribunal within sixty days
after receipt of the application. If this shall not be possible, a new
Tribunal shall be constituted in accordance with the provisions of
Sections (a) to (d) above. The Tribunal may stay enforcement of the
award pending its decision on the requested interpretation.
(j) Each member shall recognize an award rendered pursuant to this Article
as binding and enforceable within its territories as if it were a
final judgment of a court in that member. Execution of the award shall
be governed by the laws concerning the execution of judgments in force
in the State in whose territories such execution is sought and shall
not derogate from the law in force relating to immunity from
execution.
(k) Unless the parties shall agree otherwise, the fees and remuneration
payable to the arbitrators shall be determined on the basis of the
rates applicable to ICSID arbitration. Each party shall defray its own
costs associated with the arbitration proceedings. The costs of the
Tribunal shall be borne by the parties in equal proportion unless the
Tribunal decides otherwise. Any question concerning the division of
the costs of the Tribunal or the procedure for payment of such costs
shall be decided by the Tribunal. Article 5. Service of Process
Service of any notice or process in connection with any proceeding under this
Annex shall be made in writing. It shall be made by the Agency upon the
authority designated by the member concerned pursuant to Article 38 of this
Convention and by that member at the principal office of the Agency.
SCHEDULE A
Membership and Subscriptions
CATEGORY ONE
Country Number of Shares Subscription
(millions of SDR)
Australia 1,713 17.13
Austria 775 7.75
Belgium 2,030 20.30
Canada 2,965 29.65
Denmark 718 7.18
Finland 600 6.00
France 4,860 48.60
Germany, Federal Republic of
5,071 50.71
Iceland 90 0.90
Ireland 369 3.69
Italy 2,820 28.20
Japan 5,095 50.95
Luxembourg 116 1.16
Netherlands 2,169 21.69
New Zealand 513 5.13
Norway 699 6.99
South Africa 943 9.43
Sweden 1,049 10.49
Switzerland 1,500 15.00
United Kingdom 4,860 48.60
United States 20,519 205.19
______ ______
59,473 594.73
CATEGORY TWO*
Country Number of Shares Subscription
(millions of SDR)
Afghanistan 118 1.18
Algeria 649 6.49
Antigua and Barbuda 50 0.50
Argentina 1,254 12.54
Bahamas 100 1.00
Bahrain 77 0.77
Bangladesh 340 3.40
Barbados 68 0.68
Belize 50 0.50
Benin 61 0.61
Bhutan 50 0.50
Bolivia 125 1.25
Botswana 50 0.50
Brazil 1,479 14.79
Burkina Faso 61 0.61
Burma 178 1.78
Burundi 74 0.74
Camaroon 107 1.07
Cape Verde 50 0.50
Central African Republic 60 0.60
Chad 60 0.60
Chile 485 4.85
China 3,138 31.38
Colombia 437 4.37
Comoros 50 0.50
Congo, People's Rep. of the
65 0.65
Costa Rica 117 1.17
Cyprus 104 1.04
Djibouti 50 0.50
Dominica 50 0.50
Dominican Republic 147 1.47
Ecuador 182 1.82
Egypt, Arab Republic of 459 4.59
El Salvador 122 1.22
Equatorial Guinea 50 0.50
Ethiopia 70 0.70
Fiji 71 0.71
Gabon 96 0.96
Gambia, The 50 0.50
Ghana 245 2.45
Greece 280 2.80
Grenada 50 0.50
Guatemala 140 1.40
Guinea 91 0.91
Guinea-Bissau 50 0.50
Guyana 84 0.84
Haiti 75 0.75
Honduras 101 1.01
Hungary 564 5.64
India 3,048 30.48
Indonesia 1,049 10.49
Iran, Islamic Republic of
1,659 16.59
Iraq 350 3.50
Israel 474 4.74
Ivory Coast 176 1.76
Jamaica 181 1.81
Jordan 97 0.97
Kampuchea, Democratic 93 0.93
Kenya 172 1.72
Korea, Republic of 449 4.49
Kuwait 930 9.30
Lao People's Dem. Rep. 60 0.60
Lebanon 142 1.42
Lesotho 50 0.50
Liberia 84 0.84
Libyan Arab Jamahiriya 549 5.49
Madagascar 100 1.00
Malawi 77 0.77
Malaysia 579 5.79
Maldives 50 0.50
Mali 81 0.81
Malta 75 0.75
Mauritania 63 0.63
Mauritius 87 0.87
Mexico 1,192 11.92
Morocco 348 3.48
Mozambique 97 0.97
Nepal 69 0.69
Nicaragua 102 1.02
Niger 62 0.62
Nigeria 844 8.44
Oman 94 0.94
Pakistan 660 6.60
Panama 131 1.31
Papua New Guinea 96 0.96
Paraguay 80 0.80
Peru 373 3.73
Philippines 484 4.84
Portugal 382 3.82
Qatar 137 1.37
Romania 555 5.55
Rwanda 75 0.75
St. Christopher and Nevis
50 0.50
St. Lucia 50 0.50
St. Vincent 50 0.50
Sao Tome and Principe 50 0.50
Saudi Arabia 3,137 31.37
Senegal 145 1.45
Seychelles 50 0.50
Sierra Leone 75 0.75
Singapore 154 1.54
Solomon Islands 50 0.50
Somalia 78 0.78
Spain 1,285 12.85
Sri Lanka 271 2.71
Sudan 206 2.06
Suriname 82 0.82
Syrian Arab Republic 168 1.68
Swaziland 58 0.58
Tanzania 141 1.41
Thailand 421 4.21
Togo 77 0.77
Trinidad and Tobago 203 2.03
Tunisia 156 1.56
Turkey 462 4.62
United Arab Emirates 372 3.72
Uganda 132 1.32
Uruguay 202 2.02
Vanuatu 50 0.50
Venezuela 1,427 14.27
Viet Nam 220 2.20
Western Samoa 50 0.50
Yemen Arab Republic 67 0.67
Yemen, People's Dem. Rep. of
115 1.15
Yugoslavia 635 6.35
Zaire 338 3.38
Zambia 318 3.18
Zimbabwe 236 2.36
________ ________
40,527 405.27
Total 100,000 1,000.00
*Countries listed under Category Two are developing member countries for the
purposes of this Convention.
SCHEDULE B
Election of Directors 1. Candidates for the office of Director shall be
nominated by the Governors, provided that a Governor may nominate only one
person. 2. The election of Directors shall be by ballot of the Governors. 3.
In balloting for the Directors, every Governor shall cast for one candidate
all the votes which the member represented by him is entitled to cast under
Section (a) of Article 40. 4. One-fourth of the number of Directors shall be
elected separately, one by each of the Governors of members having the largest
number of shares. If the total number of Directors is not divisible by four,
the number of Directors so elected shall be one- fourth of the next lower
number that is divisible by four. 5. The remaining Directors shall be elected
by the other Governors in accordance with the provisions of paragraphs 6 to 11
of this Schedule. 6. If the number of candidates nominated equals the number
of such remaining Directors to be elected, all the candidates shall be elected
in the first ballot; except that a candidate or candidates having received
less than the minimum percentage of total votes determined by the Council for
such election shall not be elected if any candidate shall have received more
than the maximum percentage of total votes determined by the Council. 7. If
the number of candidates nominated exceeds the number of such remaining
Directors to be elected, the candidates receiving the largest number of votes
shall be elected with the exception of any candidate who has received less
than the minimum percentage of the total votes determined by the Council. 8.
If all of such remaining Directors are not elected in the first ballot, a
second ballot shall be held. The candidate or candidates not elected in the
first ballot shall again be eligible for election. 9. In the second ballot,
voting shall be limited to (i) those Governors having voted in the first
ballot for a candidate not elected and (ii) those Governors having voted in
the first ballot for an elected candidate who had already received the maximum
percentage of total votes determined by the Council before taking their votes
into account. 10. In determining when an elected candidate has received more
than the maximum percentage of the votes, the votes of the Governor casting
the largest number of votes for such candidate shall be counted first, then
the votes of the Governor casting the next largest number, and so on until
such percentage is reached. 11. If not all the remaining Directors have been
elected after the second ballot, further ballots shall be held on the same
principles until all the remaining Directors are elected, provided that when
only one Director remains to be elected, this Director may be elected by a
simple majority of the remaining votes and shall be deemed to have been
elected by all such votes.
[Minister's second reading speech made in -
House of Representatives on 11 December 1996
Senate on 24 February 1997]
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