[Senate Treaty Document 106-46]
[From the U.S. Government Publishing Office]
106th Congress Treaty Doc.
SENATE
2d Session 106-46
_______________________________________________________________________
PROTOCOL AMENDING INVESTMENT TREATY WITH PANAMA
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
transmitting
PROTOCOL BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE
GOVERNMENT OF THE REPUBLIC OF PANAMA AMENDING THE TREATY CONCERNING
THE TREATMENT AND PROTECTION OF INVESTMENTS OF OCTOBER 27, 1982.
PROTOCOL WAS SIGNED AT PANAMA CITY, ON JUNE 1, 2000
September 12, 2000.--Protocol was read the first time, and together
with the accompanying papers, referred to the Committee on Foreign
Relations and ordered to be printed for the use of the Senate
__________
U.S. GOVERNMENT PRINTING OFFICE
79-118 WASHINGTON : 2000
LETTER OF TRANSMITTAL
----------
The White House, September 12, 2000.
To the Senate of the United States:
With a view to receiving the advice and consent of the
Senate to ratification, I transmit herewith the Protocol
Between the Government of the United States of America and the
Government of the Republic of Panama Amending the Treaty
Concerning the Treatment and Protection of Investments of
October 27, 1982. This Protocol was signed at Panama City, on
June 1, 2000. I transmit also, for the information of the
Senate, the report of the Department of State with respect to
this Protocol.
The 1982 bilateral investment treaty with Panama (the
``1982 Treaty'') was the second treaty to be signed under the
U.S. bilateral investment treaty (BIT) program. The 1982 Treaty
protects U.S. investment and assists Panama in its efforts to
develop its economy by creating conditions more favorable for
U.S. private investment and thereby strengthening the
development of its private sector.
As explained in the Department of State's report, the
Protocol is needed in order to ensure that investors continue
to have access to binding international arbitration following
Panama's 1996 accession to the Convention on the Settlement of
Investment Disputes Between States and Nationals of Other
States, done at Washington, March 18, 1965 (the ``ICSID
Convention''). The Protocol provides each Party's consent to
international arbitration of investment disputes under the 1982
Treaty before the International Centre for the Settlement of
Investment Disputes, established under the ICSID Convention.
The Protocol also provides for arbitration in accordance with
the Arbitration Rules of the United Nations Commission on
International Trade Law. The Protocol thus facilitates the use
of such procedures by investors of the Parties to resolve
investment disputes under the 1982 Treaty. The Protocol also
sets forth each Party's consent to ICSID Additional Facility
arbitration, if Convention Arbitration is not available.
Convention Arbitration would not be available, for example, if
either Party subsequently ceased to be a party to the ICSID
Convention.
I recommend that the Senate consider this Protocol as soon
as possible, and give its advice and consent to ratification of
the Protocol at an early date.
William J. Clinton.
LETTER OF SUBMITTAL
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Department of State,
Washington, August 11, 2000.
The President,
The White House.
The President: I have the honor to submit to you the
Protocol Between the Government of the United States of America
and the Government of the Republic of Panama Amending the
Treaty Concerning the Treatment and Protection of Investments
of October 27, 1982. The Protocol was signed at Panama City, on
June 1, 2000. I recommend that this Protocol be transmitted to
the Senate for its advice and consent to ratification.
The 1982 bilateral investment treaty with Panama (``1982
Treaty'') was the second treaty to be signed under the U.S.
bilateral investment treaty (``BIT'') program. To date, 31 BITs
are in force for the United States--with Albania, Argentina,
Armenia, Bangladesh, Bulgaria, Cameroon, the Republic of the
Congo, the Democratic Republic of the Congo (formerly Zaire),
the Czech Republic, Ecuador, Egypt, Estonia, Georgia, Grenada,
Jamaica, Kazakhstan, Kyrgyzstan, Latvia, Moldova, Mongolia,
Morocco, Panama, Poland, Romania, Senegal, Slovakia, Sri Lanka,
Trinidad & Tobago, Tunisia, Turkey, and Ukraine. The United
States has also signed, but not yet brought into force, BITs
with Azerbaijan, Bahrain, Belarus, Bolivia, Croatia, El
Salvador, Honduras, Jordan, Lithuania, Mozambique, Nicaragua,
Russia, and Uzbekistan.
One of the important objectives of the 1982 Treaty was to
ensure that investors could arbitrate investment disputes with
a Party in at least one forum, specified in the Treaty, by
providing the prior consent of each Party to arbitrate
investment disputes in that forum. This important investment
protection was lost when the forum specified in the 1982 Treaty
subsequently ceased to be available to the Parties. The
Protocol restores this investment protection by providing the
prior consent of the Parties to the use of specified
alternative fora or arbitration rules to resolve investment
disputes.
The forum specified in the 1982 Treaty was the Additional
Facility of the International Centre for the Settlement of
Investment Disputes (``ICSID''). ICSID was established by the
Convention on the Settlement of Investment Disputes between
States and Nationals of Other States, done at Washington, March
18, 1965 (``ICSID Convention'') as a forum for international
arbitration of investment disputes between Contracting States
and nationals of other Contracting States (``Convention
Arbitration''). The United States has been a Party to the ICSID
Convention since its entry into force on October 14, 1966.
When the 1982 Treaty was signed, Panama was not a party to
the ICSID Convention. Convention Arbitration therefore was not
available for disputes involving Panama or its nationals. The
ICSID Additional Facility, however, does provide a forum for
arbitration of international investment disputes arising
between parties where one party is not an ICSID Contracting
State or a national of a Contracting State. The 1982 Treaty
therefore specifies the ICSID Additional Facility as the
primary forum for international arbitration, and under Article
VII of the 1982 Treaty provides the prior consent of the
Parties to the use of the Additional Facility. Under the 1982
Treaty, the parties may also mutually agree to use other
dispute resolution procedures to resolve their investment
dispute.
The ICSID Convention entered into force with respect to
Panama on May 8, 1996. As of that date, the Additional Facility
ceased to be available for the settlement of investment
disputes under the 1982 Treaty. The 1982 Treaty does not
provide each Party's prior consent to the use of any other
procedures for the resolution of investment disputes. Although
an investor may still request a Party's consent to use any
other dispute settlement procedures for the resolution of their
investment dispute, the Party may withhold its consent.
The Parties negotiated the Protocol to restore assured
investor access to dispute settlement by providing each Party's
prior consent to Convention Arbitration as well as arbitration
in accordance with the Arbitration Rules of the United Nations
Commission on International Trade Law (``UNCITRAL Rules''). The
Protocol thus facilities the use of such procedures by
investors of the Parties to resolve investment disputes under
the 1982 Treaty. The Protocol also sets forth each Party's
consent to ICSID Additional Facility arbitration, if Convention
Arbitration is notavailable. Convention Arbitration would not
be available, for example, if either Party subsequently ceased to be a
party to the ICSID Convention.
The terms of the Protocol are described below.
Article I (Amending Article VII of the 1982 Treaty)
Paragraph 1 amends Article VII(3) of the 1982 Treaty by
replacing that paragraph with the text set forth in Article
I(1) of the Protocol.
Under amended Article VII(3)(a), at any time after 6 months
from the date upon which an investment dispute has arisen, the
national or company concerned (``investor'') may consent in
writing to the submission of the dispute to binding
arbitration. In providing its consent, the investor may choose
among convention Arbitration, the Additional Facility of ICSID
(if Convention Arbitration is not available), or ad hoc
arbitration using the UNCITRAL Rules. Once the investor has so
consented, either party to the dispute may institute
proceedings, provided that the dispute has not, for any reason,
been submitted for resolution in accordance with any applicable
dispute resolution procedure previously agreed upon and the
investor has not brought the dispute before a judicial,
administrative or agency tribunal of competent jurisdiction of
either Party.
Amended Article VII(3)(b) constitutes each Party's consent
to the submission of investment disputes to binding arbitration
in accordance with the choice of the investor under amended
Article VII(3)(a).
Amended Article VII(3)(c) provides that if the parties
elect conciliation or arbitration using Convention Arbitration
or the Additional Facility, the regulations and rules of ICSID
or the Additional Facility, as applicable, will govern.
Under amended Article VII(3)(d), each Party commits to
enforcing arbitral awards rendered pursuant to Article VII. The
Federal Arbitration Act (9 U.S.C. 1 et seq.) satisfies the
requirement for the enforcement of non-ICSID Convention awards
in the United States. The Convention on the Settlement of
Investment Disputes Act of 1966 (22 U.S.C. 1650-1650a) provides
for the enforcement of ICSID Convention awards.
Amended Article VII(3)(e) provides that any non-Convention
Arbitration shall take place in a country that is a party to
the United Nations Convention on the Recognition and
Enforcement of Arbitral Awards done at New York, June 10, 1958.
This provision facilitates enforcement of arbitral awards.
Paragraph 2 amends Article VII(5) of the 1982 Treaty by
replacing that paragraph with the text set forth in Article
I(2) of the Protocol. Amended Article VII(5) provides that, for
the purposes of Article 25(2)(b) of the ICSID convention and
Article VII of the 1982 Treaty, the nationality of a company in
the host country will be determined by ownership or control,
rather than by place of incorporation. This provision allows a
company that is an investment covered by the 1982 Treaty to
bring a claim in its own name.
Article II (Entry into Force and Duration)
Article II provides that the Protocol forms an integral
part of the 1982 Treaty. The Protocol will enter into force
upon an exchange of notes confirming that the Parties have
completed their domestic legal requirements for entry into
force of the Protocol. The Protocol will remain in force for so
long as the 1982 Treaty is in force. If the 1982 Treaty is
terminated, the Protocol will continue to be effective (as will
the other Articles of the 1982 Treaty) for an additional 10
years as provided in Article XIII(4) of the 1982 Treaty.
The 1982 Treaty was negotiated jointly by the Department of
State and the Office of the United States Trade Representative,
with the active participation of the Departments of Commerce
and the Treasury. These agencies join me in recommending that
it be transmitted to the Senate at an early date.
Respectfully submitted.
Strobe Talbott.