Investment > Bilateral Investment Treaties > Canada – El Salvador > Annexes

ANNEX I

GENERAL AND SPECIFIC EXCEPTIONS

SPECIAL PROVISIONS

I. MFN Exceptions:

1. Articles III(1)(a), IV(1)(a) and IV(2)(a) shall not apply to treatment by a Contracting Party pursuant to any existing or future bilateral or multilateral agreement:

1. establishing, strengthening or expanding a free trade area or customs union;

2. negotiated within the framework of the GATT (including in particular the General Agreement on Trade in Services (GATS)), the World Trade Organization, or any successor organization), and containing obligations and rights relating to trade in services; or

3. relating to:

1. aviation;

2. telecommunications transport networks and telecommunications transport services;

3. fisheries;

4. maritime matters, including salvage; or

5. financial services.

2. Article III(1)(a) does not apply in respect of financial services.

3. For the purposes of this Agreement, the term "financial service" means a service of a financial nature, including insurance, and a service incidental or auxiliary to a service of a financial nature;

II.National Treatment Exceptions:

1. Articles III(1)(b), IV(I)(b), IV(2)(b), V(1), V(2) and VI do not apply to:

1. any measure maintained or adopted after the date of entry into force of this Agreement that, at the time of sale or other disposition of a government's equity interests in, or the assets of, an existing enterprise that is governmentally-owned or controlled through ownership interests by a government or an existing government entity, prohibits or imposes limitations on the ownership of equity interests or assets or imposes nationality requirements relating to senior management or members of the board of directors;

2. any existing non-conforming measures maintained within the territory of a Contracting Party; the continuation or prompt renewal of any such non-conforming measure or any measure referred to in paragraph (a) above; any amendment to such non-conforming measure or any measure referred to in paragraph (a) above, to the extent that such amendment does not decrease the conformity of the measure as it existed immediately before the amendment with those obligations;

3. the right of each Contracting Party to make or maintain exceptions within the following sectors or matters:

Canada:

- social services (i.e. public law enforcement; correctional services; income security or insurance; social security or insurance; social welfare; public education; public training; health and child care);

- services in any other sector;

- residency requirements for ownership of ocean front land;

- measures implementing the Northwest. Territories Oil and Gas Accord

- measures implementing the Yukon Oil and Gas Accord

- government securities - acquisition, sale or other disposition by nationals of the other Contracting Party of bonds, treasury bills or other kinds of debt securities issued by the Government of Canada, a province or local government.

El Salvador:

- coastal fishing under Articles 26 and 28 of the General Law of Fishing Activities;

- small-scale commerce, industry and rendering of services in accordance with Article 115 of the Constitution of the Republic of El Salvador;

- exercise of notarial activities, in conformity with Article IV of the Law on Notarial Activities;

- any amendment for the purpose of adjusting for inflation made to the Regulating Law for the Exercise of Commerce and Industry regarding the requirement for a minimum amount of capital for the establishment or acquisition of an enterprise;

- acquisition of rural real estate for non-industrial use except where similar rights are granted on a reciprocal basis by the other Contracting Party, in accordance with Article 109 of the Constitution of the Republic of El Salvador.

2. The Contracting Parties shall, within a two year period after the entry into force of this Agreement, exchange letters listing, to the extent possible any existing measures that it may rely on to limit national treatment obligations in accordance with paragraph (1)(b) hereof.

III. General Exceptions and Exemptions:

1. Nothing in this Agreement shall be construed to prevent a Contracting Party from adopting, maintaining or enforcing any measure otherwise consistent with this Agreement that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns.

2. Provided that such measures are not applied in an arbitrary or unjustifiable manner, or do not constitute a disguised restriction on international trade or investment, nothing in this Agreement shall be construed to prevent a Contracting Party from adopting or maintaining measures, including environmental measures:

1. necessary to ensure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;

2. necessary to protect human, animal or plant life or health; or

3. relating to the conservation of living or non-living exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.

3. Nothing in this Agreement shall be construed to prevent a Contracting party from adopting or maintaining reasonable measures for prudential reasons, such as:

1. the protection of investors, depositors, financial market participants, policy-holders, policy-claimants, or persons to whom a fiduciary duty is owed by a financial institution;

2. the maintenance of the safety, soundness, integrity or financial responsibility of financial institutions; and

3. ensuring the integrity and stability of a Contracting Party's financial system.

4. Investments in cultural industries are exempt from the provisions of this   Agreement. "Cultural industries" means natural or juridical persons or enterprises engaged in any. of the following activities:

1. the publication, distribution, or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the sole activity of printing or typesetting any of the foregoing;

2. the production, distribution, sale or exhibition of film or video recordings the production, distribution, sale or exhibition of audio or video music recordings;

3. the publication, distribution, sale or exhibition of music in print or machine readable form; or

4. radiocommunications in which the transmissions are intended for direct reception by the general public, and all radio, television or cable broadcasting undertakings and all satellite programming and broadcast network services.

5. The provisions of Articles II, III, IV, V and VI of this Agreement do not apply to:

1. procurement by a government or an enterprise that is governmentally-owned or controlled through ownership interests by a government;

2. subsidies or grants provided by a government or an enterprise that is governmentally-owned or controlled through ownership interests by a government, including government-supported loans, guarantees and insurance;

3. any measure denying investors of the other Contracting Party and their investments any rights or preferences provided to the aboriginal peoples of Canada; or

4. any current or future foreign aid program to promote economic development, whether under a bilateral agreement, or pursuant to a multilateral arrangement or agreement, such as the OECD Agreement on Export Credits.

IV. Exceptions to Specific Obligations:

1. In respect of intellectual property rights, a Contracting Party may derogate from Article IV in a manner that is consistent with the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at Marrakesh, April 15, 1994.

2. The provisions of Article VIII do not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at Marrakesh, April 15, 1994.

I. Prudential Measures

1. Where an investor submits a claim to arbitration under Article XII, and the disputing Contracting Party invokes Article III(3) or V(4) of Annex I, the tribunal established pursuant to Article XII shall, at the request of that Contracting Party, seek a report in writing from the Contracting Parties on the issue of whether and to what extent the said paragraphs are a valid defence to the claim of the investor. The tribunal may not proceed pending receipt of A report under this Article.

2. Pursuant to a request received in accordance with paragraph (1), the Contracting Parties shall proceed in accordance with Article XIII to prepare a written report, either on the basis of agreement following consultations, or by means of an arbitral panel. The consultations shall be between the financial services authorities of the Contracting Parties. The report shall be transmitted to the tribunal, and shall be binding on the tribunal.

3. Where, within 70 days of the referral by the tribunal, no request for the   establishment of a panel pursuant to paragraph (2) has been made and no report has been received by the tribunal, the tribunal may proceed to decide the matter.

4. Panels for disputes on prudential issues and other financial matters shall have the necessary expertise relevant to the specific financial service in dispute.

II. Taxation Measures

1. An investor may submit a claim relating to taxation measures covered by this Agreement to arbitration under Article XII only if the taxation authorities of the Contracting Parties fail to reach the joint determinations specified in Article VIII(3) or XI(2) within six months of being notified in accordance with the relevant Article.

2. The taxation authorities referred to in Articles VIII(4) and XI(2) shall be the   following until notice in writing to the contrary is provided to the other Contracting Party:

1. for Canada:

the Assistant Deputy Minister, Tax Policy, of the Department of Finance Canada;

2. for El Salvador:

Ministry of Finance.

III. Damage Incurred by a Controlled Enterprise

1. A claim that a Contracting Party is in breach of this Agreement, and that an enterprise that is a juridical person incorporated or duly constituted in accordance with applicable laws of that Contracting Party has incurred loss or damage by reason of, or arising out of, that breach, may be brought by an investor of the other Contracting Party acting on behalf of an enterprise which the investor owns or controls directly or indirectly. In such a case

1. any award shall be made to the affected enterprise;

2. the consent to arbitration of both the investor and the enterprise shall be required;

3. both the investor and enterprise must waive any right to initiate or continue any other proceedings in relation to the measure that is alleged to be in breach of this Agreement before the courts or tribunals of the Contracting Party concerned or in a dispute settlement procedure of any kind; and

4. the investor may not make a claim if more than three years have elapsed from the date on which the enterprise first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that it has incurred loss or damage.

1. Notwithstanding paragraph (1)(a) above, where a disputing Contracting Party has deprived a disputing investor of control of an enterprise, the following shall not be required:

1. a consent to arbitration by the enterprise under (1)(b); and

2. a waiver from the enterprise under (1)(c).