Treaty between the Government of the
United States of America and the Government of the Republic of Nicaragua
concerning the Encouragement and
Reciprocal Protection of Investment
The Government of the United States of America and the Government of the Republic of
Nicaragua (hereinafter the "Parties");
Desiring to promote greater economic cooperation between them, with respect to investment
by nationals and companies of one Party in the territory of the other Party;
Recognizing that agreement upon the treatment to be accorded such investment will
stimulate the flow of private capital and the economic development of the Parties;
Agreeing that a stable framework for investment will maximize effective utilization of
economic resources and improve living standards;
Recognizing that the development of economic and business ties can promote respect for
internationally recognized worker rights;
Agreeing that these objectives can be achieved without relaxing health, safety and
environmental measures of general application; and
Having resolved to conclude a Treaty concerning the encouragement and reciprocal
protection of investment;
Have agreed as follows:
1. For the purposes of this Treaty,
(a) "company" means any entity constituted or organized under
applicable law, whether or not for profit, and whether privately or governmentally owned
or controlled, and includes a corporation, trust, partnership, sole proprietorship,
branch, joint venture, association, or other organization;
(b) "company of a Party" means a company constituted or
organized under the laws of that Party;
(c) "national" of a Party means a natural person who is a
national of that Party under its applicable law;
(d) "investment" of a national or company means every kind of
investment owned or controlled directly or indirectly by that national or company, and
includes investment consisting or taking the form of:
(i) a company;
(ii) shares, stock, and other forms of equity participation, and
bonds, debentures, and other forms of debt interests, in a company;
(iii) contractual rights, such as under turnkey, construction or
management contracts, production or revenue-sharing contracts, concessions, or other
(iv) tangible property, including real property; and intangible property,
including rights, such as leases, mortgages, liens and pledges;
(v) intellectual property, including: copyrights
and related rights, patents, rights in plant varieties, industrial
designs, rights in semiconductor layout designs, trade secrets,
including know-how and confidential business information, trade and
service marks, and trade names; and
(vi) rights conferred pursuant to law, such as% licenses and permits;
(e) "covered investment" means an investment of a national
or company of a Party in the territory of the other Party;
(f) "state enterprise" means a company owned, or controlled
through ownership interests, by a Party;
(g) "investment authorization" means an authorization granted
by the foreign investment authority of a Party to a covered investment or a national or
company of the other Party;
(h) "investment agreement". means a written agreement between
the national authorities of a Party and a covered investment or a national or company of
the other Party that (i) grants rights with respect to natural resources or other assets
controlled by the national authorities and (ii) the investment, national or company relies
upon in establishing or acquiring a covered investment.
(i) "territory" means the territory of the United States or the
Republic of Nicaragua, including the territorial sea established in accordance with
international law as reflected in the 1982 United Nations Convention on the Law of the
Sea. This Treaty also applies in the seas and seabed adjacent to the territorial seas in
which the United States or the Republic of Nicaragua has sovereign rights or jurisdiction
in accordance with international law as reflected in the 1982 United Nations Convention on
the Law of the Sea.
(j) "ICSID Convention" means the Convention on the Settlement
of Investment Disputes between States and Nationals of Other States, done at Washington,
March 18, 1965;
(k) "Centre" means the International Centre for Settlement of
Investment Disputes Established by the ICSID Convention; and
(1) "UNCITRAL Arbitration Rules" means the arbitration rules of
the United Nations Commission on International Trade Law.
1. With respect to the establishment, acquisition, expansion,
management, conduct, operation and sale or other disposition of covered investments, each
Party shall accord treatment no less favorable than that it accords, in like situations,
to investments in its territory of its own nationals or companies (hereinafter
"national treatment") or to investments in its territory of nationals or
companies of a third country (hereinafter "most favored nation treatment"),
whichever is most favorable (hereinafter "national and most favored nation
treatment"). Each Party shall ensure that its state enterprises, in the provision of
their goods or services, accord national and most favored nation treatment to covered
a) A Party may adopt or maintain exceptions to the obligations of
paragraph 1 in the sectors or with respect to the matters specified in
the Annex to this Treaty. In adopting such an exception, a Party may not require the
divestment, in whole or in part, of covered investments existing at the time the exception
(b) The obligations of paragraph 1 do not apply to procedures provided
in multilateral agreements concluded under the auspices of the World intellectual Property
Organization relating to the acquisition or maintenance of intellectual property rights.
(a) Each Party shall at all times accord to covered investments fair
and equitable treatment and full protection and security, and shall in no case accord
treatment less favorable than that required by international law.
(b) Neither Party shall in any way impair by unreasonable and
discriminatory measures the management, conduct, operation, and sale or other disposition
of covered investments.
4. Each Party shall provide effective -means of asserting claims
and enforcing rights with respect to covered investments.
5. Each Party shall ensure that its laws, regulations, administrative
practices and procedures of general application, and adjudicatory decisions, that pertain
to or affect covered investments are promptly published or otherwise made publicly
1. Neither Party shall expropriate or nationalize a covered investment
either directly or indirectly through measures tantamount to expropriation or
nationalization ("expropriation")' except for a public purpose; in a
nondiscriminatory manner; upon payment of prompt, adequate and effective compensation; and
in accordance with due process of law and the general principles of treatment provided for
in Article 11(3).
2. Compensation shall be paid without delay; be equivalent to the fair
market value of the expropriated investment immediately before the expropriatory action
was taken ("the date of expropriation"); and be fully realizable and freely
transferable. The fair market value shall not reflect any change in value occurring
because the expropriatory action had become known before the date of expropriation.
3. If the fair market value is denominated in a freely usable currency,
the compensation paid shall be no less than the fair market value on the date of
expropriation, plus interest at a commercially reasonable rate for that currency, accrued
from the date of expropriation until the date of payment.
4. If the fair market value is denominated in a currency that is not
freely usable, the compensation paid -- converted into the currency of payment at the
market rate of exchange prevailing on the date of Payment -- shall be no less than:
(a) the fair market value on the date of expropriation, converted into
a freely usable currency at the market rate of exchange prevailing on that date, plus
(b) interest, at a commercially reasonable rate for that freely usable
currency, accrued from the date of expropriation until the date of payment.
1. Each Party shall accord national and most favored nation treatment
to covered investments as regards any measure relating to losses that investments suffer
in its territory owing to war or other armed conflict, revolution, state of national
emergency, insurrection, civil disturbance, or similar events.
2. Each Party shall accord restitution, or pay compensation in accordance
with paragraphs 2 through 4 of Article III, in the event that covered investments suffer
losses in its territory, owing to war or other armed conflict, revolution, state of
national emergency, insurrection, civil. disturbance, or similar events, that result from:
(a) requisitioning of all or part of such investments by the Party's
forces or authorities, or
(b) destruction of all or part of such investments by the Party's forces
or authorities that was not required by the necessity of the situation.
1. Each Party shall permit all transfers relating to a covered
investment to be made freely and without delay into and out of its territory. Such
(a) contributions to capital;
(b) profits, dividends, capital gains, and proceeds from the sale of
all or any part of the investment or from the partial or complete liquidation of the
(c) interest, royalty payments, management fees, and technical assistance
and other fees;
(d) payments made under a contract, including a loan agreement; and
(e) compensation pursuant to Articles III and IV, and payments arising
out of an investment dispute.
2. Each Party shall permit transfers to be made in a freely
usable currency at the market rate of exchange prevailing on the date of transfer.
3. Each Party shall permit returns in kind to be made as authorized or
specified in an investment authorization, investment agreement, or other written agreement
between the Party and a covered investment or a national or company of the other Party.
4. Notwithstanding paragraphs 1 through 3, a Party may prevent a transfer
through the equitable, non-discriminatory and good faith application of its laws relating
(a) bankruptcy, insolvency or the protection of the. rights of
(b) issuing, trading or dealing in securities;
(c) criminal or.penal offenses; or
(d) ensuring compliance with orders or judgments in adjudicatory
1. Neither Party shall mandate or enforce, as a condition for the
establishment, acquisition, expansion, management, conduct or operation of a covered
investment, any requirement (including any commitment or undertaking in connection with
the receipt of a governmental permission or authorization):
(a) to achieve a particular level or percentage of local content, or
to purchase, use or otherwise give a preference to products or services of domestic origin
or from any domestic source;
(b) to limit imports by the investment of products or services in
relation to a particular volume or value of production, exports or foreign exchange
(c) to export a particular type, level or percentage of products or
services, either generally or to a specific market region;
(d) to limit sales by the investment of products or services in the
Party's territory in relation to a particular volume or: value of production, exports or
foreign exchange earnings;
(e) to transfer technology, a production process or other proprietary
knowledge to a national or company in the Party's territory, except pursuant to an order,
commitment or undertaking that is enforced by a court, administrative tribunal or
competition authority to remedy an alleged or adjudicated violation of competition laws;
(f) to carry out a particular type, level or percentage of research and
development in the Party's territory.
2. Nothing in paragraph 1 shall preclude a Party from providing
benefits and incentives conditioned upon the requirements listed in paragraph 1.
(a) Subject to its laws relating to the entry and sojourn of aliens,
each Party shall permit to enter and to remain in its territory nationals of the other
Party for the purpose of establishing, developing, administering or advising on the
operation of an investment to which they, or a company of the other Party that employs
them, have committed or are in the process of committing a substantial amount of capital
or other resources.
(b) Neither Party shall, in granting entry under paragraph l(a), require
a labor certification test or other procedures of similar effect, or apply any numerical
2. Each Party shall permit covered investments to engage top
managerial personnel of their choice, regardless of nationality.
The Parties agree to consult promptly, on the request of either, to resolve any
disputes in connection with the Treaty, or to discuss any matter relating to the
interpretation or application of the Treaty or to the realization of the objectives of the
1. For purposes of this Treaty, an investment dispute is a dispute
between a Party and a national or company of the -other Party arising out of or relating
to an investment authorization, an investment agreement or an alleged breach of any right
conferred, created or recognized by this Treaty with respect to a covered investment.
2. A national or company that is a party to an investment dispute may
submit the dispute for resolution under one of the
(a) to the courts or administrative tribunals of the Party that is a
party to the dispute; or
(b) in accordance with any applicable, previously agreed
dispute-settlement procedures; or
(c) in accordance with the terms of paragraph 3.
(a) Provided that the national or company concerned has not submitted
the dispute for resolution under paragraph 2 (a) or (b), and that three months have
elapsed from the date on which the dispute arose, the national or company concerned may
submit the dispute for settlement by binding arbitration:
(i) to the Centre, if the Centre is available; or
(ii) to the Additional Facility of the Centre, if the Centre is not
(iii) in accordance with the UNCITRAL Arbitration
(iv) if agreed by both parties to the dispute, to any
other arbitration institution or in accordance with any other arbitration rules.
(b) a national or company, notwithstanding that it may
have submitted a dispute to binding arbitration under paragraph 3(a), may seek interim
injunctive relief, not involving the payment of damages, before the judicial or
administrative tribunals of the Party that is a party to the dispute, prior to the
institution of the arbitral proceeding or during the proceeding, for the preservation of
its rights and interests.
4. Each Party hereby consents to the submission of any
investment dispute for settlement by binding arbitration in accordance with the choice of
the national or company under paragraph 3(a)(i), (ii), and (iii) or the mutual agreement
of both parties to the dispute under paragraph 3(a)(iv). This consent and the submission
of the dispute by a national or company under paragraph 3(a) shall satisfy the requirement
(a) Chapter II of the ICSID Convention (Jurisdiction
of the Centre) and the Additional Facility Rules for written consent of the parties to the
(b) Article II of the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, done &t New York, June 10, 1958, for an
"agreement in writing".
5. Any arbitration under paragraph 3(a)(ii), (iii) or
(iv) shall be held in a state that is a party to the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958.
6. Any arbitral award rendered pursuant to this Article shall be final
and binding on the parties to the dispute. Each Party shall carry out without delay the
provisions of any such award and provide in its territory for the enforcement of such
7. In any proceeding involving an investment dispute, a Party shall not
assert, as a defense, counterclaim, right of set-off or for any other reason, that
indemnification or other compensation for all or part of the alleged damages has been
received or will be received pursuant to an insurance or guarantee contract.
8. For purposes of Article 25(2)(b) of the ICSID Convention and this
Article, a company of a Party that, immediately before the occurrence of the event or
events giving rise to an investment dispute, was a covered investment, shall be treated as
a company of the other Party.
1. Any dispute between the Parties concerning the interpretation or
application of the Treaty, that is not resolved through consultations; or other
diplomatic channels, shall be submitted upon the request of either Party to an arbitral
tribunal for binding decision in accordance with the applicable rules of international
law. In the absence of an agreement by the Parties to the contrary, the UNCITRAL
Arbitration Rules shall govern, except to the extent these rules are (a) modified by the
Parties or (b) modified by the arbitrators unless either Party objects to the proposed
2. Within two months of receipt of a request, each Party shall appoint
an arbitrator. The two arbitrators shall select a third arbitrator as chairman, who shall
be a national of a third state. The UNCITRAL Arbitration Rules applicable to appointing
members of three-member panels shall apply mutatis mutandis to the appointment of the
arbitral panel except that the appointing authority referenced in those rules shall be the
Secretary General of the Centre.
3. Unless otherwise agreed, all submissions shall be made and all
hearings shall be completed within six months of the date of selection of the third
arbitrator, and the arbitral panel shall render its decisions within two months of the
date of the final submissions or the date of the closing of the hearings, whichever is
4. Expenses incurred by the Chairman and other arbitrators, and other
costs of the proceedings, shall be paid for equally by the Parties. However, the arbitral
panel may, at its' discretion, direct that a higher proportion of the costs be paid by one
of the Parties.
This Treaty shall not derogate from any of the following that entitle covered
investments to treatment more favorable than that accorded by this Treaty:
(a) laws and regulations, administrative practices or procedures, or
administrative or adjudicatory decisions of a Party;
(b) international legal obligations; or
(c) obligations assumed by a Party, including those contained in an
investment authorization or an investment agreement.
Each Party reserves the right to deny to a company of the other Party the.benefits of
this Treaty if nationals of a third country own or control the company and
(a) the denying Party does not maintain normal economic relations with
the third country; or
(b) the company has no substantial business activities in the territory
of the Party under whose laws it is constituted or organized.
1. No provision of this Treaty shall impose obligations with respect
to tax matters, except that:
(a) Articles III, IX and X will apply with respect to expropriation;
(b) Article IX will apply with respect to an investment agreement or
an investment authorization.
2. A national or company, that asserts in an investment dispute that a
tax matter involves an expropriation, may submit that dispute to arbitration pursuant to
Article IX(3) only if:
(a) the national or company concerned has first referred to the
competent tax authorities of both Parties the issue of whether the tax matter involves an
(b) the competent tax authorities have not both determined, within nine
months from the time the national or company referred the issue, that the matter does not
involve an expropriation.
1. This Treaty shall not preclude a Party from applying measures
necessary for the fulfillment of its obligations with respect to the maintenance or
restoration of international peace or security, or the protection of its own essential
2. This Treaty shall not preclude a Party from prescribing special
formalities in connection with covered investments, such as a requirement that such
investments be legally constituted under the laws and regulations of that Party, or a
requirement that transfers of currency or other -monetary instruments be reported,
provided that such formalities shall not impair the substance of any of the rights set
forth in this Treaty.
(a) The obligations of this Treaty shall apply to the political subdivisions of the Parties.
(b) With respect to the treatment accorded by a State, Territory or
possession of the United States of America, national treatment means treatment no less
favorable than the k treatment accorded thereby, in like situations, to investment&6
of nationals of the United States of America resident in, and companies legally
constituted under the laws and regulations of, other States, Territories or possessions of
the United States of America.
2. A Party's obligations under this Treaty shall apply to a state
enterprise in the exercise of any regulatory, administrative or other governmental
authority delegated to it by that Party.
1. This Treaty shall enter into force thirty days after the date of
exchange of instruments of ratification. It shall remain in force for a period of ten
years and shall continue in force unless terminated in accordance with paragraph 2. It
shall apply to covered investments existing at the time of entry into force as well as to
those established or acquired thereafter.
2. A Party may terminate this treaty at the end of the initial ten year
period or at any time thereafter by giving one year's written notice to the other Party.
3. For ten years from the date of termination, all other Articles shall
continue to apply to covered investments established or acquired prior to the date of
termination, except insofar as those Articles extend to the establishment or acquisition
of covered investments.
4. The Annex and Protocol shall form an integral part of the Treaty.
IN WITNESS WHEREOF, the respective plenipotentiaries have signed this Treaty.
DONE in duplicate at Denver this first day of July, 1995, in the English and Spanish
languages, each text being equally authentic.
|FOR THE GOVERNMENT OF
||FOR THE GOVERNMENT OF
|THE UNITED STATES OF AMERICA
||THE REPUBLIC OF NICARAGUA
1. The Government of the United States of America may
adopt or maintain exceptions to the obligation to accord national treatment to covered
investments in the sectors or with respect to the matters specified below:
atomic energy; customhouse brokers; licenses for broadcast, common
carrier, or aeronautical radio stations; COMSAT; subsidies or grants, including
government-supported loans, guarantees and insurance; state and local measures exempt from
Article 1102 of the North American Free Trade Agreement pursuant to Article 1108 thereof;
and landing of submarine cables.
Most favored nation treatment shall be accorded in the sectors and matters
2. The Government of the United States of America may adopt or maintain
exceptions to the obligation to accord national and most favored nation treatment to
covered investments in the sectors or with respect to the matters specified below:
fisheries; air and maritime transport, and related activities.
3. The Government of the United States of America may
adopt or maintain exceptions to the obligation to accord national and most favored nation
treatment to covered investments, provided that the exceptions do not result in treatment
under this Treaty less favorable than the treatment that the Government of the United
States of America has undertaken to accord in the North American Free Trade Agreement with
respect to another party to that Agreement, in the sectors or with respect to the matters
banking, insurance, securities, and other financial services.
4. The Government of the Republic of Nicaragua may adopt,
or maintain exceptions to the obligation to accord national treatment to covered
investments in the sectors or with respect to the matters specified below:
real estate in the border zone; fishing (with the exception of
aquaculture); and official subsidies for small and medium-sized businesses.
Most favored nation treatment shall be accorded in the sectors and matters
5. Each Party agrees to accord national treatment to covered investments
in the following sectors:
leasing of minerals or pipeline rights-of-way on government lands.
1. With respect to Article XIV, paragraph 1, the Parties
confirm their mutual understanding that whether a measure is .undertaken by a Party to
protect its national security interests is self judging.
2. The Parties confirm their mutual understanding that the provisions
of this Treaty do not bind either Party in relation to any act or fact which took place or
any situation which ceased to exist before the date of.the entry into force of this
3. The Parties understand that, with respect to rights reserved in
paragraph 1 of Article XIV of the Treaty, "obligations with respect to the
maintenance or restoration of international peace or security" means obligations
under the Charter of the United Nations.