At a glance: investment treaty practice in Peru

Investment Treaty Practice

Model BIT

Does the state have a model BIT?

Yes, the state has a model bilateral investment treaty (BIT).

The Peruvian BIT model guarantees various investors’ rights. It contains diverse provisions such as the fair and equitable treatment of investors and the preclusion of discriminatory treatment between national and foreign investors and foreign investors of different nationalities.

It also guarantees that investors can freely transfer abroad investors’ capital, after-tax dividends and royalties in their preferred currency. Similarly, it states that an investment shall not be expropriated, nationalised or subjected to measures with equivalent effects except for reasons of national security or public necessity, on a non-discriminatory basis and under due legal process.

Finally, this BIT model has an International Centre for Settlement of Investment Disputes (ICSID) arbitration clause for investors to be able to have an independent jurisdiction to make their investment-related claims, if necessary.

Preparatory Materials

Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?

No, the state does not have a central repository of publicly available treaty-preparatory materials, but the background of some treaties may be found on the official website of the Ministry of Foreign Affairs of Peru.

Scope and Coverage

What is the typical scope of coverage of investment treaties?

The scope of coverage varies in each treaty. However, the BITs entered into by Peru typically extend its protections to investors defined as:

• natural persons who, according to the legislation of that contracting party, are considered to be nationals of that contracting party; and
• legal entities, including partnerships, corporations, business associations or any other entity incorporated or otherwise duly organised under the laws of the contracting party.

In addition, each treaty has specific language to expressly include or exclude certain natural persons or legal entities within the term ‘investor’. For example:

• the Argentina–Peru BIT, the France–Peru BIT and the Portugal–Peru BIT require legal entities to have their seat or corporate headquarters in the contracting party territory;
• the Argentina–Peru BIT also includes legal entities organised in any country that are ‘effectively controlled’ by natural persons or legal entities of the other contracting party;
• the Spain–Peru BIT requires that the legal entity is ‘effectively controlled’ in the territory of the contracting party;
• the France–Peru BIT includes legal entities that are controlled, directly or indirectly, by nationals of one of the contracting parties or by legal entities that have their seat or corporate headquarters in the contracting party;
• the Netherlands–Peru BIT includes legal entities, localised anywhere, directly or indirectly controlled by nationals of the contracting party. The Belgium–Peru BIT has a similar provision;
• the Peru–Sweden BIT includes legal entities organised under the laws of third countries in which a national has a ‘predominant interest’;
• the Colombia–Peru BIT, Canada–Peru free trade agreement (FTA), Chile–Peru FTA and Costa Rica–Peru FTA expressly include state-owned corporations. These treaties, as well as the Singapore–Peru FTA, state that in cases of double nationality, a natural person will be considered a national of the state of their ‘dominant and effective nationality’;
• the China–Peru FTA expressly includes within the definition of investor for China economic entities established in accordance with Chinese laws and domiciled in the territory of China;
• the Malaysia–Peru BIT and the Singapore–Peru FTA include permanent residents within the definition of investor;
• the Czech Republic–Peru BIT requires legal entities to have a permanent residence in the contracting party;
• the United Kingdom–Peru BIT includes companies organised in other territories for which international relations the United Kingdom is responsible;
• the Switzerland–Peru BIT requires legal entities organised under the laws of the contracting party to have ‘real economic activities’ in the contracting party territory. The Romania–Peru BIT only requires legal entities to have ‘economic activities’; and
• certain BITs (Peru–Japan, Peru–Colombia) and FTAs (Australia, Canada and Costa Rica) include, within the definition of investor, more precise language regarding the timing of the investment, including a national or an enterprise of a party that attempts to make or is making an investment in the territory of the other party. The Peru–Costa Rica, Peru–Japan, Peru–Panama, Peru–Mexico and Peru–Korea FTAs are even more specific and establish that an investor attempts to make an investment when they take concrete actions, understood as taking the essential and necessary actions to make the investment such as funding and obtaining permits and licences, among others.

With respect to the investments covered by the treaties’ protection, all treaties use broad language that includes any type of tangible or intangible assets invested according to the laws of the contracting party and contains the usual non-exhaustive list of assets. Additionally, certain treaties have specific language to include or exclude certain types of investments. For example:

• many BITs and FTAs expressly include assets that an investor owns or controls, directly or indirectly. Others are silent regarding indirect control of an asset;
• the France–Peru BIT expressly mentions indirectly held shares as protected investments;
• the Denmark–Peru BIT includes assets connected with economic activities acquired for the purpose of establishing lasting economic relations;
• the Italy–Peru BIT includes in the list of assets the increases in the original investment value;
• most FTAs with Peru refer to investments as assets that have the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit or the assumption of risk;
• the Australia–Peru and the Peru–Panama FTAs establish that whether a particular type of licence, authorisation, permit or similar instrument (including a concession to the extent that it has the nature of such an instrument) has the characteristics of an investment depends on such factors as the nature and extent of the rights that the holder has under the party’s law;
• the Canada–Peru FTA excludes claims to money that solely arise from commercial contracts for the sale of goods and services and the extension of credits in connection to commercial transactions. The Peru–Costa Rica FTA, Peru–Colombia FTA, Peru–Panama FTA and Peru–Mexico FTA have similar exclusions;
• the Peru–Singapore FTA excludes bonds, debentures and loans and other debt instruments that are of a personal nature, unrelated to any business activity

  SDGs, Targets, and Indicators

  1. Which SDGs are addressed or connected to the issues highlighted in the article?

  • SDG 16: Peace, Justice, and Strong Institutions
  • SDG 17: Partnerships for the Goals

  2. What specific targets under those SDGs can be identified based on the article’s content?

  • SDG 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all.
  • SDG 17.17: Encourage and promote effective public, public-private, and civil society partnerships, building on the experience and resourcing strategies of partnerships.

  3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

  Yes, the article mentions indicators that can be used to measure progress towards the identified targets:

  • Existence of a model bilateral investment treaty (BIT) – indicates progress towards SDG 16.3.
  • Presence of an International Centre for Settlement of Investment Disputes (ICSID) arbitration clause – indicates progress towards SDG 16.3.
  • Availability of treaty preparatory materials on the official website of the Ministry of Foreign Affairs of Peru – indicates progress towards SDG 17.17.

  Table: SDGs, Targets, and Indicators

  SDGs	Targets	Indicators
  SDG 16: Peace, Justice, and Strong Institutions	Target 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all.	– Existence of a model bilateral investment treaty (BIT) – Presence of an International Centre for Settlement of Investment Disputes (ICSID) arbitration clause
  SDG 17: Partnerships for the Goals	Target 17.17: Encourage and promote effective public, public-private, and civil society partnerships, building on the experience and resourcing strategies of partnerships.	– Availability of treaty preparatory materials on the official website of the Ministry of Foreign Affairs of Peru

  Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

  Source: lexology.com

   

  

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