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Ministry of Finance
Revenue and International
Organisation Division
Agreement
between
Brunei Darussalam
and
the Federal Republic
of Germany
concerning
the Encouragement and Reciprocal
Protection of Foreign Investments
Brunei Darussalam
and
The Federal Republic of Germany
(hereby collectively referred to as the Contracting Parties
and each referred to as the Contracting Party),
Desiring to create favourable conditions for greater economic co-operation between them
and in particular for investments by nationals and companies of one Contracting Party in
the territory of the other Contracting Party,
Recognising that the encouragement and reciprocal protection under international
agreements of such investments will be conducive to the stimulation of business initiative
and will increase the prosperity in both countries,
Recognising the importance of the transfer of technology and human resources
development arising from such investments,
Have agreed as follows:
Article 1
Definitions
For the purposes of this Agreement:
- The term "investment" mean every kind of asset and in particular, though not
exclusively includes:
- movable and immovable property and any other property rights such as mortgages, liens or
pledges;
- shares in and stocks and debentures of a company and any other form of participation in
a company as well as securities issued by a Contracting Party;
- claims to money or to any performance under contract associated with any investment
having an economic value;
- intellectual property rights, in particular copyrights, patents, utility-model patents,
registered patents, trade-marks, trade-names, trade and business secrets, technical
processes, know how, and goodwill;
- business concessions conferred by law or under contract, including concessions to search
for, cultivate, extract or exploit natural resources.
Any alteration to the form in which the assets are invested shall not affect their
classification as investments.
- The term "territory" means the territory of each Contracting Party as well as
the maritime area, the continental shelf and the exclusive economic zone of each
Contracting Party over which it may exercise sovereign rights or jurisdiction in
accordance with international law.
- The term "returns" mean the amounts of yielded by an investment and in
particular, though not exclusively, includes profit, interest, capital gains, dividends,
royalties and fees.
- The term "nationals" means:
- In respect of Brunei Darussalam:
Natural persons who are afforded the status of a national in Brunei Darussalam under
the applicable laws.
- In respect of the Federal Republic of Germany:
Germans within the meaning of the Basic Law of the Federal Republic of Germany.
- The term "companies" means:
- In respect of Brunei Darussalam:
Any kind of juridical entity, including any partnership, corporation, body corporate,
firm, association or other organisation with or without legal personality that is duly
incorporated or constituted within or outside the territory of Brunei Darussalam with
limited or unlimited liability irrespective of whether or not their entities are directed
to profit and being companies in which nationals of Brunei Darussalam have a substantial
or controlling interest.
- In respect of the Federal Republic of Germany:
Any juridical person as well as any commercial or other company or association with or
without legal personality having its seat in the territory of the Federal Republic of
Germany, irrespective of whether or not its activities are directed at profit.
Article 2
Protection of Investment
- Each Contracting Party shall in its territory promote as far as possible investments by
nationals or companies of the other Contracting Party and admit such investments in
accordance with its law and regulations. Each Contracting Party shall at all times ensure
fair and equitable treatments to investments made in its territory by nationals and
companies of the other Contracting Party.
- Investments by nationals or companies of each Contracting Party shall at all times enjoy
full protection and security in the territory of the other Contracting Party. Returns from
the investment and, in the event of their re-investment, the returns therefrom shall enjoy
the same protection as the investment. Neither Contracting Party shall in any way impair
by arbitrary or discriminatory measures the management, maintenance, use or enjoyment of
investments in its territory of nationals or companies of the other Contracting Party.
- This Agreement shall also apply to investments made prior to its entry into force by
nationals or companies of either Contracting Party in the territory of the other
Contracting Party consistent with the latter’s legislation.
Article 3
Most-favoured-nation Provisions
- Neither Contracting Party shall subject investments in its territory owned or controlled
by national or companies of the other Contracting Party to treatment less favourable than
it accords to investments of its own nationals or companies or to investments of nationals
or companies of any third State.
- Neither Contracting Party shall subject nationals or companies of the other Contracting
Party, as regards their activity in connection with investments in its territory, to
treatment less favourable than it accords to its own nationals or companies or to
nationals or companies of any third State.
- Such treatment shall not relate to privileges which either Contracting Party accords to
nationals or companies of third States on account of its membership of, or association
with, a customs or economic union, a common market or a free trade area.
- The treatment granted under this Article shall not relate to advantages which either
Contracting Party accords to nationals or companies of third States by virtue of a double
taxation agreement or other agreements regarding matters of taxation.
Article 4
Nationalisation or Expropriation
- Investments by nationals or companies of either Contracting Party shall enjoy full
protection and security in the territory of the other Contracting party.
- Investments of nationals or companies of either Contracting Party shall neither be
expropriated, nationalised nor subject directly or indirectly to measures having effect
equivalent to expropriation or nationalisation (hereinafter referred to as
"expropriation") in the territory of the other Contracting Party except for a
public purpose and on a non-discriminatory basis and against prompt, adequate and
effective compensation.
- Such compensation shall be computed as equivalent of a fair market value of the
investment immediately prior to the point of time when the actual or threatened
expropriation has become publicly known. Where the market value cannot be ascertained
properly the compensation shall be determined in accordance with internationally
recognised accounting principles. The compensation shall include interest at the current
LIBOR rate from the date of expropriation until the date of payment. The amount of
compensation shall be subject to review by due process of law. The amount of compensation
finally determined shall be paid to the investor in a freely convertible currency, shall
be effectively realisable and shall be repatriated in accordance with Article 6.
Article 5
Compensation for Damage or Loss
- Nationals and companies of a Contracting Party whose investments in the territory of the
other Contracting Party suffer losses owing to war or other armed conflict, a state of
national emergency, revolt, or riot in the territory of the latter Contracting Party shall
be accorded by the latter Contracting Party treatment not less favourable than that which
the latter Contracting Party accords to his nationals and companies or to nationals and
companies of any third country whichever is the most favourable as regards restitution,
compensation or any other valuable consideration.
- Without prejudice to Paragraph 1 of this Article, nationals and companies of one
Contracting Party who in any of the situations referred to in that Paragraph suffer
damages or losses in the territory of the other Contracting Party resulting from:
- requisitioning of their property by its forces or authorities, or
- destruction of their property by its forces or authorities which was not caused in
combat action or was not required by the necessity of the situation,
shall be accorded restitution or fair and adequate compensation.
- Payments resulting under this Article shall be made in a convertible currency, freely
transferable and shall be repatriated in accordance with Article 6.
Article 6
Free Transfer
- Each Contracting Party shall guarantee to nationals or companies of the other
Contracting Party the free transfer of payments in connection with an investment, in
particular:
- of the initial and additional capital amounts used to maintain, increase or expand
investments;
- of the returns;
- in the repayment of loans;
- of the proceeds accruing from the total or partial sale or total or partial liquidation
of the investments;
- of the compensation provided for in Articles 4 and 5.
- The transfers shall be made without delay and, in any event, within a period of time not
exceeding one month from the date on which the request for the transfer has been made.
Transfers shall be effected at the applicable market exchange rate prevailing on the day
of the transfer.
- In the event a market exchange rate does not exist, the rate of exchange shall
correspond to the cross rate obtained from those rates which would be applied by the
International Monetary Fund on the date of payment for conversions of the currencies
concerned into Special Drawing Rights.
Article 7
Subrogation
If either Contracting Party makes a payment to any of its nationals or companies under
a guarantee it has assumed in respect of an investment in the territory of the other
Contracting Party and if an investment in the territory of one Contracting Party is
insured against non-commercial risks under a system established by law and a payment is
made by an insurer under an indemnity given in respect of that investment, the Contracting
Party in whose territory the investment was made shall, without prejudice to the rights of
the former Contracting Party under Article 8, recognise the assignment to the former
Contracting Party or the insurer as appropriate, whether under a law or pursuant to a
legal transition, of any right or claim of such national or company of the former
Contracting Party. The latter Contracting Party shall also recognise the subrogation of
the former Contracting Party or insurer to any such right or claim (assigned claims) which
that Contracting Party or insurer shall be entitled to assert to the same extent as its
predecessor in title. As regards the transfer of payments made by virtue of such assigned
claims, Articles 5 and 6 shall apply mutatis mutandis.
Article 8
Settlement of Disputes between Contracting Parties
- Disputes between the Contracting Parties concerning the interpretation or application of
this Agreement shall as far as possible be settled by the Governments of the two
Contracting Parties through diplomatic consultations and negotiations.
- If a dispute cannot thus be settled, it shall upon the request of either Contracting
Party be submitted to an arbitration tribunal.
- Such arbitration tribunal shall be constituted for each individual case as follows: each
Contracting Party shall appoint one member and these two members shall agree upon a
national of a third State as their chairman to be appointed by the Governments of the two
Contracting Parties. Such members shall be appointed within two months, and such chairman
shall be appointed within three months from the date on which either Contracting Party has
informed the other Contracting Party that it wants to submit the dispute to an arbitration
tribunal.
- If the periods specified in paragraph 3 above have not been observed either Contracting
Party may, in the absence of any other relevant arrangements, invite the President of the
International Court of Justice to make the necessary appointments. If the President is a
national of either Contracting Party or if he is otherwise prevented from discharging the
said function, the Vice-President shall make the necessary appointments. If the
Vice-President is a national of either Contracting Party or if he, too, is prevented from
discharging the said function, the member of the International Court of Justice next in
seniority who is not a national of either Contracting Party shall make the necessary
appointments.
- The arbitration tribunal shall reach its decision by a majority of votes and its
decisions shall be binding. Each Contracting Party shall bear the cost of its own members
of the arbitration tribunal and the costs of its counsel in the arbitration proceedings;
the cost of the chairman and the remaining costs shall be borne in equal parts by both
Contracting Parties. The tribunal may decide on any alternative system to share the costs.
In all other respects, the arbitration tribunal shall determine its own procedure.
Article 9
Settlement of Investment Disputes
- Disputes concerning investments between one Contracting Party and a national or company
of the other Contracting Party shall, as far as possible, be settled amicably between the
parties in dispute.
- If a dispute cannot be settled within six months of the date when it has been raised by
one of the parties in dispute, it shall, upon the request of the national or company of
the other Contracting Party or the relevant Contracting Party be submitted for
arbitration. Each Contracting Party herewith declares its acceptance of such arbitration
procedure. Unless the parties in dispute have agreed otherwise, the provisions of
Paragraphs 3 to 5 of Article 8 shall be applied mutatis mutandis on condition that the
appointment of the members of the arbitration tribunal in accordance with Paragraph 3 of
Article 8 is effected by the parties in dispute and that, insofar as the periods specified
in Paragraph 3 of Article 8 are not observed, either party in dispute may, in the absence
of other arrangements, invite the President of the International Court of Arbitration of
the International Chamber of Commerce in Paris to make the required appointments. The
award shall be enforced in accordance with domestic law.
- During arbitration proceedings or the enforcement of an award, the Contracting Party
involved in the dispute shall not raise the objection that the nationals or companies of
the other Contracting Party have received compensation under an insurance contract in
respect of all or part of its loss.
- In the event of both the Contracting Parties having become Contracting States of the
Convention on the Settlement of Investment Disputes between States and Nationals of Other
States of 18th March, 1965, disputes under this Article between the parties in dispute
shall be submitted for arbitration under the aforementioned convention unless the parties
in dispute agree otherwise; each Contracting Party hereby declares its acceptance of such
a procedure.
Article 10
Other Obligations
- If the legislation of either Contracting Party or obligations under bilateral or
multilateral agreements, to which the Contracting Parties hereto are parties, existing at
present established hereafter in addition to this Agreement contain a regulation, whether
general or specific, entitling investments by nationals or companies of the other
Contracting Party to a treatment more favourable than is provided in this Agreement, such
regulation shall to the extent that it is more favourable over this Agreement.
- Each Contracting Party shall observe any other obligation it has assumed with regard to
investments in its territory by nationals or companies of the other Contracting Party.
Article 11
Entry Into Force, Duration and Termination
- This Agreement is subject to ratification. It shall enter into force one month after the
exchange of the instruments of ratification.
- This Agreement shall remain in force a period of twenty years and shall continue in
force thereafter for an unlimited period unless terminated in writing by either
Contracting Party one year before its expiration. After the expiry of the period of twenty
years this Agreement may be denounced at any time by either Contracting Party giving
twelve months notice.
- This Agreement shall be in force irrespective of whether or not diplomatic or consular
relations exist between the Contracting Parties.
- In respect of investments made prior to the date of termination of this Agreement, the
provisions of Articles 1 to 10 shall continue to be in force for a further period of
fifteen years from the date of termination of this Agreement.
- The Protocol annexed thereto shall form an integral part of this Agreement.
IN WITNESS WHEREOF, the plenipotentiaries, being duly authorised thereto, have
signed this Agreement.
Done in duplicate at ………………………… on
this day …………………………. of
……….., in the Malay, ………….., English Languages, all
three texts being authentic. In case of any divergent interpretation of the Malay and
French texts, the English text shall prevail.
| FOR BRUNEI DARUSSALAM |
FOR THE FEDERAL REPUBLIC
OF GERMANY |
Protocol
to the Agreement
between
Brunei Darussalam
and
The Federal Republic of Germany
concerning
the Encouragement And Reciprocal Protection of Foreign Investments
On signing the Agreement between Brunei Darussalam and the Federal Republic of Germany
concerning the Encouragement and Reciprocal Protection of Foreign Investments, the
undersigned plenipotentiaries have, in addition, agreed on the following provisions which
shall form an integral part of the Agreement:
- Ad Article 3
- Measures undertaken by one Contracting Party in pursuit of its development objectives to
stimulate the creation of industries in its territory and applied only to its nationals
are not considered to be contrary to the obligations of Articles 3, provided they do not
substantially impair established and admitted investments of nationals and companies of
the Contracting Party. Measures that have been taken for reason of public security and
order, public health or morality shall not be deemed "treatment less favourable"
within the meaning of Article 3.
- The following shall more particularly, though not exclusively, be deemed
"activity" within the meaning of Articles 3(2): the management, maintenance use
and enjoyment of an investment. The following shall, in particular, be deemed
"treatment less favourable" within the meaning of Article 3: unequal treatment
in the case of restrictions on the purchase of raw auxiliary materials, of energy or fuel
or of means of production or operation of any kind, unequal treatment in the case of
impending the marketing of products inside or outside the country, as well as any other
measures having similar effects.
- The provisions of Article 3 do not oblige a Contracting Party to extend to natural
persons or companies resident in the territory of the other Contracting Party tax
privileges, tax exemptions and tax reductions which according to its tax laws are granted
only to natural persons and companies resident in its territory.
- The Contracting Party shall within the framework of their national legislation give
sympathetic consideration to application for the entry and sojourn of persons of either
Contracting Party who wish to enter the territory of the other Contracting Party in
connections with an Investment; the same shall apply to employed persons of either
Contracting Party who in connection with an investment wish to enter the territory of the
other Contracting Party and sojourn there to take up employment. Application for work
permits shall also be given sympathetic consideration.
- Whenever goods or person connected with an investment are to be transported, each
Contracting Party shall neither exclude nor hinder transport enterprises of the other
Contracting Party and shall issue permits, in accordance with its laws and regulations, as
required to carry out such transport.
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