Microsoft Word - Italy.DOC

AGREEMENT

BETWEEN THE ITALIAN REPUBLIC

AND THE LEBANESE REPUBLIC

ON THE PROMOTION AND RECIPROCAL PROTECTION

OF INVESTMENTS

Signed in Beirut on November 7, 1997

Ratified by Law N. 56 dated March 31, 1999

Published in the O.G N. 18 of April 13, 1999

Entered into force on February 9, 2000

AGREEMENT

BETWEEN THE LEBANESE REPUBLIC

AND THE ITALIAN REPUBLIC

ON THE PROMOTION AND

RECIPROCAL PROTECTION

OF INVESTMENTS

The Government of the Lebanese Republic and the Government of the Italian

Republic herein referred to as the "Contracting Parties",

Desiring to encourage economic cooperation to the mutual benefit of both

States,

Intending to create and maintain favourable conditions for investments by

investors of one Contracting Party in the territory of the other Contracting

Party,

Recognizing that the encouragement and contractual protection of such

investments are apt to stimulate private business initiative and to increase the

prosperity of both States,

Have agreed as follows:

ARTICLE 1

DEFINITIONS

For the purposes of this Agreement:

1- The term “investor” means any natural or legal person of a Contracting Party

investing in the territory of the other Contracting Party as well as the

subsidiaries and branches registered and having a seat in the territory of one of

the Contracting Parties and controlled in anyway by the above natural and

legal persons:

a) The term “natural person”, in reference to either Contracting Party, means any

natural person holding the nationality of that State in accordance with its laws;

b) The term “legal person”, in reference to either Contracting Party means any

public institution, foundation, association or any entity registered in either

Contracting Party and having its head office in its territory which are

constituted or otherwise duly organized under the law of that Contracting

Party.

2- The term "investment" means every kind of asset established or acquired by an

investor of one Contracting Party in the territory of the other Contracting Party

in accordance with the laws and regulations of the latter and shall include

particularly, but not exclusively:

a) movable and immovable property as well as any other rights in rem, such as

mortgages, liens, and pledges;

b) debentures, shares and other kinds of interest in companies, irrespective

whether these companies are publicly or privately owned;

c) claims to money which have been used to create an economic value or claims

to any performance having an economic value;

d) intellectual property rights, such as copyrights, patents, industrial designs or

models, trade or service marks, trade names, technical processes, know-how

and goodwill, as well as other similar rights recognized by the laws of the

Contracting Parties;

e) business concessions under public law, including concessions to search, extract

or exploit natural resources as well as all other rights given by law, by contract

or by decision of the authority in accordance with the law; and

f) additional contributions to capital for the maintenance or development of an

existing investment as well as reinvested income.

Any alteration of the form in which assets are invested or reinvested shall not

affect their character as investment.

3- The term "returns" means amounts yielded by an investment and includes, in

particular, though not exclusively, profits, dividends, interest, capital gains,

royalties, management and technical assistance or other fees, irrespective of the

form in which the return is paid.

4- The term "territory" means:

a) for the Lebanese Republic, in addition to the zones contained within the

internationally recognized boundaries, the marine and submarine zones over

which Lebanon exercises sovereignty, sovereign and jurisdictional rights, in

accordance with international law.

b) for the Italian Republic, in addition to the zones contained within the land

boundaries, the marine and submarine zones over which Italy exercises

sovereignty, sovereign and jurisdictional rights, in accordance with

international law.

ARTICLE 2

PROMOTION AND PROTECTION OF INVESTMENTS

1- Each Contracting Party shall in its territory promote investments by investors

of the other Contracting Party and admit such investments in accordance with

its laws and regulations.

2- Each Contracting Party, in accordance with its laws and regulations, shall

allow the investor to engage top managerial and technical personnel of his

choice, regardless of nationality and grant the related permits.

3- Each Contracting Party shall protect within its territory investments made in

accordance with its laws and regulations by investors of the other Contracting

Party and shall not impair by unreasonable or discriminatory measures the

management, maintenance, use, enjoyment, extension, sale or liquidation of

such investments. In particular, each Contracting Party or its competent

authorities shall issue the necessary permits mentioned in paragraph 2 of this

Article.

4- Each Contracting Party shall create and maintain, in its territory favorable

economic and legal conditions in order to ensure the effective application of

this Agreement.

ARTICLE 3

NATIONAL TREATMENT AND MOST FAVORED NATION

TREATMENT

1- Each Contracting Party shall ensure fair and equitable treatment within its

territory of the investments of the other Contracting Party. This treatment

shall not be less favourable than that granted by each Contracting Party to the

investments made within its territory by its own investors, or than that granted

by each Contracting Party to the investments made within its territory by

investors of any third State, if this latter treatment is more favourable.

2- The most favoured nation treatment shall not be construed so as to oblige a

Contracting Party to extend to the investors and investments of the other

Contracting Party the advantages resulting from any existing or future

customs or economic union, a free trade area or regional economic

organization or international multilateral economic agreement, to which either

of the Contracting Parties is or becomes a member, or in the case of Lebanon

the treatment granted to investors who are nationals of Arab countries in

relation to their investment in real estate properties. Nor shall such treatment

relate to any advantage which either Contracting Party accords to investors of

a third State by virtue of a double taxation agreement or other agreements on a

reciprocal basis regarding tax matters or to facilitate cross border trade.

ARTICLE 4

EXPROPRIATION AND COMPENSATION

1- Investments by investors of either Contracting Party shall enjoy full

protection and security in the territory of the other Contracting Party.

2- Neither of the Contracting Parties shall take, either directly or indirectly,

de jure or de facto, measures of expropriation, nationalization or any

other measures having the same nature or the same effect against

investments of investors of the other Contracting Party, unless the

measures are taken in the public interest as established by law, on a non-

discriminatory basis, and under due process of law, and provided that

provisions be made for effective and adequate compensation, according

to the enforced national law without any kind of discrimination. Such

compensation shall be equivalent to the market value of the expropriated

investment immediately before the date on which the actual or threatened

expropriation, nationalization or comparable measure has become

publicly known. Once the amount of the compensation is fixed, it shall

be paid within a period of three months and shall carry the interest

calculated on a basis of Libor standards until the time of payment; it shall

be effectively realizable and freely transferable. Provisions shall have

been made in an appropriate manner at or prior to the time of

expropriation, nationalization or comparable measure for the

determination and payment of such compensation. The legality of any

such expropriation, nationalization or comparable measure and the

amount of compensation shall be subject to review by due process of

law.

3- If the real market value is denominated in a freely convertible currency,

the compensation paid shall be no less than the real market value prior to

the date on which the decision to nationalize or expropriate is announced

or made public, plus interest, calculated on the basis of Libor standards,

accrued from the date of expropriation until the date of payment.

If the real market value is denominated in a currency that is not freely

convertible, the compensation paid - converted into the currency of

payment - shall be no less than:

a) the real market value, prior to the date on which the decision to

nationalize or expropriate is announced or made public, converted into

a freely convertible currency at the market rate of exchange prevailing

on the date of payment, plus

b) interest, calculated on the basis of Libor standards for that freely

convertible currency, accrued from the date of expropriation until the

date of payment.

4- The provisions of paragraph 2 of this Article shall also apply where a

Contracting Party expropriates the assets of a company which is

constituted under the laws in force in any part of its own territory and in

which investors of the other Contracting Party own shares.

5- If, after the dispossession, the asset concerned has not been utilized,

wholly or partially, for public purpose or national interest, the owner or

his assignees are entitled to the repurchasing of the asset at the market

price.

6- Investors of either Contracting Party whose investments suffer losses or

damages in the territory of the other Contracting Party owing to war or

other armed conflict, revolution, a state of national emergency, civil

strife, or revolt, shall be accorded treatment, as regards restitution,

indemnification, compensation or other valuable consideration, no less

favourable than that the latter Contracting Party accords to its own

investors or to investors of any third State whichever is more favourable.

Such payments shall be freely transferable.

ARTICLE 5

FREE TRANSFER

1- Each Contracting Party in whose territory investments have been made by

investors of the other Contracting Party shall grant those investors the free

transfer of the payments relating to these investments, after all fiscal

obligations have been met by the investors, particularly but not exclusively the

following:

a) investment returns according to Article 1, paragraph 3 of this Agreement;

b) amounts relating to loans incurred, or other contractual obligations undertaken,

for the investment;

c) proceeds accruing from the total or partial sale, alienation or liquidation of an

investment;

d) the earnings and other compensations of nationals of the other Contracting

Party who are allowed to work in connection with an investment in the

territory of the other Contracting Party;

e) capital and additional amounts to maintain or increase the investment;

f) payment of compensation under Article 4 of this Agreement; and

g) payment provided for in Article 6 of this Agreement.

2- The provisions of this Agreement will not, however, limit the application of

the national provisions aimed at preventing fiscal evasion and tax avoidance.

To this end the competent authorities of each Contracting Party, upon the other

Contracting Party’s request, commit themselves to provide any useful

information concerning fiscal assessment.

3- The host Contracting Party of the investment shall allow the investors of the

other Contracting Party access to the foreign exchange market in a non-

discriminatory manner and to purchase the necessary foreign currency to make

transfers pursuant to this Article, at the prevailing market rate of exchange

applicable on the date on which the investor applies for such transfer.

4- The Contracting Parties undertake to facilitate the procedures needed to make

these transfers without delay, according to the practices followed in

international financial centers. Both Contracting Parties should undertake to

carry out the formalities required for the acquisition of foreign currency and for

its effective transfer abroad within a period of one month. Moreover, the

Contracting Parties should agree to accord to transfers referred to in the present

Article a treatment no less favourable than that accorded to transfers originated

from investments made by investors of any third state.

ARTICLE 6

PRINCIPLE OF SUBROGATION

If either Contracting Party or its designated agency makes payment to one of

its investors under any financial guarantee against non-commercial risks it has

granted in respect of an investment in the territory of the other Contracting

Party, the latter shall, without prejudice to the rights of the former Contracting

Party under Article 8 of this Agreement, recognize the assignment, whether

under a law or pursuant to a legal transaction, of any right or title of that

investor to the first Contracting Party or its designated agency. The latter

Contracting Party shall also recognize the subrogation of the former

Contracting Party to any such right or claim which that Contracting Party shall

be entitled to assert to the same extent as its predecessor in title. The other

Contracting Party shall be entitled to set off taxes and other public charges due

and payable by the investor.

ARTICLE 7

SETTLEMENT OF DISPUTES BETWEEN A CONTRACTING PARTY

AND AN INVESTOR OF THE OTHER CONTRACTING PARTY

1- In case of disputes regarding investments between a Contracting Party and an

investor of the other Contracting Party, consultations will take place between

the Parties concerned with a view to solving the case, as far as possible,

amicably.

2- If these consultations do not result in a solution within six months from the

date of written request for settlement, the investor may submit the dispute, at

his choice, for settlement to:

a) the competent court of the Contracting Party in the territory of which the

investment has been made; or

b) the International Center for Settlement of Investment Disputes (ICSID)

provided for by the Convention on the Settlement of Investment Disputes

between States and Nationals of the other States, opened for signature at

Washington, on March 18, 1965, in case both Contracting Parties have

become members of this Convention; or

c) an ad hoc arbitral tribunal which, unless otherwise agreed upon by the Parties

to the dispute, shall be established under the arbitration rules of the United

Nations Commission on International Trade Law (UNCITRAL)

The choice made as per subparagraphs a, b, and c herein above is final.

3- The arbitral tribunal shall decide the dispute in accordance with the provisions

of this Agreement and the applicable rules and principles of international law.

The awards of arbitration shall be final and binding on both parties to the

dispute. Each Contracting Party shall carry out without delay any such award

and such award shall be enforced in accordance with domestic law.

4- The Contracting Party which is a party to the dispute shall, at no time

whatsoever during the procedures involving investment disputes, assert as a

defense its immunity or the fact that the investor has received compensation

under an insurance contract covering the whole or part of the incurred damage

or loss.

ARTICLE 8

SETTLEMENT OF DISPUTES BETWEEN CONTRACTING PARTIES

1- Disputes between Contracting Parties regarding the interpretation or

application of the provisions of this Agreement shall be settled amicably

through diplomatic channels.

2- If both Contracting Parties cannot reach an agreement within six months from

the start of the negotiations, the dispute shall, upon request of either

Contracting Party, be submitted to an arbitral tribunal of three members. Each

Contracting Party shall appoint one arbitrator, and these two arbitrators shall

nominate a chairman who shall be a national of a third State.

3- If one of the Contracting Parties has not appointed its arbitrator and has not

followed the invitation of the other Contracting Party to make that

appointment within two months, the arbitrator shall be appointed upon the

request of that Contracting Party by the President of the International Court of

Justice.

4- If both arbitrators cannot reach an agreement about the choice of the chairman

within two months after their appointment, the latter shall be appointed upon

the request of either Contracting Party by the President of the International

Court of Justice.

5- If, in the cases specified under paragraphs 3 and 4 of this Article, the President

of the International Court of Justice is prevented from carrying out the said

function or if he is a national of either Contracting Party, the appointment

shall be made by the Vice-President, and if the latter is prevented from

carrying out the said function or if he is a national of either Contracting Party,

the appointment shall be made by the most senior Judge of the Court who is

not national of either Contracting Party.

6- The tribunal shall reach its decision by a majority of votes.

7- The tribunal shall issue its decision on the basis of respect for the law, the

provisions of this Agreement, as well as of the universally accepted principles

of international law.

8- Subject to other provisions made by the Contracting Parties, the tribunal shall

determine its procedure.

9- Each Contracting Party shall bear the cost of the arbitrator it has appointed and

of its representation in the arbitral proceedings. The cost of the chairman and

the remaining costs shall be borne in equal parts by the Contracting Parties.

The arbitration tribunal may make a different regulation concerning costs.

10- The decisions of the tribunal are final and binding for each Contracting Party.

ARTICLE 9

OTHER OBLIGATIONS

1- If the legislation of either Contracting Party or obligations under international

law existing at present or established hereafter between the Contracting

Parties in addition to this Agreement contain a provision, whether general or

specific, entitling investments by investors of the other Contracting Party to

treatment more favourable than that provided for by this Agreement, such a

provision shall, to the extent that it is more favourable, prevail over this

Agreement.

2- Each Contracting Party shall observe any other obligation it has assumed with

regard to investments in its territory by investors of the other Contracting

Party.

3- In case a Contracting Party shall issue legislation which is contrary to the

provisions of this Agreement, such provisions would remain in force and

hence will not be affected.

ARTICLE 10

APPLICATION OF THE AGREEMENT

The present Agreement shall also apply to investments in the territory of a

Contracting Party made in accordance with its laws and regulations by

investors of the other Contracting Party prior to the entry into force of this

Agreement. However, the Agreement shall not apply to disputes that have

arisen before its entry into force.

ARTICLE 11

RELATIONS BETWEEN GOVERNMENTS

This Agreement shall be in force irrespective of whether or not diplomatic or

consular relations exist between the Contracting Parties.

ARTICLE 12

FINAL PROVISIONS

1- This Agreement shall enter into force on the thirtieth day after the day of the

reception of the last notification by which the Contracting Parties have

notified each other that their constitutional requirements for the entry into

force of this Agreement have been fulfilled.

2- This Agreement shall remain in force for a period of ten years. Thereafter, it

shall remain in force for an unlimited period unless denounced in writing by

either Contracting Party twelve months in advance.

3- In case of official notice as to the denunciation of the present Agreement, the

provisions of Article 1 to 11 shall continue to be effective for a further period

of ten years for investments made before the official notice was given.

IN WITNESS WHEREOF the Undersigned, being duly authorized by their

respective Governments, have signed this Agreement.

Done at .....……..................... , on ....………………............…......in two

originals, in Arabic, Italian and English languages, each text being equally

authentic. In case of difference of interpretation, the English text shall prevail.

FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF

THE LEBANESE REPUBLIC THE ITALIAN REPUBLIC

Protocol

On signing the Agreement between the Government of the Lebanese Republic

and the Government of the Italian Republic, on the promotion and protection

of investments, the Contracting Parties also agreed to the following clauses,

which shall be deemed to form an integral part of the Agreement.

1- General Provision.

This Agreement and the provisions thereof shall extend as well to the

following activities connected with an investment in accordance with the laws

and regulations of each Contracting Party:

the organization, control, operation, maintenance, liquidation and winding up

of companies, branches, agencies, offices or other organizations for the

conduct of business; the granting of registrations, licenses, permits and other

approvals necessary for the conduct of commercial business; the acquisition,

use and disposal of property of all kinds as well as the protection thereof; the

access to the financial market, in particular the borrowing of funds, the

purchase, sale and issue of shares and other securities and the purchase of

foreign exchange for imports necessary for the conduct of business activities;

the marketing of goods and services; the procurement, sale and transport of

raw and processed materials, energy, fuel and other materials; the

dissemination of commercial information.

2- With reference to Article 2:

According to its laws and regulations, each Contracting Party shall regulate as

favorable as possible the problems connected with the entry, stay, work and

movement in its territory of nationals of the other Contracting Party

performing activities related to investments under this Agreement, and

members of their families.

3- With reference to Article 4:

Any measure undertaken by one of the Contracting Parties relating to an

investment made by an investor of the other Contracting Party, which shall

substantially diminish the value of the assets or create major obstacles to the

activities or substantial prejudice to the value of the same asset as well as any

other measure having equivalent effect, shall be considered as one of the

measures referred to in paragraph 2 of Article 4.

Done at Beirut , on November 7, 1997 in two originals, in Arabic, Italian and

English languages, each text being equally authentic. In case of difference of

interpretation, the English text shall prevail.

FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF

THE LEBANESE REPUBLIC THE ITALIAN REPUBLIC