Article
21.1:
Scope and Coverage
1. Unless
otherwise provided for in this Agreement, this Chapter shall
apply with respect to the avoidance or settlement of disputes
between the Parties concerning the implementation,
interpretation, application or operation of this Agreement,
which includes wherever a Party considers that:
(a) a measure of the other Party is inconsistent with its obligations under this Agreement;
(b) the other Party has otherwise failed to carry out its obligations under this Agreement; or
(c) a benefit the Party could reasonably have expected to accrue to it under Chapters 3 (National Treatment and Market Access for Goods), 4 (Rules of Origin), 5 (Customs Administration), 7 (Technical Regulations, Standards and Conformity Assessment Procedures), 9 (Cross-Border Trade in Services), 15 (Government Procurement) or 17 (Intellectual Property) is being nullified or impaired as a result of a measure that is not inconsistent with this Agreement.
2. In cases
where there is an infringement of the obligations under this
Agreement, the action is considered prima facie to
constitute a case of nullification or impairment.
Article
21.2:
Choice of Dispute Settlement Procedure
1. Where a
dispute regarding any matter arises under this Agreement and
under another free trade agreement to which both Parties are
party or the WTO Agreement, the complaining Party may select
the dispute settlement procedure in which to settle the
dispute.
2. Once the
complaining Party has requested a panel under an agreement
referred to in paragraph 1, the forum selected shall be used to
the exclusion of the others.
Article
21.3:
Consultations
1. Either
Party may request in writing consultations with the other Party
concerning any matter on the implementation, interpretation,
application or operation of this Agreement, including a matter
relating to a measure that the other Party proposes to take
(hereinafter referred to in this Chapter as "proposed
measure").
2. The
requesting Party shall deliver the request to the other Party,
setting out the reasons for the request, including
identification of the measure at issue and an indication of the
legal basis for the complaint, and providing sufficient
information to enable an examination of the matter.
3. The
Parties shall make every effort to arrive at a mutually
satisfactory resolution of the matter through consultations
under this Article.
4. In
consultations under this Article, a Party may request the other
Party to make available personnel of its government agencies or
other regulatory bodies who have expertise in the matter
subject to consultations.
5. The
consultations under this Article shall be confidential and
without prejudice to the rights of either Party in any further
proceedings.
Article
21.4:
Referral of Matters to the Joint FTA Committee
1. If the
consultations fail to resolve the matter within 40 days of the
delivery of a Party's request for consultations under
Article 21.3.2, or 20 days in cases of urgency including those
which concern perishable goods, the complaining Party may refer
the matter to the Joint FTA Committee by delivering written
notification to the other Party. The Joint FTA Committee
shall endeavour to resolve the matter.
2. The Joint
FTA Committee may:
(a) call on such technical advisers or create such working groups or expert groups as it deems necessary;
(b) have recourse to good offices, conciliation, mediation or such other dispute resolution procedures; or
(c) make recommendations;
as may assist the Parties to reach a mutually satisfactory
resolution of the dispute.
Article
21.5:
Establishment of Arbitral Panels
1. The
complaining Party that requested consultations under Article
21.3 may request in writing the establishment of an arbitral
panel, if the Parties fail to resolve the matter within:
(a) 45 days after the date of receipt of the request for consultation if there is no referral to the Joint FTA Committee under Article 21.4;
(b) 30 days of the Joint FTA Committee convening pursuant to Article 21.4, or 15 days in cases of urgency including those which concern perishable goods; or
(c) 60 days after a Party has delivered a request for consultation under Article 21.3, or 30 days in cases of urgency including those which concern perishable goods, if the Joint FTA Committee has not convened after a referral under Article 21.4.
2. The
establishment of an arbitral panel shall not be requested on
any matter relating to a proposed measure.
3. Any
request to establish an arbitral panel pursuant to this Article
shall identify:
(a) the specific measure at issue;
(b) the legal basis of the complaint including any provision of this Agreement alleged to have been breached and any other relevant provisions; and
(c) the factual basis for the complaint.
4. The panel
shall be established and perform its functions in a manner
consistent with the provisions of this Chapter.
5. The date
of the establishment of an arbitral panel shall be the date on
which the chair is appointed.
Article
21.6:
Terms of Reference of Arbitral Panels
Unless the Parties otherwise agree within 20 days from the date
of receipt of the request for the establishment of the arbitral
panel, the terms of reference of the arbitral panel shall
be:
"To examine, in the light of the relevant provisions
of this Agreement, the matter referred to in the request for
the establishment of an arbitral panel pursuant to Article
21.5, to make findings of law and fact and determinations on
whether the measure is not in conformity with the Agreement or
is causing nullification or impairment in the sense of Article
21.1(c) together with the reasons therefore, and to issue a
written report for the resolution of the dispute. If the
Parties agree, the arbitral panel may make recommendations for
resolution of the dispute."
Article
21.7:
Composition of Arbitral Panels
1. An
arbitral panel shall comprise three panelists.
2. Each
Party shall, within 30 days after the date of receipt of the
request for the establishment of an arbitral panel, appoint one
panelist who may be its national and propose up to three
candidates to serve as the third panelist who shall be the
chair of the arbitral panel. The third panelist shall not
be a national of either Party, nor have his or her usual place
of residence in either Party, nor be employed by either Party,
nor have dealt with the dispute in any capacity.
3. The
Parties shall agree on and appoint the third panelist within 45
days after the date of receipt of the request for the
establishment of an arbitral panel, taking into account the
candidates proposed pursuant to paragraph 2.
4. If a
Party has not appointed a panelist pursuant to paragraph 2 or
if the Parties fail to agree on and appoint the third panelist
pursuant to paragraph 3, the panelist or panelists not yet
appointed shall be chosen within seven days by lot from the
candidates proposed pursuant to paragraph 2.
5. All
panelists shall:
(a) have expertise or experience in law, international trade or other matters covered by this Agreement;
(b) be chosen strictly on the basis of objectivity, reliability and sound judgment;
(c) be independent of, and not be affiliated with or receive instructions from, the government of either Party; and
(d) comply with a code of conduct, to be provided in the Rules of Procedure referred to in Article 21.13.
6. If a
panelist appointed under this Article dies, becomes unable to
act or resigns, a successor shall be appointed within 15 days
in accordance with the appointment procedure provided for in
paragraphs 2, 3 and 4, which shall be applied, respectively, mutatis mutandis. The successor shall have all the
powers and duties of the original panelist. The work of
the arbitral panel shall be suspended for a period beginning on
the date the original panelist dies, becomes unable to act or
resigns. The work of the arbitral panel shall resume on
the date the successor is appointed.
Article
21.8:
Proceedings of Arbitral Panels
1. The
arbitral panel shall meet in closed session except when meeting
with the Parties. Panel meetings with the Parties shall
be open to the public except where information designated as
confidential by a Party is being discussed.
2. The
Parties shall be given the opportunity to provide at least one
written submission and to attend any of the presentations,
statements or rebuttals in the proceedings. All
information or written submissions submitted by a Party to the
arbitral panel, including any comments on the draft report and
responses to questions put by the arbitral panel, shall be made
available to the other Party.
3. The
arbitral panel should consult with the Parties as appropriate
and provide adequate opportunities for the development of a
mutually satisfactory resolution.
4. The
arbitral panel shall aim to make its decisions, including its
report, by consensus but may also make its decisions, including
its report, by majority vote.
5. After
notifying the Parties, and subject to such terms and conditions
as the Parties may agree if any within 10 days, the arbitral
panel may seek information from any relevant source and may
consult experts to obtain their opinion or advice on certain
aspects of the matter. The panel shall provide the
Parties with a copy of any advice or opinion obtained and an
opportunity to provide comments.
6. The
deliberations of the arbitral panel and the documents submitted
to it shall be kept confidential.
7.
Notwithstanding paragraph 6, either Party may make public
statements as to its views regarding the dispute, but shall
treat as confidential, information and written submissions
submitted by the other Party to the arbitral panel which that
other Party has designated as confidential. Where a Party
has provided information or written submissions designated to
be confidential, that Party shall, within 28 days of a request
of the other Party, provide a non-confidential summary of the
information or written submissions which may be disclosed
publicly.
8. Each
Party shall bear the cost of its appointed panelist and its own
expenses. The cost of the chair of an arbitral panel and
other expenses associated with the conduct of the proceedings
shall be borne by the Parties in equal shares.
Article
21.9:
Suspension or Termination of Proceedings
1. The
Parties may agree that the arbitral panel suspend its work at
any time for a period not exceeding 12 months from the date of
such agreement. In the event of such a suspension, the
time-frames set out in paragraphs 2, 5 and 7 of Article 21.10
and paragraph 7 of Article 21.12 shall be extended by the
amount of time that the work was suspended. If the work
of the arbitral panel has been suspended for more than 12
months, the authority for establishment of the arbitral panel
shall lapse unless the Parties agree otherwise.
2. The
Parties may agree to terminate the proceedings of the arbitral
panel by jointly so notifying the chair of the arbitral panel
at any time before the issuance of the report to the
Parties.
Article
21.10:
Report
1. The
report of the arbitral panel shall be drafted without the
presence of the Parties. The panel shall base its report
on the relevant provisions of this Agreement and the
submissions and arguments of the Parties, and may take into
account any other relevant information provided to the
panel.
2. The
arbitral panel shall, within 180 days, or within 60 days in
cases of urgency, including those which concern perishable
goods, after the date of its establishment, submit to the
Parties its draft report.
3. The draft
report shall contain both the descriptive part summarising the
submissions and arguments of the Parties and the findings and
determinations of the arbitral panel. If the Parties
agree, the arbitral panel may make recommendations for
resolution of the dispute in its report. The findings and
determinations of the panel and, if applicable, any
recommendations cannot add to or diminish the rights and
obligations of the Parties provided in this Agreement.
4. When the
arbitral panel considers that it cannot submit its draft report
within the aforementioned 180 or 60 day period, it may extend
that period with the consent of the Parties.
5. A Party
may provide written comments to the arbitral panel on its draft
report within 15 days after the date of submission of the draft
report.
6. After
considering any written comments on the draft report, the
arbitral panel may reconsider its draft report and make any
further examination it considers appropriate.
7. The
arbitral panel shall issue its final report, within 30 days
after the date of submission of the draft report. The
report shall include any separate opinions on matters not
unanimously agreed, not disclosing which panelists are
associated with majority or minority opinions.
8. The final
report of the arbitral panel shall be available to the public
within 15 days after the date of issuance, subject to the
requirement to protect confidential information.
9. The
report of the arbitral panel shall be final and binding on the
Parties.
Article
21.11:
Implementation of the Report
1. Unless
the Parties agree otherwise, the Party complained against shall
eliminate the non-conformity or the nullification or impairment
in the sense of Article 21.1(c) as determined in the report of
the arbitral panel, immediately, or if this is not practicable,
within a reasonable period of time.
2. The
Parties shall continue to consult at all times on the possible
development of a mutually satisfactory resolution.
3. The
reasonable period of time referred to in paragraph 1 shall be
mutually determined by the Parties. Where the Parties
fail to agree on the reasonable period of time within 45 days
after the date of issuance of the report of the arbitral panel
referred to in Article 21.10, either Party may refer the matter
to an arbitral panel as provided for in Article 21.12.7, which
shall determine the reasonable period of time.
4. Where
there is disagreement between the Parties as to whether the
Party complained against eliminated the non-conformity or the
nullification or impairment in the sense of Article 21.1(c) as
determined in the report of the arbitral panel within the
reasonable period of time as determined pursuant to paragraph
3, either Party may refer the matter to an arbitral panel as
provided for in Article 21.12.7.
Article
21.12:
Non-Implementation – Compensation and Suspension of
Concessions or other Obligations
1. If the
Party complained against notifies the complaining Party that it
is impracticable, or the arbitral panel to which the matter is
referred pursuant to Article 21.11.4 confirms that the Party
complained against has failed to eliminate the non-conformity
or the nullification or impairment in the sense of Article
21.1(c) as determined in the report of the arbitral panel
within the reasonable period of time as determined pursuant to
Article 21.11.3, the Party complained against shall, if so
requested, enter into negotiations with the complaining Party
with a view to reaching mutually satisfactory compensation.
2. If there
is no agreement on satisfactory compensation within 20 days
after the date of receipt of the request mentioned in paragraph
1, the complaining Party may suspend the application to the
Party complained against of concessions or other obligations
under this Agreement, after giving notification of such
suspension 30 days in advance. Such notification may only
be given 20 days after the date of receipt of the request
mentioned in paragraph 1.
3. The
compensation referred to in paragraph 1 and the suspension
referred to in paragraph 2 shall be temporary measures.
Neither compensation nor suspension is preferred to full
elimination of the non-conformity or the nullification or
impairment in the sense of Article 21.1(c) as determined in the
report of the arbitral panel. The suspension shall only
be applied until such time as the non-conformity or the
nullification or impairment in the sense of Article 21.1(c) is
fully eliminated, or a mutually satisfactory solution is
reached.
4. In
considering what concessions or other obligations to suspend
pursuant to paragraph 2:
(a) the complaining Party should first seek to suspend concessions or other obligations with respect to the same sector(s) as that in which the report of the arbitral panel referred to in Article 21.10 has found a failure to comply with the obligations under this Agreement, or nullification or impairment of benefits in the sense of Article 21.1(c); and
(b) if the complaining Party considers that it is not practicable or effective to suspend concessions or other obligations with respect to the same sector(s), it may suspend concessions or other obligations with respect to other sectors. The notification of such suspension pursuant to paragraph 2 shall indicate the reasons on which it is based.
5. The level
of suspension referred to in paragraph 2 shall be equivalent to
the level of the nullification or impairment.
6. If the
Party complained against considers that the requirements for
the suspension of concessions or other obligations by the
complaining Party set out in paragraph 2, 3, 4 or 5 have not
been met, it may refer the matter to an arbitral panel.
7. The
arbitral panel that is established for the purposes of this
Article or Article 21.11 shall have, wherever possible, as its
panelists, the panelists of the original arbitral panel.
If this is not possible, then the panelists to the arbitral
panel that is established for the purposes of this Article or
Article 21.11 shall be appointed pursuant to Article
21.7. The arbitral panel established under this Article
or Article 21.11 shall issue its report within 60 days after
the date when the matter is referred to it. When the
arbitral panel considers that it cannot issue its report within
the aforementioned 60 day period, it may extend that period for
a maximum of 30 days with the consent of the Parties. The
report shall be available to the public within 15 days after
the date of issuance, subject to the requirement to protect
confidential information. The report shall be final and
binding on the Parties.
Article
21.13:
Rules of Procedure
The Joint FTA Committee shall adopt the Rules of Procedure
which provide for the details of the rules and procedures of
arbitral panels established under this Chapter, upon the entry
into force of this Agreement. Unless the Parties
otherwise agree, the arbitral panel shall follow the rules of
procedure adopted by the Joint FTA Committee and may, after
consulting the Parties, adopt additional rules of procedure not
inconsistent with the rules adopted by the Joint FTA
Committee.
Article
21.14:
Application and Modification of Rules and Procedures
Any time period or other rules and procedures for arbitral
panels provided for in this Chapter, including the Rules of
Procedure referred to in Article 21.13, may be modified by
mutual consent of the Parties. The Parties may also agree
at any time not to apply any provision of this Chapter.