Sino-Japanese-ROK Trilateral Agreement, 2012

8/13/2019 Sino-Japanese-ROK Trilateral Agreement, 2012

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AGREEMENT AMONG THE GOVERNMENT OF JAPAN,

THE GOVERNMENT OF THE REPUBLIC OF KOREAAND THE GOVERNMENT OF THE PEOPLES REPUBLIC OF CHINAFOR THE PROMOTION, FACILITATIONAND PROTECTION OF INVESTMENT

The Government of Japan, the Government of theRepublic of Korea and the Government of the PeoplesRepublic of China,

Desiring to further promote investment in order tostrengthen the economic relationship among Japan, the

Republic of Korea and the Peoples Republic of China(hereinafter referred to in this Agreement as theContracting Parties);

Intending to create stable, favorable and transparentconditions for investment by investors of one ContractingParty in the territory of the other Contracting Parties;

Recognizing that the reciprocal promotion,facilitation and protection of such investment and theprogressive liberalization of investment will be conduciveto stimulating business initiative of the investors and

increase prosperity among the Contracting Parties;

Recognizing that these objectives can be achievedwithout relaxing health, safety and environmental measuresof general application;

Recognizing the importance of investors complyingwith the laws and regulations of a Contracting Party in theterritory of which the investors are engaged in investmentactivities, which contribute to the economic, social andenvironmental progress; and

Bearing in mind their respective rights andobligations under the WTO Agreement and other multilateralinstruments of cooperation;

Have agreed as follows:


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Article 1Definitions

For the purposes of this Agreement:

(1) the term investments means every kind of assetthat an investor owns or controls, directly or indirectly,which has the characteristics of an investment, such as thecommitment of capital or other resources, the expectationof gain or profit, or the assumption of risk. Forms thatinvestments may take include:

(a) an enterprise and a branch of an enterprise;

(b) shares, stocks or other forms of equity

participation in an enterprise, including rightsderived therefrom;

(c) bonds, debentures, loans and other forms of debt,including rights derived therefrom;

(d) rights under contracts, including turnkey,construction, management, production or revenue-sharing contracts;

(e) claims to money and claims to any performanceunder contract having a financial value

associated with investment;

(f) intellectual property rights, includingcopyrights and related rights, patent rights andrights relating to utility models, trademarks,industrial designs, layout-designs of integratedcircuits, new varieties of plants, trade names,indications of source or geographical indicationsand undisclosed information;

(g) rights conferred pursuant to laws and regulationsor contracts such as concessions, licenses,authorizations and permits; and

(h) any other tangible and intangible, movable andimmovable property, and any related propertyrights, such as leases, mortgages, liens andpledges;

Note: Investments also include the amounts yielded byinvestments, in particular, profit, interest,capital gains, dividends, royalties and fees.A change in the form in which assets areinvested does not affect their character asinvestments.


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(2) the term investor of a Contracting Party meansa natural person or an enterprise of a Contracting Party

that makes investments in the territory of anotherContracting Party;

(3) the term natural person of a Contracting Partymeans a natural person that has the nationality of thatContracting Party in accordance with its applicable lawsand regulations;

(4) the term enterprise of a Contracting Partymeans any legal person or any other entity constituted ororganized under the applicable laws and regulations of thatContracting Party, whether or not for profit, and whetherprivate-or government-owned or controlled, and includes a

company, corporation, trust, partnership, soleproprietorship, joint venture, association or organization;

Note: For greater certainty, a branch of anenterprise is not, in and by itself, deemed tobe an enterprise.

(5) the term investment activities meansmanagement, conduct, operation, maintenance, use, enjoymentand sale or other disposition of investments;

(6) the term freely usable currencies means freely

usable currencies as defined under the Articles ofAgreement of the International Monetary Fund;

(7) the term ICSID Convention means the Conventionon the Settlement of Investment Disputes between States andNationals of Other States, done at Washington, March 18,1965;

(8) the term UNCITRAL Arbitration Rules means thearbitration rules of the United Nations Commission onInternational Trade Law;

(9) the term WTO Agreement means the MarrakeshAgreement Establishing the World Trade Organization, doneat Marrakesh, April 15, 1994;

(10) the term ICSID Additional Facility Rules meansthe Rules Governing the Additional Facility for theAdministration of Proceedings by the Secretariat of theInternational Centre for Settlement of Investment Disputes.


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Article 2Promotion and Protection of Investments

1. Each Contracting Party shall encourage and createfavorable conditions for investors of the other ContractingParties to make investments in its territory.

2. Each Contracting Party shall, subject to its rights toexercise powers in accordance with the applicable laws andregulations, including those with regard to foreignownership and control, admit investment of investors ofanother Contracting Party.

Article 3National Treatment

1. Each Contracting Party shall in its territory accordto investors of another Contracting Party and to theirinvestments treatment no less favorable than that itaccords in like circumstances to its own investors andtheir investments with respect to investment activities.

2. Paragraph 1 shall not apply to non-conformingmeasures, if any, existing at the date of entry into forceof this Agreement maintained by each Contracting Partyunder its laws and regulations or any amendment ormodification to such measures, provided that the amendment

or modification does not decrease the conformity of themeasure as it existed immediately before the amendment ormodification.

Treatment granted to investment once admitted shall inno case be less favorable than that granted at the timewhen the original investment was made.

3. Each Contracting Party shall take, where applicable,all appropriate steps to progressively remove all the non-conforming measures referred to in paragraph 2.

Note: The Peoples Republic of China confirms that itsmeasures referred to in paragraph 2 shall not beinconsistent with paragraph 2 of Article 3 of, andparagraph 3 of the Protocol to, the Agreementbetween Japan and the Peoples Republic of ChinaConcerning the Encouragement and ReciprocalProtection of Investment, signed at Beijing,August 27, 1988.


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Article 4Most-Favored-Nation Treatment

1. Each Contracting Party shall in its territory accordto investors of another Contracting Party and to theirinvestments treatment no less favorable than that itaccords in like circumstances to investors of the thirdContracting Party or of a non-Contracting Party and totheir investments with respect to investment activities andthe matters relating to the admission of investment inaccordance with paragraph 2 of Article 2.

2. Paragraph 1 shall not be construed so as to oblige aContracting Party to extend to investors of anotherContracting Party and to their investments any preferential

treatment resulting from its membership of:

(a) any customs union, free trade area, monetaryunion, similar international agreement leading tosuch union or free trade area, or other forms ofregional economic cooperation;

(b) any international agreement or arrangement forfacilitating small scale trade in border areas;or

(c) any bilateral and multilateral international

agreements involving aviation, fishery andmaritime matters including salvage.

3. It is understood that the treatment accorded toinvestors of the third Contracting Party or any non-Contracting Party and to their investments as referred toin paragraph 1 does not include treatment accorded toinvestors of the third Contracting Party or any non-Contracting Party and to their investments by provisionsconcerning the settlement of investment disputes between aContracting Party and investors of the third ContractingParty or between a Contracting Party and investors of anynon-Contracting Party that are provided for in otherinternational agreements.

Note: For the purposes of this Article, the term non-Contracting Parties shall not include any separatecustoms territory within the meaning of the GeneralAgreement on Tariffs and Trade or of the WTOAgreement that is a member of the World TradeOrganization as of the date of entry into force ofthis Agreement.


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Article 5General Treatment of Investments

1. Each Contracting Party shall accord to investments ofinvestors of another Contracting Party fair and equitabletreatment and full protection and security. The conceptsof fair and equitable treatment and full protection andsecurity do not require treatment in addition to or beyondany reasonable and appropriate standard of treatmentaccorded in accordance with generally accepted rules ofinternational law. A determination that there has been abreach of another provision of this Agreement, or of aseparate international agreement, does not ipso factoestablish that there has been a breach of this paragraph.

2. Each Contracting Party shall observe any writtencommitments in the form of an agreement or contract it mayhave entered into with regard to investments of investorsof another Contracting Party.

Article 6Access to the Courts of Justice

Each Contracting Party shall in its territory accordto investors of another Contracting Party treatment no lessfavorable than that it accords in like circumstances to itsown investors, investors of the third Contracting Party or

of a non-Contracting Party, with respect to access to thecourts of justice and administrative tribunals and agenciesin all degrees of jurisdiction, both in pursuit and indefense of such investors rights.

Article 7Prohibition of Performance Requirements

1. The provisions of the Agreement on Trade-RelatedInvestment Measures in Annex 1A to the WTO Agreement areincorporated into and made part of this Agreement, mutatismutandisand shall apply with respect to all investmentsunder this Agreement.

2. No Contracting Party shall, in its territory, imposeunreasonable or discriminatory measures on investment byinvestors of another Contracting Party concerningperformance requirements on export or transfer oftechnology.


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Article 8Entry of Personnel

Each Contracting Party shall endeavor, to the extentpossible, in accordance with its applicable laws andregulations, to facilitate the procedures for the entry,sojourn and residence of natural persons of anotherContracting Party who wish to enter the territory of theformer Contracting Party and to remain therein for thepurpose of conducting business activities in connectionwith investments.

Article 9Intellectual Property Rights

1. (a) Each Contracting Party shall, in accordance withits laws and regulations, protect intellectualproperty rights.

(b) Each Contracting Party shall establish andmaintain transparent intellectual property rightsregimes, and will, under the existingconsultation mechanism on intellectual property,promote cooperation and communications among theContracting Parties in the intellectual propertyfield.

2. Nothing in this Agreement shall be construed so as toderogate from the rights and obligations underinternational agreements in respect of protection ofintellectual property rights to which two or moreContracting Parties are parties.

3. Nothing in this Agreement shall be construed so as tooblige a Contracting Party to extend to investors ofanother Contracting Party and their investments treatmentaccorded to investors of the third Contracting Party or ofa non-Contracting Party and their investments by virtue ofinternational agreements in respect of protection ofintellectual property rights, to which, respectively, thefirst-mentioned Contracting Party and the third ContractingParty and the first-mentioned Contracting Party and thenon-Contracting Party are parties.


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Article 10Transparency

1. Each Contracting Party shall promptly publish, orotherwise make publicly available, its laws, regulations,administrative procedures and administrative rulings andjudicial decisions of general application as well asinternational agreements to which the Contracting Party isa party and which pertain to or affect investmentactivities. The Government of each Contracting Party shallmake easily available to the public, the names andaddresses of the competent authorities responsible for suchlaws, regulations, administrative procedures andadministrative rulings.

2. When a Contracting Party introduces or changes itslaws or regulations that significantly affect theimplementation and operation of this Agreement, theContracting Party shall endeavor to provide a reasonableinterval between the time when such laws or regulations arepublished or made publicly available and the time when theyenter into force, except for those laws or regulationsinvolving national security, foreign exchange rates ormonetary policies and other laws or regulations thepublication of which would impede law enforcement.

3. Each Contracting Party shall, upon the request by

another Contracting Party, within a reasonable period oftime and through existing bilateral channels, respond tospecific questions from, and provide information to, thelatter Contracting Party with respect to any actual orproposed measure of the former Contracting Party, whichmight materially affect the interests of the latterContracting Party and its investors under this Agreement.

4. Each Contracting Party shall, in accordance with itslaws and regulations:

(a) make public in advance regulations of generalapplication that affect any matter covered bythis Agreement; and

(b) provide a reasonable opportunity for comments bythe public for those regulations related toinvestment and give consideration to thosecomments before adoption of such regulations.


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5. The provisions of this Article shall not be construedso as to oblige any Contracting Party to disclose

confidential information, the disclosure of which:

(a) would impede law enforcement;

(b) would be contrary to the public interest; or

(c) could prejudice privacy or legitimate commercialinterests.

Article 11Expropriation and Compensation

1. No Contracting Party shall expropriate or nationalize

investments in its territory of investors of anotherContracting Party or take any measure equivalent toexpropriation or nationalization (hereinafter referred toin this Agreement as expropriation) except:

(a) for a public purpose;

(b) on a non-discriminatory basis;

(c) in accordance with its laws and internationalstandard of due process of law; and

(d) upon compensation pursuant to paragraphs 2, 3 and4.

2. The compensation shall be equivalent to the fairmarket value of the expropriated investments at the timewhen the expropriation was publicly announced or when theexpropriation occurred, whichever is the earlier. The fairmarket value shall not reflect any change in market valueoccurring because the expropriation had become publiclyknown earlier.

3. The compensation shall be paid without delay and shallinclude interest at a commercially reasonable rate, takinginto account the length of time from the time ofexpropriation to the time of payment. It shall beeffectively realizable and freely transferable and shall befreely convertible, at the market exchange rate prevailingon the date of expropriation, into the currency of theContracting Party of the investors concerned, and intofreely usable currencies.


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4. Without prejudice to the provisions of Article 15, theinvestors affected by expropriation shall have a right of

access to the courts of justice or the administrativetribunals or agencies of the Contracting Party making theexpropriation to seek a prompt review of the investorscase and the amount of compensation in accordance with theprinciples set out in this Article.

Article 12Compensation for Losses or Damages

1. Each Contracting Party shall accord to investors ofanother Contracting Party that have suffered loss or damagerelating to their investments in the territory of theformer Contracting Party due to armed conflict or a state

of emergency such as revolution, insurrection, civildisturbance or any other similar event in the territory ofthat former Contracting Party, treatment, as regardsrestitution, indemnification, compensation or any othersettlement, that is no less favorable than that it accordsto its own investors, to investors of the third ContractingParty or to investors of a non-Contracting Party, whicheveris more favorable to the investors of another ContractingParty.

2. Any payments as a means of settlement referred to inparagraph 1 shall be effectively realizable, freely

transferable and freely convertible at the market exchangerate into the currency of the Contracting Party of theinvestors concerned and into freely usable currencies.

Article 13Transfers

1. Each Contracting Party shall ensure that all transfersrelating to investments in its territory of an investor ofanother Contracting Party may be made freely into and outof its territory without delay. Such transfers shallinclude, in particular, though not exclusively:

(a) the initial capital and additional amounts tomaintain or increase investments;

(b) profits, capital gains, dividends, royalties,interests, fees and other current account incomesaccruing from investments;

(c) proceeds from the total or partial sale orliquidation of investments;


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(d) payments made under a contract including loanpayments in connection with investments;

(e) earnings and remuneration of personnel from thelatter Contracting Party who work in connectionwith investments in the territory of the formerContracting Party;

(f) payments made in accordance with Articles 11 and12; and

(g) payments arising out of the settlement of adispute under Article 15.

2. Each Contracting Party shall further ensure that such

transfers may be made in freely usable currencies at themarket exchange rate prevailing on the date of eachtransfer.

3. Notwithstanding paragraphs 1 and 2, a ContractingParty may delay or prevent such transfers through theequitable, non-discriminatory and good faith application ofits laws relating to:

(a) bankruptcy, insolvency or the protection of therights of creditors;

(b) issuing, trading or dealing in securities,futures, options or other derivatives;

(c) criminal or penal offenses;

(d) ensuring compliance with orders or judgments inadjudicatory proceedings; or

(e) reports of transfers of currency or othermonetary instruments.

4. The transfers referred to in this Article shall complywith relevant formalities stipulated by the laws andregulations, if any, of each Contracting Party relating toexchange administration which are in force at the time ofinvestment by investors of another Contracting Party.These formalities include, but are not limited to thoserelated to:

(a) overseas investment;

(b) liquidation, transfer of ownership and registeredcapital reduction, including those related toreinvestment of funds derived therefrom;


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(c) the repayment of principal and interest ofregistered external debts (including loans from

foreign investors); or

(d) external guarantee provided by domesticguarantors.

5. The period required for the completion of theformalities referred to in paragraph 4 shall commence onthe day on which a written request for each transfer withnecessary documentation is submitted by the investorreferred to in paragraph 1 to the foreign exchangeauthorities of the Contracting Party in the territory ofwhich the investors investments exist. The necessaryauthorizations should be granted in a period of

approximately one month, which shall not exceed two months,from the submission of the request. Such formalities shallnot be used as a means of avoiding the obligations of theContracting Party under this Agreement.

Article 14Subrogation

1. If a Contracting Party or its designated agency makesa payment to any of its investors pursuant to an indemnity,guarantee or insurance contract, pertaining to investmentsof that investor in the territory of another Contracting

Party, the latter Contracting Party shall:

(a) recognize the assignment, to the formerContracting Party or its designated agency, ofany right or claim of the investor that formedthe basis of such payment; and

(b) recognize the right of the former ContractingParty or its designated agency to exercise byvirtue of subrogation such right or claim to thesame extent as the original right or claim of theinvestor.

2. If a Contracting Party or its designated agency hasmade a payment to its investors and thereby entered intothe rights of the investor, the investor may not make aclaim based on these rights against another ContractingParty without the consent of the former Contracting Partyor its designated agency making the payment. For greatercertainty, the investor shall continue to be entitled toexercise its rights that have not been subrogated pursuantto paragraph 1.


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3. Articles 11, 12 and 13 shall apply mutatis mutandisasregards payment to be made to the Contracting Party or its

designated agency referred to in paragraph 1 by virtue ofsuch assignment of right or claim, and the transfer of suchpayment.

Article 15Settlement of Investment Disputes

between a Contracting Party and an Investorof Another Contracting Party

1. For the purposes of this Article, an investmentdispute is a dispute between a Contracting Party and aninvestor of another Contracting Party that has incurredloss or damage by reason of, or arising out of, an alleged

breach of any obligation of the former Contracting Partyunder this Agreement with respect to the investor or itsinvestments in the territory of the former ContractingParty.

2. Any investment dispute shall, as far as possible, besettled amicably through consultation between the investorwho is a party to the investment dispute (hereinafterreferred to in this Article as disputing investor) andthe Contracting Party that is a party to the investmentdispute (hereinafter referred to in this Article asdisputing Contracting Party). A written request for

consultation shall be submitted to the disputingContracting Party by the disputing investor before thesubmission of the investment dispute to the arbitration setout in paragraph 3. Such a written request shall specify:

(a) the name and address of the disputing investor;

(b) the obligations under this Agreement alleged tohave been breached;

(c) a brief summary of the facts of the investmentdispute; and

(d) the relief sought and the approximate amount ofdamages.

Note: The written consultation request shall bedelivered to the following competentauthorities of the disputing Contracting Party:

(a) in the case of the Peoples Republic of China,the Treaty and Law Department, Ministry ofCommerce;


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(b) in the case of Japan, the Ministry of ForeignAffairs or the entity in lieu of or replacing

the aforementioned; and

(c) in the case of the Republic of Korea,International Legal Affairs Division, Ministryof Justice.

3. The investment dispute shall at the request of thedisputing investor be submitted to either:

(a) a competent court of the disputing ContractingParty;

(b) arbitration in accordance with the ICSID

Convention, if the ICSID Convention is available;

(c) arbitration under the ICSID Additional FacilityRules, if the ICSID Additional Facility Rules areavailable;

(d) arbitration under the UNCITRAL Arbitration Rules;or

(e) if agreed with the disputing Contracting Party,any arbitration in accordance with otherarbitration rules,

provided that, for the purposes of subparagraphs (b)through (e):

(i) the investment dispute cannot be settledthrough the consultation referred to inparagraph 2 within four months from the dateof the submission of the written request forconsultation to the disputing ContractingParty; and

(ii) the requirement concerning the domesticadministrative review procedure set out inparagraph 7, where applicable, is met.

Note: For the purposes of subparagraph (a), thisparagraph shall not be construed to prevent,where applicable, preliminary trial byadministrative tribunals or agencies.

4. Each Contracting Party hereby gives its consent to thesubmission of an investment dispute by a disputing investorto the arbitration set out in paragraph 3 in accordancewith the provisions of this Article.


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5. Once the disputing investor has submitted aninvestment dispute to the competent court of the disputing

Contracting Party or to one of the arbitrations set out inparagraph 3, the choice of the disputing investor shall befinal and the disputing investor may not submit thereafterthe same dispute to the other arbitrations set out inparagraph 3.

6. Notwithstanding paragraphs 3 and 4, no claim may besubmitted to the arbitration set out in paragraph 3 unlessthe disputing investor gives the disputing ContractingParty written waiver of any right to initiate before anycompetent court of the disputing Contracting Party withrespect to any measure of the disputing Contracting Partyalleged to constitute a breach referred to in paragraph 1.

7. When the disputing investor submits a written requestfor consultation to the disputing Contracting Party underparagraph 2, the disputing Contracting Party may require,without delay, the investor concerned to go through thedomestic administrative review procedure specified by thelaws and regulations of that Contracting Party before thesubmission to the arbitration set out in paragraph 3.

The domestic administrative review procedure shall notexceed four months from the date on which an applicationfor the review is filed. If the procedure is not completed

by the end of the four months, it shall be deemed to becompleted and the disputing investor may submit theinvestment dispute to the arbitration set out in paragraph3. The investor may file an application for the reviewunless the four months consultation period as provided inparagraph 3 has elapsed.

Note: It is understood that any decision made underthe domestic administrative review procedureshall not prevent the disputing investor fromsubmitting the investment dispute to thearbitration set out in paragraph 3.

8. The applicable arbitration rules shall govern thearbitration set out in paragraph 3 except to the extentmodified in this Article.

9. The award rendered by an arbitral tribunal establishedunder paragraph 3 (hereinafter referred to in this Articleas the Tribunal) shall include:

(a) a finding whether or not there has been a breachby the disputing Contracting Party of anyobligation under this Agreement with respect tothe disputing investor and its investments; and


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(b) one or both of the following remedies, only ifthe disputing investors loss or damage is

attributed to such breach:

(i) monetary damages and applicable interest;and

(ii) restitution of property, in which case theaward shall provide that the disputingContracting Party may pay monetary damagesand any applicable interest, in lieu ofrestitution.

10. The award which is rendered by the Tribunal shall befinal and binding upon both parties to the investment

dispute. This award shall be executed in accordance withthe applicable laws and regulations concerning theexecution of award in force, in the country in whoseterritory such execution is sought.

11. Notwithstanding paragraph 3, no claim may be submittedto the arbitration set out in that paragraph, if more thanthree years have elapsed from the date on which thedisputing investor first acquired, or should have firstacquired, whichever is the earlier, the knowledge that thedisputing investor had incurred the loss or damage referredto in paragraph 1.

12. Paragraph 3 (except subparagraph (a)) and paragraph 4shall not apply to any investment dispute with respect to:

(a) the obligations of a Contracting Party undersubparagraph 1(b) of Article 9; and

(b) the measures of a Contracting Party that fallwithin the scope of Article 20.

Article 16Special Formalities and Information Requirements

1. Nothing in Article 3 shall be construed to prevent aContracting Party from adopting or maintaining a measurethat prescribes special formalities in connection withinvestment activities by investors of another ContractingParty in its territory, such as the requirement thatinvestments be legally constituted under the laws orregulations of the former Contracting Party, provided thatsuch formalities are consistent with this Agreement and donot materially impair the protections afforded by theformer Contracting Party to investors of the latterContracting Party and their investments pursuant to thisAgreement.


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2. Notwithstanding Articles 3 and 4, a Contracting Partymay require an investor of another Contracting Party, in

its territory, to provide information concerning itsinvestments solely for informational or statisticalpurposes. The former Contracting Party shall protect suchinformation that is confidential from any disclosure thatwould prejudice the competitive position of the investor ofthe latter Contracting Party or its investments. Nothingin this paragraph shall be construed so as to prevent aContracting Party from otherwise obtaining or disclosinginformation in connection with the equitable and good faithapplication of its law.

Article 17Settlement of Disputes among Contracting Parties

1. Any Contracting Party may request in writingconsultations with another Contracting Party to resolve anydispute relating to the interpretation or application ofthis Agreement. The former Contracting Party (hereinafterreferred to in this Article as the complaining Party)shall at the time of the request deliver to the thirdContracting Party a copy of that request. Where the thirdContracting Party considers that it has a substantialinterest in the dispute, it shall be entitled toparticipate in such consultations.

2. (a) Where the consultations referred to in paragraph1 do not satisfactorily resolve the disputewithin six months after the date of receipt ofthe request referred to in that paragraph, thecomplaining Party or the Contracting Party towhich such request was addressed (hereinaftercollectively referred to in this Article as thedisputing Parties) may, upon written request tothe other disputing Party, submit the dispute toan arbitral tribunal.

(b) The disputing Party that submits the dispute toan arbitral tribunal under subparagraph (a) shalldeliver to the third Contracting Party a copy ofthe request for arbitration under thatsubparagraph.

(c) The third Contracting Party may make submissionsto the arbitral tribunal referred to insubparagraph (a) on a question of theinterpretation of this Agreement, upon writtennotice to the disputing Parties.


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(d) Where the third Contracting Party considers thatit has a substantial interest in the dispute, it

shall be entitled to participate in thearbitration proceedings by joining either of thedisputing Parties on delivery of a written noticeof its intention to participate to the disputingParties and to the arbitral tribunal referred toin subparagraph (a). Such written notice shallbe delivered to the disputing Parties at theearliest possible time and in any event no laterthan seven days after the date of delivery of thecopy of the request under subparagraph (b).

3. Unless otherwise provided for in this Article, or inthe absence of an agreement by the disputing Parties to the

contrary, the UNCITRAL Arbitration Rules shall applymutatis mutandisto the proceedings of the arbitraltribunal. However, these rules may be modified by thedisputing Parties or modified by the arbitrators appointedpursuant to paragraph 4, provided that none of thedisputing Parties objects to the modification. Thearbitral tribunal may, for its part, determine its ownrules and procedures.

4. Within sixty days from the date of receipt of therequest under subparagraph 2(a), each disputing Party shallappoint an arbitrator. The two arbitrators shall, in

consultation with the disputing Parties, select a thirdarbitrator as the chairperson, who shall be a national of anon-Contracting Party. The UNCITRAL Arbitration Rulesapplicable to appointing members of three-member panelsshall apply mutatis mutandisto other matters relating tothe appointment of the arbitrators of the arbitral tribunalprovided that the appointing authority referenced in thoserules shall be the President of the International Court ofJustice. If the President is a national of any ContractingParty or otherwise prevented from discharging the saidfunction, the Vice-President shall be invited to make theappointment. If the Vice-President also is a national ofany Contracting Party or otherwise prevented fromdischarging the said function, the member of theInternational Court of Justice next in seniority who is nota national of any Contracting Party shall be invited tomake the appointment.


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5. Unless otherwise agreed by the disputing Parties, allsubmissions of documents shall be made and all hearings

shall be completed within a period of one hundred andeighty days from the date of selection of the thirdarbitrator. The arbitral tribunal shall render its award,in accordance with the provisions of this Agreement and therules of international law applicable to the disputingParties, within sixty days from the date of the finalsubmissions of documents or the date of the closing of thehearings, whichever is the later. Such award shall befinal and binding upon the disputing Parties.

6. The third Contracting Party that is not participatingin the arbitration proceedings in accordance withsubparagraph 2(d) shall, on delivery of a written notice to

the disputing Parties and to the arbitral tribunal, beentitled to attend all hearings, to make written and oralsubmissions to the arbitral tribunal and to receive a copyof the written submissions of the disputing Parties to thearbitral tribunal.

7. Unless otherwise agreed by the disputing Parties,expenses incurred by the chairperson and other arbitrators,and other costs of the proceedings, shall be borne equallyby the disputing Parties.

Article 18

Security Exceptions

1. Notwithstanding any other provisions in this Agreementother than the provisions of Article 12, each ContractingParty may take any measure:

(a) which it considers necessary for the protectionof its essential security interests;

(i) taken in time of war, or armed conflict, orother emergency in that Contracting Party orin international relations; or

(ii) relating to the implementation of nationalpolicies or international agreementsrespecting the non-proliferation of weapons;

(b) in pursuance of its obligations under the UnitedNations Charter for the maintenance ofinternational peace and security.


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2. In cases where a Contracting Party takes any measure,pursuant to paragraph 1, that does not conform with the

obligations of the provisions of this Agreement other thanthe provisions of Article 12, that Contracting Party shallnot use such measure as a means of avoiding itsobligations.

Article 19Temporary Safeguard Measures

1. A Contracting Party may adopt or maintain measures notconforming with its obligations under Article 3 relating tocross-border capital transactions and Article 13:

(a) in the event of serious balance-of-payments and

external financial difficulties or threatthereof; or

(b) in cases where, in exceptional circumstances,movements of capital cause or threaten to causeserious difficulties for macroeconomicmanagement, in particular, monetary and exchangerate policies.

2. The measures referred to in paragraph 1:

(a) shall be consistent with the Articles of

Agreement of the International Monetary Fund, solong as the Contracting Party taking the measuresis a party to the said Articles;

(b) shall not exceed those necessary to deal with thecircumstances set out in paragraph 1;

(c) shall be temporary and eliminated as soon asconditions permit;

(d) shall be promptly notified to the otherContracting Parties in an appropriate manner;

(e) shall ensure that any of the other ContractingParties is treated as favorably as the thirdContracting Party and any non-Contracting Party;and

(f) shall be adopted or maintained endeavoring toavoid unnecessary damage to the commercial,economic and financial interests of the otherContracting Parties.


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3. Nothing in this Agreement shall be regarded asaltering the rights enjoyed and obligations undertaken by a

Contracting Party as a party to the Articles of Agreementof the International Monetary Fund.

Article 20Prudential Measures

1. Notwithstanding any other provisions of thisAgreement, a Contracting Party shall not be prevented fromtaking measures relating to financial services forprudential reasons, including measures for the protectionof investors, depositors, policy holders or persons to whoma fiduciary duty is owed by an enterprise supplyingfinancial services, or to ensure the integrity and

stability of the financial system.

2. Where the measures referred to in paragraph 1 do notconform with the provisions of this Agreement, they shallnot be used as a means of avoiding the Contracting Partysobligations under this Agreement.

Article 21Taxation

1. Nothing in this Agreement shall apply to taxationmeasures except as expressly provided for in paragraphs 3,

4 and 5.

2. Nothing in this Agreement shall affect the rights andobligations of any Contracting Party under any taxconvention. In the event of any inconsistency between thisAgreement and any such convention, that convention shallprevail to the extent of the inconsistency.

Note: In resolving issues relating to taxes, thecompetent authorities of each Contracting Partyunder the relevant tax convention shalldetermine whether or not such conventiongoverns such issues.

3. Article 11 shall apply to taxation measures.

4. Article 15 shall apply to disputes under paragraph 3.

5. (a) No investor may invoke Article 11 as the basisfor the submission of an investment dispute tothe arbitration set out in paragraph 3 of Article15, where it has been determined pursuant tosubparagraph (b) the taxation measure in questionis not an expropriation.


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(b) The disputing investor shall refer the issue, atthe time of the submission of a written request

for consultation to the disputing ContractingParty under paragraph 2 of Article 15, to thecompetent authorities of the Contracting Party ofthe disputing investor and the disputingContracting Party to determine whether suchmeasure is not an expropriation. If thecompetent authorities of both Contracting Partiesdo not consider the issue or, having consideredit, fail to determine that the measure is not anexpropriation within six months from the date onwhich the written request for consultation issubmitted to the disputing Contracting Partyunder paragraph 2 of Article 15, the investor may

submit its claim to the arbitration set out inparagraph 3 of Article 15.

(c) For the purposes of subparagraph (b), the termcompetent authorities means:

(i) in the case of the Peoples Republic ofChina, the Ministry of Finance and StateAdministration of Taxation or theirauthorized representatives;

(ii) in the case of Japan, the Minister of

Finance or his or her authorizedrepresentatives, who shall consider theissue in consultation with the Minister forForeign Affairs or his or her authorizedrepresentatives; and

(iii) in the case of the Republic of Korea, theDeputy Minister for Tax and Customs Officeof the Ministry of Strategy and Finance orhis or her authorized representatives.

Article 22Denial of Benefits

1. A Contracting Party may deny the benefits of thisAgreement to an investor of another Contracting Party thatis an enterprise of the latter Contracting Party and to itsinvestments if the enterprise is owned or controlled by aninvestor of a non-Contracting Party and the denyingContracting Party:

(a) does not maintain normal economic relations withthe non-Contracting Party; or


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(b) adopts or maintains measures with respect to thenon-Contracting Party that prohibit transactions

with the enterprise or that would be violated orcircumvented if the benefits of this Agreementwere accorded to the enterprise or to itsinvestments.

2. A Contracting Party may deny the benefits of thisAgreement to an investor of another Contracting Party thatis an enterprise of the latter Contracting Party and to itsinvestments if the enterprise is owned or controlled by aninvestor of a non-Contracting Party or of the denyingContracting Party, and the enterprise has no substantialbusiness activities in the territory of the latterContracting Party.

Note: For the purposes of this Article, the term non-Contracting Parties shall not include any separatecustoms territory within the meaning of the GeneralAgreement on Tariffs and Trade or of the WTOAgreement that is a member of the World TradeOrganization as of the date of entry into force ofthis Agreement.

Article 23Environmental Measures

Each Contracting Party recognizes that it isinappropriate to encourage investment by investors ofanother Contracting Party by relaxing its environmentalmeasures. To this effect each Contracting Party should notwaive or otherwise derogate from such environmentalmeasures as an encouragement for the establishment,acquisition or expansion of investments in its territory.

Article 24Joint Committee

1. The Contracting Parties shall establish a JointCommittee (hereinafter referred to in this Article as theCommittee) with a view to accomplishing the objectives ofthis Agreement. The functions of the Committee shall be:

(a) to discuss and review the implementation andoperation of this Agreement; and

(b) to discuss other investment-related mattersconcerning this Agreement, including the scope ofthe existing non-conforming measures referred toin paragraphs 2 and 3 of Article 3.


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2. The Committee may, as necessary, decide to makeappropriate recommendations to the Contracting Parties for

the more effective functioning or the attainment of theobjectives of this Agreement.

3. The Committee shall be composed of representatives ofthe Governments of the Contracting Parties and may decideto invite representatives of relevant entities other thanthe Governments of the Contracting Parties with thenecessary expertise relevant to the issues to be discussed.The Committee shall decide on the modalities of itsoperation as necessary.

4. Any decision of the Committee shall be made byconsensus.

5. Unless otherwise decided by the Contracting Parties,the Committee shall convene once a year.

Article 25Relation to Other Agreements

Nothing in this Agreement shall affect the rights andobligations of a Contracting Party, including thoserelating to treatment accorded to investors of anotherContracting Party, under any bilateral investment agreementbetween those two Contracting Parties existing on the date

of entry into force of this Agreement, so long as such abilateral agreement is in force.

Note: It is confirmed that, when an issue arises betweenan investor of a Contracting Party and anotherContracting Party, nothing in this Agreement shallbe construed so as to prevent the investor fromrelying on the bilateral investment agreementbetween those two Contracting Parties which isconsidered by the investor to be more favorable thanthis Agreement.

Article 26Headings

The headings of the Articles of this Agreement areinserted for convenience of reference only and shall notaffect the interpretation of this Agreement.


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Article 27Final Provisions

1. The Governments of the Contracting Parties shallnotify one another, through diplomatic channels, of thecompletion of their respective internal proceduresnecessary for the entry into force of this Agreement. ThisAgreement shall enter into force on the thirtieth day afterthe latest of the dates of receipt of the notifications.

2. This Agreement shall remain in force for a period often years after its entry into force and shall continue inforce thereafter except as provided in paragraphs 5 and 6.This Agreement shall also apply to all investments ofinvestors of any Contracting Party acquired in the

territory of another Contracting Party in accordance withthe applicable laws and regulations of the latterContracting Party prior to the entry into force of thisAgreement.

3. The Contracting Parties shall undertake a generalreview of this Agreement, as well as a review of itsimplementation and operation, so as to further facilitateinvestment and create more open investment environment inthe Contracting Parties, every three years after the entryinto force of this Agreement or upon the request of anyContracting Party, unless otherwise agreed by the

Contracting Parties.

4. The Contracting Parties shall, at the request of anyContracting Party, enter into negotiations throughappropriate channels for the purpose of amending thisAgreement. This Agreement may be amended by agreementamong the Contracting Parties. Such amendment shall beaccepted by the Contracting Parties in accordance withtheir respective legal procedures, and shall enter intoforce on the date to be agreed upon by the ContractingParties. Amendments shall not affect the rights andobligations of the Contracting Parties provided for underthis Agreement until the amendments enter into force.

5. A Contracting Party may, by giving one years advancenotice in writing to the other Contracting Parties,withdraw from this Agreement at the end of the initial tenyear period or at any time thereafter. If a ContractingParty withdraws, this Agreement shall remain in force forthe remaining Contracting Parties. In respect ofinvestments acquired prior to the date of withdrawal fromthis Agreement, the provisions of this Agreement shallcontinue to be effective for that withdrawing ContractingParty for a period of ten years from the date of suchwithdrawal.


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6. This Agreement shall terminate when either of theremaining Contracting Parties as are stipulated in

paragraph 5 withdraws in accordance with that paragraph.In respect of investments acquired prior to the date oftermination of this Agreement, the provisions of thisAgreement shall continue to be effective for thoseremaining Contracting Parties for a period of ten yearsfrom the date of termination of this Agreement.

7. This Agreement shall not apply to claims arising outof events which occurred, or to claims which had beensettled, prior to its entry into force.

IN WITNESS WHEREOF, the undersigned, being dulyauthorized by their respective Governments, have signed

this Agreement.

DONE in triplicate at Beijing, on this day ofMay, 2012, in the English language.

FOR THE GOVERNMENT OF JAPAN:

FOR THE GOVERNMENT OF THE REPUBLIC OF KOREA:

FOR THE GOVERNMENT OF THE PEOPLES REPUBLIC OF CHINA:


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PROTOCOL

At the time of signing the Agreement among theGovernment of Japan, Government of the Republic of Koreaand the Government of the Peoples Republic of China forthe Promotion, Facilitation and Protection of Investment(hereinafter referred to as the Agreement), theundersigned have agreed upon the following provisions whichshall form an integral part of the Agreement:

1. Paragraph 1 of Article 4 of the Agreement shall not

apply to matters related to the acquisition of landproperty.

2. (a) The Contracting Parties confirm their sharedunderstanding that paragraph 1 of Article 11 ofthe Agreement addresses the following twosituations:

(i) the first situation is direct expropriation,where investments are nationalized orotherwise directly expropriated throughformal transfer of title or outright

seizure; and

(ii) the second situation is indirectexpropriation, where an action or a seriesof actions by a Contracting Party has aneffect equivalent to direct expropriationwithout formal transfer of title or outrightseizure.

(b) The determination of whether an action or aseries of actions by a Contracting Party, in aspecific fact situation, constitutes an indirectexpropriation requires a case-by-case, fact-basedinquiry that considers, among other factors:

(i) the economic impact of the action or seriesof actions, although the fact that suchaction or series of actions has an adverseeffect on the economic value of investments,standing alone, does not establish that anindirect expropriation has occurred;

(ii) the extent to which the action or series ofactions interferes with distinct andreasonable expectations arising out of

investments; and


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(iii) the character and objectives of the action

or series of actions, including whether suchaction is proportionate to its objectives.

(c) Except in rare circumstances, such as when anaction or a series of actions by a ContractingParty is extremely severe or disproportionate inlight of its purpose, non-discriminatoryregulatory actions adopted by the ContractingParty for the purpose of legitimate publicwelfare do not constitute indirect expropriation.

IN WITNESS WHEREOF, the undersigned, being dulyauthorized by their respective Governments, have signed the

present Protocol.

DONE in triplicate at Beijing, on this day ofMay, 2012, in the English language.

FOR THE GOVERNMENT OF JAPAN:

FOR THE GOVERNMENT OF THE REPUBLIC OF KOREA:

FOR THE GOVERNMENT OF THE PEOPLES REPUBLIC OF CHINA:

Documents

Sino-Japanese-ROK Trilateral Agreement, 2012