Agreement between the Government of the Hungarian People's Republic and the Government of the Republic of Cyprus on mutual promotion and protection of investments

The Government of the Republic of Cyprus and the Government of the Hungarian People's Republic.

Desiring to expand and develop their mutual relations in the fields of economic, industrial scientific and technological cooperation on a long-term basis.

Having as their objective the creation of favourable conditions for investments by investors of one Contracting Party in the territory of the other Contracting Party,

Have agreed the following:

For the purposes of this Agreement:

a.

"company" means any entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, and includes a corporation, trust, partnership, sole proprietorship, branch, joint venture, association, or other organization;

b.

"company of a Contracting Party" means that a company constituted or organized under the laws of that Contracting Party;

c.

"national" of a Contracting Party means a natural person who is a national of that Contracting Party under its applicable law;

d.

"investment" of a national or company means every kind of investment owned or controlled directly or indirectly by that national or company, and includes investment consisting or taking the form of:

i.

a company;

ii.

shares, stock, and other forms of equity participation and bonds, debentures, and other forms of debt interests, in a company;

iii.

contractual rights, such as under turnkey, construction or management contracts, production or revenue-sharing contracts, concessions, or other similar contracts;

iv.

tangible property, including real property; and intangible property, including rights, such as leases, mortgages, liens and pledges;

v.

intellectual property, including;

copyrights and related rights,

industrial property rights,

patents,

rights in plant varieties,

utility models,

industrial designs or models,

rights in semiconductor layout design,

indications of origin,

trade secrets, including know-how,

confidential business information,

trade and service marks, and

trade names; and

vi.

rights conferred pursuant to law, such as licenses and permits;

any change in the form of an investment does not affect its character as an investment;

e.

"covered investment" means an investment of a national or company of a Contracting Party in the territory of the other Contracting Party;

f.

"state enterprise" means an investment of a national or company of a Contracting Party in the territory of the other Contracting Party;

g.

"investment authorization" means an authorization granted by the foreign investment authority of a Contracting Party to a covered investment or a national or company of the other Contracting Party;

h.

"investment agreement" means a written agreement between the national authorities of a Contracting Party and a covered investment or a national or company of the other Contracting Party that (i) grants rights with respect to natural resources or other assets controlled by the national authorities and (ii) the investment, national or company relies upon in establishing or acquiring a covered investment;

i.

"ICSID Convention" means the convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington, March 18, 1965;

j.

"Centre" means the International Centre for Settlement of Investment Disputes Established by the ICSID Convention; and

k.

"UNCITRAL Arbitration Rules" means the arbitration rules of the United Nations Commission on International Trade Law.

1.

The term "investments" shall comprise every kind of asset connected with the participation in companies and joint ventures, more particularly, though not exclusively:

a.

Movable and immovable property as well as any other property rights in respect of every kind of asset;

b.

rights derived from shares, bonds and other kinds of interests in companies;

c.

title to money goodwill and other assets and to any performance having an economic value;

d.

rights in the field of intellectual property, technical processes and know-how.

These investments shall be made in compliance with the laws and regulations and any written permits that may be required thereunder of the Contracting Party in the territory of which the investment has been made.

A possible change in the form in which the investments have been made does not affect their substance as investments, provided that such a change does not contradict the laws and regulations and written permits of the Contracting Parties.

2.

The term "income" means those net amounts received from the investments for a certain period of time, such as shares of profits, dividends, interest. royalties and othег fees, proceeds from total or partial liquidation of the investment, as well as any other sums emanating from such investments which are considered as income under the laws of the host country.

a.

Natural persons having the citizenship of that Contracting Party in accordance with its law;

who, in compliance with this Agreement are making investments in the territory of the other Contracting Party.

ARTICLE 2

1.

Each Contracting Party shall promote in its territory the investments by investors of the other Contracting Party.

2.

Investments permitted in compliance with the laws and regulations of the Contracting Party in the territory of which they are made, enjoy the protection of the present Agreement.

a.

A Contracting Party may adopt or maintain exceptions to the obligations of paragraph 1 in the sectors or with respect to the matters specified in the Annex to this Treaty. In adopting such an exception, a Contracting Party may not require the divestment, in whole or in part, of covered investments existing at the time the exception becomes effective.

b.

The obligations of paragraph 1 do not apply to procedures provided in multilateral

3.

In cases of approved re-investments, the incomes ensuing therefrom enjoy the same protection as the original investments.

4.

The present Agreement shall apply to all investments made in the territory of either Contracting Party by investors of the other Contracting Party after its entry into force.

a.

Each Contracting Party shall at all times accord to covered investments fair and equitable treatment and full protection and security, and shall in no case accord treatment less favorable than that required by international law.

b.

Neither Contracting Party shall in any way impair by unreasonable and discriminatory measures the management, conduct, operation, and sale or other disposition of covered investments.

4.

Each Contracting Party shall provide effective means of asserting claims and enforcing rights with respect to covered investments.

5.

Each Contracting Party shall ensure that its laws, regulations, administrative practices and procedures of general application, and adjudicatory decisions, that pertain to or affect covered investments are promptly published or otherwise made publicly available.

ARTICLE 3

1.

Each Contracting Party shall ensure fair and equitable treatment to the investments of investors of the other Contracting Party and shall not impair, by unreasonable or discriminatory measures, the operation, management, maintenance use, enjoyment or disposal thereof by those investors.

2.

More particularly, each Contracting Party shall accord to such investments full security and protection which in any case shall not be less than that accorded to investments of investors of any third State.

3.

If a Contracting Party has accorded special advantages to investors of any third State by virtue of agreements establishing customs unions, economic unions or simitar institutions, or on the basis of interim agreements leading to such unions or institutions, that Contracting Party shall not be obliged to accord such advantages to investors of the other Contracting Party.

4.

The treatment granted under the present Article shall not extend to taxes, fees, charges and to fiscal deductions and exemptions granted by either Contracting Party to investors of third States by virtue of a double taxation agreement or other agreements regarding matters of taxation, or on the basis of reciprocity with a third State.

a.

the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date, plus

b.

interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.

a.

The measures are taken in the public interest and under due process of law;

b.

the measures are not discriminatory;

c.

the measures are accompanied by provision for the payment of just compensation.

2.

The amount of compensation must correspond to the market value of the expropriated investments at the moment of the expropriation.

a.

requisitioning of all or part of such investments by the Contracting Party's forces or authorities, or

b.

destruction of all or part of such investments by the Contracting Party's forces or authorities that was not required by the necessity of the situation.

3.

The amount of this compensation may be estimated according to the laws and regulations of the country where the expropriation is made.

4.

The compensation must be paid without undue delay upon completion of the legal expropriation procedure, but not later than three months upon completion of this procedure and shall be transferred in the currency in which the investment is made. In the event of delays beyond the three-months' period, the Contracting Party concerned shall be liable to the payment of interest based on prevailing rates.

5.

Investors of either Contracting Party who suffer losses of their investments in the territory of the other Contracting Party due to war or other armed conflict or state of emergency in the territory of the other Contracting Party, shall be treated, with respect to the compensations for these losses, as investors of any third State.

ARTICTE 5

1.

In compliance with its regulations in force, either Contracting Party will permit the investors oi the other Contracting Party to transfer, in any convertible currency, income from investments and proceeds from total or partial liquidation of the investment.

a.

contributions to capital;

b.

profits, dividends, capital gains, and proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;

c.

interest, royalty payments, management fees, and technical assistance and other fees;

d.

payments made under a contract, including a loan agreement;

e.

compensation pursuant to Articles III and IV, and payments arising out of an investment dispute;

f.

earnings of a national of one Contracting Party earned in the territory of the other Contracting Party in earned in the territory of the other Contracting Party in connection with a covered investment of that national; and

g.

other forms of income.

2.

The transfer will be made within reasonable time, which is usually required for the observance of all formalities in transfer of amounts, starting from the day on which the request for the transfer has been made.

3.

Each Contracting Party shall permit returns in kind to be made as authorized or specified in an investment authorization, investment agreement, or other written agreement between the Contracting Party and a covered investment or a national or company of the other Contracting Party.

4.

Notwithstanding paragraphs 1 through 3, a Contracting Party may prevent a transfer through the equitable, non-discriminatory and good faith application of its laws relating to:

a.

bankruptcy, insolvency or the protection of the rights of creditors;

b.

issuing, trading or dealing in securities;

c.

criminal or penal offenses; or

d.

ensuring compliance with orders or judgments in adjudicatory proceedings.

ARTICLE 6

1.

Disputes between the Contracting Parties concerning the interpretation and application of this Agreement should be settled through diplomatic channels.

a.

to achieve a particular level or percentage of local content, or to purchase, use or otherwise give a preference to products or services of domestic origin or from any domestic source;

b.

to limit imports by the investment of products or services in relation to a particular volume or value of production, exports or foreign exchange earnings;

c.

to export a particular type, level or percentage of products or services, either generally or to a specific market region;

d.

to limit sales by the investment of products or services in the Contracting Party's territory in relation to a particular value or value of production, exports or foreign exchange earnings;

e.

to transfer technology, a production process or other proprietary knowledge to a national or company in the Contracting Party's territory, except pursuant to an order, commitment or undertaking that is enforced by a court, administrative tribunal or competition authority to remedy an alleged or adjudicated violation of competition laws; or

f.

to carry out a particular type, level or percentage of research and development in the Contracting Party's territory.

Such requirements do not include conditions for the receipt or continued receipt of an advantage.

2.

If the dispute cannot thus be settled within six months from the beginning of the negotiations, it shall upon the request of either Contracting Party be submitted to an arbitral tribunal.

3.

The arbitral tribunal shall be constituted as follows: each Contracting Party shall appoint one arbitrator and these two arbitrators shall agree upon a national of a third State as Chairman. The arbitrators shall be appointed within three months, the Chairman within five months from the date on which either Contracting Party has informed the other Contracting Party that it intends to submit the dispute to an arbitral tribunal.

4.

If one of the Parties fails to appoint its arbitrator and has not proceeded to do so within the specified period, the other Party may invite the President of the International Court of Justice to make the necessary appointment. If the two arbitrators are unable to reach an agreement, in the specified period, on the choice of the third arbitrator, either Party may invite the President of the International Court of Justice to make the necessary appointment.

5.

The arbitral tribunal shall decide on the basis of respect for the law, including particularly the present Agreement and other relevant agreements existing between the two Contracting Parties and the universally acknowledged rules and principles of international law.

6.

Unless the parties decide otherwise, the tribunal shall determine its own procedure.

7.

The tribunal shall reach its decision by a majority of votes. Such decision shall be final and binding on the Parties.

8.

Each Contracting Party shall beat the cost of the arbitrator appointed by itself and of its representation. The cost of the Chairman as well as the other costs will be borne in equal parts by the Contracting Parties.

1.

Any dispute between either Contracting Party and the investor of the other Contracting Party concerning expropriation of an investment shall, as far as possible, be settled by the disputing parties in an amicable way.

If such disputes cannot be settled within six months from the date either party requested amicable settlement, it shall, upon request of the investor, be submitted to one of the following:

a.

The Arbitration Institute of the Arbitral Tribunal of the Chamber of Commerce in Stockholm;

b.

the Arbitral Tribunal of the International Chamber of Commerce in Paris;

c.

the International Centre for the Settlement of Investment Disputes in case both Contracting Parties have become members of the Convention of 18 March 1965 on the Settlement of Investment Disputes between States and Nationals of Other States.

2.

Each Contracting Party shall permit covered investments to engage top managerial personnel of their choice regardless of nationality.

ARTICLE 8

Representatives of the Contracting Parties shall whenever necessary hold meetings in order to review the implementation of this Agreement. These meetings shall be held on the proposal of one of the Contracting Parties at a place and at a time agreed upon through diplomatic channels.

ARTICLE 9

1.

Either Contracting Party will permit in accordance with its laws, regulations and administrative practices followed, the entrance and stay of the investors, employees and workers of the other Party who are involved in activities connected with the investments.

2.

The Contracting Parties shall not exclude or hinder the transport agencies of the other Contracting Party and whenever necessary, shall issue permits for the transportation of goods and persons in connection with the investments made.

a.

to the courts or administrative tribunals of the Party that is a party to the dispute; or

b.

in accordance with any applicable, previously agreed dispute-settlement procedures; or

c.

in accordance with the terms of paragraph 3.

3.

a.

Provided that the national or company concerned has not submitted the dispute for resolution under paragraph 2 (a) or (b), and that three months have elapsed from the date on which the dispute arouse, the national or company concerned may submit the dispute for settlement by binding arbitration:

i.

to the Centre, if the Centre is available; or

ii.

to the Additional Facility of the Centre, if the Centre is not available; or

iii.

in accordance with the UNCITRAL Arbitration Rules; or

iv.

if agreed by both parties to the dispute, to any other arbitration institution or in accordance with any other arbitration rules.

b.

a national or company, notwithstanding that it may have submitted a dispute to binding arbitration under paragraph 3 (a), may seek interim injunctive relief, not involving the payment of damages, before the judicial or administrative tribunals of the Contracting Party that is a party to the dispute, prior to the institution of the arbitral proceeding or during the proceeding, for the preservation of its rights and interests.

4.

Each Contracting Party hereby consents to the submission of any investment dispute for settlement by binding arbitration in accordance with the choice of the national or company under paragraph 3 (a) (i), (ii), and (iii) or the mutual agreement of both parties to the dispute under paragraph 3 (a) (iv). This consent and the submission of the dispute by a national or company under paragraph 3 (a) shall satisfy the requirements of:

a.

Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the Additional Facility Rules for written consent of the parties to the dispute; and

b.

Article II of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958, for an "agreement in writing."

5.

Any arbitration under paragraph 3 (a) (ii), (iii) or (iv) shall be held in a state that is a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958.

6.

Any arbitral award rendered pursuant to this Article shall be final and binding on the parties to the dispute. Each Contracting Party shall carry out without delay the provisions of any such award and provide in its territory for the enforcement of such award.

7.

In any proceeding involving an investment dispute, a Contracting Party shall not assert, as a defense, counterclaim, right of set-off or for any other reason, that indemnification or other compensation for all or part of the alleged damages has been received or will be received pursuant to an insurance or guarantee contract.

8.

For purposes of Article 2(2) (b) of the ICSID Convention and this Article, a company of a Contracting Party that, immediately before the occurrence of the event or events giving rise to an investment dispute, was a covered investment, shall be treated as a company of the other Contracting Party.

ARTICLE 10

1.

This Agreement shall enter into force thirty days after the date on which the Contracting Parties have notified each other that the constitutional requirements for the entry into force of this Agreement have been fulfilled.

2.

This Agreement is concluded for a period of 10 years. Its validity shall be extended for an indefinite period of time unless either Contracting Party notifies in writing, at least 6 months prior to its expiry, the other Contracting Party of its wish to terminate the Agreement. After the ten-year period of validity each Contracting Party has the right to terminate the Agreement upon a 6-months' written notice. The termination shall become effective 6 months after the notification has been received by the other Contracting Party.

3.

In respect of investments made prior to the date when the termination of this Agreement becomes effective, the provisions of this Agreement remain in force for a further period of 15 years from that date.

4.

Expenses incurred by the Chairman and other arbitrators, and other costs of the proceedings, shall be paid for equally by the Contracting Parties. However, the arbitral panel may, at its discretion, direct that a higher proportion of the costs be paid by one of the Contracting Parties.

DONE at Budapest this 24th day of May 1989 in two originals in the English language, both texts being equally authentic.

a.

laws and regulations, administrative practices or procedures, or administrative or adjudicatory decisions of a Contracting Parties;

b.

international legal obligations or

c.

obligations assumed by a Contracting Party, including those contained in an investment authorization or an investment agreement.

ARTICLE XII

DENIAL OF BENEFITS

Each Contracting Party reserves the right to deny to a company of the other Contracting Party the benefits of this Treaty if nationals of a third country own or control the company and:

a.

the denying Contracting Party does not maintain normal economic relations with the third country; or

b.

the company has no substantial business activities in the territory of the Contracting Party under whose laws it is constituted or organized.

ARTICLE XIII

TAXATION

1.

No provision of this Treaty shall impose obligations with respect to tax matters, except that:

a.

Articles III, IX and X will apply with respect to expropriation; and

b.

Article IX will apply with respect to an investment agreement or an investment authorization.

2.

A national or company, that asserts in an investment dispute that a tax matter involves an expropriation, may submit that dispute to arbitration pursuant to Article IX(3) only if:

a.

the national or company concerned has first referred to the competent tax authorities of both Contracting Parties the issue of whether the tax matter involves an expropriation; and

b.

the competent tax authorities have not both determined within nine months from the time the national or company referred the issue, that the matter does not involve an expropriation.

ARTICLE XIV

MEASURES NOT PRECLUDED BY THIS TREATY

1.

This Treaty shall not preclude a Contracting Party from applying measures necessary for the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.

2.

This Treaty shall not preclude a Contracting Party from prescribing special formalities in connection with covered investments, such as a requirement that such investments be legally constituted under the laws and regulations of that Contracting Party, or a requirement that transfers of currency or other monetary instruments be reported, proved that such formalities shall not impair the substance of any of the rights set forth in this Treaty.

ARTICLE XV

APPLICATION OF THIS TREATY TO POLITICAL SUBDIVISIONS AND STATE ENTERPRISES OF THE CONTRACTING PARTIES

1.

a.

The obligations of this Treaty shall apply to the political subdivisions of the Contracting Parties.

b.

With respect to the treatment accorded by a State, Territory or possession of the United States of America, national treatment means treatment no less favorable than the treatment accorded thereby, in like situations, to investments of nationals of the United States of America resident in, and companies legally constituted under the laws and regulations of, other States, Territories or possessions of the United States of America.

2.

A Contracting Party's obligations under this Treaty shall apply to a stat enterprise in the exercise of any regulatory, administrative or other governmental authority delegated to it by that Contracting Party.

ARTICLE XVI

ENTRY INTO FORCE, DURATION AND TERMINATION

1.

This Treaty shall enter into forces thirty days after the date of exchange of instruments of ratification. It shall remain in force for a period of then years and shall continue in force unless terminated in accordance with paragraph 2. It shall apply to covered investments existing at the time of entry into force as well as to those established or acquired thereafter.

2.

A Contracting Party may terminate this Treaty at the end of the initial ten year period or at any time thereafter by giving one year's written notice to the other Contracting Party.

3.

For ten years from the date of termination, all other Articles shall continue to apply to covered investments established or acquired prior to the date of termination, except insofar as those Articles extend to the establishment or acquisition of covered investments.

4.

The Annex and Protocol shall form an integral part of the Treaty.

IN WITNESS WHEREOF, the respective plenipotentiaries have signed this Treaty.

DONE in duplicate at Amman this second day of July 1997, in the English and Arabic languages, each text being equally authentic.

ANNEX

1.

The Government of the United States of America may adopt or maintain exceptions to the obligation to accord national treatment to covered investment in the sectors or with respect to the matters specified below:

atomic energy; customhouse brokers; licenses for broadcast, common carrier, or aeronautical radio stations; COMSAT; subsidies or grants, including governments-supported loans, guarantees and insurance; state and local measures exempt from Article 1102 of the North American Free Trade Agreement pursuant to Article 1108 thereof; and landing of submarine cables.

Most favored nation treatment shall be accorded in the sectors and matters indicated above.

2.

The Government of the United States of America may adopt or maintain exceptions to the obligations to accord national treatment to covered investments in the sectors or with respect to the matters specified below:

fisheries; air and maritime transport, and related activities; banking, insurance, securities, and other financial services; and minerals leases on government land.

3.

The Government of the Hashemite Kingdom of Jordan may adopt or maintain exception to the obligations to accord national treatment to covered investments in the sectors and with respect to the matters specified below:

air transport; ownership of bus transport companies; ownership of construction contracting companies, but not including cross-border provision of construction services; small scale commerce with total invested capital of no more than US $50,000 (or its equivalent in national currency), as adjusted annually for the first five years that the treaty is in force by the annual percentage change in the GDP deflator of the United States of America; ownership of banks and insurance companies; ownership of companies engaged in telecommunications systems operations, but not including activities such as maintenance, equipment production, equipment and spare parts sales, or other telecommunications related services; extraction concessions for minerals, including oil, natural gas and oil shale; farming (not including animal husbandry) on large tracts of land (greater than 500 acres or its equivalent in dunums); ownership of agricultural land; ownership of land in the Jordan valley and ownership of land for non-business related purposes.

Most favored nation treatment shall be accorded in the sectors and matters indicated above.

4.

Notwithstanding paragraphs 1 and 3, each Party agrees to accord national treatment to covered investment in the following sectors:

leasing of pipeline rights-of-way on government land.

PROTOCOL

1.

With respect to Article I (d), the Contracting Parties confirm with their mutual understanding that either Contracting Party may require approvals or impose format requirements in connection with a change in the form of an investment, provided that such approvals or formal requirements are otherwise consistent with this Treaty.

2.

With regard to Article III (2), the term "without delay" does not necessarily mean instantaneous. The intent is that the Contracting Party diligently and expeditiously carry out necessary formalities.

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