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§5. Value of Modelling contract ATES about investment projects for fastening by the national legislation of uniform approaches to investment regulation

Within the limits of ATES for assistance to development of investments in an infrastructure and protection of foreign capital investments in an infrastructure has been accepted «Modelling contract ATES on investment projects», intended for fastening by the national legislation of uniform approaches to investment regulation in an infrastructure (further - the Modelling contract on investment projects).
Agreements on the infrastructural investment projects fall under action of this Modelling contract, concluded by the countries-participants ATES with private persons for stimulation of inflow of capital investment in national economy and maintenance of a favorable investment mode in an infrastructure. It concerns, for example, contracts of such kinds used in Vietnam how to "build-ekpluatirovat-transfer" (Build-Operate-Transfer, or HERE), to "build-transfer-ekplatirovat" (Build-Transfer-Operate, or WTO), to "build-transfer" (Build - Transfer, or VT), in Kingdom Cambodia "to contracts:"to build-maintain-transfer" Model Contract Provisions for Projects under the APEC Voluntary Investment Project (AVIP) Scheme and the Infrastructure Investment Initiative (III). 2 See: Article 2 (11), (12), (13) of the Law On Foreign Investment in Vietnam in 2000. "The kingdom Cambodia has declared the readiness to become member ATES after the expiration in 2008г. Moratorium term. 195 (Build-Operate-Transfer: HERE); to "build-own-maintain-transfer" (Build-Own-Operate-Transfer, or BOOT); to "build-own-maintain" (Build-Own-Operate, or BOO) and «to build - to hand over in rent-transfer» (Build - Lease - Transfer, or BLT). The modelling contract possesses a number of specific lines which are necessary for defining for correct explanation of its legal nature. The basic specificity of this contract consists in the following: 1) an agreement subject - the investments provided by the investment agreement, in particular an infrastructure of-power station, road, prospectuses, ports, means of communication, the ground areas etc. (the investment agreement - the agreement between the investor/investors (the private foreign person, the multilateral organisations) and the state accepting foreign investment for the purpose of realisation of investments) (item 1); 2) subjects are the state accepting foreign investment (the sovereign state) and investors/investors (items 1); 3) the agreement submits to the national law of the state accepting foreign investment, but with the reservation on granting to the private investor of a so-called long-term constant legal regime that means non-use to it of the new laws published after making agreement if their conditions are unprofitable for the investor (item 4). The contract contains instructions on obligations of the foreign investor (foreign investors) according to which its any investment activity in the states accepting foreign investment should promote economic development, i.e. investors are obliged: 1) to stimulate strengthening of existing export, and to support systems of investment insurance upon noncommercial risks for the purpose of assistance to investment inflows to an infrastructure; 2) to observe internal rules of the state in which territory capital investment in an infrastructure is carried out; 3) to promote elimination regulating and institutsionnyh barriers on a way of export of the capital for infrastructure development (item 2, 3).
The contract fixes also obligations of the state-recipient of the foreign capital acting as the party of the contract, on creation of a favorable investment mode for foreign investors, in particular the state-recipient of the foreign capital are obliged: 1) not to subject the foreign investors investing the capital in an infrastructure, discrimination throughout all period of their investment activity, except for the restrictions provided for cases, the investments defined especially for the admission into the financed project; 2) to give a most favoured nation treatment (RNB) and a national treatment to foreign investors in an infrastructure on an extent 196 all their investment activity; 3) to give to foreigners investing in an infrastructure equal access on the local markets and natural resources taking into account the limited and specific exceptions, the concerning admission of investments into the financed project; 4) to abstain from unilateral change of conditions of agreements on investment projects; 5) to avoid the double taxation connected with foreign investments into an infrastructure; 5) to provide free and fast repatriation of the fixed capital connected with investments in an infrastructure and expressed in it is hard to currency; 6) to resolve temporary entrance and stay of the foreign technical and administrative personnel for the purpose of acceptance of participation in working out of infrastructural investment projects; 7) not to show such requirements to industrial activity of foreign investors which harm or limit expansion of investments into an infrastructure; 8) not to demand from belonging to the foreign investor under the project of the enterprise of the information of more detailed, than from the local enterprise; 9) to fix refusal of expropriation or nationalisation of the capital investments which have been carried out by foreign investors in an infrastructure, or to declare refusal of other measures equal on consequences of expropriation or nationalisation; 10) to provide the fast resolution of disputes between the parties, connected with investments into an infrastructure, by means of consultations, negotiations and the international arbitration; 11) to combine stimulus of foreign investments in an infrastructure with maintenance of requirements about public health services, safety and rules about preservation of the environment; 12) to provide an openness, availability and a transparency of laws, administrative acts and the departmental instructions, directly concerning infrastructural investments in the country (item 2,3,4,5,6,7,8,9,10,11 item). It is necessary to notice, that buying making agreement concerning infrastructural investments is carried out by participants of investment relations as the obligatory investment auctions which are coming under to carrying out on a fair basis at observance of open and transparent procedure of their carrying out. Stated above allows to conclude, that the basic maintenance of the Modelling contract on investment projects is reduced to following sections: 1) definitions; 2) conditions of granting of a national treatment and a most favoured nation treatment (RNB); 3) access conditions on the local markets and local natural resources; 4) an order of change of conditions of investment agreements; 5) positions about fiscal incentives; 6) an order and conditions of transfer of money resources (capital repatriation); 7) an order of appointment of the main heads infrastructural Enhancing Private Investment in infrastructure and Access to capital (1997 Report)//ABAC Investment Liberalization: Investment Liberalization Menu (http://www.abaconline.org/library/inv_lib.asp).P.12. 197 investment projects; 8) prohibition of requirements to industrial activity of foreign investors; 9) rule fastening about the reporting of foreign investors in the volume which is not exceeding established for national businessmen; 10) definition of conditions at which as an exception of the general rule expropriation of property of the foreign investor can be admitted; 11) an order of the resolution of disputes. On the basis of not obliging investment principles ATES for the purpose of improvement of an investment climate for inflow of foreign investments and close connection strengthening between the investor and the state-recipient of the foreign capital, ATES recommends to investors for territories of the state-recipient of the foreign capital always to operate as respectable corporate subjects of host countries, and to bear responsibility for results of realisation of enterprise activity and observance of civilised values of the states-recipients (respect of the national sovereignty, observance of national laws, adherence to economic targets and development problems, non-interference to internal affairs of host countries and t.p. *). Set of similar rules of behaviour of foreign investors is called as "the Investment charter» (Investor's Charter). The charter fixes the similar approach for impression elimination as if for foreign investors are available is only right also privileges, but there are no duties. According to a charter, foreign investors undertake: 1) to observe laws and state rules in which territory investments are carried out, that is to observe local and international the right, to abstain from fulfilment of the actions contradicting a public order, safety and traditional values of host countries; 2) to promote development of economy of the states-recipients, that is to make all efforts, to operate as respectable corporate subjects, to respect local culture and customs, and to adjust the actions with the country leaders in which territory investments are carried out; 3) to increase employment and to develop human resources, that is to hire the administrative board or technicians under own discretion, to follow a policy about maintenance of employment and training of corresponding local workers and employees, and not to subject their discrimination to signs of a sex, age, race and religion, to observe equality and a course on maintenance of the equal possibilities, it is necessary for capable workers to create promotion possibilities; 4) Variety of such conditions can be looked more in detail: market Rules: foreign investments; foreign trade; labour migration; competitiveness; diplomacy; the help / Under the editorship of prof. V.D.Schetinin. M: mezhdunar.otnoshenija, 1994. С.120. Finance and Investment: Enhancing Foreign Investment Flows within APEC//ABAC Investment Liberalization: Investment Liberalization Menu: (http://www.abaconline.org/library/inv_lib.asp). P.24. 198 to protect environment, that is to use the best efforts, to improve an environment condition, to prevent destructive operation of natural resources, to make possible viable economic development. As an example of the contract on investment projects it is possible to result the contract about «to construction - operation - transfer» (Build-Operate-Transfer (HERE) Contract), provided in the Decision №11 ANK-BK Cambodia from February, 13th 1998r. (AnukretNo. 11/ANK/BK). According to Decision article 1 № 11 ANK-BK about the contract about «to construction - operation - transfer» (further - Decisions № 11 ANK-BK) the contract «constructions - operation - transfers» is understood as the agreement between the person giving concession (the state or the public legal body) and the private legal body, the so-called "concessionary" who is responsible for construction of an infrastructure and management of it at own expense with compulsory condition gratuitously to return to the state this constructed infrastructure upon termination of the term of operation established in the contract. The contract specified by the Decision is applied only between the state or the public legal body and the private legal body (concessionary), but not applied between private and the private person. The ministries, establishments and the authorised bodies which are responsible for corresponding activity and the project of an infrastructure should be the party giving concession, except the state. The concessionary can be physical or the legal body having the Cambodian either foreign citizenship, or the joint venture formed between them (the Item of item 2 and 6 Decisions № 11). Contract subject «constructions - operation - transfers» is the infrastructure published by Council of Development of Cambodia or any authorised Royal Government of Cambodia by bodies. The infrastructure includes the following: power station, roads, prospectuses, ports, means of communication, railways, ground area division under the house, hospitals, schools, the airports, stadiums, the tourist areas, new cities, hydrostation, dams, water-purifying station, incinerate station (item item 2). Expenses on infrastructure building on conditions in the contract «-operation constructions - transfers» completely lay on the concessionary. In the contract the sum of money as maintenance of performance of the obligation with the concessionary (item Z the item) should be established. 199 The right and duty of the parties under the contract - the Royal government or other public person who is representing itself as the person, giving concession, possesses following rights and duties: 1) have the right to carry out the control over performance of the conditions established by the contract (item 1 of item 4 of the Decision № 11); 2) have the right to establish ways and an order of collecting of monetary incomes for the concessionary (item 4 item 4); have the right to amerce or cancel the contract unilaterally without indemnification, in a case if the concessionary has made bankrupt, or the concessionary does not carry out of the main obligations provided in the contract after the repeated prevention by the Principal (the public person), or the concessionary breaks laws and other subordinate legislation of Kingdom Cambodia (item 8); 4) is obliged to give the absolute power on management of an infrastructure on the term established by the contract (the minimum term - 30 years) and to enlarge this term according to conditions in the contract (item item 2 4); is obliged to give privileges and the privileges specified in the Law and the Decision about investments (item 13). As the person who has received concession, or the concessionary possesses following rights and duties: 1) have the right to transfer to the third party all rights established by the contract on conditions:) the infrastructure should be constructed, at least, on 30 % from the investment project provided by the contract; the concessionary undertakes to bear a joint liability with the third party for the end result of construction specified by the contract; transfer should be approved the royal government or the public legal body giving concession (item 7); 2) (item 13) have the right to use privileges and privileges, statutory and the Decision about investments; 3) have the right to buy and translate freely a foreign currency for performance of the obligations established by the contract within the limits of the Law on currency regulation (item 12); 4) have the right to establish rate of return for service in the country with the consent of the government of Cambodia (item 4 item 4); 5) undertakes to bear responsibility for all expenses, concerning managements of an infrastructure specified in the contract (item Z item 4); 6) undertakes to pay in a royalty or a part from incomes on the conditions established by the contract to the royal government or the public legal body (item 4 item 5); 7) undertakes to satisfy the conditions established by the contract, otherwise the contract it will be cancelled unilaterally by the person giving concession, or it is punished by the penalty (item 8); 8) undertakes to form the company and to register it under the Kingdom Cambodia law, to carry out treaty provisions about «to construction - operation - transfer». Company activity should correspond to the licence given under the contract about «to-operation construction - transfer» (item Z item 11); 9) undertakes on the termination of the established 200 contract of term to transfer the corresponding constructed infrastructure and real estate in a good condition which can be maintained, to the royal government or the public legal body representing concession it is gratuitous (item 5 item 1). It is necessary to remind, that for reception of the full right to making contract about «to construction - operation - transfer» which subject is the infrastructure as a state ownership, each participant of investment relations should pass competition at the investment auctions spent by the international and national rules. Procedures and conditions for competition are defined by the chapter of II Decision № 11 ANK.-BK. All disputes and the disagreements arising at enforcement of the treaty, dare by reconciliation, negotiations and arbitration on the conditions provided by the contract (item 14). The analysis of substantive provisions of the contract about «to construction - operation - transfer» allows to draw a conclusion that the civil-law nature of the investment agreement, proves to be true and a following reason. The agreement offers the parties equality of their position. At such different subjects whom the sovereign state or its public body are, on the one hand, with another - the private company, equality it is possible in the sense that the state establishes for itself certain frameworks with reference to the given mutual relations. For the considered case as such frameworks the conditions provided by the contract on which investors / the private company are informed till the making contract moment act. Thereby the state as though equates itself on character of the rights and duties to the concrete counterpart. Acting as the partner of the private capital, the state cannot take up more than the rights or duties, than is established by the contract. If there is a question which leaves for the filled civil-law frameworks, he will dare the state, but any more as the party in the contract, and as the dominating subject. That fact, that the disputes following from investment agreements, are usually resolved by the international arbitration or international court, does not form the basis for a recognition of this agreement the international legal contract as these disputes under the arrangement of the parties can dare and other by, first, and secondly, the order of the resolution of disputes does not concern at all a circle of essential treaty provisions. Certainly, the civil-law nature of the investment agreement does not deprive the state of the right to its cancellation under own initiative. However in this case the state as the agreement party is obliged to indemnify the loss suffered by the investor. 201 The right of other party to receive adequate indemnification taking into account the suffered losses and the loss of profit, caused by infringement of the obligation from the state is indisputable, under a condition, however, that the state cancelled the contract not because of the investor. If contract cancellation was a consequence of gross infringement of the obligation from the investor, is caused by its guilty behaviour and if in this case losses are born by the state they should be collected from the investor also with the account, both a direct damage, and the loss of profit. The modelling contract on investment projects is a source of recommendatory norms for fastening by the national legislation of a uniform order of investment regulation, protection of investments and stimulation of inflow of the foreign capital in an infrastructure. If to consider, that in comparison with special certificates of the national investment legislation of the countries-participants the Modelling contract contains much more a wide range of the positions concerning directly to investment agreements its value is difficult for overestimating. Sm: Voznesensky N.N.foreign investments and joint enterprises in the countries of Africa. M, 1975. С.57. 202
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A source: CHhorn prolyng. Legal regulation of foreign investments in the countries-participants ATES / the Dissertation / Moscow. 2007

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