Common use of Risk Mitigation and Disputes Prevention Clause in Contracts

Risk Mitigation and Disputes Prevention. 1. The investment and investors of the Parties are subject to the legal system of the Host Party, therefore no provision of this Agreement shall be used for the purpose of not complying with local laws and regulations. 2. Subject to its laws and regulations, a Party shall not directly nationalize or expropriate covered investments by this Agreement, except: a) in the public purpose; b) in a non-discriminatory manner; c) on payment of effective compensation, according to paragraphs 4 to 6; and d) in accordance with due process of law. 3. The Parties shall cooperate to improve their knowledge of their respective domestic legislations on expropriation of investment. 4. The compensation shall: a) Be paid without undue delay, in accordance with the legal system of the Host Party; b) Be equivalent to the fair market value of the expropriated investment, immediately before the effective expropriation (expropriation date); c) Not reflect a negative change in the market value due to the knowledge of the intention to expropriate, before the expropriation date; and d) Be completely payable and freely transferable, according to the article about transfers. 5. If the fair market value is denominated in an internationally convertible currency, the compensation to be paid shall not be inferior to the fair market value on the date of the expropriation, plus interests, accrued since the date of expropriation until the date of payment, according to the legislation of the Host Party. 6. If the fair market value is denominated in a currency that is not internationally convertible, the compensation to be paid shall not be inferior to the fair market value on the date of the expropriation, plus interests and, if applicable, adjustment to inflation, accrued since the date of the expropriation until the date of payment, according to the legislation of the Host Party.

Risk Mitigation and Disputes Prevention. 1. The investment and investors of the Parties are subject to the legal system of the Host Party, therefore no provision of this Agreement shall be used for the purpose of not complying with local laws and regulations. 2. Subject to its laws and regulations, a Party shall not directly nationalize or expropriate covered investments by this Agreement, except: a) in the public purpose; b) in a non-discriminatory manner; c) on payment of effective compensation, according to paragraphs 4 to 6; and d) in accordance with due process of law. 3. The Parties shall cooperate to improve their knowledge of their respective domestic legislations on expropriation of investment. 4. The compensation shall: a) Be paid without undue delay, in accordance with the legal system of the Host Party; b) Be equivalent to the fair market value of the expropriated investment, immediately before the effective expropriation (“expropriation date”); c) Not reflect a negative change in the market value due to the knowledge of the intention to expropriate, before the expropriation date; and d) Be completely payable and freely transferable, according to the article about transfers. 5. If the fair market value is denominated in an internationally convertible currency, the compensation to be paid shall not be inferior to the fair market value on the date of the expropriation, plus interests, accrued since the date of expropriation until the date of payment, according to the legislation of the Host Party. 6. If the fair market value is denominated in a currency that is not internationally convertible, the compensation to be paid shall not be inferior to the fair market value on the date of the expropriation, plus interests and, if applicable, adjustment to inflation, accrued since the date of the expropriation until the date of payment, according to the legislation of the Host Party.