MULTILATERAL INVESTMENT GUARANTEE AGENCY ACT

MULTILATERAL INVESTMENT GUARANTEE AGENCY

CHAPTER 335

MULTILATERAL INVESTMENT

GUARANTEE AGENCY ACT

To provide for Malta’s membership of the Multilateral Investment

Guarantee Agency.

(10th October, 1989) *

Enacted by ACT XXX of 1989 .

This Act may be cited as the Multilateral Investment

Guarantee Agency Act.

[Section 2]

CONVENTION ESTABLISHING THE MULTILATERAL INVESTMENT GUARANTEE AGENCY

PREAMBLE

The Contracting States

Considering the need to strengthen international cooperation for economic

development and to foster the contribution to such development of foreign

investment in general and private foreign investment in particular;

Recognizing that the flow of foreign investment to developing countries would be

facilitated and further encouraged by alleviating concerns related to non-commercial

risks;

Desiring to enhance the flow to developing countries of capital and technology for

productive purposes under conditions consistent with their development needs,

policies and objectives, on the basis of fair and stable standards for the treatment of

foreign investment;

Convinced that the Multilateral Investment Guarantee Agency can play an

important role in the encouragement of foreign investment complementing national

and regional investment guarantee programs and private insurers of non-commercial

risk; and

Realizing that such Agency should, to the extent possible, meet its obligations

without resort to its callable capital and that such an objective would be served by

continued improvement in investment conditions,

Have Agreed as follows

CHAPTER I

ESTABLISHMENT, STATUS, PURPOSES AND DEFINITIONS

Article 1. Establishment and Status of the Agency

(a) There is hereby established the Multilateral Investment Guarantee Agency

(hereinafter called the Agency).

(b) The Agency shall possess full juridical personality and, in particular, the

capacity to

(i) contract;

(ii) acquire and dispose of movable and immovable property; and

(iii) institute legal proceedings.

Article 2.

Objective and Purposes

The objective of the Agency shall be to encourage the flow of investments for

productive purposes among member countries, and in particular to developing

member countries, thus supplementing the activities of the International Bank for

Reconstruction and Development (hereinafter referred to as the Bank), the

International Finance Corporation and other international development finance

institutions.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

To serve its objective, the Agency shall

(a) issue guarantees, including coinsurance and reinsurance, against non-

commercial risks in respect of investments in a member country which flow from

other member countries;

(b) carry out appropriate complementary activities to promote the flow of

investments to and among developing member countries; and

(c) exercise such other incidental powers as shall be necessary or desirable in

the furtherance of its objective.

The Agency shall be guided in all its decisions by the provisions of this Article.

Article 3.

Definitions

For the purposes of this Convention

(a) "Member" means a State with respect to which this Convention has entered

into force in accordance with Article 61.

(b) "Host country" or "host government" means a member, its government, or

any public authority of a member in whose territories, as defined in Article 66, an

investment which has been guaranteed or reinsured, or is considered for guarantee or

reinsurance, by the Agency is to be located.

(c) A "developing member country" means a member which is listed as such in

Schedule A hereto as this Schedule may be amended from time to time by the

Council of Governors referred to in Article 30 (hereinafter called the Council).

(d) A "special majority" means an affirmative vote of not less than two-thirds of

the total voting power representing not less than fifty-five percent of the subscribed

shares of the capital stock of the Agency.

(e) A "freely usable currency" means (i) any currency designated as such by the

International Monetary Fund from time to time and (ii) any other freely available

and effectively usable currency which the Board of Directors referred to in Article

30 (hereinafter called the Board) may designate for the purposes of this Convention

after consultation with the International Monetary Fund and with the approval of the

country of such currency.

CHAPTER II

MEMBERSHIP AND CAPITAL

Article 4. Membership

(a) Membership in the Agency shall be open to all members of the Bank and to

Switzerland.

(b) Original members shall be the States which are listed in Schedule A hereto

and become parties to this Convention on or before October 30, 1987.

Article 5.

Capital

(a) The authorized capital stock of the Agency shall be one billion Special

Drawing Rights (SDR 1,000,000,000). The capital stock shall be divided into

100,000 shares having a par value of SDR 10,000 each, which shall be available for

subscription by members. All payment obligations of members with respect to

MULTILATERAL INVESTMENT GUARANTEE AGENCY

capital stock shall be settled on the basis of the average value of the SDR in terms of

United States dollars for the period January 1, 1981 to June 30, 1985, such value

being 1.082 United States dollars per SDR.

(b) The capital stock shall increase on the admission of a new member to the

extent that the then authorized shares are insufficient to provide the shares to be

subscribed by such member pursuant to Article 6.

(c) The Council, by special majority, may at any time increase the capital stock

of the Agency.

Article 6.

Subscription of Shares

Each original member of the Agency shall subscribe at par to the number of shares

of capital stock set forth opposite its name in Schedule A hereto. Each other member

shall subscribe to such number of shares of capital stock on such terms and

conditions as may be determined by the Council, but in no event at an issue price of

less than par. No member shall subscribe to less than fifty shares. The Council may

prescribe rules by which members may subscribe to additional shares of the

authorized capital stock.

Article 7.

Division and Calls of Subscribed Capital

The initial subscription of each member shall be paid as follows

(i) Within ninety days from the date on which this Convention enters into

force with respect to such member, ten percent of the price of each share

shall be paid in cash as stipulated in Section (a) of Article 8 and an

additional ten percent in the form of non-negotiable, non-interest-

bearing promissory notes or similar obligations to be encashed pursuant

to a decision of the Board in order to meet the Agency’s obligations.

(ii) The remainder shall be subject to call by the Agency when required to

meet its obligations.

Article 8. Payment of Subscription of Shares

(a) Payments of subscriptions shall be made in freely usable currencies except

that payments by developing member countries may be made in their own currencies

up to twenty-five percent of the paid-in cash portion of their subscriptions payable

under Article 7 (i).

(b)

Calls on any portion of unpaid subscriptions shall be uniform on all shares.

(c) If the amount received by the Agency on a call shall be insufficient to meet

the obligations which have necessitated the call, the Agency may make further

successive calls on unpaid subscriptions until the aggregate amount received by it

shall be sufficient to meet such obligations.

(d)

Liability on shares shall be limited to the unpaid portion of the issue price.

Article 9.

Valuation of Currencies

Whenever it shall be necessary for the purposes of this Convention to determine

the value of one currency in terms of another, such value shall be as reasonably

determined by the Agency, after consultation with the International Monetary Fund.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

Refunds

(a) The Agency shall, as soon as practicable, return to members amounts paid

on calls on subscribed capital if and to the extent that

(i)

the call shall have been made to pay a claim resulting from a

guarantee or reinsurance contract and thereafter the Agency shall

have recovered its payment, in whole or in part, in a freely usable

currency; or

(ii) the call shall have been made because of a default in payment by a

member and thereafter such member shall have made good such

default in whole or in part; or

(iii) the Council, by special majority, determines that the financial

position of the Agency permits all or part of such amounts to be

returned out of the Agency’s revenues.

(b) Any refund effected under this Article to a member shall be made in freely

usable currency in the proportion of the payments made by that member to the total

amount paid pursuant to calls made prior to such refund.

(c) The equivalent of amounts refunded under this Article to a member shall

become part of the callable capital obligations of the member under Article 7 (ii).

CHAPTER III

OPERATIONS

Covered Risks

(a) Subject to the provisions of Sections (b) and (c) below, the Agency may

guarantee eligible investments against a loss resulting from one or more of the

following types of risk

(i)

Currency Transfer

any introduction attributable to the host government of

restrictions on the transfer outside the host country of its currency

into a freely usable currency or another currency acceptable to the

holder of the guarantee, including a failure of the host

government to act within a reasonable period of time on an

application by such holder for such transfer;

(ii) Expropriation and Similar Measures

any legislative action or administrative action or omission

attributable to the host government which has the effect of

depriving the holder of a guarantee of his ownership or control of,

or a substantial benefit from, his investment, with the exception

of non-discriminatory measures of general application which

governments normally take for the purpose of regulating

economic activity in their territories;

(iii) Breach of Contract

any repudiation or breach by the host government of a contract

with the holder of a guarantee, when (a) the holder of a guarantee

does not have recourse to a judicial or arbitral forum to determine

the claim of repudiation or breach, or (b) a decision by such

forum is not rendered within such reasonable period of time as

MULTILATERAL INVESTMENT GUARANTEE AGENCY

shall be prescribed in the contracts of guarantee pursuant to the

Agency’s regulations, or (c) such a decision cannot be enforced;

and

(iv)

War and Civil Disturbance

any military action or civil disturbance in any territory of the host

country to which this Convention shall be applicable as provided

in Article 66.

(b) Upon the joint application of the investor and the host country, the Board, by

special majority, may approve the extension of coverage under this Article to

specific non-commercial risks other than those referred to in Section (a) above, but

in no case to the risk of devaluation or depreciation of currency.

(c)

Losses resulting from the following shall not be covered

(i)

any host government action or omission to which the holder of the

guarantee has agreed or for which he has been responsible; and

(ii) any host government action or omission or any other event

occurring before the conclusion of the contract of guarantee.

Eligible Investments

(a) Eligible investments shall include equity interests, including medium- or

long-term loans made or guaranteed by holders of equity in the enterprise concerned,

and such forms of direct investment as may be determined by the Board.

(b) The Board, by special majority, may extend eligibility to any other medium-

or long-term form of investment, except that loans other than those mentioned in

Section (a) above may be eligible only if they are related to a specific investment

covered or to be covered by the Agency.

(c) Guarantees shall be restricted to investments the implementation of which

begins subsequent to the registration of the application for the guarantee by the

Agency. Such investments may include

(i)

any transfer of foreign exchange made to modernize, expand, or

develop an existing investment; and

(ii) the use of earnings from existing investments which could

otherwise be transferred outside the host country.

(d)

In guaranteeing an investment, the Agency shall satisfy itself as to

(i)

the economic soundness of the investment and its contribution to

the development of the host country;

(ii) compliance of the investment with the host country’s laws and

regulations;

(iii) consistency of the investment with the declared development

objectives and priorities of the host country; and

(iv) the investment conditions in the host country, including the

availability of fair and equitable treatment and legal protection for

the investment.

Article 13. Eligible Investors

(a) Any natural person and any juridical person may be eligible to receive the

Agency’s guarantee provided that

(i)

such natural person is a national of a member other than the host

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country;

(ii) such juridical person is incorporated and has its principal place of

business in a member or the majority of its capital is owned by a

member or members or nationals thereof, provided that such

member is not the host country in any of the above cases; and

(iii) such juridical person, whether or not it is privately owned,

operates on a commercial basis.

(b) In case the investor has more than one nationality, for the purposes of

Section (a) above the nationality of a member shall prevail over the nationality of a

non-member, and the nationality of the host country shall prevail over the nationality

of any other member.

(c) Upon the joint application of the investor and the host country, the Board, by

special majority, may extend eligibility to a natural person who is a national of the

host country or a juridical person which is incorporated in the host country or the

majority of whose capital is owned by its nationals, provided that the assets invested

are transferred from outside the host country.

Article 14.

Eligible Host Countries

Investments shall be guaranteed under this Chapter only if they are to be made in

the territory of a developing member country.

Article 15.

Host Country Approval

The Agency shall not conclude any contract of guarantee before the host

government has approved the issuance of the guarantee by the Agency against the

risks designated for cover.

Article 16.

Terms and Conditions

The terms and conditions of each contract of guarantee shall be determined by the

Agency subject to such rules and regulations as the Board shall issue, provided that

the Agency shall not cover the total loss of the guaranteed investment. Contracts of

guarantee shall be approved by the President under the direction of the Board.

Article 17.

Payment of Claims

The President under the direction of the Board shall decide on the payment of

claims to a holder of a guarantee in accordance with the contract of guarantee and

such policies as the Board may adopt. Contracts of guarantee shall require holders of

guarantees to seek, before a payment is made by the Agency, such administrative

remedies as may be appropriate under the circumstances, provided that they are

readily available to them under the laws of the host country. Such contracts may

require the lapse of certain reasonable periods between the occurrence of events

giving rise to claims and payments of claims.

Article 18.

Subrogation

(a) Upon paying or agreeing to pay compensation to a holder of a guarantee, the

Agency shall be subrogated to such rights or claims related to the guaranteed

investment as the holder of a guarantee may have had against the host country and

other obligors. The contract of guarantee shall provide the terms and conditions of

such subrogation.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

(b) The rights of the Agency pursuant to Section (a) above shall be recognized

by all members.

(c) Amounts in the currency of the host country acquired by the Agency as

subrogee pursuant to Section (a) above shall be accorded, with respect to use and

conversion, treatment by the host country as favourable as the treatment to which

such funds would be entitled in the hands of the holder of the guarantee. In any case,

such amounts may be used by the Agency for the payment of its administrative

expenditures and other costs. The Agency shall also seek to enter into arrangements

with host countries on other uses of such currencies to the extent that they are not

freely usable.

Article 19.

Relationship to National and Regional Entities

The Agency shall cooperate with, and seek to complement the operations of,

national entities of members and regional entities the majority of whose capital is

owned by members, which carry out activities similar to those of the Agency, with a

view to maximizing both the efficiency of their respective services and their

contribution to increased flows of foreign investment. To this end, the Agency may

enter into arrangements with such entities on the details of such cooperation,

including in particular the modalities of reinsurance and coinsurance.

Article 20.

Reinsurance of National and Regional Entities

(a) The Agency may issue reinsurance in respect of a specific investment

against a loss resulting from one or more of the non-commercial risks underwritten

by a member or agency thereof or by a regional investment guarantee agency the

majority of whose capital is owned by members. The Board, by special majority,

shall from time to time prescribe maximum amounts of contingent liability which

may be assumed by the Agency with respect to reinsurance contracts. In respect of

specific investments which have been completed more than twelve months prior to

receipt of the application for reinsurance by the Agency, the maximum amount shall

initially be set at ten percent of the aggregate contingent liability of the Agency

under this Chapter. The conditions of eligibility specified in Articles 11 to 14 shall

apply to reinsurance operations, except that the reinsured investments need not be

implemented subsequent to the application for reinsurance.

(b) The mutual rights and obligations of the Agency and a reinsured member or

agency shall be stated in contracts of reinsurance subject to such rules and

regulations as the Board shall issue. The Board shall approve each contract for

reinsurance covering an investment which has been made prior to receipt of the

application for reinsurance by the Agency, with a view to minimizing risks, assuring

that the Agency receives premiums commensurate with its risk, and assuring that the

reinsured entity is appropriately committed toward promoting new investment in

developing member countries.

(c) The Agency shall, to the extent possible, assure that it or the reinsured entity

shall have the rights of subrogation and arbitration equivalent to those the Agency

would have if it were the primary guarantor. The terms and conditions of reinsurance

shall require that administrative remedies are sought in accordance with Article 17

before a payment is made by the Agency. Subrogation shall be effective with respect

to the host country concerned only after its approval of the reinsurance by the

Agency. The Agency shall include in the contracts of reinsurance provisions

requiring the reinsured to pursue with due diligence the rights or claims related to

the reinsured investment.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

Article 21.

Cooperation with Private Insurers and with Reinsurers

(a) The Agency may enter into arrangements with private insurers in member

countries to enhance its own operations and encourage such insurers to provide

coverage of non-commercial risks in developing member countries on conditions

similar to those applied by the Agency. Such arrangements may include the

provision of reinsurance by the Agency under the conditions and procedures

specified in Article 20.

(b) The Agency may reinsure with any appropriate reinsurance entity, in whole

or in part, any guarantee or guarantees issued by it.

(c) The Agency will in particular seek to guarantee investments for which

comparable coverage on reasonable terms is not available from private insurers and

reinsurers.

Article 22.

Limits of Guarantee

(a) Unless determined otherwise by the Council by special majority, the

aggregate amount of contingent liabilities which may be assumed by the Agency

under this Chapter shall not exceed one hundred and fifty percent of the amount of

the Agency’s unimpaired subscribed capital and its reserves plus such portion of its

reinsurance cover as the Board may determine. The Board shall from time to time

review the risk profile of the Agency’s portfolio in the light of its experience with

claims, degree of risk diversification, reinsurance cover and other relevant factors

with a view to ascertaining whether changes in the maximum aggregate amount of

contingent liabilities should be recommended to the Council. The maximum amount

determined by the Council shall not under any circumstances exceed five times the

amount of the Agency’s unimpaired subscribed capital, its reserves and such portion

of its reinsurance cover as may be deemed appropriate.

(b) Without prejudice to the general limit of guarantee referred to in Section (a)

above, the Board may prescribe

(i)

maximum aggregate amounts of contingent liability which may be

assumed by the Agency under this Chapter for all guarantees

issued to investors of such individual member. In determining

such maximum amounts, the Board shall give due consideration

to the share of the respective member in the capital of the Agency

and the need to apply more liberal limitations in respect of

investments originating in developing member countries; and

(ii) maximum aggregate amounts of contingent liability which may be

assumed by the Agency with respect to such risk diversification

factors as individual projects, individual host countries and types

of investment or risk.

Article 23.

Investment Promotion

(a) The Agency shall carry out research, undertake activities to promote

investment flows and disseminate information on investment opportunities in

developing member countries, with a view to improving the environment for foreign

investment flows to such countries. The Agency may, upon the request of a member,

provide technical advice and assistance to improve the investment conditions in the

territories of that member. In performing these activities, the Agency shall

(i)

be guided by relevant investment agreements among member

countries;

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(ii) seek to remove impediments, in both developed and developing

member countries, to the flow of investment to developing

member countries; and

(iii) coordinate with other agencies concerned with the promotion of

foreign investment, and in particular the International Finance

Corporation.

(b)

The Agency also shall

(i)

encourage the amicable settlement of disputes between investors

and host countries;

(ii) endeavour to conclude agreements with developing member

countries, and in particular with prospective host countries, which

will assure that the Agency, with respect to investment guaranteed

by it, has treatment at least as favourable as that agreed by the

member concerned for the most favoured investment guarantee

agency or State in an agreement relating to investment, such

agreements to be approved by special majority of the Board; and

(iii) promote and facilitate the conclusion of agreements, among its

members, on the promotion and protection of investments.

(c) The Agency shall give particular attention in its promotional efforts to the

importance of increasing the flow of investments among developing member

Guarantees of Sponsored Investments

In addition to the guarantee operations undertaken by the Agency under this

Chapter, the Agency may guarantee investments under the sponsorship arrangements

provided for in Annex I to this Convention.

CHAPTER IV

FINANCIAL PROVISIONS

Financial Management

The Agency shall carry out its activities in accordance with sound business and

prudent financial management practices with a view to maintaining under all

circumstances its ability to meet its financial obligations.

Premiums and Fees

The Agency shall establish and periodically review the rates of premiums, fees

and other charges, if any, applicable to each type of risk.

Article 27. Allocation of Net Income

(a) Without prejudice to the provisions of Section (a) (iii) of Article 10, the

Agency shall allocate net income to reserves until such reserves reach five times the

subscribed capital of the Agency.

(b) After the reserves of the Agency have reached the level prescribed in

Section (a) above, the Council shall decide whether, and to what extent, the

Agency’s net income shall be allocated to reserves, be distributed to the Agency’s

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members or be used otherwise. Any distribution of net income to the Agency’s

members shall be made in proportion to the share of each member in the capital of

the Agency in accordance with a decision of the Council acting by special majority.

Article 28.

Budget

The President shall prepare an annual budget of revenues and expenditures of the

Agency for approval by the Board.

Article 29.

Accounts

The Agency shall publish an Annual Report which shall include statements of its

accounts and of the accounts of the Sponsorship Trust Fund referred to in Annex I to

this Convention, as audited by independent auditors. The Agency shall circulate to

members at appropriate intervals a summary statement of its financial position and a

profit and loss statement showing the results of its operations.

CHAPTER V

ORGANIZATION AND MANAGEMENT

Article 30. Structure of the Agency

The Agency shall have a Council of Governors, a Board of Directors, a President

and staff to perform such duties as the Agency may determine.

Article 31.

The Council

(a) All the powers of the Agency shall be vested in the Council, except such

powers as are, by the terms of this Convention, specifically conferred upon another

organ of the Agency. The Council may delegate to the Board the exercise of any of

its powers, except the power to

(i)

admit new members and determine the conditions of their

admission;

(ii) suspend a member;

(iii) decide on any increase or decrease in the capital;

(iv) increase the limit of the aggregate amount of contingent liabilities

pursuant to Section (a) of Article 22;

(v) designate a member as a developing member country pursuant to

Section (c) of Article 3;

(vi) classify a new member as belonging to Category One or Category

Two for voting purposes pursuant to Section (a) of Article 39 or

reclassify an existing member for the same purposes;

(vii) determine the compensation of Directors and their Alternates;

(viii) cease operations and liquidate the Agency;

(ix) distribute assets to members upon liquidation; and

(x) amend this Convention, its Annexes and Schedules.

(b) The Council shall be composed of one Governor and one Alternate

appointed by each member in such manner as it may determine. No Alternate may

vote except in the absence of his principal. The Council shall select one of the

Governors as Chairman.

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(c) The Council shall hold an annual meeting and such other meetings as may be

determined by the Council or called by the Board. The Board shall call a meeting of

the Council whenever requested by five members or by members having twenty-five

percent of the total voting power.

Article 32.

The Board

(a) The Board shall be responsible for the general operations of the Agency and

shall take, in the fulfilment of this responsibility, any action required or permitted

under this Convention.

(b) The Board shall consist of not less than twelve Directors. The number of

Directors may be adjusted by the Council to take into account changes in

membership. Each Director may appoint an Alternate with full power to act for him

in case of the Director’s absence or inability to act. The President of the Bank shall

be ex officio Chairman of the Board, but shall have no vote except a deciding vote in

case of an equal division.

(c) The Council shall determine the term of office of the Directors. The first

Board shall be constituted by the Council at its inaugural meeting.

(d) The Board shall meet at the call of its Chairman acting on his own initiative

or upon request of three Directors.

(e) Until such time as the Council may decide that the Agency shall have a

resident Board which functions in continuous session, the Directors and Alternates

shall receive compensation only for the cost of attendance at the meetings of the

Board and the discharge of other official functions on behalf of the Agency. Upon

the establishment of a Board in continuous session, the Directors and Alternates

shall receive such remuneration as may be determined by the Council.

Article 33.

President and Staff

(a) The President shall, under the general control of the Board, conduct the

ordinary business of the Agency. He shall be responsible for the organization,

appointment and dismissal of the staff.

(b) The President shall be appointed by the Board on the nomination of its

Chairman. The Council shall determine the salary and terms of the contract of

service of the President.

(c) In the discharge of their offices, the President and the staff owe their duty

entirely to the Agency and to no other authority. Each member of the Agency shall

respect the international character of this duty and shall refrain from all attempts to

influence the President or the staff in the discharge of their duties.

(d) In appointing the staff, the President shall, subject to the paramount

importance of securing the highest standards of efficiency and of technical

competence, pay due regard to the importance of recruiting personnel on as wide a

geographical basis as possible.

(e) The President and staff shall maintain at all times the confidentiality of

information obtained in carrying out the Agency’s operations.

Article 34.

Political Activity Prohibited

The Agency, its President and staff shall not interfere in the political affairs of any

member. Without prejudice to the right of the Agency to take into account all the

circumstances surrounding an investment, they shall not be influenced in their

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decisions by the political character of the member or members concerned.

Considerations relevant to their decisions shall be weighed impartially in order to

achieve the purposes stated in Article 2.

Article 35.

Relations with International Organizations

The Agency shall, within the terms of this Convention, cooperate with the United

Nations and with other inter-governmental organizations having specialized

responsibilities in related fields, including in particular the Bank and the

International Finance Corporation.

Article 36.

Location of Principal Office

(a) The principal office of the Agency shall be located in Washington, D.C.,

unless the Council, by special majority, decides to establish it in another location.

(b)

The Agency may establish other offices as may be necessary for its work.

Article 37.

Depositories for Assets

Each member shall designate its central bank as a depository in which the Agency

may keep holdings of such member’s currency or other assets of the Agency or, if it

has no central bank, it shall designate for such purpose such other institution as may

be acceptable to the Agency.

Article 38.

Channel of Communication

(a) Each member shall designate an appropriate authority with which the

Agency may communicate in connection with any matter arising under this

Convention. The Agency may rely on statements of such authority as being

statements of the member. The Agency, upon the request of a member, shall consult

with that member with respect to matters dealt with in Articles 19 to 21 and related

to entities or insurers of that member.

(b) Whenever the approval of any member is required before any act may be

done by the Agency, approval shall be deemed to have been given unless the member

presents an objection within such reasonable period as the Agency may fix in

notifying the member of the proposed act.

CHAPTER VI

VOTING, ADJUSTMENTS OF SUBSCRIPTIONS AND

REPRESENTATION

Article 39.

Voting and Adjustments of Subscriptions

(a) In order to provide for voting arrangements that reflect the equal interest in

the Agency of the two Categories of States listed in Schedule A of this Convention,

as well as the importance of each member’s financial participation, each member

shall have 177 membership votes plus one subscription vote for each share of stock

held by that member.

(b) If at any time within three years after the entry into force of this Convention

the aggregate sum of membership and subscription votes of members which belong

to either of the two Categories of States listed in Schedule A of this Convention is

less than forty percent of the total voting power, members from such a Category

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shall have such number of supplementary votes as shall be necessary for the

aggregate voting power of the Category to equal such a percentage of the total voting

power. Such supplementary votes shall be distributed among the members of such

Category in the proportion that the subscription votes of each bears to the aggregate

of subscription votes of the Category. Such supplementary votes shall be subject to

automatic adjustment to ensure that such percentage is maintained and shall be

cancelled at the end of the above-mentioned three-year period.

(c) During the third year following the entry into force of this Convention, the

Council shall review the allocation of shares and shall be guided in its decision by

the following principles

(i)

the votes of members shall reflect actual subscriptions to the

Agency’s capital and the membership votes as set out in Section

(a) of this Article;

(ii) shares allocated to countries which shall not have signed the

Convention shall be made available for reallocation to such

members and in such manner as to make possible voting parity

between the above-mentioned Categories; and

(iii) the Council will take measures that will facilitate members’

ability to subscribe to shares allocated to them.

(d) Within the three-year period provided for in Section (b) of this Article, all

decisions of the Council and Board shall be taken by special majority, except that

decisions requiring a higher majority under this Convention shall be taken by such

higher majority.

(e) In case the capital stock of the Agency is increased pursuant to Section (c)

of Article 5, each member which so requests shall be authorized to subscribe a

proportion of the increase equivalent to the proportion which its stock theretofore

subscribed bears to the total capital stock of the Agency, but no member shall be

obligated to subscribe any part of the increased capital.

(f) The Council shall issue regulations regarding the making of additional

subscriptions under Section (e) of this Article. Such regulations shall prescribe

reasonable time limits for the submission by members of requests to make such

subscriptions.

Article 40.

Voting in the Council

(a) Each Governor shall be entitled to cast the votes of the member he

represents. Except as otherwise specified in this Convention, decisions of the

Council shall be taken by a majority of the votes cast.

(b) A quorum for any meeting of the Council shall be constituted by a majority

of the Governors exercising not less than two-thirds of the total voting power.

(c) The Council may by regulation establish a procedure whereby the Board,

when it deems such action to be in the best interests of the Agency, may request a

decision of the Council on a specific question without calling a meeting of the

Council.

Article 41.

Election of Directors

(a)

Directors shall be elected in accordance with Schedule B.

(b) Directors shall continue in office until their successors are elected. If the

office of a Director becomes vacant more than ninety days before the end of his

MULTILATERAL INVESTMENT GUARANTEE AGENCY

term, another Director shall be elected for the remainder of the term by the

Governors who elected the former Director. A majority of the votes cast shall be

required for election. While the office remains vacant, the Alternate of the former

Director shall exercise his powers, except that of appointing an Alternate.

Article 42. Voting in the Board

(a) Each Director shall be entitled to cast the number of votes of the members

whose votes counted towards his election. All the votes which a Director is entitled

to cast shall be cast as a unit. Except as otherwise specified in this Convention,

decisions of the Board shall be taken by a majority of the votes cast.

(b) A quorum for a meeting of the Board shall be constituted by a majority of

the Directors exercising not less than one-half of the total voting power.

(c) The Board may by regulation establish a procedure whereby its Chairman,

when he deems such action to be in the best interests of the Agency, may request a

decision of the Board on a specific question without calling a meeting of the Board.

CHAPTER VII

PRIVILEGES AND IMMUNITIES

Article 43.

Purposes of Chapter

To enable the Agency to fulfil its functions, the immunities and privileges set forth

in this Chapter shall be accorded to the Agency in the territories of each member.

Article 44.

Legal Process

Actions other than those within the scope of Articles 57 and 58 may be brought

against the Agency only in a court of competent jurisdiction in the territories of a

member in which the Agency has an office or has appointed an agent for the purpose

of accepting service or notice of process. No such action against the Agency shall be

brought (i) by members or persons acting for or deriving claims from members or (ii)

in respect of personnel matters. The property and assets of the Agency shall,

wherever located and by whomsoever held, be immune from all forms of seizure,

attachment or execution before the delivery of the final judgment or award against

the Agency.

Article 45. Assets

(a) The property and assets of the Agency, wherever located and by

whomsoever held, shall be immune from search, requisition, confiscation,

expropriation or any other form of seizure by executive or legislative action.

(b) To the extent necessary to carry out its operations under this Convention, all

property and assets of the Agency shall be free from restrictions, regulations,

controls and moratoria of any nature; provided that property and assets acquired by

the Agency as successor to or subrogee of a holder of a guarantee, a reinsured entity

or an investor insured by a reinsured entity shall be free from applicable foreign

exchange restrictions, regulations and controls in force in the territories of the

member concerned to the extent that the holder, entity or investor to whom the

Agency was subrogated was entitled to such treatment.

(c)

For purposes of this Chapter, the term "assets" shall include the assets of the

MULTILATERAL INVESTMENT GUARANTEE AGENCY

Sponsorship Trust Fund referred to in Annex I to this Convention and other assets

administered by the Agency in furtherance of its objective.

Article 46.

Archives and Communications

(a)

The archives of the Agency shall be inviolable, wherever they may be.

(b) The official communications of the Agency shall be accorded by each

member the same treatment that is accorded to the official communications of the

Bank.

Article 47.

Taxes

(a) The Agency, its assets, property and income, and its operations and

transactions authorized by this Convention, shall be immune from all taxes and

customs duties. The Agency shall also be immune from liability for the collection or

payment of any tax or duty.

(b) Except in the case of local nationals, no tax shall be levied on or in respect

of expense allowances paid by the Agency to Governors and their Alternates or on or

in respect of salaries, expense allowances or other emoluments paid by the Agency

to the Chairman of the Board, Directors, their Alternates, the President or staff of the

Agency.

(c) No taxation of any kind shall be levied on any investment guaranteed or

reinsured by the Agency (including any earnings therefrom) or any insurance

policies reinsured by the Agency (including any premiums and other revenues

therefrom) by whomsoever held: (i) which discriminates against such investment or

insurance policy solely because it is guaranteed or reinsured by the Agency; or (ii) if

the sole jurisdictional basis for such taxation is the location of any office or place of

business maintained by the Agency.

Article 48.

Officials of the Agency

All Governors, Directors, Alternates, the President and staff of the Agency

(i)

shall be immune from legal process with respect to acts performed

by them in their official capacity;

(ii) not being local nationals, shall be accorded the same immunities

from immigration restrictions, alien registration requirements and

national service obligations, and the same facilities as regards

exchange restrictions as are accorded by the members concerned

to the representatives, officials and employees of comparable rank

of other members; and

(iii) shall be granted the same treatment in respect of travelling

facilities as is accorded by the members concerned to

representatives, officials and employees of comparable rank of

other members.

Article 49. Application of this Chapter

Each member shall take such action as is necessary in its own territories for the

purpose of making effective in terms of its own law the principles set forth in this

Chapter and shall inform the Agency of the detailed action which it has taken.

Article 50. Waiver

MULTILATERAL INVESTMENT GUARANTEE AGENCY

The immunities, exemptions and privileges provided in this Chapter are granted in

the interests of the Agency and may be waived, to such extent and upon such

conditions as the Agency may determine, in cases where such a waiver would not

prejudice its interests. The Agency shall waive the immunity of any of its staff in

cases where, in its opinion, the immunity would impede the course of justice and can

be waived without prejudice to the interests of the Agency.

CHAPTER VIII

WITHDRAWAL, SUSPENSION OF MEMBERSHIP AND

CESSATION OF OPERATIONS

Article 51.

Withdrawal

Any member may, after the expiration of three years following the date upon

which this Convention has entered into force with respect to such member, withdraw

from the Agency at any time by giving notice in writing to the Agency at its

principal office. The Agency shall notify the Bank, as depository of this Convention,

of the receipt of such notice. Any withdrawal shall become effective ninety days

following the date of the receipt of such notice by the Agency. A member may

revoke such notice as long as it has not become effective.

Article 52. Suspension of Membership

(a) If a member fails to fulfil any of its obligations under this Convention, the

Council may, by a majority of its members exercising a majority of the total voting

power, suspend its membership.

(b) While under suspension a member shall have no rights under this

Convention, except for the right of withdrawal and other rights provided in this

Chapter and Chapter IX, but shall remain subject to all its obligations.

(c) For purposes of determining eligibility for a guarantee or reinsurance to be

issued under Chapter III or Annex I to this Convention, a suspended member shall

not be treated as a member of the Agency.

(d) The suspended member shall automatically cease to be a member one year

from the date of its suspension unless the Council decides to extend the period of

suspension or to restore the member to good standing.

Article 53.

Rights and Duties of States Ceasing to be Members

(a) When a State ceases to be a member, it shall remain liable for all its

obligations, including its contingent obligations, under this Convention which shall

have been in effect before the cessation of its membership.

(b) Without prejudice to Section (a) above, the Agency shall enter into an

arrangement with such State for the settlement of their respective claims and

obligations. Any such arrangement shall be approved by the Board.

Article 54.

Suspension of Operations

(a) The Board may, whenever it deems it justified, suspend the issuance of new

guarantees for a specified period.

(b) In an emergency, the Board may suspend all activities of the Agency for a

period not exceeding the duration of such emergency, provided that necessary

MULTILATERAL INVESTMENT GUARANTEE AGENCY

arrangements shall be made for the protection of the interests of the Agency and of

third parties.

(c) The decision to suspend operations shall have no effect on the obligations of

the members under this Convention or on the obligations of the Agency towards

holders of a guarantee or reinsurance policy or towards third parties.

Article 55.

Liquidation

(a) The Council, by special majority, may decide to cease operations and to

liquidate the Agency. Thereupon the Agency shall forthwith cease all activities,

except those incident to the orderly realization, conservation and preservation of

assets and settlement of obligations. Until final settlement and distribution of assets,

the Agency shall remain in existence and all rights and obligations of members under

this Convention shall continue unimpaired.

(b) No distribution of assets shall be made to members until all liabilities to

holders of guarantees and other creditors shall have been discharged or provided for

and until the Council shall have decided to make such distribution.

(c) Subject to the foregoing, the Agency shall distribute its remaining assets to

members in proportion to each member ’s share in the subscribed capital. The

Agency shall also distribute any remaining assets of the Sponsorship Trust Fund

referred to in Annex I to this Convention to sponsoring members in the proportion

w h i c h t h e i n v e s t m e n t s s p o n s o r e d b y e a c h b e a r s t o t h e t o t a l o f sp o n s o r e d

investments. No member shall be entitled to its share in the assets of the Agency or

the Sponsorship Trust Fund unless that member has settled all outstanding claims by

the Agency against it. Every distribution of assets shall be made at such times as the

Council shall determine and in such manner as it shall deem fair and equitable.

CHAPTER IX

SETTLEMENT OF DISPUTES

Article 56. Interpretation and Application of the Convention

(a) Any question of interpretation or application of the provisions of this

Convention arising between any member of the Agency and the Agency or among

members of the Agency shall be submitted to the Board for its decision. Any

member which is particularly affected by the question and which is not otherwise

represented by a national in the Board may send a representative to attend any

meeting of the Board at which such question is considered.

(b) In any case where the Board has given a decision under Section (a) above,

any member may require that the question be referred to the Council, whose decision

shall be final. Pending the result of the referral to the Council, the Agency may, so

far as it deems necessary, act on the basis of the decision of the Board.

Article 57.

Disputes between the Agency and Members

(a) Without prejudice to the provisions of Article 56 and of Section (b) of this

Article, any dispute between the Agency and a member or an agency thereof and any

dispute between the Agency and a country (or agency thereof) which has ceased to

be a member, shall be settled in accordance with the procedure set out in Annex II to

this Convention.

(b)

Disputes concerning claims of the Agency acting as subrogee of an investor

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shall be settled in accordance with either (i) the procedure set out in Annex II to this

Convention, or (ii) an agreement to be entered into between the Agency and the

member concerned on an alternative method or methods for the settlement of such

disputes. In the latter case, Annex II to this Convention shall serve as a basis for

such an agreement which shall, in each case, be approved by the Board by special

majority prior to the undertaking by the Agency of operations in the territories of the

member concerned.

Article 58.

Disputes Involving Holders of a Guarantee or Reinsurance

Any dispute arising under a contract of guarantee or reinsurance between the

parties thereto shall be submitted to arbitration for final determination in accordance

with such rules as shall be provided for or referred to in the contract of guarantee or

reinsurance.

CHAPTER X

AMENDMENTS

Article 59. Amendment by Council

(a) This Convention and its Annexes may be amended by vote of three-fifths of

the Governors exercising four-fifths of the total voting power, provided that

(i)

any amendment modifying the right to withdraw from the Agency

provided in Article 51 or the limitation on liability provided in

Section (d) of Article 8 shall require the affirmative vote of all

Governors; and

(ii) any amendment modifying the loss-sharing arrangement provided

in Articles 1 and 3 of Annex I to this Convention which will result

in an increase in any member’s liability thereunder shall require

the affirmative vote of the Governor of each such member.

(b) Schedules A and B to this Convention may be amended by the Council by

special majority.

(c) If an amendment affects any provision of Annex I to this Convention, total

votes shall include the additional votes allotted under Article 7 of such Annex to

sponsoring members and countries hosting sponsored investments.

Article 60. Procedure

Any proposal to amend this Convention, whether emanating from a member or a

Governor or a Director, shall be communicated to the Chairman of the Board who

s h a l l b r i n g t h e p r o p o s a l b e f o r e t h e B o a r d . I f t h e p r o p o s e d a m e nd m e n t i s

recommended by the Board, it shall be submitted to the Council for approval in

accordance with Article 59. When an amendment has been duly approved by the

Council, the Agency shall so certify by formal communication addressed to all

members. Amendments shall enter into force for all members ninety days after the

date of the formal communication unless the Council shall specify a different date.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

CHAPTER XI

FINAL PROVISIONS

Article 61.

Entry into Force

(a) This Convention shall be open for signature on behalf of all members of the

Bank and Switzerland and shall be subject to ratification, acceptance or approval by

the signatory States in accordance with their constitutional procedures.

(b) This Convention shall enter into force on the day when not less than five

instruments of ratification, acceptance or approval shall have been deposited on

behalf of signatory States in Category One, and not less than fifteen such

instruments shall have been deposited on behalf of signatory States in Category Two;

provided that total subscriptions of these States amount to not less than one-third of

the authorized capital of the Agency as prescribed in Article 5.

(c) For each State which deposits its instrument of ratification, acceptance or

approval after this Convention shall have entered into force, this Convention shall

enter into force on the date of such deposit.

(d) If this Convention shall not have entered into force within two years after its

opening for signature, the President of the Bank shall convene a conference of

interested countries to determine the future course of action.

Article 62.

Inaugural Meeting

Upon entry into force of this Convention, the President of the Bank shall call the

inaugural meeting of the Council. This meeting shall be held at the principal office

of the Agency within sixty days from the date on which this Convention has entered

into force or as soon as practicable thereafter.

Article 63.

Depository

Instruments of ratification, acceptance or approval of this Convention and

amendments thereto shall be deposited with the Bank which shall act as the

depository of this Convention. The depository shall transmit certified copies of this

Convention to States members of the Bank and to Switzerland.

Article 64.

Registration

The depository shall register this Convention with the Secretariat of the United

Nations in accordance with Article 102 of the Charter of the United Nations and the

Regulations thereunder adopted by the General Assembly.

Article 65.

Notification

The depository shall notify all signatory States and, upon the entry into force of

this Convention, the Agency of the following

(a)

signatures of this Convention;

(b) deposits of instruments of ratification, acceptance and approval in

accordance with Article 63;

(c) the date on which this Convention enters into force in accordance with

Article 61;

(d)

exclusions from territorial application pursuant to Article 66; and

MULTILATERAL INVESTMENT GUARANTEE AGENCY

(e)

withdrawal of a member from the Agency pursuant to Article 51.

Article 66.

Territorial Application

This Convention shall apply to all territories under the jurisdiction of a member

including the territories for whose international relations a member is responsible,

except those which are excluded by such member by written notice to the depository

of this Convention either at the time of ratification, acceptance or approval or

subsequently.

Article 67. Periodic Reviews

(a) The Council shall periodically undertake comprehensive reviews of the

activities of the Agency as well as the results achieved with a view to introducing

any changes required to enhance the Agency’s ability to serve its objectives.

(b) The first such review shall take place five years after the entry into force of

this Convention. The dates of subsequent reviews shall be determined by the

Council.

DONE at Seoul, in a single copy which shall remain deposited in the archives of

the International Bank for Reconstruction and Development, which has indicated by

its signature below its agreement to fulfil the functions with which it is charged

under this Convention.

ANNEX I

GUARANTEES OF SPONSORED INVESTMENTS UNDER ARTICLE 24

Article 1.

Sponsorship

(a) Any member may sponsor for guarantee an investment to be made by an

investor of any nationality or by investors of any or several nationalities.

(b) Subject to the provisions of Sections (b) and (c) of Article 3 of this Annex,

each sponsoring member shall share with the other sponsoring members in losses

under guarantees of sponsored investments, when and to the extent that such losses

cannot be covered out of the Sponsorship Trust Fund referred to in Article 2 of this

Annex, in the proportion which the amount of maximum contingent liability under

the guarantees of investments sponsored by it bears to the total amount of maximum

contingent liability under the guarantees of investments sponsored by all members.

(c) In its decisions on the issuance of guarantees under this Annex, the Agency

shall pay due regard to the prospects that the sponsoring member will be in a

position to meet its obligations under this Annex and shall give priority to

investments which are co-sponsored by the host countries concerned.

(d) The Agency shall periodically consult with sponsoring members with

respect to its operations under this Annex.

Article 2. Sponsorship Trust Fund

(a) Premiums and other revenues attributable to guarantees of sponsored

investments, including returns on the investment of such premiums and revenues,

shall be held in a separate account which shall be called the Sponsorship Trust Fund.

(b)

All administrative expenses and payments on claims attributable to

MULTILATERAL INVESTMENT GUARANTEE AGENCY

guarantees issued under this Annex shall be paid out of the Sponsorship Trust Fund.

(c) The assets of the Sponsorship Trust Fund shall be held and administered for

the joint account of sponsoring members and shall be kept separate and apart from

the assets of the Agency.

Article 3. Calls on Sponsoring Members

(a) To the extent that any amount is payable by the Agency on account of a loss

under a sponsored guarantee and such amount cannot be paid out of assets of the

Sponsorship Trust Fund, the Agency shall call on each sponsoring member to pay

into such Fund its share of such amount as shall be determined in accordance with

Section (b) of Article 1 of this Annex.

(b) No member shall be liable to pay any amount on a call pursuant to the

provisions of this Article if as a result total payments made by that member will

exceed the total amount of guarantees covering investments sponsored by it.

(c) Upon the expiry of any guarantee covering an investment sponsored by a

member, the liability of that member shall be decreased by an amount equivalent to

the amount of such guarantee; such liability shall also be decreased on a pro rata

basis upon payment by the Agency of any claim related to a sponsored investment

and shall otherwise continue in effect until the expiry of all guarantees of sponsored

investments outstanding at the time of such payment.

(d) If any sponsoring member shall not be liable for an amount of a call

pursuant to the provisions of this Article because of the limitation contained in

Sections (b) and (c) above, or if any sponsoring member shall default in payment of

an amount due in response to any such call, the liability for payment of such amount

shall be shared pro rata by the other sponsoring members. Liability of members

pursuant to this Section shall be subject to the limitation set forth in Sections (b) and

(c) above.

(e) Any payment by a sponsoring member pursuant to a call in accordance with

this Article shall be made promptly and in freely usable currency.

Article 4.

Valuation of Currencies and Refunds

The provisions on valuation of currencies and refunds contained in this

Convention with respect to capital subscriptions shall be applied mutatis mutandis to

funds paid by members on account of sponsored investments.

Article 5. Reinsurance

(a) The Agency may, under the conditions set forth in Article 1 of this Annex,

provide reinsurance to a member, an agency thereof, a regional agency as defined in

Section (a) of Article 20 of this Convention or a private insurer in a member country.

The provisions of this Annex concerning guarantees and of Articles 20 and 21 of this

Convention shall be applied mutatis mutandis to reinsurance provided under this

Section.

(b) The Agency may obtain reinsurance for investments guaranteed by it under

this Annex and shall meet the cost of such reinsurance out of the Sponsorship Trust

Fund. The Board may decide whether and to what extent the loss-sharing obligation

of sponsoring members referred to in Section (b) of Article 1 of this Annex may be

reduced on account of the reinsurance cover obtained.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

Article 6.

Operational Principles

Without prejudice to the provisions of this Annex, the provisions with respect to

guarantee operations under Chapter III of this Convention and to financial

management under Chapter IV of this Convention shall be applied mutatis mutandis

to guarantees of sponsored investments except that (i) such investments shall qualify

for sponsorship if made in the territories of any member, and in particular of any

developing member, by an investor or investors eligible under Section (a) of Article

1 of this Annex, and (ii) the Agency shall not be liable with respect to its own assets

for any guarantee or reinsurance issued under this Annex and each contract of

guarantee or reinsurance concluded pursuant to this Annex shall expressly so

provide.

Article 7. Voting

For decisions relating to sponsored investments, each sponsoring member shall

have one additional vote for each 10,000 Special Drawing Rights equivalent of the

amount guaranteed or reinsured on the basis of its sponsorship, and each member

hosting a sponsored investment shall have one additional vote for each 10,000

Special Drawing Rights equivalent of the amount guaranteed or reinsured with

respect to any sponsored investment hosted by it. Such additional votes shall be cast

only for decisions related to sponsored investments and shall otherwise be

disregarded in determining the voting power of members.

ANNEX II

SETTLEMENT OF DISPUTES BETWEEN A MEMBER AND

THE AGENCY UNDER ARTICLE 57

Article 1.

Application of the Annex

All disputes within the scope of Article 57 of this Convention shall be settled in

accordance with the procedure set out in this Annex, except in the cases where the

Agency has entered into an agreement with a member pursuant to Section (b)(ii) of

Article 57.

Article 2. Negotiation

The parties to a dispute within the scope of this Annex shall attempt to settle such

dispute by negotiation before seeking conciliation or arbitration. Negotiations shall

be deemed to have been exhausted if the parties fail to reach a settlement within a

period of one hundred and twenty days from the date of the request to enter into

negotiation.

Article 3.

Conciliation

(a) If the dispute is not resolved through negotiation, either party may submit

the dispute to arbitration in accordance with the provisions of Article 4 of this

Annex, unless the parties, by mutual consent, have decided to resort first to the

conciliation procedure provided for in this Article.

(b) The agreement for recourse to conciliation shall specify the matter in

dispute, the claims of the parties in respect thereof and, if available, the name of the

conciliator agreed upon by the parties. In the absence of agreement on the

conciliator, the parties may jointly request either the Secretary-General of the

MULTILATERAL INVESTMENT GUARANTEE AGENCY

International Centre for Settlement of Investment Disputes (hereinafter called

ICSID) or the President of the International Court of Justice to appoint a conciliator.

The conciliation procedure shall terminate if the conciliator has not been appointed

within ninety days after the agreement for recourse to conciliation.

(c) Unless otherwise provided in this Annex or agreed upon by the parties, the

conciliator shall determine the rules governing the conciliation procedure and shall

be guided in this regard by the conciliation rules adopted pursuant to the Convention

on the Settlement of Investment Disputes between States and Nationals of Other

States.

(d) The parties shall cooperate in good faith with the conciliator and shall, in

particular, provide him with all information and documentation which would assist

him in the discharge of his functions; they shall give their most serious consideration

to his recommendations.

(e) Unless otherwise agreed upon by the parties, the conciliator shall, within a

period not exceeding one hundred and eighty days from the date of his appointment,

submit to the parties a report recording the results of his efforts and setting out the

issues controversial between the parties and his proposals for their settlement.

(f)

Each party shall, within sixty days from the date of the receipt of the report,

express in writing its views on the report to the other party.

(g) Neither party to a conciliation proceeding shall be entitled to have recourse

to arbitration unless

(i)

the conciliator shall have failed to submit his report within the

period established in Section (e) above; or

(ii) the parties shall have failed to accept all of the proposals

contained in the report within sixty days after its receipt; or

(iii) the parties, after an exchange of views on the report, shall have

failed to agree on a settlement of all controversial issues within

sixty days after receipt of the conciliator’s report; or

(iv) a party shall have failed to express its views on the report as

prescribed in Section (f) above.

(h) Unless the parties agree otherwise, the fees of the conciliator shall be

determined on the basis of the rates applicable to ICSID conciliation. These fees and

the other costs of the conciliation proceedings shall be borne equally by the parties.

Each party shall defray its own expenses.

Article 4.

Arbitration

(a) Arbitration proceedings shall be instituted by means of a notice by the party

seeking arbitration (the claimant) addressed to the other party or parties to the

dispute (the respondent). The notice shall specify the nature of the dispute, the relief

sought and the name of the arbitrator appointed by the claimant. The respondent

shall, within thirty days after the date of receipt of the notice, notify the claimant of

the name of the arbitrator appointed by it. The two parties shall, within a period of

thirty days from the date of appointment of the second arbitrator, select a third

arbitrator, who shall act as President of the Arbitral Tribunal (the Tribunal).

(b) If the Tribunal shall not have been constituted within sixty days from the

date of the notice, the arbitrator not yet appointed or the President not yet selected

shall be appointed, at the joint request of the parties, by the Secretary-General of

ICSID. If there is no such joint request, or if the Secretary-General shall fail to make

the appointment within thirty days of the request, either party may request the

MULTILATERAL INVESTMENT GUARANTEE AGENCY

President of the International Court of Justice to make the appointment.

(c) No party shall have the right to change the arbitrator appointed by it once

the hearing of the dispute has commenced. In case any arbitrator (including the

President of the Tribunal) shall resign, die, or become incapacitated, a successor

shall be appointed in the manner followed in the appointment of his predecessor and

such successor shall have the same powers and duties of the arbitrator he succeeds.

(d) The Tribunal shall convene first at such time and place as shall be

determined by the President. Thereafter, the Tribunal shall determine the place and

dates of its meetings.

(e) Unless otherwise provided in this Annex or agreed upon by the parties, the

Tribunal shall determine its procedure and shall be guided in this regard by the

arbitration rules adopted pursuant to the Convention on the Settlement of Investment

Disputes between States and Nationals of Other States.

(f) The Tribunal shall be the judge of its own competence except that, if an

objection is raised before the Tribunal to the effect that the dispute falls within the

jurisdiction of the Board or the Council under Article 56 or within the jurisdiction of

a judicial or arbitral body designated in an agreement under Article 1 of this Annex

and the Tribunal is satisfied that the objection is genuine, the objection shall be

referred by the Tribunal to the Board or the Council or the designated body, as the

case may be, and the arbitration proceedings shall be stayed until a decision has been

reached on the matter, which shall be binding upon the Tribunal.

(g) The Tribunal shall, in any dispute within the scope of this Annex, apply the

provisions of this Convention, any relevant agreement between the parties to the

dispute, the Agency’s by-laws and regulations, the applicable rules of international

law, the domestic law of the member concerned as well as the applicable provisions

of the investment contract, if any. Without prejudice to the provisions of this

Convention, the Tribunal may decide a dispute ex aequo et bono if the Agency and

the member concerned so agree. The Tribunal may not bring a finding of non liquet

on the ground of silence or obscurity of the law.

(h) The Tribunal shall afford a fair hearing to all the parties. All decisions of the

Tribunal shall be taken by a majority vote and shall state the reasons on which they

are based. The award of the Tribunal shall be in writing, and shall be signed by at

least two arbitrators and a copy thereof shall be transmitted to each party. The award

shall be final and binding upon the parties and shall not be subject to appeal,

annulment or revision.

(i)

If any dispute shall arise between the parties as to the meaning or scope of

an award, either party may, within sixty days after the award was rendered, request

interpretation of the award by an application in writing to the President of the

Tribunal which rendered the award. The President shall, if possible, submit the

request to the Tribunal which rendered the award and shall convene such Tribunal

within sixty days after receipt of the application. If this shall not be possible, a new

Tribunal shall be constituted in accordance with the provisions of Sections (a) to (d)

above. The Tribunal may stay enforcement of the award pending its decision on the

requested interpretation.

(j)

Each member shall recognize an award rendered pursuant to this Article as

binding and enforceable within its territories as if it were a final judgment of a court

in that member. Execution of the award shall be governed by the laws concerning the

execution of judgments in force in the State in whose territories such execution is

sought and shall not derogate from the law in force relating to immunity from

execution.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

(k) Unless the parties shall agree otherwise, the fees and remuneration payable

to the arbitrators shall be determined on the basis of the rates applicable to ICSID

arbitration. Each party shall defray its own costs associated with the arbitration

proceedings. The costs of the Tribunal shall be borne by the parties in equal

proportion unless the Tribunal decides otherwise. Any question concerning the

division of the costs of the Tribunal or the procedure for payment of such costs shall

be decided by the Tribunal.

Article 5. Service of Process

Service of any notice or process in connection with any proceeding under this

Annex shall be made in writing. It shall be made by the Agency upon the authority

designated by the member concerned pursuant to Article 38 of this Convention and

by that member at the principal office of the Agency.

In this Act, unless the context otherwise requires -

"Agency" means the Multilateral Investment Guarantee Agency;

"Convention" means the Convention providing for the

establishment and operation of the Agency as approved by the

Board of Governors of the International Bank for Reconstruction

and Development on the 11th October, 1985, and signed by Malta

in Washington D.C. on the 16th September, 1986, as set out in the

Schedule to this Act, and for the purposes of sections 4 and 6 of

this Act, as from time to time amended;

"Minister" means the Minister responsible for finance.

MEMBERSHIP AND SUBSCRIPTIONS

CATEGORY ONE

Country

Number of Shares

Subscription

(millions of SDR)

Australia

1,713

In virtue of this Act, and in compliance with the provisions

of the Ratification of Treaties Act, the Government of Malta is

hereby authorised to accede to the Convention.

ELECTION OF DIRECTORS

1. Candidates for the office of Director shall be nominated by the Governors,

provided that a Governor may nominate only one person.

2. The election of Directors shall be by ballot of the Governors.

3. In balloting for the Directors, every Governor shall cast for one candidate all

the votes which the member represented by him is entitled to cast under Section (a)

of Article 40.

4. One-fourth of the number of Directors shall be elected separately, one by each

of the Governors of members having the largest number of shares. If the total

number of Directors is not divisible by four, the number of Directors so elected shall

be one-fourth of the next lower number that is divisible by four.

5. The remaining Directors shall be elected by the other Governors in accordance

with the provisions of paragraphs 6 to 11 of this Schedule.

6. If the number of candidates nominated equals the number of such remaining

Directors to be elected, all the candidates shall be elected in the first ballot; except

that a candidate or candidates having received less than the minimum percentage of

total votes determined by the Council for such election shall not be elected if any

candidate shall have received more than the maximum percentage of total votes

determined by the Council.

7. If the number of candidates nominated exceeds the number of such remaining

Directors to be elected, the candidates receiving the largest number of votes shall be

elected with the exception of any candidate who has received less than the minimum

percentage of the total votes determined by the Council.

8. If all of such remaining Directors are not elected in the first ballot, a second

ballot shall be held. The candidate or candidates not elected in the first ballot shall

again be eligible for election.

9. In the second ballot, voting shall be limited to (i) those Governors having voted

in the first ballot for a candidate not elected and (ii) those Governors having voted in

the first ballot for an elected candidate who had already received the maximum

percentage of total votes determined by the Council before taking their votes into

account.

10. In determining when an elected candidate has received more than the

maximum percentage of the votes, the votes of the Governor casting the largest

number of votes for such candidate shall be counted first, then the votes of the

Governor casting the next largest number, and so on until such percentage is

reached.

11. If not all the remaining Directors have been elected after the second ballot,

further ballots shall be held on the same principles until all the remaining Directors

are elected, provided that when only one Director remains to be elected, this Director

may be elected by a simple majority of the remaining votes and shall be deemed to

have been elected by all such votes.

(1) There shall be paid out of the Consolidated Fund, on

the warrant of the Minister, all sums required for the purpose of

making all payments required to be made from time to time under

the provisions of the Convention.

(2) The Minister may, if he thinks fit, create and issue, or direct

the Central Bank of Malta (as the depository for the Government of

Malta for the purposes of Article 37 of the Convention) to create

and issue, to the Agency non-interest bearing and non-negotiable

notes or other obligations as are provided for by Article 7(i) of the

Convention, and the sums payable under such notes or obligations

so created and issued shall be a charge on the Consolidated Fund

Provided that where the Minister has directed the Central

Bank of Malta to create and issue notes or other obligations as

aforesaid, the Minister shall also undertake to repay to the Central

Bank of Malta such amount or amounts of notes or other

obligations as may be called for payment by the Agency, such

repayments to be made as soon as possible and in no case later than

a month after the date of payment to the Agency; and in respect of

any such payment all repayments due as aforesaid shall be a charge

on the Consolidated Fund and the sums required for such

repayments are hereby appropriated for that purpose.

*See Government Notice No. 577 of 10th October, 1989.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

(3) Any sums received by the Government of Malta, or by the

C e n t r a l B a n k o f M a l t a , f r o m t h e Ag e n c y o n a c c o u n t o f i t s

subscription to the capital stock thereof shall be paid into the

Consolidated Fund.

The provisions of Article 1 (b) and Articles 44 to 48

inclusive of the Convention shall have the force of law in Malta, so

however, that nothing in Article 47 of the Convention shall be

construed

(i) as entitling the Agency to import goods free of

customs duty without any restriction on their

subsequent sale in Malta;

(ii) as conferring on the Agency any exemption from taxes

and duties which form part of the prices of goods

acquired by the Agency in Malta; or

(iii) as conferring on the Agency any exemption from taxes

or duties which are in fact no more than charges for

services rendered.

The Minister may by order make such provisions as are

necessary for carrying into effect any of the provisions of the

Convention.

The Schedule to this Act shall be in the English language

only, and such text shall apply also to the Maltese text of the Act.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

13

Austria

7.75

Belgium

2,030

20. 30 Canada 2,965

65

Denmark

7.18

Finland

6.00

France

4,860

60

Germany, Federal Republic of

5,071

71

Iceland

0.90

Ireland

3.69

Italy

2,820

28.20

Japan

5,095

50.95

Luxembourg

1.16

Netherlands

2,169

21.69

New Zealand

5.13

Norway

6.99

South Africa

9.43

Sweden

1,049

10.49

Switzerland

1,500

15.00

United Kingdom

4,860

48.60

United States

20,519

205.19

59,473

594.73

MULTILATERAL INVESTMENT GUARANTEE AGENCY

CATEGORY TWO *

Country

Number of Shares

Subscription

(millions of SDR)

Afghanistan

1.18

Algeria

6.49

Antigua and Barbuda

0.50

Argentina

1,254

12.54

Bahamas

1.00

Bahrain

0.77

Bangladesh

3.40

Barbados

0.68

Belize

0.50

Benin

0.61

Bhutan

0.50

Bolivia

1.25

Botswana

0.50

Brazil

1,479

14.79

Burkina Faso

0.61

Burma

1.78

Burundi

0.74

Cameroon

1.07

Cape Verde

0.50

Central African Republic

0.60

Chad

0.60

Chile

4.85

China

3,138

31.38

Colombia

4.37

Comoros

0.50

Congo, People’s Rep. of the

0.65

Costa Rica

1.17

Cyprus

1.04

Djibouti

0.50

Dominica

0.50

Dominican Republic

1.47

Ecuador

1.82

Egypt, Arab Republic of

4.59

E1 Salvador

1.22

Equatorial Guinea

0.50

Ethiopia

0.70

Fiji

7l

0.71

Gabon

0.96

Gambia, The

0.50

Ghana

2.45

Greece

2.80

Grenada

0.50

Guatemala

1.40

Guinea

0.91

Guinea-Bissau

0.50

*Countries listed under Category Two are developing member countries for the purposes of this Convention.

MULTILATERAL INVESTMENT GUARANTEE AGENCY

Country

Number of Shares

Subscription

(millions of SDR)

Guyana

0.84

Haiti

0.75

Honduras

1.01

Hungary

5.64

India

3,048

30.48

Indonesia

1,049

10.49

Iran, Islamic Republic of

1,659

16.59

Iraq

3.50

Israel

4.74

Ivory Coast

1.76

Jamaica

1.81

Jordan

0.97

Kampuchea, Democratic

0.93

Kenya

1.72

Korea, Republic of

4.49

Kuwait

9.30

Lao People’s Dem. Rep.

0.60

Lebanon

1.42

Lesotho

0.50

Liberia

0.84

Libyan Arab Jamahiriya

5.49

Madagascar

1.00

Malawi

0.77

Malaysia

5.79

Maldives

0.50

Mali

0.81

Malta

0.75

Mauritania

0.63

Mauritius

0.87

Mexico

1,192

11.92

Morocco

3.48

Mozambique

0.97

Nepal

0.69

Nicaragua

1.02

Niger

0.62

Nigeria

8.44

Oman

0.94

Pakistan

6.60

Panama

1.31

Papua New Guinea

0.96

Paraguay

0.80

Peru

3.73

Philippines

4.84

Portugal

3.82

Qatar

1.37

Romania

5.55

Rwanda

0.75

St. Christopher and Nevis

0.50

St. Lucia

0.50

MULTILATERAL INVESTMENT GUARANTEE AGENCY

Country

Number of Shares

Subscription

(millions of SDR)

St. Vincent

0.50

Sao Tome and Principe

0.50

Saudi Arabia

3,137

31.37

Senegal

1.45

Seychelles

0.50

Sierra Leone

0.75

Singapore

1.54

Solomon Islands

0.50

Somalia

0.78

Spain

1,285

12.85

Sri Lanka

2.71

Sudan

2.06

Suriname

0.82

Syrian Arab Republic

1.68

Swaziland

0.58

Tanzania

1.41

Thailand

4.21

Togo

0.77

Trinidad and Tobago

2.03

Tunisia

1.56

Turkey

4.62

United Arab Emirates

3.72

Uganda

1.32

Uruguay

2.02

Vanuatu

0.50

Venezuela

1,427

14.27

Viet Nam

2.20

Western Samoa

0.50

Yemen Arab Republic

0.67

Yemen, People’s Dem.Rep. of

1.15

Yugoslavia

6.35

Zaire

3.38

Zambia

3.18

Zimbabwe

2.36

40,527

405.27

Total

100,000

1,000.00

MULTILATERAL INVESTMENT GUARANTEE AGENCY