AGREEMENT ON INVESTMENT

AMONG

THE GOVERNMENTS OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

OF THE PEOPLE’S REPUBLIC OF CHINA

AND

THE MEMBER STATES OF

THE ASSOCIATION OF SOUTHEAST ASIAN

NATIONS
 PREAMBLE

The Governments of the Member States of the

Association of Southeast Asian Nations (“ASEAN”),
namely Brunei Darussalam, the Kingdom of Cambodia
(“Cambodia”), the Republic of Indonesia (“Indonesia”),
the Lao People’s Democratic Republic (“Lao PDR”),
Malaysia, the Republic of the Union of Myanmar
(“Myanmar”), the Republic of the Philippines
(“Philippines”), the Republic of Singapore
(“Singapore”), the Kingdom of Thailand (“Thailand”),
and the Socialist Republic of Viet Nam (“Viet Nam”)
(hereinafter referred to collectively as the “ASEAN
Member States” and individually as an “ASEAN
Member State”), and the Government of the Hong
Kong Special Administrative Region of the People’s
Republic of China (“the Hong Kong Special
Administrative Region”), the latter having been duly
authorised to conclude this Agreement by the Central
People’s Government of the People’s Republic of
China;

RECOGNISING the importance of enhancing

investment flows among the Parties;

RECOGNISING that the creation of a business-friendly

environment will be conducive to the stimulation of
business initiative for greater investment among the
Parties; and

REAFFIRMING that this Agreement is part of a wider

process of economic integration and trade
liberalisation among the Parties, initiated by the
ASEAN - Hong Kong, China Free Trade Agreement;

HAVE AGREED AS FOLLOWS:

 Article 1

Definitions

For the purposes of this Agreement:

(a) Area in respect of:

(i) each ASEAN Member State means

its territory; and

(ii) the Hong Kong Special

Administrative Region means the
Hong Kong Special Administrative
Region as delineated by the Order of
State Council of the People’s
Republic of China No. 221 dated 1
July 1997, which includes Hong Kong
Island, Kowloon and the New
Territories;

(b) covered investment means, with respect

to a Party, an investment in its Area of an
investor of any other Party, in existence as
of the date of entry into force of this
Agreement or established, acquired or
expanded thereafter, and has been
admitted, according to its laws, regulations
and policies, and where applicable,
specifically approved in writing by its
competent authority;

(c) freely usable currency means a freely

usable currency as determined by the
International Monetary Fund (“IMF”) under
its Articles of Agreement and any
amendments thereto;

2
 (d) GATS means the General Agreement on
Trade in Services in Annex 1B to the WTO
Agreement;

(e) investment 1 means every kind of asset

that an investor owns or controls, and that
has the characteristics of an investment,
such as the commitment of capital or other
resources, the expectation of gains or
profits or the assumption of risk, including
but not limited to:

(i) movable and immovable property

and other property rights such as
mortgages, liens or pledges;

(ii) shares, stocks, bonds and

debentures and any other forms of
participation in a juridical person and
rights derived therefrom;

(iii) intellectual property rights which are

recognised pursuant to the laws and
regulations of a host Party;

(iv) claims to money or to any contractual

performance having financial value2;

(v) business concessions required for

conducting economic activities and
having financial value conferred by

1
For greater certainty, the term “investment” does not include an order or judgment
entered in a judicial or administrative action or an arbitral award made in an arbitral
proceeding.
2
For greater certainty, investment does not mean claims to money that arise solely
from:
(i) commercial contracts for sale of goods or services; or
(ii) the extension of credit in connection with such commercial contracts.

3
 law or under a contract, including any
concession to search for, cultivate,
extract or exploit natural resources;

For the purpose of the definition of

“investment”, returns that are invested shall
be treated as investments and any
alteration of the form in which assets are
invested or reinvested shall not affect their
character as investments;

(f) investor of a Party means a natural

person of a Party or a juridical person of a
Party that has made an investment in the
Area of another Party;

(g) juridical person means any legal entity

duly constituted or otherwise organised
under the applicable law of a Party,
whether for profit or otherwise, and
whether privately-owned or
governmentally-owned, including any
corporation, trust, partnership, joint
venture, sole proprietorship, association or
similar organisation;

(h) measures mean any measure by a Party,

whether in the form of a law, regulation,
rule, procedure, decision, administrative
action, or in any other form affecting
investors or investments, and include
measures taken by:

(i) in the case of ASEAN Member States,

(1) central, regional, or local

governments or authorities; and

4
 (2) non-governmental bodies in
the exercise of powers delegated by
central, regional, or local
governments or authorities; and

(ii) in the case of the Hong Kong Special

Administrative Region,

(1) the Government of the Hong

Kong Special Administrative Region;
and

(2) non-governmental bodies in

the exercise of powers delegated by
the Government of the Hong Kong
Special Administrative Region;

(i) natural person of a Party shall have the

meaning as agreed by the Parties under
Article 22 (Work Programme);

(j) newer ASEAN Member States means

Cambodia, Lao PDR, Myanmar and Viet
Nam;

(k) Parties means the ASEAN Member States

and the Hong Kong Special Administrative
Region collectively;

(l) Party means an ASEAN Member State or

the Hong Kong Special Administrative
Region;

(m) returns mean amounts yielded by or

derived from an investment including, but
not limited to, any profits, interests, capital
gains, dividends, royalties or fees;

5
 (n) TRIPS Agreement means the Agreement
on Trade-Related Aspects of Intellectual
Property Rights in Annex 1C to the WTO
Agreement, as revised or amended from
time to time by a revision or amendment
that applies to the Parties and including any
waiver in force among the Parties of any
provision thereof granted by Members of
the World Trade Organization in
accordance with the WTO Agreement; and

(o) WTO Agreement means the Marrakesh

Agreement Establishing the World Trade
Organization, done on 15 April 1994.

Article 2

Scope

1. This Agreement shall apply to measures adopted

or maintained by a Party relating to:

(a) investors of any other Party; and

(b) covered investments.

2. This Agreement shall not apply to:

(a) government procurement;

(b) subsidies or grants provided by a Party;

(c) taxation measures except under Article 12

(Transfers);

(d) claims arising out of events which occurred,

or claims which had been raised, prior to
the entry into force of this Agreement;

6
 (e) services supplied in the exercise of
governmental authority by the relevant
body or authority of a Party. For the
purposes of this Agreement, a service
supplied in the exercise of governmental
authority means any service which is
supplied neither on a commercial basis nor
in competition with one or more service
suppliers; and

(f) measures adopted or maintained by a

Party to the extent that they are covered by
Chapter 8 (Trade in Services) of the
ASEAN - Hong Kong, China Free Trade
Agreement.

3. Notwithstanding subparagraph 2 (f), Article 5

(Treatment of Investment), Article 10 (Expropriation
and Compensation), Article 11 (Compensation for
Losses or Damages), Article 12 (Transfers), Article 14
(Subrogation) and Article 20 (Settlement of Investment
Disputes between a Party and an Investor) shall apply,
mutatis mutandis, to any measure affecting the supply
of a service by a service supplier of a Party through
commercial presence in the Area of any other Party but
only to the extent that any such measure relates to a
covered investment and an obligation under this
Agreement regardless of whether or not such service
sector is scheduled in the latter Party’s Schedule of
Commitments under Chapter 8 (Trade in Services) of
the ASEAN - Hong Kong, China Free Trade Agreement.

Article 3

National Treatment3

Each Party shall accord to investors of any other Party,

3
For greater certainty, the titles of Article 3 (National Treatment) and Article 4
(Most-Favoured-Nation Treatment), and references to the same in this Agreement,
have no implication on the status of the Hong Kong Special Administrative Region as
a part of the People’s Republic of China.

7
and to covered investments of investors of any other
Party, treatment no less favourable than that it accords,
in like circumstances, to its own investors and to
investments of its own investors with respect to the
management, conduct, operation, use, and sale or
other disposition of investments in its Area.

Article 4

Most-Favoured-Nation Treatment

1. Each Party shall accord to investors of another

Party treatment no less favourable than that it accords,
in like circumstances, to investors of any other Party or
a non-Party with respect to the management, conduct,
operation, use, and sale or other disposition of
investments in its Area.

2. Each Party shall accord to covered investments

treatment no less favourable than that it accords, in like
circumstances, to investments in its Area of investors
of any other Party or a non-Party with respect to the
management, conduct, operation, use, and sale or
other disposition of investments in its Area.

3. The treatment, as set forth in paragraphs 1 and

2, shall not include:

(a) any preferential treatment accorded to

investors or their investments under any
existing bilateral, regional or international
agreements or arrangements or any forms
of economic or regional cooperation with
any non-Party; and

(b) any existing or future preferential treatment

accorded to investors or their investments

8
 under any agreement or arrangement
between or among ASEAN Member
States, or between or among the Hong
Kong Special Administrative Region and
other customs territories of the People’s
Republic of China.

4. Notwithstanding paragraphs 1 and 2, if a Party

accords more favourable treatment to investors of
another Party or a non-Party or their investments by
virtue of any future agreement or arrangement to which
the Party is a party, it shall not be obliged to accord
such treatment to investors of any other Party or their
investments. However, upon request from any other
Party, it shall accord adequate opportunity to negotiate
the benefits granted therein.

5. For greater certainty, the obligation in this Article

does not encompass a requirement for a Party to
extend to investors of another Party dispute resolution
procedures other than those set out in this Agreement.

Article 5

Treatment of Investment

1. Each Party shall accord to covered investments

fair and equitable treatment and full protection and
security.

(a) “fair and equitable treatment” requires each

Party not to deny justice in any legal or
administrative proceedings in accordance
with the principle of due process of law;

(b) “full protection and security” requires each

Party to take such measures as may be
reasonably necessary to ensure the
physical protection and security of the
covered investment; and

9
 (c) the concepts of “fair and equitable
treatment” and “full protection and security”
do not require treatment in addition to or
beyond that which is required under
customary international law, and do not
create additional substantive rights.

3. A determination that there has been a breach of

another provision of this Agreement, or of a separate
international agreement, does not establish that there
has been a breach of this Article.

Article 6

Non-Conforming Measures4

1. Article 3 (National Treatment) and Article 4

(Most-Favoured-Nation Treatment) shall not apply to:

(a) any existing non-conforming measure

maintained by a Party:
(i) in the case of an ASEAN Member
State, at the central or regional levels
of government, as set out by that
Party in its Schedule to List 1 under
Annex 1 (Schedules of
Reservations), or at the local level of
government; and

(ii) in the case of the Hong Kong Special

Administrative Region, as set out in
its Schedule to List 1 under Annex 1
(Schedules of Reservations);
(b) the continuation or prompt renewal of any
non-conforming measure referred to in
subparagraph 1 (a); or
4
This Article is subject to Article 22 (Work Programme).

10
 (c) an amendment to any non-conforming
measure referred to in subparagraph 1 (a)
to the extent that the amendment does not
decrease the conformity of the measure, as
it existed as of the date of entry into force
of that Party's Schedule to List 1 under
Annex 1 (Schedules of Reservations), with
Article 3 (National Treatment) and Article 4
(Most-Favoured-Nation Treatment).

2. Article 3 (National Treatment) and Article 4

(Most-Favoured-Nation Treatment) shall not apply to
any measure that a Party adopts or maintains with
respect to sectors, subsectors or activities as set out in
its Schedule to List 2 under Annex 1 (Schedules of
Reservations).

3. Procedures for the modification of the Schedules

are to be agreed pursuant to Article 22 (Work
Programme).

4. Article 3 (National Treatment) and Article 4

(Most-Favoured-Nation Treatment) shall not apply to
any measure that falls within Article 5 of the TRIPS
Agreement, and any measure that is covered by an
exception to, or derogation from, the obligations under
Article 3 or Article 4 of the TRIPS Agreement.

Article 7

Transparency

1. Each Party shall make publicly available or

provide upon request of another Party, its laws,
regulations, procedures and administrative guidelines
of general application as well as any of its international
investment agreements in force which may affect the
covered investments of investors of any Party.

11
2. Nothing in this Agreement shall require a Party to
furnish or allow access to any confidential or
proprietary information, including information
concerning particular investors or covered
investments, the disclosure of which would impede law
enforcement, or be contrary to public interest or to its
laws protecting confidentiality, or prejudice legitimate
commercial interests of particular investors, public or
private.

Article 8

Security Exceptions

1. Nothing in this Agreement shall be construed to:

(a) require a Party to furnish or allow access to

any information, the disclosure of which it
considers contrary to its essential security
interests;

(b) prevent a Party from taking any actions

which it considers necessary for the
protection of its essential security interests:

(i) relating to the traffic in arms,

ammunition and implements of war
and to such traffic in other goods and
materials or relating to the supply of
services as carried on, directly or
indirectly, for the purpose of
supplying or provisioning any military
establishments;

(ii) taken in time of war or other

emergency in domestic or
international relations;

(iii) relating to fissionable and fusionable

12
 materials or the materials from which
they are derived;

(iv) taken to protect critical public

infrastructures, including
communication, power and water
infrastructures, from deliberate
attempts intended to disable or
degrade such infrastructures; or

(c) prevent a Party from taking any action in

pursuance of the obligations that apply to it
under the United Nations Charter for the
maintenance of international peace and
security.

2. The ASEAN - Hong Kong, China Free Trade Area

Joint Committee (“AHKFTA Joint Committee”)
established pursuant to Article 1 (AHKFTA Joint
Committee) of Chapter 12 (Institutional Provisions) of
the ASEAN - Hong Kong, China Free Trade Agreement
shall be informed to the fullest extent possible of
measures taken under subparagraphs 1 (b) and 1 (c)
and of their termination.

Article 9

General Exceptions

1. Subject to the requirement that such measures

are not applied in a manner which would constitute a
means of arbitrary or unjustifiable discrimination
between the Parties or their investors where like
conditions prevail, or a disguised restriction on
investors of another Party or their investments, nothing
in this Agreement shall be construed to prevent the
adoption or enforcement by any Party of measures:

(a) necessary to protect public morals or to

13
 maintain public order5;

(b) necessary to protect human, animal or

plant life or health;

(c) necessary to secure compliance with laws

or regulations which are not inconsistent
with the provisions of this Agreement
including those relating to:

(i) the prevention of deceptive and

fraudulent practices or to deal with
the effects of a default on contracts;

(ii) the protection of the privacy of

individuals in relation to the
processing and dissemination of
personal data and the protection of
confidentiality of individual records
and accounts; or

(iii) safety;

(d) inconsistent with Article 3 (National

Treatment), provided that the difference in
treatment is aimed at ensuring the
equitable or effective imposition or
collection of direct taxes in respect of
investors of any other Party or their
investments6;

(e) imposed for the protection of national

treasures of artistic, historic or
archaeological value; or
5
The public order exception may be invoked by a Party only where a genuine and
sufficiently serious threat is posed to one of the fundamental interests of society.
6
For the purpose of this subparagraph, footnote 6 of Article XIV of GATS is
incorporated into and shall form part of this Agreement, mutatis mutandis.

14
 (f) relating to the conservation of exhaustible
natural resources if such measures are
made effective in conjunction with
restrictions on domestic production or
consumption.

2. Insofar as measures affecting the supply of

financial services are concerned, paragraph 2
(Domestic Regulation) of the Annex on Financial
Services of GATS is incorporated into and shall form
part of this Agreement, mutatis mutandis.

Article 10

Expropriation and Compensation7

1. A Party shall not expropriate covered

investments of an investor of any other Party, either
directly or through measures equivalent to
expropriation (“expropriation”), except:

(a) for a public purpose;

(b) in accordance with due process of law;

(c) on a non-discriminatory basis; and

(d) upon payment of compensation in

accordance with the requirements of this
Article.

2. For the purpose of subparagraph 1 (d),

compensation shall:

(a) be equivalent to the fair market value (if the

expropriating Party is an ASEAN Member

7
This Article is subject to Annex 2 (Expropriation and Compensation).

15
 State) or real value (if the expropriating
Party is the Hong Kong Special
Administrative Region) of the expropriated
investment at the time when the
expropriation was publicly announced8, or
when the expropriation occurred,
whichever is applicable;

(b) not reflect any change in value occurring

because the intended expropriation had
become known earlier;

(c) be settled and paid without undue delay9;

and

(d) be effectively realisable and freely

transferable between the Areas of the
Parties.

3. In the event of delay, the compensation referred

to in subparagraph 1 (d) shall include appropriate
interest10 at the prevailing commercial rate. The
compensation, including any accrued interest, shall be
payable either in the currency of the expropriating Party,
or if requested by the investor, in a freely usable
currency.

4. Notwithstanding paragraphs 1, 2, and 3, any

8
ln the case of the Philippines, the time when or immediately before the
expropriation was publicly announced refers to the date of filing of the Petition for
Expropriation.

9
The Parties understand that there may be legal and administrative processes that
need to be observed before payment can be made.

10
For Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines,
Thailand and Viet Nam, in the event of delay, the rate and procedure for
payment of interest of compensation for expropriation of covered
investments of investors of another Party shall be determined in
accordance with their laws, regulations and policies provided that such
laws, regulations and policies are applied on a non-discriminatory basis.

16
measure of expropriation relating to land shall be as
defined in the existing laws and regulations of the
expropriating Party on the date of entry into force of this
Agreement, and shall be, for the purposes of and upon
payment of compensation, in accordance with the
aforesaid laws and regulations. Such compensation
shall be subject to any subsequent amendments to the
aforesaid laws and regulations relating to the amount
of compensation where such amendments follow the
general trends in the market value of the land.

5. For greater certainty, this Article does not apply

to the issuance of compulsory licences granted in
relation to intellectual property rights, or to the
revocation, limitation, or creation of intellectual
property rights, to the extent that such issuance,
revocation, limitation, or creation is consistent with
TRIPS Agreement11.

Article 11

Compensation for Losses or Damages

Each Party shall accord to investors of another Party

that have suffered loss or damage relating to their
covered investments in the Area of the former Party
owing to war, armed conflict, a state of emergency,
revolution, insurrection, civil strife or any other similar
event in that former Party, treatment, as regards
restitution, indemnification, compensation or any other
settlement, that is no less favourable than that which it
accords, in like circumstances, to its own investors or
to investors of a non-Party.

11
The Parties recognise that, for the purposes of this Article, the term “revocation”
of intellectual property rights includes the cancellation or nullification of such
rights, and the term “limitation” of intellectual property rights includes exceptions
to such rights.

17
 Article 12

Transfers

1. Each Party shall allow all transfers relating to a

covered investment to be made freely and without
delay into and out of its Area. Such transfers include:

(a) contributions to capital, including the initial

contribution;

(b) profits, capital gains, dividends, royalties,

licence fees, technical assistance and
technical and management fees, interest
and other current income accruing from any
covered investment;

(c) proceeds from the total or partial sale or

liquidation of any covered investment;

(d) payments made under a contract, including

a loan agreement;

(e) payments made pursuant to Article 10

(Expropriation and Compensation) and
Article 11 (Compensation for Losses or
Damages);

(f) payments arising out of the settlement of a

dispute by any means including
adjudication, arbitration or the agreement
of the parties to the dispute; and

(g) earnings and other remuneration of

personnel engaged from abroad in
connection with that covered investment.

2. Each Party shall allow such transfers relating to

a covered investment to be made in a freely usable

18
currency at the market rate of exchange prevailing at
the time of transfer.

3. Notwithstanding paragraphs 1 and 2, a Party

may prevent or delay a transfer through the equitable,
non-discriminatory, and good faith application of its
laws and regulations relating to any of the following:

(a) bankruptcy, insolvency, or the protection of

the rights of creditors;

(b) issuing, trading, or dealing in securities,

futures, options, or derivatives;

(c) criminal or penal offences and the recovery

of the proceeds of crime;

(d) financial reporting or record keeping of

transfers when necessary to assist law
enforcement or financial regulatory
authorities;

(e) ensuring compliance with orders or

judgments in judicial or administrative
proceedings;

(f) taxation;

(g) social security, public retirement, or

compulsory savings schemes;

(h) severance entitlements of employees; and

(i) requirement to register and satisfy other

transfer formalities imposed by the Central
Bank or other relevant authorities of a Party.

4. Nothing in this Agreement shall affect the rights

and obligations that apply to the Parties under the

19
Articles of Agreement of the IMF, including the use of
exchange actions which are in conformity with the
Articles of Agreement of the IMF, provided that a Party
shall not impose restrictions on any capital transactions
inconsistently with its specific commitments regarding
such transactions, except under Article 13 (Temporary
Safeguard Measures) or at the request of the IMF.

Article 13

Temporary Safeguard Measures

1. A Party may adopt or maintain measures not

conforming with its obligations under Article 3 (National
Treatment) relating to cross-border capital transactions
and Article 12 (Transfers):

(a) in the event of serious balance of payments

and external financial difficulties or threat
thereof; or

(b) in cases where, in exceptional

circumstances, movements of capital
cause or threaten to cause serious
difficulties for macroeconomic
management, in particular monetary and
exchange rate policies.

2. The measures referred to in paragraph 1 shall:

(a) be consistent with the Articles of

Agreement of the IMF;

(b) avoid unnecessary damage to the

commercial, economic and financial
interests of another Party;

(c) not exceed those necessary to deal with

the circumstances described in

20
 paragraph 1;

(d) be temporary and phased out progressively

as the situation specified in paragraph 1
improves; and

(e) be applied such that any one of the other

Parties is treated no less favourably than
any other Party or non-Party.

3. Any measures adopted or maintained under

paragraph 1 or any changes therein shall be promptly
notified to the other Parties.

Article 14

Subrogation

1. If a Party or an agency of a Party makes a

payment to an investor of that Party under a guarantee,
a contract of insurance or other form of indemnity it has
granted on non-commercial risks in respect of a
covered investment, the host Party shall recognise the
subrogation or transfer of any right or claim in respect
of such investment. The subrogated or transferred
right or claim shall not be greater than the original right
or claim of the investor.

2. Where a Party or an agency of a Party has made

a payment to an investor of that Party and has taken
over rights and claims of the investor, that investor shall
not, unless authorised to act on behalf of the Party or
the agency making the payment, pursue those rights
and claims against the host Party.

3. In the exercise of subrogated rights or claims, a

Party or the agency of the Party exercising such rights
or claims shall disclose the coverage of the claims

21
arrangement with its investors to the host Party.

Article 15

Promotion of Investment

The Parties shall cooperate in promoting and

increasing awareness of the region as an investment
area through, among others:

(a) increasing investments between the

Parties;

(b) organising investment promotion activities;

(c) promoting business matching events;

(d) organising and supporting the organisation

of various briefings and seminars on
investment opportunities and on
investment laws, regulations and policies;
and

(e) conducting information exchanges on other

issues of mutual concern relating to
investment promotion and facilitation.

Article 16

Facilitation of Investment

Subject to their laws and regulations, the Parties shall

cooperate to facilitate investments among the Parties
through, among others:

(a) creating the necessary environment for all

forms of investment;

(b) simplifying procedures for investment

22
 applications and approvals;

(c) promoting dissemination of investment

information, including investment rules,
regulations, policies and procedures; and

(d) establishing one-stop investment centres in

the respective host Parties to provide
assistance and advisory services to the
business sectors including facilitation of
operating licences and permits.

Article 17

Special Formalities and Disclosure of Information

1. Nothing in Article 3 (National Treatment) or

Article 4 (Most-Favoured-Nation Treatment) shall be
construed to prevent a Party from adopting or
maintaining a measure that prescribes special
formalities in connection with covered investments,
including a requirement that covered investments be
legally constituted under the laws or regulations of the
Party, provided that such formalities do not materially
impair the protections afforded by a Party to investors
of another Party and covered investments pursuant to
this Agreement.

2. Notwithstanding Article 3 (National Treatment) or

Article 4 (Most-Favoured-Nation Treatment), a Party
may require an investor of another Party, or a covered
investment, to provide information concerning that
investment solely for informational or statistical
purposes. The Party shall protect to the extent
possible any confidential information which has been
provided from any disclosure that would prejudice
legitimate commercial interests of the investor or the
covered investment. Nothing in this paragraph shall be
construed to prevent a Party from otherwise obtaining

23
or disclosing information in connection with the
equitable and good faith application of its law.

Article 18

Special and Differential Treatment for the Newer

ASEAN Member States

In order to increase the benefits of this Agreement for

the newer ASEAN Member States, and in accordance
with the objectives set out in the Preamble, the Parties
recognise the importance of according special and
differential treatment to the newer ASEAN Member
States under this Agreement, through:

(a) technical assistance to strengthen their

capacity in relation to investment policies
and promotion, including in areas such as
human resource development;

(b) access to information on the investment

policies of other Parties, business
information, relevant databases and
contact points for investment promotion
agencies;

(c) commitments in areas of interest to the

newer ASEAN Member States; and

(d) recognising that commitments by each

newer ASEAN Member State may be made
in accordance with its stage of
development.

24
 Article 19

Denial of Benefits

1. A Party may deny the benefits of this Agreement

to:

(a) an investor of another Party that is a

juridical person of such other Party and to
investments of that investor if an investor of
a non-Party owns or controls the juridical
person and the juridical person has no
substantive business operations in the
Area of such other Party;

(b) an investor of another Party that is a

juridical person of such other Party and to
investments of that investor if an investor of
the denying Party owns or controls the
juridical person and the juridical person has
no substantive business operations in the
Area of any Party, other than the denying
Party; or

(c) an investor of another Party that is a

juridical person of such other Party and to
investments of that investor if persons of a
non-Party own or control the juridical
person and the denying Party adopts or
maintains measures with respect to the
non-Party or a person of the non-Party that
prohibit transactions with the juridical
person or that would be violated or
circumvented if the benefits of this
Agreement were accorded to the juridical
person or to its investments.

2. Notwithstanding paragraph 1 and subject to prior

notification to the relevant Party, Thailand may, under

25
its applicable laws and regulations, deny the benefits
of this Agreement relating to the admission,
establishment, acquisition and expansion of
investments to an investor of another Party that is a
juridical person of such Party and to investments of
such an investor where Thailand establishes that the
juridical person is owned or controlled by natural
persons or juridical persons of a non-Party or the
denying Party.

3. In the case of Thailand, a juridical person is:

(a) “owned” by natural persons or juridical

persons of a Party or a non-Party if more
than 50 percent of the equity interest in it is
beneficially owned by such persons;

(b) “controlled” by natural persons or juridical

persons of a Party or non-Party if such
persons have the power to name a majority
of its directors or otherwise to legally direct
its actions.

4. Without prejudice to paragraph 1, the Philippines

may deny the benefits of this Agreement to investors of
another Party and to investments of that investor,
where the Philippines establishes that such investor
has made an investment in breach of the provisions of
Commonwealth Act No. 108, entitled “An Act to Punish
Acts of Evasion of Laws on the Nationalization of
Certain Rights, Franchises or Privileges”, as amended
by Presidential Decree No. 715, otherwise known as
“The Anti-Dummy Law”, as may be amended.

5. A Party's right to deny the benefits of this

Agreement as provided for in this Article may be
exercised at any time, including after the institution of
arbitration proceedings in accordance with Article 20
(Settlement of Investment Disputes between a Party

26
and an Investor).

Article 20

Settlement of Investment Disputes between a

Party and an Investor

This Article shall be agreed by the Parties under Article

22 (Work Programme).

Article 21

Consultations and Dispute Settlement

between the Parties

Chapter 13 (Consultations and Dispute Settlement) of

the ASEAN - Hong Kong, China Free Trade Agreement
shall apply mutatis mutandis to this Agreement.

Article 22

Work Programme

1. The Parties shall enter into discussions on:

(a) Annex 1 (Schedules of Reservations);

(b) procedures for the modification of Annex 1

(Schedules of Reservations);

(c) the application of Article 10 (Expropriation

and Compensation) to taxation measures
that constitute expropriation;

(d) the definition of “natural person of a Party”;

and

(e) Article 20 (Settlement of Investment

Disputes between a Party and an Investor).

27
2. The Parties shall conclude the discussions
referred to in paragraph 1 within one year of the date
of entry into force of this Agreement under paragraph 1
or 2 of Article 26 (Entry into Force), unless otherwise
agreed by the Parties. The discussions shall be
overseen by the AHKFTA Joint Committee.

3. Annex 1 (Schedules of Reservations) shall enter

into force on a date to be agreed by the Parties.

4. Article 3 (National Treatment) and Article 4 (Most-

Favoured-Nation Treatment) shall not apply until
Annex 1 (Schedules of Reservations) enters into force
in accordance with paragraph 3.

Article 23

Relation between this Agreement and

the ASEAN - Hong Kong, China Free Trade
Agreement

1. Unless otherwise specified in this Agreement,

provisions in the ASEAN - Hong Kong, China Free
Trade Agreement shall not apply to this Agreement.

2. In the event of any inconsistency between this

Agreement and the ASEAN - Hong Kong, China Free
Trade Agreement, the Parties shall proceed to hold
consultations within the AHKFTA Joint Committee
pursuant to its functions under Article 1 (AHKFTA
Joint Committee) of Chapter 12 (Institutional
Provisions) of the ASEAN - Hong Kong, China Free
Trade Agreement with a view to finding a mutually
satisfactory solution.

28
 Article 24

Annexes and Footnotes

The Annexes and footnotes to this Agreement

constitute an integral part of this Agreement.

Article 25

Amendments

This Agreement may be amended by the Parties by

agreement in writing.

Article 26

Entry into Force

1. This Agreement shall be subject to ratification,

acceptance or approval. The instrument of ratification,
acceptance or approval by a Party shall be deposited
with the depositary who shall promptly notify all other
Parties of each deposit. This Agreement shall enter
into force on 1 January 2019 for the Parties that have
deposited their instruments of ratification, acceptance
or approval provided that the Hong Kong Special
Administrative Region and at least four ASEAN
Member States have deposited their instruments of
ratification, acceptance or approval.

2. If this Agreement does not enter into force on the

date referred to in paragraph 1, it shall enter into force,
for the Parties that have deposited their instruments of
ratification, acceptance or approval, 60 days after the
date by which the Hong Kong Special Administrative
Region and at least four ASEAN Member States have
deposited their instruments of ratification, acceptance
or approval.

29
3. After the entry into force of this Agreement
pursuant to paragraph 1 or 2, this Agreement shall
enter into force for any other Party 60 days after the
date of the deposit of its instrument of ratification,
acceptance or approval.

4. Notwithstanding the entry into force of this

Agreement for a Party pursuant to paragraph 1, 2, or 3
of this Article, the rights and obligations in this
Agreement except Article 28 (Withdrawal and
Termination) shall not take effect for the Party unless
such Party is, at the same time, a party to the ASEAN
– Hong Kong, China Free Trade Agreement.

Article 27

Depositary

This Agreement including its amendments shall be

deposited with the Secretary-General of ASEAN, who
shall promptly furnish a certified copy thereof to each
Party.

Article 28

Withdrawal and Termination

1. Any Party may withdraw from this Agreement by

giving 180 days’ advance notice in writing to the
depositary who shall promptly notify the same to all
other Parties.

2. Any other Party may request in writing,

consultations concerning any matter that would arise
from the withdrawal within 60 days after the date of
receipt of the notification in paragraph 1 from the
depositary. The requested Party shall enter into
consultations in good faith upon receipt of the request.

30
3. Any Party giving a notice of withdrawal pursuant
to:

(a) paragraph 1 to withdraw from this

Agreement shall be deemed to have given
a notice of withdrawal at the same time
under paragraph 1 of Article 6 (Withdrawal
and Termination) of Chapter 14 (Final
Provisions) of the ASEAN - Hong Kong,
China Free Trade Agreement; and

(b) paragraph 1 of Article 6 (Withdrawal and

Termination) of Chapter 14 (Final
Provisions) of the ASEAN – Hong Kong,
China Free Trade Agreement shall be
deemed to have given a notice of
withdrawal at the same time under
paragraph 1 to withdraw from this
Agreement.

4. This Agreement shall terminate if, pursuant to

paragraph 1:

(a) the Hong Kong Special Administrative

Region withdraws; or

(b) this Agreement is in force for less than four

ASEAN Member States.

5. The ASEAN - Hong Kong, China Free Trade

Agreement shall automatically terminate upon the
termination of this Agreement pursuant to paragraph 4.

Article 29

Review

The Parties shall undertake a general review of this

Agreement with a view to furthering its objectives within

31
 three years from the date of entry into force of this
Agreement, and every five years thereafter, unless
otherwise agreed by the Parties.

IN WITNESS WHEREOF, the undersigned, being duly

authorised by their respective Governments, have
signed this Agreement.

DONE at , , this ,
in a single original in the English language.

For the Government of For the Government of the

Brunei Darussalam Hong Kong Special
Administrative Region of the
People’s Republic of China

PEHIN DATO LIM JOCK SENG

Minister at the Prime Minister's EDWARD YAU TANG-WAH
Office and Second Minister of Secretary for Commerce and
Foreign Affairs and Trade Economic Development

For the Government of

the Kingdom of Cambodia

PAN SORASAK
Minister of Commerce

32
 For the Government of
the Republic of Indonesia

ENGGARTIASTO LUKITA
Minister of Trade

For the Government of

the Lao People’s Democratic
Republic

KHEMMANI PHOLSENA
Minister of Industry and Commerce

For the Government of

Malaysia

DATO’ SRI MUSTAPA MOHAMED

Minister of International Trade and
Industry

33
 For the Government of
the Republic of
the Union of Myanmar

KYAW WIN
Union Minister for Planning
and Finance

For the Government of

the Republic of the Philippines

RAMON M. LOPEZ
Secretary of Trade and Industry

For the Government of

the Republic of Singapore

LIM HNG KIANG

Minister for Trade and Industry
(Trade)

34
 For the Government of
the Kingdom of Thailand

APIRADI TANTRAPORN
Minister of Commerce

For the Government of

the Socialist Republic of Viet Nam

TRAN TUAN ANH

Minister of Industry and Trade

35
 Annex 1

Schedules of Reservations

This Annex shall be agreed by the Parties under Article

22 (Work Programme).

36
 Annex 2

Expropriation and Compensation

1. An action or a series of related actions by a Party

cannot constitute an expropriation unless it interferes
with a tangible or intangible property right or property
interest12 under the laws or regulations of that Party, in
a covered investment.

2. Paragraph 1 of Article 10 (Expropriation and

Compensation) addresses two situations:

(a) the first situation is direct expropriation,

where a covered investment is directly
expropriated through formal transfer of title
or outright seizure; and

(b) the second situation is where an action or

series of related actions by a Party has an
effect equivalent to direct expropriation
without formal transfer of title or outright
seizure.

3. The determination of whether an action or series

of related actions by a Party, in a specific fact situation,
constitutes an expropriation of the type referred to in
subparagraph 2 (b) requires a case-by-case and fact-
based inquiry that considers, among other factors:

(a) the economic impact of the government

action, although the fact that an action or
series of related actions by a Party has an
adverse effect on the economic value of a
covered investment, standing alone, does
12
For greater certainty, “property interest” refers to such property interest as may be
applicable under the law of that Party.

37
 not establish that such an expropriation
has occurred;

(b) whether the government action breaches

the government’s prior binding written
commitment to the investor whether by
contract, licence or other legal document;
and

(c) the character of the government action,

including its objective and whether the
action is disproportionate to the public
purpose.

4. Non-discriminatory regulatory actions by a Party

that are designed and applied to achieve legitimate
public welfare objectives, such as the protection of
public health, safety, and the environment, do not
constitute expropriation of the type referred to in
subparagraph 2 (b).

38