EXCHANGE OF NOTES CONSTITUTING AN AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA
AND THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF CHINA RELATING TO FOREIGN INVESTMENT INSURANCE

The original official languages of this BIT were: Chinese and English.  The Tsinghua Rule of Law Project has produced this unofficial English language version from the original Chinese text.  While the English language version is for the benefit of the website readers, users should rely on official language versions when advising clients or undertaking some legal process.  

EMBASSY OF THE UNITED STATES OF AMERICA

Beijing, October 30, 1980

Note No. 438

 

Excellency:


I have the honor to refer to conversations which have recently taken place on the basis of equality and mutual benefit between representatives of the Government of the United States of America and of the Government of the People’s Republic of China relating to investments in the People’s Republic of China and to investment insurance (including reinsurance) and investment guaranties which are administered by the Overseas Private Investment Cooperation (“OPIC”), and independent government cooperation organized under the laws of the United States of America. On behalf of the Government of the United States of America, I also have the honor to confirm the following understandings reached as a result of those conversations:


ARTICLE 1

As used herein, the term ”Coverage” shall refer to any investment insurance (including reinsurance ) against loss from political risk or to any investment guaranty which is issued in accordance with this Agreement by OPIC or by any successor United States Government agency, OPIC and any such successor being hereinafter referred to as the “Issuer” to the extent of its interest as insurer or reinsurer in any Coverage.


ARTICLE 2

The procedures set forth in this Agreement shall apply only with respect to Coverage of Investments relating to projects or activities approved by the Government of the People’s Republic of China.


ARTICLE 3

  1. If the Issuer makes payment to any investor under Coverage, the Government of the People’s Republic of China shall. Subject to the provisions of Article 4 hereof, recognize the transfer to the Issuer of any currency, credits, assets, or investment on account of which payment under such Coverage is made, as well as the succession of the Issuers to any right, title, claim, or cause of action existing, or which may arise, in connection therewith, subject to existing legal obligations.
  2. The Issuers shall assert no greater rights than those of the transferring investor with respect to any interests transferred or succeeded to under this paragraph. The Government of the United States of America does, however, reserve its rights to assert to a claim in its sovereign capacity under international law.

ARTICLE 4

To the extent that the laws of the People’s Republic of China partially or wholly invalidate or prohibit the acquisition from a covered investor of any interest in any property within the territory of the People’s Republic of China by the Issuer, the Government of the People’s Republic of China shall permit such investor and the Issuer to make appropriate arrangement pursuant to which such interests are transferred to an entity permitted to own such interests under the laws of the People’s Republic of China.


ARTICLE 5

Amounts in lawful currency of the People’s Republic of China, including credits thereof, acquired by the Issuer by virtue of such Coverage shall be accorded treatment by the Government of the People’s Republic of China no less favorable as to use and conversation than the treatment to which such funds would be entitled in the hands of the covered investor. Such amounts and credits shall be freely available for use by the Government of the United States of America to meet its expenditures in the territory of the People’s Republic of China. Such amounts and credits may also be transferred by the Issuer to any Government of the People’s Republic of China for use by such person or entity in the territory of the People’s Republic of China.


ARTICLE 6

  1. Any dispute between the Government of the United States of America and the Government of the People’s Republic of China regarding the interpretation of the Agreement or which, in the option of one of the Governments, involves a question of public international law arising out of any investment or project or activity relating to such investment for which Coverage has been issued shall be resolves, insofar as possible, through negations between the two Governments. If at the end of three months following the request for negations the two Governments have not resolved the dispute by agreement, the dispute, including the question of whether such dispute presents a question of public international law, shall be submitted, at the initiative of either Government, to an arbitral tribunal for resolution in accordance with Article 6 (b).
  2. The arbitral tribunal for resolution of disputes pursuant to Article 6 (a) shall be established and function as follows:
    1. Each Government shall appoint one arbitrator; these two arbitrators shall designate a President by common agreement who shall be a citizen of a third state shall be appointed within two months and the President within three months of the date of receipt of either Government’s request for arbitration. If the appointments are not made within the forgoing time limits, either Government may, in the absence of any other agreement, request the Secretary General of the United Nations to make the necessary appointment or appointments, and both to make the necessary appointments, and both Governments agree to accept such appointment or appointments.
    2. The arbitral tribunal shall base its decision on the applicable principles and rules of public international law. The arbitral tribunal shall decide by majority vote. Its decision shall be final and biding.
    3. Each Government shall pay the expense of its arbitrator and of its representation in the proceedings before the arbitral tribunal; the expense of the President and the other costs shall be paid in equal parts by the two Governments. The arbitral tribunal may adopt regulations concerning the costs, consistent with the foregoing.
    4. The all other matters, the arbitral tribunal shall regulate its own procedures.

ARTICLE 7

The two Governments, desiring reciprocity, agree that, in the event, the Government of the People’s Republic of China is authorized under its laws to issue coverage for investments in any project or activity within the United States of America under a program similar to the investment incentive program to which this Agreement relates, there shall be, upon the request of either Government. An exchange of notes to make applicable, with respect to such investments made in the United States of America, provisions equivalent to those of this Agreement.


ARTICLE 8

Upon receipt of a note of confirmation from your Excellency on behalf of the Government of the People’s Republic of China indicating that the foreign provisions are acceptable, this note and your reply thereto shall constitute an Agreement between our two Governments on this Subject, and enter into force on the date of your reply. This Agreement shall continue in force until six months from the date of receipt of a note by which one Government informs the other of a request for the termination of this Agreement. In such event, the provisions of the Agreement with respect to Coverage issued while the Agreement was in force shall remain in force for the duration of such Coverage, but in no case longer than twenty years after the denunciation of the Agreement.


Accept, Excellency, the renewed assurance of my higher consideration.


Leonard Woodcock
Ambassador of the United States
To the People’s Republic of China

His Excellency
Zhang Wenjin
Vice Minister of Foreign Affairs
Beijing, People’s Republic of China







EMBASSY OF THE UNITED STATES OF AMERICA

ANNEX
Beijing, October 30, 1980


Excellency:


I have the honor to refer to the Investment Incentive Agreement between the Government of the United States of America and the Government of the People’s Republic of China, effected by an exchange of notes on October 30, 1980 (the “Agreement”), relating to investment insurance and investment guaranties which are administrated by the Overseas Private Investment Cooperation. (“OPIC”).

Article 2 of the Agreement states that the procedures set forth in the Agreement shall apply only with respect to coverage of investments relating to projects or activities approved by the Government of the People’s Republic of China. I wish to confirm my understanding that for the purposes of Article 2 of the Agreement, the procedure for approval by the Government of the People’s Republic of China shall be as follows:

  1. Approval of a project or activity by the Foreign Investment Commission (“FIC”) shall constitute approval by the Government of the People’s Republic of China for purpose of Article 2 of the Agreement. After a project of activity has received such approval, investment insurance of guaranties issued by OPIC for investments which are related to such project or activity shall be governed by the procedures set forth in the Agreement. such related investments include the following:
    1. equity investments and loans by investors in projects or activities approval by FIC;
    2. loans from financial institutions to projects or activities approved by FIC; and
    3. transfers of technology, services and management agreements with projects or activities approved by FIC.
  2. For purpose of Article 2 of the Agreement, any project or activity approved by the Administrative Commission for Special Economic Zones of concerned provinces in accordance with Chinese legislation shall be deemed as approval by the Chinese Government.
  3. In caser of a project or activity which does not require the approval set forth in (1) and (2) above, upon request by the Government of the United States of America, FIC shall as soon as possible advise it of the appropriate agency or instrumentality of the Government of the People’s Republic of China to issue such approval on behalf of the Chinese Government and shall inform the United States Government of the decision of such agency or instrumentality for purposes of Article 2 of the Agreement.

I would be grateful for your confirmation that this is also your understanding.


Accept, Excellency, the renewed assurance of my highest consideration.


Leonard Woodcock
Ambassador of the United States
To the People’s Republic of China

His Excellency
Zhang Wenjin
Vice Minister of Foreign Affairs
Beijing, People’s Republic of China







October 7, 1980


Mr. Chen Shuzhi
Vice President
China International Trust and
Investment Corporation
Beijing


Dear Mr. Chen:


The United States reaffirming that the continuing cultural, commercial and other relations between the people of the United States and the people on Taiwan are nongovernmental in nature. As stated in the Joint Communiqué issued by the United States of America and the People’s Republic of China on December 15, 1978, in connection with the normalization of relations between our two countries, the United States of America recognizes the Government of the People’s Republic of China as the sole legal government of China and acknowledges the Chinese position that there is but one China and Taiwan is part of China. Within this context, the people of the United States maintain cultural, commercial, and other unofficial relations with the people of Taiwan. Agreements concluded with the Taiwan authorities are administered on a nongovernmental basis by the American Institute on Taiwan, a nonprofit District of Colombia Corporation, and constitute neither recognition of the Taiwan authorities nor the continuation of any official relationships with Taiwan.


Very truly yours,

Paul R. Gilbert
Vice President and General Counsel
Overseas Private Investment Corporation







October 7, 1980


Mr. Chen Shuzhi
Vice President
China International Trust and
Investment Corporation
Beijing, China


Dear Mr. Chen:


In connection with our discussions relating to the Investment Incentive Agreement covering the procedures for the operation of the investment insurance programs of the Overseas Private Investment Cooperation (“OPIC”), you have inquired as to whether the issuance by OPIC of investment insurance covering losses resulting from war, revolution, and insurrection would create an obligation for the Government of the People’s Republic of China. I wish to inform you that the issuance of such coverage would not obligate the Government of the People’s Republic of China to reimburse the investor or OPIC for losses resulting from war, revolution, or insurrection.

Sincerely yours,

Paul R. Gilbert
Vice President and General Counsel
Overseas Private Investment Corporation







Translation
Beijing October 30 .1980


Note No. (80) Bu Meida 1149


His Excellency
Leonard Woodcock

Ambassador Extraordinary and
Minister Plenipotentiary of
The United States of America
to the People’s Republic of China
Beijing, People’s Republic of China


Excellency:


I have the honor to acknowledge the receipt of your note of October 30, 1980, which reads:

    "I have the honor to refer to conversations which have recently taken place on the basis of equality and mutual benefit between representatives of the Government of the United States of America and of the Government of the People’s Republic of China relating to investments in the People’s Republic of China and to investment insurance (including reinsurance) and investment guaranties which are administered by the Overseas Private Investment Cooperation (“OPIC”), and independent government cooperation organized under the laws of the United States of America. On behalf of the Government of the United States of America, I also have the honor to confirm the following understandings reached as a result of those conversations:


    ARTICLE 1

    As used herein, the term ”Coverage” shall refer to any investment insurance (including reinsurance ) against loss from political risk or to any investment guaranty which is issued in accordance with this Agreement by OPIC or by any successor United States Government agency, OPIC and any such successor being hereinafter referred to as the “Issuer” to the extent of its interest as insurer or reinsurer in any Coverage.


    ARTICLE 2

    The procedures set forth in this Agreement shall apply only with respect to Coverage of Investments relating to projects or activities approved by the Government of the People’s Republic of China.


    ARTICLE 3

    1. If the Issuer makes payment to any investor under Coverage, the Government of the People’s Republic of China shall. Subject to the provisions of Article 4 hereof, recognize the transfer to the Issuer of any currency, credits, assets, or investment on account of which payment under such Coverage is made, as well as the succession of the Issuers to any right, title, claim, or cause of action existing, or which may arise, in connection therewith, subject to existing legal obligations.
    2. The Issuers shall assert no greater rights than those of the transferring investor with respect to any interests transferred or succeeded to under this paragraph. The Government of the United States of America does, however, reserve its rights to assert to a claim in its sovereign capacity under international law.

    ARTICLE 4

    To the extent that the laws of the People’s Republic of China partially or wholly invalidate or prohibit the acquisition from a covered investor of any interest in any property within the territory of the People’s Republic of China by the Issuer, the Government of the People’s Republic of China shall permit such investor and the Issuer to make appropriate arrangement pursuant to which such interests are transferred to an entity permitted to own such interests under the laws of the People’s Republic of China.


    ARTICLE 5

    Amounts in lawful currency of the People’s Republic of China, including credits thereof, acquired by the Issuer by virtue of such Coverage shall be accorded treatment by the Government of the People’s Republic of China no less favorable as to use and conversation than the treatment to which such funds would be entitled in the hands of the covered investor. Such amounts and credits shall be freely available for use by the Government of the United States of America to meet its expenditures in the territory of the People’s Republic of China. Such amounts and credits may also be transferred by the Issuer to any Government of the People’s Republic of China for use by such person or entity in the territory of the People’s Republic of China.


    ARTICLE 6

    1. Any dispute between the Government of the United States of America and the Government of the People’s Republic of China regarding the interpretation of the Agreement or which, in the option of one of the Governments, involves a question of public international law arising out of any investment or project or activity relating to such investment for which Coverage has been issued shall be resolves, insofar as possible, through negations between the two Governments. If at the end of three months following the request for negations the two Governments have not resolved the dispute by agreement, the dispute, including the question of whether such dispute presents a question of public international law, shall be submitted, at the initiative of either Government, to an arbitral tribunal for resolution in accordance with Article 6 (b).
    2. The arbitral tribunal for resolution of disputes pursuant to Article 6 (a) shall be established and function as follows:
      1. Each Government shall appoint one arbitrator; these two arbitrators shall designate a President by common agreement who shall be a citizen of a third state shall be appointed within two months and the President within three months of the date of receipt of either Government’s request for arbitration. If the appointments are not made within the forgoing time limits, either Government may, in the absence of any other agreement, request the Secretary General of the United Nations to make the necessary appointment or appointments, and both to make the necessary appointments, and both Governments agree to accept such appointment or appointments.
      2. The arbitral tribunal shall base its decision on the applicable principles and rules of public international law. The arbitral tribunal shall decide by majority vote. Its decision shall be final and biding.
      3. Each Government shall pay the expense of its arbitrator and of its representation in the proceedings before the arbitral tribunal; the expense of the President and the other costs shall be paid in equal parts by the two Governments. The arbitral tribunal may adopt regulations concerning the costs, consistent with the foregoing.
      4. The all other matters, the arbitral tribunal shall regulate its own procedures.

    ARTICLE 7

    The two Governments, desiring reciprocity, agree that, in the event, the Government of the People’s Republic of China is authorized under its laws to issue coverage for investments in any project or activity within the United States of America under a program similar to the investment incentive program to which this Agreement relates, there shall be, upon the request of either Government. An exchange of notes to make applicable, with respect to such investments made in the United States of America, provisions equivalent to those of this Agreement.


    ARTICLE 8

    Upon receipt of a note of confirmation from your Excellency on behalf of the Government of the People’s Republic of China indicating that the foreign provisions are acceptable, this note and your reply thereto shall constitute an Agreement between our two Governments on this Subject, and enter into force on the date of your reply. This Agreement shall continue in force until six months from the date of receipt of a note by which one Government informs the other of a request for the termination of this Agreement. In such event, the provisions of the Agreement with respect to Coverage issued while the Agreement was in force shall remain in force for the duration of such Coverage, but in no case longer than twenty years after the denunciation of the Agreement."


On behalf of the Government of the People’s Republic of China, I have the honor to confirm our agreement to the contents of the above note.


Please accept, Excellency, the renewed assurance of my highest consideration.


Zhang Wenjin
Vice Minister of Foreign Affairs
People’s Republic of China







Translation
Beijing October 30 .1980


Note No. (80) Bu Meida 1149


His Excellency
Leonard Woodcock

Ambassador Extraordinary and
Minister Plenipotentiary of
The United States of America
to the People’s Republic of China
Beijing, People’s Republic of China


Excellency:


I have the honor to refer to the Investment Incentive Agreement between our two governments and to your letter of today’s date which reads:

    I have the honor to refer to the Investment Incentive Agreement between the Government of the United States of America and the Government of the People’s Republic of China, effected by an exchange of notes on October 30, 1980 (the “Agreement”), relating to investment insurance and investment guaranties which are administrated by the Overseas Private Investment Cooperation. (“OPIC”).

    Article 2 of the Agreement states that the procedures set forth in the Agreement shall apply only with respect to coverage of investments relating to projects or activities approved by the Government of the People’s Republic of China. I wish to confirm my understanding that for the purposes of Article 2 of the Agreement, the procedure for approval by the Government of the People’s Republic of China shall be as follows:

    1. Approval of a project or activity by the Foreign Investment Commission (“FIC”) shall constitute approval by the Government of the People’s Republic of China for purpose of Article 2 of the Agreement. After a project of activity has received such approval, investment insurance of guaranties issued by OPIC for investments which are related to such project or activity shall be governed by the procedures set forth in the Agreement. such related investments include the following:
      1. equity investments and loans by investors in projects or activities approval by FIC;
      2. loans from financial institutions to projects or activities approved by FIC; and
      3. transfers of technology, services and management agreements with projects or activities approved by FIC.
    2. For purpose of Article 2 of the Agreement, any project or activity approved by the Administrative Commission for Special Economic Zones of concerned provinces in accordance with Chinese legislation shall be deemed as approval by the Chinese Government.
    3. In caser of a project or activity which does not require the approval set forth in (1) and (2) above, upon request by the Government of the United States of America, FIC shall as soon as possible advise it of the appropriate agency or instrumentality of the Government of the People’s Republic of China to issue such approval on behalf of the Chinese Government and shall inform the United States Government of the decision of such agency or instrumentality for purposes of Article 2 of the Agreement.

    I would be grateful for your confirmation that this is also your understanding.”


On behalf of the Government of the People’s Republic of China, I have the honor to confirm our agreement to the contents of the above letter.


Please accept, Excellency, the renewed assurance of my highest consideration.


Zhang Wenjin
Vice Minister of Foreign Affairs
People’s Republic of China