A G R E E M E N T Republic Austria Ethiopia
A G R E E M E N T
between the Republic of Austria
Federal Democratic Republic of Ethiopia
the Promotion and Protection of Investments
THE REPUBLIC OF AUSTRIA AND THE FEDERAL DEMOCRATIC REPUBLIC
OF ETHIOPIA hereinafter referred to as “Contracting Parties”,
DESIRING to create favourable conditions to the investments of investors of a
Contracting Party in the territory of the other Contracting Party,
RECOGNISING that the promotion and protection of investments may
strengthen the readiness for such investments and hereby make an important
contribution to the development of economic relations,
HAVE AGREED AS FOLLOWS:
CHAPTER ONE: GENERAL PROVISIONS
For the purpose of this Agreement
(1) “investor of a Contracting Party” means:
(a) a natural person having the nationality of a Contracting Party in
accordance with its applicable law, or
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(b) an enterprise constituted or organised under the applicable law of a
making or having made an investment in the other Contracting Party’s territory.
(2) “investment by an investor of a Contracting Party” means every kind of
asset in the territory of one Contracting Party, owned or controlled, directly or
indirectly, by an investor of the other Contracting Party, including:
(a) an enterprise constituted or organised under the applicable law of the first
(b) shares, stocks and other forms of equity participation in an enterprise as
referred to in subparagraph (a), and rights derived therefrom;
(c) bonds, debentures, loans and other forms of debt and rights derived
(d) any right whether conferred by law or contract, including turnkey contracts,
concessions, licences, authorisations or permits to undertake an economic
(e) claims to money and claims to performance pursuant to a contract having
an economic value;
(f) intellectual property rights as defined in the multilateral agreements
concluded under the auspices of the World Intellectual Property
Organisation, including industrial property rights, copyrights, trademarks,
patents, industrial designs and technical processes, know-how, trade
secrets, trade names and goodwill;
(g) any other tangible or intangible, movable or immovable property, or any
related property rights, such as leases, mortgages, liens, pledges or
Any alteration of the form in which assets are invested or reinvested shall not affect
their character as an investment provided that such alteration is in accordance with
the laws and regulations of the Contracting Party in whose territory the investment
(3) “enterprise” means a legal person or any entity constituted or organised
under the applicable law of a Contracting Party whether private or government owned
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or controlled, including a corporation, trust, partnership, sole proprietorship, branch,
joint venture or association.
(4) “returns” means the amounts yielded by an investment and, in
particular, profits, interests, capital gains, dividends, royalties, licence fees and other
(5) “territory” means with respect to each Contracting Party the land
territory, internal waters and airspace where the Contracting Party exercises, in
conformity with international law, sovereign rights and jurisdiction.
Promotion and Admission of Investments
Each Contracting Party shall, within the framework of its laws and legislation, admit
and encourage investments by investors of the other Contracting Party in its territory
and shall create favourable conditions to such investments.
Treatment of Investments
(1) Each Contracting Party shall accord to investments by investors of the
other Contracting Party fair and equitable treatment and full and constant protection
(2) A Contracting Party shall not impair by unreasonable or discriminatory
measures the management, operation, maintenance, use, enjoyment, sale and
liquidation of an investment by investors of the other Contracting Party.
(3) Each Contracting Party shall accord to investors of the other
Contracting Party and to their investments treatment no less favourable than that it
accords to its own investors and their investments or to investors of any third country
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and their investments with respect to the management, operation, maintenance, use,
enjoyment, sale and liquidation of an investment, whichever is more favourable to the
(4) No provision of this Agreement shall be construed as to oblige a
Contracting Party to extend to the investors of the other Contracting Party and to their
investments the present or future benefit of any treatment, preference or privilege
(a) any membership in a free trade area, customs union, common market,
economic community or any multilateral agreement on investment;
(b) any international agreement, international arrangement or domestic
legislation regarding taxation.
(1) Each Contracting Party shall promptly publish or otherwise make
publicly available its laws, regulations, procedures as well as international
agreements which may affect the operation of the Agreement.
(2) Each Contracting Party shall promptly respond to specific questions and
provide, upon request, information to the other Contracting Party on matters referred
to in paragraph (1) of this Article.
(3) No Contracting Party shall be required to furnish or allow access to
information concerning particular investors or investments the disclosure of which
would impede law enforcement or would be contrary to its laws and regulations
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Expropriation and Compensation
(1) A Contracting Party shall not expropriate or nationalise directly or
indirectly an investment of an investor of the other Contracting Party or take any
measures having equivalent effect (hereinafter referred to as “expropriation”) except:
(a) for a purpose which is in the public interest,
(b) on a non-discriminatory basis,
(c) in accordance with due process of law, and
(d) accompanied by payment of prompt, adequate and effective
compensation in accordance with paragraphs (2) and (3) of this Article.
(2) Compensation shall:
(a) be paid without delay.
(b) be equivalent to the fair market value of the expropriated investment
immediately before the expropriation occurred. The fair market value shall
not reflect any change in value occurring because the expropriation had
become publicly known earlier.
(c) be paid and made freely transferable to the country designated by the
claimants concerned and in the currency of the country of which the
claimants are nationals or in any freely convertible widely used currency.
(c) include interest at a commercial rate established on a market basis for the
currency of payment from the date of expropriation until the date of actual
(3) An investor of a Contracting Party who claims to be affected by
expropriation by the other Contracting Party shall have the right to prompt review of
his case, including the valuation of his investment and the payment of compensation
in accordance with the provisions of this Article, by a judicial authority or another
competent and independent authority of the latter Contracting Party.
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Compensation for Losses
(1) An investor of a Contracting Party who has suffered a loss relating to
his investment in the territory of the other Contracting Party due to war or to other
armed conflict, state of emergency, revolution, insurrection, civil disturbance, or any
other similar event in the territory of the latter Contracting Party, shall be accorded by
the latter Contracting Party, as regards restitution, indemnification, compensation or
any other settlement, treatment no less favourable than that which it accords to its
own investors or to investors of any third state, whichever is more favourable to the
(2) An investor of a Contracting Party who in any of the events referred to
in paragraph (1) of this Article suffers loss resulting from:
(a) requisitioning of his investment or part thereof by the forces or authorities
of the other Contracting Party, or
(b) destruction of his investment or part thereof by the forces or authorities of
the other Contracting Party, which was not required by the necessity of the
shall in any case be accorded by the latter Contracting Party restitution or
compensation which in either case shall be prompt, adequate and effective and, with
respect to compensation, shall be in accordance with Article 5 (2) and (3).
(1) Each Contracting Party shall guarantee that all payments relating to an
investment by an investor of the other Contracting Party may be freely transferred
into and out of its territory without delay. Such transfers shall include, in particular:
(a) the initial capital and additional amounts to maintain or increase an
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(c) payments made for the reimbursement of the credits for investments, and
(d) proceeds from the sale or liquidation of all or any part of an investment;
(e) payments of compensation under Articles 5 and 6;
(f) payments arising out of the settlement of a dispute;
(g) earnings and other remuneration of personnel engaged from abroad in
connection with an investment.
(2) Each Contracting Party shall further guarantee that such transfers may
be made in a freely convertible currency at the market rate of exchange prevailing on
the date of transfer in the territory of the Contracting Party from which the transfer is
(3) In the absence of a market for foreign exchange, the rate to be used
shall be the most recent exchange rate for conversion of currencies into Special
(4) Notwithstanding paragraphs (1) to (3) of this Article, a Contracting Party
may prevent a transfer through the equitable, non-discriminatory and good faith
application of measures to protect the rights of creditors, relating to or ensuring
compliance with laws and regulations on the issuing, trading and dealing in
securities, futures and derivatives, reports or records of transfer, or in connection with
criminal offences and orders or judgements in administrative and adjudicatory
proceedings, provided that such measures and their application shall not be used as
a means of avoiding the Contracting Party’s commitments or obligations under this
If a Contracting Party or its designated agency makes a payment under an indemnity,
guarantee or contract of insurance given in respect of an investment by an investor in
the territory of the other Contracting Party, the latter Contracting Party shall recognise
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without prejudice to the rights of the investor under Chapter Two Part One of this
Agreement the assignment of any right or claim of such investor to the former
Contracting Party or its designated agency and the right of the former Contracting
Party or its designated agency to exercise by virtue of subrogation any such right and
claim to the same extent as its predecessor in title.
If the laws of either Contracting Party or obligations under international law existing at
present or established hereafter between the Contracting Parties in addition to the
present Agreement contain rules, whether general or specific, entitling investments
by nationals or enterprises of the other Contracting Party to a treatment more
favourable than is provided for by the present Agreement, such rules shall, to the
extent that they are more favourable, prevail over the present Agreement.
Denial of Benefits
A Contracting Party may deny the benefits of this Agreement to an investor of the
other Contracting Party and to his investments, if investors of a Non-Contracting
Party own or control the first mentioned investor and that investor has no substantial
business activity in the territory of the Contracting Party under whose law it is
constituted or organised.
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CHAPTER TWO: DISPUTE SETTLEMENT
PART ONE: Settlement of Disputes between an Investor and a Contracting
Scope and Standing
This Part applies to disputes between a Contracting Party and an investor of the
other Contracting Party concerning an alleged breach of an obligation of the former
under this Agreement, which causes loss or damage to the investor or his
Means of Settlement, Time Periods
(1) A dispute between a Contracting Party and an investor of the other
Contracting Party, shall, as far as possible, be settled by negotiation or consultation.
If it is not so settled, the investor may choose to submit it for resolution:
(a) to the competent courts or administrative tribunals of the Contracting
Party, party to the dispute;
(b) in accordance with any applicable previously agreed dispute settlement
(c) in accordance with this Article to:
(i) the International Centre for Settlement of Investment Disputes (“the
Centre”), established pursuant to the Convention on the Settlement
of Investment Disputes between States and Nationals of other
States, signed in Washington on 18 March 1965 (“the ICSID
Convention”), if the Contracting Party of the investor and the
Contracting Party, party to the dispute, are both parties to the ICSID
(ii) the Centre under the rules governing the Additional Facility for the
Administration of Proceedings by the Secretariat of the Centre
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(Additional Facility Rules), if one of the Contracting Parties is not a
Contracting State of the Convention mentioned in c (i) of this Article
(iii) a sole arbitrator or an ad hoc arbitration tribunal established under
the Arbitration Rules of the United Nations Commission on
International Trade Law (“UNCITRAL”);
(iv) the International Chamber of Commerce, by a sole arbitrator or an ad
hoc tribunal under its rules of arbitration.
(2) A dispute may be submitted for resolution pursuant to paragraph 1 (c)
of this Article after 60 days from the date notice of intent to do so was provided to the
Contracting Party, party to the dispute, but not later than five years from the date the
investor first acquired or should have acquired knowledge of the events which gave
rise to the dispute.
Contracting Party Consent
(1) Each Contracting Party hereby gives its unconditional consent to the
submission of a dispute to international arbitration in accordance with Article 12 of
this Agreement. However, a dispute may not be submitted to international arbitration
if a local court in either Contracting Party has rendered its decision on the dispute.
(2) The consent referred to in paragraph (1) implies the renunciation of the
requirement that the internal administrative or juridical remedies should be
A Contracting Party shall not assert as a defence, counter-claim, right of set-off or for
any other reason, that indemnification or other compensation for all or part of the
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alleged damages has been received or will be received pursuant to an indemnity,
guarantee or insurance contract.
A tribunal established under this Part shall decide the dispute in accordance with this
Agreement and applicable rules and principles of international law.
Awards and Enforcement
(1) Arbitration awards, which may include an award of interest, shall be
final and binding upon the parties to the dispute and may provide the following forms
(a) a declaration that the Contracting Party has failed to comply with its
obligations under this Agreement;
(b) pecuniary compensation, which shall include interest from the time the
loss or damage was incurred until the time of payment;
(c) restitution in kind in appropriate cases, provided that the Contracting Party
may pay pecuniary compensation in lieu thereof where restitution is not
(d) with the agreement of the parties to the dispute, any other form of relief.
(2) Each Contracting Party shall make provision for the effective
enforcement of awards made pursuant to this Article and shall carry out without delay
any such award issued in a proceeding to which it is a party.
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PART TWO: Settlement of Disputes between the Contracting Parties
Initiation of Proceedings
(1) Any dispute relating to the interpretation or application of the
Agreement shall be settled, as far as possible, through diplomatic channels.
(2) If the parties can’t settle their dispute through diplomatic channels within
a period of three months from the date of notification, the dispute can be submitted to
a joint commission consisting of the representatives of the two Contracting Parties.
This commission shall convene, without undue delay, at the request of one of the
(3) If the joint commission can’t settle the dispute, the dispute may be
submitted to an arbitral tribunal not earlier than 60 days after such request has been
notified to the other Contracting Party.
(4) A Contracting Party may not initiate proceedings under this Part for a
dispute regarding the infringement of rights of an investor which that investor has
submitted to arbitration under Part One of Chapter Two of this Agreement, unless the
other Contracting Party has failed to abide by and comply with the award rendered in
that dispute or those proceedings have terminated without resolution by an arbitral
tribunal of the investor’s claim.
Formation of the Tribunal
(1) The arbitral tribunal shall be constituted ad hoc as follows:
Each Contracting Party shall appoint one member and these two members shall
agree upon a national of a third state as their chairman. Such members shall be
appointed within two (2) months from the date one Contracting Party has informed
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the other Contracting Party of its intention to submit the dispute to an arbitral tribunal,
the chairman of which shall be appointed within two (2) further months.
(2) If the periods specified in paragraph (1) of this Article are not observed,
either Contracting Party may, in the absence of any relevant arrangement, invite the
President of the International Court of Justice to make the necessary appointments. If
the President of the International Court of Justice is a national of either of the
Contracting Parties or if he is otherwise prevented from discharging the said function,
the Vice-President or in case of his inability the member of the International Court of
Justice next in seniority should be invited under the same conditions to make the
(3) Members of an arbitral tribunal shall be independent and impartial.
Applicable Law, Default Rules
(1) The arbitral tribunal will decide disputes in accordance with this
Agreement and the applicable rules and principles of international law.
(2) Unless the parties to the dispute decide otherwise, the Permanent
Court of Arbitration Optional Rules for Arbitrating Disputes shall apply to matters not
governed by other provisions of this Part.
(1) The tribunal, in its award, shall set out its findings of law and fact,
together with the reasons therefore, and may, at the request of a Contracting Party,
award the following forms of relief:
(a) a declaration that an action of a Contracting Party is in contravention of its
obligations under this Agreement;
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(b) a recommendation that a Contracting Party brings its actions into
conformity with its obligations under this Agreement;
(c) pecuniary compensation for any loss or damage to the requesting
Contracting Party’s investor or his investment; or
(d) any other form of relief to which the Contracting Party against whom the
award is made consents, including restitution in kind to an investor.
(2) The arbitration award shall be final and binding upon the parties to the
Each Contracting Party shall pay the costs of its representation in the proceedings.
The costs of the tribunal shall be paid for equally by the Contracting Parties unless
the tribunal directs that they be shared differently.
Pecuniary awards which have not been complied with within one year from the date
of the award may be enforced in the courts of either Contracting Party with
jurisdiction over assets of the defaulting Contracting Party.
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CHAPTER THREE: FINAL PROVISIONS
Application of the Agreement
(1) This Agreement shall apply to investments made in the territory of either
Contracting Party in accordance with its legislation by investors of the other
Contracting Party prior as well as after the entry into force of this Agreement.
(2) This Agreement shall not apply to claims which have been settled or
procedures which have been initiated prior to its entry into force.
Each Contracting Party may propose to the other Contracting Party consultations on
any matter relating to this Agreement. These consultations shall be held at a place
and at a time agreed upon through diplomatic channels.
Entry into Force and Duration
(1) The Contracting Parties shall notify each other in writing that their
constitutionally required procedures have been fulfilled. This Agreement shall enter
into force on the first day of the third month following the date of the latter notification.
(2) This Agreement shall remain in force for a period of ten years; it shall
be extended thereafter for an indefinite period and may be denounced in writing
through diplomatic channels by either Contracting Party giving twelve months’ notice.
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(3) In respect of investments made prior to the date of termination of this
Agreement its provisions shall continue to be effective for a further period of ten
years from the date of termination of the Agreement.
DONE in duplicate at Vienna, on 12 November 2004 in the English language.
For the Republic of Austria:
For the Federal Democratic Republic of Ethiopia:
Ato Seyoum Mesfin
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