Honduras - United States of America BIT (1995) (EN - ES)


Article III (Expropriation) Article III incorporates into the Treaty customary international law standards for expropriation. Article III also includes detailed provisions regarding the computation and payment of prompt, ade- quate, and effective compensation. Paragrah 1 describes the obligations of the Parties with respect to expropriation and nationalization of a covered investment. These obligations apply to both direct expropriation and indirect expro- priation through measures ‘‘tantamount to expropriation or nation- alization’’ and thus apply to ‘‘creeping expropriations’’—a series of measures that effectively amounts to an expropriation of a covered investment without taking title. Paragraph 1 further bars all expropriations or nationalizations except those that are for a public purpose; carried out in a non-dis- criminatory manner; in accordance with due process of law; in ac- cordance with the general principles of treatment provided in Arti- cle II(3); and subject to ‘‘prompt, adequate and effective compensa- tion.’’ Paragraphs 2, 3, and 4 more fully describe the meaning of ‘‘prompt, adequate and effective compensation.’’ The guiding prin- ciple is that the investor should be made whole. Article IV (Compensation for Damage Due to War and Similar Events) Paragraph 1 entitles investments covered by the Treaty to na- tional and MFN treatment with respect to any measure relating to losses suffered in a Party’s territory owing to war or other armed conflict, civil disturbances, or similar events. Paragraph 2, by con- trast, creates an unconditional obligation to pay compensation for such losses when the losses result from requisitioning or from de- struction not required by the necessity of the situation. Article V (Transfers) Article V protects investors from certain government exchange controls that limit current and capital account transfers, as well as limits on inward transfers made by screening authorities and, in certain circumstances, limits on returns in kind. In paragraph 1, each Party agrees to ‘‘permit all transfers relat- ing to a covered investment to be made freely and without delay into and out of its territory.’’ Paragraph 1 also provides a list of transfers that must be allowed. The list is non-exclusive, and is in- tended to protect flows to both affiliated and non-affiliated entities. Paragraph 2 provides that each Party must permit transfers to be made in a ‘‘freely usable currency’’ at the market rate of ex- change prevailing on the date of transfer. ‘‘Freely usable’’ is a term used by the International Monetary Fund; at present there are five ‘‘freely usable’’ currencies: the U.S. dollar, Japanese yen, German mark, French franc, and British pound sterling. In paragraph 3, each Party agrees to permit returns in kind to be made where such returns have been authorized by an invest- ment authorization or written agreement between a Party and a covered investment or a national or company of the other Party. Paragraph 4 recognizes that, notwithstanding the obligations of paragraphs 1 through 3, a Party may prevent a transfer through

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