Agreement on the Promotion and Reciprocal Protection of Investments between Honduras and Spain

Definitions. For the purposes of this Agreement: 1. By "investors" shall be understood: a) In the case of the Kingdom of Spain, natural persons who are residents in Spain in accordance with Spanish Law; and in the case of the Republic of Honduras, natural persons whose condition as nationals of Honduras is derived from the laws in force in the Republic of Honduras. b) Any legal person that is constituted or, in any case, duly organized in accordance with the legislation in force of that Contracting Party and has its registered office in the territory of that same Contracting Party. 2. By "investments" is meant all types of assets, such as property and rights of all kinds, acquired in accordance with the Legislation of the country receiving the investment and, in particular, although not exclusively, the following: Shares and other forms of participation in companies; rights derived from all types of contributions made with the purpose of creating economic value; expressly included are all those loans granted for this purpose; whether or not capitalized; movable and immovable property, as well as other real rights, such as mortgages, pledge rights, usufruct, and similar rights; all types of rights in the field of intellectual property, expressly including patents of invention, trademarks, service marks and trade marks, as well as manufacturing licenses, "know-how" and "good-will"; rights to conduct economic and commercial activities granted by Law or by virtue of a contract, in particular those related to the prospecting, cultivation, extraction or exploitation of natural resources. 3. The term "investment returns" refers to the yields derived from an investment in accordance with the definition contained in the preceding point, and expressly includes profits, dividends and interest. 4. The term "territory" designates the terrestrial territory and the territorial sea of each of the Contracting Parties, as well as the exclusive economic zone and the continental shelf that extends beyond the limit of the territorial sea of each of the Contracting Parties, over which these have or may have, in accordance with International Law, jurisdiction and sovereign rights for the purposes of exploitation, exploration and preservation of natural resources.

Nationalization and Expropriation. Nationalization, expropriation, or any other measure of similar characteristics or effects that may be adopted by the authorities of a Contracting Party against the investments of investors of the other Contracting Party in its territory, shall be applied exclusively for reasons of public utility, in accordance with legal provisions and, in no case, shall be discriminatory. The Contracting Party that adopts these measures shall pay to the investor or to his legal successor, without unjustified delay, adequate compensation, in convertible currency and freely transferable.

Compensation for Losses. To investors of a Contracting Party whose investments or investment returns in the territory of the other Contracting Party suffer losses due to war, other armed conflicts, a state of national emergency, rebellion or riot and other similar circumstances, including losses caused by requisition, shall be granted, by way of restitution, indemnification, compensation or other settlement, treatment no less favorable than that which the latter Contracting Party grants to its own investors and to investors of any third State. Any payment made in accordance with this Article shall be made promptly, adequately, effectively and freely transferable.

Transfer. 1. Each Contracting Party shall guarantee to the investors of the other Contracting Party, with respect to the investments made in its territory, the free transfer of the returns from those investments and other payments related to the same, and in particular, but not exclusively, the following: investment returns, as they have been defined in Article 1; the indemnifications provided for in Article 5; the compensations provided for in Article 6; the proceeds from the sale or liquidation, total or partial, of the investments; the sums necessary for the amortization of loans and the payment of their interest; the sums necessary for the acquisition of raw materials or auxiliary materials, semi-manufactured or finished products or for the replacement of capital goods or any other sum necessary for the maintenance and development of the investment; the salaries, wages and other remuneration received by citizens of a Contracting Party who have obtained in the other Contracting Party the corresponding work permits in relation to an investment. 2. The Contracting Party receiving the investment shall facilitate to the investor of the other Contracting Party or to the company in which it participates access to the foreign exchange market, in a non-discriminatory manner, in order to acquire the necessary foreign currency to carry out the transfers covered by this Article. 3. The transfers referred to in this Agreement shall be made in freely convertible currencies and in accordance with the tax obligations established by the legislation in force in the Contracting Party receiving the investment. 4. The Contracting Parties undertake to facilitate the necessary procedures to effect such transfers without excessive delay or restrictions and in accordance with the exchange rate applicable on the date of the transfer. In particular, no more than three months shall elapse from the date on which the investor has properly submitted the necessary requests to effect the transfer, until the moment in which said transfer is effectively realized. Therefore, each Contracting Party undertakes to comply with the necessary formalities, both for the purchase of the foreign currency and for its effective transfer abroad before the aforementioned deadline. 5. The Contracting Parties shall grant to the transfers referred to in this Article treatment no less favorable than that granted to transfers originating from investors of any third State.

Most Favorable Conditions. The more favorable conditions than those of the present Agreement that have been agreed upon by one of the Contracting Parties with investors of the other Contracting Party shall not be affected by the present Agreement.

Principle of Subrogation. In the event that a Contracting Party has granted any financial guarantee covering non-commercial risks in relation to an investment made by its investors in the territory of the other Contracting Party, the latter shall accept the subrogation of the first Contracting Party in the economic rights of the investor from the moment when the first Contracting Party has made a first payment under the guarantee granted. This subrogation will enable the first Contracting Party to be a direct beneficiary of any type of payment by way of compensation to which the investor could be entitled. With respect to rights of property, use, enjoyment, or any other real right, subrogation may only take place upon obtaining the relevant authorizations, in accordance with the legislation in force of the Contracting Party where the investment was made. Article 10. Disputes between the Contracting Parties. 1. Any dispute between the Contracting Parties concerning the interpretation or application of the present Agreement shall be resolved, to the extent possible, by the Governments of the two Contracting Parties through diplomatic channels. 2. If the dispute cannot be resolved in that manner within a period of six months from the beginning of negotiations, it shall be submitted, at the request of either of the two Contracting Parties, to an arbitral tribunal. 3. The arbitral tribunal shall be constituted as follows: Each Contracting Party shall appoint one arbitrator and these two arbitrators shall select a citizen of a third State as President. The arbitrators shall be appointed within a period of three months, and the President within a period of five months from the date on which either of the two Contracting Parties shall have informed the other Contracting Party of its intention to submit the dispute to an arbitral tribunal. 4. If one of the Contracting Parties has not appointed its arbitrator within the established period, the other Contracting Party may request the President of the International Court of Justice to make such appointment. In the event that the two arbitrators do not reach an agreement on the appointment of the third arbitrator within the established period, either of the Contracting Parties may resort to the President of the International Court of Justice to make the corresponding appointment. 5. If, in the cases provided for in paragraph 4 of the present article, the President of the International Court of Justice is unable to perform such function, or is a national of either of the Contracting Parties, the request shall be made to the Vice President to make the corresponding appointments. If the Vice President is unable to perform such function or is a national of either of the Contracting Parties, the appointments shall be made by the most senior member of the Court who is not a national of either of the Contracting Parties. 6. The arbitral tribunal shall issue its opinion on the basis of respect for the Law, the rules contained in the present Convention or in other Agreements in force between the Contracting Parties, and on the universally recognized principles of International Law. 7. Unless the Contracting Parties decide otherwise, the tribunal shall establish its own procedure. 8. The tribunal shall adopt its decision by majority of votes and such decision shall be final and binding for both Contracting Parties. 9. Each Contracting Party shall bear the costs of the arbitrator appointed by it and those related to its representation in the arbitral proceedings. The remaining costs, including those of the President, shall be borne equitably by both Contracting Parties.

Disputes between a Contracting Party and Investors of the other Contracting Party. 1. Any dispute relating to investments that arises between one of the Contracting Parties and an investor of the other Contracting Party, regarding matters regulated by the present Agreement, shall be notified in writing, including detailed information, by the investor to the Contracting Party receiving the investment. To the extent possible, the parties in dispute shall attempt to settle these differences by means of an amicable agreement. 2. If the dispute cannot be resolved in this manner within a period of six months counting from the date of written notification mentioned in paragraph 1, it shall be submitted at the choice of the investor: to the competent courts of the Contracting Party in whose territory the investment was made; to an ad hoc arbitral tribunal established by the Arbitration Rules of the United Nations Commission for International Commercial Law; to the International Centre for Settlement of Investment Disputes (ICSID) created by the "Convention on the Settlement of Investment Disputes between States and Nationals of Other States," open for signature in Washington on March 18, 1965, when each State party to the present Agreement has acceded thereto; to the Arbitration Tribunal of the International Chamber of Commerce in Paris. 3. The arbitration shall be based on: the provisions of the present Agreement and those of other agreements concluded between the Contracting Parties; the rules and principles of International Law generally admitted; the national law of the Contracting Party in whose territory the investment has been made, including the rules relating to conflicts of law. 4. The arbitral awards shall be final and binding for the parties in the dispute. Each Contracting Party undertakes to enforce the awards in accordance with its national legislation.

Entry into Force, Extension, Denunciation. 1. The present Agreement shall enter into force on the day on which the Contracting Parties have notified each other reciprocally that the respective constitutional formalities required for the entry into force of international agreements have been fulfilled. It shall remain in force for an initial period of ten years and shall be renewed by tacit consent for consecutive periods of two years. Each Contracting Party may denounce the present Agreement by means of written prior notification six months before the date of its expiration. 2. In the event of denunciation, the provisions foreseen in Articles 1 through 11 of the present Agreement shall continue to apply for a period of ten years to investments made before the official notification of denunciation. Done in two originals in the Spanish language, which are equally authentic, in Tegucigalpa on March 18, 1994. For the Kingdom of Spain [signed] Javier Gómez-Navarro Navarrete, Minister of Commerce and Tourism. For the Republic of Honduras [signed] Ernesto Paz Aguillar, Minister of Foreign Relations. The present Agreement entered into force on May 23, 1996, the date of the last cross notification between the Parties communicating the fulfillment of the respective constitutional formalities required, as established in Article 12.1 thereof. This is made public for general knowledge. Madrid, July 8, 1996.—The Technical General Secretary, Antonio Bellver Manrique.