On October 1, 2020, the Agreement between the Government of the Republic of Turkey and the Government of the People’s Republic of China Concerning the Reciprocal Promotion and Protection of Investments (the “Agreement”) was published in the Turkish Official Gazette to ratify an amendment protocol signed by the contracting parties.
The Agreement covers the promotion and protection of all types of investments coming from each country, except those constituting under 10% of the shares or voting rights of a company acquired through shares listed on a stock exchange which do not establish any lasting economic relationship.
According to the Agreement, both countries shall:
- Promote investors from each country as far as possible;
- Treat investments from each country fairly and equitably to prevent any sort of discrimination; and
- Provide a certain level of protection and security to ensure the sustainability of investments.
Under the Agreement, each of Turkey and China agree to certain undertakings to ease the investment climate and secure the investment environment for investments from each country into the other. These undertakings provide:
- Security for investments (equitable treatment, adequate law enforcement, compensation of losses, no sanctions, non-nationalization, exceptional expropriation with fair compensation in case of public benefit etc.)
- Ease of investment processes (providing required working visas for expats, amicable settlement of disputes, agreement on seeking resolution before various fora such as competent national courts, ICSID or UNCITRAL arbitration tribunals)
- Efficient circulation for investment related money transfers such as returns, compensation, interest payments, money coming from liquidations (freely and without delay after the fulfilment of fiscal obligations).
In addition to the above, an amendment has been adopted by the amending protocol, repeating the annotation of Turkey to dispute settlement Article 64 of the ICSID Convention, indicating that Turkey shall not accept any referral to the International Court of Justice of disputes concerning the interpretation or application of the Convention on the Settlement of Investment Disputes between Turkey or China and Turkish or Chinese nationals, which are not settled by negotiation.
By Tamsyn Mileham, Partner, and Ian McGrath, Partner, Dentons