INVESTMENT INCENTIVE AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF TONGA

(Suva – Nuku’alofa, 22 August 1983 – 26 November 1984)

ENTRY INTO FORCE: 26 NOVEMBER 1984

The American Charge d'Affaires ad interim to the Tongan Secretary for Foreign Affairs

EMBASSY OF THE UNITED STATES OF AMERICA

Suva, Fiji

22 August 1983
 
Dear Secretary:

In 1979, the then United States Ambassador accredited to His Majesty's Government proposed that the Government of Tonga consider concluding an Investment Incentive Agreement with the United States whereby the Government of Tonga would become eligible for programs offered by the Overseas Private Investment Corporation (OPIC). At that time, I understand, His Majesty's Government indicated interest in the matter.

I should like to renew that proposal. OPIC is a United States Government institution created in 1969 to mobilize and facilitate the flow of private U.S. capital and skills to friendly countries and areas of the developing world. Under its charter, OPIC operates two main programs: It finances projects sponsored by eligible U.S. investors in countries with which OPIC has concluded an agreement, and it insures U.S. private investors against certain political risks. Fiji has had such an agreement with OPIC since 1976. 

I have enclosed with this letter both background material on OPIC and the text of a draft Investment Incentive Agreement for your review. I would very much appreciate receiving your Government's views on this proposal and whether it would be interested in entering into such an agreement as soon as is convenient.

Highest considerations,

Sincerely,
 
Enclosures

As Stated
 
Excellency:

I have the honor to refer to conversations which have recently taken place between representatives of our two Governments relating to economic activities in Tonga which promote the development of the economic resources and productive capacities of Tonga to investment insurance (including reinsurance) and guaranties which are backed in whole or in part by the credit or public monies of the United States of America and are administered either directly by the Overseas Private Investment Corporation ("OPIC"), an independent government corporation organized under the laws of the United States of America, or pursuant to arrangements between OPIC and commercial insurance, reinsurance and other companies. 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, reinsurance or guarantee which is issued in accordance with this Agreement by OPIC, by any successor agency of the United States of America or by any other entity or group of entities, pursuant to arrangements with OPIC or any successor agency, all of whom are hereinafter deemed included in the term "Issuer" to the extent of their interest as insurer, reinsurer, or guarantor in any Coverage, whether as a party or successor to a contract providing Coverage or as an agent for the administration of Coverage.

Article 2

The procedures set forth in this Agreement shall apply only with respect to Coverage relating to projects or activities registered with or otherwise approved by the Government of Tonga or to Coverage relating to projects with respect to which the Government of Tonga, or any agency or political subdivision thereof, has entered into a contract involving the provision of goods or services.

Article 3

(a) If the Issuer makes payment to any party under Coverage, the Government of Tonga 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 Issuer to any right, title, claim, privilege, or cause of action existing, or which may arise, in connection therewith.

(b) The Issuer shall assert no greater rights than those of the transferring party under Coverage with respect to any interests transferred or succeeded to under this Article. Nothing in this Agreement shall limit the right of the Government of the United States of America to assert a claim under international law in its sovereign capacity, as distinct from any rights it may have as Issuer.

(c) The issuance of Coverage outside of Tonga with respect to a project or activity in Tonga shall not subject the Issuer to regulation under the laws of Tonga applicable to insurance or financial organizations.

(d) Funds introduced or acquired in Tonga or withdrawn from Tonga by the Issuer shall be exempt from all taxes upon income, real property or sales, from customs duties, and from any other similar taxes or levies in Tonga.

Article 4

To the extent that the laws of Tonga partially or wholly invalidate or prohibit the acquisition from a party under Coverage of any interest in any property within the territory of Tonga by the Issuer, the Government of Tonga shall permit such party and the Issuer to make appropriate arrangements pursuant to which such interests are transferred to an entity permitted to own such interests under the laws of Tonga.

Article 5

Amounts in the lawful currency of Tonga, including credits thereof, acquired by the Issuer by virtue of such Coverage shall be accorded treatment by the Government of Tonga no less favorable as to use and conversion than the treatment to which such funds would be entitled in the hands of the party under Coverage.

Such amounts and credits may be transferred by the Issuer to any person or entity and upon such transfer shall be freely available for use by such person or entity in the territory of Tonga.

Article 6

(a) Any dispute between the Government of the United States of America and the Government of Tonga regarding the interpretation of this Agreement or which, in the opinion of one of the Governments, involves a question of public international law arising out of any project or activity for which Coverage has been issued shall be resolved, insofar as possible, through negotiations between the two Governments. If at the end of three months following the request for negotiations 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).

(b) The arbitral tribunal for resolution of disputes pursuant to Article 6(a) shall be established and function as follows:

(i) 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 and be appointed by the two Governments. The arbitrators 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 foregoing time limits, either Government may, in the absence of any other agreement, request the President of the International Court of Justice to make the necessary appointment or appointments, and both Governments agree to accept such appointment or appointments.

(ii) 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 binding.

(iii) Each of the Governments shall pay the expense of its arbitrator and of its representation in the proceedings before the arbitral tribunal; the expenses 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.

(iv) In all other matters, the arbitral tribunal shall regulate its own procedures.

Article 7

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 an intent no longer to be a party to the 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.

Upon receipt of a note from Your Excellency indicating that the foregoing provisions are acceptable to the Government of Tonga, the Government of the United States of America will consider that this note and your reply thereto constitute an Agreement between our two Governments on this subject, to enter into force on the date of the note by which the Government of Tonga communicates to the Government of the United States of America that this exchange of notes has been approved pursuant to its constitutional procedures.

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

The Tongan Prime Minister to the American Charge d'Affaires ad interim

PRIME MINISTER'S OFFICE, NUKU'ALOFA, TONGA.

26th November 1984
 
Mr R. Surber,
Charge d'Affairs a.i.,
American Embassy,
Suva,
FIJI.
 
Dear Mr Surber,

I have the honour to refer to your letter  dated August 22, 1983 and to the Overseas Private Investment Corporation (OPIC) Investment Incentive Agreement.

I can now advise you that this Agreement has been approved pursuant to the constitutional procedures of the Government of the Kingdom of Tonga and that this exchange of letters therefore constitutes an Agreement between our two Governments to enter into effect on the date of this letter.

Yours sincerely,

SIGNATORIES:
Russell J. Surber
Charge d'Affaires ad interim
 
Mr. Siaosi T. 'Aho
Secretary for Foreign Affairs
Kingdom of Tonga
Nuku'alofa, Tonga
 
Russell J. Surber
August 22, 1983
 
(H.R.H. [ILLEGIBLE WORD] ipelehake)
Prime Minister