SUNDAY MAY 19: Riyadh, Islamabad to expedite treaty: MFN treatment to be accorded to investors

ISLAMABAD: Pakistan and Saudi Arabia have reportedly decided to expedite finalisation of an agreement on encouragement and reciprocal protection of investment according to which both countries will accord most favoured nation treatment to investors, official sources told Business Recorder.
The sources said Board of Investment (BoI), after Cabinet approval in 2004 started negotiations with the Saudi counterparts on the draft agreement on encouragement and reciprocal protection of investment. The Saudi side conveyed their comments on the amended draft agreement in 2008 and proposed minor amendments to almost all articles. In June 2010 the draft agreement was finalised in consultation with all stakeholders and keeping in view the comments of Saudi side.
The ninth Session of Pak Saudi Arabia Joint Ministerial Commission (JMC) was held on September 26, 2012, in Islamabad. Both delegations felt the need for early resumption of talks between concerned authorities in both countries within three months so that the draft agreement which aims at promotion and protection of investments in both countries could be finalised.
As a follow up of ninth JMC a review meeting with Saudi delegation was also held on March 26, 2013 in Islamabad. It was decided that, General Body of Investment in Saudi Arabia and Board of Investment of Pakistan will exchange copies of the draft agreement on Promotion and Protection of Investment so that both sides can deliberate on the final version.
According to the draft agreement each contracting state will grant investments once admitted and investment returns of investors of the other contracting state a treatment not less favourable than that accorded to investments and investment returns of investors of any third state.
In accordance with its laws and regulations each contracting state shall grant investments once admitted and investment returns of investors of the other contracting state a treatment not less favourable than that accorded to investments and investment returns of its investors. The draft agreement further suggests that the investors of either contracting state whose investments suffer losses in connection with their investments in the territory of other contracting state owning to war or other armed conflict, revolution, a state of general emergency, or revolt, will be accorded treatment not less favourable by such other contracting state to its own investors. Such payments will be freely transferable.
Contracting states may prevent a transfer through the equitable, non-discriminatory and good faith application of its laws relating to: (i) bankruptcy, insolvency or the protection of rights of creditors; (ii) issuing, trading or dealing in securities; (iii) criminal or penal offences; (iv) financial reporting or record keeping of transfers when necessary to assist the financial regulatory authorities or the law enforcement initiated by these authorities; (v) ensuring compliance with orders or judgements in judicial proceedings; and (vi) in compliance with tax obligation in case of a final liquidation an investment.