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Toward for the Creation of International Investment Rules
and Improvement of the Japanese Investment Environment


The following agreement simply lists provisions which Japanese business wishes to see contained in principle in any bilateral investment treaty, and is not intended to be exhaustive. Actual negotiations will require a flexible response to the needs of contracting states. This model treaty was created based on the US Government model bilateral investment treaty, the Agreement between Japan and the Republic of Singapore for a New-Age Economic Partnership, the Agreement between Japan and the Republic of Korea for the Liberalization, Promotion and Protection of Investment and other agreements.


Contracting Parties,

Desiring to further promote investment in order to deepen bilateral economic ties;

Seeking to create more favorable conditions for the expansion of investment in both Contracting Parties;

Hereby agree as follows:


Investment shall comprise those assets directly or indirectly owned or controlled by investors (natural persons, juridical persons or other legal entities) and includes investment consisting or taking the form of:

  1. Companies (juridical persons and other groups);
  2. Stocks, equity, or any other corporate holdings;
  3. Securities, corporate bonds, loans or any other form of debt interests;
  4. Contractual rights;
  5. Intellectual property rights;
  6. Rights to search for, extract or exploit natural resources;
  7. Tangible or intangible assets other than those above, movable and immovable property, mortgages and other property rights;
  8. Any value arising from investment assets.


In principle, all areas of investment shall be covered. Contracting Parties may stipulate exemptions in areas related to national security. Where both Contracting Parties are in agreement, specific areas may be exempted. Exemption lists will be created. Contracting Parties shall endeavor to progressively reduce and eliminate these exemptions.


  1. Contracting Parties shall announce promptly all domestic measures which pertain to or affect investment, including laws, regulations, administrative procedures and judicial decisions, and shall make these publicly available.

  2. Contracting Parties shall ensure that investment-related administrative approval and licensing procedures do not become an unnecessary barrier by working to secure transparency. This shall include providing notification of decisions based on objective and transparent standards within a reasonable time frame in response to requests in accordance with domestic law.

  3. Contracting Parties shall establish litigation procedures independent of legislative and administrative institutions to engage in non-discriminatory, transparent, timely and effective investigations so as to enable complaints to be laid in regard to domestic investment-related measures in response to an investor request.

  4. Contracting Parties shall notify the other Parties promptly of the introduction of or changes to domestic measures related to investment, such as laws, regulations and administrative procedures.

  5. Each Party shall establish an enquiry point to supply information on domestic measures in relation to investment in response to requests for specific information from other member states or investors.

  6. Each contracting state shall publish a notice on domestic measures such as laws and regulations related to investment prior to the formulation of said measures, and, where a written opinion is submitted by an investor from another Member state, engage in discussions in response to said request, and consider both the submitted opinion and the results of discussions.


Contracting Parties shall provide fair and equitable treatment and full and continued protection and security for the investments of investors from other contracting states.


Contracting Parties shall not expropriate investment unless this expropriation meets all the following criteria:

  1. Expropriation is for the purpose of public interest.
  2. Expropriation is based on the principle of non-discrimination.
  3. Expropriation is undertaken in accordance with due process of law and the principles of international law.
  4. Prompt payment is made in an internationally convertible currency of compensation equivalent to the fair market value of the investment immediately prior to expropriation.


Each Party shall guarantee that investors will be able to effect all remittance, including investment profits, freely, without delay, and in an internationally convertible currency. Contracting states shall also guarantee that investors will be able to freely convert their funds to any currency.


Each Party shall accord treatment no less favorable than it accords to a third country in regard to investments in terms of investment approvals and licenses and post-investment business activities, including establishment, acquisition, expansion, operation, management, maintenance, use, possession, settlement, sale or other disposal of investment assets.

Most-favored-nation treatment shall also apply to the right to appeal and tax matters.


Each Party shall accord treatment no less favorable than it accords to its own nationals or companies to the investment of other Parties in regard to investment approvals and licenses and post-establishment business activities. However, on the agreement of Parties, certain areas may be exempted.

National treatment shall also apply to the right to appeal and tax matters.


Neither Party shall mandate or enforce the following performance requirements.

  1. Merger requirements (requirement that a joint venture be established with a local company)
  2. Domestic sales regulations (linkage to export volume or foreign exchange revenue value as a means of limiting the sale of goods produced or services supplied through investment)
  3. Technology transfer requirements (requirement that a technology, manufacturing process or know-how with asset value be transferred to natural persons or juridical persons within the host territory)
  4. Export requirements (requirement that a certain level or ratio of goods or services be exported)
  5. Supply area designation requirement (requiring designation of specific areas to which manufactured goods or services can be supplied)
  6. Headquarters establishment requirement (requirement that company headquarters for a specific region or the world market be established in the host territory)
  7. Product mandate requirement (requirement that a company act as a monopolistic supplier for a specific region or the world market for the goods it manufactures or the products it supplies)
  8. R&D requirement (requirement that a certain level or value of R&D is achieved within the host territory)
  9. Local nationals employment requirement (requirement that a certain level of local nationals be employed)
(These performance requirements are listed in the order of priority for Japanese business. We wish the Japanese Government to negotiate the inclusion in bilateral investment agreements of provisions prohibiting these requirements, with the same priority as above.)

Where any Contracting Party is not a WTO Member, conformance will also be sought with the provisions of the WTO TRIMs Agreement, including local content requirements, export-import equilibrium requirements, exchange regulations, export and import restrictions, and other requirements not in conformance with national treatment and the general prohibition on quantitative restrictions.


Contracting Parties shall not maintain or introduce nationality requirements, residence requirements or limitations of numbers for key personnel in regard to investments from other Contracting Parties.

Contracting Parties shall permit the temporary entry and sojourn of key personnel and investors necessary to the investments of other contracting Parties, and shall grant work permits expeditiously.

Key personnel shall include company executives, managers, specialists and other general white-collar staff.


Where a dispute arises between Contracting Parties or between an investor in one Party and another Party in regard to the interpretation, application, or other issue pertaining to this Agreement, consultations or negotiations shall be conducted between parties to the dispute. Where the dispute cannot be resolved by consultation or negotiation between the parties to the dispute, an arbitration tribunal shall be established to rule on the matter.

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