Increased economic activity between Curacao and Suriname II: Bilateral investment treaties

February 25, 2015 3:26 PM

In an article, dated July 2013, the increased activities between Curacao and Suriname were discribed, which was evidenced, for instance, by negotiations between the two countries on two treaties in the making.

One of the treaties deals with the Reciprocal Recognition and Enforcement of Judgment and Authentic Acts (notarial deeds) in Civil Matters, while the other treaty under negotiation is a tax treaty, which sees on avoiding double taxation and the prevention of tax evasion on income and capital. So far, these treaties have not come into existence.

 
In this follow-up article, we discuss a third treaty, being the Treaty on the Reciprocal Protection of Investments between the Kingdom of The Netherlands and the Republic of Suriname, which is already in force and was entered into on 31 March 2005.
 
Bilateral Investment Treaty ("BIT")
This so-called Bilateral Investment Treaty (“BIT”) is a treaty which is not only in force between The Netherlands and Suriname, but also between the former Netherlands Antilles (being Curacao and Sint Maarten) and Suriname as well as Aruba. The purpose of this treaty is to guarantee a just and honest treatment of the investments of the nationals of the other state, and protecting against discrimination or unreasonable measures. In particular, the contracting states guarantee to treat such investments in a 
way that is not less favorable than those of its own citizens.
 
Suriname is only party to two (2) other Bilateral Investment Treaties; one with Indonesia and one with Cuba. It is however not clear whether these treaties ever came into force.
 
Assets that are protected
Such BIT would protect any form of investment, including investment in real estate, movable property, shares, bonds and other kind of interest in companies and joint ventures, title to moneys, rights in the fields of intellectual property or technical process, goodwill and know-how and rights granted under public law. This includes the rights to prospect, explore, extract and win natural resources.
 
Free movement and convertibility of currency
The contracting parties furthermore guarantee that payments relating to any investment, may be transferred to another country. The transfers shall be made in a freely convertible currency, without undue restriction or delay. Such transfers include in particular, although not exclusively:
 
a.    profits, interest, dividends and other current income;
b.    funds necessary for the acquisition of raw or auxiliary materials, semi fabricated or finished products etc;
c.    additional funds necessary for the development of an investment;
d.    funds in repayment of loans;
e.    royalty or fees;
f.     earnings of national persons;
g.    the proceeds of sale or liquidation of the investment.
 
In other words, the treaty protects assets and movement of money in the broadest sense of the word.
 
Who is protected?
All nationals of The Netherlands, Curacao and Sint Maarten and Aruba. The term “Nationals” would be considered to be:
 
a.    national persons having the nationality of that contracting party; in other words any Curacao, Sint Maarten, Aruba or Dutch citizen, all having the Dutch nationality;
b.    legal persons constituted under the law of that contracting party; this would mean any legal entity validly incorporated under Curacao, Sint Maarten law, Aruba law or under Dutch law;
c.    legal persons not constituted under the law of that contracting party, but controlled directly or indirectly by national persons as defined in (a) or by legal persons as defined in (b) above.
 
A great practical advantage of this treaty is that any Curacao, Sint Maarten, Dutch or Aruban investor that meets any of the above qualifications, would have the benefits of this treaty, including nationals 
and companies from non-treaty countries, that invest in Suriname through e.g. a Curacao or Dutch legal entity.
 
Recourse through International Arbitral Court
Such investor would not be dependent, upon violation by the Government of his investments, to seek monetary recourse for his damages at a Suriname court. He may directly bring a claim to the International Center for Settlement of Investment Disputes (ECSID) situated in the United States. ECSID is a public international organization, created by an international convention. As Suriname has consented to be bound by the ECSID Convention, it must honor any arbitral awards, rendered against 
Suriname.
 
Nationalisation and just compensation
The treaty requires that nationalization is only allowed when:
 
a.    done in the public interest;
b.    done under due process of law, 
c.     it is non discriminatory; and 
d.    done against just compensation.
 
Market value
Such compensation shall represent the market value of the investments. This valuation is made immediately before the (nationalization) measures are taken or at the time the measures will have become public knowledge, whichever is earlier. This is an important provision, for the market value of investments tends to drop dramatically as and when any intended nationalization is made public.
 
Author: Randolph van Eps of VanEps Kunneman VanDoorne
 
 
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