Decision of Economic Court of the Commonwealth of Independent States

of January 21, 1997 No. C-1/12-96/C-1/18-96

Economic Court of the Commonwealth of Independent States in structure:

the chairman - the vice-chairman of Economic Court Apostle D.D.,

judges of Economic Court of Bekenov R. A., Vylkova I. K., Dashuka L. A., Makhmudova L. Sh., Miroshnik V. I., Simonyana G. V.,

in case of Madudina T. I. secretary.,

with participation of General advisers of Economic Court of Pronina M. G. and Lazarenkova E.V.,

having considered case on requests of Interstate bank and the Executive Secretariat of the Commonwealth of Independent States on interpretation in proceeding in open court,

established:

The interstate bank and the Executive Secretariat of the Commonwealth of Independent States appealed to Economic Court with statements for interpretation of Article 6 of the Agreement on cooperation in the field of investing activities of December 24, 1993, and Interstate bank - and about interpretation of article 16 of the Agreement on mutual recognition of the rights and regulation of the relations of property of October 9, 1992.

Interpretation as applicants specify, is necessary for determination of legal status of investors of the State Parties of the Agreement on cooperation in the field of investing activities of December 24, 1993 in the territory of other State Parties of this Agreement, and in particular whether investors of the State Parties in the territory of each other have the status of foreign investors.

The analysis of the Agreement of December 24, 1993 of the legislation on investments existing in the State Parties, and also Agreements on cooperation in the field of investing activities of December 24, 1993 allowed Economic Court to draw the following conclusions.

The investors performing investments in the territory of any state depending on their national (state) identity are subdivided into two groups: national investors and foreign investors.

National investors:

the legal entities of the state in the place of investment created according to the legislation of this state;

physical persons - the citizens of the state in the place of investment who are constantly living in its territory citizens of other states (foreign citizens), and also stateless persons;

the state and the state and administrative-territorial educations located within its territory on behalf of the legal entities and physical persons authorized by them according to the legislation of this state.

It is conditionally possible to call this group of investors "own investors of the state in the place of investment" or "investors of this state".

Foreign investors:

foreign legal entities;

foreign citizens, stateless persons, and also the citizens of the state in the place of investment having the permanent residence abroad;

international organizations;

foreign states.

Taking into account stated it is necessary to state that the investors of one State Party of the Commonwealth of Independent States performing investments in the territory of other State Party shall be considered as foreign investors.

The national legal system of the State Parties of the Commonwealth of Independent States contains the special legal acts and regulations regulating national investments, on the one hand, and foreign investments - with another.

The legal acts of the State Parties of the Commonwealth regulating foreign investments in their territories provide concerning the specified investments, and also activities of foreign investors for implementation of these investments at least favorable legal regime, than for investing activities of legal entities and citizens of the country (country recipient), behind the exceptions provided by the Law (article 6 of the Law RSFSR of July 4, 1991 "About foreign investments in RSFSR", article 6 of the Law of the Republic of Armenia of July 31, 1991 "About foreign investments", article 7 of the Decree of Ukraine of May 20, 1993 "About the mode of foreign investment", etc.).

In case of establishment for foreign investments of national treatment of investment legal acts of the State Parties of the Commonwealth provide at the same time as separate withdrawals (for example, on participation in privatization of state-owned property, prohibition or restriction to be engaged in separate types of activity or in separate zones, etc.), and some privileges and benefits (for example, on the taxation, on export of self-produced products, etc.).

The legal regime of foreign investments can be also determined and international (bilateral or multilateral) by agreements. At the same time the legal acts of all State Parties of the Commonwealth regulating foreign investments provide that if the international treaty establishes other rules, than those which contain in the national legal system are applied rules of the international treaty (article 38 of the Law of the Republic of Belarus of November 14, 1991 "About foreign investments in the territory of the Republic of Belarus", article 5 of the Law of the Kyrgyz Republic of June 28, 1991 "About foreign investments in the Republic Kyrgyzstan", etc.).

Such international agreements, in particular, regional, were concluded by the State Parties of the Commonwealth of Independent States.

Article 16 of the Agreement on mutual recognition of the rights and regulation of the relations of property of October 9, 1992 provides: "The parties are recognized that their legal entities and physical persons performing investments are considered in the territory of each other as foreign investors. Their activities in the territory of each of the Parties are performed according to its legislation on foreign investments and international agreements in which contracting parties participate".

Participants of the specified Agreement are the Republic of Armenia, the Republic of Belarus, Georgia, the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Moldova, the Russian Federation, the Republic of Tajikistan, Turkmenistan, the Republic of Uzbekistan.

The agreement of October 9, 1992 according to Article 19 became effective from the date of its signing, and for the State Parties of the Commonwealth which legislation requires ratification of such agreements, - from the date of delivery of instruments of ratification to the state depositary.

On December 24, 1993 the State Parties of the Commonwealth of Independent States sign the Agreement on cooperation in the field of investing activities which Article 6 established: "The relations connected with investments of the Parties are regulated by the relevant provisions of the legislation of the state in the place of investment established for investors of this state, this agreement and other agreements between his participants, and also international agreements in which the Parties participate. At the same time, during further enhancement of the legislation, the Parties will recognize that legal regime of investments of the Parties, and also activities of investors for their implementation cannot be less favorable, than the mode for investing activities of legal entities and physical persons of the state in the place of investment".

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