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Agreement between the Government of the Republic of Kazakhstan and Government of the Russian Federation on encouragement and mutual protection of investments

of July 6, 1998

The government of the Republic of Kazakhstan and the Government of the Russian Federation which are hereinafter referred to as with Contracting Parties

developing basic provisions of the Agreement on cooperation in the field of investing activities of December 24, 1993,

wishing to strengthen economic cooperation on long-term basis for mutual advantage of both Contracting Parties,

having intentions to create and support favorable conditions for investors of one Contracting Party in the territory of other Contracting Party,

recognizing that encouragement and mutual protection of investments on the basis of this agreement will promote development mutually advantageous trade and economic and sci-tech cooperation,

agreed about the following:

Article 1 of Determination

For the purposes of this agreement:

1. The term "investments" covers all types of the property and intellectual values put by the investor of one Contracting Party in the territory of the state of other Contracting Party according to its legislation, and in particular:

a) personal and real estate, and also any other related property rights;

b) money, and also shares, deposits, and other forms of participation; c) right to claim on money which invests for creation of the economic values, or to the services having economic value connected with investments;

d) exclusive rights on intellectual property items (copyright, the rights to inventions, industrial designs, useful models, trademarks or service marks, trade names, technology, information having the commercial value, and know-how);

e) the rights to implementation of business activity granted on the basis of the law or the agreement.

No change of form in which property invests or reinvested will influence their nature as investments provided that such change will not contradict the legislation of the Contracting Party in the territory of which state investments are performed.

2. The term "investor" means concerning each of Contracting Parties:

a) any physical person who is the citizen of the state of the Contracting Party or constantly living in the territory of the state of the Contracting Party and competent according to its legislation to perform investments in the territory of the state of other Contracting Party;

b) any legal entity created according to the legislation existing in the territory of the state of this Contracting Party provided that the legal entity is competent according to the legislation of the Contracting Party to perform investments in the territory of the state of other Contracting Party.

3. The term "income" means the means received as a result of investments according to Item 1 of this Article, and includes, in particular: profit, dividends, percent, license and commission fees, and also other remunerations.

4. The term "legislation of the Contracting Party" means the legislation of the state of the Contracting Party.

Article 2 Encouragement and protection of investments

1. Each Contracting Party will encourage investors of other Contracting Party to perform investments in the territory of the state and to allow such investments according to the legislation.

2. Each Contracting Party guarantees legal protection to investments of investors of other Contracting Party according to the legislation.

Article 3 Mode of Investments

1. Each Contracting Party will provide in the territory of the state to the investments performed by investors of other Contracting Party, and activities in connection with such investments the fair and equal mode excluding application of measures of discrimination nature which could interfere with management and the order of investments.

2. The mode mentioned in Item 1 of this Article will be at least favorable, than the mode which is provided to investments and activities in connection with investments of own investors or investors of any third state.

3. Each Contracting Party reserves the right to determine industries and fields of activity in which activities of foreign investors are excluded or limited.

4. The most favored nation treatment provided according to Item 2 of this Article will not extend to benefits which the Contracting Party provides or will provide in the future:

a) in connection with participation in the free trade area, custom or economic union;

b) on the basis of the agreement on avoidance of double taxation or other arrangements on the tax matters.

Article 4 Main personnel

1. The contracting party according to the legislation concerning entrance, stay and works of persons who are not her citizens resolves physical persons which are investors of other Contracting Party, and the main personnel (leading, administrative, technical), hired by legal entities of this Contracting Party to drive and remain in the territory of its state for the purpose of implementation of activities in connection with investments.

2. The contracting party, according to the legislation, permits the investors of other Contracting Party who performed investments in the territory of the state of the first Contracting Party to hire in the territory of the state the main personnel at the choice, irrespective of nationality.

Article 5 Openness and availability of the legislation

Each Contracting Party for the purpose of the assistance to understanding of the legislation relating or affecting the investments performed by investors of other Contracting Party in the territory of its state provides openness and availability of such legislation.

Article 6 Compensation of Damage

The mode at least favorable will be provided to investors of one Contracting Party to whose investments damage in the territory of the state of other Contracting Party owing to war, civil conflicts or other similar circumstances is caused, than that which the last Contracting Party provides to own investors or investors of any third state concerning any form of compensation of such damage.

Article 7 Expropriation

1. The investments of investors of one Contracting Party performed in the territory of the state of other Contracting Party will not be expropriated, nationalized or subjected to the measures equal for effects of expropriation or nationalization (further hereinafter are referred to as - expropriation), except as specified, when such measures are taken in public concerns in the procedure established by the legislation, are not discrimination and are followed by payment of bystry, adequate and effective compensation.

2. Compensation shall correspond to market value of the expropriated investments directly before date when officially it became known of the actual implementation or of the forthcoming expropriation. Compensation is paid without delay in freely convertible currency and freely transferred from the territory of the state of one Contracting Party to the territory of the state of other Contracting Party. To payment date on compensation amount percent on LIBOR rate will be charged.

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