Chapter Eleven-- Cross-Border Trade in Services

Chapter Eleven-- Cross-Border Trade in Services

Article 11.1:  Scope and Coverage

1. This Chapter applies to measures adopted or maintained by a Party affecting cross-border

trade in services by service suppliers of another Party.  Such measures include measures

affecting:

 

(a) the production, distribution, marketing, sale, and delivery of a service;

(b) the purchase or use of, or payment for, a service;

(c) the access to and use of distribution, transport, or telecommunications networks

and services in connection with the supply of a service;

(d) the presence in its territory of a service supplier of another Party; and

(e) the provision of a bond or other form of financial security as a condition for the

supply of a service.

2. For purposes of this Chapter, “measures adopted or maintained by a Party” means

measures adopted or maintained by:

(a) central, regional, or local governments and authorities; and

(b) non-governmental bodies in the exercise of powers delegated by central, regional,

or local governments or authorities.

3. Articles 11.4, 11.7, and 11.8 also apply to measures by a Party affecting the supply of a

service in its territory by an investor of another Party as defined in Article 10.28 (Definitions) or

a covered investment.1

4. This Chapter does not apply to:

(a) financial services, as defined in Article 12.20 (Definitions), except as provided in

paragraph 3;

(b) air services, including domestic and international air transportation services,

whether scheduled or non-scheduled, and related services in support of air

services, other than:

                                                

1

  The Parties understand that nothing in this Chapter, including this paragraph, is subject to investor-state dispute

settlement pursuant to Section B of Chapter Ten (Investment).

 

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(i) aircraft repair and maintenance services during which an aircraft is

withdrawn from service, and

(ii) specialty air services;

(c) procurement; or

(d) subsidies or grants provided by a Party, including government-supported loans,

guarantees and insurance.

5. This Chapter does not impose any obligation on a Party with respect to a national of

another Party seeking access to its employment market, or employed on a permanent basis in its

territory, and does not confer any right on that national with respect to that access or

employment.

6. This Chapter does not apply to services supplied in the exercise of governmental

authority.  A “service supplied in the exercise of governmental authority” means any service that

is supplied neither on a commercial basis, nor in competition with one or more service suppliers.

Article 11.2:  National Treatment

1. Each Party shall accord to service suppliers of another Party treatment no less favorable

than that it accords, in like circumstances, to its own service suppliers. 

2. The treatment to be accorded by a Party under paragraph 1 means, with respect to a

regional level of government, treatment no less favorable than the most favorable treatment

accorded, in like circumstances, by that regional level of government to service suppliers of the

Party of which it forms a part.

Article 11.3:  Most-Favored-Nation Treatment

 Each Party shall accord to service suppliers of another Party treatment no less favorable

than that it accords, in like circumstances, to service suppliers of any other Party or a non-Party.

Article 11.4:  Market Access

 No Party may adopt or maintain, either on the basis of a regional subdivision or on the

basis of its entire territory, measures that:

(a) impose limitations on:

(i) the number of service suppliers whether in the form of numerical quotas,

monopolies, exclusive service suppliers, or the requirement of an

economic needs test,

 

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(ii) the total value of service transactions or assets in form of numerical quotas

or the requirement of an economic needs test,

(iii) the total number of service operations or on the total quantity of services

output expressed in terms of designated numerical units in the form of

quotas or the requirement of an economic needs test,2 or

(iv) the total number of natural persons that may be employed in a particular

service sector or that a service supplier may employ and who are

necessary for, and directly related to, the supply of a specific service in the

form of numerical quotas or the requirement of an economic needs test; or

(b) restrict or require specific types of legal entity or joint venture through which a

service supplier may supply a service.

Article 11.5:  Local Presence

 No Party may require a service supplier of another Party to establish or maintain a

representative office or any form of enterprise, or to be resident, in its territory as a condition for

the cross-border supply of a service.

Article 11.6:  Non-conforming Measures

1. Articles 11.2, 11.3, 11.4, and 11.5 do not apply to:

(a) any existing non-conforming measure that is maintained by a Party at:

(i) the central level of government, as set out by that Party in its Schedule to

Annex I;

(ii) a regional level of government, as set out by that Party in its Schedule to

Annex I; or

(iii) a local level of government;

(b) the continuation or prompt renewal of any non-conforming measure referred to in

subparagraph (a); or

(c) an amendment to any non-conforming measure referred to in subparagraph (a) to

the extent that the amendment does not decrease the conformity of the measure, as

it existed immediately before the amendment, with Articles 11.2, 11.3, 11.4, and

11.5.

                                                

2

  This clause does not cover measures of a Party that limit inputs for the supply of services.

 

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2. Articles 11.2, 11.3, 11.4, and 11.5 do not apply to any measure that a Party adopts or

maintains with respect to sectors, sub-sectors or activities as set out in its Schedule to Annex II.

Article 11.7:  Transparency in Developing and Applying Regulations3

 Further to Chapter Eighteen (Transparency):

(a) each Party shall maintain or establish appropriate mechanisms for responding to

inquiries from interested persons regarding its regulations relating to the subject

matter of this Chapter; 

(b) at the time it adopts final regulations relating to the subject matter of this Chapter,

each Party shall, to the extent possible, including on request, address in writing

substantive comments received from interested persons with respect to the

proposed regulations; and

(c) to the extent possible, each Party shall allow a reasonable time between

publication of final regulations and their effective date.

Article 11.8:  Domestic Regulation

1. Where a Party requires authorization for the supply of a service, the Party’s competent

authorities shall, within a reasonable time after the submission of an application considered

complete under its laws and regulations, inform the applicant of the decision concerning the

application.  At the request of the applicant, the Party’s competent authorities shall provide,

without undue delay, information concerning the status of the application.  This obligation shall

not apply to authorization requirements that are within the scope of Article 11.6.2.

2. With a view to ensuring that measures relating to qualification requirements and

procedures, technical standards, and licensing requirements do not constitute unnecessary

barriers to trade in services, each Party shall endeavor to ensure, as appropriate for individual

sectors, that any such measures that it adopts or maintains are:

(a) based on objective and transparent criteria, such as competence and the ability to

supply the service;

(b) not more burdensome than necessary to ensure the quality of the service; and

(c) in the case of licensing procedures, not in themselves a restriction on the supply

of the service.

3. If the results of the negotiations related to Article VI:4 of the GATS (or the results of any

similar negotiations undertaken in other multilateral fora in which the Parties participate) enter

                                                

3

  For greater certainty, “regulations” includes regulations establishing or applying to licensing authorization or

criteria.

 

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into effect for each Party, this Article shall be amended, as appropriate, after consultations

between the Parties, to bring those results into effect under this Agreement.  The Parties will

coordinate on such negotiations as appropriate.

Article 11.9:  Mutual Recognition

1. For the purposes of the fulfillment, in whole or in part, of its standards or criteria for the

authorization, licensing, or certification of services suppliers, and subject to the requirements of

paragraph 4, a Party may recognize the education or experience obtained, requirements met, or

licenses or certifications granted in a particular country, including another Party and a non-Party. 

Such recognition, which may be achieved through harmonization or otherwise, may be based

upon an agreement or arrangement with the country concerned or may be accorded

autonomously.

2. Where a Party recognizes, autonomously or by agreement or arrangement, the education

or experience obtained, requirements met, or licenses or certifications granted in the territory of

another Party or a non-Party, nothing in Article 11.3 shall be construed to require the Party to

accord such recognition to the education or experience obtained, requirements met, or licenses or

certifications granted in the territory of any other Party.

3. A Party that is a party to an agreement or arrangement of the type referred to in paragraph

1, whether existing or future, shall afford adequate opportunity for another Party, if that other

Party is interested, to negotiate its accession to such an agreement or arrangement or to negotiate

a comparable one with it.  Where a Party accords recognition autonomously, it shall afford

adequate opportunity for another Party to demonstrate that education, experience, licenses, or

certifications obtained or requirements met in that other Party’s territory should be recognized.

4. No Party may accord recognition in a manner that would constitute a means of

discrimination between countries in the application of its standards or criteria for the

authorization, licensing, or certification of services suppliers, or a disguised restriction on trade

in services.

5. Annex 11.9 applies to measures adopted or maintained by a Party relating to the licensing

or certification of professional service suppliers as set out in that Annex.

Article 11.10:  Transfers and Payments

1.  Each Party shall permit all transfers and payments relating to the cross-border supply of

services to be made freely and without delay into and out of its territory.  

2. Each Party shall permit such transfers and payments relating to the cross-border supply of

services to be made in a freely usable currency at the market rate of exchange prevailing at the

time of transfer.

3. Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer or payment through

the equitable, non-discriminatory, and good faith application of its laws relating to:

 

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(a) bankruptcy, insolvency, or the protection of the rights of creditors;

(b) issuing, trading, or dealing in securities, futures, options, or derivatives;

(c) financial reporting or record keeping of transfers when necessary to assist law

enforcement or financial regulatory authorities;

(d) criminal or penal offenses; or

(e) ensuring compliance with orders or judgments in judicial or administrative

proceedings.

Article 11.11:  Implementation

 The Parties shall consult annually, or as otherwise agreed, to review the implementation

of this Chapter and consider other issues of mutual interest.

Article 11.12:  Denial of Benefits

1. A Party may deny the benefits of this Chapter to a service supplier of another Party if the

service is being supplied by an enterprise owned or controlled by persons of a non-Party, and the

denying Party:

(a) does not maintain diplomatic relations with the non-Party; or

(b) adopts or maintains measures with respect to the non-Party that prohibit

transactions with the enterprise or that would be violated or circumvented if the

benefits of this Chapter were accorded to the enterprise.

2. Subject to Articles 18.3 (Notification and Provision of Information) and 20.4

(Consultations), a Party may deny the benefits of this Chapter to a service supplier of another

Party that is an enterprise of such other Party if the enterprise has no substantial business

activities in the territory of any Party, other than the denying Party, and persons of a non-Party,

or the denying Party, own or control the enterprise.

Article 11.13:  Specific Commitments

1. Express Delivery Services:

(a) The Parties affirm that measures affecting express delivery services are subject to

this Agreement.

(b) For purposes of this Agreement, express delivery services means the collection,

transport, and delivery, of documents, printed matter, parcels, goods, or other

items on an expedited basis, while tracking and maintaining control of these items

throughout the supply of the service.  Express delivery services do not include (i)

 

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air transport services, (ii) services supplied in the exercise of governmental

authority, or (iii) maritime transport services.4

(c) The Parties express their desire to maintain at least the level of market openness

they provided for express delivery services existing on the date this Agreement is

signed.

(d) Neither a Central American Party nor the Dominican Republic may adopt or

maintain any restriction on express delivery services that is not in existence on the

date this Agreement is signed.  Each such Party confirms that it does not intend to

direct revenues from its postal monopoly to benefit express delivery services as

defined in subparagraph (b).  Under title 39 of the United States Code, an

independent government agency determines whether postal rates meet the

requirement that each class of mail or type of mail service bear the direct and

indirect postal costs attributable to that class or type plus that portion of all other

costs of the U.S. Postal Service reasonably assignable to such class or type.

(e) Each Party shall ensure that, where its monopoly supplier of postal services

competes, either directly or through an affiliated company, in the supply of

express delivery services outside the scope of its monopoly rights, such a supplier

does not abuse its monopoly position to act in its territory in a manner

inconsistent with the Party’s obligations under Articles 11.2, 11.3, 11.4, 10.3

(National Treatment), or 10.4 (Most-Favored-Nation Treatment).  The Parties also

reaffirm their obligations under Article VIII of the GATS.5

2. A Party’s Section of Annex 11.13 sets out specific commitments by that Party.

Article 11.14:  Definitions

 For purposes of this Chapter: 

cross-border trade in services or cross-border supply of services means the supply of a

service:

(a) from the territory of one Party into the territory of another Party; 

(b) in the territory of one Party by a person of that Party to a person of another Party;

or

                                                

4

  For greater certainty, for the United States, express delivery services do not include delivery of letters subject to

the Private Express Statutes (18 U.S.C. § 1693 et seq., 39 U.S.C. § 601 et seq.), but do include delivery of letters

subject to the exceptions to, or suspensions promulgated under, those statutes, which permit private delivery of

extremely urgent letters.

5

  For greater certainty, the Parties reaffirm that nothing in this Article is subject to investor-state dispute settlement

pursuant to Section B of Chapter Ten (Investment).

 

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(c) by a national of a Party in the territory of another Party;

but does not include the supply of a service in the territory of a Party by an investor of another

Party as defined in Article 10.28 (Definitions) or a covered investment;

enterprise means an “enterprise” as defined in Article 2.1 (Definitions of General Application),

and a branch of an enterprise; 

enterprise of a Party means an enterprise constituted or organized under the laws of that Party,

and a branch located in the territory of that Party and carrying out business activities there;

professional services means services, the provision of which requires specialized post-

secondary education, or equivalent training or experience, and for which the right to practice is

granted or restricted by a Party, but does not include services provided by trades-persons or

vessel and aircraft crew members; 

service supplier of a Party means a person of a Party that seeks to supply or supplies a service;6

and

specialty air services means any non-transportation air services, such as aerial fire-fighting,

sightseeing, spraying, surveying, mapping, photography, parachute jumping, glider towing, and

helicopter-lift for logging and construction, and other airborne agricultural, industrial, and

inspection services.

                                                 

6

  The Parties understand that for purposes of Articles 11.2 and 11.3, “service suppliers” has the same meaning as

“services and service suppliers” in the GATS.

 

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Annex 11.9

Professional Services

Development of Professional Standards

1. The Parties shall encourage the relevant bodies in their respective territories to develop

mutually acceptable standards and criteria for licensing and certification of professional service

suppliers and to provide recommendations on mutual recognition to the Commission.

2. The standards and criteria referred to in paragraph 1 may be developed with regard to the

following matters:

(a) education – accreditation of schools or academic programs;

(b) examinations – qualifying examinations for licensing, including alternative

methods of assessment such as oral examinations and interviews;

(c) experience – length and nature of experience required for licensing;

(d) conduct and ethics – standards of professional conduct and the nature of

disciplinary action for non-conformity with those standards;

(e) professional development and re-certification – continuing education and ongoing

requirements to maintain professional certification;

(f) scope of practice – extent of, or limitations on, permissible activities;

(g) local knowledge – requirements for knowledge of such matters as local laws,

regulations, language, geography, or climate; and

(h) consumer protection – alternatives to residency requirements, including bonding,

professional liability insurance, and client restitution funds, to provide for the

protection of consumers.

3. On receipt of a recommendation referred to in paragraph 1, the Commission shall review

the recommendation within a reasonable time to determine whether it is consistent with this

Agreement.  Based on the Commission’s review, each Party shall encourage its respective

competent authorities, where appropriate, to implement the recommendation within a mutually

agreed time.

Temporary licensing

4. Where the Parties agree, each Party shall encourage the relevant bodies in its territory to

develop procedures for the temporary licensing of professional service suppliers of another

Party.

 

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Review

5. The Commission shall review the implementation of this Annex at least once every three

years.

 

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Annex 11.13  

Specific Commitments

 

Section A:  Costa Rica

1. Costa Rica shall repeal articles 2 and 9 of Law No. 6209, entitled Ley de Protección al

Representante de Casas Extranjeras, dated 9 March 1978, and its regulation, and item b) of

article 361 of the Código de Comercio, Law No. 3284 of 24 April 1964, effective on the date of

entry into force of this Agreement.

2. Subject to paragraph 1, Costa Rica shall enact a new legal regime that shall become

applicable to contracts of representation, distribution, or production, and:

(a) shall apply principles of general contract law to such contracts; 

(b) shall be consistent with the obligations of this Agreement and the principle of

freedom of contract;

(c) shall treat such contracts as establishing an exclusive relationship only if the

contract explicitly states that the relationship is exclusive;

(d) shall provide that the termination of such contracts either on their termination

dates or in the circumstances described in subparagraph (e) is just cause for a

goods or service supplier of another Party to terminate the contract or allow the

contract to expire without renewal; and

(e) will allow contracts with no termination date to be terminated by any of the

parties by giving ten months advance termination notice.

3. The absence of an express provision for settlement of disputes in a contract of

representation, distribution, or production shall give rise to a presumption that the parties

intended to settle any disputes through binding arbitration.  Such arbitration may take place in

Costa Rica.  However, the presumption of an intent to submit to arbitration shall not apply where

any of the parties objects to arbitration.

4. The United States and Costa Rica shall encourage parties to existing contracts of

representation, distribution, or production to renegotiate such contracts so as to make them

subject to the new legal regime enacted in accordance with paragraph 2.

5. In any case, the repeal of articles 2 and 9 of Law No. 6209 shall not impair any vested

right, when applicable, derived from that legislation and recognized under Article 34 of the

Constitución Política de la República de Costa Rica.

 

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6. Costa Rica shall, to the maximum extent possible, encourage and facilitate the use of

arbitration for the settlement of disputes in contracts of representation, distribution, or

production.  To this end, Costa Rica shall endeavor to facilitate the operation of arbitration

centers and other effective means of alternative resolution of claims arising pursuant to Law No.

6209 or the new legal regime enacted in accordance with paragraph 2, and shall encourage the

development of rules for such arbitrations that provide, to the greatest extent possible, for the

prompt, low-cost, and fair resolution of such claims.

7. For purposes of this Section:

(a) contract of representation, distribution, or production has the same meaning

as under Law No. 6209; and

(b) termination date means the date provided in the contract for the contract to end,

or the end of a contract extension period agreed upon by the parties to the

contract. 

Section B:  The Dominican Republic

1. The Dominican Republic shall not apply Law No. 173 to any covered contract signed

after the date of entry into force of this Agreement unless the contract explicitly provides for the

application of Law No. 173 and in place of Law No. 173 shall:

(a) apply principles of the Código Civil of the Dominican Republic to the covered

contract; 

(b) treat the covered contract in a manner consistent with the obligations of this

Agreement and the principle of freedom of contract;

(c) treat the termination of the covered contract, either on its termination date or

pursuant to subparagraph (d), as just cause for a goods or service supplier to

terminate the contract or allow the contract to expire without renewal;

(d) if the covered contract has no termination date, allow it to be terminated by any of

the parties by giving six months advance termination notice;

(e) provide that after the termination of the covered contract or the decision not to

renew it:

(i) if the covered contract contains an indemnification provision, including a

provision providing for no indemnification, the indemnification shall be

based on such provision;

(ii) if the covered contract contains no such provision, any indemnification

shall be based on actual economic damages and not on a statutory formula;

 

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(iii) the principal shall honor any pending warranties; and

(iv) the principal shall compensate the distributor for the value of any

inventory that the distributor is unable to sell by reason of the termination

or decision not to renew the contract.  The value of inventory shall include

any customs duties, surcharges, freight expenses, internal movement costs,

and inventory carrying costs paid by the distributor;

(f) allow disputes arising from the covered contract to be resolved through binding

arbitration; and

(g) allow the parties to the covered contract to establish in the contract the

mechanisms and forums that will be available in the case of disputes.

Nothing in subparagraph (c) shall prevent parties from demanding indemnification, when

appropriate, in the form, type, and amount agreed in the contract.  

2. If Law No. 173 applies to a covered contract, either because the contract was signed

before the entry into force of this Agreement or the contract explicitly provides for the

application of Law No. 173, and the contract is registered with the Banco Central in accordance

with Article 10 of Law No. 173, the Dominican Republic shall provide, consistent with articles

46 and 47 of the Constitución de la República Dominicana, that:

(a) the amount of an indemnity for termination of a covered contract based on the

factors listed in Article 3 of Law No. 173 shall be no greater than would be

available to the claimant under the Código Civil of the Dominican Republic; 

(b) during or after the conciliation process under Article 7 of Law No. 173, the parties

to a contract may agree to resolve the dispute through binding arbitration; and

(c) the Government of the Dominican Republic and the conciliation authorities shall

take all appropriate steps to encourage the resolution of disputes arising under

covered contracts through binding arbitration.

3. For all covered contracts, 

(a) a goods or service supplier shall not be required to pay damages or an indemnity

for terminating a covered contract for just cause or allowing such a contract to

expire without renewal for just cause; and

(b) a contract shall be interpreted as establishing an exclusive distributorship only to

the extent that the terms of the contract explicitly state that the distributor has

exclusive rights to distribute a product or service.

 

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4. The requirement that the parties to a contract seek a negotiated settlement of any dispute

through conciliation, and all other provisions of Law No. 173, shall retain all their validity and

force for all contractual relations not subject to paragraph 1.   

5. For purposes of this Section:

(a) covered contract means a concession contract, as defined in Law No. 173, to

which a goods or service supplier of the United States or any enterprise controlled

by such supplier is a party;

(b) Law No. 173 means Law No. 173, entitled “Ley sobre Protección a los Agentes

Importadores de Mercancías y Productos,” dated April 6, 1966, and its

modifications; and

(c) termination date means the date provided in the contract, or the end of a period

of extension of a contract agreed upon by the parties to the contract.

 

Section C:  El Salvador

1. Articles 394 through 399-B of the Código de Comercio shall apply only to contracts that

were entered into after such Articles entered into force.

2. Articles 394 through 399-B of the Código de Comercio shall not apply to any distribution

contract that a person of the United States enters into after the date of entry into force of this

Agreement, as long as the contract so provides.

3. Parties to a distribution contract shall be permitted to establish in the contract the

mechanisms and forums that will be available in the case of disputes.

4. If a distribution contract makes specific provision for indemnification, including a

provision providing for no indemnification, Article 397 of the Código de Comercio shall not

apply to that contract.

5. Under Salvadoran law, a distribution contract shall be treated as exclusive only if the

contract states so expressly.

6. El Salvador shall encourage parties to distribution contracts made after the date of entry

into force of this Agreement to include provisions providing for binding arbitration of disputes

and specifying methods for determining any indemnity.

7. For purposes of this Section, distribution contract has the same meaning as under

Articles 394 through 399-B of the Código de Comercio.

 

 

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Section D:  Guatemala

1. The Parties recognize that Guatemala, through Decree 8-98 of the Congreso de la

República, which reformed the Código de Comercio de Guatemala, repealed Decree 78-71,

which regulated contracts of agency, distribution, or representation, and created a new regime for

agents of commerce, distributors, and representatives.

2. During the year following the date of entry into force of this Agreement, the United

States and Guatemala shall encourage parties to contracts without a fixed termination date that

remain subject to Decree 78-71 to renegotiate such contracts.  The new contracts shall be based

on the terms and conditions established by mutual agreement of the parties and on the provisions

of the Código de Comercio de Guatemala, which shall regulate the activities of agents of

commerce, distributors, and representatives.  The United States and Guatemala shall also

encourage parties to other contracts of agency, distribution, or representation that remain subject

to Decree 78-71 to renegotiate such contracts so as to make them subject to the new regime

referenced in paragraph 1.

3. The absence of an express provision for settlement of disputes in a contract of agency,

distribution, or representation shall, to the extent consistent with the Constitución Política de la

República de Guatemala, give rise to a rebuttable presumption that the parties intended to settle

any disputes through binding arbitration.

4. The United States and Guatemala shall encourage the parties to contracts of agency,

distribution, or representation to settle any disputes through binding arbitration.  In particular, if

the amount and form of any indemnification payment is not established in the contract and a

party wishes to terminate the contract, the parties may agree to arbitration to establish the

amount, if any, of the indemnity.

5. For purposes of this Section:

(a) termination date means the date provided in the contract for the contract to end,

or the end of a contract extension period agreed upon by the parties to the

contract; and

(b) contract of agency, distribution, or representation has the same meaning as

under Decree 78-71.

 

Section E:  Honduras

1. The obligations set out in paragraphs 2, 3, and 4 shall not apply to:

(a) express conditions included in a contract of representation, distribution, or

agency; or

 

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(b) to contractual relations entered into before the date of entry into force of this

Agreement.

2. Honduras may not require a goods or service supplier of another Party: 

(a) to supply such goods or services in Honduras by means of a representative, agent,

or distributor, except as otherwise provided by law for reasons of health, safety, or

consumer protection;

(b) to offer or introduce goods or services in the territory of Honduras through

existing concessionaires for such goods or services unless a contract between

them requires an exclusive relationship; or

(d) to pay damages or an indemnity for terminating a contract of representation, or

agency for just cause or allowing such a contract to expire without renewal for

just cause.

3. Honduras may not require that a representative, agent, or distributor be a national of

Honduras or an enterprise controlled by nationals of Honduras;

4. Honduras shall provide that:

(a) the fact that a contract of representation, distribution, or agency has reached its

termination date shall be considered just cause for a goods or service supplier of

another Party to terminate the contract or allow the contract to expire without

renewal; and

(b) any damages or indemnity for terminating a contract of representation,

distribution, or agency, or allowing it to expire without renewal, without just

cause shall be based on the general law of contracts.  

Nothing in subparagraph (b) shall be construed to require Honduras to adopt any measure that

affects the right of the parties to demand indemnification, when appropriate, in the form, type,

and amount agreed in the contract.

5. Honduras shall provide that:

(a) if the amount and form of any indemnification payment is not established in a

contract of representation, distribution, or agency and a party wishes to terminate

the contract;

(i) the parties may agree to resolve any dispute regarding such payment in the

Center for Conciliation and Arbitration of Honduras, or if the parties agree

otherwise, to another arbitration center; and 

(ii) in such proceeding general principles of contract law will be applied;

 

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(b) Decree Law No. 549 shall apply to a contract only if:

(i) the representative, distributor, or agent has registered with the Secretaría

de Estado en los Despachos de Industria y Comercio, which shall be

possible only if it is party to a written contract of representation,

distribution, or agency; and

(ii) the contract was entered into while such law was in effect; and

(c) in any decision awarding an indemnity calculated under Article 14 of Decree Law

No. 549, the amount shall be calculated as of the date of entry into force of this

Agreement, expressed in terms of Honduran lempiras as of that date, and

converted into U.S. dollars at the exchange rate in effect on the date of the

decision.

6. Under Honduran law, a contract of representation, distribution, or agency is exclusive

only if the contract states so expressly.

7. For purposes of this Section: 

(a) termination date means the date provided in the contract for the contract to end,

at 12:00 p.m. on that day, or the end of a contract extension period agreed upon

by the parties to the contract; and

(b) contract of representation, distribution, or agency has the same meaning as

under Decree Law No. 549.