Multilateral Investment Guarantee Agency Act


Published: 1992-12-30

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Multilateral Investment Guarantee Agency Act
MULTILATERAL INVESTMENT GUARANTEE AGENCY [CH.365 – 1



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[Original Service 2001] STATUTE LAW OF THE BAHAMAS

MULTILATERAL INVESTMENT GUARANTEE AGENCY
CHAPTER 365

MULTILATERAL INVESTMENT GUARANTEE AGENCY

ARRANGEMENT OF SECTIONS

SECTION

1. Short title.
2. Interpretation.
3. Approval of acceptance of the Convention.
4. Financial provisions.
5. Status immunities and privileges of the Agency.
6. Power of Minister to amend Schedule.

SCHEDULE — Convention Establishing the Multilateral Investment Guarantee
Agency.



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CHAPTER 365

MULTILATERAL INVESTMENT GUARANTEE
AGENCY

An Act to provide for the acceptance by the
Government of The Commonwealth of The Bahamas of
the Convention establishing the Multilateral Investment
Guarantee Agency and for matters connected therewith.

[Assent 29th December, 1992]
[Commencement 30th December, 1992]

1. This Act may be cited as the Multilateral
Investment Guarantee Agency Act, 1992.

2. In this Act —
“the Agency” means the Multilateral Investment

Guarantee Agency established under the
Convention;

“the Convention” means the Convention which was
open for signature on October 11th, 1985
providing for the establishment and operation of
an international body to be called the
Multilateral Investment Guarantee Agency and
the text of which Convention is set out in the
Schedule.

3. Approval is hereby given for —
(a) acceptance by the Government of the

Convention and the deposit on behalf of the
Government of the necessary instruments of
acceptance;

(b) the Minister of Finance (or any person
designated by him) shall have power on behalf
of the Government to sign the Convention and to
deposit at the head office of the International
Bank for Reconstruction and Development the
instrument setting forth that The Bahamas has
signed and accepted the Convention and is
willing to perform all its obligations thereunder
and for that purpose has taken the necessary
steps to enable The Bahamas to fulfil them.

47 of 1992

Short title.

Interpretation.

Approval of
acceptance of the
Convention.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

4. (1) There shall be paid out of the Consolidated
Fund all sums required for payments to be made by the
Government from time to time to the Agency by reason of
the membership of The Bahamas under the Convention and
for the purposes of the Convention the Central Bank of The
Bahamas may act as a depository for any payment to be
made to the Agency by the Government or for the holding
of any asset of the Agency.

(2) The Minister of Finance may issue or cause to
be issued to the Agency non-negotiable non-interest
bearing notes or similar securities in lieu of any portion of
the subscription to the Agency’s authorised capital.

5. (1) Subject to subsection (2) the provisions of
Article 1 of Chapter 1, Articles 43 to 48 (inclusive) of
Chapter VII of the Convention shall have the force of law
in The Bahamas.

(2) Nothing in Articles 47 and 48 of Chapter VII of
the Convention shall be construed —

(a) as entitling the Agency to import goods free of
customs duty without any restriction on their
subsequent sale in The Bahamas; or

(b) as conferring on the Agency any exemption
from duties or taxes which form part of the price
of goods sold; or

(c) as conferring on the Agency any exemption
from taxes or duties which are in fact no more
than charges for services rendered.

6. (1) Where any amendment of the Convention is
accepted by the Government of The Bahamas, the Minister
of Finance may, by order, amend the Schedule by
including therein the amendment so accepted.

(2) Where the Schedule is amended pursuant to
subsection (1) any references in the Act or any other
instrument to the Convention shall, unless the context
otherwise requires, be construed as a reference to the
Convention as so amended.

Financial
provisions.

Status
immunities and
privileges of the
Agency.

Power of
Minister to
amend Schedule.

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SCHEDULE (Section 2)

CONVENTION ESTABLISHING THE MULTILATERAL
INVESTMENT GUARANTEE AGENCY

PREAMBLE
The Contracting States
Considering the need to strengthen international co-operation for
economic development and to foster the contribution to such
development of foreign investment in general and private
foreign investment in particular;
Recognizing that the flow of foreign investment to developing
countries would be facilitated and further encouraged by
alleviating concerns related to non-commercial risks;
Desiring to enhance the flow to developing countries of capital
and technology for productive purposes under conditions
consistent with their development needs, policies and objectives,
on the basis of fair and stable standards for the treatment of
foreign investment;
Convinced that the Multilateral Investment Guarantee Agency
can play an important role in the encouragement of foreign
investment complementing national and regional investment
guarantee programs and private insures of non-commercial risk;
and
Realizing that such Agency should, to the extent possible, meet
its obligations without resort to its callable capital and that such
an objective would be served by continued improvement in
investment conditions,
Have Agreed as follows:

CHAPTER I
ESTABLISHMENT, STATUS, PURPOSES AND

DEFINITIONS

ARTICLE 1
Establishment and Status of the Agency

(a) There is hereby established the Multilateral
Investment Guarantee Agency (hereinafter called the Agency).

(b) The Agency shall possess full juridical personality and, in
particular, the capacity to:
(i) contract;
(ii) acquire and dispose of movable and immovable

property; and
(iii) institute legal proceedings.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

ARTICLE 2
Objection and Purposes

The objective of the Agency shall be to encourage the flow
of investments for productive purpose among member countries,
and in particular to developing member countries, thus
supplementing the activities of the International Bank for
Reconstruction and Development (hereinafter referred to as the
Bank), the International Finance Corporation and other
international development finance institutions.

To serve its objective, the Agency shall:
(a) issue guarantees, including co-insurance and reinsurance,

against non-commercial risks in respect of investments in a
member country which flow from other member countries;

(b) carry out appropriate complementary activities to promote
the flow of investments to and among developing member
countries; and

(c) exercise such other incidental powers as shall be necessary
or desirable in the furtherance of its objective.
The Agency shall be guided in all its decisions by the

provisions of this Article.

ARTICLE 3
Definitions

For the purposes of this Convention:
(a) “Member” means a State with respect to which this

Convention has entered into force in accordance with Article 61.
(b) “Host country”‘ or “host government” means a

member, its government, or any public authority of a member in
whose territories, as defined in Article 66, an investment which
has been guaranteed or reinsured, or is considered for guarantee
or reinsurance, by the Agency is to be located.

(c) A “developing member country” means a member
which is listed as such in Schedule A hereto as this Schedule
may be amended from time to time by the Council of Governors
referred to in Article 30 (hereinafter called the Council).

(d) A “special majority” means an affirmative vote of
not less than two-thirds of the total voting power representing
not less than 55 percent of the subscribed shares of the capital
stock of the Agency.

(e) A “freely usable currency” means (i) any currency
designated as such by the International Monetary Fund from
time to time and (ii) any other freely available and effectively
usable currency which the Board of Directors referred to in
Article 30 (hereinafter called the Board) may designate for the
purposes of this Convention after consultation with the
International Monetary Fund and with the approval of the
country of such currency.

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CHAPTER II
MEMBERSHIP AND CAPITAL

ARTICLE 4
Membership

(a) Membership in the Agency shall be open to all
members of the Bank and to Switzerland.

(b) Original members shall be the States which are listed
in Schedule A hereto and become parties to this Convention on
or before October 30, 1987.

ARTICLE 5
Capital

(a) The authorized capital stock of the Agency shall be
one billion Special Drawing Rights (SDR 1,000,000,000). The
capital stock shall be divided into 100,000 shares having a par
value of SDR 10,000 each, which shall be available for
subscription by members. All payment obligations of members
with respect to capital stock shall be settled on the basis of the
average value of the SDR in terms of United States dollars for
the period January 1,1981 to June 30,1985, such value being
1.082 United States dollars per SDR.

(b) The capital stock shall increase on the admission of a
new member to the extent that the then authorized shares are
sufficient to provide the shares to be subscribed by such member
pursuant to Article 6.

(c) The Council, by special majority, may at any time
increase the capital stock of the Agency.

ARTICLE 6
Subscription of Shares

Each original member of the Agency shall subscribe at par
to the number of shares of capital stock set forth opposite its
name in Schedule A hereto. Each other member shall subscribe
to such number of shares of capital stock on such terms and
conditions as may be determined by the Council, but in no event
at an issue price of less than par. No member shall subscribe to
less than fifty shares. The Council may prescribe rules by which
members may subscribe to additional shares of the authorized
capital stock.

ARTICLE 7
Division and Calls of Subscribed Capital

The initial subscription of each member shall be paid as
follows:
(i) Within ninety days from the date on which this Convention

enters into force with respect to such member, ten percent of


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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

the price of each share shall be paid in cash as stipulated in
Section (a) of Article 8 and an additional ten percent in the
form of non-negotiable, non-interest-bearing promissory
notes or similar obligations to be encashed pursuant to a
decision of the Board in order to meet the Agency’s
obligations.

(ii) The remainder shall be subject to call by the Agency
when required to meet its obligations.

ARTICLE 8
Payment of Subscription of Shares

(a) Payment of subscriptions shall be made in freely
usable currencies except that payments by developing member
countries may be made in their own currencies up to 25 percent
of the paid-in cash portion of their subscription payable under
Article 7(i).

(b) Calls on any portion of unpaid subscriptions shall be
uniform on all shares.

(c) If the amount received by the Agency on a call shall
be insufficient to meet the obligations which have necessitated
the call, the Agency may make further successive calls on
unpaid subscriptions until the aggregate amount received by it
shall be sufficient to meet such obligations.

(d) Liability on shares shall be limited to the unpaid
portion of the issue price.

ARTICLE 9
Valuation of Currencies

Whenever it shall be necessary for the purposes of this
Convention to determine the value of one currency in terms of
another, such value shall be as reasonably determined by the
Agency, after consultation with the International Monetary
Fund.

ARTICLE 10
Refunds

(a) The Agency shall, as soon as practicable, return to
members amounts paid on calls on subscribed capital if and to
the extent that:
(i) the call shall have been made to pay a claim resulting

from a guarantee or reinsurance contract and thereafter
the Agency shall have recovered its payment, in whole
or in part, in a freely usable currency; or

(ii) the call shall have been made because of a default in
payment by a member and thereafter such member shall
have made good such default in whole or in part; or

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(iii) the Council, by special majority, determines that the
financial position of the Agency permits all or part of such
amounts to be retuned out of the Agency’s revenues.

(b) Any refund effected under this Article to a member
shall be made in freely usable currency in the proportion of the
payments made by that member to the total amount paid
pursuant to calls made prior to such refund.

(c) The equivalent of amounts refunded under this
Article to a member shall become part of the callable capital
obligations of the member under Article 7(ii).

CHAPTER III
OPERATIONS
ARTICLE 11
Covered Risks

(a) Subject to the provisions of Sections (b) and (c)
below, the Agency may guarantee eligible investments against a
loss resulting from one or more of the following types of risk:

(i) Currency Transfer:
any introduction attributable to the host government of
restrictions on the transfer outside the host country of its
currency into a freely usable currency or another currency
acceptable to the holder of the guarantee, including a failure
of the host government to act within a reasonable period of
time on an application by such holder for such transfer;

(ii) Expropriation and Similar Measures:
any legislative action or administrative action or
omission attributable to the host government which
has the effect of depriving the holder of a guarantee of
his ownership or control of, or a substantial benefit
from, his investment, with the exception of non-
discriminatory measures of general application which
governments normally take for the purpose of
regulating economic activity in their territories;

(iii) Breach of Contract:
any repudiation or breach by the host government of a
contract with the holder of a guarantee, when (a) the
holder of a guarantee does not have recourse to a
judicial or arbitral forum to determine the claim of
repudiation or breach, or (b) a decision by such forum
is not rendered within such reasonable period of time
as shall be prescribed in the contracts of guarantee
pursuant to the Agency’s regulations, or (c) such a
decision cannot be enforced; and

(iv) War and Civil Disturbance:
any military action or civil disturbance in any territory
of the host country to which this Convention shall be
applicable as provided in Article 66.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

(b) Upon the joint application of the investor and the host
country, the Board by special majority, may approve the extension
of coverage under this Article to specific non-commercial risks
other than those referred to in Section (a) above, but in no case to
the risk of devaluation or depreciation of currency.

(c) Losses resulting from the following shall not be covered:
(i) any host government action or omission to which the

holder of the guarantee has agreed or for which he has
been responsible; and

(ii) any host government action or omission or any other event
occurring before the conclusion of the contract of guarantee.

ARTICLE 12
Eligible Investments

(a) Eligible investments shall include equity interests,
including medium- or long-term loans made or guaranteed by
holders of equity in the enterprise concerned, and such forms of
direct investment as may be determined by the Board.

(b) The Board, by special majority, may extend eligibility
to any other medium- or long-term form of investment, except that
loans other than those mentioned in Section (a) above may be
eligible only if they are related to a specific investment covered or
to be covered by the Agency.

(c) Guarantees shall be restricted to investments the imple-
mentation of which begins subsequent to the registration of the
application for the guarantee by the Agency. Such investments may
include:
(i) any transfer of foreign exchange made to modernise,

expand, or develop an existing investment; and
(ii) the use of earnings from existing investments which

could otherwise be transferred outside the host country.
(d) In guaranteeing an investment, the Agency shall

satisfy itself as to:
(i) the economic soundness of the investment and its

contribution to the development of the host country;
(ii) compliance of the investment with the host country’s

laws and regulations;
(iii) consistency of the investment with the declared

development objectives and priorities of the host
country; and

(iv) the investment conditions in the host country including
the availability of fair and equitable treatment and legal
protection for the investment.

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ARTICLE 13
Eligible Investors

(a) Any natural person and any juridical person may be
eligible to receive the Agency’s guarantee provided that:
(i) such natural person is a national of a member other

than the host country;
(ii) such juridical person is incorporated and has its

principal place of business in a member or the majority
of its capital is owned by a member or members or
nationals thereof, provided that such member is not the
host country in any of the above cases; and

(iii) such juridical person, whether or not it is privately
owned, operates on a commercial basis.

(b) In case the investor has more than one nationality,
for the purposes of Section (a) above the nationality of a
member shall prevail over the nationality of a non-member, and
the nationality of the host country shall prevail over the
nationality of any other member.

(c) Upon the joint application of the investor and the
host country, the Board, by special majority, may extend
eligibility to a natural person who is a national of the host
country or a juridical person which is incorporated in the host
country or the majority of whose capital is owned by its
nationals, provided that the assets invested are transferred from
outside the host country.

ARTICLE 14
Eligible Host Countries

Investment shall be guaranteed under this Chapter only if
they are to be made in the territory of a developing member
country.

ARTICLE 15
Host Country Approval

The Agency shall not conclude any contract of guarantee
before the host government has approved the issuance of the
guarantee by the Agency against the risks designated for cover.

ARTICLE 16
Terms and Conditions

The terms and conditions of each contract of guarantee
shall be determined by the Agency subject to such rules and
regulations as the Board shall issue, provided that the Agency
shall not cover the total loss of the guaranteed investment.
Contracts of guarantee shall be approved by the President under
the direction of the Board.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

ARTICLE 17
Payment of Claims

The President under the direction of the Board shall decide
on the payment of claims to a holder of a guarantee in
accordance with the contract of guarantee and such policies as
the Board may adopt. Contracts of guarantee shall require
holders of guarantees to seek, before a payment is made by the
Agency, such administrative remedies as may be appropriate
under the circumstances, provided that they are readily available
to them under the laws of the host country. Such contracts may
require the lapse of certain reasonable periods between the
occurrence of events giving rise to claims and payments of
claims.

ARTICLE 18
Subrogation

(a) Upon paying or agreeing to pay compensation to a
holder of a guarantee, the Agency shall be subrogated to such
rights or claims related to the guaranteed investment as the
holder of a guarantee may have had against the host country and
other obligors. The contract of guarantee shall provide the terms
and conditions of such subrogation.

(b) The rights of the Agency pursuant to Section (a)
above shall be recognized by all members.

(c) Amounts in the currency of the host country acquired
by the Agency as subrogee pursuant to Section (a) above shall
be accorded, with respect to use and conversion, treatment by
the host country as favourable as the treatment to which such
funds would be entitled in the hands of the holder of the
guarantee. In any case, such amounts may be used by the
Agency for the payment of its administrative expenditures and
other costs. The Agency shall also seek to enter into
arrangements with host countries on other uses of such
currencies to the extent that they are not freely usable.

ARTICLE 19
Relationship to National and Regional Entities

The Agency shall co-operate with, and seek to complement
the operations of, national entities of members and regional
entities the majority of whose capital is owned by members,
which carry out activities similar to those of the Agency, with a
view to maximizing both the efficiency of their respective
services and their contribution to increased flows of foreign
investment. To this end, the Agency may enter into
arrangements with such entities on the details of such co-
operation, including in particular the modalities of reinsurance
and co-insurance.

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ARTICLE 20
Reinsurance of National and Regional Entities

(a) The Agency may issue reinsurance in respect of a
specific investment against a loss resulting from one or more of
the non-commercial risks underwritten by a member or agency
thereof or by a regional investment guarantee agency the
majority of whose capital is owned by members. The Board, by
special majority, shall from time to time prescribe maximum
amounts of contingent liability which may be assumed by the
Agency with respect to reinsurance contracts. In respect of
specific investments which have been completed more than
twelve months prior to receipt of the application for reinsurance
by the Agency, the maximum amount shall initially be set at ten
percent of the aggregate contingent liability of the Agency under
this Chapter. The conditions of eligibility specified in Articles
11 to 14 shall apply to reinsurance operations, except that the
reinsured investments need not be implemented subsequent to
the application for reinsurance.

(b) The mutual rights and obligations of the Agency and
a reinsured member or agency shall be stated in contracts of
reinsurance subject to such rules and regulations as the Board
shall issue. The Board shall approve each contract for
reinsurance covering an investment which has been made prior
to receipt of the application for reinsurance by the Agency, with
a view to minimising risks, assuring that the Agency receives
premiums commensurate with its risk, and assuring that the
reinsured entity is appropriately committed toward promoting
new investment in developing member countries.

(c) The Agency shall, to the extent possible, assure that
it or the reinsured entity shall have the rights of subrogation and
arbitration equivalent to those the Agency would have if it were
the primary guarantor. The terms and conditions of reinsurance
shall require that administrative remedies are sought in
accordance with Article 17 before a payment is made by the
Agency. Subrogation shall be effective with respect to the host
country concerned only after its approval of the reinsurance by
the Agency. The Agency shall include in the contracts of
reinsurance provisions requiring the reinsured to pursue with
due diligence the rights or claims related to the reinsured
investment.

ARTICLE 21
Co-operation with Private Insurers and with Reinsurers

(a) The Agency may enter into arrangements with private
insurers in member countries to enhance its own operations and
encourage such insurers to provide coverage of non-commercial
risks in developing member countries on conditions similar to
those applied by the Agency. Such arrangements may include the
provision of reinsurance by the Agency under the conditions and
procedures specified in Article 20.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

(b) The Agency may reinsure with any appropriate
reinsurance entity, in whole or in part, any guarantee or
guarantees issued by it.

(c) The Agency will in particular seek to guarantee
investments for which comparable coverage on reasonable terms
is not available from private insurers and reinsurers.

ARTICLE 22
Limits of Guarantee

(a) Unless determined otherwise by the Council by
special majority, the aggregate amount of contingent liabilities
which may be assumed by the Agency under this Chapter shall
not exceed one hundred and 50 percent of the amount of the
Agency’s unimpaired subscribed capital and its reserves plus
such portion of its reinsurance cover as the Board may
determine. The Board shall from time to time review the risk
profile of the Agency’s portfolio in the light of its experience
with claims, degree of risk diversification, reinsurance cover and
other relevant factors with a view to ascertaining whether
changes in the maximum aggregate amount of contingent
liabilities should be recommended to the Council. The maximum
amount determined by the Council shall not under any
circumstances exceed five times the amount of the Agency’s
unimpaired subscribed capital, its reserves and such portion of
its reinsurance cover as may be deemed appropriate.

(b) Without prejudice to the general limit of guarantee
referred to in Section (a) above, the Board may prescribe:
(i) maximum aggregate amounts of contingent liability

which may be assumed by the Agency under this
Chapter for all guarantees issued to investors of each
individual member. In determining such maximum
amounts, the Board shall give due consideration to the
share of the respective member in the capital of the
Agency and the need to apply more liberal limitations
in respect of investments originating in developing
member countries; and

(ii) maximum aggregate amounts of contingent liability
which may be assumed by the Agency with respect to
such risk diversification factors as individual projects,
individual host countries and types of investment or
risk.

ARTICLE 23
Investment Promotion

(a) The Agency shall carry out research, undertake activities to
promote investment flows and disseminate information on invest-
ment opportunities in developing member countries, with a view to
improving the environment for foreign investment flows to such
countries. The Agency may, upon the request of a member, provide


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technical advice and assistance to improve the investment
conditions in the territories of that member. In performing these
activities, the Agency shall:
(i) be guided by relevant investment agreements among

member countries;
(ii) seek to remove impediments, in both developed and

developing member countries, to the flow of
investment to developing member countries; and

(iii) co-ordinate with other agencies concerned with the
promotion of foreign investment, and in particular the
International Finance Corporation.

(b) The Agency also shall:
(i) encourage the amicable settlement of disputes between

investors and host countries;
(ii) endeavour to conclude agreements with developing

member countries, and in particular with prospective
host countries, which will assure that the Agency, with
respect to investment guaranteed by it, has treatment at
least as favourable as that agreed by the member
concerned for the most favoured investment guarantee
agency or State in an agreement relating to investment,
such agreements to be approved by special majority of
the Board; and

(iii) promote and facilitate the conclusion of agreements,
among its members, on the promotion and protection of
investments.

(c) The Agency shall give particular attention in its
promotional efforts to the importance of increasing the flow of
investments among developing member countries.

ARTICLE 24
Guarantees of Sponsored Investments

In addition to the guarantee operations undertaken by the
Agency under this Chapter, the Agency may guarantee
investments under the sponsorship arrangements provided for in
Annex I to this Convention.

CHAPTER IV
FINANCIAL PROVISIONS

ARTICLE 25
Financial Management

The Agency shall carry out its activities in accordance with
sound business and prudent financial management practices with
a view to maintaining under all circumstances its ability to meet
its financial obligations.

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ARTICLE 26
Premiums and Fees

The Agency shall establish and periodically review the
rates of premiums, fees and other charges, if any, applicable to
each type of risk.

ARTICLE 27
Allocation of Net Income

(a) Without prejudice to the provisions of Section (a)(iii)
of Article 10, the Agency shall allocate net income to reserves
until such reserves reach five times the subscribed capital of the
Agency.

(b) After the reserves of the Agency have reached the
level prescribed in Section (a) above, the Council shall decide
whether, and to what extent, the Agency’s net income shall be
allocated to reserves, be distributed to the Agency’s members or
be used otherwise. Any distribution of net income to the
Agency’s members shall be made in proportion to the share of
each member in the capital of the Agency in accordance with a
decision of the Council acting by special majority.

ARTICLE 28
Budget

The President shall prepare an annual budget of revenues
and expenditures of the Agency for approval by the Board.

ARTICLE 29
Accounts

The Agency shall publish an Annual Report which shall
include statements of its accounts and of the accounts of the
Sponsorship Trust Fund referred to in Annex I to this
Convention, as audited by independent auditors. The Agency
shall circulate to members at appropriate intervals a summary
statement of its financial position and a profit and loss statement
showing the results of its operations.

CHAPTER V
ORGANIZATION AND MANAGEMENT

ARTICLE 30
Structure of the Agency

The Agency shall have a Council of Governors, a Board of
Directors, a President and staff to perform such duties as the
Agency may determine.

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ARTICLE 31
The Council

(a) All the powers of the Agency shall be vested in the
Council, except such powers as are, by the terms of this
Convention, specifically conferred upon another organ of the
Agency. The Council may delegate to the Board the exercise of
any of its powers, except the power to:
(i) admit new members and determine the conditions of

their admission;
(ii) suspend a member;
(iii) decide on any increase or decrease in the capital;
(iv) increase the limit of the aggregate amount of contingent

liabilities pursuant to Section (a) of Article 22;
(v) designate a member as a developing member country

pursuant to Section (c) of Article 3;
(vi) classify a new member as belonging to Category One

or Category Two for voting purposes pursuant to
Section (a) of Article 39 or reclassify an existing
member for the same purposes;

(vii) determine the compensation of Directors and their
Alternates;

(viii) cease operations and liquidate the Agency;
(ix) distribute assets to members upon liquidation; and
(x) amend this Convention, its Annexes and Schedules.

(b) The Council shall be composed of one Governor and
one Alternate appointed by each member in such manner as it
may determine. No Alternate may vote except in the absence of
his principal. The Council shall select one of the Governors as
Chairman.

(c) The Council shall hold an annual meeting and such
other meetings as may be determined by the Council or called by
the Board. The Board shall call a meeting of the Council
whenever requested by five members or by members having 25
percent of the total voting power.

ARTICLE 32
The Board

(a) The Board shall be responsible for the general
operations of the Agency and shall take, in the fulfilment of this
responsibility, any action required or permitted under this
Convention.

(b) The Board shall consist of not less than twelve Directors.
The number of Directors may be adjusted by the Council to take into
account changes in membership. Each Director may appoint


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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

an Alternate with full power to act for him in case of the
Director’s absence or inability to act. The President of the Bank
shall be ex officio Chairman of the Board, but shall have no vote
except a deciding vote in case of an equal division.

(c) The Council shall determine the term of office of the
Directors. The first Board shall be constituted by the Council at
its inaugural meeting.

(d) The Board shall meet at the call of its Chairman
acting on his own initiative or upon request of three Directors.

(e) Until such time as the Council may decide that the
Agency shall have a resident Board which functions in
continuous session, the Directors and Alternates shall receive
compensation only for the cost of attendance at the meetings of
the Board and the discharge of other official functions on behalf
of the Agency. Upon the establishment of a Board in continuous
session, the Directors and Alternates shall receive such
remuneration as may be determined by the Council.

ARTICLE 33
President and Staff

(a) The President shall, under the general control of the
Board, conduct the ordinary business of the Agency. He shall be
responsible for the organization, appointment and dismissal of
the staff.

(b) The President shall be appointed by the Board on the
nomination of its Chairman. The Council shall determine the
salary and terms of the contract of service of the President.

(c) In the discharge of their offices, the President and the
staff owe their duty entirely to the Agency and to no other
authority. Each member of the Agency shall respect the
international character of this duty and shall refrain from all
attempts to influence the President or the staff in the discharge
of their duties.

(d) In appointing the staff, the President shall, subject to
the paramount importance of securing the highest standards of
efficiency and of technical competence, pay due regard to the
importance of recruiting personnel on as wide a geographical
basis as possible.

(e) The President and staff shall maintain at all times the
confidentiality of information obtained in carrying out the
Agency’s operations.

ARTICLE 34
Political Activity Prohibited

The Agency, its President and staff shall not interfere in the
political affairs of any member. Without prejudice to the right of
the Agency to take into account all the circumstances surrounding


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an investment, they shall not be influenced in their decisions by
the political character of the member or members concerned.
Considerations relevant to their decisions shall be weighed
impartially in order to achieve the purposes stated in Article 2.

ARTICLE 35
Relations with international Organizations

The Agency shall, within the terms of this Convention, co-
operate with the United Nations and with other inter-
governmental organizations having specialized responsibilities
in related fields, including in particular the Bank and the
International Finance Corporation.

ARTICLE 36
Location of Principal Office

(a) The principal office of the Agency shall be located in
Washington, D.C., unless the Council, by special majority,
decides to establish it in another location.

(b) The Agency may establish other offices as may be
necessary for its work.

ARTICLE 37
Depositories for Assets

Each member shall designate its central bank as a
depository in which the Agency may keep holdings of such
member’s currency or other assets of the Agency or, if it has no
central bank, it shall designate for such purpose such other
institution as may be acceptable to the Agency.

ARTICLE 38
Channel of Communication

(a) Each member shall designate an appropriate
authority with which the Agency may communicate in
connection with any matter arising under this Convention. The
Agency may rely on statements of such authority as being
statements of the member. The Agency, upon the request of a
member, shall consult with that member with respect to matters
dealt with in Articles 19 to 21 and related to entities or insurers
of that member.

(b) Whenever the approval of any member is required
before any act may be done by the Agency, approval shall be
deemed to have been given unless the member presents an
objection within such reasonable period as the Agency may fix
in notifying the member of the proposed act.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

CHAPTER VI
VOTING, ADJUSTMENTS OF SUBSCRIPTIONS AND

REPRESENTATION

ARTICLE 39
Voting and Adjustments of Subscriptions

(a) In order to provide for voting arrangements that
reflect the equal interest in the Agency of the two Categories of
States listed in Schedule A of this Convention, as well as the
importance of each member’s financial participation, each
member shall have 177 membership votes plus one subscription
vote for each share of stock held by that member.

(b) If at any time within three years after the entry into
force of this Convention the aggregate sum of membership and
subscription votes of members which belong to either of the two
Categories of States listed in Schedule A of this Convention is
less than 40 percent of the total voting power, members from
such a Category shall have such number of supplementary votes
as shall be necessary for the aggregate voting power of the
Category to equal such a percentage of the total voting power.
Such supplementary votes shall be distributed among the
members of such Category in the proportion that the
subscription votes of each bears to the aggregate of subscription
votes of the Category. Such supplementary votes shall be subject
to automatic adjustment to ensure that such percentage is
maintained and shall be cancelled at the end of the above-
mentioned three-year period.

(c) During the third year following the entry into force
of this Convention, the Council shall review the allocation of
shares and shall be guided in its decision by the following
principles:
(i) the votes of members shall reflect actual subscriptions

to the Agency’s capital and the membership votes as set
out in Section (a) of this Article;

(ii) shares allocated to countries which shall not have
signed the Convention shall be made available for
reallocation to such members and in such manner as to
make possible voting parity between the above-
mentioned Categories; and

(iii) the Council will take measures that will facilitate
members’ ability to subscribe to shares allocated to
them.

(d) Within the three-year period provided for in Section
(b) of this Article, all decisions of the Council and Board shall
be taken by special majority, except that decisions requiring a
higher majority under this Convention shall be taken by such
higher majority.

(e) In case the capital stock of the Agency is increased
pursuant to Section (c) of Article 5, each member which so requests
shall be authorized to subscribe a proportion of the increase
equivalent to the proportion which its stock theretofore subscribed
bears to the total capital stock of the Agency, but no member shall
be obligated to subscribe any part of the increased capital.

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(f) The Council shall issue regulations regarding the making
of additional subscriptions under Section (e) of this Article. Such
regulations shall prescribe reasonable time limits for the submission
by members of requests to make such subscriptions.

ARTICLE 40
Voting in the Council

(a) Each Governor shall be entitled to cast the votes of
the member he represents. Except as otherwise specified in this
Convention, decisions of the Council shall be taken by a
majority of the votes cast.

(b) A quorum for any meeting of the Council shall be
constituted by a majority of the Governors exercising not less
than two-thirds of the total voting power.

(c) The Council may by regulation establish a procedure
whereby the Board, when it deems such action to be in the best
interests of the Agency, may request a decision of the Council
on a specific question without calling a meeting of the Council.

ARTICLE 41
Election of Directors

(a) Directors shall be elected in accordance with
Schedule B.

(b) Directors shall continue in office until their
successors are elected. If the office of a Director becomes vacant
more than ninety days before the end of his term, another
Director shall be elected for the remainder of the term by the
Governors who elected the former Director. A majority of the
votes cast shall be required for election. While the office
remains vacant, the Alternate of the former Director shall
exercise his powers, except that of appointing an Alternate.

ARTICLE 42
Voting in the Board

(a) Each Director shall be entitled to cast the number of
votes of the members whose votes counted towards his election.
All the votes which a Director is entitled to cast shall be cast as a
unit. Except as otherwise specified in this Convention, decisions
of the Board shall be taken by a majority of the votes cast.

(b) A quorum for a meeting of the Board shall be
constituted by a majority of the Directors exercising not less
than one-half of the total voting power.

(c) The Board may by regulation establish a procedure
whereby its Chairman, when he deems such action to be in the
best interests of the Agency, may request a decision of the Board
on a specific question without calling a meeting of the Board.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

CHAPTER VII
PRIVILEGES AND IMMUNITIES

ARTICLE 43
Purposes of Chapter

To enable the Agency to fulfil its functions, the immunities
and privileges set forth in this Chapter shall be accorded to the
Agency in the territories of each member.

ARTICLE 44
Legal Process

Actions other than those within the scope of Articles 57
and 58 may be brought against the Agency only in a court of
competent jurisdiction in the territories of a member in which
the Agency has an office or has appointed an agent for the
purpose of accepting service or notice of process. No such action
against the Agency shall be brought (i) by members or persons
acting for or deriving claims from members or (ii) in respect of
personnel matters. The property and assets of the Agency shall,
wherever located and by whomsoever held, be immune from all
forms of seizure, attachment or execution before the delivery of
the final judgment or award against the Agency.

ARTICLE 45
Assets

(a) The property and assets of the Agency, wherever
located and by whomsoever held, shall be immune from search,
requisition, confiscation, expropriation or any other form of
seizure by executive or legislative action.

(b) To the extent necessary to carry out its operations
under this Convention, all property and assets of the Agency
shall be free from restrictions, regulations, controls and
moratoria of any nature; provided that property and assets
acquired by the Agency as successor to or subrogee of a holder
of a guarantee, a reinsured entity or an investor insured by a
reinsured entity shall be free from applicable foreign exchange
restrictions, regulations and controls in force in the territories of
the member concerned to the extent that the holder, entity or
investor to whom the Agency was subrogated was entitled to
such treatment.

(c) For purposes of this Chapter, the term “assets” shall
include the assets of the Sponsorship Trust Fund referred to in
Annex I to this Convention and other assets administered by the
Agency in furtherance of its objective.

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ARTICLE 46
Archives and Communications

(a) The archives of the Agency shall be inviolable,
wherever they may be.

(b) The official communications of the Agency shall be
accorded by each member the same treatment that is accorded to
the official communications of the Bank.

ARTICLE 47
Taxes

(a) The Agency, its assets, property and income, and its
operations and transactions authorized by this Convention, shall
be immune from all taxes and customs duties. The Agency shall
also be immune from liability for the collection or payment of
any tax or duty.

(b) Except in the case of local nationals, no tax shall be
levied on or in respect of expense allowances paid by the
Agency to Governors and their Alternates or on or in respect of
salaries, expense allowances or other emoluments paid by the
Agency to the Chairman of the Board, Directors, their
Alternates, the President or staff of the Agency.

(c) No taxation of any kind shall be levied on any
investment guaranteed or reinsured by the Agency (including
any earnings therefrom) or any insurance policies reinsured by
the Agency (including any premiums and other revenues
therefrom) by whomsoever held: (i) which discriminates against
such investment or insurance policy solely because it is
guaranteed or reinsured by the Agency; or (ii) if the sole
jurisdictional basis for such taxation is the location of any office
or place of business maintained by the Agency.

ARTICLE 48
Officials of the Agency

All Governors, Directors, Alternates, the President and
staff of the Agency:
(i) shall be immune from legal process with respect to acts

performed by them in their official capacity;
(ii) not being local nationals, shall be accorded the same

immunities from immigration restrictions, alien
registration requirements and national service obligations,
and the same facilities as regards exchange restrictions as
are accorded by the members concerned to the
representatives, officials and employees of comparable
rank of other members; and

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

(iii) shall be granted the same treatment in respect of
travelling facilities as is accorded by the members
concerned to representatives, officials and employees
of comparable rank of other members.

ARTICLE 49
Application of this Chapter

Each member shall take such action as is necessary in its
own territories for the purpose of making effective in terms of its
own law the principles set forth in this Chapter and shall inform
the Agency of the detailed action which it has taken.

ARTICLE 50
Waiver

The immunities, exemptions and privileges provided in this
Chapter are granted in the interests of the Agency and may be
waived, to such extent and upon such conditions as the Agency
may determine, in cases where such a waiver would not
prejudice its interests. The Agency shall waive the immunity of
any of its staff in cases where, in its opinion, the immunity
would impede the course of justice and can be waived without
prejudice to the interests of the Agency.

CHAPTER VIII
WITHDRAWAL, SUSPENSION OF MEMBERSHIP

AND CESSATION OF OPERATIONS

ARTICLE 51
Withdrawal

Any member may, after the expiration of three years
following the date upon which this Convention has entered into
force with respect to such member, withdraw from the Agency
at any time by giving notice in writing to the Agency at its
principal office. The Agency shall notify the Bank, as depository
of this Convention, of the receipt of such notice. Any
withdrawal shall become effective ninety days following the
date of the receipt of such notice by the Agency. A member may
revoke such notice as long as it has not become effective.

ARTICLE 52
Suspension of Membership

(a) If a member fails to fulfil any of its obligations under
this Convention, the Council may, by a majority of its members
exercising a majority of the total voting power, suspend its
membership.

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(b) While under suspension a member shall have no
rights under this Convention, except for the right of withdrawal
and other rights provided in this Chapter and Chapter IX, but
shall remain subject to all its obligations.

(c) For purposes of determining eligibility for a
guarantee or reinsurance to be issued under Chapter III or Annex
I to this Convention, a suspended member shall not be treated as
a member of the Agency.

(d) The suspended member shall automatically cease to
be a member one year from the date of its suspension unless the
Council decides to extend the period of suspension or to restore
the member to good standing.

ARTICLE 53
Rights and Duties of States Ceasing to be Members

(a) When a State ceases to be a member, it shall remain
liable for all its obligations, including its contingent obligations,
under this Convention which shall have been in effect before the
cessation of its membership.

(b) Without prejudice to Section (a) above, the Agency
shall enter into an arrangement with such State for the settlement
of their respective claims and obligations. Any such arrangement
shall be approved by the Board.

ARTICLE 54
Suspension of Operations

(a) The Board may, whenever it deems it justified,
suspend the issuance of new guarantees for a specified period.

(b) In an emergency, the Board may suspend all
activities of the Agency for a period not exceeding the duration
of such emergency, provided that necessary arrangements shall
be made for the protection of the interests of the Agency and of
third parties.

(c) The decision to suspend operations shall have no
effect on the obligations of the members under this Convention
or on the obligations of the Agency towards holders of a
guarantee or reinsurance policy or towards third parties.

ARTICLE 55
Liquidation

(a) The Council, by special majority, may decide to cease
operations and to liquidate the Agency. Thereupon the Agency
shall forthwith cease all activities, except those incident to the
orderly realization, conservation and preservation of assets and
settlement of obligations. Until final settlement and distribution of


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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

assets, the Agency shall remain in existence and all rights and
obligations of members under this Convention shall continue
unimpaired.

(b) No distribution of assets shall be made to members
until all liabilities to holders of guarantees and other creditors
shall have been discharged or provided for and until the Council
shall have decided to make such distribution.

(c) Subject to the foregoing, the Agency shall distribute
its remaining assets to members in proportion to each member’s
share in the subscribed capital. The Agency shall also distribute
any remaining assets of the Sponsorship Trust Fund referred to
in Annex I to this Convention to sponsoring members in the
proportion which the investments sponsored by each bears to the
total of sponsored investments. No member shall be entitled to
its share in the assets of the Agency or the Sponsorship Trust
Fund unless that member has settled all outstanding claims by
the Agency against it. Every distribution of assets shall be made
at such times as the Council shall determine and in such manner
as it shall deem fair and equitable.

CHAPTER IX
SETTLEMENT OF DISPUTE

ARTICLE 56
Interpretation and Application of the Convention

(a) Any question of interpretation or application of the
provisions of this Convention arising between any member of
the Agency and the Agency or among members of the Agency
shall be submitted to the Board for its decision. Any member
which is particularly affected by the question and which is not
otherwise represented by a national in the Board may send a
representative to attend any meeting of the Board at which such
question is considered.

(b) In any case where the Board has given a decision
under Section (a) above, any member may require that the
question be referred to the Council whose decision shall be final.
Pending the result of the referral to the Council, the Agency
may, so far as it deems necessary, act on the basis of the
decision of the Board.

ARTICLE 57
Dispute between the Agency and Members

(a) Without prejudice to the provisions of Article 56 and
of Section (b) of this Article, any dispute between the Agency
and a member or an agency thereof and any dispute between the
Agency and a country (or agency thereof) which has ceased to
be a member, shall be settled in accordance with the procedure
set out in Annex II to this Convention.

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(b) Disputes concerning claims of the Agency acting as
subrogee of an investor shall be settled in accordance with either
(i) the procedure set out in Annex II to this Convention, or (ii)
an agreement to be entered into between the Agency and the
member concerned on an alternative method or methods for the
settlement of such disputes. In the latter case, Annex II to this
Convention shall serve as a basis for such an agreement which
shall, in each case, be approved by the Board by special majority
prior to the undertaking by the Agency of operations in the
territories of the member concerned.

ARTICLE 58
Disputes Involving Holders of a Guarantee or Reinsurance

Any dispute arising under a contract of guarantee or
reinsurance between the parties thereto shall be submitted to
arbitration for final determination in accordance with such rules
as shall be provided for or referred to in the contract of
guarantee or reinsurance.

CHAPTER X
AMENDMENTS

ARTICLE 59
Amendment by Council

(a) This Convention and its Annexes may be amended
by vote of three-fifths of the Governors exercising four-fifths of
the total voting power, provided that:
(i) any amendment modifying the right to withdraw from

the Agency provided in Article 51 or the limitation on
liability provided in Section (d) of Article 8 shall
require the affirmative vote of all Governors; and

(ii) any amendment modifying the loss-sharing
arrangement provided in Articles 1 and 3 of Annex I to
this Convention which will result in an increase in any
member’s liability thereunder shall require the
affirmative vote of the Governor of each such member.

(b) Schedules A and B to this Convention may be
amended by the Council by special majority.

(c) If an amendment affects any provision of Annex I to
this Convention, total votes shall include the additional votes
allotted under Article 7 of such Annex to sponsoring members
and countries hosting sponsored investments.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

ARTICLE 60
Procedure

Any proposal to amend this Convention, whether
emanating from a member or a Governor or a Director, shall be
communicated to the Chairman of the Board who shall bring the
proposal before the Board. If the proposed amendment is
recommended by the Board, it shall be submitted to the Council
for approval in accordance with Article 59. When an amendment
has been duly approved by the Council, the Agency shall so
certify by formal communication addressed to all members.
Amendments shall enter into force for all members ninety days
after the date of the formal communication unless the Council
shall specify a different date.

CHAPTER XI
FINAL PROVISIONS

ARTICLE 61
Entry into Force

(a) This Convention shall be open for signature on
behalf of all members of the Bank and Switzerland and shall be
subject to ratification, acceptance or approval by the signatory
States in accordance with their constitutional procedures.

(b) This Convention shall enter into force on the day
when not less than five instruments of ratification, acceptance or
approval shall have been deposited on behalf of signatory States
in Category One, and not less than fifteen such instruments shall
have been deposited on behalf of signatory States in Category
Two; provided that total subscriptions of these States amount to
not less than one-third of the authorized capital of the Agency as
prescribed in Article 5.

(c) For each State which deposits its instrument of
ratification, acceptance or approval after this Convention shall
have entered into force, this Convention shall enter into force on
the date of such deposit.

(d) If this Convention shall not have entered into force
within two years after its opening for signature, the President of
the Bank shall convene a conference of interested countries to
determine the future course of action.

ARTICLE 62
Inaugural Meeting

Upon entry into force of this Convention, the President of
the Bank shall call the inaugural meeting of the Council. This
meeting shall be held at the principal office of the Agency
within sixty days from the date on which this Convention has
entered into force or as soon as practicable thereafter.

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ARTICLE 63
Depository

Instruments of ratification, acceptance or approval of this
Convention and amendments thereto shall be deposited with the
Bank which shall act as the depository of this Convention. The
depository shall transmit certified copies of this Convention to
States members of the Bank and to Switzerland.

ARTICLE 64
Registration

The depository shall register this Convention with the
Secretariat of the United Nations in accordance with Article 102
of the Charter of the United Nations and the Regulations
thereunder adopted by the General Assembly.

ARTICLE 65
Notification

The depository shall notify all signatory States and, upon
the entry into force of this Convention, the Agency of the
following:
(a) signatures of this Convention;
(b) deposits of instruments of ratification, acceptance and

approval in accordance with Article 63;
(c) the date on which this Convention enters into force in

accordance with Article 61;
(d) exclusions from territorial application pursuant to Article

66; and
(e) withdrawal of a member from the Agency pursuant to

Article 51.

ARTICLE 66
Territorial Application

This Convention shall apply to all territories under the
jurisdiction of a member including the territories for whose
international relations a member is responsible, except those
which are excluded by such member by written notice to the
depository of this Convention either at the time of ratification,
acceptance or approval or subsequently.

ARTICLE 67
Periodic Reviews

(a) The Council shall periodically undertake comprehensive
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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

with a view to introducing any changes required to enhance the
Agency’s ability to serve its objectives.

(b) The first such review shall take place five years after
the entry into force of this Convention. The dates of subsequent
reviews shall be determined by the Council.

DONE at Seoul, in a single copy which shall remain deposited
in the archives of the International Bank for Reconstruction and
Development, which has indicated by its signature below its
agreement to fulfil the functions with which it is charged under this
Convention.

ANNEX I
GUARANTEES OF SPONSORED INVESTMENTS

UNDER ARTICLE 24

ARTICLE 1
Sponsorship

(a) Any member may sponsor for guarantee an
investment to be made by an investor of any nationality or by
investors of any or several nationalities.

(b) Subject to the provisions of Sections (b) and (c) of
Article 3 of this Annex, each sponsoring member shall share
with the other sponsoring members in losses under guarantees of
sponsored investments, when and to the extent that such losses
cannot be covered out of the Sponsorship Trust Fund referred to
in Article 2 of this Annex, in the proportion which the amount of
maximum contingent liability under the guarantees of
investments sponsored by it bears to the total amount of
maximum contingent liability under the guarantees of
investments sponsored by all members.

(c) In its decisions on the issuance of guarantees under
this Annex, the Agency shall pay due regard to the prospects
that the sponsoring member will be in a position to meet its
obligations under this Annex and shall give priority to
investments which are co-sponsored by the host countries
concerned.

(d) The Agency shall periodically consult with sponsoring
members with respect to its operations under this Annex.

ARTICLE 2
Sponsorship Trust Fund

(a) Premiums and other revenues attributable to guarantees
of sponsored investments, including returns on the investment of
such premiums and revenues, shall be held in a separate account
which shall be called the Sponsorship Trust Fund.

(b) All administrative expenses and payments on claims
attributable to guarantees issued under this Annex shall be paid
out of the Sponsorship Trust Fund.

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(c) The assets of the Sponsorship Trust Fund shall be
held and administered for the joint account of sponsoring
members and shall be kept separate and apart from the assets of
the Agency.

ARTICLE 3
Calls on Sponsoring Members

(a) To the extent that any amount is payable by the
Agency on account of a loss under a sponsored guarantee and
such amount cannot be paid out of assets of the Sponsorship
Trust Fund, the Agency shall call on each sponsoring member to
pay into such Fund its share of such amount as shall be
determined in accordance with Section (b) of Article 1 of this
Annex.

(b) No member shall be liable to pay any amount on a
call pursuant to the provisions of this Article if as a result total
payments made by that member will exceed the total amount of
guarantees covering investments sponsored by it.

(c) Upon the expiry of any guarantee covering an
investment sponsored by a member, the liability of that member
shall be decreased by an amount equivalent to the amount of
such guarantee; such liability shall also be decreased on a pro
rata basis upon payment by the Agency of any claim related to a
sponsored investment and shall otherwise continue in effect until
the expiry of all guarantees of sponsored investments
outstanding at the time of such payment.

(d) If any sponsoring member shall not be liable for an
amount of a call pursuant to the provisions of this Article
because of the limitation contained in Sections (b) and (c) above,
or if any sponsoring member shall default in payment of an
amount due in response to any such call, the liability for
payment of such amount shall be shared pro rata by the other
sponsoring members. Liability of members pursuant to this
Section shall be subject to the limitation set forth in Sections (b)
and (c) above.

(e) Any payment by a sponsoring member pursuant to a
call in accordance with this Article shall be made promptly and
in freely usable currency.

ARTICLE 4
Valuation of Currencies and Refunds

The provisions on valuation of currencies and refunds
contained in this Convention with respect to capital
subscriptions shall be applied mutatis mutandis to funds paid by
members on account of sponsored investments.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

ARTICLE 5
Reinsurance

(a) The Agency may, under the conditions set forth in
Article 1 of this Annex, provide reinsurance to a member, an
agency thereof, a regional agency as defined in Section (a) of
Article 20 of this Convention or a private insurer in a member
country. The provisions of this Annex concerning guarantees
and of Articles 20 and 21 of this Convention shall be applied
mutatis mutandis to reinsurance provided under this Section.

(b) The Agency may obtain reinsurance for investments
guaranteed by it under this Annex and shall meet the cost of
such reinsurance out of the Sponsorship Trust Fund. The Board
may decide whether and to what extent the loss-sharing
obligation of sponsoring members referred to in Section (b) of
Article 1 of this Annex may be reduced on account of the
reinsurance cover obtained.

ARTICLE 6
Operational Principles

Without prejudice to the provisions of this Annex, the
provisions with respect to guarantee operations under Chapter
III of this Convention and to financial management under
Chapter IV of this Convention shall be applied mutatis mutandis
to guarantees of sponsored investments except that (i) such
investments shall qualify for sponsorship if made in the
territories of any member, and in particular of any developing
member, by an investor or investors eligible under Section (a) of
Article 1 of this Annex, and (ii) the Agency shall not be liable
with respect to its own assets for any guarantee or reinsurance
issued under this Annex and each contract of guarantee or
reinsurance concluded pursuant to this Annex shall expressly so
provide.

ARTICLE 7
Voting

For decisions relating to sponsored investments, each
sponsoring member shall have one additional vote for each
10,000 Special Drawing Rights equivalent of the amount
guaranteed or reinsured on the basis of its sponsorship, and each
member hosting a sponsored investment shall have one
additional vote for each 10,000 Special Drawing Rights
equivalent of the amount guaranteed or reinsured with respect to
any sponsored investment hosted by it. Such additional votes
shall be cast only for decisions related to sponsored investments
and shall otherwise be disregarded in determining the voting
power of members.

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ANNEX II
SETTLEMENT OF DISPUTES BETWEEN A MEMBER

AND THE AGENCY UNDER ARTICLE 57

ARTICLE 1
Application of the Annex

All disputes within the scope of Article 57 of this
Convention shall be settled in accordance with the procedure set
out in this Annex, except in the cases where the Agency has
entered into an agreement with a member pursuant to Section
(b)(ii) of Article 57.

ARTICLE 2
Negotiation

The parties to a dispute within the scope of this Annex shall
attempt to settle such dispute by negotiation before seeking
conciliation or arbitration. Negotiations shall be deemed to have
been exhausted if the parties fail to reach a settlement within a
period of one hundred and twenty days from the date of the
request to enter into negotiation.

ARTICLE 3
Conciliation

(a) If the dispute is not resolved through negotiation,
either party may submit the dispute to arbitration in accordance
with the provisions of Article 4 of this Annex, unless the parties,
by mutual consent, have decided b resort first to the conciliation
procedure provided for in this Article.

(b) The agreement for recourse to conciliation shall
specify the matter in dispute, the claims of the parties in respect
thereof and, if available, the name of the conciliator agreed upon
by the parties. In the absence of agreement on the conciliator,
the parties may jointly request either the Secretary-General of
the International Centre for Settlement of Investment Disputes
(hereinafter called ICSID) or the President of the International
Court of Justice to appoint a conciliator. The conciliation
procedure shall terminate if the conciliator has not been
appointed within ninety days after the agreement for recourse to
conciliation.

(c) Unless otherwise provided in this Annex or agreed
upon by the parties, the conciliation shall determine the rules
governing the conciliation procedure and shall be guided in this
regard by the conciliation rules adopted pursuant to the
Convention on the Settlement of Investment Disputes between
States and Nationals of Other States.

(d) The parties shall co-operate in good faith with the
conciliator and shall, in particular, provide him with all information
and documentation which would assist him in the discharge of his


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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

functions; they shall give their most serious consideration to his
recommendations.

(e) Unless otherwise agreed upon by the parties, the
conciliator shall, within a period not exceeding one hundred and
eighty days from the date of his appointment, submit to the
parties a report recording the results of his efforts and setting out
the issues controversial between the parties and his proposals for
their settlement.

(f) Each party shall, within sixty days from the date of the
receipt of the report, express in writing its views on the report to
the other party.

(g) Neither party to a conciliation proceeding shall be
entitled to have recourse to arbitration unless:
(i) the conciliator shall have failed to submit his report

within the period established in Section (e) above; or
(ii) the parties shall have failed to accept all of the

proposals contained in the report within sixty days after
its receipt; or

(iii) the parties, after an exchange of views on the report,
shall have failed to agree on a settlement of all
controversial issue within sixty days after receipt of the
conciliator’s report; or

(iv) a party shall have failed to express its views on the
report as prescribed in Section (f) above.

(h) Unless the parties agree otherwise, the fees of the
conciliator shall be determined on the basis of the rates
applicable to ICSID conciliation. These fees and the other costs
of the conciliation proceedings shall be borne equally by the
parties. Each party shall defray its own expenses.

ARTICLE 4
Arbitration

(a) Arbitration proceeding shall be instituted by means
of a notice by the party seeking arbitration (the claimant)
addressed to the other party or parties to the dispute (the
respondent). The notice shall specify the nature of the dispute,
the relief sought and the name of the arbitrator appointed by the
claimant. The respondent shall, within thirty days after the date
of receipt of the notice, notify the claimant of the name of the
arbitrator appointed by it. The two parties shall, within a period
of thirty days from the date of appointment of the second
arbitrator, select a third arbitrator, who shall act as President of
the Arbitral Tribunal (the Tribunal).

(b) If the Tribunal shall not have been constituted within sixty
days from the date of the notice, the arbitrator not yet appointed or the
President not yet selected shall be appointed, at the joint request of the
parties, by the Secretary-General of ICSID. If there is no


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such joint request, or if the Secretary-General shall fail to make
the appointment within thirty days of the request, either party
may request the President of the International Court of Justice to
make the appointment.

(c) No party shall have the right to change the arbitrator
appointed by it once the hearing of the dispute has commenced.
In case any arbitrator (including the President of the Tribunal)
shall resign, die, or become incapacitated, a succesor shall be
appointed in the manner followed in the appointment of his
predecessor and such successor shall have the same powers and
duties of the arbitrator he succeeds.

(d) The Tribunal shall convene first at such time and
place as shall be determined by the President. Thereafter, the
Tribunal shall determine the place and dates of its meetings.

(e) Unless otherwise provided in this Annex or agreed
upon by the parties, the Tribunal shall determine its procedure
and shall be guided in this regard by the arbitration rules adopted
pursuant to the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States.

(f) The Tribunal shall be the judge of its own competence
except that, if an objection is raised before the Tribunal to the
effect that the dispute falls within the jurisdiction of the Board or
the Council under Article 56 or within the jurisdiction of a
judicial or arbitral body designated in an agreement under
Article 1 of this Annex and the Tribunal is satisfied that the
objection is genuine, the objection shall be referred by the
Tribunal to the Board or the Council or the designated body, as
the case may be, and the arbitration proceedings shall be stayed
until a decision has been reached on the matter, which shall be
binding upon the Tribunal.

(g) The Tribunal shall, in any dispute within the scope of
this Annex, apply the provisions of this Convention, any
relevant agreement between the parties to the dispute, the
Agency’s by-laws and regulations, the applicable rules of
international law, the domestic law of the member concerned as
well as the applicable provisions of the investment contract, if
any. Without prejudice to the provisions of this Convention, the
Tribunal may decide a dispute ex aequo et bono if the Agency
and the member concerned so agree. The Tribunal may not bring
a finding of non liquet on the ground of silence or obscurity of
the law.

(h) The Tribunal shall afford a fair hearing to all the
parties. All decisions of the Tribunal shall be taken by a majority
vote and shall state the reasons on which they are based. The
award of the Tribunal shall be in writing, and shall be signed by
at least two arbitrators and a copy thereof shall be transmitted to
each party. The award shall be final and binding upon the parties
and shall not be subject to appeal, annulment or revision.

CH.365 – 36] MULTILATERAL INVESTMENT GUARANTEE AGENCY





STATUTE LAW OF THE BAHAMAS [Original Service 2001]

(i) If any dispute shall arise between the parties as to the
meaning or scope of an award, either party may, within sixty
days after the award was rendered, request interpretation of the
award by an application in writing to the President of the
Tribunal which rendered the award. The President shall, if
possible, submit the request to the Tribunal which rendered the
award and shall convene such Tribunal within sixty days after
receipt of the application. If this shall not be possible, a new
Tribunal shall be constituted in accordance with the provisions
of Sections (a) to (d) above. The Tribunal may stay enforcement
of the award pending its decision on the requested interpretation.

(j) Each member shall recognize an award rendered
pursuant to this Article as binding and enforceable within its
territories as if it were a final judgment of a court in that
member. Execution of the award shall be governed by the laws
concerning the execution of judgments in force in the State in
whose territories such execution is sought and shall not derogate
from the law in force relating to immunity from execution.

(k) Unless the parties shall agree otherwise, the fees and
remuneration payable to the arbitrators shall be determined on
the basis of the rates applicable to ICSID arbitration. Each party
shall defray its own costs associated with the arbitration
proceedings. The costs of the Tribunal shall be borne by the
parties in equal proportion unless the Tribunal decides
otherwise. Any question concerning the division of the costs of
the Tribunal or the procedure for payment of such costs shall be
decided by the Tribunal.

ARTICLE 5
Service of Process

Service of any notice or process in connection with any
proceeding under this Annex shall be made in writing. It shall be
made by the Agency upon the authority designated by the
member concerned pursuant to Article 38 of this Convention and
by that member at the principal office of the Agency.

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SCHEDULE A

MEMBERSHIP AND SUBSCRIPTIONS

CATEGORY ONE

Country Number of Shares

Subscription
(millions of

SDR)
Australia 1,713 17.13
Austria 775 7.75
Belgium 2,030 20.30
Canada 2,965 29.65
Denmark 718 7.18
Finland 600 6.00
France 4,860 48.60
Germany, Federal Republic of 5,071 50.71
Iceland 90 0.90
Ireland 369 3.69
Italy 2,820 28.20
Japan 5,095 50.95
Luxembourg 116 1.16
Netherlands 2,169 21.69
New Zealand 513 5.13
Norway 699 6.99
South Africa 943 9.43
Sweden 1,049 10.49
Switzerland 1,500 15.00
United Kingdom 4,860 48.60
United States 20,519 205.19

Total 59,473 594.73



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STATUTE LAW OF THE BAHAMAS [Original Service 2001]



CATEGORY TWO1

Country Number of Shares

Subscription
(millions of

SDR)
Afghanistan 118 1.18
Algeria 649 6.49
Antigua and Barbuda 50 0.50
Argentina 1,254 12.54
Bahamas 100 1.00
Bahrain 77 0.77
Bangladesh 340 3.40
Barbados 68 0.68
Belize 50 0.50
Benin 61 0.61
Bhutan 50 0.50
Bolivia 125 1.25
Botswana 50 0.50
Brazil 1,479 14.79
Burkina Faso 61 0.61
Burma 178 1.78
Burundi 74 0.74
Cameroon 107 1.07
Cape Verde 50 0.50
Central African Republic 60 0.60
Chad 60 0.60
Chile 485 4.85
China 3,138 31.38
Colombia 437 4.37
Comoros 50 0.50
Congo, Peoples Republic of the 65 0.65
Costa Rica 117 1.17
Cyprus 104 1.04
Djibouti 50 0.50
Dominica 50 0.50
Dominican Republic 147 1.47
Ecuador 182 1.82
Egypt, Arab Republic of 459 4.59
El Salvador 122 1.22


1 Countries listed under Category Two are developing member countries from the

purposes of this Convention.

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Equatorial Guinea 50 0.50
Ethiopia 70 0.70
Fiji 71 0.71
Gabon 96 0.96
Gambia, The 50 0.50
Ghana 245 2.45
Greece 280 2.80
Grenada 50 0.50
Guatemala 140 1.40
Guinea 91 0.91
Guinea-Bissau 50 0.50
Guyana 84 0.84
Haiti 75 0.75
Honduras 101 1.01
Hungary 564 5.64
India 3,048 30.48
Indonesia 1,049 10.49
Iran, Islamic Republic of 1,659 16.59
Iraq 350 3.50
Israel 474 4.74
Ivory Coast 176 1.76
Jamaica 181 1.81
Jordan 97 0.97
Kampuchea, Democratic 93 0.93
Kenya 172 1.72
Korea, Republic of 449 4.49
Kuwait 930 9.30
Lao People’s Dem. Republic 60 0.60
Lebanon 142 1.42
Lesotho 50 0.50
Liberia 84 0.84
Libyan Arab Jamahiriya 549 5.49
Madagascar 100 1.00
Malawi 77 0.77
Malaysia 579 5.79
Maldives 50 0.50
Mali 81 0.81
Malta 75 0.75
Mauritania 63 0.63
Mauritius 87 0.87
Mexico 1,192 11.92
Morocco 348 3.48
Mozambique 97 0.97

CH.365 – 40] MULTILATERAL INVESTMENT GUARANTEE AGENCY





STATUTE LAW OF THE BAHAMAS [Original Service 2001]



Nepal 69 0.69
Nicaragua 102 1.02
Niger 62 0.62
Nigeria 844 8.44
Oman 94 0.94
Pakistan 660 6.60
Panama 131 1.31
Papua New Guinea 96 0.96
Paraguay 80 0.80
Peru 373 3.73
Philippines 484 4.84
Portugal 382 3.82
Qatar 137 1.37
Romania 555 5.55
Rwanda 75 0.75
St. Christopher and Nevis 50 0.50
St. Lucia 50 0.50
St. Vincent 50 0.50
São Tome and Principe 50 0.50
Saudi Arabia 3,137 31.37
Senegal 145 1.45
Seychelles 50 0.50
Sierra Leone 75 0.75
Singapore 154 1.54
Solomon Islands 50 0.50
Somalia 78 0.78
Spain 1,285 1.285
Sri Lanka 271 2.71
Sudan 206 2.06
Suriname 82 0.82
Syrian Arab Republic 168 1.68
Swaziland 58 0.58
Tanzania 141 1.41
Thailand 421 4.21
Togo 77 0.77
Trinidad and Tobago 203 2.03
Tunisia 156 1.56
Turkey 462 4.62
United Arab Emirates 372 3.72
Uganda 132 1.32
Uruguay 202 2.02
Vanuatu 50 0.50
Venezuela 1,427 14.27

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Viet Nam 220 2.20
Western Samoa 50 0.50
Yemen Arab Republic 67 0.67
Yemen, People’s Dem. Republic of 115 1.15
Yugoslavia 635 6.35
Zaire 338 3.38
Zambia 318 3.18
Zimbabwe 236 2.36
Total 40,527 405.27
Total: Categories One

and Two 100,000 1,000.00


SCHEDULE B

ELECTION OF DIRECTORS
1. Candidates for the office of Director shall be nominated

by the Governors, provided that a Governor may nominate only
one person.

2. The election of Directors shall be by ballot of the
Governors.

3. In balloting for the Directors, every Governor shall cast
for one candidate all the votes which the member represented by
him is entitled to cast under Section (a) of Article 40.

4. One-fourth of the number of Directors shall be elected
separately, one by each of the Governors of members having the
largest number of shares. If the total number of Directors is not
divisible by four, the number of Directors so elected shall be
one-fourth of the next lower number that is divisible by four.

5. The remaining Directors shall be elected by the other
Governors in accordance with the provisions of paragraphs 6 to
11 of this Schedule.

6. If the number of candidates nominated equals the
number of such remaining Directors to be elected, all the
candidates shall be elected in the first ballot; except that a
candidate or candidates having received less than the minimum
percentage of total votes determined by the Council for such
election shall not be elected if any candidate shall have received
more than the maximum percentage of total votes determined by
the Council.

7. If the number of candidates nominated exceeds the
number of such remaining Directors to be elected, the candidates
receiving the largest number of votes shall be elected with the
exception of any candidate who has received less than the
minimum percentage of the total votes determined by the
Council.

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STATUTE LAW OF THE BAHAMAS [Original Service 2001]

8. If all of such remaining Directors are not elected in the
first ballot, a second ballot shall be held. The candidate or
candidates not elected in the first ballot shall again be eligible
for election.

9. In the second ballot, voting shall be limited to (i) those
Governors having voted in the first ballot for a candidate not
elected and (ii) those Governors having voted in the first ballot
for an elected candidate who had already received the maximum
percentage of total votes determined by the Council before
taking their votes into account.

10. In determining when an elected candidate has
received more than the maximum percentage of the votes, the
votes of the Governor casting the largest number of votes for
such candidate shall be counted first, then the votes of the
Governor casting the next largest number, and so on until such
percentage is reached.

11. If not all the remaining Directors have been elected
after the second ballot, further ballots shall be held on the same
principles until all the remaining Directors are elected, provided
that when only one Director remains to be elected, this Director
may be elected by a simple majority of the remaining votes and
shall be deemed to have been elected by all such votes.

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