  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        1
CHAPTER 335 
MULTILATERAL INVESTMENT 
GUARANTEE AGENCY ACT
To provide for Malta’s membership of the Multilateral Investment
Guarantee Agency.
(10th October, 1989) *
Enacted by ACT XXX of 1989.
Short title.
Guarantee Agency Act.
Interpretation.
"Agency" means the Multilateral Investment Guarantee Agency;
"Convention" means the Convention providing for the
establishment and operation of the Agency as approved by the
Board of Governors of the International Bank for Reconstruction
and Development on the 11th October, 1985, and signed by Malta
in Washington D.C. on the 16th September, 1986, as set out in the
Schedule to this Act, and for the purposes of sections 4 and 6 of
this Act, as from time to time amended;
"Minister" means the Minister responsible for finance.
Authorisation for 
acceding to the 
Convention. 
Cap. 304.
3. In virtue of this Act, and in compliance with the provisions
of the Ratification of Treaties Act, the Government of Malta is
hereby authorised to accede to the Convention.
Financial 
provisions relating 
to membership.
4. (1) There shall be paid out of the Consolidated Fund, on
the warrant of the Minister, all sums required for the purpose of
making all payments required to be made from time to time under
the provisions of the Convention.
(2) The Minister may, if he thinks fit, create and issue, or direct
the Central Bank of Malta (as the depository for the Government of
Malta for the purposes of Article 37 of the Convention) to create
and issue, to the Agency non-interest bearing and non-negotiable
notes or other obligations as are provided for by Article 7(i) of the
Convention, and the sums payable under such notes or obligations
so created and issued shall be a charge on the Consolidated Fund:
Provided that where the Minister has directed the Central
Bank of Malta to create and issue notes or other obligations as
aforesaid, the Minister shall also undertake to repay to the Central
Bank of Malta such amount or amounts of notes or other
obligations as may be called for payment by the Agency, such
repayments to be made as soon as possible and in no case later than
a month after the date of payment to the Agency; and in respect of
any such payment all repayments due as aforesaid shall be a charge
on the Consolidated Fund and the sums required for such
repayments are hereby appropriated for that purpose.
* See  Government Notice No. 577 of 10th October, 1989.
  2      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
(3) Any sums received by the Government of Malta, or by the
Central Bank of Malta, from the Agency on account of its
subscription to the capital stock thereof shall be paid into the
Consolidated Fund.
Certain provisions 
of the Convention 
given force of law 
in Malta.
 5. The provisions of Article 1 ( b ) and Articles 44 to 48
inclusive of the Convention shall have the force of law in Malta, so
however, that nothing in Article 47 of the Convention shall be
construed: 
 (i) as entitling the Agency to import goods free of
customs duty without any restriction on their
subsequent sale in Malta; 
(ii) as conferring on the Agency any exemption from taxes
and duties which form part of the prices of goods
acquired by the Agency in Malta; or
(iii) as conferring on the Agency any exemption from taxes
or duties which are in fact no more than charges for
services rendered.
Power of Minister 
to make orders.
 6. The Minister may by order make such provisions as are
necessary for carrying into effect any of the provisions of the
Convention.
Language of 
Schedule.
 7. The Schedule to this Act shall be in the English language
only, and such text shall apply also to the Maltese text of the Act. 
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        3
SCHEDULE
[Section 2]
CONVENTION ESTABLISHING THE MULTILATERAL INVESTMENT GUARANTEE AGENCY
PREAMBLE  
The Contracting States
Considering  the need to strengthen international cooperation 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 insurers 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.
Article 2. Objective and Purposes
The objective of the Agency shall be to encourage the flow of investments for
productive purposes 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.
  4      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
To serve its objective, the Agency shall:
( a ) issue guarantees, including coinsurance 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 fifty-five 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.
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
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        5
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 insufficient 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 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 ) Payments 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 twenty-five percent of the paid-in cash portion of their subscriptions 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.
 
  6      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
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
(iii) the Council, by special majority, determines that the financial
position of the Agency permits all or part of such amounts to be
returned 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
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        7
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.
  ( 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 implementation 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 modernize, 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.
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
  8      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
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
Investments 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.
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.
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        9
( 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 cooperate 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 cooperation,
including in particular the modalities of reinsurance and coinsurance.
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 minimizing 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.
  10      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
Article 21. Cooperation 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.
( 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 fifty 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 such 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 investment 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 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; 
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        11
(ii) seek to remove impediments, in both developed and developing
member countries, to the flow of investment to developing
member countries; and
(iii) coordinate 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.
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
  12      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
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.
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.
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        13
( 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 twenty-five
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 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 an investment, they shall not be influenced in their
  14      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
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, cooperate 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.
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 forty percent of the total voting power, members from such a Category
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        15
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.
( 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
  16      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
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.
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.
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        17
( 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.
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
(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.
  18      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
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.
( 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.
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        19
( 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 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 DISPUTES 
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. Disputes 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
  20      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
this Convention.
( 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.
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.
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        21
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.
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 
  22      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
( 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 reviews of the
activities of the Agency as well as the results achieved 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
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        23
guarantees issued under this Annex shall be paid out of the Sponsorship Trust Fund.
( 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.
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.
  24      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
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.
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 to 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
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        25
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
conciliator 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 cooperate 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 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 issues 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 proceedings 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 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
  26      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
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 successor
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.
( 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.
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        27
( 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.
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
59,473 594.73
  28      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
CATEGORY TWO *
*Countries listed under Category Two are developing member countries for the purposes of this Convention.
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, People’s Rep. 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
E1 Salvador  122 1.22
Equatorial Guinea 50 0.50
Ethiopia 70 0.70
Fiji  7l 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
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        29
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. Rep. 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
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
Country   Number of Shares Subscription 
(millions of SDR) 
  30      CAP. 335. ]     MULTILATERAL  INVESTMENT GUARANTEE AGENCY
St. Vincent  50  0.50
Sao 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  12.85
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
Viet Nam  220 2.20
Western Samoa  50 0.50
Yemen Arab Republic  67 0.67
Yemen, People’s Dem.Rep. of  115 1.15
Yugoslavia  635 6.35
Zaire  338 3.38
Zambia  318 3.18
Zimbabwe  236 2.36
 40,527 405.27
Total  100,000 1,000.00
Country   Number of Shares Subscription 
(millions of SDR) 
  MULTILATERAL  INVESTMENT GUARANTEE AGENCY [ CAP. 335.        31
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.
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.
