On December 16, 2013, Kuwait and Iraq concluded a bilateral agreement for the promotion and protection of Investments (The “BIT”). Kuwait ratified the BIT with Law 135 of the Year 2014. Iraq ratified it in Gazette No. 4346 dated 29/12/2014. The two countries exchanged instruments of ratification of February 4, 2015, which is the date the BIT entered into force. If their investments are impaired or lost as a result of actions and omissions of or attributable to Iraq, Kuwaiti investors may avail themselves of the substantive protections and procedural remedies afforded by the Kuwait-Iraq BIT.
The Kuwait-Iraq BIT protects Kuwaiti citizens and legal entities, as well as any legal entity which is owned or administered by a Kuwaiti citizen or legal entity which has its administrative headquarters in Kuwait (Article 1(2)).
The broad definition of the term “investment” contained in the Kuwait-Iraq BIT protects most types of investments made by Kuwaiti companies in Iraq. The Kuwait-Iraq BIT defines “investments” to include “all kinds of assets” invested, before or after the entry into force of the BIT, by an Kuwaiti investor in Iraq, including “movable and immovable property”, “shares, bonds and interests in companies”, “claims to money or other rights having economic value”, “intellectual property rights, and concessions (Article 1(1)).
The Kuwait-Iraq BIT grants traditional substantive investment treaty protections to Kuwaiti investors. Under the Kuwait-Iraq BIT, Kuwaiti Investors are entitled to fair and equitable treatment and the “full and complete protection and security” in conformity with Iraqi legislation (provided that it is not inconsistent with the BIT, Article 3(2), compensation for losses due to war or other armed conflict, state of national emergency, revolution, insurrection, riot or similar events (article 6), free transfer of capital (Article 8), and payment of prompt and effective compensation in case of direct or indirect expropriation (Article 7). In addition, Kuwaiti investors may invoke the substantive protections granted by Iraq to investors of other States by invoking the most-favored-nation clause ion Article 5 of the Kuwait-Iraq BIT. At this time, however, in addition to the bit with Kuwait, Iraq has only entered into a bilateral investment agreement with Japan.
The Kuwait-Iraq BIT provides Kuwaiti Investors with access to an international forum to remedy treaty violations (Article 10). After a period of 180 days during which the parties should seek to settle the dispute amicably, Kuwaiti investors are entitled to commence either ICSID or UNCITRAL arbitration to enforce their rights under the Kuwait-Iraq BIT.
It is also notable that Iraq signed the ICSID Convention on November 17, 2015, which entered into force for Iraq on December 17, 2015.