PERU Law and Practice Contributed by: Alvaro Echeandía, Alfred Kossuth Wieland, Pilar Santillán Meza and Rodrigo Varillas Cueto, Thorne, Echeandia & Lema Abogados
Likewise, foreign investors are guaranteed respect for their private property, the right to resort to arbitration, and freedom of trade, among other guarantees to protect their invest - ments. 2.2 Procedure and Sanctions in the Event of Non-Compliance Notwithstanding the foregoing, Peruvian law establishes certain restrictions for foreigners for national security and defence purposes. The Peruvian Constitution provides that for - eigners cannot acquire or own assets within 50 kilometres of the borders, unless authorised by a supreme decree issued by the Council of Ministers in cases of public necessity. Failure to comply with such prohibition could trigger expropriation by the Peruvian state. Along the same line, Peruvian regulations estab - lish restrictions on foreign investments in sectors such as commercial aviation, private security and surveillance, commercialisation of weap - ons and explosives, radio broadcasting servic - es, maritime transportation of hydrocarbons and water transportation. 2.3 Commitments Required From Foreign Investors Within the framework of the promotion of for - eign investments, local legislation provides for the execution of Legal Stability Agreements with the Peruvian state. The purpose of such agreements is to stabilise the guarantees applicable to the foreign inves - tors with respect to the tax regime, the free avail - ability of foreign currency and the right of free remittance of profits, dividends and royalties.
Foreign investors who execute Legal Stability Agreements must comply with certain require - ments: (i) channel the investments through the National Financial System and (ii) make a mon - etary contribution of at least USD10 million (in the mining and hydrocarbon sectors) and USD5 million (in other sectors). The term of Legal Stability Agreements is ten years, except in the case of concessions where the term is subject to the term of the concession. Likewise, any disputes that may arise between foreign investors and the Peruvian state shall be submitted to an arbitration tribunal. The agreements executed between the Peru - vian state and investors have the force of law and cannot be modified unilaterally by any of the parties. 2.4 Right to Appeal The Peruvian Constitution establishes the plural - ity of instances as a principle of the jurisdictional function. In this way, in accordance with the guarantee of equal treatment before the law, foreign inves - tors shall exercise the right of appeal against any judicial decision or administrative resolution applicable to them (complying with the corre - sponding procedures, formalities and deadlines). With respect to arbitration, Peru has signed the Convention on the Settlement of Investment Disputes; consequently, foreign investors may submit to arbitration under ICSID rules.
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