European Investment Bank Framework Agreement Between The Republic Of Latvia And European Investment Bank

Governing EIB activities in Latvia Luxembourg, 24 July 1997

MADE BETWEEN:

the Republic of Latvia, represented by H.E. Mr Juris Kanels, the Ambassador Extraordinary and Plenipotentiary of the Republic of Latvia to the European Union,

(Power of Attorney: Annex 1 )

of the first part, and

European Investment Bank having its Head office at 100, boulevard Konrad Adenauer, L-2950 Luxembourg-Kirchberg, Grand Duchy of

Luxembourg, represented by Mr Volfgang Roth, Vice President,

hereinafter called: “THE BANK”

of the second part.

WHEREAS:

Desiring, within the framework both of the Europe Agreement between the European Community (hereinafter the “EC”) and The Republic of LATVIA (hereinafter “LATVIA”), signed on 18 July 1994 and generally to facilitate the granting of loans by the European Investment Bank (hereinafter “the Bank”) for investment projects of interest to LATVIA, and for that purpose to extend certain protection to such projects and to ensure certain rights and privileges for the Bank.

NOW THEREFORE it is hereby agreed as follows:

Article 1

Definitions

For the purposes of this Agreement:

“beneficiary” means any person, whether a natural person or a person established under private or public law, receiving the benefit of financing provided by the Bank for any project, and includes a borrower from the Bank, a co-debtor, a guarantor or an owner of a project financed by the Bank;

“project” means any investment project, which the Bank finances directly or through an intermediary, and which satisfies the following criteria:

(i) it is located in, or its financing by the Bank is effected in or through, the territory of LATVIA, and

(ii) the government of LATVIA requests financing for it or acknowledges that the financing falls within the scope of this Agreement,

where the Bank agrees to the financing on a date after the date of entry into force of this Agreement or expressly in expectation of its execution or entry into force;

“tax” means any tax, imposition, duty, levy, withholding or fiscal charge whatsoever, whether national, regional or local.

Article 2

Bank's Activity

The Bank may freely pursue within the territory of LATVIA the activities envisaged by its Statute, including the borrowing of funds under the laws and regulations of LATVIA by means of all instruments permitted thereby. In particular it may, on the basis of its appraisal of a project, decide whether, and on what terms and conditions, to grant finance in support of it.

Article 3

Taxation of Bank

Interest and all other payments due to the Bank and arising out of activities envisaged by this Agreement, as well as the assets and revenues of the Bank connected with such activities, shall be exempt from tax. No activity of the Bank in the territory of LATVIA in connection with any matter covered by this Agreement shall, of itself, render the Bank or its assets subject to tax.

Article 4

Currency Convertibility

Throughout the life of any financial operation concluded pursuant to Article 2 of this Agreement LATVIA shall:

(a) ensure: (i) that beneficiaries may convert into any fully convertible currency, at the prevailing market exchange rate on due date, the amounts in the national currency of LATVIA necessary for the timely payment of all sums due to the Bank in respect of loans and guarantees in connection with any project; and (ii) that such amounts shall be freely, immediately and effectively transferable;

(b) ensure: (i) that the Bank may convert into any fully convertible currency, at such prevailing market exchange rate, the amounts in the national currency of LATVIA received by the Bank by way of payments arising in respect of loans and guarantees or any other activity and that the Bank may freely, immediately and effectively transfer the amounts so converted; or, at the Bank's option, (ii) that It may freely dispose of such amounts within the territory of LATVIA.

Article 5

Treatment of Projects

LATVIA shall ensure that projects financed by the Bank pursuant to this Agreement, as well as contracts awarded for the execution thereof, benefit, in respect of fiscal, customs and other matters, from treatment no less favorable than that which is accorded to projects or contracts financed by any international financial institution or accorded under any bilateral agreement in respect of such matters or under national legislation, whichever is the most favorable.

LATVIA shall extend to each project full and constant protection and security against expropriation and strife insofar as is necessary of preserve the capacity of the project to generate income which is available to service the debt incurred in connection with the project.

Article 6

Public Tendering

The Bank may make its financing of projects conditional upon the arrangements for participation in tenders and other competitive procedures for the award of contracts being in accordance with the Bank's rules and procedures in force from time to time.

Article 7

Bank Status and Treatment

The Bank shall enjoy full juridical personality in the territory of LATVIA, including in particular the capacity to contract, to acquire and dispose of movable and immovable property and to be party to legal proceedings.

The Bank shall enjoy in respect of its activities In the territory of LATVIA the treatment accorded to the international institution which is most favoured in respect of any such activity or, if that is more favourable, the treatment accorded under any International agreement covering such activities.

In particular, the Bank shall have free access to the national financial market in LATVIA, and its obligations and securities shall be treated on terms, including terms as to tax treatment, at least as favourable as those accorded to public bodies of LATVIA, including the State, and the most favoured international financial institution.

Article 8

Bank Privileges and Immunities

The assets of the Bank shall be exempt:

(a) from search and all forms of expropriation;

(b) from the levy or imposition of any measure of execution or distraint prior to the award of a final, unappealable judgement against the Bank, rendered by a court of competent jurisdiction.

Representatives of the Bank, while they are engaged in activities connected with or in implementation of this Agreement, shall enjoy at least the following immunities and privileges:

(a) immunity from legal and administrative proceedings in respect of acts performed by them in their official capacity, except in cases where the Bank waives such immunity;

(b) diplomatic privileges and facilities accorded by LATVIA far official communications, for the transmission of documents and travel.

Article 9

Settlement of Disputes over Bank Financing

LATVIA undertakes, in respect of any dispute arising between the Bank and a beneficiary regarding the financing of a project: (I) to ensure that the courts of LATVIA have the authority to recognise a final decision delivered by due process by a court or tribunal of competent jurisdiction, including the Court of Justice of the European Communities or any national court of a member state of the EC; and (ii) to ensure the execution of any such decision in accordance with its applicable national rules and procedures.

For the purposes of this Article 9, the term “project' includes a project financed by the Bank pursuant to the framework agreement between LATVIA and the Bank dated 13 October 1993.

Article 10

Subrogation

The rights conferred on the Bank by this Agreement may be enjoyed and exercised (i) by the Bank both in its own name and, to the extent that the EC has made payment to the Bank in respect of any guarantee or insurance concerning any loan concluded pursuant to this Agreement, as representative of the EC, or (ii) as the case may be, by the EC itself by virtue of a right of subrogation.

Article 11

Co-operation

LATVIA undertakes to inform the Bank in a timely manner of any measure or proposed measure on its part, or of any other circumstance, such as may be reasonably expected to affect materially the rights and interests of the Bank under this Agreement.

Article 12

Settlement of Disputes over this Agreement

Any dispute, disagreement, controversy or claim together referred to as a “dispute”) arising in connection with the existence, validity, interpretation, implementation or termination of this Agreement shall to the extent possible be settled by agreement between LATVIA and the Bank.

If the dispute cannot be amicably settled by LATVIA and the Bank within 60 days of the notification of the dispute by either of those parties, the dispute shall be submitted by either party for a final and binding decision of the Court of Justice of the European Communities.

The submission of a dispute to that Court does not imply the waiver by either party of any privilege or right of Immunity from execution under applicable law.

Article 13

Entry into force

This Agreement shall enter into force upon the day following date on which the Bank confirms to the government of LATVIA its receipt of a certified copy of the latter's instrument of ratification or other instrument mutually agreed between LATVIA and the Bank, as well as of a legal opinion acceptable to the Bank as to the legal force of this Agreement.

Article 14

Expiry

The Bank may by notice to LATVIA release it from all or any of its obligations under this Agreement. Unless otherwise stated, the giving of any such notice shall not affect the rights and interests acquired by the Bank in respect of projects and financial operations outstanding of the date of the notice.

Article 15

Address for Communications

The parties agree that any communication arising in the course of the operation of this Agreement may be addressed to their respective addresses set out as follows:

— FOR LATVIA : Ministry of Finance

1 Smilsu str.
Riga
LV-1919 Latvia

— FOR THE BANK : 100, boulevard Konrad Adenauer L-2950 Luxembourg

Telex: 3530 BNKEU LU

IN WITNESS WHEREOF the parties hereto have caused this Contract to be executed in three originals in the English language.

This Framework Agreement has been initialled on behalf of the Republic of Latvia by and on behalf of THE BANK by Mr

Hans-Jurgen Seeliger, Head of Division.

Signed for and on behalf of

THE REPUBLIC OF LATVIA

J. Kanels

Signed for and on behalf of

THE EUROPEAN INVESTMENT BANK

W. Roth

this 24th day of July 1997, at Luxembourg