This is a Free Translation prepared by the CVM
Any questions arising from the text should be
clarifyed by consulting the original

The Republic of Argentina, the Federative Republic of Brazil, the Republic of Paraguay and the Eastern Republic of Uruguay (henceforth designated Member States)

Taking into account the Assunção Treaty signed in March 26, 1991, in which the Member States decided to create the Common Market of the South (MERCOSUL);

Considering the Colônia Protocol on the Promotion and Reciprocal Protection of Investments in the MERCOSUL approved by the Decision number 11/93 of the Common Market Council, of January, 17,1994, that it has for objective to promote investment of investors of Member States of the MERCOSUL in the scope of territorial application of the Assunção Treaty;

Standing out the need to harmonize the general legal principles to be adopted by each of the Member States to the investment originated from countries which are not –MERCOSUL members (henceforth designated "Third States") aiming at not to create distinguishing conditions that distort the investment flow;

Recognizing that the promotion and the protection of investment based on the agreements with Third States will contribute to stimulate the individual economic environment and to promote the prosperity in the four Member States,

Agreed the following:

Member States compromise to grant to the investments made by investors of Third States a treatment not more favorable than that one established in the present Protocol.

For this purpose, the general treatment to be agreed by each Member State with Third States will not recognize, for these, larger benefits and rights than those assured to the investor under the following regulatory basis:

1- The term " investment " will assign, in compliance with the laws and regulations of a Member State in whose territory the investment will be effected, all type of asset directly or indirectly invested by investors of a Third State in the territory of a Member State, in accordance with its legislation. It will include, in particular, yet not exclusively:

a) the property of real estate and other goods, as well as other assets, like mortgages, guarantees and pledges;

b) stocks, corporate shares and any other kind of participation in companies;

c) creditors rights and rights over bonds with an economic value; the loans will only be included when directly bounded to an specific investment;

d) Intellectual and intangible property rights, specifically including royalties, patent, industrial design, brands, commercial names, technical procedures, know how and goodwill;

e) economic concessions granted by law or by contract, including concessions for research, cultivation, extraction, or exploitation of natural resources.

2- The term "investor" will assign:

a) any person who is a natural born of one of the Member State, or one of the Third State, in accordance with their own legislation. The arrangements of agreements will not be applied to the investment made in the territory of a Member State by persons who are natural born from Third States if these people, by the time of the investment, inhabit or resides permanently in the mentioned territory in agreement to the legislation in force, unless it is proved that the resources for such investment is originated abroad;

c) any established firm in conformity with the legislation of any country that is effectively burst for defined person or firm mentioned in items "a" and "b" of this paragraph.

3- the term "gains" will be assigned to all amounts produced by an investment, such as profits, incomes, shares, interests, royalties and other current revenues.

4- The term "territory" will assign, the domestic territory of each Member State or of a Third State, including the adjacent maritime zones to the external limit of the national territorial sea on which a Member State in question or the Third State can, in compliance with the international law, exercise sovereign rights or jurisdiction.

1- Each Member State will promote, in its territory, investments of investors of Third States and will admit these investments in agreement with its legislation and its regulations.

2- When one of the Member States admits an investment in its territory, it will grant to the necessary authorizations for its effective development including the contract execution under license, commercial, or administrative assistance and the admission of key personnel.

1- Each Member State will guarantee a just and equitable treatment to the investment of investors of Third States and it will not harm its management, maintenance, use, fruition or term by unjustified means or discriminate measures.

2- Each Member State will grant full protection to these investments and it will not be able to grant a treatment to them less favorable of the one than that one granted to the investments of its own national investors or from other States.

3- Member States will not extend to the investors of Third States the benefits of any treatment, preference or resultant privilege of:

a) its participation or association to a free commerce zone, customs union, common market or similar regional agreement;

b) an international agreement related to taxation, even if partially.

1- None of Member States will take measures of nationalization or dispossession or any another measure of similar effect against investment that are in its territory and that belong to Third States investors, unless such measures are taken by reasons of public utility or social interest, in a non discriminate basis and by means of due process of law. Such measures will be followed by the payment of a fair adequate, immediate and opportune indemnization.

The sum of the related indemnization will correspond to the value of the expropriated investment.

2- The investors of a Third State who suffer losses in its investments as result of war or another armed conflict, state of national emergency, revolt, rebellion or riot in the territory of a Member State will have, as result of a not less favorable treatment of the one than granted the its own investors or the investors of other States as for restitution, indemnization or another form of compensation.

1- Each Member State will allow to the investors of the Third State the free transference of its investments and gains, and particularly, but exclusively, the following ones:

a) the capital and the additional sums necessary to the maintenance and development of an investment;

b) the revenues, profits, incomes, interests, dividends and other current incomes;

c) the reimburse funds of loans as defined as defined in Article 2, letter A Paragraph 1 C;

d) the royalties and honorary and the all the other relative payments to the rights foreseen in article 2, letter A, paragraph 1 D and E;

e) the results of sales or partial or total redemption of an investment;

f) the compensations, indemnitizations or other payments foreseen in article 2, letter D;

g) the remuneration of citizens of a Contracting Party that had authorization for working with an investment related task.

2- The transference will be effected without delay, in freely convertible currency.

If a Third State or agency by it assigned pays an investor by virtue of a guarantee or insurance contracted to cover not commercial in relation to an investment, the Member State in whose territory the investment has been performed, will recognize the validity of the subrogation in favor of the Third State or one of its agencies with respect to any right or title of the investor with the objective of getting the correspondent pecuniary compensation.

1- Controversies that are raised between a Member State and the Third State regarding the interpretation or the application of an agreement signed between them will be, if possible, solved in a diplomatic way.

2- If it is not possible to solve the controversy this way within a reasonable term to be determined, it will be submitted to the international arbitration.

1- Any controversy related to the interpretation of an agreement on reciprocal promotion of investments appeared between an investor of a Third State and Member State will be, if possible, solved by means of friendly consultations.

2- If the controversy can not be solved within a reasonable term from the moment in which it will be raised by one or another one of the parts, it can be submitted, by a request of the investor:

a) or to the competent courts of a Member State in whose territory the investment was carried through;

b) or to the international arbitration, in the conditions described in paragraph 3.

Since the investor has submitted the controversy to the jurisdiction of a Member State in litigation or to the international arbitration, the choice of one or another one of these procedures will be definitive.

3- In case of appeal to the international arbitration, the controversy could be submitted, by a request of the investor, to a court of ad hoc arbitration or an international institution of arbitration.

4- The Arbitration Agency will decide the controversies based on the terms of the present Protocol, the rights of the Member State involved in the controversy, including the rules related to Law conflicts, the terms of private agreements related to the investment that are concluded, as well as the principles of international law.

5- The arbitrage sentences will be definitive and mandatory for the parts in litigation. The Member State will execute them in accordance to its own legislation.

I - INVESTMENT AND CONTROVERSIES COVERED BY THIS AGREEMENT

The clauses of this agreement may apply to all investment effectuated before or after the date of its entry in force, but they will not be applicable to any controversy, claim or divergence that was raises before its entry in force.

The minimum stated period for the validity of this agreement will be of 10 (ten) years. As for the investments effected previously to the date of expiration of the validity of the agreement, the Member State will be able to agree that the terms will continue to be valid for a maximum period of 15 (fifteen) years to count of this date.

Member States that compromise to exchange information on future negotiations and in course on promotion agreements and reciprocal protection of investment with Third States will be consulted previously on any substantial modification in the general agreement treatment in article 2 of the present Protocol. For such goal, the Commission of Promotion and Reciprocal Protection of Investments of the Common Market Group, or an forum that eventually replaces it, will be the competent technical agency for the accomplishment of the consultations and changes of the information related with the subject.

The present Protocol is integral part of the Assunção Treaty.

The adhesion on the part of a State to the Assunção Treaty, will imply ipso jure the adhesion to the present Protocol.

This Protocol will take effect 30 (thirty) days after the deposit of the fourth ratification instrument.

The Government of the Republic of Paraguay will be the depositary of the present Protocol and the instruments of ratification and will send copy duly notarized of the same ones to the Governments of the other Member States.

Made in the City of Buenos Aires, August, 5, 1994, an original hardcopy, on the Portuguese and Spanish Languages, being both the equally authentic texts.