
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 22USC2197]

 
               TITLE 22--FOREIGN RELATIONS AND INTERCOURSE
 
                     CHAPTER 32--FOREIGN ASSISTANCE
 
                 SUBCHAPTER I--INTERNATIONAL DEVELOPMENT
 
                         Part II--Other Programs
 
           subpart iv--overseas private investment corporation
 
Sec. 2197. General provisions relating to insurance, guaranty, 
        financing, and reinsurance programs
        

(a) Scope

    Insurance, guaranties, and reinsurance issued under this subpart 
shall cover investment made in connection with projects in any less 
developed friendly country or area with the government of which the 
President of the United States has agreed to institute a program for 
insurance, guaranties, or reinsurance.

(b) Protection of interest

    The Corporation shall determine that suitable arrangements exist for 
protecting the interest of the Corporation in connection with any 
insurance, guaranty or reinsurance issued under this subpart, including 
arrangements concerning ownership, use, and disposition of the currency, 
credits, assets, or investments on account of which payment under such 
insurance, guaranty or reinsurance is to be made, and any right, title, 
claim, or cause of action existing in connection therewith.

(c) Guaranties as obligations backed by full faith and credit of United 
        States

    All guaranties issued prior to July 1, 1956, all guaranties issued 
under sections 1872(b) \1\ and 1933(b) \1\ of this title, all guaranties 
heretofore issued pursuant to prior guaranty authorities repealed by the 
Foreign Assistance Act of 1969, and all insurance, reinsurance and 
guaranties issued pursuant to this subpart shall constitute obligations, 
in accordance with the terms of such insurance, reinsurance or 
guaranties, of the United States of America and the full faith and 
credit of the United States of America is hereby pledged for the full 
payment and performance of such obligations.
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    \1\ See References in Text note below.
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(d) Fees

                           (1) In general

        Fees may be charged for providing insurance, reinsurance, 
    financing, and other services under this subpart in amounts to be 
    determined by the Corporation. In the event fees charged for 
    insurance, reinsurance, financing, or other services are reduced, 
    fees to be paid under existing contracts for the same type of 
    insurance, reinsurance, financing, or services and for similar 
    guarantees issued under predecessor guarantee authority may be 
    reduced.

                    (2) Credit transaction costs

        Project-specific transaction costs incurred by the Corporation 
    relating to loan obligations or loan guarantee commitments covered 
    by the provisions of the Federal Credit Reform Act of 1990 [2 U.S.C. 
    661 et seq.], including the costs of project-related travel and 
    expenses for legal representation provided by persons outside the 
    Corporation and other similar expenses which are charged to the 
    borrower, shall be paid out of the appropriate finance account 
    established pursuant to section 505(b) of such Act [2 U.S.C. 
    661d(b)].

                   (3) Noncredit transaction costs

        Fees paid for the project-specific transaction costs and other 
    direct costs associated with services provided to specific investors 
    or potential investors pursuant to section 2194 of this title (other 
    than those covered in paragraph (2)), including financing, 
    insurance, reinsurance, missions, seminars, conferences, and other 
    preinvestment services, shall be available for obligation for the 
    purposes for which they were collected, notwithstanding any other 
    provision of law.

(e) Maximum term of obligation

    No insurance, guaranty, or reinsurance of any equity investment 
shall extend beyond twenty years from the date of issuance.

(f) Limitations on amounts

    Compensation for insurance, reinsurance, or guaranties issued under 
this subpart shall not exceed the dollar value, as of the date of the 
investment, of the investment made in the project with the approval of 
the Corporation plus interest, earnings, or profits actually accrued on 
such investment to the extent provided by such insurance, reinsurance, 
or guaranty, except that the Corporation may provide that (1) 
appropriate adjustments in the insured dollar value be made to reflect 
the replacement cost of project assets, (2) compensation for a claim of 
loss under insurance of an equity investment may be computed on the 
basis of the net book value attributable to such equity investment on 
the date of loss, and (3) compensation for loss due to business 
interruption may be computed on a basis to be determined by the 
Corporation which reflects amounts lost. Notwithstanding the preceding 
sentence, the Corporation shall limit the amount of direct insurance and 
reinsurance issued by it under section 2194 or 2194b of this title so 
that risk of loss as to at least 10 per centum of the total investment 
of the insured and its affiliates in the project is borne by the insured 
and such affiliates, except that such limitation shall not apply to 
direct insurance or reinsurance of loans by banks or other financial 
institutions to unrelated parties.

(g) Fraud or misrepresentation

    No payment may be made under any guaranty, insurance, or reinsurance 
issued pursuant to this subpart for any loss arising out of fraud or 
misrepresentation for which the party seeking payment is responsible.

(h) Limits of obligation

    Insurance, guaranties, or reinsurance of a loan or equity investment 
of an eligible investor in a foreign bank, finance company, or other 
credit institution shall extend only to such loan or equity investment 
and not to any individual loan or equity investment made by such foreign 
bank, finance company, or other credit institution.

(i) Claims settlement

    Claims arising as a result of insurance, reinsurance, or guaranty 
operations under this subpart or under predecessor guaranty authority 
may be settled, and disputes arising as a result thereof may be 
arbitrated with the consent of the parties, on such terms and conditions 
as the Corporation may determine. Payment made pursuant to any such 
settlement, or as a result of an arbitration award, shall be final and 
conclusive notwithstanding any other provision of law.

(j) Presumption of compliance

    Each guaranty contract executed by such officer or officers as may 
be designated by the Board shall be conclusively presumed to be issued 
in compliance with the requirements of this chapter.

(k) Balance of payments

    In making a determination to issue insurance, guaranties, or 
reinsurance under this subpart, the Corporation shall consider the 
possible adverse effect of the dollar investment under such insurance, 
guaranty, or reinsurance upon the balance of payments of the United 
States.

(l) Convictions under Foreign Corrupt Practices Act of 1977; prohibition 
        on payments for losses resulting from unlawful activities; 
        suspension from eligibility of receipt of financial support

    (1) No payment may be made under any insurance or reinsurance which 
is issued under this subpart on or after April 24, 1978, for any loss 
occurring with respect to a project, if the preponderant cause of such 
loss was an act by the investor seeking payment under this subpart, by a 
person possessing majority ownership and control of the investor at the 
time of the act, or by any agent of such investor or controlling person, 
and a court of the United States has entered a final judgment that such 
act constituted a violation under the Foreign Corrupt Practices Act of 
1977.
    (2) Not later than 120 days after April 24, 1978, the Corporation 
shall adopt regulations setting forth appropriate conditions under which 
any person convicted under the Foreign Corrupt Practices Act of 1977 for 
an offense related to a project insured or otherwise supported by the 
Corporation shall be suspended, for a period of not more than five 
years, from eligibility to receive any insurance, reinsurance, guaranty, 
loan, or other financial support authorized by this subpart.

(m) Notification of countries of environmental restrictions on certain 
        activities

    (1) Before finally providing insurance, reinsurance, guarantees, or 
financing under this subpart for any environmentally sensitive 
investment in connection with a project in a country, the Corporation 
shall notify appropriate government officials of that country of--
        (A) all guidelines and other standards adopted by the 
    International Bank for Reconstruction and Development and any other 
    international organization relating to the public health or safety 
    or the environment which are applicable to the project; and
        (B) to the maximum extent practicable, any restriction under any 
    law of the United States relating to public health or safety or the 
    environment that would apply to the project if the project were 
    undertaken in the United States.

The notification under the preceding sentence shall include a summary of 
the guidelines, standards, and restrictions referred to in subparagraphs 
(A) and (B), and may include any environmental impact statement, 
assessment, review, or study prepared with respect to the investment 
pursuant to section 2199(g) of this title.
    (2) Before finally providing insurance, reinsurance, guarantees, or 
financing for any investment subject to paragraph (1), the Corporation 
shall take into account any comments it receives on the project 
involved.
    (3) On or before September 30, 1986, the Corporation shall notify 
appropriate government officials of a country of the guidelines, 
standards, and legal restrictions described in paragraph (1) that apply 
to any project in that country--
        (A) which the Corporation identifies as potentially posing major 
    hazards to public health and safety or the environment; and
        (B) for which the Corporation provided insurance, reinsurance, 
    guarantees, or financing under this subpart before December 23, 
    1985, and which is in the Corporation's portfolio on that date.

(n) Penalties for fraud

    Whoever knowingly makes any false statement or report, or willfully 
overvalues any land, property, or security, for the purpose of 
influencing in any way the action of the Corporation with respect to any 
insurance, reinsurance, guarantee, loan, equity investment, or other 
activity of the Corporation under section 2194 of this title or any 
change or extension of any such insurance, reinsurance, guarantee, loan, 
equity investment, or activity, by renewal, deferment of action or 
otherwise, or the acceptance, release, or substitution of security 
therefor, shall be fined not more than $1,000,000 or imprisoned not more 
than 30 years, or both.

(o) Use of local currencies

    Direct loans or investments made in order to preserve the value of 
funds received in inconvertible foreign currency by the Corporation as a 
result of activities conducted pursuant to section 2194(a) of this title 
shall not be considered in determining whether the Corporation has made 
or has outstanding loans or investments to the extent of any limitation 
on obligations and equity investment imposed by or pursuant to this 
subpart. The provisions of section 504(b) of the Federal Credit Reform 
Act of 1990 [2 U.S.C. 661c(b)] shall not apply to direct loan 
obligations made with funds described in this subsection.

(Pub. L. 87-195, pt. I, Sec. 237, as added Pub. L. 91-175, pt. I, 
Sec. 105, Dec. 30, 1969, 83 Stat. 814; amended Pub. L. 93-390, 
Sec. 2(4), Aug. 27, 1974, 88 Stat. 767; Pub. L. 95-268, Secs. 5, 6, Apr. 
24, 1978, 92 Stat. 215; Pub. L. 97-65, Sec. 6, Oct. 16, 1981, 95 Stat. 
1023; Pub. L. 99-204, Secs. 4(b), 6(b), 9(b)(2), Dec. 23, 1985, 99 Stat. 
1670, 1671, 1673; Pub. L. 100-461, title V, Sec. 555, Oct. 1, 1988, 102 
Stat. 2268-36; Pub. L. 102-549, title I, Sec. 105, Oct. 28, 1992, 106 
Stat. 3652.)

                       References in Text

    Sections 1872(b) and 1933(b) of this title, referred to in subsec. 
(c), were repealed by Pub. L. 87-195, pt. III, Sec. 642(a)(2), Sept. 4, 
1961, 75 Stat. 460. Section 642(b) of Pub. L. 87-195 provided that 
references to provisions of law repealed by subsec. (a) were to be 
deemed references to the appropriate provisions of Pub. L. 87-195. See 
sections 2163 and 2351 of this title.
    The Foreign Assistance Act of 1969, referred to in subsec. (c), is 
Pub. L. 91-175, Dec. 30, 1969, 83 Stat. 805, as amended. For complete 
classification of this Act to the Code, see Short Title note set out 
under section 2151 of this title and Tables. The guaranty authorities 
repealed by the 1969 Act were the guaranty authorities contained in 
sections 2181 to 2184 prior to the general reorganization of subpart III 
by the 1969 Act.
    The Federal Credit Reform Act of 1990, referred to in subsec. 
(d)(2), is title V of Pub. L. 93-344, as added by Pub. L. 101-508, title 
XIII, Sec. 13201(a), Nov. 5, 1990, 104 Stat. 1388-609, which is 
classified generally to subchapter III (Sec. 661 et seq.) of chapter 17A 
of Title 2, The Congress. For complete classification of this Act to the 
Code, see Short Title note set out under section 621 of Title 2 and 
Tables.
    This chapter, referred to in subsec. (j), was in the original ``this 
Act'', meaning Pub. L. 87-195, Sept. 4, 1961, 75 Stat. 424, as amended, 
known as the Foreign Assistance Act of 1961. For complete classification 
of this Act to the Code, see Short Title note set out under section 2151 
of this title and Tables.
    The Foreign Corrupt Practices Act of 1977, referred to in subsec. 
(l), is title I of Pub. L. 95-213, Dec. 19, 1977, 91 Stat. 1494, as 
amended, which enacted sections 78dd-1 and 78dd-2 of Title 15, Commerce 
and Trade, and amended sections 78m and 78ff of Title 15. For complete 
classification of this Act to the Code, see Short Title of 1977 
Amendment note set out under section 78a of Title 15 and Tables.

                          Codification

    Amendment by Pub. L. 100-461 is based on section 110(c) of title I 
of H.R. 5263, One Hundredth Congress, as passed by the House of 
Representatives on Sept. 20, 1988, and section 110(c) of title I of S. 
2757, One Hundredth Congress, as reported Sept. 7, 1988, and enacted 
into law by Pub. L. 100-461.


                               Amendments

    1992--Subsec. (d). Pub. L. 102-549, Sec. 105(a), amended subsec. (d) 
generally. Prior to amendment, subsec. (d) read as follows: ``Fees shall 
be charged for insurance, guaranty, and reinsurance coverage in amounts 
to be determined by the Corporation. In the event fees charged for 
investment insurance, guaranties, or reinsurance are reduced, fees to be 
paid under existing contracts for the same type of insurance, 
guaranties, or reinsurance and for similar guaranties issued under 
predecessor guaranty authority may be reduced.''
    Subsecs. (n), (o). Pub. L. 102-549, Sec. 105(b), (c), added subsecs. 
(n) and (o).
    1988--Pub. L. 100-461 inserted reference to financing in section 
catchline.
    1985--Subsec. (f). Pub. L. 99-204, Sec. 6(b), added cl. (3).
    Pub. L. 99-204, Sec. 9(b)(2), inserted ``or 2194b'' after ``section 
2194''.
    Subsec. (m). Pub. L. 99-204, Sec. 4(b), added subsec. (m).
    1981--Subsec. (f). Pub. L. 97-65 substituted ``Compensation for 
insurance, reinsurance, or guaranties issued under this subpart shall 
not exceed the dollar value, as of the date of the investment, of the 
investment made in the project with the approval of the Corporation plus 
interest, earnings, or profits actually accrued on such investment to 
the extent provided by such insurance, reinsurance, or guaranty, except 
that the Corporation may provide that (1) appropriate adjustments in the 
insured dollar value be made to reflect the replacement cost of project 
assets, and (2) compensation for a claim of loss under insurance of an 
equity investment may be computed on the basis of the net book value 
attributable to such equity investment on the date of loss'' for ``No 
insurance, reinsurance, or guaranty issued under this subpart shall 
exceed the dollar value, as of the date of the investment, of the 
investment made in the project with the approval of the Corporation plus 
interest, earnings or profits actually accrued on said investment to the 
extent provided by such insurance, reinsurance, or guaranty, except that 
the Corporation may provide for appropriate adjustments in the insured 
dollar value to reflect the replacement cost of project assets'', and 
struck out provision that the preceding sentence not apply to the extent 
not permitted by State law.
    1978--Subsec. (f). Pub. L. 95-268, Sec. 5, inserted provisions 
excepting from dollar amounts adjustments in the insured dollar amounts 
to reflect replacement cost of project assets, and provisions excepting 
from limitations loans by banks or other financial institutions to 
unrelated parties.
    Subsec. (l). Pub. L. 95-268, Sec. 6, added subsec. (l).
    1974--Subsecs. (a) to (c). Pub. L. 93-390, Sec. 2(4)(A)-(C), 
inserted references to reinsurance wherever appearing.
    Subsec. (d). Pub. L. 93-390, Sec. 2(4)(D), inserted provisions 
authorizing fees to be charged for reinsurance and reduction of 
reinsurance fees under existing contracts in the event fees charged for 
reinsurance are reduced.
    Subsec. (e). Pub. 93-390, Sec. 2(4)(E), inserted reference to 
reinsurance.
    Subsec. (f). Pub. L. 93-390, Sec. 2(4)(F), (G), inserted 
``reinsurance'' before ``or guaranty'' wherever appearing and provisions 
relating to limitations on the amount of direct insurance or 
reinsurance.
    Subsec. (g). Pub. L. 93-390, Sec. 2(4)(H), inserted applicability to 
insurance and reinsurance.
    Subsecs. (h) to (k). Pub. L. 93-390, Sec. 2(4)(I)-(K), inserted 
reference to reinsurance wherever appearing.

                         Delegation of Functions

    For delegation of functions of President under this section, see Ex. 
Ord. No. 12163, Sept. 29, 1979, 44 F.R. 56673, as amended, set out as a 
note under section 2381 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 2194b, 2195, 2199 of this 
title.
