Alternative Investors -- State Dispute Settlement Systems: Diplomatic Protection and State to State Arbitration

17 Pages Posted: 11 Feb 2015

See all articles by Giorgio Sacerdoti

Giorgio Sacerdoti

Bocconi University - Department of Law

Matilde Recanati

Bocconi University - Department of Law

Date Written: February 10, 2015

Abstract

Apart from BITs there are other types of treaties relevant for ensuring definite rights to foreign investors even if not focused on investment protection, most of them predating BITs, on which we will focus in the present contribution. This is the case with treaties of friendship, commerce and navigation (FCN treaties) typically entered into by the USA, or Consular and Establishment treaties, some of them dating back to the XIX century. This was the case in the well-known ELSI dispute, in which the United States invoked certain provisions of the bilateral FCN Treaty of 1948 before the International Court of Justice (ICJ) in 1986-89 against Italy. In another case, Italy successfully exercised diplomatic protection towards Switzerland in 1991-92 in favour of Italian citizens faced with confiscation of immovable property because of alleged violations of Swiss legislation restricting acquisition of land by foreigners. Another avenue, distinct from invocation of the BIT by a protected foreign investor itself through direct arbitration against the host State, is its invocation by the home country through diplomatic protection of aggrieved national investors against the host country in a State-to-State arbitration. This is provided in BITs but rarely resorted to. One such case is a recent dispute between Italy and Cuba, where Italy espoused the claims of several Italian investors against Cuba in direct State-to-State arbitration pursuant to Art. 10 of the BIT of 1993 between the two countries. Through the examination of the treaty provisions invoked in the above-mentioned cases, of the procedural features of each of them and of the outcomes we intend to contribute to a better understanding of available options and their respective value, highlighting the differences from recourse to direct arbitration by the foreign investor concerned under a BIT.

Keywords: Diplomatic Protrection; State-to-State Arbitration; BITs, ICSID, Friendship, Commerce and navigation Treaties, Consular and Establishment treaties, ELSI, Barcelona Traction, Italy, Cuba, Switzerland

Suggested Citation

Sacerdoti, Giorgio and Recanati, Matilde, Alternative Investors -- State Dispute Settlement Systems: Diplomatic Protection and State to State Arbitration (February 10, 2015). Bocconi Legal Studies Research Paper No. 2562782. Available at SSRN: https://ssrn.com/abstract=2562782 or http://dx.doi.org/10.2139/ssrn.2562782

Giorgio Sacerdoti (Contact Author)

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, Milan 20136
Italy

Matilde Recanati

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, Milan 20136
Italy

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