Investment Protection Agreement

Swiss BITs provide for two types of dispute settlement mechanisms: an investor–state mechanism, which addresses specific conflicts arising between an investor and the host country regarding an existing investment, and a state–state mechanism, which deals with disputes concerning the interpretation and application of the BIT. Both mechanisms begin with a mandatory consultation phase lasting six to twelve months, during which the parties attempt to reach an amicable settlement. In many cases, mutually acceptable solutions are found during this stage, with or without the support of the authorities of the investor’s home country.

In recent years, the significant increase in the number of investment-related disputes that have been submitted to international arbitration under the terms of BITs has come to the attention of the international community.

In addition to BITs, which are intended to protect investments that have already been made in the partner country (post-establishment phase), it is also possible to establish international rules to ensure that investors have free access to markets (pre-establishment phase). This makes it more difficult for the partner country to amend the legislation for protectionist reasons. Switzerland negotiates provisions on the establishment in industrial sectors (chapters on investment) and in services sectors (chapters on trade in services) in its free trade agreements.