Mechanisms to enforce obligations under the BIT

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.

If no agreement can be reached, both mechanisms allow the dispute to be submitted to independent international arbitration. The introduction of investor–state dispute settlement in Swiss BITs (systematically included since 1990) aims to de‑politicise investment disputes, which is why the state–state mechanism is only applied subsidiarily. In international practice, the state–state dispute settlement mechanism is rarely used.