1 1Swiss Attorney-at-Law, Beijing, People's Republic of China.The author wishes to express his gratitude to Professor Mathias-Charles Krafft, Ambassador of Switzerland, former Chief of the Public International Law Department of the Swiss Ministry of Foreign Affairs, Honorary Professor of International Economic Law at the University of Lausanne, for his advice and assistance.The author may be contacted at: <firstname.lastname@example.org>.
See Part i of this article, w.3(b)(ii), "Protection, Fair and Equitable Treatment and Most-favoured-nation treatment". 2See,veg., the recent Treaty on Investment (Toi) between European Free Trade Area (EFTA) Member States (minus Norway) and South Korea, FF 2006 p. 963, art. 3, "Protection and Treatment", 13, "Compensation and Indemnification" and 14 "Compensation of Losses"; and comparedwith art 16, "Disputes Between an Investor and a State-Party" and 17 (for financial services). Seealso Part of this article, note 101 (on the Toi with South Korea). 3 "To anticipate is to cure." French motto.
4See Loi federale sur la garantie contre les dsques a 1'expottation, RS 946.11 (26 September 1958). Seealso its implementation order, Ordonnance sur la garantie contre les risques a 1'expottation, RS 946.111 (15 June 1998). ' See Loi federale sur 1'Assurance suisse contre les risques a l' exportation (LASRE), FF 2005 p. 6987 (16 December 2005). The Act was subject to the possibility of an optional, citizen-initiated referendum up until 6 April 2006. The referendum was not used; therefore, the Act will enter into force. The date of entry into force will be fixed by the Federal Council. SfeAI50 CONSEIL FEDERAL, MESSAGE CONCERNANT LA LOI FtDtRALE SUR L'ASSURANCE SUISSE CONTRE LES RISQUES A L'EXPORTATION, FF 2004 p. 5441 (24 September 2004). 6 This coverage was not available under the old Act. Even though the old Act was generally competitive and had proven to serve its purpose throughout its history, among its direct competitors Switzerland was the only country not ensuring against this risk. As business patterns have changed, namely with the privatization of many former State or State-controlled entities, the old Act was no longer coping with the challenges of economic globalization. In French : "établissementdedroitpublic". The export risk guarantee has existed so far in the form of a fund administered by the government. It will be transformed to an autonomous public law entity and re-organized in accordance with the New Public Management principles, namely as to the allocation of competences between the government and AssurancesuissecontrelesrisquesdI'exportation (AsRE). 8 The acronym is based on the French: "G'arantiecontrelesrisquesa 1'exportation". 9 The acronym is based on the French: "Assurancesuissecontrelesrisquesa1'exportation". '. 10 Certain currencies are eligible for complimentary coverage; see Ordonnance du DFE sur les monnaies susceptibles de donner lieu a une garantie complementaire lors de marches conclus en monnaie etrangere, RS 946.111.5 (1 December 1998). 11 The goods must contain a minimal Swiss added-value, though; .eee Ordonnance du DFE sur la part minimale de valeur ajoutee suisse dans le cadre des garanties contre les risques a 1'exponation, RS 946.111.1 (18 November 2002). z See Ordonnance du DFE sur la perception, par des organisations economiques, d'emoluments pour la garantie contre les risques a l'exportation, RS 946.112 (8 March 1999), and Ordonnance du DFE concernant la perception d'une prime minimale pour les garanties contre les risques a 1'exportation, RS 946.112.1 (8 March 1999). Seealso OECD, Trade Directorate, Arrangement on Officially Supported Export Credits, 2005 Revision, TD/PG(2005)38/FINAL (6 December 2005). The OECD's Export Credit Division facilitates work relating to the policies and practices of OECD Member governments which provide Officially Supported Export Credits; see13 See Ordonnance du DFE concemant le classement de pays importateurs dans les categories de pays etablies en relation avec la garantie contre les risques a 1'exportation, RS 946.111.6 (19 August 2002). Countries are classified in accordance with the OECD's country risk scale from 1 (safe) to 7 (risky). See OecD, Trade Directorate, Country Risk Classifications of the Participants to the Arrangement on Officially Supported Export Credits (21 April 2006).
� �Industriesuissedesmachines,desequipementselectriquesetdesmetaux (Machine-Tool, Electrical Equipment & Metal Industry); see. For the GRE Bureau, see �www.swiss-erg.ch>. 15 The Federal Council shall occasionally rule on guarantees and decisions of principle of a particular magnitude and importance. �'� The President of the Commission is currently the Head of Economic Promotion (Promotion delaplaceeconomique) at seco. 17 Austria, the Czech Republic, France, Germany, Italy, the Netherlands, Poland, Spain and Sweden. The agreements were passed between 2001 and 2005. See RS 0.946. These agreements are exclusively reinsurance, not insurance, agreements, and therefore do not directly involve the exporter. 11 The Paris Club is an informal group of public creditors the role of which is to find co-ordinated and sustainable solutions to the payment difficulties experienced by debtor States. Paris Club creditors agree to reschedule debts owed to them. See �www.clubdeparis.org>. 11See Loi federale sur la garantie contre les risques a 1'investissement (GRI), RS 977.0 (20 March 1970). Seealso its implementation order, Ordonnance d'execution de la loi federale sur la garanties contre les risques de l'investissement, RS 977.02 (2 September 1970). Seealso Arrêté federal concernant le maximum des engagements totaux pouvant etre pris au titre de la garantie contre les risques de 1'investissement, RS 977.01 (9 October 1970) (on GRt's total ceiling). 211 See Loi sur la Gri cited id., art. 1 (1). 21 Including Eastern European countries which are technically known as "transitional economies", a development stage somewhat more advanced than that of developing countries. The list of these countries is established by the GRi Commission and is available on GRt Bureau's website at �www.swiss-irg.ch/politik/f/ index. htm>. zz See Loi sur la GRi cited supra note 19, art. 4. z3 Risks linked to private creditors or guarantors, voluntary capital repatriation, or exchange risks are not covered. See Ordonnance sur la Gpi cited supra note 19, art. 1-3. 24See Loi sur la GRi cited supra notel9, art. 5.
zsId., art. 6. Investments are defined as capital stakes in money or in the nature of loans. Id., art. 3. The level of coverage of capital revenues is limited to 24 per cent of the capital whereas coverage of the revenue itself is limited on a case-by-case, yearly basis. See Ordonnance sur la Gat cited supra note 19, art. 3(2). 26 See Loi sur la GRt cited supra note 19, art. 6. z�Id., art. 7. =R Id., art. 9. z9 Id., art. 10. 3u Id., art. 11. 31 Id., art. 17. 32 Id., art. 18. 3;Seesupra note 14. For the GRi Bureau, see. 3t The President of Gm is the same as for GPE, seesupra note 16. 3s See Part t of this article, 1V.C.l(b), "TheDedarationonInternationalInvestmentandMultinationalEnterprises". 3� Officially known as the International Union of Credit & Investment Insurers, the Berne Union is the leading international organization and community for the export credit and investment insurance industry. The Berne Union actively facilitates cross-border trade by supporting intemational acceptance of sound principles in export credits and foreign investments and by providing a forum for professional exchanges among its members. See �www.bemeunion.org.uk/>. 37See. �e See Part of this article, IV.C.3, "The World Bank". 39See Convention portant creation de 1'Agence multilaterale de garantie des investissements, RS 0.975.1 (signed in Seoul, Republic of Korea on 11 October 1985). 40 Provided the investment is not made in Switzerland. Under certain conditions, however, investments made by nationals of the host country may also be eligible, but not in Switzerland, since Switzerland isnot a developing country.
41See Convention cited supra note 39, art. 13(a)(ii). 42 Id., art. 13(a)(iii). 43 Id., art. 12(c). 44 Id., art. 14. There are 144 such Members as of 15 October 1985; seeSee also Convention cited suyra note 39, Appendix A, Category II at 33, and "Champ d'application de la Convention" at 39. However, both lists are outdated. 45 Id., art. 12(c)(i). 46 New investments are those that have neither been made nor irrevocably committed to by the time the investor submits a preliminary application for guarantee to M1l;A. Other investments may be eligible and are considered on a case-by-case basis. 47 Provided the loans have a minimum maturity of three years. 48 See Convention cited supra note 39, art. 12(a). 4"Id., art. 12(b). 50 Id., art. 12(d). 51 Transfer restriction coverage protects against losses arising from an investor's inability to convert local currency (capital, interest, principal, profits, royalties, or other monetary benefits) into foreign exchange for transfer outside the host country. The coverage also insures against excessive delays in acquiring foreign exchange caused by the host government's actions or failure to act. Currency devaluation is not covered. Sz Expropriation coverage offers protection against loss of the insured investment as a result of acts by the host government that may reduce or eliminate ownership of, control over, or rights to the insured investment. This policy also covers partial losses, as well as "creeping expropriation", a series of acts that over time have an expropriatory effect. BofM /iA', non-discriminatory measures taken by the host government in the exercise of its legitimate regulatory authority arc not considered expropriatory. 53 See Convention cited stipra note 39, art. 11. Breach of contract coverage protects against losses arising from the host government's breach or repudiation of a contractual agreement with the investor. In the event of such an alleged breach or repudiation, the investor is covered if no judicial remedy or arbitration is available; no decision is rendered within a deadline defined in the insurance policy; or such decision cannot be enforced. Seeid., art. 1 l(a)(iii). 5^Seeinfra III.A.4, "The Multilateral Investment Guarantee Agency".
55 Possibly 20, if justified by the nature of the project. 56 The SME must fulfill two out of the three following criteria: (1) no more than 300 employees; (2) total annual sales should not be more than US$ 15 million; (3) total assets should not be more than US$ 15 million. Investments in the financial sector are eligible if the investment is geared towards providing financial services for SMEs and at least 50 per cent of the clients related to the investment are SMEs as defined above. 57 In order to qualify as an Smi, an investor must have no more than 375 employees and fulfill one of the following criteria: have no more than (1) US$ 50 million in assets or (2) US$ 100 million in annual sales. The application fee is waived for Smis. 5H On bilateral investment treaties (BITS) generally, see Part t of this article, m.A.s, "Treaties on the Protection of Investments". On dispute resolution in particular, see Part of this article, IV.A.3(b)(v), "Dispute Resolution". s° Before the ICSID Convention of 1965 and the creation of the International Centre for Settlement of Investment Disputes, BITS generally contained "horizontal" clauses-dispute resolution clauses between States. At that time, diagonal clauses-investor-host State clauses-were only inserted, if at all, in investment contracts agreed directly between the investor and the host State. Swiss BITS signed between 1961 and 1978 only contain one horizontal clause. Switzerland signed the ICSID Convention in 1967 but did not insert a diagonal clause into its BITS until 1981. It has done so systematically ever since, with only two exceptions. These two exceptions are the BIT with Morocco signed in 1985 (art. 9) and the BIT with Thailand signed in 1997. There was only one BIT between the first Swiss BIT including a diagonal clause (the BIT with Sri Lanka signed in 1981, art. 9) and the Bij with Morocco: the BIT with Panama signed in 1983, which contains both a horizontal clause (art. 10) and a diagonal clause (art. 9). The BIT with Thailand contains one horizontal clause (art. 10) and one diagonal ICSID conciliation and arbitration clause (art. 11). However, this clause shall enter into force only when Thailand becomes a Member of the IC:SID Convention. Thailand signed the Convention on 6 December 1985 but had not yet ratified it as of 25 January 2006. In the meantime, only the horizontal clause is operative. Thus, the 31 Swiss BITS signed between 1961 and 1978 only contain one horizontal clause. With the two exceptions noted above, since 1981 Swiss BITS systematically contain two separate clauses: one horizontal clause and one diagonal clause. See J.-C. Liebeskind, One-Hundred-TwoSwissBilateralInvesfmentTreaties:AnOvenieu,OfInvestor-Host-stateDisputeSettlementClauses, 19 ASA SPECIAL SERIES 81 (2002), notes 16-21.
b° For example, if a party overtly refuses consultation, should the other party still expect to wait 12 months? What if the party implicitly refuses? In the meantime, the investor-especially in the case of small and medium- sized undertakings with limited financial means-may suffer considerable, if not fatal and irreparable, harm. For a critical appraisal see,e.g., Tibor Varady, TheCourtesyTrap:Arbitration"If NoAmicableSettlementCartBeReached", Vol. 6 No. ARBITRATION AND Ai>R 27 (LB.A. October 2001). On consultation or negotiation periods generally, seef.�., NGUYEN QUOC DIN11, PATRICK DAILLIER & ALAIN PELLET, DROIT INTERNATIONAL PUBLIC 793-6 (6th ed., L.G.D.J. 1999); G. Sacerdoti, BilateralTreatiesandMultilateralInstrumentsonInvestmentProtection,in RECUEIL DES COURS DE L'ACADLMIE DE DROIT IN'I'ERNATIONAI. UE LA HAYE 442-4 (Nijhoff 1998); CHARLES ROUSSEAU, DROIT INTERNATIONAL PUBLIC, TOME V, LFS RAPPORTS CONFLICTUELS 259-60 (Sirey 1983); D.P. O'CONNNELL, INTERNATIONAL LAW, VOL. 2 1067 (Stevens & Sons 1970). 61 See,e.g., art. 43 ICSID Rules; art. 34 UNCITRAL Rules; art. 26 Icc Rules. 62 International Centre for Settlement of Investment Disputes, set up by the Washington Convention of 18 March 1965. Seeinfia Iu.A.3, "The Convention for the Settlement of Investment Disputes Between States and Nationals of Other States". A list of Member States is to be found at . On ICSID arbitration clauses in Swiss BITS, see Christian Dominicé, LaclauseCIRDIdanslestraitesbilaterauxsuisses deprotectiondesinvestissements,in 1M DIENST AN DER GEMEINSCHAFT, FESTSCHRIFT FOR DIETRICH SCHINDLER ZUM 65. GEBURTSTAG 457 (1989). 63 United Nations Commission on International Trade Law. The UNCITRAL Arbitration Rules are to be found at . 64I.e. the Court of Arbitration of the International Chamber of Commerce. 65 See
66 Unless the mediation clause itself provides for arbitration or litigation in case the mediation is not successful. 67 In such cases, the dispute resolution mechanism often loses its efficiency, as it enables the dispute to extend indefinitely in time. bs See,e.g., the case of the BIT with El Salvador, art. 9, RS 0.975.232.3. 69 Art. 9, RS 0.975.242.3. �« India is still not a Member of the Washington Convention as of 25 January 2006. 71 Or its substitutes, as provided by art. 9(3)(c)(i) of the BIT. 72 Art. 9(3)(c)(iv) of the BIT.
�3 Art. 10, RS 0.975.229.4. In this order. 5See,e.g., the case of the BIT with El Salvador, supra note 68. �See,e.g., the case of the BIT with Brazil (not published), art. 8(6). In several cases, it is reduced to six months. See,e.g., the case of the BIT with India, art. 9(2), supra note 69. " On the Bilateral Agreements generally, see Part t of this article, IV.B.i(b), "Bilateral Agreements". 79 On the direct effect of the Bilateral Agreements generally, see Fabrice Filliez, Application desaccordssectorielspar les juridictionssuisses:quelguesrapports,in 8 DOSSIERS DE DROIT EUROPEAN 183 ff. (Daniel Felder & Christine Kaddous eds., 2001). 80 Such judicial protection is granted by EC law as a matter of principle, even in the absence of a specific provision in the agreement or the regulation invoked.
81See,e.q., art. 11 of the Free Circulation of Persons Agreement, Accord entre la Confederation suisse, d'une part, et la Communaute europeenne et ses Etats membres, d'autre part, sur la libre circulation des personnes, RS 0.142.112.681 (21 June 1999). An identical provision is contained in each sectoral agreement. sz Traite instituant la Communaute europeenne (version consolidee), Joumal officiel no C 325 (24 December 2002), art. 230(4). 83Id., art. 14. An identical provision is contained in each sectoral agreement. s�See Convention concemant la competence judiciaire et l'execution des decisions en matiere civile et commercial, RS 0.275.11 (16 September 1988). The Convention entered into force in Switzerland on 1 January 1992. 85 Title Vu expressly deals with the Brussels Convention. es Of 27 September 1968. s� On the Lugano Convention generally, see L'ESPACE JUOIC1A1RE EUROP�EN: LA CONVENTION DE LUGANO Du 16 SEPTEMBRE 1988 (Nicolas Gillard ed.), CEDIDAC (Lausanne 1992). 88 Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Iceland, Italy, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. $9 Namely in the fields of civil procedure (Conventionrelativedlaprocédurecivile signed at The Hague on 1 March 1954, RS 0.274.12), service (ConventionrelativealasynificationetlanotificationaI'etrangerdesactes judiciairesetextrajudiciairesenmatierecivileoncommerciale signed at The Hague on 15 November 1965, RS 0.274.131) and discovery (Conventionsur1'obtention despreuvesàI'etrangerenmatierecivileoncommerciale signed at The Hague on 18 March 1970, RS 0.274.132). This list is not exhaustive; there are numerous other conventions related to civil procedure. 90See Part of this article, note 83.
See Convention du 18 mars 1965 pour le reglement des differends relatifs aux investissements entre Etats et ressortissants d'autres Etats, RS 0.975.2 (18 mars 1965). y2 Icsn> has an Administrative Council and a Secretariat. The Administrative Council is chaired by the World Bank's President and consists of one representative of each State which has ratified the Convention. Annual meetings of the Council are held in conjunction with the joint Bank/Fund annual meetings. 93 See Convention, supra note 91, art. 54. y^ As of 25 January 2006. 95 See Convention, suyra note 91. The Convention entered into force in Switzerland on 14 June 1968. 96 These countries represent 32 per cent of the 185 countries to which Switzerland is bound by a trade-or investment-related treaty. Seeinfra Annex, "List of Dispute Resolution Mechanisms in Swiss Trade-and Investment-Related Treaties". 91 See ICSID Doc. 11, IcsiD Additional Facility (June 1979). ya Id., Annex B, Conciliation (Additional Facility) Rules. yy Id., Annex C, Arbitration (Additional Facility) Rules. 100 Angola, Antigua, Canada, Dominica, Holy See, Iraq, Liechtenstein, Macao, Maldives, Monaco, Myanmar, Palestinian National Authority, San Marino, Suriname and Taiwan.
101See ICSID Doc. 11, ICSID Additional Facility (June 1979), Annex D, Fact-Finding (Additional Facility) Rules. lozSee ICSID Doc. 11, ICSID Additional Facility (June 1979), art. 3. l05Id., art. 4(l)-(2). 104Id., art. 4(3). 101 On the Icsid Convention generally, see CHRISTOPH H. SCHREUER, THE ICSID CONVENTION: A COMMENTARY, Cambridge University Press (2001). lob See . low On the guarantee itself, seesupra ILC, "The Multilateral Investment Guarantee Agency". 108 See Convention cited supra note 39, art. 17. Seeid., art. 18. I�° On MIGA generally, see P. SCHAUFFELt3ERGER, LA PROTECTION JURIDIQUE DES INVESTISSEMENTS INTERNATIONAUX DANS LES PAYS EN DtV]ELOPPF.MENT, ETUDE DE LA GARANTIE CONTRE LES RISQUES DE L'INVESTISSEMENT ET EN PARTICULIER DE L'AGENCE MULTILATERALE DE GARANTIE DES INVESTISSEMENTS (AMGI), in: 83 ETUDES SUISSES DE DROIT INTERNATIONAL, SOCIETE SUISSE DE DROIT INTERNATIONAL, Schulthess (ed.), 1993.
111Seeinfra IV.B, "Diplomatic Support". 112 Seeinfra W .A, "Diplomatic Protection". Seesupra note 58. 114 Alternatives are provided if the President or his substitutes is prevented from doing so. 115 Seesupra note 111. Seesupra note 112. Seesupra III.A.3, "The Convention for the Settlement of Investment Disputes Between States and Nationals of Other States". "" See supra m.n.a, "The Multilateral Investment Agency". "9 On Treaties of Commerce (Toes) generally, see Part i of this article, m.n.z, "Treaties of Commerce". tzo Or, in case of mixed treaties containing provisions on both investments and trade, dispute resolution mechanisms applicable to the provisions on trade. 'z' The same statement can be made for the countries Members of the then EC, now EU, with which Swiss trade had been gradually integrating at an even earlier stage. The treaties with the EU leave ample room for diagonal dispute resolution. Seesupra W .n.z, "Bilateral Agreements with the European Union".
122 Certain Toes even contain an express reference to GATT and/or the WTO; see,e.g., Toe with Georgia, art. 2, RS 0.946.293.601. 123 This implies that the trader will have to request diplomatic support or protection to trigger the horizontal clause of the Toc, like an investor relying on a BIT's horizontal clause would have to do. Seesuyra m.ts.t, "Bilateral Investment Treaties", and notes 111 and 112. 124See,e.g., Toe with Sweden, art. 5, RS 0.946.297.142. tzs Toe with Chad, art. 11, RS 0.946.297.361. 1. tze See,e.g., Toe with Greece, art. 9, RS 0.946.293.721. t2�See Toe with Croatia, art. 19(2), RS 0.946.292.911, referring to the Arbitration Treaty of 23 May 1995, RS 0.193.412.91. Seealso Toe with Paraguay, art. 8, RS 0.946.296.321. In the latter case, such a separate arbitration agreement was never concluded, even though the Toe was signed in 1969. Seealsoinfra II.B.3, t, "International Disputes Settlement Agreements". t2R See,eg., Toe with Peru, art. 4, RS 0.946.296.411, by which the parties "conunit to study with utmost care any suggestion the other party could submit as to a better application of the treaty provisions". 129 Even though these expressions are used indifferently from one treaty to another, their meaning is identical. Compare,e.g., Toe with Mozambique, art. 7, RS 0.946.295.741 ("consultations") with Toe with New Zealand, art. 3, RS 0.946.296.142 ("negotiations"). 130 In French: "Comitéd'examen".t3tSee,e.g., Toc with Yugoslavia, art. 19(2), RS 0.946.298.184. t32 See Toe with Argentina, art. 17, RS 0.946.291.541. This provision foresees that in case the trade or monetary conditions which prevailed at the time of signing the treaty substantially change, any party may immediately request consultations for adapting the treaty. If no agreement can be reached within two months, the treaty shall be terminated for the following month. Seealso Toc with Brazil, art. 5, RS 0.946.291.981. t33 See,e.,q., Toe with Egypt, RS 0.946.293.211. Those treaties containing provisions on both investments and trade generally contain dispute resolution provisions for investment-related disputes, if not for trade. See,e.g., Toe with Togo, art. 8, RS 0.946.297.491. The fact that the Toe does not provide for trade-related dispute resolution does not prevent the trader from requesting diplomatic support or protection; seesupra notes 111 and 112. Absent specific dispute resolution provisions, the State parties would then deal with the dispute through the diplomatic channel, i.e. negotiation or consultation, or possibly, if any, under an International Disputes Settlement Agreement; seeinfra m.13.3, "International Disputes Settlement Agreements". 134See,veg., Toe with the United Kingdom and its former colonies, art. 111(2), RS 0.142.113.671. This does not imply that such access is not guaranteed by the domestic law of the rest of the States parties to a Toe. Such guarantee offers an additional protection at the level of international law, however.
r35 See RS 0.193, Rcglentent des conflits intematiomaux. 1.16 Seesupra note 127. 137 Twenty-one International Disputes Settlement Agreements were concluded between 1921 and 1931; nine between 1962 and 1965, and three between 1992 and 1995. 138 With Croatia; see RS 0.193.412.91. 1. 139 Iran appears to be the only case in which such agreement would apply, since this country has no BIT with Switzerland and is a Member of neither the Washington Convention nor the WTO. However, the International Disputes Settlement Agreement relies on one provision contained in the Treaty of Friendship between Switzerland and the then Empire of Persia of 1934 (art. 4), and even though it is technically still in force from a Swiss perspective, whether Iran would recognize it nowadays is uncertain. See RS 0.142.114.361. Furthermore, Brazil and Poland are not Members of the Washington Convention, but Switzerland has entered into a BIT with each of them. Seesupra note 133. On EFTA generally, see Part t of this article, m.tt, r (a), "The 1972 EFTA Bilateral FTAs and the 1994 EFTA-EEA Agreements", and rv.s.z, "The European Free Trade Agreement". 142 Stockholm Convention (Consolidated Version of 21 June 2001), art. 47(1). The Stockholm Convention is the founding instrument of EFTA. See Part r of this article, IV.B.1 (a), "The 1972 EFTA Bilateral F'rAS and the 1994 EFTA-EEA Agreements". 143 The Council is one of the organs and the governing body of EFTA. Id., art. 43(l)(h) and (5), and art. 47(2). The latter provision only refers to consultations and docs not expressly state that the Council has the right to make binding decisions, but art. 43(4) appears to empower the Council to do so and this is not excluded by art. 47. It is expected that the Council will only issue recommendations and that if the parties do not agree consensually they will resort to the arbitration foreseen by art. 48.
145Id., art. 48 and Annex T. The arbitration is adhoc, subject to the Optional Rules for Arbitrating Disputes between Two States of the Permanent Court of Arbitration, unless otherwise agreed between the parties (art. 1(6)). If the parties are unable to nominate a tribunal, the President of the Icj shall do so (art. 1 (5)). 146 Annex T, art. 3(l)(b). �;� See,e.g., art. 23 of the FTA with Turkey which was the first FTA signed by EFTA with a third-country. t4"See,e.g., Chapter III of the Doc signed by Mercosur. 149 See,e.g., Chapter VIII of the FTA with Mexico. ISO Accord entre la Confederation suisse et la Communaute economique europeenne, signed in Brussels on 22 July 1972, RS 0.632.401. tst Seeid., art. 27 fl. tsz Seesupra note 123. ts3 See FF 2006 p. 963. Seealso Part of this article, note 101. 114 Seeid., art. 16-7. Art. 16 (ordinary disputes) provides for consultations for six months, then for ICSID or adhoc arbitration or litigation. Art. 17 (financial services) foresees that the dispute shall be notified by the State party to the Sub-Committee for Financial Services, which shall either render a decision itself or authorize the investor to submit the dispute to international arbitration. tssSee Part i of this article, IV.B.1(2), "The 1972 EFTA Bilateral FTAS and the 1994 EFTA-EEA Agreements". tse On the OECD generally, see Part I of this article, IV.C.I, "The Organisation for Economic Co-Operation and Development". 157 Seesupra note 123.
'S" See art. 13 of both the Code of Liberalisation of Capital Movements and the Code of Liberalisation of Invisible Transactions of May 2001. 1S9 On the WTO generally, see Part of this article, IV.C.2, "The World Trade Organization". Seealsosupra III.B.2, "Treaties of Commerce". 160 Uruguay Round Agreement, Annex 2, Understanding on Rules and Procedures Governing the Settlement of Disputes (15 April 1994). ' The procedure is exclusively horizontal. Seesupra note 123.
112 A 1994 Ministerial Decision said that dispute settlement rules should be reviewed by 1 January 1999. The review started in the DSB in 1997. The deadline was extended to 31 July 1999, but there was no agreement. In November 2001, at the Doha Ministerial Conference, Member governments agreed to negotiate to improve and clarify the Dsu. These negotiations take place in special sessions of the DSB. '63 Done on 10 June 1958. U.N.T.S., vol. 330, p. 38, No. 4739 (1959). '6° Switzerland had passed a small number of treaties on the recognition and enforcement of judicial and arbitral decisions with certain European countries which are technically still in force but which became practically obsolete at the entry into force of both the New York and the Lugano Conventions. See RS 0.276. For the Lugano Convention, seesupra note 84. 165 See,erg., IMPROVING THE EFFICIENCY OF ARBITRATION AGREEMENTS AND AWARDS: FORTY YEAIS OF APPLICATION OF THE NEW YORK CONVENTION (Albert Jan Van Den Berg ed., Kluwer November 1999). tse Among these, the only country economically significant for Switzerland appears to be Saudi Arabia. '6� It should also be noted that almost one third, or 48 Member States, posed reservations with respect to the "commercial" nature of the dispute; i.e. they will not enforce an award if they deem that the dispute is not "commercial" as per their domestic law. Norway will not enforce awards related to immovable property or rights. These reservations can considerably reduce the scope of the Convention. 1ó8 Seesupra note 84. '6� These countries are Liechtenstein, the Czech Republic and Slovakia (formerly Czechoslovakia). These treaties also apply to arbitral awards but are practically obsolete from this point of view since all three countries have subsequently become Members of the New York Convention. See RS 0.276.195.141, Convention entre la Confederation suisse et la Principaute de Liechtenstein sur la reconnaissance et 1'execution de decisions judiciaires et de sentences arbitrales en matiere civile (25 April 1968); RS 0.276.197.411, Convention du 21 decembre 1926 entre la Suisse et la Republique tchecoslovaque relative a la reconnaissance et a 1'execution de decisions judiciaires (21 decembre 1926); RS 0.276.197.431 (application to the Czech Republic); and RS 0.276.196.901 (application to Slovakia).
170SPe,e.,(�., NC:UYGN CTAL.supra note 60 at 769-78, No. 488 (�.; PIERRE-MARIE DUPUY, DROIT INTERNATIONALE PUBLIC at 453 ff., No. 477 ff. (Dalloz 2000). The so-called Calvo clause (part of the Calvo doctrine mentioned in Part I of this article, note 44) prescribed that the investor must renounce in advance resort to diplomatic protection. This clause was soon declared null and void by internationaljudges and arbitrators. See,e.g., NGUYEN Quoc DINH, PATRICK DAILLIt',R & ALAIN PELLET, DROIT INTERNATIONAL PUBLIC (7th ed., L.G.D J. 2002) at 808-16. 171 J.A.A.C. 61.75, cons. 2. I�2 This condition is often problematic in the case of companies or groups of companies which are owned by investors-which are often institutional themselves--of different nationalities and which are registered, and which run operations, in multiple jurisdictions. 173See,e.g., Donunice, supra note 62, at 457, 524, No. 5. 174 See NGUYEN ET AL.,supra note 170, p. 813. "5 Arbitral Tribunal U.S.A. v. U.K., 22 May 1923, R.Brourit, R.S.A. vol. VI, p. 120; seealso arbitration Unden of29 March 1933, ForetsduRhodupecentral, R.S.A., vol. III, p. 1405; arbitration Hutcheson, 1937, U.K. v. U.S.A., S.-S.Lisman, R.S.A. vol. m, p. 1767, cited by NGUYEN e'rAL.,supra note 60. I�6 C.E.D.H., arret du 18 juin 1971, Tiagabondage, para. 61-2; E.C.H.R., Decision of 9 May 1982, DeVarga, cited by NGUYEN ETAL.,supra note 170, pp. 813-4. 177 J.A.A.C. 61.75, cons. 3.3.
z" Loi federale sur les demandes d'indemnisation envers l'etranger, RS 981 (21 March 1980). 179Id., art. 2(2). '8�Id., art. 2(3). 181Id., art. 4(1), 7 and 8(3). '82See,e,y., art. 27(2) of the Washington Convention, which expressly refers to "infomial diplomatic exchanges for the sole purpose of facilitating a settlement of the dispute". The preliminary consultations or negotiations generally foreseen in BIT'S diagonal clauses often involve such diplomatic support. 183Department federaldesaffairesetrangeres (DFAE) (hereinafter MOFA). 184Secretariatd'EtataI'economie.185Department federalde1'6conomie (DFE). See Part 1 of this Article, III, "The Internal Actors". �RfiSee Part t of this article, III, "The Internal Actors".
187 In 2004, the total amount of Switzerland's aid to developing countries (Am) and transition economies amounted to CHF 2,045 million. That is 6.2 per cent of Swiss foreign direct investment flows the same year; see Part I of this article, note 3. APD alone (CHF 1.921 billion) represented 0.41 per cent of Swiss gross domestic product (GDP) in 2004. The Swiss government's policy is that APD shall reach 0.4 per cent of GDP by 2010. This objective appears to have already been reached in 2004 (APD had reached 0.39 per cent in 2003). As per OECD statistics (December 2005), in 2004 Switzerland ranked as the 13th biggest donor of APD in absolute figures but 8th in percentage of GDP; see the Website of DDC, La cooperation intemationale de la Suisse en chiflres, �www.deza.adiiiin.ch,. In 2003, DDC's budget was fivefold seco's; see Part I of this article, note 31. IR8 See Part I of this article, notes 15 and 16. 1B9 See MESSAGE DU CONSEIL FEDERAL CONCERNANT LA CONTINUATION DU FINANCEMENT DES MESURES DE POLITI(ZUE EC:ONOMIQUE ET COMMERCIALE AU TITRE DE LA COOPERATION AU DEVELOPPEMENT, (20 November 2002), FF 2003 p. 155. IvnSee MESSAGE DU CONSEIL FEDERAL CONCERNANT LA CONTINUATION DE LA COOPERATION TECHNIQUE ET DE L'AIDE financiers EN FAVEUR DES PAYS EN DTVELOPPEMENT (28 May 2003), FF 2003 p. 4155. Seealso RS 0.973 for a list of bilateral financial aid treaties, and RS 0.974 for bilateral scientific and technical co-operation treaties. Sff MESSAGE I)U C:ONSEIL FtDtKAL CONCERNANT LA CONTINUATION DE L'AIDE HUMANITAIRE INTERNATIONALE DE LA CONFEDERATION (14 November 2001), FF 2002 p. 2087. 192 It has been calculated that every Swiss franc spent for development aid yields 1.5 franc to the Swiss economy. In 2003, development aid represented 15,000 jobs in Switzerland. See MESSAGE supra notel90, p. 4158. Iy3 Loi federale sur la cooperation au developpement et 1'aide humanitaire intcrnationales of 19 March 1976, RS 974.0.
194 Id., art. 2(1). "Elles[lacooperationaudeveloppementet1'aidehumanitaire]son! jondeessurlerespectmutlleldesdroitsetinteretsdespartenaires." 19S Id., art. 3. 196 For example, the International Committee of the Red Cross. 197 Loi sur la cooperation au developpement, supra note 193, art. 6. 198Id., art. 11. ("Activitesprivees")."LeCotiseilfid�ralpetit,danslecadredesmoyensasadisposition,sOlltenirdesactivitesd'institutionspriveesquirepondentaua-buts forniulesdanslapresenteloi.Cesinstitutionsdowentywntril¡uer pardesprestationsadequates."199Id., art. 14(1). "Commissionconsultativedelacooperationandevelnppement". 200 Ordonnance concernant la cooperation au developpement et 1'aide humanitaire intemationales, RS 974.01. =°'See Part of this article, note 30. 202 See Pan of this article, note 31. z°' Ordonnance concernant la cooperation au developpement, supra note 200, art. 4. 204 Id., art. 7(1). 2115 Id., art. 9. 20(, Good public governance is one of the concerns of Switzerland's aid policy; see MESSAGE supra notel90, p. 4157.
See Part I of this article, 1V.C.3. "The World Bank". 20MSee Part of this article, IV. B. "Regional Financial Institutions". zo9 See RS 0.972 for a list of multilateral financial aid treaties entered into by Switzerland. 210See Yart of this article, i, "Introduction", and notes 1-4.
z�� The recent disappointment caused by the tentative negotiations with the United States is not slowing down Switzerland's efforts in other regions where negotiations carry on, namely through EFTA, although perhaps with less ambitious objectives. See Part I of this article, notes 45 and 94. Seealso,e.g., the recent FTA concluded with South Korea, Part I of this article, note 102. Seealso the negotiations with Canada, Part t of this article, IV.B.2(g), "Regional Organizations". z�zSee Part i of this article, m.c.t(c), "The Policy Framework for Investment (PFp". Switzerland had actively supported the Multilateral Agreement on Investment (MAI); see Part I of this article, notes 53 and 124. The PFi also seems to be welcomed by the government; see Part 1 of this article, note 129. z�3 The Preamble of the recent FTA between EFTA Members and South Korea, which was signed simultaneously with a Treaty on Investment, affirms that free trade will generate a stable and predictable environment for investments. Even though Toes have contained provisions on both trade and investments in the past, I believe that the relationship between trade and investment has rarely been expressed so clearly and strongly in the past. See Part of this article, note 102, Recital 2. Seealso Part I of this article, note 101 (on the Toi). =�aSee Part t of this article, note 65. =�sSee Part of this article, note 66. 211 The fact that Norway abstained from signing the Toi that Switzerland, Liechtenstein and Iceland signed with South Korea may raise questions about the future of EF rn's cohesion. See Part I ofthis article, note 101. 217 The fact that EFTA's external policy is arguably more flexible and more dynamic than the EU's may favour the continuity of Switzerland's adhesion to the former, however. See Part I of this article, IV.B.2, "The European Free Trade Agreement".
zte See,e.,q., Part I of this article, note 28 (on the audit report on external trade promotion). Zt`' Art. 141(l)(d)(l-3) of the Swiss Constitution requires that international treaties which are not of a determined duration, which cannot be denounced, which provide for adhesion to an international organization, or which contain important rules of law or require to be implemented by federal laws, shall be submitted to a referendum if 50,000 citizens or eight cantons request one within 100 days from the treaty's publication. This is the case every time the EU extends to another country, as was the case for the extension of the agreement on the free movement of persons to the ten new EU Members. See Part I of this article, IV.B. 1 (b) (iii), "Extended Free Movement of Persons". 220 The EEA Agreement was rejected in Switzerland by popular vote on 6 December 1992, contrary to the government's expectations. Subsequently, it interpreted the people's will as a mandate to negotiate "sectoral" bilateral agreements with the EU which would suppress or reduce the downsides of not being an EEA Member. See Part 1 ofthis article, lv.D.l(a), "The 1972 EFTA Bilateral FTAS and the 1994 EFTA-EEA Agreements", and Iv.t3.t(b), "Bilateral Agreements". ==t Among the Bilaterals n, a referendum was requested on the agreement on the Schengen system, which was accepted by popular vote on 5 June 2005. See Part I of this article, note 84. The additional protocol on the extension of the agreement on the free movement of persons to the ten new EU Members was equally accepted by popular vote following a referendum on 25 September 2005. See Part I of this article, IV.B.I(b)(iii), "Extended Free Movement of Persons". z2z Switzerland's adhesion to the United Nations, which was accepted by popular vote on 3 March 2002 following a popular initiative, illustrates this tendency, even though Switzerland remains neutral within the United Nations. The adhesion, proposed by the government, had previously been rejected by popular vote on 16 March 1986. See C,ONSEIL federal, MESSA(;E KELATIF A L'INITIATIVE POPULAIR-E POUR L'A174iE.S10N DE LA SUISSE A L'ORGANISATION des NATIONS LTNIES (ONU), FF 2001 p. 1117 (4 December 2000).
223 As far as Swiss organizations are concerned, only the French names and acronyms have been used. The former, if any, is given in italics, followed by the free translation in English.
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