Investment protection agreements are a legacy of the post-colonial era. After many developing countries became independent, industrialized countries concluded such agreements so as to safeguard the interests of their companies in those countries. Switzerland is one of the world's leading investors and concluded its first agreements in 1961. Today it has a dense network of 116 agreements – all with developing countries.
Many questions can be raised about these agreements from a developmental standpoint. They protect the interests of investors first and foremost and considerably restrict the policy space of host countries. In particular, they allow companies to bring actions against States in international arbitral bodies if they deem their interests to be prejudiced. The vague formulation of various provisions in these agreements is a recipe for abuse. The suit filed by the Philip Morris tobacco corporation against Uruguay with the World Bank's arbitration body speaks volumes. It takes direct aim at the Latin American country's health policy, relying on the agreement between Switzerland and Uruguay.
The Alliance Sud background paper analyses the implications of worldwide investment flows and the history of protection agreements. It uses numerous disputes to illustrate the weaknesses of the traditional treaties. It discusses the direction being taken by international efforts to revise them, and puts forward concrete proposals as to how Switzerland too should improve its policies.
> Switzerland's bilateral investment treaties: Rights to the investors – duties to the States | February 2013 > Download