Diplomatic Intervention and State-to-State Arbitration as alternative means for the protection of foreign Investments and host States' general interests: the Italian experience

The ICSID investor-State arbitration system has been recently criticized as a system favouring investors’ interests at the prejudice of States’ interests. The current ‘backlash’ against investor-State arbitration is perceived to have begun with a number of ICSID awards against measures that host States have defended as designed to achieved legitimate domestic policy objectives. Several are the State “General interest” the protection of which may limit the rights of foreign investors. They may consist of needs of the population and economy at large as it was in the ICSID Arbitral cases involving Argentina’s financial crisis; host State general regulatory action; the protection of the host State national security; the protection of non-economic concerns like sustainable and human development, the protection of human rights and environment, as well as the control of the production and sale of harmful substances. Also in the field of intellectual property rights, the standard of IPRs’ protection (TRIPs-plus regime) may result in limiting the rights of host States to rely on the exceptions and flexibilities under the TRIPs in order to address public interests concerns. This alleged legitimacy crisis bring us to wonder whether on the one hand treaties predating BITs and on the other hand the resort to diplomatic protection of aggrieved investors by their home State against the host State, either through diplomatic means or by interstate adjudication, might protect States’ general interests better than the current investment regime does. The aim of this contribute is trying to analyse whether treaties different from BITs and recourse to diplomatic protection can be a real alternative to investor-State arbitration under ICSID, which better serves the protection of States’ interests in respect of the investors ‘ones.