ITALY Law and Practice Contributed by: Maria Chiara Malaguti, Filippo Rossi and Roberto Longhi, PedersoliGattai
2. Investment Treaties, Free Trade Agreements and Investment Laws 2.1 Bilateral and Multilateral Investment Treaties Italy has ratified over 100 BITs. Since the Treaty of Lisbon (2009), foreign investment policy has been a centralised competence of the EU. However, the European Commission allows member states to maintain and (re)negotiate agreements with third countries in cases where the EU does not intend to proceed with an agreement. This is based on the procedures established by Regulation No 1219/2012 (transitional arrangements for bilateral investment agreements between member states and third coun- tries), which requires member states to request authorisation from the European Commission both to open negotiations and to sign the negotiated text. The Commission imposes similar conditions, and has also adopted a non-paper drafting a model BIT that member states use as a benchmark ( Annotations to the Model Clauses for negotiation or re-negotiation of Member States’ Bilateral Investment Agreements with third countries ). Member states’ practices in this regard are therefore becoming increasingly similar. The number of multilateral treaties concluded by Italy in this area is much more limited. Italy withdrew from the ECT in 2014, effective from 1 January 2016 (by virtue of ECT Article 47.3, the so-called “sunset provi- sion”, the protection offered to foreign investors by the ECT continues to apply for a 20-year period running from the effective date of withdrawal, provided that the investment has occurred before the date of such withdrawal). 2.2 Model Bilateral Investment Treaty Italy has long used a Model BIT in its negotiations. For many years, this text was not updated, and many existing BITs still bear the imprint of this model. Recently, Italy adopted a new Model BIT with several significant changes, which were the result of a gradual progress. This exercise has in fact initiated a dynamic phase of modernisation, partly due to the need to align with the European Commission’s requests as well as best practices. Currently, the Model BIT (2024) largely
reflects the model clauses proposed by the European Commission, and: • contains several provisions on sustainability (Article 19, Corporate Social Responsibility, Responsible Business Conduct and Measures Against Cor- ruption; Article 20, Investment and Environment; Article 21, Investment and Climate Change); • better clarifies the right of states to regulate (Article 6, Investment and Regulatory Measures); and • introduces several exceptions (Article 14, Pru- dential Carve-Out; Article 15, General Exceptions; Article 16, Security Exception). It is included in what are commonly referred to as “new generation BITs”. One point of interest is that such novel provisions are not justiciable, as the clause on dispute settlement (Article 24 of the Model BIT) exclusively covers obligations included in Section 2 on protection of investors, while the provisions on sus- tainability and the like follow from Section 3 onwards. 2.3 Free Trade Agreements Italy is an EU member state. As previously discussed, with the adoption of the Lisbon Treaty, foreign invest- ment policy became a centralised policy driven by the European Commission. Since then, all member states, although still free to undertake some invest- ment obligations, need to obtain an authorisation to negotiate and then an authorisation to sign an agree- ment from the European Commission. There is thus co-ordination and monitoring activity by the European Commission that affects member states’ choices, as regards both the substantive provisions and the use of arbitration in dispute resolution. Moreover, many of the free trade agreements (FTAs) signed by the European Commission are so-called “mixed agreements”, where the European Commis- sion and member states share competence and jointly sign the agreement. Italy is thus party to such agree- ments; yet, negotiations are directed by the European Commission. Despite having signed, Italy has not yet ratified the Comprehensive Economic and Trade Agree- ment (CETA) with Canada, and some press reports of declarations by the Italian government leave one
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