Foreign investment

What is the prevailing attitude towards foreign investment?

Switzerland welcomes and actively encourages foreign investment. Foreign investment is promoted at federal and state (cantonal) levels and investors can often benefit from tax and financial incentives. Domestic debates concerning political and economic issues typically include discussion of potential impacts on the attractiveness of Switzerland as a location for international corporate headquarters and other inbound foreign investment. Corporations domiciled in Switzerland also have a long-standing tradition of investing considerable amounts abroad.

What are the main sectors for foreign investment in the state?

More than 85 per cent of foreign investment in Switzerland is in the services sector, with finance and holding companies accounting for more than half of the total of all foreign investments. Switzerland also attracts foreign investment in manufacturing, particularly in the chemicals and plastics industry and in precision manufacturing such as electronics, power-supply equipment, optical equipment and watches.

Is there a net inflow or outflow of foreign direct investment?

For most of the past decade, capital outflows from Switzerland were, on average, more than twice as high as capital inflows. In 2018, Switzerland even registered a negative FDI inflow because of significant repatriations of funds invested in US multinational enterprises. Meanwhile, FDI outflows (which had experienced a steep decline in 2017) turned positive again. The total capital stock of Swiss investment abroad remains almost 20 per cent higher than foreign investment in Switzerland. Switzerland’s high level of direct investment abroad made it, as of 2017, the ninth-highest direct investor in the world.

Investment agreement legislation

Describe domestic legislation governing investment agreements with the state or state-owned entities.

From 1963 to 2004, the Swiss Federal Council was entitled to conclude investment agreements between Switzerland and other states. Since 2004, investment agreements are submitted to the Swiss parliament for approval. The Swiss State Secretariat for Economic Affairs (SECO) is responsible for negotiating international investment agreements.

International legal obligations

Investment treaties

Identify and give brief details of the bilateral or multilateral investment treaties to which the state is a party, also indicating whether they are in force.

Switzerland was the first state after Germany to enter into bilateral investment treaties, beginning in 1961. Since then, Switzerland has signed more than 120 bilateral investment treaties (BITs), most of which are in force. This is the third-largest network of such investment treaties, after Germany and China. Most recently, the bilateral investment treaty between Switzerland and Guyana entered into force on 2 May 2018. The types of protections provided by Swiss bilateral investment treaties are described in questions 19, 20 and 21. Switzerland signed the Energy Charter Treaty in 1994, which entered into force in 1998. The Energy Charter Treaty grants investors protection for non-commercial risks associated with investments in the energy sector and provides an investor-state dispute settlement mechanism.

Switzerland has been a member of the Organisation for Economic Co-operation and Development (OECD) since 1961 and is a party to the Code of Liberalisation of Capital Movements and the Code of Liberalisation of Current Invisible Operations. Switzerland is thereby committed to abstain from discriminatory practices against foreign investments made by investors from OECD member countries, although Switzerland has attached a number of reservations to both codes. These instruments do not afford direct protection to international investments or legally binding dispute settlement mechanisms. Likewise, Switzerland joined the World Trade Organization as a member in 1995 and is a party to the Agreement on Trade-Related Investment Measures and the General Agreement on Trade in Services. However, these treaties regulate only certain trade aspects of foreign investments and efforts to broaden their scope to international direct investment have not been successful to date.

Switzerland is also a party to a number of free trade agreements. While most of these agreements focus on trade, they also include chapters on investment and trade in services, and the national treatment standard applies to the establishment of investments (market access). Investment protection is primarily addressed through Switzerland’s bilateral investment treaties.

If applicable, indicate whether the bilateral or multilateral investment treaties to which the state is a party extend to overseas territories.

Not applicable.

Has the state amended or entered into additional protocols affecting bilateral or multilateral investment treaties to which it is a party?

Given the large number of investment treaties to which Switzerland is a party and its ongoing efforts to update older treaties, the specific treaty or treaties potentially at issue for an investment or dispute should be consulted with respect to their current status, including any additional protocols or amendments.

Has the state unilaterally terminated any bilateral or multilateral investment treaty to which it is a party?

No. However, a number of other states have unilaterally terminated BITs with Switzerland. South Africa terminated its BIT with Switzerland with effect from 1 November 2014. According to the BIT, its provisions continue to be effective for a further period of 20 years from the date of the BIT’s termination in respect of investments made or acquired before the date of its termination.

Indonesia terminated its BIT with Switzerland with effect from 8 April 2016. According to the BIT, its provisions continue to be effective for the period of validity of investments admitted by the respective state prior to the notification of termination of the BIT.

India also unilaterally terminated its BIT with Switzerland with effect from 6 April 2017. According to the BIT’s terms, it shall continue to be effective for a further period of 15 years from the date of its termination in respect of investments made or acquired before the date of its termination.

Ecuador terminated its BIT with Switzerland with effect from 11 September 2018. According to the BIT, its provisions continue to be effective for a further period of 10 years from the date of the BIT’s termination in respect of investments made before the date of its termination.

Most recently, Bolivia unilaterally terminated its BIT with Switzerland with effect from 17 May 2019. The BIT’s provisions continue to be effective for 10 years after its termination in respect of investments made before the date of its termination.

Has the state entered into multiple bilateral or multilateral investment treaties with overlapping membership?

Switzerland is a member state to the Energy Charter Treaty (see question 5). A number of other Energy Charter Treaty member states have also entered into BITs with Switzerland. Generally, these BITs apply in addition to and in parallel with the Energy Charter Treaty.

ICSID Convention

Is the state party to the ICSID Convention?

Yes. Switzerland signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) 1965 on 22 September 1967 and the Convention entered into force on 14 June 1968.

Mauritius Convention

Is the state a party to the UN Convention on Transparency in Treaty-based Investor-State Arbitration (Mauritius Convention)?

Yes. Switzerland signed and ratified the Mauritius Convention on 27 March 2015 and 18 April 2017 respectively. The Convention entered into force on 18 October 2017.

Investment treaty programme

Does the state have an investment treaty programme?

As mentioned (see questions 1 and 5), Switzerland has a long history of recognising the importance of international investments and investment treaties in promoting domestic economic prosperity. Switzerland, through SECO, continues to update and expand its network of bilateral investment treaties. SECO also represents Switzerland in bodies of international institutions in which multilateral investment treaties have been established.

Regulation of inbound foreign investment

Government investment promotion programmes

Does the state have a foreign investment promotion programme?

Switzerland has a sophisticated foreign investment promotion programme. Encouraging foreign companies to invest or settle in Switzerland is a joint undertaking conducted at both federal and cantonal level.

At the federal level, SECO is responsible for promoting Switzerland as a business location abroad. SECO has delegated this task to a private non-profit association, Switzerland Global Enterprise. Its main responsibilities are to ensure that Switzerland presents a consistent image abroad, to transmit information between foreign companies and the cantons, and to coordinate marketing activities and otherwise foster a cooperative environment for the location of foreign companies in Switzerland.

Switzerland Global Enterprise provides assistance, for example, in establishing contacts with regional and cantonal investment organisations, collaborating with research institutes and universities, establishing partnerships with Swiss companies in their business sector, and organising work and residence permits. On a cantonal level, investment promotion is coordinated by regional organisations that focus on promoting specific areas within Switzerland; for example, the Greater Zurich, Greater Geneva, Berne, St Gallen-Bodensee and Basle areas. These organisations advise and support foreign investors with regard to policies that apply in each Swiss canton. For example, each canton is entitled to attract new investments by promising tax incentives to interested companies, by providing companies with financial assistance and providing support with respect to employees, infrastructure or real estate.

Applicable domestic laws

Identify the domestic laws that apply to foreign investors and foreign investment, including any requirements of admission or registration of investments.

Except for acquisitions of real estate, foreign investments are not subject to any specific admission or registration requirements; rather, foreign investors are subject to the same legal framework and requirements as domestic investors. For example, the federal Swiss Code of Obligations governs private contractual relationships, corporate law, financial reporting and securities law. The trading of securities on the stock exchange is also regulated by a Federal Act. Additionally, foreign investors should be aware of the relevant provisions of federal competition law. In Switzerland, taxation is a shared responsibility of the federal and cantonal authorities, therefore different sets of rules govern the taxation of investments on a federal and on a cantonal level. A Swiss peculiarity is the ‘Lex Koller’. This law provides that a foreign national intending to acquire land in Switzerland requires an authorisation by the competent cantonal body. However, there are various exceptions and exclusions to this rule. In addition, natural persons are subject to federal immigration laws regulating the conditions under which foreign nationals can live and work in Switzerland.

Relevant regulatory agency

Identify the state agency that regulates and promotes inbound foreign investment.

As mentioned (see questions 13 and 14), regulation and promotion of foreign investment takes place at the state and cantonal levels.

SECO is responsible for promotion of inbound foreign investment on the federal level and has delegated this task to the non-profit association Switzerland Global Enterprise. On a cantonal level, the cantonal governments have empowered regional organisations to promote foreign investment in those areas. Foreign inbound investment is subject to federal laws, including those regulating private contracts, corporations and competition. Such laws are enacted by the Swiss Federal Parliament, and the Swiss Federal Council is authorised to issue regulations for the implementation of these laws. Cantonal governments also enjoy broad power to regulate certain aspects of inbound foreign investment, including cantonal tax laws and the establishment of incentives to attract investments.

Relevant dispute agency

Identify the state agency that must be served with process in a dispute with a foreign investor.

A foreign investor wishing to directly enforce claims for violation of investment treaty obligations would name the Swiss Confederation as the respondent. It is possible to serve the Swiss Confederation at any federal agency; for example, the Federal Department of Foreign Affairs or the Federal Department of Finance. There is no predetermined federal agency responsible for disputes arising out of investment treaties. In each case of actual investment disputes, the Swiss Federal Council decides which agency to mandate.

Investment treaty practice

Model BIT

Does the state have a model BIT?

There is no Swiss model BIT in the sense of an official, published model BIT. However, SECO maintains a template or working document for internal use in negotiations. As this is merely used as a basis for negotiations and is regularly updated, caution should be exercised with respect to statements made about ‘the Swiss model BIT’.

Preparatory materials

Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?

All administrative documents of the Swiss federal government, including diplomatic correspondence, are available in the Swiss Federal Archives (which are located in Berne but searchable online), but only after the statutory closure periods have expired. These periods run for a minimum of 30 years; therefore, not all treaty preparatory materials are publicly available. Parliamentary ratification records can be found in the Federal Gazette, which is available online. However, from 1963 to 2004, the Swiss Federal Council had sole authority to negotiate and conclude BITs, so no parliamentary deliberations or ratifications were necessary.

Scope and coverage

What is the typical scope of coverage of investment treaties?

Swiss BITs typically define the term ‘investor’ to include natural persons who are citizens of a contracting party, legal entities that are incorporated or duly organised under the laws of a contracting party and legal entities that are controlled by citizens of, or legal entities that are incorporated or duly organised under the laws of, a contracting party. More recent BITs concluded by Switzerland also require that legal entities have real economic activities in the territory of the contracting party to qualify as investors.

Switzerland’s addition of the ‘real economic activities’ requirement was intended to exclude entities without any substance in a contracting party’s territory (eg, mailbox companies) from BIT coverage. Therefore, a Swiss company that merely forwards correspondence to a foreign parent company would have difficulty showing that it conducts ‘real economic activities’ in Switzerland. Swiss BITs usually contain a very broad definition of ‘investment’ that begins with a general clause stating that the term extends to every kind of asset and then lists several categories by way of example. Examples include movable and immovable property and other rights in rem, shares and participations in companies, intellectual property rights and concessions under public law. They also include claims to money or to any performance having an economic value. However, Switzerland’s most recent BITs explicitly exclude claims arising solely out of commercial contracts for the sale of goods or services.


What substantive protections are typically available?

Swiss BITs typically provide that investors:

  • shall be accorded fair and equitable treatment;
  • shall enjoy full protection and security in the territory of the other contracting party; and
  • shall not be discriminated against.

According to the Swiss understanding, ‘fair and equitable treatment’ is a reference to an absolute standard (rather than a relative and minimum standard of customary international law) with respect to the treatment of foreign property. Unlike BITs of some other states, Swiss BITs do not state that the treatment of investors shall not exceed this standard; therefore, they do not set a ceiling on the fair and equitable standard established under the BIT. The ‘full protection and security’ provision is understood to set a standard that is higher than the minimum standard of customary international law.

Swiss BITs also guarantee the free transfer of funds related to the investment and include a national treatment clause and a most-favoured-nation clause. Switzerland’s most recent BITs explicitly state that the most-favoured-nation clause does not extend to dispute resolution mechanisms provided for in other BITs concluded by the contracting parties.

The protection from expropriation contained in Swiss BITs extends to direct and indirect expropriation. Especially in newer BITs, direct expropriation is subject to the explicit requirements that it be enacted for a public purpose, in a non-discriminatory manner and according to due process of law and that provisions be made for prompt payment of effective and adequate compensation. Such compensation is further defined as the market value of the investment expropriated immediately before the expropriatory action was taken or became public knowledge, whichever is earlier. Newer Swiss BITs also contain an umbrella clause providing that each contracting party shall observe any obligation or commitment it has assumed with regard to investments in its territory by investors of the other contracting party.

Dispute resolution

What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?

Swiss BITs contain a wide variety of dispute resolution options, which is not surprising as they have been negotiated and signed over a span of more than 50 years (see question 5). Swiss BITs provide that disputes may be submitted to international arbitration if a mandatory consultation phase does not result in an amicable settlement of the dispute. However, most Swiss BITs signed before 1981 (and two signed thereafter) merely contain a ‘state-state’ or ‘horizontal’ dispute resolution clause. Nearly all Swiss BITs signed since 1981 also include ‘investor-state’ or ‘diagonal’ dispute resolution clauses. These are also quite varied but typically provide, at the investor’s choice, either for ICSID arbitration or for ad hoc arbitration (usually under the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules). Some BITs contain the additional option to submit the dispute to arbitration under the Rules of Arbitration of the International Chamber of Commerce.


Does the state have an established practice of requiring confidentiality in investment arbitration?

There is no established practice regarding confidentiality issues that may arise during the course of investment arbitration proceedings as Switzerland has not been a party to any known investment treaty arbitrations. But in the course of the negotiations regarding the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, Switzerland took an active role in promoting transparency in investment arbitration. Moreover, SECO has announced that Switzerland will strive to include in all its future BITs a reference to the application of the UNCITRAL Rules on Transparency, and Switzerland’s recent BIT with Georgia contains such a reference. On 27 March 2015, Switzerland signed the UN Convention on Transparency in Treaty-based Investor-State Arbitration (Mauritius Convention) and, on 18 April 2017, Switzerland became one of the first three states to ratify the UN Convention on Transparency, hence resulting in the Treaty’s entry into force on 18 October 2017. The Mauritius Convention extended Switzerland’s consent to apply the UNCITRAL Rules on Transparency to all Swiss BITs concluded prior to 1 April 2014.


Does the state have an investment insurance agency or programme?

Since the discontinuation in 2007 of the former Investment Risk Guarantee fund, Switzerland no longer has a specific investment insurance programme. However, Switzerland is a member of the Multilateral Investment Guarantee Agency. Furthermore, certain investments or aspects of investments may be able to obtain Swiss Export Risk Insurance (SERV) coverage. SERV was not designed to insure direct foreign investments as such. However, because SERV insures exporters of goods or services from Switzerland against political risks, transfer and moratorium risks, force majeure, and credit risks, investments involving such exports may be able to obtain such coverage.

Investment arbitration history

Number of arbitrations

How many known investment treaty arbitrations has the state been involved in?

Switzerland has not been a party to any known investment treaty arbitrations.

Industries and sectors

Do the investment arbitrations involving the state usually concern specific industries or investment sectors?

No. There are no known investment arbitrations involving Switzerland.

Selecting arbitrator

Does the state have a history of using default mechanisms for appointment of arbitral tribunals or does the state have a history of appointing specific arbitrators?

See question 25.


Does the state typically defend itself against investment claims? Give details of the state’s internal counsel for investment disputes.

See question 25.

Enforcement of awards against the state

Enforcement agreements

Is the state party to any international agreements regarding enforcement, such as the 1958 UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards?

Yes. Switzerland is a member of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), which entered into force in Switzerland in 1965. In addition, as a member of the ICSID Convention (see question 6), Switzerland has agreed that ICSID awards are final and binding subject only to remedies set out in the Convention and that Switzerland will comply with such awards. Switzerland has also obligated itself to enforce ICSID awards as if such an award were a final judgment of a court in Switzerland. Switzerland is also a party to several bilateral treaties concerning recognition and enforcement of arbitral awards.

Award compliance

Does the state usually comply voluntarily with investment treaty awards rendered against it?

See question 25.

Unfavourable awards

If not, does the state appeal to its domestic courts or the courts where the arbitration was seated against unfavourable awards?

See question 25.

Provisions hindering enforcement

Give details of any domestic legal provisions that may hinder the enforcement of awards against the state within its territory.

Enforcement of an ICSID award in Switzerland cannot be hindered by a public policy defence, because Switzerland’s obligation to enforce ICSID awards as if such an award were a final judgment of a Swiss court (see question 28) excludes invocation of public policy as a defence to enforcement.

With regard to other types of foreign arbitral awards, the Swiss view of public policy as a defence to enforcement is restrictive. A court called on to enforce a foreign arbitral award will only find a public policy violation where the award unbearably shocks the sense of justice as it stands in Switzerland and violates fundamental rules of the Swiss legal system. This is a very high threshold that has rarely been exceeded.

Sovereign immunity may be raised as a defence to enforcement of ICSID awards as well as other foreign arbitral awards. However, the Swiss Federal Supreme Court applies a restrictive concept of sovereign immunity. There is no guarantee of immunity where a state acts in a private capacity (for example, as a commercial actor) as opposed to acting in its capacity as sovereign (public acts).

The Swiss Supreme Court has recently confirmed that immunity to enforcement of an award will be upheld to the extent it targets assets belonging to foreign states or central banks that are assigned to tasks that are part of their duties as public authorities; for example, a building used by diplomatic missions. However, the latter restriction would be of little concern to a foreign investor seeking to enforce an arbitral award against Switzerland within Swiss territory.

Update and trends

Key developments of the past year

Are there any emerging trends or hot topics in your jurisdiction?

Key developments of the past year32 Are there any emerging trends or hot topics in your jurisdiction?

At a time when the EU Commission has proposed replacing BITs with a system of investment courts, the European Court of Justice has determined that intra-EU BITs are ineffective, and the negotiation of multilateral free trade and investment protection treaties has faltered, Switzerland quietly continues to move forward with its efforts to update its older BITs and to enter into new, state-of-the-art BITs that address various concerns that have been raised about investor-state treaty arbitration. BIT negotiations with India, Indonesia, Malaysia and Slovakia are ongoing, and negotiations with four more countries will commence upon approval of the negotiation mandate by the Swiss Federal Council and consultation of the Swiss Parliament’s committee for foreign policy. By continuing to offer investors and its treaty partners a stable, sustainable framework for foreign investments (besides being actively involved in multilateral efforts to reform international investment law), Switzerland is further strengthening its position as an attractive location for holding companies interested in investing in Europe and throughout the world.