Investment protection between Serbia and major economies: Italy

Investment Flows

This week we focus on Italy within our series on investment protection between Serbia and major economies. According to the Development Agency of Serbia, Italy is the top country of origin of foreign investments in Serbia, with a 10.7% market share in terms of the value of projects, and second country of origin, with a 14.4% market share, in terms of the number of projects. The most famous Italian investment in Serbia is a decade-old joint venture of Fiat and the Serbian government in the automotive industry.

Investment Protection Regime

The Federal Republic of Yugoslavia (now Serbia) and Italy signed a bilateral investment treaty in 2000. However, according to publicly available data, it has never entered into force (“BIT“). Since the Federal Republic of Yugoslavia ratified the treaty in 2001, and thus expressed its consent to be bound, this implied an obligation of Serbia not to defeat the object and purpose of the BIT under the Vienna Convention on the Law of Treaties. However, that obligation has probably expired as a result of undue delay of the treaty’s entry into force. As there is no provisional application clause, the Serbia-Italy BIT remains dead letter. We nevertheless set out below its main provisions, for the sake of completeness.

The BIT provided for a broad definition of “investment”, but required investments to be established in accordance with the host state’s domestic laws. Had the BIT entered into force, Italian investments in Serbia would have benefited from fair and equitable treatment, full protection and security, protection against arbitrary and discriminatory measures, national and most-favoured nation treatment, protection concerning compensation for losses, protection against expropriation (including an explicit reference to indirect expropriation), and freedom of transfers. They would have also benefited from a broad umbrella clause, which referred to “all undertaken obligations concerning every individual investor”.

The investor-state dispute settlement clause was drafted broadly, referring to “any dispute … concerning an investment, including disputes regarding the amount of compensation”. After a 6-month cooling-off period, investors could resort to local courts, ad hoc international arbitration under UNCITRAL rules, or ICSID arbitration. Notably, the proposed BIT stated that if the investor and the host state concluded an investment contract with a dispute settlement clause, BIT-related investment dispute would be governed by that contractually agreed procedure.

Considering that the BIT has never entered into force, Italian investments in Serbia enjoy protections under the Serbian national law, including the Serbian Investment Act. However, they do not enjoy the benefit of access to international arbitration normally accorded by BITs.

Recognition and Enforcement of Judicial and Arbitral Decisions

There is no treaty on this matter between Serbia and Italy and therefore the general procedure for recognition and enforcement of foreign court decisions applies (see the initial post within the series).

Both Serbia and Italy are members of the New York Convention securing smooth recognition and enforcement of arbitral decisions, insofar as they fall within the scope of Serbian reservation to commercial matters.


Italian investors in Serbia do not enjoy investment treaty protections, at least not directly, and they must rely on domestic protections. Recognition and enforcement of Italian court decisions must be conducted in accordance with the national law of Serbia governing that matter, whereas the enforcement of arbitral awards in Serbia would be governed by the New York Convention and substantially similar national rules.

Our final post within the series will focus on France.


Photo by Jonathan Bean on Unsplash