Italian Republic v. Republic of Cuba, ad hoc state-state arbitration
Ad hoc · Investment (ICSID and treaty) · Cuba · 15 Mar 2005
Why it matters
This ad hoc state-state arbitration under the Italy-Cuba BIT is notable for its preliminary rulings on several procedural and substantive issues. The Tribunal clarified that a state has standing to bring claims both on its own behalf and through diplomatic protection, defined investment broadly as any economic operation with contribution, duration, and risk, and held that new claims could be added after initiation of arbitration to avoid fragmentation and contradictory decisions. The award illustrates the interplay between treaty interpretation and procedural efficiency in interstate arbitration.
Summary
The dispute arose from alleged violations by Cuba of the 1993 Italy-Cuba Bilateral Investment Treaty (BIT) concerning Italian investments in Cuba. Italy initiated arbitration under Article 10 of the BIT after diplomatic efforts failed. The Tribunal was composed of Professor Attila Tanzi (Italy-appointed), Dr. Olga Miranda Bravo (Cuba-appointed), and President Yves Derains. The seat was Paris. Cuba raised four preliminary objections: (1) Italy lacked standing to bring claims on behalf of its nationals; (2) the alleged investments did not qualify as 'investments' under the BIT; (3) Italy had not exhausted local remedies; and (4) the Tribunal could only hear the two cases mentioned in the initial diplomatic notes (Caribe & Figuerella and Finmed), not the additional 13 cases Italy later included. The Tribunal, by majority (Cuba's arbitrator dissenting), rejected all objections. On standing, it held that Italy could assert its own rights under the BIT and also exercise diplomatic protection. On investment, it defined investment broadly as any economic operation involving a contribution, a certain duration, and participation in risks. On exhaustion of local remedies, it distinguished between Italy's own rights (no exhaustion required) and diplomatic protection (exhaustion required unless remedies are ineffective). On admissibility of new claims, it ruled that new claims could be added after initiation to avoid multiple proceedings and contradictory decisions, as long as procedural fairness is maintained. The Tribunal deferred decisions on jurisdiction over each specific case to the merits phase. The award is significant for its analysis of state standing, the definition of investment, and procedural flexibility in interstate arbitration.
The detail
Parties: Italian Republic v. Republic of Cuba, ad hoc state-state arbitration
Case number: italaw/cases/580
Outcome: Preliminary award: Tribunal rejected Cuba's objections on Italy's standing, definition of investment, exhaustion of local remedies, and admissibility of new claims; reserved costs and further decisions.
Applicable law: Italy-Cuba BIT (1993), Vienna Convention on the Law of Treaties, international law
Issues in play: The case involved the interpretation of the BIT's dispute resolution clause (Article 10), the definition of 'investment', the requirement to exhaust local remedies, and the admissibility of new claims after arbitration had commenced.
Read the full decision at italaw ↗
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