There is an example of a case in which two countries, Italy and Cuba, signed an IIA and then had to seek arbitration. According to Italy, Cuba did not meet the terms of the treaty obligation. So, the Republic of Italy initially attempted diplomatic demarches for the settlement of disputes but failed to succeed. Therefore on 16 May 2003, Italy notified Cuba of its intention to resort to arbitration.

1. Italy vs Cuba,
0 to 9 on the arbitration score
According to Wikipedia “an International Investment Agreement
(IIA) is a type of treaty between countries that addresses issues
relevant to cross-border investments, usually for the purpose of
protection, promotion and liberalization of such investments. Most
IIA’s cover foreign direct investment (FDI) and portfolio investment,
but some exclude the latter. Countries concluding IIAs commit
themselves to adhere to specific standards on the treatment of
foreign investments within their territory. IIA’s further define
procedures for the resolution of disputes should these
commitments not be met. The most common types of IIA’s are
Bilateral Investment Treaties (BIT’s) (which deal primarily with the
admission, treatment and protection of foreign investment. They
usually cover investments by enterprises or individuals of one
country in the territory of its treaty partner) and Preferential Trade
and Investment Agreements (PTIA’s) (treaties among countries on
cooperation in economic and trade areas. Usually, they cover a
broader set of issues and are concluded at bilateral or regional
levels). International Taxation Agreements and Double Taxation
Treaties (DTT’s) (which deal primarily with the issue of double
taxation in international financial activities) are also considered as
IIA’s, as taxation commonly has an important impact on foreign
investment.”

2. There is an example of a case in which two countries, Italy and
Cuba, signed an IIA and then had to seek arbitration. According to
Italy, Cuba did not meet the terms of the treaty obligation. So, the
Republic of Italy initially attempted diplomatic demarches for the
settlement of disputes but failed to succeed. Therefore on 16 May
2003, Italy notified Cuba of its intention to resort to arbitration.
As claimant, Italy not only acted as the subject victim of the
breach in the agreement in its subjective rights guaranteed by
International Law and the Agreement, but also acted in diplomatic
representation of its investors whose rights were also breached
by the Cuban Authorities and Cuban individuals, mostly
companies under the control of the State allegedly attributable to
Cuba.
The claim for reparation claimed by Italy addressed the following
cases:
(a) Caribe and Figuerella Project s.r.l. (Caribe), an Italian company
with the purpose of creating and managing aesthetic medicine,
beauty, health and tourist centers. On September 3, 1999, Caribe
and Grupo Hotelero Gran Caribe SA signed a contract for three
years for the opening of a beauty center in the Hotel Habana Libre
Trip. On November 3, 2000, the Cuban party closed the center
without any notice declaring that the tattoo service being provided
there was not in the list of services authorized by the Ministry of
Internal Commerce. However, the license to operate was later

3. restored but Caribe was never informed; therefore the Italian
company never resumed its activity.
Image courtesy of Amy Goodman at Flickr.com
(b) In 1996, Grupo Cubanacan (Cubanacan) a Cuban company and
Finmed Limited (Finmed Ltd), an Irish company whose shareholders
are two Italian companies and who requested the Irish Company be
substituted by an Italian one also called Finmed, signed a
partnership agreement for the establishment of a joint company
named Medi Club SA (Medi) to build and manage a tourist resort in
Cuba. In 1998, Medi Shareholders’ Meeting approved the entry of
Finmed in Medi in lieu of Finmed Ltd., subject to the approval of
the Cuban authorities. However, Cubanacan considered that there
was no need for a government approval because the shareholders
of both companies were the same. For some reason, the shares

4. were never transferred to Finmed and Italy claimed that Cuba
prevented the transfer of the investments made in Cuba by an Irish
company to an Italian company and therefore Cuba did not allow
Finmed (Italian) to be an investor.
Image courtesy of pescator at Flickr.com
And other 9 cases to which the arbitration court answered it had no
jurisdiction to hear due to the nature of their contracts not being
contemplated in the original IIA.
However, regarding the cases mentioned above, the court
considered the following.

5. 1. In the Preliminary Award rendered by the majority, the Tribunal
decided that Italy could, in its own right, invoke diplomatic
protection and exercise it on behalf of its nationals as long as the
investor had not brought international arbitration against the host
State. The Tribunal quoted that diplomatic protection is “the
endorsement or ownership by a State of the claims of a particular
injured by an internationally wrongful act of another State or
international organization.
2. The Tribunal recalled that:
● The concept of investment, according to the agreement, must
be understood as any economic operation comprising an
economic contribution, certain duration in time and a
participation in the risks of the operation;
● There is no need to verify the exhaustion of local remedies
when Italy submitted a breach of one of its rights under the
Agreement even if it referred to the violation of the
Agreement on a harm allegedly suffered by individual
investors.
● It should verify if in each of the cases submitted to arbitration,
the conditions for the exercise of diplomatic protection are
met, i.e. that there has been a behavior of Cuba bearing on
the interests and rights of natural or legal Italian individuals.
Ultimately, on January 15, 2008, in Paris, France, after careful
consideration of each case, the Tribunal dismissed Italy’s claim
exercising diplomatic protection to obtain compensation for the
damage alleged by Caribe, Finmend and its shareholders; The claim
on the basis of its own rights in order to obtain a statement from

6. the Tribunal noting the violation by Cuba of certain provisions of
the Agreement, its letter, its spirit and its purpose, obligations
resulting from the Agreement and standards of International Law
on the treatment and the protection of foreigners; the subsidiary
claim of Italy based on unjust enrichment; Cuba’s counterclaim and
all other claims of the parties.