On 23 April 2026, Switzerland and the Kingdom of Saudi Arabia (KSA) signed a new Bilateral Investment Treaty (2026 Switzerland-KSA BIT or BIT). The KSA is one of the most important destinations for Swiss foreign investment in in the Middle East. In 2024, Swiss direct investment in the KSA totaled approximately CHF 1.66 billion, with around 200 Swiss companies operating in the KSA.
As outlined in this article, the 2026 Switzerland-KSA BIT will establish modern rules governing the promotion and protection of foreign investments by Swiss nationals and companies in the KSA, and vice versa.
Background
With over CHF 1.34 trillion in foreign direct investments abroad, Switzerland ranks among the ten largest capital exporters in the world. These investments are protected by key guarantees under international investment law, enshrined in more than 110 bilateral investment treaties (BITs) that Switzerland has concluded with countries around the globe. In terms of treaty volume, Switzerland is one of the leading countries worldwide – after China and Germany – in the number of BITs signed. Both as an individual country and a member of the European Free Trade Association (EFTA), Switzerland has been one of the most active countries in investment treaty rule-making in recent years (see also our coverage here and here).
The KSA maintains a relatively limited but meaningful BIT network with 28 BITs concluded and 21 currently in force. Its treaty partners include major capital-exporting states such as Germany, France, Italy, China, Japan, South Korea, and Turkey, as well as several Middle Eastern countries, including Egypt, Iraq, and Jordan. Although the KSA is primarily known as a destination for foreign investment, Saudi investors have also built a substantial overseas presence. The KSA's investment landscape has undergone significant transformation in recent years, driven by the objectives of Vision 2030, the KSA's ambitious economic diversification programme. A central pillar of Vision 2030 is to increase foreign direct investment into the KSA while simultaneously expanding Saudi investment abroad. In this context, the 2026 Switzerland-KSA BIT aligns with the KSA’s broader strategy to strengthen its international investment framework, enhance investor confidence, and foster deeper economic ties with key trading and investment partners such as Switzerland.
BITs incorporate rules of customary international law (CIL) concerning the minimum standard of treatment for foreign nationals and their property in host states. This includes investment protections related to (i) expropriation and compensation, and (ii) full protection and security. Under the expropriation clauses in BITs, the legality of a direct or indirect expropriation of a foreign investment depends on several criteria: it must be carried out in the public interest, be non-discriminatory, comply with due process of law, and be accompanied by compensation. BITs also provide legal protections that go beyond those under CIL. These include non-discrimination standards such as (iii) national treatment (NT), and (iv) most-favoured-nation (MFN) treatment. Additionally, BITs require host states to provide foreign investors with (v) fair and equitable treatment (FET), including protection against arbitrary measures and denial of justice, and (vi) to permit the free transfer of profits out of the host country.
The procedural enforcement of these investment protections is ensured through investor-state arbitration clauses included in BITs. These clauses grant foreign investors the right to bring claims against the host state for breaching protection standards set out in the BIT before an international arbitral tribunal. Investors may seek compensation for any damage or loss resulting from such breaches.
2026 Switzerland-KSA BIT
The 2026 Switzerland–KSA BIT will replace the previous BIT signed by the two countries in 2006 (2006 Switzerland-KSA BIT), which ceased to be in force on 9 August 2025. The 2026 Switzerland-KSA BIT fills the gap in the international law framework for the protection of foreign investments between the two countries.
The 2006 Switzerland-KSA BIT reflects an older generation of BITs, characterised by broadly worded provisions that lack specificity and do not address several issues now regarded as crucial by many states in modern investment treaty practice.
The text of the 2026 Switzerland-KSA BIT has not yet been made public. Announcements by the Swiss government referring to provisions on state regulatory powers, corporate social responsibility, and sustainable development indicate that the new BIT adopts a modern approach, which may be consistent with the BIT concluded between Switzerland and Indonesia in 2022 (2022 Switzerland-Indonesia BIT).
As a result, the 2026 Switzerland-KSA BIT is expected to be more comprehensive than the 2006 Switzerland-KSA BIT, and include the key treaty rules of investment protection outlined above (e.g. provisions on the prohibition of unlawful expropriation, NT, MFN treatment, and FET) with more precise rule definitions and guidance for investment arbitration tribunals in the interpretation and application of these rules.
Similar to the 2022 Switzerland-Indonesia BIT, the 2026 Switzerland-KSA BIT will likely include provisions affirming the contracting parties' right to regulate in pursuit of legitimate policy objectives, such as public health, safety, and environmental protection. In addition, the new BIT may feature general exceptions on the following:
- State measures necessary to protect the health of humans, animals and plant life;
- Rules on corporate social responsibility;
- Provisions for investor-state mediation;
- Regulations on third-party funding of investor claims; and
- Mechanisms for security for costs applications in investment arbitration proceedings.
Comment
The 2026 Switzerland-KSA BIT resumes legal protection after the termination of the previous BIT between the two countries last year. Upon ratification and entry into force, the new BIT will provide calibrated investment protections alongside modern provisions addressing regulatory autonomy and investment arbitration. The signing of this modernised BIT by Switzerland and the KSA marks an important step towards further promoting and protecting foreign investment by investors of each country in the other's market.
Before the BIT becomes operative, it must undergo ratification proceedings in both countries. In Switzerland, this typically involves approval by the Federal Assembly, after which the Federal Council will ratify the treaty. In the KSA, ratification is carried out by Royal Decree following review by the relevant governmental authorities. The timeline for ratification and entry into force will depend on the domestic procedures in each country, although given the strategic importance of the treaty for both parties, it is anticipated the process will be pursued in a timely manner.
CMS law will provide a detailed analysis of the key provisions of the 2026 Switzerland-KSA BIT once the treaty text is published.
