Private Rights of Action in FTAs

This is from the recently completed Iceland-China FTA:

Article 122

Private Rights

Neither Party may provide for a right of action under its domestic law against the other Party on the ground that a measure of the other Party is inconsistent with this Agreement.

The suggestion is that there is a possibility that one government party might provide a right of action under domestic law for private entities to sue the other government party, on the basis that a measure of the other government violates the agreement.

Has such a domestic law ever been proposed or adopted?  Is this a real worry?  It's a common provision in trade agreements, but I'm not sure why.