INVESTOR-STATE ARBITRATION: EMERGING TRENDS AND CHALLENGES

CD: How would you describe key trends in investor-state arbitration? What issues are affecting rights, obligations and protections?

Nelson: The main current trend in investor-state arbitration is the tactic of states that, although found liable to pay damages for bilateral investment treaties (BIT) violations, try to avoid paying the award. In non-International Centre for Settlement of Investment Disputes (ICSID) cases, they seek to set aside the awards or argue they should be denied recognition under Article V of the New York Convention. In ICSID cases, sovereigns raise sovereign immunity objections to enforcement. Thus, Nigeria is resisting payment of a United Nations Commission of International Trade Law award under the China-Nigeria BIT, and seeks certiorari on a related point before the US Supreme Court, Zimbabwe objects to enforcement of the ICSID award in Borders Timber made under a Swiss BIT, with multiple appeals in the UK courts, and Russia is still seeking to overturn the 2014 Yukos award in the Dutch courts. Although few such challenges have been sustained, they have delayed enforcement. For investors, this adds significant cost and complexity to investor-state arbitration and diminishes the certainty these treaties are intended to promote.

Bejarano: First, in recent years, there were a series of decisions in Europe following the Achmea decision by the court, which have essentially put an end to intra-European Union (EU) investor-state cases, often halting or disturbing enforcement activity of awards rendered against certain EU states. I think we will continue to see pushes around the world on the enforcement front, with mixed results. Second, looking elsewhere in the world, Latin American states continue to be repeat players in the investor-state field, not least because of the relative political instability in the region over the past decade. That is bound to continue even as some states reevaluate their approach to investor-state dispute resolution. Finally, as we look into the future, it is also likely that the US’s evolving trade policy, and how states around the world respond to it, will be a subject of investor-state disputes.

Apr-Jun 2025 issue

Latham & Watkins LLP

Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates