Introduction
The first half of 2026 shows a clear global trend toward stronger enforcement of investment arbitration awards and a continued willingness of courts outside the EU to uphold investor protections despite growing political and regulatory resistance within Europe. Across North America, Asia, and parts of Europe, courts have consistently reinforced the binding nature of ICSID and treaty-based awards, especially in intra-EU disputes. Meanwhile, states increasingly test the limits of sovereign immunity and public policy objections. The update also highlights a rapidly evolving treaty landscape, marked by withdrawals from the Energy Charter Treaty (ECT), negotiation of new-generation Bilateral Investment Treaties (BITs) and Free Trade Agreements (FTAs), and intensified debates over the future shape of investor-state dispute settlement. Readers will find significant developments in sanctions-related arbitration, dual nationality claims, sovereign immunity, and the growing intersection of geopolitics, regulatory measures, and investment protection. Finally, this edition examines accelerating reform of the ISDS system, including UNCITRAL’s latest procedural reform proposals and broader efforts by states to recalibrate the balance between investor protection and regulatory sovereignty.
North America
The North America overview for the first half of the year shows that US courts maintained a strong pro-enforcement approach to intra-EU awards, consistently prioritising the finality and enforceability of arbitral awards over EU law objections from respondent states. Meanwhile, Canadian proceedings highlighted new issues involving investment protection, sanctions regimes, and treaty jurisdiction, particularly regarding dual nationality and sanctions-related investment claims.
In early March, a US federal court granted the application for summary judgment with respect to the possibility of enforcing the intra-EU ECT award against Croatia in Mol Hungarian Oil and Gas PLC v. Republic of Croatia. MOL’s first summary judgement motion was rejected, by the same court. However, MOL applied the second time arguing that a US court cannot refuse the enforcement of an ICSID award despite Croatia’s arguments on sovereign immunity. Croatia argued that, although it had agreed to arbitrate disputes under the ECT, that consent was invalid under EU law. On that basis, Croatia contended that the ICSID tribunal lacked jurisdiction and that the award was therefore not entitled to “full faith and credit” in the United States.
The court rejected the argument, holding that Croatia’s jurisdictional objections had already been fully and fairly litigated before the tribunal, which had concluded that it possessed jurisdiction. The court therefore declined to reopen the issue. Croatia also invoked the foreign sovereign compulsion doctrine, arguing that principles of international comity barred enforcement of the award. The court dismissed this argument as well, finding that the ICSID Convention and its implementing legislation already incorporate considerations of international comity and require US courts to enforce ICSID awards. The judge admitting the summary judgement motion invited both parties to submit their joint proposal for a judgement by 19 March 2026. Most probably by the end of the year, the US District Court for the District of Columbia will render its final judgement.
US courts showed similar resolve in proceedings related to the enforcement of the intra-EU Micula award. In a Third Judgment of Accrued Sanctions dated 14 April 2026, the US District Court for the District of Columbia ordered Romania to pay an additional USD 5.8 million in contempt sanctions for continuing to disregard a post-judgment enforcement order. These court‑imposed sanctions build on a 2020 order setting fines that began at USD 25,000 per week and doubled every four weeks up to a maximum of USD 100,000 per week, as well as a second judgment in November 2024 awarding approximately USD 13.7 million in accrued sanctions. As a result, Romania’s total exposure to contempt sanctions in the US proceedings now stands at roughly USD 21 million, in addition to the underlying ICSID award of approximately USD 330 million.
Coming in on the heels of the same trend, on 12 May, the US District Court for the District of Columbia allowed Blasket Renewables to proceed with the enforcement of the intra-EU ECT award. Spain filed a motion to stay the enforcement, but the US Court rejected it while recognizing the difficult situation Spain finds itself due to the intra-EU incompatibility of the award. It was once again pointed out that, from the US Court’s perspective, the rights of the award-creditor prevail over the intra-EU exception analysis.
Significant developments in Canada include a new ICSID arbitration arising out of Canadian sanctions imposed on a former Moldovan-Cypriot businessman Igor Viktorovich Makarov, and an Ontario Superior Court’s decision on NAFTA claims by dual nationals.
As to the first development, on 30 January 2026, ICSID registered the claim of a Mr Igor Makarov, Moldovan-Cypriot nationality, against Canada. The dispute arose out of the sanctions imposed against Mr Makarov due to his ties with the Russian Federation being classified as an “associate” to the Russian government within the context of the Russian invasion of Ukraine since February 2022. Since April 2022, Canada placed Mr Makarov on its sanctions list. Despite Mr Makarov’s renunciation to the Russian nationality, the Canadian authorities refused to delist him from the sanctions list and continued the asset freezing and the other restrictive measures imposed against him. Mr Makarov is using the Canada-Moldova BIT (2018) as a legal basis for his claims against Canada.
As to the second development, on 10 April 2026, the Ontario Superior Court held in Grace and others/ Oro Negro v. Mexico that the NAFTA text did not bar claims by dual nationals and that the arbitral tribunal had wrongly relied on an alleged “subsequent practice” of the NAFTA parties to import the dominant‑and‑effective nationality test. The judge found that the pleadings of Canada, the United States, and Mexico did not amount to a “clear, well‑understood, agreed common position” sufficient to qualify as subsequent practice under Article 31(3)(b) VCLT, nor did customary international law otherwise require excluding dual nationals, so the tribunal had incorrectly declined jurisdiction over the two dual‑national individual claimants.
Asia
Recent developments in Asia indicate a renewed phase of investment treaty activity and investor-State dispute engagement, characterised by enhanced enforcement of arbitral obligations and ongoing treaty modernisation.
The Singapore High Court enforced the ICSID award in NextEra v. Spain, rejecting Spain’s sovereign immunity defence and reaffirming that ICSID Convention obligations continue to be upheld outside the EU notwithstanding objections grounded in EU law.
In reaching its decision, the Court relied on its earlier reasoning in DNZ v DOA and another [2026] SGHC(I), where it stated at [139] that
… Any contradictory obligations the State now faces, are a function of the State entering into the relevant treaties: the ECT and the EU Treaties. It is not contrary to Singapore’s public policy to uphold an award merely because the award debtor would then face contradictory obligations arising from commitments the debtor had entered into. It is not for the Singapore court to relieve the State of the consequences that may flow from the treaty obligations the State has entered into.
The Court held that by joining the ICSID Convention, Spain accepted the jurisdiction of the courts of other Contracting States for recognition and enforcement proceedings. Since ICSID awards are “binding” under the Convention, enforcing courts do not need to reconsider the tribunal’s jurisdiction before recognising or enforcing an award. It rejected Spain’s argument that its obligations under the ECT were limited by EU membership. It found that Spain joined the ECT in its own capacity as a Contracting Party, not solely through the European Union. As a result, Spain assumed all rights and obligations under the ECT, including the offer to arbitrate investment disputes in Article 26.
The Court also found no basis to interpret Article 26 as applying only to investors from non-EU Contracting Parties and excluding those from EU Member States. This judgment reinforces that intra-EU objections do not override the enforcement obligations under the ICSID Convention and the ECT.
Earlier in 2026, Korea was faced with two Notices of Intent over data breaches and violations of KORUS Treaty from American companies. The disputes emerged as a consequence of the measures taken by the Korean authorities against the American companies and their Korean subsidiaries, respectively, in 2025 in the aftermath of a data breach. The American investors claim that the Korean government took the respective measures with the direct and sole purpose to benefit the domestic and Chinese competitors of the claimants. In parallel, it appears that this dispute also determined the reaction of the US administration because on 5 February 2026 the US House Judiciary Committee announced the existence of an ongoing investigation on the discriminatory measures taken by South Korea against American companies.
On 27 January 2026, the EU and India concluded the negotiations on an FTA after almost 20 years of negotiations which have been suspended at different stages. The FTA will include a separate Investment Protection Agreement (IPA) and a Geographical Indications Agreement. The IPA is still in the negotiation process with the last round of negotiations to have taken place in March 2026. The EU publicised its proposal for the IPA, while the Indian counterparties are yet to provide their proposals. This proposal dates from 2022 and while it will probably undergo further amendments, it provides a series of protection for foreign investors and qualified investments such as national treatment, most-favoured-nation treatment, a narrow application of the fair and equitable treatment, and protection against illegal expropriation. The dispute resolution clause also includes the use of arbitration by foreign investors and provides for either ICSID or UNCITRAL arbitration. The Draft IPA also includes recourse to alternative dispute resolution mechanisms such as mediation and negotiation prior to the cooling off period. The readers should note that the negotiations are still ongoing.
On 23 April 2026, the Swiss government revealed the conclusion of a new BIT with Saudi Arabia. This is the second BIT that the two countries have concluded. The first BIT was concluded in 2006 and mutually terminated in 2025. While the official text of the 2026 BIT has yet to be published, Switzerland disclosed that the new investment treaty includes several protections for investors against political risks and discriminatory measures, and allows investors to have recourse to international arbitration in case of a dispute. The next steps will include the drafting of the explanatory memorandum accompanying the agreement by Switzerland and submitting it to the Federal Assembly for adoption. The agreement will come into effect once both countries have completed their internal ratification.
On 17 April 2026, Bahrain signed a BIT with Switzerland during the IMF Spring Meeting in Washington DC. This is the first BIT the two countries have concluded, Bahrain being the only Gulf country without an investment protection agreement with Switzerland. The text of the BIT is not yet public. However, the Swiss government noted that the BIT provides protection against illegal expropriation and discriminatory measures against foreign investors, guarantees the free transfer of payments, and provides aggrieved investors with recourse to an international arbitration tribunal. Switzerland mentioned that this BIT is part of the country’s new negotiation approach, initiated when it concluded the BIT with Indonesia in 2024, i.e., to include detailed provisions aimed at limiting arbitral tribunals’ discretion in interpreting the treaty, the scope of protection, and the application of the agreement. It appears that since 2024, the BITs Switzerland concludes will include special provisions on the state’s regulatory powers, corporate social responsibility, and anti-corruption measures. The Bahrain-Switzerland BIT will enter into force once both countries complete their internal ratification procedures.
On 14 May 2026, the Kazakh Senate ratified the latest BIT concluded with China back in June 2025 marking the conclusion of the ratification process. The text of BIT is not yet available, but from the text of the Decree accompanying the draft BIT published in June 2025 it appears that the BIT includes a set of protections for foreign investors (national treatment, most-favoured-nation treatment, protection against expropriation, and limited in scope fair and equitable treatment clause). The BIT provides for the use of UNCITRAL arbitration with a cooling-off period of 6 months before starting the arbitration.
Kyrgyzstan has once again amended its Investment Law in April 2026, after a previous amendment in 2025, this time in relation to the introduction of a multi-tier system in which investment disputes must first be pursued through negotiations and optional mediation, and may only proceed to domestic courts or arbitration where there is a valid arbitration clause in an investment agreement or treaty. The amendments also strengthen protections against confiscation of investors’ property and abolish the prior statutory basis for unilateral investor access to arbitration.
Europe
Europe has been the playground of the most intense activity in the first half of 2026. Throughout Europe, courts, regulators, and arbitral institutions are redefining the relationship among EU law, international arbitration, sanctions enforcement, and investment treaty protection. A clear trend of increasing judicial and regulatory intervention has emerged. EU institutions are reinforcing the primacy of EU public policy in arbitration, while Member States are accelerating their withdrawal from the ECT.
Sanctions
On the sanctions front, CJEU Advocate General (AG) Andrea Biondi opined on the arbitrability of sanctions-related arbitrations, with a focus on the interpretation of the No-Claims Clause in Article 11 of the EU sanctions regulation adopted against Russia after the Ukraine-related measures (EU Council Regulation No. 833/2014). The provision states that a Russian party (or certain sanctioned persons/entities) cannot successfully bring claims for compensation, indemnification, repayment, damages, or similar remedies, where the loss arose because EU sanctions prevented performance of the contract. The aim of the provision is to stop sanctioned parties from using courts or arbitration to recover losses caused by the sanctions themselves. In the present case, the question was whether a Russian claimant, Stankoimport, could use arbitration to recover advance payments after the underlying transaction became affected by sanctions. The AG answered in the negative and argued that the No-Claims Clause should generally stop parties from bringing arbitration claims covered by Article 11. Furthermore, since this Article is part of EU public policy, arbitration panels, even those outside the EU, should not approve such claims and must ensure their decisions follow EU public policy. EU national courts must also ensure that national rulings enforcing sanctions based on arbitration awards fully comply with EU law and public policy. The AG’s opinion does not have to be followed by the CJEU in its final decision. The Court will probably make its decision by the end of this year.
On 23 March 2026, AG Szpunar issued an opinion as to how enforcement of awards providing for monetary relief should be determined if sanctioned entities could control the funds. The preliminary request came from the French Court of Cassation in a set-aside of an award involving the state of Yemen. In the set-aside proceedings, Claimants argued that enforcing the award would violate French public policy because paying the amounts would breach EU and US sanctions against the Houthis, the ultimate beneficiaries of the funds. The Paris Court of Appeal rejected the claimants’ set-aside. Claimants then appealed to the French Court of Cassation, which requested a preliminary interpretation of Article 2(2) of EU Regulation No. 1352/2014, establishing the Yemen-related sanctions regime. This article states that no funds or economic resources shall be made available, directly or indirectly, to or for the benefit of persons or entities listed in Annex I of the Regulation. Annex I lists the persons and entities sanctioned under the Yemen sanctions regime. The AG opined that the prohibition in Article 2(2) on making funds available to entities directly or indirectly controlled by sanctioned entities should be broadly construed. This means it extends beyond cases where sanctioned persons actually hold ownership or control over the ultimate beneficiary of the funds. The notion of “holding control” should be interpreted on a case-by-case basis by the national court. If there are competing influences from both sanctioned and non-sanctioned parties, the referring court should determine, based on the facts, who is controlling. It should also assess whether there is a risk that the funds may ultimately be passed to the sanctioned entities or that these entities may access or dispose of them. The court should analyse, based on existing evidence, if there is “a reasonable risk that the funds will be made indirectly available to those designated persons”. The case is still pending a final decision from the CJEU. Readers should remember that the AG’s Opinion is not binding on the CJEU’s final judgement.
ECT developments
Coming to the topic of the ECT withdrawal, in January 2026, the EU Commission initiated the first step in infringement proceedings against 16 EU Member States (Belgium, Bulgaria, Czechia, Estonia, Ireland, Greece, Croatia, Cyprus, Latvia, Hungary, Malta, Austria, Romania, Slovakia, Finland, and Sweden) for failing to withdraw from the ECT. The Commission argues that, following the EU’s withdrawal from the ECT in June 2025, the EU Member States have not received authorisation to remain contracting parties to the ECT, which they would require because trade and investment fall within the exclusive competence of the EU.
Subsequent to this development, Bulgaria’s government introduced a bill on 16 February 2026 to withdraw from the ECT, citing its incompatibility with EU energy and climate objectives and modern investment protection standards.
On 16 March 2026, Iceland (not an EU Member State, but part of the EEA) deposited with the Energy Charter Secretariat its notification of withdrawal. In accordance with the sunset clause of the ECT, the withdrawal of Iceland from the ECT will take effect on 17 March 2027.
On 27 April 2026, Ireland deposited with the Energy Charter Secretariat its notification of withdrawal. In accordance with the sunset clause of the ECT, the withdrawal of Ireland from the ECT will take effect on 28 April 2027.
In April 2026, the Government of Moldova approved a draft law on the state’s withdrawal from the ECT, which was published in the Official Gazette on 23 April 2026. The Moldovan parliament still needs to approve the law and then the withdrawal needs to be notified to the ECT Secretariat.
Most recently, on 22 May 2026, the Romanian Government notified the ECT Secretariat of its official withdrawal from the Charter. As per the sunset clause, the withdrawal will take effect 1 year after the country’s withdrawal, i.e., 23 May 2027. The sunset clause will continue to apply for 20 years, i.e. until May 2047.
On 3 March 2026, Slovakia deposited with the Energy Charter Secretariat its instrument of ratification of the modernised ECT, dated 29 October 2025. Slovakia is the first State that has notified the ratification of the modernisation amendments to the ECT, which were adopted by the Energy Charter Conference on 3 December 2024.
The EU’s inter-se agreement on the non-applicability of the ISDS provisions of the ECT in intra-EU relations was published in the Official Journal of the EU on 27 March 2026. While the final text had already been adopted by the EU Parliament and the Council of the EU, it was not published in the Official Journal until now. 26 Member States appear as signatories, with Hungary not having signed the agreement. The agreement will enter into force 30 calendar days after the date on which the Depositary receives the second instrument of ratification, approval or acceptance.
On 29 April 2026, the EU Commission released its monthly package of infringement actions. It targeted Belgium and Hungary for non-compliance with EU law’s supremacy principle in enforcing ICSID awards. It issued a reasoned opinion against Belgium for recognising and enforcing intra-EU and extra-EU arbitral awards against Spain before completing its State aid assessment. The Commission considers that this created a risk that Spain would breach the standstill obligation under Article 108(3) TFEU and circumvent EU State aid rules, violating the principle of sincere cooperation. Belgium has two months to comply, or the Commission may refer the case to the CJEU. It also issued a reasoned opinion against Hungary for failing to prevent MOL, the Hungarian state-owned company, from enforcing the intra-EU ICSID award against Croatia and from starting a second intra-EU arbitration before the PCA against Croatia.
Case law across Europe
On 19 March 2026, the Hague District Court authorised enforcement of the Eurus Energy v. Spain ICSID award and allowed seizure of a Spanish-linked property in the Netherlands, the Spanish cultural centre Instituto Cervantes. The award was assigned to the US-based fund, Blasket Renewable Investments, which is now enforcing the ICSID award.
On 24 March 2026, the Hague Court of Appeal set aside the UNCITRAL awards in WCV World Capital Ventures Cyprus and Channel Crossings v. Czech Republic (PCA Case No. 2016-12) on public policy grounds, with the Court raising the intra-EU incompatibility objection ex officio. The court also granted the Czech Republic’s request to prohibit the claimants from initiating any fresh BIT arbitration arising from the same dispute, imposing a penalty payment of 100,000 EUR for each day of non-compliance, capped at 133 million EUR.
On 29 April 2026, the Cyprus Supreme Court dismissed an appeal filed by a Polish national seeking reimbursement of the damages suffered in the context of the 2013 Cyprus bank crisis and the Cypriot government’s bailout of Laiki Bank (Cyprus Popular Bank). The Supreme Court held that it could not satisfy the claim of the Polish national (based on the Cyprus-Poland BIT 1992) because the BIT automatically became ineffective upon the countries’ accession to the EU in 2004. The Court held that while the BIT was in force when the events occurred in 2013, it ceased to be effective because the EU law applied between the two countries, and if Cyprus were to apply the BIT for the Polish nationals and the expropriation provisions as claimed by the Polish national, this would create a situation of discrimination between Polish nationals and any other EU nationals. Such discrimination would amount to a violation by Cyprus of its obligations under Article 18 of the TFEU.
In a judgment from6 May 2026 in García Armas and García Gruber v. Venezuela, the French Cour de Cassation confirms the UNCITRAL tribunal’s jurisdiction over dual Spanish-Venezuelan nationals under the Spain–Venezuela BIT. The court holds that the BIT operates as a lex specialis, clearly defining its personal and material scope. Since the treaty text does not exclude dual nationals and contains clear jurisdictional terms, the Cour de Cassation ruled that customary international law on diplomatic protection and dominant-and-effective nationality tests cannot fill the BIT’s silence on dual nationality. It thus rejected Venezuela’s cassation appeal and upheld the 2014 jurisdictional award.
In Dangelas v. Vietnam, the French Cour de Cassation held that a 2023 diplomatic note exchanged between the United States and Vietnam qualifies as a “subsequent agreement” under Article 31(3)(a) VCLT, in which the treaty parties clarified that dual US-Vietnamese nationals fall outside the investor category under the US-Vietnam Trade Relations Agreement. By finding that the Paris Court of Appeal erred in ignoring this joint interpretation, which was issued after the award of jurisdiction, the Court annulled the 2023 judgment that had upheld jurisdiction over Ms Dangelas and remanded the case, confirming that both arbitral tribunals and French courts must give decisive weight to authentic inter‑state interpretative agreements, even when adopted after a jurisdictional award.
On 10 May 2026, a Norwegian District Court refused to allow the enforcement of the Yukos award against hunting and mining sites on the Svalbard Archipelago, which are managed by a Russian state-owned entity. The Court found that the respective assets are, in fact, cultural property owned by the Russian state-owned trust, Trust Arktikugol, and therefore could not be attached in the enforcement proceeding because they are shielded by state immunity as cultural heritage sites. The Yukos investors are seeking to recover over USD 5 billion from the Russian Federation in their worldwide efforts to enforce their 2023 UNCITRAL award.
The UK Supreme Court unanimously held in The Kingdom of Spain v Infrastructure Services Luxembourg S.À.R.L.; and Republic of Zimbabwe v Border Timbers Ltd [2026] UKSC 9 that by ratifying Article 54(1) of the ICSID Convention a Contracting State makes a “clear and unequivocal” submission to the adjudicative jurisdiction of the courts of every other Contracting State for the purpose of recognising an ICSID award, within the meaning of Section 2(2) of the State Immunity Act 1978. State immunity, therefore, cannot be invoked to resist registration and recognition of an ICSID award in the United Kingdom. The reasoning is unaffected by Article 55 of the ICSID Convention, which preserves State immunity for the purposes of execution of the award against State assets. This aligns with the reasoning of the Singapore High Court in the enforcement proceedings of NextEra v. Spain, above.
New claims
In the first four months of 2026, ICSID registered three new cases against Switzerland related to the Crédit-Suisse saga. These arbitrations involve Additional Tier 1 bondholders who were written off when UBS took over Crédit-Suisse. In October 2025, a Swiss administrative court annulled a FINMA decision that wrote off AT1 bondholders to the detriment of UBS shareholders. An appeal against this judgment is pending before the Swiss Federal Tribunal, so the effects of the annulment are suspended. ICSID currently has three cases pending the FTA with Japan. The cases are: Hiroshi Osumi v. Swiss Confederation (ICSID Case No. ARB/26/1); S-Planning Co., Ltd. and others v. Swiss Confederation (ICSID Case No. ARB/26/4); and Nagisa Murakami and others v. Swiss Confederation (ICSID Case No. ARB/26/15).
On 7 April 2026, Ukrainian-owned state bank Oschadbank filed its second BIT claim against Russia under the Russia-Ukraine BIT – Oschadbank v. Russia (II). In a statement on 17 April 2026, Oschadbank said it filed the notice for losses caused by Russia’s occupation of the Donetsk, Luhansk, Kherson, and Zaporizhzhia Regions. This followed Oschadbank’s Notice of Dispute, submitted on 24 July 2025, which the Russian government did not respond to. Back in 2018, Oschadbank won a USD 1.1 billion arbitral award against the Russian government relating to the annexation of Crimea. On 1 July 2025, the Paris Court of Appeal dismissed Russia’s set-aside application and upheld the validity of the award.
On 8 May 2026, ICSID registered the first-ever ECT arbitration administered by the institution against Ireland. The arbitration was filed by a British investor, who has served the Irish authorities with a Notice of Dispute since June 2023. The dispute concerns the Irish government’s refusal to grant the investor a license to drill the Barryroe offshore oil and gas field in the Celtic Sea.
South America (including Central America and the Caribbean)
Recent developments in Latin America show a fragmented approach to investor-state dispute settlement (ISDS). Some states are more open to international arbitration, while others question its legitimacy and economic impact. In 2026, Ecuador, Honduras, Venezuela, and Mexico took steps to expand or recalibrate investor protections and arbitral mechanisms. These actions reflect renewed efforts to attract foreign investment by enhancing legal certainty and promoting market liberalisation. Conversely, Colombia’s proposed withdrawal from the international arbitration system shows a countervailing trend of scepticism toward ISDS motivated by concerns about regulatory autonomy.
On 30 March 2026, in a substantive review of the Ecuador-UAE BIT, Ecuador’s Constitutional Court held that the ISDS mechanism was compatible with Article 422 of the Constitution, which provides that “[T]reaties or international instruments where the Ecuadorian State yields its sovereign jurisdiction to international arbitration entities in disputes involving contracts or trade between the State and natural persons or legal entities cannot be entered into.” Departing from a 2023 decision reviewing the ISDS clause in a treaty negotiated between Costa Rica and Ecuador, in which the Court found the ISDS mechanism incompatible with that provision, the Ecuadorian Constitutional Court held in its recent decision that Article 422 did not cover treaty-based ISDS but still required the exclusion of contractual disputes. Therefore, the ISDS provision of the BIT was considered compatible with the Ecuadorian Constitution, provided that the treaty be amended to explicitly exclude contractual or commercial disputes. The decision comes after the arbitration community and investors expressed concerns about Ecuador’s stance and the effectiveness of having an ISDS clause in the treaty. On this isssue see also the blogpost by Sebastián Espinosa Velasco.
A little over two years after its withdrawal from the ICSID Convention, Honduras’ new president brought the country back as a signatory to the ICSID Convention . Honduras will become the 166th contracting party once again upon completion of the ratification process. The reversal of the position on investment arbitration followed the election of a new president of Honduras. The change was welcomed by foreign investors, who saw Honduras as a jurisdiction willing to provide robust protection. It should be noted that Honduras continues to have 12 active investment disputes only before ICSID.
On 29 January 2026, following the US military’s apprehension of President Maduro, Venezuela’s Parliament adopted the Law Reforming the Organic Law on Hydrocarbons (Hydrocarbons Law). One of the main changes the new Hydrocarbons Law brings is that the state will open hydrocarbons activities in the oil and gas sector to private and foreign investors. The second very important change concerns the use of arbitration as the principal dispute-resolution mechanism for future disputes arising from contracts concluded between foreign investors and the state. However, the exact scope of Venezuela’s consent to arbitration remains only partially clarified in the current framework and needs to be fleshed out in secondary legislation, and more specifically in future contracts that investors will conclude with the state.
On 9 April 2026, Venezuela adopted a new Mining Law, only a few months after amending its Hydrocarbons Law. The 2026 Mining Law, similar to the Hydrocarbons Law, reopens the country’s mining sector to foreign investment, be it public or private, with a caveat only for metallic minerals, while non-metallic minerals are excluded from the scope of the law. The law provides private companies with the option to apply for an authorisation to conduct mining activities in the country, either independently, in partnership with the state, or with a state-owned company. The law also provides that concession contracts concluded with foreign investors may include an arbitration clause to resolve future disputes, giving investors the assurance that they can have recourse to an international arbitral tribunal to resolve their grievances rather than relying exclusively on domestic courts or domestic arbitration. However, the law does not provide any consent to investment arbitration.
Moving in the opposite direction to Honduras and Venezuela, on 25 March 2026, the president of Colombia, Mr Petro, announced that Colombia plans to withdraw from the international arbitration system because arbitral tribunals tend to rule in favour of private parties. His announcement responds to a letter from 220 economists and legal scholars, including Nobel prize winner Mr Joseph Stiglitz, who asked President Petro to terminate the investment treaties Colombia has signed. They argue that ISDS threatens the country’s prosperity and sustainable development by allowing private companies to challenge public policies. President Petro also mentioned that Colombia now faces at least 11 publicly known investment disputes totaling around USD 14 billion. These disputes pose a serious risk to the country’s financial stability. He acknowledges that the Colombian judicial system is not well equipped to handle such disputes and suggests establishing specialised domestic tribunals to protect all parties involved.
On 22 May 2026, Mexico and the EU signed the Modernised Global Agreement (MGA), which replaces the 2000 Economic Partnership, Political Coordination and Cooperation Agreement. The MGA is a statement of the trade relationships between the EU and Mexico, especially within the current geopolitical context. The MGA includes an investment chapter and specific detailed provisions for investor-state disputes. The investment chapter provides for a detailed right to regulate for the state, a narrow fair and equitable treatment clause, a national treatment and most-favoured nation clause, protection against illegal expropriation, protection of transfer of funds and compensation for losses. The investment chapter also includes two specific annexes for expropriation and public debt. Aggrieved investors may resort to arbitration before a standing tribunal to resolve their dispute and may appeal to an appeal tribunal. The arbitrations will be conducted under the ICSID Arbitration Rules, the ICSID Additional Facility Rules, or the UNCITRAL Arbitration Rules. The text is yet to be finalised, and it will enter into force once it is ratified by Mexico and all EU Member States.
Africa
In Africa, there is a notable shift in the landscape of international investment law, with states increasingly relying on investment contracts and exploring alternative arbitration frameworks outside traditional BIT structures.
The first two cases registered by ICSID in 2026 were against Burundi, and both involved mining companies active in the country. Both cases are based on investment contracts rather than BITs and use the Additional Facility rules. According to public information, both investors concluded long-term mining exploitation contracts with the Burundi government, but in 2021, due to some internal political movements, the government unilaterally terminated the contracts and cancelled the exploitation permits. While these are not the first investment disputes the country is involved in, they might be the first cases of a new wave of investment disputes from the African continent, arising from investment contracts rather than BITs.
On 16 May 2025, the Russian government submitted to the Duma (the Russian Parliament) the draft bill ratifying the latest Bilateral Investment Treaty (BIT) concluded between the Democratic Republic of Congo (DRC) and the Russian Federation back in October 2025. This is the first BIT concluded by the two countries and includes a series of protections for foreign investors, such as full protection and security, national treatment, and most-favoured-nation treatment, and prohibits unlawful expropriation. The BIT does not include a fair and equitable treatment clause. But it includes a detailed dispute-resolution clause that provides for both state-to-state and investor-state dispute settlement. The novelty lies in the chosen institution to administer the dispute, namely the Dubai International Arbitration Centre (DIAC), and in the selected place of arbitration, namely Dubai. Such a choice results from the restrictive measures adopted by the EU and the US, along with other jurisdictions such as Canada, Switzerland and Australia, which, as we saw last year, greatly impacted both investment and commercial arbitrations.
Australia & Oceania
Australia is entering a more cautious and strategically sensitive phase in its approach to international investment law and arbitration. The following developments illustrate this trend.
On 26 April 2026, ICSID registered the notice of arbitration filed by Chinese investors, namely Mr Ye Cheng and his associated entities (Shandong Landbridge Group Co and Landbridge International Commercial Ltd). The dispute arose out of Australia’s attempts to terminate the investors’ long-term lease of the Port of Darwin, in the northern part of the country. Following the 2025 elections, the new Labour government publicly affirmed its intention to regain control over the port. These public statements led to heated diplomatic tensions between the Australian and Chinese governments. The Chinese government even announced the possibility of taking retaliatory measures if the Australian government terminates the lease contract. However, it appears that the Chinese investors followed suit and initiated arbitration proceedings before ICSID.
On 8 April 2026, Australia’s High Court confirmed the 2025 judgment rendered by the Federal Court in which the latter court refused to enforce the award in CC/Devas et al v. India (1) on the ground that India had not waived its sovereign immunity from jurisdiction when it ratified the New York Convention. This litigation derives from the first arbitration initiated by Devas against the Indian government after the cancellation of an agreement for the lease of space segment capacity concluded between Devas and an Indian state-owned company, Antrix. Initially, the Federal Court of Australia allowed the investor to enforce the award issued by a PCA tribunal, holding that India waived its sovereign immunity upon ratifying the New York Convention. The initial judgment of the Federal Court was reversed by a subsequent judgment issued by the full court, in which the court found that when it ratified the New York Convention, India made a reservation that the Convention should apply only to commercial disputes and that investment disputes would be outside the scope of the New York Convention. The Court held that the dispute was based on a BIT and thus not commercial in nature. Accordingly, the reservation did not apply, triggering India’s immunity. The High Court dismissed both previous judgments of the lower court and held that India’s waiver of immunity was neither clear nor unequivocal. The High Court dismissed the appeal, confirming India’s immunity.
On 24 March 2026, after eight years of negotiations, Australia and the EU concluded the FTA. While the other FTAs the EU negotiated include an investment chapter providing for the protection of foreign investments and referencing the Multilateral Investment Court, the EU-Australia FTA did not include such a chapter. The treaty includes an MFN clause. The FTA includes two forms of state-to-state dispute settlement: mediation and adjudication before independent panellists. Additionally, the FTA provides that any party may impose sanctions if the other party breaches trade or sustainable obligations.
ISDS Reform & Other Legislative Developments
2026 is a very important year for ISDS reform as the UNCITRAL parties have agreed that the Working Group III on ISDS reform should conclude its work by the year-end.
On 15 April 2026, the UNCITRAL Secretariat published the Draft Supplementary Provisions on the Conduct of Proceedings to Resolve International Investment Disputes (A/CN.9/1246), prepared by Working Group III as part of the ongoing ISDS reform process. The draft proposes a structured set of procedural rules intended to supplement existing arbitration frameworks and, if adopted, would function as a single “package” designed to supplement and modify current ISDS practices and frameworks.
Among the key areas addressed is the issue of interim measures and the right to regulate under Provision III, which includes a bracketed proposal in paragraph 10(b) that would prohibit interim measures impeding a State’s right to regulate in the public interest. The Secretariat has nevertheless noted that the feasibility of assessing this issue at the interim stage remains open for further discussion by the Commission.
Provision IV introduces a structured mechanism for the early dismissal of claims manifestly lacking legal merit. It establishes a 60-day window for objections following the tribunal’s constitution and requires the tribunal to decide on the objection within 60 days of the last submission on the objection. Regarding costs, Provision IX(3) provides that costs generally follow the losing party, unless exceptional circumstances justify a different allocation.
Provision V, dealing with security for costs, formally links third-party funding to the assessment of a party’s ability to satisfy a potential costs award, while preserving the presumption that States and regional organisations are both able and willing to comply with such awards.
Provision VII clarifies the circumstances under which proceedings may be terminated and requires suspension upon the parties’ joint request. Termination may result from a joint request, a unilateral request that is not opposed within 30 days, 150 days of inactivity, settlement, or impossibility of continuation. In addition, Provision VI(1) provides that failure to comply with an order for security for costs within 90 days may also result in termination of the proceedings.
Provision VIII introduces strict timelines for awards, requiring tribunals to render decisions within 60 days for dismissals based on manifest lack of merit, within 180 days for awards in bifurcated proceedings, and within 240 days for all other awards, with each period running from the date of the last submission. Any extension must be justified by special circumstances. This represents a significant departure from the previous “best efforts” standard.
Provision IX adopts a default “loser pays” rule for the allocation of costs, while preserving structured discretion for tribunals to depart from that rule on the basis of factors such as the outcome of the proceedings, the conduct of the parties, the complexity of the case, the reasonableness of the costs claimed, and the proportionality between the damages sought and those ultimately awarded. The provision also excludes from recoverable costs those associated with third-party funding and “success fees,” defined as bonuses exceeding remuneration for work performed.
Finally, Provision X establishes a framework allowing parties to consolidate or coordinate multiple pending arbitrations into either a single award or aligned proceedings, while Provision XI imposes extensive disclosure obligations regarding third-party funding arrangements, including the identities of funders and beneficial owners, and the extent of their decision-making authority. Non-compliance may result in sanctions ranging from adverse cost allocations to termination of the proceedings.
Events & Others
ICSID released its Annual Report for 2025, which includes some interesting statistics demonstrating that investment arbitration, despite public outcry and criticism on the other side of the Atlantic, remains a tool that continues to serve both foreign investors and states. Therefore, 2025 was the second year with the highest number of registered cases, i.e. 65 cases, with over half of these cases using bilateral investment treaties as a legal basis and only 15% of these cases having an investment contract as the main legal basis for the investors’ claims. The ICSID Additional Facility provisions have been used in 6 cases last year. Compared with trends over the past years, in 2025, Sub-Saharan Africa had the most cases (24%), followed closely by South America (20%) and Eastern Europe and Central Asia (19%). When it comes to the nationality of the investors, 44% have been initiated by Western European nationals, followed by North American investors who represented only 14%. In 2025, the dominant industries of disputes were mining (24%), oil and gas (21%) and construction (16%). Interestingly, in 2025, 53% of investors’ claims were upheld partially or fully, while 31% were lost on the merits, and 11% were dismissed for lack of jurisdiction. It is important to note that in 60% of cases in which arbitral tribunals rendered awards, no damages were awarded to investors.
What is new @ IFILA
In the first half of 2026, the Young IFILA Blog welcomed its new Editor-in-Chief, Dr. Johannes Tropper, a Postdoctoral Researcher and Lecturer at the University of Vienna whose work focuses on international investment law, investment arbitration and selected issues of general international law.
The IFILA annual conference, titled “International Arbitration in Geo-Political and Geo-Economic Volatile Times,” will take place on 1 July 2026 at the London offices of Herbert Smith Freehills Kramer LLP. The programme will feature keynote remarks by Sir Christopher Vajda KC (Monckton Chambers) and regional panels examining developments in international arbitration across North America, Africa, and Europe. The conference also marks IFILA’s international expansion as the successor to EFILA. This reflects the organisation’s broader focus on global investment law and arbitration issues.