By Horatiu Dumitru[1]

Introduction

On 30 April 2025, Young EFILA convened another forward-looking panel discussion, held at the London offices of Gibson Dunn. The discussion focused on the evolving landscape of Investor-State Dispute Settlement (“ISDS”) over the coming decade, and brought together practitioners active in this space to explore the challenges and opportunities that lie ahead for ISDS.

Stephanie Collins, Chair of Young EFILA (Gibson Dunn), commenced the event by reflecting on EFILA’s decade-long journey, and Young EFILA’s growth over the past three years, and the enduring role of these organisations in fostering dialogue within the arbitration community. Ms Collins highlighted Young EFILA’s continued commitment to engaging with emerging issues in investment law and arbitration, and public international law, and noted her intention to continue building upon the organisation’s success to date.

Subsequently, Nika Madyoon (Gibson Dunn), the moderator of the debate, provided a brief introduction to the themes and topics to be discussed, before presenting the panellists:

• Monika Hlavkova (Debevoise & Plimpton), who would examine the challenges and opportunities facing ISDS in the AI and technology sectors.
• Agnieszka Zarówna (White & Case), who would discuss how the global energy transition and climate change policies are reshaping the ISDS landscape.
• Godwin Tan (A&O Shearman), who would explore the expanding scope of national security considerations in ISDS, and their impact on foreign investment protections.
• Ridhi Kabra (Three Crowns), who would discuss the increasing significance of critical minerals in ISDS, focusing on resource nationalism and ESG-related disputes.

Panel Discussion

1. AI and Technology Sectors

Ms Hlavkova commenced the debate with a presentation on the unique challenges and emerging legal questions that the AI and technology sectors pose to the traditional ISDS framework. She began by noting that, historically, these sectors have been less prone to investment disputes (when compared to industries with significant physical assets). That is primarily due to the fact that digital assets, by their very nature, are less capable of being left “stranded” in the host State as a result of an adverse measure. Similarly, investors in digital assets have been less “captive” than their counterparts who invested in physical assets, hence the lower number of investment disputes in the digital assets sphere.

However, Ms Hlavkova noted that increased regulation has led to a recent rise in disputes within the tech sector. She touched upon a few examples, including:

• Uber v. Colombia, where Uber threatened to initiate arbitration proceedings against Colombia under the US-Colombia Trade Promotion Agreement, after the Colombian competition authority banned its ride-sharing app domestically.
• Nexo v. Bulgaria, where cryptocurrency platform Nexo filed a USD 3 billion claim against Bulgaria, alleging that a politically motivated criminal investigation disrupted its operations and plans for a US stock market listing (see further here).

These cases illustrate the growing friction between digital assets and regulatory frameworks, leading to increased reliance on ISDS mechanisms. Ms Hlavkova also briefly touched upon the overlap between tech regulation and national security, mentioning:

• Huawei v. Sweden, where Huawei filed an ICSID claim against Sweden after being excluded from the country’s 5G network rollout on the basis of national security concerns.
• The current challenges faced by TikTok, in circumstances where various countries, including the US, have implemented or considered bans on TikTok on the basis of data security and national security risks (see, for example, here).

Ms Hlavkova concluded by noting the various legal complexities of defining and protecting digital investments within the ISDS framework. She highlighted that established legal concepts such as the definition of “investment” or “asset”, territoriality, attribution, and quantification of damages, all raise unique legal questions when applied in the context of digital investments.

2. Energy Transition

Ms Zarówna then provided a detailed analysis of the evolving landscape of ISDS in the energy sector. She began by highlighting that energy disputes have historically constituted a significant portion of ISDS cases (c. 20% of ISDS cases involve the energy sector, with c. 10% pertaining to renewables, and another c. 10% to oil and gas).

Ms Zarówna outlined how the global shift towards sustainable energy sources is affecting ISDS in this sector. As countries implement policies to meet international climate commitments, such as the Paris Agreement, disputes have arisen. For example, disputes commenced in the wake of State measures like fossil fuel phase-outs, adjustments to previously agreed incentives for renewable and non-renewable energy, as well as taxation measures taken in light of new environmental regulations. In particular, she highlighted the various policy changes adopted by European countries in the past decade in respect of investment incentives and/or subsidies for the energy sector, which have led to a long line of arbitral disputes brought by foreign investors.

Ms Zarówna highlighted the fact that, in addition to the cases themselves evidencing this transitional period in the energy field, the same underlying trend is also visible through the lens of recent investment treaty developments. Examples include the contentious modernisation process of the Energy Charter Treaty (and, relatedly, EU Member States’ negotiation of an inter se agreement to neutralise the application of its “sunset clause”), as well as recently negotiated investment treaties, which overwhelmingly incorporate provisions safeguarding environmental regulations.

Finally, Ms Zarówna briefly touched upon the increasing scrutiny of foreign direct investment in energy infrastructure, which is driven by national security considerations. This heightened scrutiny could lead to further disputes as States balance security interests with investment obligations. As the global energy landscape continues to evolve, the ISDS framework faces the challenge of adapting to new realities while balancing investors’ rights  with States’ rights to pursue environmental and security objectives.

3. National Security

Mr Tan then delved deeper into the evolving role of national security considerations in ISDS. His discourse highlighted the expanding definition of national security, its implications for foreign investment, and the increasing invocation of national security exceptions in investment disputes.

He began by tracing the evolution of the concept of national security. Traditionally associated with physical military threats and armed defence, States now routinely invoke the concept of national security on a much wider spectrum of issues, including economic stability, public health, energy security, critical infrastructure, cybersecurity, and environmental protection. There is debate as to whether this defence or exception is self-judging, and States have enjoyed relatively broad latitude in putting forward expansive interpretations. Indeed, certain States have attempted to rely on national security as a sweeping justification for drastic executive acts, an effort that has been aided by the securitisation of domestic concerns.

Mr Tan noted that many investment treaties include express national security exceptions or carve-outs, which States have sought to rely on to derogate from obligations to protect foreign investors under exceptional circumstances, albeit with varying degrees of success. States have also sought to invoke other sources of international law, such as the principle of necessity under customary international law, to justify certain measures. These developments mirror domestic legislative steps to enhance investment screening, such as the UK’s National Security and Investment Act of 2021.

Mr Tan also discussed recent investment treaty cases where national security exceptions were invoked. He referred to Angel Samuel Seda and Others v. Colombia, where the State successfully invoked an essential security interest exception, with the tribunal finding that the exception as worded is self-judging and that any review of whether the State invoked the exception in good faith should be limited. However, the tribunal also noted that the standard of review for such exceptions is far from settled in international investment law.

Looking ahead, Mr Tan noted that national security issues are expected to become more prominent in ISDS due to the current geopolitical climate, and in light of a general increase in protectionism.

4. Critical Minerals

Ms Kabra then provided a detailed presentation on the growing significance of critical minerals in the modern global economy, evidenced in  the evolving race between States to secure and develop these resources.

She started by observing that there is no universally agreed definition for critical minerals, but that certain common threads have emerged in the description of such resources. Generally, critical minerals are seen as:

• Vitally important, primarily due to their integral role in various economic sectors;
• Indispensable for the green energy transition, as well as in the manufacturing of key products; and
• Non-substitutable (and, consequently, susceptible to supply chain disruptions).

The strategic importance of these minerals has prompted States to implement policies aimed at securing and prioritising their access to such resources, often leading to legal disputes with foreign investors. Ms Kabra highlighted several instances where State measures taken in this context have led to ISDS claims:

• Mexico’s nationalisation of lithium mining in 2022, which resulted in the cancellation of existing licences and prompted a wave of disputes with foreign investors (including both active and threatened arbitral proceedings) (see further here).
• Greenland’s ban on uranium mining in 2021, which was driven by environmental concerns and has led to arbitration claims in excess of USD 11 billion to date (see further here).
• Chile’s new mining royalty law, which has recently led to a Canadian mining company successfully defeating a USD 30 million royalties claim brought by a Chilean real estate group (see further here).
• Copper Mesa v. Ecuador, where the State revoked the investor’s mining concession on the basis that the investor had failed to consult with local communities, in breach of national legislation. This prompted the filing of an arbitral claim against Ecuador, where the investor ultimately succeeded.

Ms Kabra noted that these disputes underscore the need for clear legal frameworks governing critical minerals, balancing all relevant competing interests. As the demand for critical minerals continues to rise, Ms Kabra concluded that the intersection of resource nationalism, environmental protection, and investor rights will remain a focal point in ISDS, necessitating nuanced legal approaches to reconcile these competing interests.

Q&A Session and Final Remarks

Following the panel discussion, the speakers engaged with the audience on various topics.  Some of the highlights of the Q&A session included:

• Ms Hlavkova’s analysis of recent judicial and legislative developments in England; namely the suggestion for a new type of property right that could attach to digital goods.
• Ms Zarówna’s comments on the limited adoption of alternative dispute resolution mechanisms within ISDS, which is primarily attributed to investors’ perception that mediation and conciliation are costly, time-intensive, and non-binding.
• Mr Tan’s remarks on the emerging pattern of States implementing and enhancing investment screening mechanisms, particularly in relation to foreign investment in technology infrastructure. This expansion of national security considerations complicates the ISDS landscape, as it has the potential to blur the line between legitimate security concerns and purely protectionist policies.
• Ms Kabra’s observations on the novel challenges faced by investors amid shifting regulatory landscapes in respect of critical minerals. The aforementioned examples of Mexico and Greenland underscore the need for clear legal frameworks that balance State sovereignty with investment protections.

So, as to the next ten years of ISDS…?  Watch this space!

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[1] Horatiu Dumitru is an English-qualified associate in Gibson Dunn’s London office, practising in the firm’s International Arbitration and Litigation groups. He has broad experience in investment treaty arbitration, commercial arbitration, and English court commercial litigation. Mr Dumitru holds an LLM from the London School of Economics and Political Science, and an LLB from University College London.

*** The views expressed above do not necessarily reflect the author’s or the speakers’ opinions on the relevant issues and should not be attributed to the firms they work at. ***