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The Other ISDS: Arbitration Under National Investment Laws

  • Writer: Aişe Gül Akkoyun
    Aişe Gül Akkoyun
  • Dec 4, 2025
  • 3 min read

Most investor-state research studies treaties. UNCTAD's newest report studies statutes instead — and finds the same risks hiding in plainer sight.



Background

UNCTAD published Investment Policy Monitor, Issue No. 32, on 4 December 2025, under the title Investor–State Arbitration under Investment Laws: Risks and Policy Lessons. It builds on the earlier Investment Policy Monitor No. 29, which had tracked global trends in the drafting of national investment laws, and turns instead to a question that report's readers were left to wonder about: what happens when those laws are actually invoked in arbitration?



Why this is the less-studied half of ISDS

The overwhelming majority of empirical and doctrinal work on investor-state dispute settlement focuses on treaty-based claims — BITs, multilateral instruments like the Energy Charter Treaty, and the standing consent to arbitrate they contain. Claims grounded instead in a host state's own domestic investment statute, where the statute itself contains an offer to arbitrate, have received comparatively little sustained empirical attention, despite representing a meaningful share of the overall caseload and, in UNCTAD's assessment, carrying risks that domestic legislators do not always anticipate when drafting.



Where the risk actually sits

The report's central concern is drafting quality. Broad or ambiguous arbitration clauses in national investment laws can expose states to claims that legislators did not intend to authorise, and can restrict the state's own policy space in ways a treaty negotiator, at least in theory, would have bargained over more carefully. Because national investment laws also frequently interact with — and sometimes conflict with — overlapping treaty obligations under BITs or other investment-provision-bearing agreements, a poorly worded statutory arbitration clause can effectively hand claimants a second, less carefully negotiated route to the same forum a treaty would have provided.



Why this matters for measurement, not just drafting

For empirical researchers, the report's underlying complaint is a methodological one as much as a policy one: because these cases are not organised or tagged as a distinct category in most existing databases, the true scale and character of statute-based ISDS is hard to see. That is precisely the kind of gap this archive's method — reading legal developments as data rather than only as doctrine — is built to notice. A dataset of national-investment-law arbitration clauses, coded by breadth of consent, interaction with treaty overlap, and litigated outcome, does not currently exist in any comprehensive public form.



What would be worth measuring

  • How many arbitration clauses in national investment laws currently in force offer genuinely open-ended consent to arbitrate, versus consent narrowly conditioned on specific triggering events

  • Whether claims brought under national investment laws succeed or fail at different rates than comparable treaty-based claims

  • How frequently claimants plead both a treaty basis and a national-investment-law basis in the same case, and whether tribunals treat the two consent sources as cumulative or alternative

  • Whether legislative reform of investment laws, once a jurisdictional problem surfaces in one case, measurably narrows arbitration clauses in subsequent amendments elsewhere



The open question

If national investment laws are producing a meaningful and under-measured share of ISDS exposure, then reform conversations focused solely on treaty text — the subject of UNCITRAL Working Group III's multi-year mandate, discussed elsewhere in this archive — are addressing only part of the architecture that creates arbitration risk for states. Whether domestic legislators are equipped, or even aware, that their own investment statutes can function as a standing offer to arbitrate is a question the report raises but cannot fully answer from the outside.



Related on DLS

  • Reform as a Corpus — the treaty-side reform process running in parallel to the statutory-consent risk this report identifies


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