Investor-State Arbitration under National Investment Laws: Background and Insights from UNCTAD Data
On 4 December 2025, the United Nations Conference on Trade and Development (UNCTAD) published a report on Investor-State Arbitration under Investment Laws (Report). The Report provides key statistics on the relevance and use of national investment laws as a basis for the initiation of investor-state arbitration.
This article provides an overview of national investment laws as a source of rights and obligations for foreign investment protection and highlights key findings of the Report.
Investment Protection under National Investment Laws
For foreign investors to invoke investment protection standards, investor-state arbitrations can be initiated under (i) available international investment treaties – both bilateral and multilateral – as well as under (ii) investor-state contracts, which are often concluded for significant long-term investment projects such as those in the natural resources sector. What is less widely known is that investment arbitration can also be initiated on the basis of (iii) special domestic host state laws governing the establishment and protection of foreign investments.
These 'national investment laws' or 'domestic investment codes' in a single piece of legislation combine rules on the admission of foreign investment with substantive investment protection standards similar to those found in investment treaties, including protection against expropriation without compensation, non-discrimination, the free transfer of funds outside the host country, and fair and equitable treatment (FET) of investments.
Additionally, national investment laws often provide special legal incentives to attract foreign investment, such as tax preferences (see the article on Ukraine's new investment tax policy here) and one-stop shop services to facilitate the making of foreign investments in certain economic sectors.
Finally, in addition to substantive investment protection and incentives, many national investment laws include dispute resolution provisions that may entitle foreign investors to settle investment disputes with the host state through international arbitration, including before the International Centre for Settlement of Investment Disputes (ICSID) in Washington, DC, or through ad hoc arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).
UNCTAD counts more than 132 national investment laws currently in force worldwide, often adopted in a highly specific manner by developing states or transition economies with significant mineral resources seeking to attract foreign investment. More than two-thirds of these domestic laws include investor-state dispute settlement provisions. These procedural provisions vary widely in both scope and effect. In some instances, they merely inform investors about available avenues for the resolution of investment disputes without conferring any direct right of access. In other cases, they guarantee recourse to domestic courts or to domestic and/or international arbitration, while some laws offer a choice among multiple dispute resolution mechanisms.
Key Statistical Insights from UNCTAD
In its recent Report, UNCTAD presents key statistics on the initiation of investment arbitration based on national investment laws, including the number of known cases, arbitration rules and forums, the types of breaches alleged and confirmed, the sectors involved, case outcomes, and damages awarded.
Investment Arbitrations involving National Investment Laws
According to UNCTAD, around 100 investor-state arbitrations have relied on domestic investment laws as their legal basis. As arbitrations can be confidential, the actual number may be higher than the published cases. Approximately 70% of these disputes were brought to international arbitration between 2010 and 2024.
In terms of economic grouping, around 35 countries have acted as respondent states in one or more of these arbitrations, with the majority being developing economies. Venezuela (12 cases), Kyrgyzstan (11 cases), Kazakhstan (10 cases), Uzbekistan (six cases), Honduras and Kosovo (with five cases each) were the most frequent participants. Investors from developed countries initiated more than 55% of the known cases, with the highest numbers brought by investors from the US (16 cases), the Netherlands (15 cases), the UK (nine cases), and Canada (six cases). Notable investors from developing economies included claimants from Mauritius and Turkey.
Arbitration Rules and Forums
Approximately three-quarters of the known investment law-based arbitrations were filed before ICSID under its specific investment arbitration rules. As noted by UNCTAD, this proportion is notably higher than ICSID's share in investment treaty-based arbitrations, which accounts for about 60% of all treaty-based cases. Domestic law-based investment arbitrations filed under the UNCITRAL Rules accounted for 16% of cases, often administered by the Permanent Court of Arbitration (PCA) in The Hague, followed by cases filed under the arbitration rules of the Stockholm Chamber of Commerce (SCC) and the International Chamber of Commerce (ICC).
Relevant Sectors
Reflecting the prevalent use of national investment laws by countries with mineral wealth and large-scale projects, the extractive sector is the most frequently encountered in investment arbitrations based on these laws, followed by information, communication, and energy disputes. Approximately 50% of known cases relate to extractive industries, including disputes over precious metals and stones, as well as cases involving critical minerals such as manganese and rare earth elements. Fossil fuel-related cases account for 16% of all investment law-based arbitrations.
Compared with investment treaty-based arbitrations, UNCTAD notes that national investment laws are more frequently invoked in the extractives sector (26% versus 17%), information and communication technologies (11% versus 7%), and transportation (10% versus 6%). In contrast, investment treaty-based cases predominate in sectors such as manufacturing (14%), construction (12%), and financial and insurance services (10%).
Case Outcomes
Investor claimants prevailed in 26% of known investment arbitrations involving national investment laws – slightly lower than the current investor success rate of 29% in treaty-based investment cases. In 16% of cases, the parties reached a settlement, which likely included some payment from the respondent state to the investor. States prevailed in approximately 40% of domestic law-based investment arbitrations. The remaining cases were either discontinued, or tribunals found liability but did not award damages.
Breaches alleged and found
Similar to investment arbitrations under investment treaties, the Report notes that, in domestic law-based investment arbitrations, investors most frequently raised direct and indirect expropriation claims (85% of cases) or allegations of violations related to FET (47% of cases). This was followed by allegations of breaches of non-discrimination standards (31%) and obligations to provide full protection and security.
In the known cases where tribunals held respondent states liable, breaches of protections against unlawful expropriation were found in nearly 50% of cases, and violations of the FET standard in around 30%, while claims of breaches of non-discrimination standards were confirmed less frequently. UNCTAD further notes that, in some instances, investors succeeded with claims related to preferential tax and customs duty commitments, underscoring the role of fiscal incentive provisions in national investment laws. As in investment treaty arbitration, counterclaims by respondent states remain rare.
Damages awarded
Finally, the Report confirms that, similar to investment treaty arbitration, the value of claims in investment arbitrations based on national investment laws can be significant. In the known cases, investor claims ranged from a few million to several billion USD. According to UNCTAD, investors claimed an average amount of USD 1.7 billion, with a median claim amount of USD 188 million. In cases where the tribunal found liability and awarded damages, the average award was USD 215 million, with a median of USD 33 million. Comparable to investment treaty-based cases, prevailing claimants were granted, on average, about 37% of the claimed damages.
Comment
UNCTAD's Report confirms both the legal and economic significance of national investment laws as a basis for resolving investor-state disputes through international arbitration. In arbitral practice, investment protections contained in international investment treaties are often invoked alongside those found in national investment laws. Where foreign investors come from a state that has no investment treaty with the host country, national investment laws can serve as a fallback source of both substantive and procedural investment protection.
Unlike investment treaties, however, national investment laws can be modified or repealed on short notice, including the withdrawal of any arbitration offer they contain before arbitration is initiated. This makes investment treaties – with sunset clauses ensuring that the treaty remains in force for existing investments even after termination and prior to the initiation of arbitration for many years – the more reliable instrument of investment protection. Despite this, investors and states are required to take national investment laws into account as important investment tools. For investors, these laws secure or enhance the level of protection available to them. For states, they incentivise investment by adopting well-balanced laws.
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