The Stakes Are High: A review of the financial costs of investment treaty arbitration

The report examines the high financial stakes of investor-state arbitrations, noting a rise in multibillion-dollar claims and the systemic risks posed to host states. It analyzes compensation claims, interest awards, and legal costs, ultimately recommending reforms such as streamlining processes, improving state defense capacities, and exploring alternatives like an international investment court.

• Investment treaty arbitrations involve high financial stakes, with the average claim being approximately half a million U.S. dollars and over 50 claims reaching multibillion-dollar levels. The volume of cases is increasing, with at least 57 new suits filed under international investment agreements (IIAs) in 2013, bringing the total known cases to 568 by the end of that year.
• Governments, especially those in developing countries, face significant financial risks because they are always the respondent parties and never the claimants. Even successful defenses can result in high costs driven by the length and complexity of proceedings. Additionally, large claims can be used as leverage to pressure governments into weakening regulatory measures or settling disputes.
• To mitigate costs, the paper recommends streamlining arbitration processes, enhancing government defense capacities, and discouraging inflated claims. It suggests that treaties should provide guidance on compensation amounts, interest rates, and cost allocation. Systemic reforms, such as creating an appeals mechanism, an international investment court, or national-level alternatives, are also proposed.

APA

Rosert,, D. (2014). The Stakes Are High: A review of the financial costs of investment treaty arbitration. International Institute for Sustainable Development. https://www.iisd.org/publications/report/stakes-are-high-review-financial-costs-investment-treaty-arbitration

Chicago

Rosert,, Diana. The Stakes Are High: A review of the financial costs of investment treaty arbitration. International Institute for Sustainable Development, 2014. https://www.iisd.org/publications/report/stakes-are-high-review-financial-costs-investment-treaty-arbitration.

Wikipedia

{{cite report |last1=Rosert, |first1=Diana |title=The Stakes Are High: A review of the financial costs of investment treaty arbitration |publisher=International Institute for Sustainable Development |date=3 October 2014 |url=https://www.iisd.org/publications/report/stakes-are-high-review-financial-costs-investment-treaty-arbitration |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rosert2014stakes, author = {Rosert,, Diana}, title = {{The Stakes Are High: A review of the financial costs of investment treaty arbitration}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = oct, url = {https://www.iisd.org/publications/report/stakes-are-high-review-financial-costs-investment-treaty-arbitration}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }