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

This report by the International Institute for Sustainable Development examines the financial risks and costs associated with investor-state dispute settlement (ISDS) under international investment agreements (IIAs), highlighting the burden on host states and proposing systemic reforms to contain costs.

• Investment treaty arbitrations involve high financial stakes, with an average claim of approximately 500,000 U.S. dollars and more than 50 claims reaching the multibillion-dollar level. The volume of such cases is increasing, with at least 57 new suits filed by investors against host states 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 states are always the respondents and never the claimants. Even successful defenses can result in high costs driven by the length and complexity of proceedings and the amount claimed. Additionally, large claims can be used as leverage to pressure governments into weakening regulatory measures or settling disputes.
• To mitigate costs, the report suggests reforms including streamlining arbitration processes, enhancing government defense capacities, and discouraging inflated claims. It proposes that treaties provide clearer guidance on compensation, interest rates, and cost allocation. More fundamental systemic changes suggested include the creation of an international investment court, an appeals mechanism, or national-level alternatives to investor-state arbitration.

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} }