Terminating a Bilateral Investment Treaty

The document analyzes the legal frameworks and practical trends associated with terminating bilateral investment treaties (BITs), specifically focusing on the roles of termination and survival clauses. It details three primary methods of termination—by consent with renegotiation, by consent without renegotiation, and unilateral termination—while providing strategic considerations for states to mitigate investor-state dispute settlement (ISDS) risks. The guide also suggests modern drafting approaches for new BITs to avoid the pitfalls of 'tacit renewal' and long survival periods.

• There is a growing trend of states terminating old-generation BITs, with effective terminations outpacing new treaty signings for the first time in 2017, when 22 terminations took effect compared to 18 new treaties.
• Most BITs utilize either 'tacit renewal' clauses, where treaties automatically renew unless terminated within a specific window, or 'fixed-term' clauses, which allow termination at any time after an initial period has elapsed. According to UNCTAD mapping, just over 60% of treaties use fixed-term clauses, while just over 20% use tacit renewal clauses.
• Survival clauses allow terminated BITs to continue producing legal effects for a set period—typically 10 to 20 years—enabling investors to launch international arbitrations against the state for investments made before termination.
• States employ various strategies to terminate BITs: 63% are replaced by a new treaty, 28% are unilaterally terminated without replacement, and 9% are jointly terminated without a replacement, based on a 2017 UNCTAD study of 212 terminated BITs.
• Recent state practice shows that survival clauses can be neutralized, extinguished, or shortened through mutual consent, even if the original BIT was terminated unilaterally. Examples include the Canada-EU CETA, which replaced various survival clauses with a three-year limit for dispute settlement.
• Modern drafting trends for new BITs include moving away from tacit renewal toward indefinite terms with unilateral termination (Canada), fixed terms requiring express renewal (India), or the complete removal of survival clauses (Morocco-Nigeria BIT).

APA

Bernasconi-Osterwalder, N., Brewin, S., Brauch, M. D., & Nikièma, S. (2020). Terminating a Bilateral Investment Treaty. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/terminating-treaty-best-practices-en.pdf

Chicago

Bernasconi-Osterwalder, Nathalie, Sarah Brewin, Martin Dietrich Brauch, and Suzy Nikièma. Terminating a Bilateral Investment Treaty. International Institute for Sustainable Development, 2020. https://www.iisd.org/system/files/publications/terminating-treaty-best-practices-en.pdf.

Wikipedia

{{cite report |last1=Bernasconi-Osterwalder |first1=Nathalie |last2=Brewin |first2=Sarah |last3=Brauch |first3=Martin Dietrich |last4=Nikièma |first4=Suzy |title=Terminating a Bilateral Investment Treaty |publisher=International Institute for Sustainable Development |date=March 2020 |url=https://www.iisd.org/system/files/publications/terminating-treaty-best-practices-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bernasconiosterwalder2020terminating, author = {Bernasconi-Osterwalder, Nathalie and Brewin, Sarah and Brauch, Martin Dietrich and Nikièma, Suzy}, title = {{Terminating a Bilateral Investment Treaty}}, institution = {International Institute for Sustainable Development}, year = {2020}, month = mar, url = {https://www.iisd.org/system/files/publications/terminating-treaty-best-practices-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }