Terminating a Bilateral Investment Treaty

This guide by the International Institute for Sustainable Development (IISD) provides a comprehensive analysis of how states can terminate old-generation bilateral investment treaties (BITs). It examines the legal frameworks under public international law, analyzes common termination and survival clause models, and reviews recent state practices. The document offers strategic recommendations for states on whether to terminate BITs unilaterally or by consent, how to handle survival clauses to reduce investor-state dispute settlement (ISDS) risks, and provides drafting suggestions for new treaties to avoid the pitfalls of older models.

• There is a growing global trend toward terminating old-generation BITs as states re-evaluate their costs and benefits. In 2017, the number of effective terminations (22) exceeded the number of new treaties signed (18) for the first time, and by the end of 2019, the total number of effective terminations reached 309.
• BIT termination clauses generally follow two primary models: 'tacit renewal' and 'fixed-term'. Tacit renewal clauses, used in just over 20% of mapped treaties, automatically extend the treaty unless a party terminates within a specific window. Fixed-term clauses, used in over 60% of mapped treaties, allow termination at any time after an initial period has elapsed, typically requiring one year's notice.
• Survival clauses allow a terminated BIT to continue producing legal effects for a set period, typically 10 to 20 years, enabling investors to launch international arbitrations. In 56% of UNCTAD-mapped treaties, the survival period is 10 years, and in 20%, it is 15 years.
• States employ various methods to terminate BITs: by mutual consent (with or without renegotiating a replacement), or unilaterally. For example, Ecuador unilaterally terminated nine BITs in 2008 and 16 more in 2017, while Indonesia unilaterally terminated BITs with 25 states between 2014 and 2017. India sent notices to unilaterally terminate BITs with 61 partner states in 2016.
• Neutralizing or shortening survival clauses requires the consent of both parties, even if the BIT itself was terminated unilaterally. Recent practices include the Canada-EU CETA, which replaced survival clauses of eight BITs with a three-year limit for dispute settlement, and Australia's new BITs with Hong Kong and Uruguay, which specifically nullified the survival clauses of the older treaties.
• The guide recommends that states drafting new BITs avoid restrictive old-style clauses. Suggested alternatives include indefinite terms with unilateral termination at any time (Canadian model), fixed terms that expire unless expressly renewed (Indian model), or shorter tacit renewal periods of five years (2019 Dutch model). For survival clauses, the guide suggests either omitting them entirely or using shorter periods, such as five years.

APA

International Institute for Sustainable Development (n.d.). Terminating a Bilateral Investment Treaty. https://www.iisd.org/system/files/publications/terminating-treaty-best-practices-en.pdf

Chicago

International Institute for Sustainable Development. Terminating a Bilateral Investment Treaty. n.d. https://www.iisd.org/system/files/publications/terminating-treaty-best-practices-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Terminating a Bilateral Investment Treaty |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{internationalinstituteforsustainabledevelopmentndterminating, author = {{International Institute for Sustainable Development}}, title = {{Terminating a Bilateral Investment Treaty}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/terminating-treaty-best-practices-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }