Investor–State Disputes in the Fossil Fuel Industry

The report identifies the fossil fuel industry as the most litigious sector in the ISDS system, accounting for nearly 20% of all known cases. It highlights a significant lack of transparency, with 54% of concluded cases remaining confidential. Findings show that investors frequently win on the merits (72% of disclosed cases) and receive substantially higher awards than non-fossil fuel investors, averaging over USD 600 million. The analysis emphasizes the role of the Energy Charter Treaty (ECT) and contract-based arbitrations, particularly in low-income countries. The report concludes that the ISDS system can create a 'regulatory chill,' deterring states from implementing urgent climate policies and phasing out fossil fuels to meet Paris Agreement objectives.

• The fossil fuel industry is the most litigious sector in the ISDS system, representing nearly 20% of all known cases. Within this sector, the oil and gas industry accounts for 92% of arbitrations, with almost half focusing on upstream investments involving exploration and extraction.
• There is a significant lack of transparency in fossil fuel disputes; 54% of concluded cases are confidential, and nearly all settlements reached before a final award are also kept secret.
• Investors in the fossil fuel industry have a high success rate and receive much larger financial awards than those in other sectors. In disclosed cases decided on the merits, investors succeeded in 72% of cases, with an average award of over USD 600 million—nearly five times the average for non-fossil fuel cases.
• The Energy Charter Treaty (ECT) is the most frequently used international investment agreement in fossil fuel disputes, appearing in 17% of all such cases.
• Contract-based arbitrations are particularly prevalent in disputes involving low-income countries, constituting nearly 60% of fossil fuel arbitrations brought against them.
• The distribution of claims is skewed toward high-income investors and middle-income host states. Approximately 92% of claimants are from high-income countries, with American investors initiating nearly 30% of fossil fuel arbitrations, while lower-middle and upper-middle-income countries face the highest number of claims.
• The 'carbon majors'—the most polluting fossil fuel companies—are highly active in the ISDS system, initiating 33% of all fossil fuel arbitrations and securing USD 19 billion in disclosed awards.
• There is a growing trend of using ISDS to challenge climate and environmental measures. Over 30% of publicly available fossil fuel arbitration decisions contain environmental components, and new cases are emerging specifically to counteract the phasing out of fossil fuels.
• Fossil fuel investors frequently employ strategies to multiply claims, such as initiating multiple arbitrations for the same project, against the same state measure, or through different parent companies over time.

APA

Di Salvatore, L. (2021). Investor–State Disputes in the Fossil Fuel Industry. International Institute for Sustainable Development. https://www.iisd.org/system/files/2022-01/investor%E2%80%93state-disputes-fossil-fuel-industry.pdf

Chicago

Di Salvatore, Lea. Investor–State Disputes in the Fossil Fuel Industry. International Institute for Sustainable Development, 2021. https://www.iisd.org/system/files/2022-01/investor%E2%80%93state-disputes-fossil-fuel-industry.pdf.

Wikipedia

{{cite report |last1=Di Salvatore |first1=Lea |title=Investor–State Disputes in the Fossil Fuel Industry |publisher=International Institute for Sustainable Development |date=December 2021 |url=https://www.iisd.org/system/files/2022-01/investor%E2%80%93state-disputes-fossil-fuel-industry.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{disalvatore2021investorstate, author = {Di Salvatore, Lea}, title = {{Investor–State Disputes in the Fossil Fuel Industry}}, institution = {International Institute for Sustainable Development}, year = {2021}, month = dec, url = {https://www.iisd.org/system/files/2022-01/investor%E2%80%93state-disputes-fossil-fuel-industry.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }