2025 in Review: Investment Arbitration and Latin America

Latin America continued to play a central role in the global investment arbitration landscape in 2025. While the year did not witness sweeping treaty reform, it was marked by an increased reliance on domestic legality, and closer scrutiny of discretionary state action. Events over the past year show that the region remains engaged with investment arbitration, while cautiously revisiting the balance between the authority of states to regulate and the protection of investors.

Caseload and Statistics

The International Centre for Settlement of Investment Disputes (ICSID) continues to be the leading forum for resolving disputes between investors and states. The ICSID Annual Report 2025, covering FY2025 (1 July 2024–30 June 2025), notes historic demand for ICSID services and confirms that Latin America continues to play a central role in ISDS.

ICSID registered 109 proceedings in FY2025 (including new cases and post‑award remedies), the highest number ever recorded in a single fiscal year. Central America and Caribbean States were respondents in 19% of newly registered cases and South American States accounted for 18% of new cases. Combined, Latin American and Caribbean States made up over a third of new ICSID cases as respondents.

Investment Legality and Constitutional Limits

In 2025, a key theme was the role of investment legality as a threshold requirement for treaty protection. In Can a Breach of Constitutional Law of the Host State Nullify Investment Protection? The Case of Energía y Renovación Holdings v. Guatemala, the authors examined how tribunals approach situations in which an investment allegedly violates constitutional norms of the host State. The analysis identified a standard from other cases requiring the State to show both the legal impact of the alleged constitutional breach and prompt initiation of domestic legal proceedings.

After the award was issued, the claimant initiated rectification proceedings. Subsequently, the State filed an annulment proceeding, which is currently pending.

Jurisdictional Boundaries and State Consent

The limits of arbitral jurisdiction also received attention. In Different Interpretations of Jurisdictional Limits in Junefield Gold v Ecuador, the authors analyzed the award on jurisdiction finding that the tribunal had jurisdiction to determine the merits of the Claimant’s expropriation claims under the China–Ecuador BIT. 

The majority’s expansive interpretation concluded that deciding compensation necessarily required determining whether an expropriation occurred. In a dissent, Professor Philippe Sands KC advocated a narrower reading that would confine jurisdiction solely to quantifying compensation and exclude ruling on liability. The article notes that this is not the first time a tribunal is faced with a similar provision and that tribunals are split on this issue.

Growing Impact of Local Communities in Investment Disputes

In Lupaka Gold Corp. v. Peru, the tribunal issued a final award holding that the state was liable for breaches of the Canada-Peru free trade agreement caused by the actions of a rural community, which had hindered the development of Lupaka’s mining project. As analyzed here, the State’s failure to intervene effectively to end the blockade and restore the investor's rights over the mining company was deemed a violation of international law attributable to the State, constituting a breach of the obligation to provide full protection and security and the FET standard, and amounting to a direct expropriation of the investments.

The same theme was present in Daniel W. Kappes and Kappes, Cassiday & Associates v. Guatemala. In Kappes, the investor claimed breaches to DR-CAFTA for the suspension of mining projects by decisions of the Constitutional Court for violations of the right to consultation of indigenous peoples, as guaranteed by the ILO Convention 169. At the end of the year, the tribunal issued a final award declining to award any damages to the claimant. The award has recently become public, and we will be reporting on the decision shortly.

Critical Minerals and Emerging ISDS Exposure

In From Mines to Courts: The Litigation Impact of Critical Minerals and Supply Chain Disruptions, the author examined how the growing demand for critical minerals is reshaping disputes involving Latin American States.  The article explains that investment in sectors related to the energy transition is becoming more connected with environmental regulations, social resistance, and supply chain challenges, which can all potentially lead to treaty claims. As a result, there is increasing focus on how sustainable development policies affect investment protection standards.

Claims by Dual Nationals Remain a Hot Topic

In May 2025, an UNCITRAL tribunal in Diamante Trading and others v. Venezuela upheld jurisdiction over dual nationals. The authors analyzed how by applying the Vienna Convention on the Law of Treaties, the tribunal found that the absence of an express exclusion of dual nationals in the BIT was deliberate, a conclusion reinforced by negotiating history and comparative treaty practice. The tribunal rejected importation of customary international law concepts from diplomatic protection, such as dominant‑and‑effective nationality, reasoning that investment treaties grant direct rights to investors as lex specialis.

The dual nationality issue under the Spain-Venezuela BIT has been analyzed by other tribunals as previously reported in the Kluwer Arbitration Blog (available here and here).

By contrast, a majority of the tribunal in Santiago Barst & Maria Rodriguez v. Ecuador determined in December 2025 that the Ecuador-Italy BIT does not allow claims by dual nationals against their home state when their dominant and effective nationality corresponds to the host state. We will report more in the coming weeks.

The ‘Contractualization of Investment Arbitration’ Trend

In 2025, the fourth edition of the Latin American Arbitration Association (ALARB) Journal was published with a focus on the contractualization of investment arbitration. The issue is comprised of nine articles devoted to examining both the strengths and the principal challenges posed by the contractualization of investment arbitration, as well as evaluating the advantages and disadvantages of this approach compared to the framework established by free trade agreements and investment protection treaties. This publication is particularly timely given the ongoing discussions within the Joint Project between UNIDROIT and the International Chamber of Commerce’s Institute of World Business regarding the publication of a set of principles for international investment contracts, accompanied by related articles and commentary. The project aims to promote the use of investment contracts as a mechanism for resolving disputes between investors and States, addressing the key challenges inherent in the treaty-based investment system.

Other regional developments

·         Peru

Peruvian courts demonstrated a generally supportive stance toward international arbitration. In Red Flags and Preliminary Indicia: Lima’s High Court of Justice Recognition Decision in Municipality of Lima v. Lima Expresa, the authors discussed a decision recognizing a Paris‑seated partial award in a dispute arising from the Línea Amarilla urban toll road concession amid Peru’s broader Lava Jato corruption fallout. It explains how the High Court addressed allegations that the underlying concession and its amendments were tainted by corruption. The court emphasized that mere “red flags” or preliminary indicia—such as links to politically exposed persons or references to ongoing criminal investigations—are not sufficient, on their own, to deny recognition of a foreign arbitral award under the New York Convention.

·         Ecuador

In 2025, Ecuador had positive outcomes in ongoing proceedings.  First, an UNCITRAL tribunal majority in Lynton Trading v. Ecuador determined that the state was justified in denying the protections of the Ecuador-USA BIT to a claimant lacking substantive business activity in its home jurisdiction. The dissenting arbitrator disagreed with the majority's interpretation regarding the prerequisites for invoking the denial of benefits provision under the specific circumstances presented. Second, in the final part of the year, Ecuador claimed another win in Santiago Romero Barst & María Auxiliadora Rodríguez v. Ecuador (PCA Case No. 2023-23) (Award), where dual Italian-Ecuadorian nationals sued Ecuador over its 2011 casino ban. The Tribunal dismissed the case (by majority), ruling it lacked jurisdiction because the claimants' predominant nationality was Ecuadorian, and thus Ecuador had not agreed to arbitrate such claims under the Ecuador-Italy BIT.

·         Nicaragua

In Riverside Coffee v. Nicaragua, an ICSID tribunal dismissed a DR‑CAFTA claim arising from the occupation of an avocado and coffee plantation during the country’s 2018 unrest, holding that Nicaragua could validly invoke the treaty’s essential security interests clause for measures taken at the peak of widespread social turmoil.  The tribunal accepted that actions such as limiting police intervention were plausibly linked to urgent national security concerns and taken in good faith, and it declined to second‑guess the state’s judgment during that emergency period. We will report more in the coming weeks.

·         Argentina

In AES v. Argentina ICSID Award: Closing the Chapter on Argentina’s 2001–2002 Crisis Saga the authors analyzed the May 30, 2025 damages award in AES Corporation v. Argentine Republic, one of the final ICSID cases arising from Argentina’s financial crisis. The tribunal unanimously held that Argentina’s post‑crisis measures in the electricity sector breached the US–Argentina BIT and could not be justified by the customary international law defense of necessity, aligning its reasoning with earlier awards such as El Paso and EDF.

Final Remarks

Taken together, developments in 2025 reflect that Latin American investment arbitration continues to shape important concepts and protections in international investment law and arbitration. Tribunals have shown greater attention to the interaction between international treaty obligations and local public law concerns, including the role of constitutional courts’ decisions, indigenous consultation requirements, community intervention, and essential security interests. At the same time, divergent approaches to issues such as dual nationality and the denial of benefits confirm that outcomes continue to turn on treaty text, forum selection, and factual context rather than uniform doctrine.

As arbitration remains in high demand, Latin America approaches 2026 anticipating that the number of cases will keep rising. As always, we invite new contributions from old and new contributors as we continue to report on the region's most significant developments.