2026 PAW: The Nexus between Investment Arbitration and Public International Law

A recurring theme throughout Paris Arbitration Week 2026 (“PAW”) was the evolving relationship between public international law and investment arbitration. Three panels  approached this intersection from different angles, offering complementary perspectives covered in this post.

1.     Fundamental Rights of the Investors: Exploring the Intersection between Public International Law and Investment Arbitration

The European Branch of the Chartered Institute of Arbitrators (CIArb) hosted a panel examining the fundamental rights of investors in the public international law context of international arbitration. The discussion was moderated by Jalal (Jil) El Ahdab (Fidal) and Alexandre Malan (Belot Malan & Associés), and featured Prof. Arnaud de Nanteuil (Université Paris Est Créteil), Benjamin Garel (ICSID),and Khawar Qureshi KC (McNeir International).

This panel defined the concept of fundamental rights within investment arbitration. De Nanteuil emphasised that investment law is inherently linked to the protection of individual rights against a State, particularly through limiting public power and promoting the rule of law. Garel offered a functional definition, describing fundamental rights as core legal protections that both constrain State conduct towards investors and shape arbitral procedure. Qureshi pointed to concrete examples, such as the right to property, fair trial, and protection against arbitrary treatment, which are all reflected across international legal instruments.

Access to arbitration

Regarding whether access to arbitration constitutes a fundamental right, Qureshi argued that access to legal representation and justice must be protected, even in politically sensitive contexts. He criticised the chilling effect sanctions can have on legal professionals and institutions, warning against the “weaponisation” of access to justice.

Garel highlighted some practical examples of how sanctions disrupt the right to fair trial: difficulties in transferring funds, securing legal representation, and paying advances on costs can all hinder access to arbitration. While third-party funding may alleviate some of these challenges, it remains limited in practice.

The Role of Arbitrators

On the question of whether arbitrators can apply fundamental rights derived from sources outside the applicable treaty, such as human rights conventions, Qureshi drew a clear distinction: tribunals may “have regard to” such instruments, but not necessarily apply them. Applying external norms may exceed the tribunal’s mandate, while merely considering them allows arbitrators to contextualise State conduct without overstepping jurisdiction.

De Nanteuil reinforced this by situating investment law within public international law. Concepts such as expropriation and denial of justice are not treaty inventions but rooted in broader legal traditions. This embeddedness gives tribunals some flexibility, but within limits. He also addressed the relationship between the minimum standard of treatment and fair and equitable treatment (“FET”), noting that both historically protect procedural fundamental rights. However, he observed a shift in modern treaties towards more rigid definitions of FET. While this may enhance clarity, it risks moving away from flexible standards towards a closed catalogue of rights.

Democratic Deficit in ISDS

The session concluded by asking whether arbitrators, operating confidentially, apply international norms not envisaged by States, creating a democratic deficit. Qureshi argued pragmatically that States entering investment treaties accept the broader framework of international law, including customary rules, and must bear the consequences of excluding appellate mechanisms or interpretative guidance. De Nanteuil rejected the premise: arbitral tribunals do not override democratic choices, they assess their compliance with legal obligations. States remain free to act, but within the limits they have accepted.

2.     Strengthening State Capacity in Investor-State Arbitration: Training, Rapid Support, and Global Reform Initiatives

The panel hosted by the African Legal Support Facility (ALSF) shifted the focus from investors to States and explored the position of African States within the ISDS system and the ways in which they can be better protected. Hosted by Manuela Dieng (ALSF), and featuring guest speakers Michael Ostrove (DLA Piper France LLP), Prof. Makane Moïse Mbengue (University of Geneva), Thabo Chakaka-Nyirenda (Attorney-General for the Republic of Malawi), and Lise Johnson (Curtis, Mallet-Prevost, Colt & Mosle LLP), this panel focused on the central question of how to strengthen State capacity in ISDS. 

Structural Asymmetries in ISDS

Johnson identified systemic features that place States at a disadvantage. First, ISDS proceedings are difficult to dismiss early. Claims can proceed for years before their merits are fully understood, generating significant costs. This pressures lower-resourced States to settle early. Second, the absence of clear statutes of limitation allows claims to be brought long after the underlying events, complicating evidence-gathering and institutional memory.
Third, information asymmetries play a significant role. Investors may rely on third-party funding and specialised expertise that States often lack.

The C-problem: Continuity, Coordination, and Culture

Mbengue framed the challenges African States face as the “C-problem”, referring to continuity, coordination, and culture. Continuity is lacking at multiple levels. Changes in government lead to abrupt shifts in leadership, resulting in a loss of institutional memory. This is compounded by strategic discontinuity, where policy objectives, such as economic nationalism, are not aligned with litigation strategies. A third layer is professional discontinuity: officials tasked with handling ISDS cases often come from domestic legal backgrounds, with limited exposure to international arbitration.

Coordination deficiencies arise across ministries, agencies, and actors like embassies or State-owned enterprises, which may have conflicting priorities and can influence decision-making in complex ways.

Finally, culture plays a crucial role. Many States lack familiarity with key aspects of the arbitration system, from choosing between ad hoc and institutional arbitration to selecting counsel and arbitrators.

Practical Constraints

Ostrove pointed out a recurring issue in practical reality of poor documentation and archiving. Many States lack centralised systems for storing contracts and correspondence. Changes in government can exacerbate this problem, leading to lost or inaccessible records. Budgetary constraints and the absence of third-party funding further limit States’ ability to respond effectively. Early external support can make a decisive difference, for example through ALSF, States can timely secure strong legal representation and build a solid defence.

Chakaka-Nyirenda added that overlapping institutional mandates can result in inconsistent positions within the State itself, further complicating dispute management.

A “Survival Checklist” for States

When asked what practical steps States should take, the panellists offered a set of priorities. Ostrove emphasised the importance of centralised and digitised document management systems. He added that States should foresee a pre-established procedure for selecting counsel. Mbengue added that capacity-building must begin before disputes arise.

Dieng explained how ALSF’s approach focuses on both pre-contentious support, such as mediation and advisory services, as well as post-dispute assistance. Their objective is to equip governments with the tools and knowledge needed to respond effectively from the moment a dispute emerges.

Treaty Design as a Tool for Capacity

Mbengue further identified substantive and procedural strategies for the treaty-making stage. Substantively, some States are redefining or removing traditional standards such as FET, replacing them with more tailored formulations (e.g. “administrative and judicial treatment”). Others are incorporating investor obligations to facilitate counterclaims.

Procedurally, there is a growing emphasis on alternative dispute resolution mechanisms, reflecting a preference for less confrontational approaches. This is visible in African contexts, with increasing interest in regional solutions and the “africanisation” of ISDS through institutions such as OHADA or regional courts. Mbengue explained that the future of ISDS in Africa will be “à la carte”, as positions on ISDS across the continent remain fragmented.

Perspectives on the Future

Chakaka-Nyirenda emphasised the need to shift from downstream to upstream approaches. Disputes often arise from misunderstandings of key standards such as expropriation and FET. Strengthening legal understanding within government, both ex ante and ex post, is essential to reduce exposure. This includes better due diligence, clearer internal processes, and a more proactive approach to governance.

Providing a different perspective, Johnson argued that many of the challenges discussed ultimately stem from structural asymmetries which disadvantage States creating a fundamental imbalance. Without addressing this, capacity-building alone may not be sufficient.

3.     The Impact of the ICJ Climate Advisory Opinion on Investment Treaty Obligations

The third panel was on the impact of the ICJ Advisory Opinion on climate change in investment treaty obligations. This panel, organised by the International Federation for Investment Law and Arbitration (IFILA) and hosted at Gide Loyrette Nouel, was led by Veronika Korom (ESSEC Business School), Nikos Lavranos (IFILA), Alexander Leventhal (Quinn Emanuel Urquhart & Sullivan, LLP), and Saadia Bhatty (Gide), who moderated the session. The panel featured interventions from Prof. Payam Akhavan (Twenty Essex), Prof. Makane Moïse Mbengue (University of Geneva), Nilufer Oral (National University of Singapore), Rémi Nouailhac (TotalEnergies SE), Stephanie Collins (Gibson Dunn), and Joël Sanon (African Legal Support Facility). Assessing the impact of the International Court of Justice (ICJ) Climate Advisory Opinion (“ICJ Opinion”) on investment treaty obligations, the roundtable was held under the Chatham House Rules.

Background on the ICJ Opinion and Key Findings

The ICJ Opinion was prompted by small island States, for whom climate change is an existential threat, to clarify States’ legal obligations. The request reflected frustration with limited progress under existing frameworks, including the Paris Agreement. While not formally binding, panellists emphasised the ICJ Opinion’s significant legal weight, reinforced by broad participation from States and international organisations.

The roundtable identified three key aspects of the ICJ’s findings. First, States parties to the Paris Agreement are expected to exercise due diligence by preparing and maintaining nationally determined contributions aligned with temperature goals and respective capabilities. Second, customary international law requires States to prevent significant environmental harm, including through regulation of activities within their jurisdiction. Third, treaty interpretation should be harmonious and systemic, ensuring coherence across multiple legal regimes.

Implications for Investment Treaty Interpretation

The ICJ Opinion clarifies that international law should be interpreted in light of State’s environmental obligations. Panellists suggested it may expand State’s environmental policy space, with climate measures less likely to be viewed as breaches of investment protections, potentially reducing regulatory chill. More broadly, the ICJ Opinion contributes to a recalibration between investor protection and the State’s regulatory authority.

At the same time, proportionality remains central. Measures should not impose an excessive burden on investors, requiring a case-by-case assessment. Tribunals will likely continue balancing environmental considerations with investor protection, with the ICJ Opinion guiding, not replacing, this analysis.

Practical Constraints and Sectoral Realities

The real-world impact of the ICJ Opinion will largely depend on how States implement it. Panellists observed that in sectors such as oil and gas, particularly in developing countries, economic and energy concerns remain decisive. As a result, many States are likely to continue prioritising resource development and energy security, particularly amid geopolitical instability and rising energy demand.

In regions such as Africa, fossil fuel resources is often linked to economic growth and poverty reduction. Panellists suggested, therefore, that the ICJ Opinion is unlikely, at least in the short term, to result in a widespread refusal or revocation of exploration and production licences. However, it may strengthen States’ negotiating position, for instance by supporting stricter environmental and social obligations for investors.

Stabilisation Clauses and Treaty Practice

On stabilisation clauses and investment treaty practice, panellists noted that the ICJ Opinion may affect traditional “freezing” clauses, potentially opening the door to renegotiation. More flexible and modern stabilisation clauses, based on economic equilibrium, were seen as less affected but may still allow greater scope for regulatory change.

More broadly, the ICJ Opinion may strengthen State’s leverage when dealing with investors and contribute to the evolution of investment treaties, including greater recognition of environmental considerations.

Its role in investment arbitration remains unsettled. While tribunals have generally been cautious with non-binding instruments, the ICJ Opinion’s articulation of customary international law may increase its relevance, particularly under older treaties lacking environmental provisions.

Its use for counterclaims was considered more uncertain, given its focus on State obligations, but it may still influence damages assessment where State measures are taken to meet climate obligations.

Broader Legal and Policy Implications

Beyond arbitration, the ICJ Opinion may have broader ripple effects, including in domestic litigation and NGOs challenges to fossil fuel projects. The ICJ’s endorsement of environmental impact assessments, including downstream (Scope 3) emissions, was also noted as reflecting a growing convergence in international practice.

At the same time, the principle of common but differentiated responsibilities remains debated. While acknowledged by the ICJ, its practical application is still unclear, particularly regarding climate justice and unequal State contributions to global emissions.

4.     Conclusion

These discussions at PAW 2026 highlighted the growing interaction between public international law and investment arbitration with a common theme: the need to balance investor protection with the evolving regulatory role of States, particularly in areas such as environmental governance and development. These discussions point to an ongoing recalibration of ISDS, shaped by both legal developments and practical constraints.

This post is part of Kluwer Arbitration Blog’s coverage of Paris Arbitration Week 2026.