1.What is the current legal landscape for your practice area in your jurisdiction?

The UK remains a strongly pro-arbitration jurisdiction. The courts here have a long‑standing record of upholding party autonomy and will only intervene in the arbitral process, and permit challenges to awards or enforcement, in accordance with narrowly defined statutory grounds. London, in particular, continues to be a leading choice of seat for international arbitrations¹ and the key piece of domestic arbitration legislation (the Arbitration Act 1996) was modernised and amended in 2025 to ensure that it remains fit for purpose. The changes made have provided welcome clarity on some key issues (including, for example, the law governing arbitration agreements) and reinforce the already robust framework that regulates arbitration in the jurisdiction.

The UK Courts also continue to address novel questions of law arising in the context of arbitrations involving states. At the time of publication, the UK Supreme Court is considering Spain and Zimbabwe’s respective appeals² in two important cases concerning whether foreign states can rely on state immunity to avoid registration of substantial arbitration awards rendered against them. Specifically, the Supreme Court will clarify whether article 54 of the ICSID Convention (which obliges states to recognise awards rendered pursuant to the Convention as if they were a final judgment of the domestic court in which enforcement is sought) amounts to a ‘waiver’ under the State Immunity Act 1978. The Supreme Court’s judgment is eagerly awaited as it will determine whether states can rely on immunity from registration of ICSID awards in this jurisdiction.

The UK legal landscape appears also to be shifting in favour of achieving a workable balance between investor protection on the one hand and state policy making on the other. This issue has come particularly to the fore in the environmental context and the UK’s recent withdrawal from the ECT represents a significant and interesting development. It remains to be seen what claims may still be advanced by investors during the transitional period for historic investments under the ECT’s sunset clause, and whether changes in governmental policy may drive an increase in other treaty claims against the UK in the future.

2. What three essential pieces of advice would you give to clients involved in your practice area matters?

1.Consider investment treaty coverage prior to finalising any foreign investment

Recent years have demonstrated how geo-political instability, and consequential state actions, can drive substantial disputes. While most international investors will be well-versed in negotiating contractual legal protections to guard their valuable investments, they are all-too-often left without recourse when those contractual protections are rendered meaningless as a result of some action on the part of the host state. With careful early-stage consideration of the investment treaty protections potentially available for investments into a particular state, investors can proactively structure their investments in a way that ensures they will have the benefit of those protections if and when needed. Conversely, of course, states should be mindful of the potentially significant ISDS implications of any representations and assurances made to foreign investors and of any later changes in policy, especially in context of legitimate expectations and unfair treatment claims.

2. Understand that investment arbitration may represent the ‘long game’ and plan accordingly

While the availability of investment treaty protections is key to ensuring appropriate recourse against states for the adverse impacts of their actions, the practical enforcement of those protections is rarely straightforward. Investment treaty arbitrations are, by their nature, factually and legally complex and typically take several years to reach final award. Even beyond that award, there is then the potentially difficult road to final enforcement against assets of the state. Of course, all of this has significant time and cost implications and can prove a particular challenge on the investor side (where, often, the issues at the heart of the underlying arbitration have resulted in some degree of impecuniosity). In recognition of this issue, a well-developed litigation funding industry has developed for investment arbitrations and investor clients are well-advised (where needed) to explore potential funding options at an early stage.

3. Craft your disputes strategy to best meet your strategic priorities and avoid prejudicing any future investment claim

Early consideration of all options is key to developing the optimal disputes strategy to meet strategic priorities. As noted above, investment treaty claims are not a ‘quick fix’ and other routes may produce results – or create leverage for settlement negotiations – more quickly. These routes may include the commencement of proceedings before local courts or a contractual arbitration claim. It is, however, essential to consider the potential impact of taking such other actions on any future investment treaty claim. This is because many treaties contain ‘fork‑in‑the‑road’ or similar provisions, which can mean that the commencement of proceedings in one forum operates to prevent a later claim under a BIT. Taking early advice on the strategic implications of each option is essential to avoid unintentionally limiting access to investment treaty arbitration at a later stage.

3. What are the greatest threats and opportunities in your practice area law in the next 12 months?

The complex sanctions landscape, and myriad disputes, prompted by the Russia-Ukraine war will undoubtedly continue to present challenges and opportunities for practitioners of international arbitration (and dispute resolution more broadly).

Several Western investors whose valuable businesses in Russia have been put under state management or otherwise adversely impacted by state measures have made clear their intentions to pursue all legal recourse available to them (including under relevant BITs) and a number of claims against the state have already been commenced. It is anticipated that more will follow.

In terms of claims against European states for actions taken in response to the Ukraine war, the EU’s 18th sanctions package now expressly shields EU member states from Russian sanctions‑related claims under BITs. Interestingly, however, as at the date of writing this guide, the UK has not introduced an equivalent measure, leaving open the potential for such Russia sanctions‑related claims to continue through UK treaty routes.

Separately, the recent political upheaval in Venezuela has reignited discussions about the possibility of recovering long‑unpaid arbitral awards obtained against the state by investors (particularly in the energy sector) whose interests were expropriated under the Maduro regime. It remains to be seen whether enforcement efforts will ultimately succeed, but the apparently improved prospects of some recovery is anticipated to spark a renewed interest in the secondary market for Venezuelan awards and to generate opportunities for disputes practitioners.

More generally, the increasing global uncertainty around the treatment of foreign investors by host states means the demand for proactive investment structuring – including the strategic use of BITs and MFN clauses to mitigate sovereign risk – is likely to increase and to present a real opportunity for investment arbitration practitioners to add meaningful value for investor clients.

In terms of major challenges to the investment treaty arbitration landscape, the growing fragmentation of the intra‑EU regime is an obvious candidate. The CJEU’s decisions in the high-profile Achmea and Komstroy cases held that investor‑state arbitration clauses in treaties between EU Member States (including the ECT) are incompatible with EU law and thus effectively prohibited their prosecution and enforcement within the EU. However, several non‑EU jurisdictions (including the US) have declined to adopt the EU’s position, leading to inconsistent outcomes on jurisdiction and enforcement. Interestingly, this significant divergence is simultaneously increasing legal uncertainty and creating strategic opportunities for investors to seek enforcement of existing treaty awards in arbitration‑friendly jurisdictions outside the EU.

4. How do you ensure high client satisfaction levels are maintained by your practice?

First, we invest time at the outset of any new instruction to get to know the people with whom we will be working and fully to understand our clients’ strategic objectives and commercial drivers. Formal disputes proceedings are rarely the preference of any client, but we help investors, in particular, to understand that treaty claims can be a crucial tool in the arsenal needed to achieve their goals and can form an integral part of a broader, holistic dispute resolution strategy.

Second, we consider the enforcement realities from the very outset and help clients to understand the potential upside of their further investment in the arbitration process as well as realistic prospects of recover early on. In this analysis, we take into account any sovereign immunity or related constraints that may impact the true value of a claim. We find this approach critical to giving clients a clear picture of what will be required to secure compensation, helping to avoid any surprises later in the process that could understandably cause dissatisfaction.

Third, we are candid about the unique challenges of treaty arbitration, including its procedural complexity and the practical dynamics of disputes involving states. Informed by the insights of Baker McKenzie’s annual Global Disputes Forecast,³ we are also able to help clients anticipate the macro‑level risks likely to influence their disputes, such as geopolitical volatility and regulatory intervention.

Finally, we leverage cutting‑edge tools such as Baker Machine Learning, Copilot‑enabled workflows and AI‑enhanced drafting, to deliver faster, more cost‑efficient outcomes for our clients. We also strive to maintain high levels of communication with our clients, providing clear budgeting and cost‑control visibility throughout the arbitration process.

5. What technological advancements are reshaping your practice area law and how can clients benefit from them?

Technological advancements and the use of AI are rapidly reshaping arbitration, particularly through sophisticated e‑disclosure platforms and emerging AI-assisted review tools. These software systems are increasingly offering opportunities to process large‑scale datasets, automate first‑level relevance screening, and highlight key patterns or documents. All of this is already helping significantly to reduce the amount of time spent by lawyers on these high-volume tasks (freeing up time for more complex, value-adding work) and thereby also reducing costs for our clients.

The leading arbitral institutions with whom we work are embracing the opportunity this new technology offers to reshape the arbitral process and increase efficiency – many of them have now incorporated into their rules and guidelines detailed virtual hearing frameworks and protocols and guidance on the responsible use of technology. This institutional shift means that clients are already benefitting from reduced logistical costs, smoother case management and greater procedural flexibility.

 

*The authors would like to thank Divyansh Sharma and Ella Jenkinson for their assistance in the preparation of this chapter.

Footnote(s):

¹ See the LCIA’s 2024 Annual Casework Report, available at https://www.lcia.org/News/lcias-2024-annual-casework-report.aspx. See also, 2025 International Arbitration Survey of Queen Mary University of London, available at https://www.qmul.ac.uk/arbitration/media/arbitration/docs/White-Case-QMUL-2025-International-Arbitration-Survey-report.pdf.
² Republic of Zimbabwe (Appellant) v Border Timbers Ltd and another (Respondents), UKSC/2024/0156; Infrastructure Services Luxembourg S.A.R.L and another (Respondents) v The Kingdom of Spain (Appellant), UKSC/2024/0155.
³ Baker McKenzie, 2026 Global Disputes Forecast, available at https://www.bakermckenzie.com/en/insight/publications/2026/01/global-disputes-forecast-2026.