ICSID

International Centre for Settlement of Investment Disputes. A World Bank Group institution and the leading global forum for investor-state arbitration. Established by the 1965 ICSID Convention. Administers cases brought by foreign investors against host states under bilateral investment treaties, multilateral instruments such as the Energy Charter Treaty, and investment chapters of trade agreements.

ISDS

Investor-State Dispute Settlement. The mechanism by which a foreign investor may bring a treaty-based arbitration claim directly against a host state, typically under a BIT or investment chapter of a trade agreement, without needing the espousal of its home state.

BIT

Bilateral Investment Treaty. An agreement between two states establishing reciprocal protections — and often investor-state arbitration rights — for investors of one state investing in the territory of the other. There are roughly 2,500 BITs in force globally.

FET

Fair and Equitable Treatment. A substantive treaty protection requiring host states to treat foreign investors consistently with basic principles of legality, due process, transparency, legitimate expectations, and non-arbitrariness. The most invoked — and most contested — protection in modern investment treaty law. See our FET standard guide for more.

Expropriation

The taking of foreign investor property by a host state. Direct expropriation is the formal nationalisation or transfer of title. Indirect expropriation arises where state measures substantially deprive the investor of the economic use or value of the investment, without formal transfer of title. Almost every BIT requires expropriation to be for a public purpose, non-discriminatory, in accordance with due process, and accompanied by prompt, adequate, and effective compensation.

MFN — Most-Favoured-Nation

A treaty obligation requiring the host state to treat investors from one treaty partner no less favourably than investors from any third state. Frequently invoked to import more favourable substantive or procedural provisions from other treaties — though the scope of MFN importation remains contested in tribunal practice.

National Treatment

A treaty obligation requiring the host state to treat foreign investors no less favourably than its own nationals in like circumstances. Closely related to but distinct from MFN.

Energy Charter Treaty (ECT)

A multilateral investment and energy-trade treaty providing investment protections to investors in the energy sector across its member states. Despite the EU's modernisation efforts and withdrawal manoeuvres, the ECT remains a major source of historical and pending ISDS claims, particularly in renewables.

Denial of Justice

A breach of the international standard of treatment arising from gross procedural impropriety, manifest unfairness, or fundamental due process failure in domestic courts or administrative proceedings affecting the foreign investor.

Legitimate Expectations

The investor's reasonable, investment-backed expectations based on specific representations by the state or on the legal framework in place at the time of investment. A key component of FET analysis; modern tribunals increasingly require specific representations rather than reliance on a general regulatory framework.

Fork in the Road

A treaty clause requiring an investor to choose between domestic courts and international arbitration for a given dispute. Once a choice is made, it is generally final and bars resort to the other forum.

Umbrella Clause

A treaty provision under which the host state undertakes to observe all obligations it has entered into with respect to investments of investors from the other treaty party — potentially elevating contractual breaches to treaty breaches and bringing them within the tribunal's jurisdiction.

Stabilisation Clause

A contractual provision in an investment agreement intended to insulate the investor from future legal or regulatory changes by the host state. Most common in long-term natural-resource contracts.

Annulment

The limited post-award review process under the ICSID Convention by which an ad hoc committee may annul an arbitral award on narrow grounds: improper constitution of the tribunal, manifest excess of powers, corruption of an arbitrator, serious departure from a fundamental rule of procedure, or failure to state reasons.

Third-Party Funding

Funding of an investment arbitration claim by a non-party (typically a specialist litigation funder) in exchange for a share of any recovery. Subject to disclosure obligations under the 2022 ICSID Arbitration Rules.

UNCITRAL Rules

Arbitration rules promulgated by the United Nations Commission on International Trade Law, widely used as an alternative to ICSID for ad hoc investor-state arbitration. Often referenced as the procedural framework in non-ICSID BIT clauses.

Resource Nationalism

A policy posture in which a host government reasserts sovereign control over strategic natural resources — through nationalisation, indigenisation requirements, retroactive royalty or tax increases, or export controls. Often a leading indicator of new ISDS cases in the extractives sector. See our 2026 analysis for more.