Construction Projects in Investor-State Arbitration: Insights from the latest trends and statistics

In recent years, investment arbitrations in the construction sector have witnessed a significant surge, securing their position as the third most represented economic sector. This is no surprise, given the pivotal role of the construction industry in rapidly developing regions across the globe. Construction sector investments often fulfill jurisdictional prerequisites of international investment treaties. A comprehensive examination of all reported investment arbitrations linked to construction investments reveals that claims pertaining to ‘fair and equitable treatment’, ‘indirect expropriation’ and ‘full protection and security’ are most frequent. Excluding cases that are still pending, it also appears that these construction-related claims have a 44% probability of leading to either a settlement or an award in favor of the investors, although not always for the entire claimed amount. This chapter demonstrates that multiple standards of investment protection can be successfully invoked, provided that the various jurisdictional challenges are navigated and quantum aspects are meticulously assessed, correctly presented and substantiated to the satisfaction of the tribunal. Investment protection serves as an invaluable additional avenue for redress for contractors operating on international projects. However, it must be managed and planned with expertise to ensure that its increased utilisation results in equitable outcomes for investors.