A decade ago, it seemed like every foreign investor was suing Argentina. After a financial crisis swept through the country in 2001, foreign investors in water, oil and gas and transportation projects filed dozens of international arbitration claims alleging that Argentina had reneged on the terms of 1990s-era privatisation deals.

More recently, Venezuela became the legal flavour of the month, as a long queue of foreign investors lined up to sue the country for the outright takeover and nationalisation of foreign-owned assets. Many of those cases are still in front of international arbitration tribunals, as investors pursue tens of billions in compensation for their losses.


Today, investor lawsuits are washing up on the shores of Europe, with Spain being particularly hard hit by claims.

Thus far, the claims have been centred on the country's roll-back of generous incentives for renewable energy production. Although those incentives spurred major investments in technologies such as solar generation, they became a financial albatross when Europe fell into recession and governments were forced to slash spending.

However, foreign investors in Spain's energy sector insist that the government cannot walk away from earlier promises to pay renewable generators higher rates so as to offset the costs of investing in new generating capacity.

In a little over a year, 10 arbitration claims have been filed by aggrieved investors at the World Bank's International Centre for Settlement of Investment Disputes (ICSID). Other claims against Spain are being pursued outside of ICSID. In all of these cases, investors are relying on international investment protection treaties that are designed to shield investors from arbitrary or unfair treatment by host countries.

This barrage of lawsuits could be another test of the adequacy of ad hoc international arbitration panels to resolve FDI disputes in a coherent manner. In the earlier flood of cases against Argentina, many observers lamented that differently composed panels of arbitrators were resolving the same legal issues in contradictory fashion. In one case, arbitrators would cut Argentina slack for having reneged on contracts during a bona fide economic emergency, while in others that defence was rejected.

Such legal confusion makes it hard for governments and investors alike. Governments cannot stay in compliance if they do not know what is truly demanded of them. Equally, investors lack certainty as to what type of treatment they can reasonably expect in a given market.

Depending upon how the Spanish cases are resolved, they could provide new fuel for the periodic debate as to whether all of these arbitration rulings should be reviewable by a single 'appeals' court that could ensure that one-off arbitration rulings are consistent and coherent.

Luke Eric Peterson is the publisher of InvestmentArbitrationReporter.com a news and analysis service focused on investor-state dispute settlement.