The Rise of Investment Treaty Arbitration: the cases of Poland and Peru

UCL Law for All Society
Feb 28
4 min read

By Andrea Berkovic

In October 2024, a small Australian mining company (GreenX) secured an award of £252 million under the bilateral investment treaty (BIT) and £183 million under the Energy Charter Treaty (ECT) against the Polish government. Six months earlier, a Canadian mining company had done much the same to Peru - and walked away with a final, binding award of over $68 million that Lima has yet to pay.

The are illustrations of one of the most consequential and least publicly understood mechanisms in international law: investor-state dispute resolution, a framework that grants foreign investors the right to bring claims against sovereign states before private international tribunals, with financial exposure that can reach hundreds of millions of dollars.

The Legal Framework

When states conclude bilateral investment treaties or accede to multilateral trade agreements, they routinely assume obligations to protect foreign investors against expropriation, discriminatory treatment, and arbitrary regulatory interference Where a government is found to have breached those obligations, an investor may bypass domestic courts entirely and submit a claim to an international arbitral tribunal - most commonly under the rules of the International Centre for Settlement of Investment Disputes (ICSID), a World Bank body, the UNCITRAL (United Nations Commission on International Trade Law) framework, or the Arbitration Rules of the Stockholm Chamber of Commerce (SCC).

What distinguishes investment treaty arbitration from conventional commercial dispute resolution is the direct right of recourse it confers on qualifying investors against sovereign states - without the need to exhaust domestic remedies. Actionable grievances extend beyond outright expropriation to include intermittence with long-term licences, inconsistent administrative decision-making, and any regulatory conduct that falls short of the fair and equitable treatment standard enshrined in the applicable treaty.

Proceedings are conducted largely in private. The tribunal - typically comprising three arbitrators drawn from the international legal profession - is appointed by the parties themselves. Awards are binding under international law and enforceable in over 160 jurisdictions under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

The volume of activity within the system is substantial. According to the UNCTAD's Investment Dispute Settlement Navigator, the cumulative total of known investor-state arbitrations reached 1401 by the end of 2024 - more than double the figure recorded a decade earlier. At least 58 new proceedings were initiated in 2024 alone. Around 60% of all ISDS cases involved damages claims in excess of $100 million and higher, highlighting a shift towards higher damage claims and awards in the past decade.

GreenX Metals v. Republic of Poland

The GreenX proceedings arose when the company - then trading as Prairie Mining - acquired development rights over two coalmining projects in southern Poland. When the Polish government declined to grant a production concession for the Jan Karski project and subsequently awarded that concession to a state-owned competitor, GreenX filed for abitration in 2020, alleging breach of both the Australia-Poland Bilateral Investment Treaty and Energy Charter Treaty.

In October 2024, the tribunal found unianimously that Poland had violated its treaty obligations, rendering an award of £252 million - among the most significant issued against an EU member state in the history of the system. As Marc Veit of LALIVE, the legal representative of GreenX, observed, the outcome demonstrated that there is 'successful recourse against resource nationalism no matter where it takes place, even in a developed European economy like Poland.'

Poland sought to challenge both awards. In November 2024 it filed a set-aside application before the courts of England and Wales in repsect of the BIT award, and in January 2025 it lodged a parallel challenged in Singapore against the ECT award. In January 2026, the Singapore International Commercial Court rejected Poland's application in its entirety, upholding GreenX's right to compensation under the ECT. The BIT set-aside proceedings in England and Wales remain ongoing. The threshold to succes on a set-aside motion in either the Singapore courts is deliberately very high, with the courts rejecting set aside applications in the vast majority of cases.

Lupaka Gold Corp. v. Republic of Peru

The Peruvian case raises a more legally novel question: not merely whether a government has acted wrongfully, but whether it can be held responsible for the actions of others. Human rights and social issues are becoming more central to investment treaty arbitration. Natural resource, energy and infrastrcutrue projects are often located in proximity to local and indigenous communities. The interaction between these projects and communities is thus increasingly at issue in investor-state disputes.

Lupaka Gold Corp., a Canadian junior mining company, acquired the Invicta gold project in Peru's Andean highlands in 2012. In 2018, members of the Parán rural community - whose lands overlapped with the mine - occupied the site, erected blockades, and ultimately seized the facility. Despite requests for assistatnce, Peruvian authorities failed to resotre access. Lupaka eventually lost control of its investment entirely when its lender foreclosed on the collateral.

The central legal question before the ICSID tribunal was whether Peru could be held responsible for conduct carried out not by state officials, but by a rural community. The tribunal found that Peru's Rural Communities are substantially integrated into the state's legal structure, exercising jurisdictional and policing functions delegated by the state — and that their conduct was therefore attributable to Peru under Articles 4 and 5 of the International Law Commission's Articles on State Responsibility, as well as the Peruvian constitution, which views the Parán community as autonomous in the conduct of its affairs, but only ‘within the framework established by the law’ (Article 89). It ordered Peru to pay $40.4 million in compensation plus $4.2 million in costs.

The award is among the first international arbitral decisions to hold a state liable for the actions of an indigenous or autonomous community exercising governmental authority within its territory.

A System Under Pressure

The reform debate has fractured along predictable lines. UNCITRAL's Working Group III, tasked with a broad mandate, has become a forum for deeper disagreement — over the right to regulate, investor misconduct, and the legitimacy of arbitration itself. ICSID, limited to the amendment of ICSID Regulations and Rules, concluded its rule amendments in 2022. UNCITRAL Working Group III, carrying the weight of more fundamental disagreement, has not. Until a permanent court or appellate mechanism emerges, the existing framework will continue to generate cases and awards that neither states nor investors fully anticipated when their treaties were signed.

Sources:

Edited by Artyom Timofeev

Image sources: https://greenxmetals.com/ , https://lupakagold.com/

The Rise of Investment Treaty Arbitration: the cases of Poland and Peru

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