Predicted Rise In Climate-Related Investment Arbitration Claims On The Horizon – Climate Change – European Union

Recent years have seen a steady increase in so-called “ESG” claims—i.e., those claims relating to environmental, social, or governance factors. A particular focus of this type of litigation has concerned climate change, with the majority of these claims being brought before national courts by nongovernmental organizations (“NGOs”) or individuals arguing that governments or corporations have not taken sufficient action to combat climate change.

There is also an increase in awareness of this trend in arbitration, especially in investment arbitration—i.e., in arbitration brought by investors against states on the basis of bilateral or multilateral investment treaties (also sometimes referred to as “ISDS,” as an abbreviation for investor-state dispute settlement). In contrast to the litigation claims brought before state courts where claimants allege too little is being done, investors frequently allege the opposite in ISDS arbitration: i.e., that states are frustrating companies’ investments by introducing stricter climate-related regulation.

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