By Omar Alserdare
The rules for cross-border business are changing, and these shifts could directly impact your investments.
Investment protections remain but with new nuances:
Modern trade and investment agreements continue to protect foreign investors by guaranteeing national treatment, meaning foreign investments should receive the same treatment as domestic ones; fair and equitable treatment, which protects against arbitrary or discriminatory State actions; and expropriation protection, ensuring investments cannot be seized or destroyed without fair compensation.
Agreements like USMCA (US, Canada, Mexico), RCEP (Asia-Pacific), and CETA (EU–Canada) continue to provide these protections, but the landscape is evolving.
Dispute resolution is shifting:
Under older agreements, investors could bring claims directly against States before independent arbitral tribunals, a mechanism known as investor-State dispute settlement (ISDS). This gave businesses a powerful, neutral forum to challenge State conduct that harmed their investments.
The new generation of agreements is walking this back. To illustrate:
Some agreements, such as the USMCA, have eliminated ISDS entirely between certain parties. Investors can no longer bring arbitration claims directly against the other State and are left with domestic courts and State-to-State mechanisms.
Others, such as the RCEP, have removed ISDS altogether in favor of a State-to-State model inspired by the WTO.
Others still, such as CETA, retain a more protective model for investors, featuring a permanent tribunal of independent judges and a novel appellate mechanism, though even this approach has faced political resistance in some jurisdictions.
Environmental commitments are taking center stage:
Modern agreements and new-generation BITs increasingly integrate environmental obligations. Recent treaties often prohibit States from lowering environmental or health standards to attract foreign investment and clarify that non-discriminatory environmental measures adopted in good faith should not be treated as indirect expropriation.
Some agreements go even further by explicitly referencing the Paris Agreement, reflecting the growing role of sustainability in international economic law.
If your company has cross-border investments or is considering expanding internationally, it is worth asking:
Which treaty protections apply to your investments, and are they old-generation or new-generation agreements?
Do you still have access to investor-State arbitration, or are you limited to domestic courts and State-to-State mechanisms?
How do the environmental obligations in applicable agreements affect your operations and exposure?
The rules of the game are evolving. Understanding them is the first step to protecting your business.