CLIENT ADVISORY MEMORANDUM
Subject: Key International Law and Arbitration Developments
For: Corporations, Sovereign Entities, Counsel for Cross-Border Investments and Dispute Resolution
Prepared by: Senior Counsel with more than fifty years of legal practice
OVERVIEW
July 2025 produced important decisions in the fields of investor state arbitration, territorial expropriation disputes, arbitration and EU constitutional law, and the interaction between arbitration and human rights. These decisions illustrate the current direction of judicial review in Europe and the scope of investor protections under public international law.
I. Paris Court of Appeal Upholds Arbitral Award in Crimea-Related Investment Dispute
Decision of 1 July 2025
A. Facts and Procedural History
A Ukrainian state-owned bank, Oschadbank, held investments in Crimea before its annexation by the Russian Federation in 2014. The bank initiated arbitration under the 1998 Russia-Ukraine bilateral investment treaty, alleging expropriation and unlawful interference with protected investments.
The arbitral tribunal awarded Oschadbank approximately 1.1 billion US dollars. Russia contested the award and challenged jurisdiction before the Paris Court of Appeal.
On 1 July 2025, the Court of Appeal rejected the jurisdictional objections and upheld the validity of the award.
B. Holding and Legal Reasoning
The Court concluded that the bilateral investment treaty remained applicable to investments made before the change in territorial control. A change in sovereignty does not extinguish treaty protections for existing investments.
Jurisdiction under the BIT was therefore preserved, and the arbitral tribunal was entitled to adjudicate the dispute. The award remained enforceable.
C. Client Implications
Investors gain reassurance that lawful investments made before a geopolitical or territorial change can continue to benefit from treaty protection.
States involved in territorial disputes must anticipate that their conduct may be scrutinized under existing treaty obligations.
Businesses considering investment in politically sensitive territories should review whether relevant BITs contain survival clauses or continuing protections.
D. Risks and Considerations
Enforcement against a non-compliant state may remain challenging. Asset tracing and enforcement strategy will be essential.
States may respond to these decisions by revising or withdrawing from BITs, which could affect long-term investment planning.
II. Decision of the Federal Constitutional Court of Germany on Investor State Arbitration and EU BIT Termination
Decision of 31 July 2025
A. Background
Following the European Union’s intra EU BIT termination program and earlier decisions such as Achmea, questions have persisted about how legacy arbitrations and obligations should be treated within EU member states.
On 31 July 2025, the German Constitutional Court considered the compatibility of these terminated BITs with German constitutional law, European law, and procedural fairness requirements.
B. Key Findings
The Court recognized that the termination of intra EU BITs raises significant questions about the consistency of investor state arbitration with EU law. It highlighted the need for transparent and fair mechanisms to resolve pending or legacy disputes.
The Court emphasized that any replacement settlement or facilitation process must meet standards of impartiality, confidentiality and procedural fairness.
C. Implications for Clients
Investors with intra EU structures should no longer assume that BIT based arbitration is automatically available or valid.
EU member states may rely increasingly on EU law and domestic remedies rather than treaty-based arbitration.
Legal counsel must structure investments with alternative legal protections such as contractual arbitration clauses or reliance on EU internal market law.
D. Risks and Cautions
Historic BIT based claims may be contested on constitutional or EU law grounds.
Investors may find that traditional treaty protection mechanisms within the EU have reduced reliability.
Cross border investment planning in the EU now requires more complex analysis.
III. European Court of Human Rights Decision in the Case of Caster Semenya
Judgment of 10 July 2025
A. Facts and Procedural Background
Caster Semenya challenged World Athletics regulations affecting athletes with differences of sex development. After proceedings before the Court of Arbitration for Sport and the Swiss Federal Tribunal, she applied to the European Court of Human Rights.
The application alleged violations of the rights to private life, non discrimination and an effective remedy.
B. Holding and Legal Reasoning
The Court ruled in her favor and held that the arbitration process and subsequent judicial review failed to provide adequate protection of her Convention rights.
The Court found that the matter involved fundamental personal rights and therefore required a more rigorous and individualized proportionality assessment than the arbitration process had provided.
C. Implications for Clients
Arbitration proceedings that affect personal rights, identity or bodily integrity will be subject to enhanced human rights scrutiny.
Sports federations, regulatory bodies and institutions using mandatory arbitration should ensure that procedures afford sufficient procedural guarantees and respect for individual rights.
D. Risks and Points of Vigilance
Arbitral awards may be vulnerable to challenge where they fail to address human rights concerns.
Organizations that rely heavily on mandatory arbitration must expect closer oversight by courts and human rights bodies.
IV. Comparative Trends Observed in July 2025
- Treaty protections may survive changes in territorial control, offering stability for long term investors.
- EU constitutional considerations increasingly limit the use of investor state arbitration within the European Union.
- Human rights review can override the finality of arbitration when fundamental rights are implicated.
- Courts continue to distinguish between commercial arbitration, which receives strong support, and arbitration involving personal rights, which attracts higher scrutiny.
V. Strategic Guidance for Clients
For Investors in Disputed or Politically Sensitive Territories
Document investments clearly and confirm that applicable BITs provide survivability of protections. Seek legal opinions before making additional capital commitments.
For Investors Operating Within the EU
Do not rely exclusively on intra EU BIT protection. Consider structuring investments through jurisdictions with established BIT networks or securing stronger contractual protections.
For Organizations Using Mandatory Arbitration
Revise arbitration procedures to ensure compliance with human rights standards. Provide fair hearing safeguards and allow for transparent review mechanisms.
For Legal Counsel
Monitor ongoing developments in human rights based challenges to arbitration, as these may affect the enforceability of awards. Reassess arbitration clauses and BIT reliance annually.
VI. Conclusion
July 2025 confirms that international arbitration remains a central mechanism for resolving investment and regulatory disputes. At the same time, human rights jurisprudence and EU constitutional developments introduce new complexities. Clients should incorporate these trends into their investment planning, contract drafting and dispute resolution strategies.
xxx
