LATVIA Trends and Developments Contributed by: Agita Sprūde and Valts Nerets, Sorainen
The shadow of geopolitics Global economic volatility: a surging caseload and reform imperatives The ISDS ecosystem has expanded dramatically, fuelled by economic volatility, regulatory changes and investor assertiveness. According to the UN Confer- ence on Trade and Development (UNCTAD), the total treaty-based ISDS caseload hit 1,401 by late 2024, with an analysis of trends slated for the forthcoming World Investment Report 2025. The ICSID alone reg- istered 55 new cases in 2024, 53 under the ICSID Convention, predominantly based on BITs (52%) and concentrated in the oil, gas and mining sectors (38%). This uptick aligns with broader patterns: 78% of ICSID cases concluded in 2024 were decided by tribunals, up from 69% in 2023, indicating a shift towards merits- based resolutions over settlements or discontinuities. Emerging trends reveal both opportunities and chal- lenges. Tribunals increasingly award damages far below claimant demands, with ICSID data showing a median award of approximately 30–40% of claimed amounts, reflecting scrutiny over causation and valu- ation methodologies. Statistically, renewables and energy disputes have proliferated, comprising over 20% of new filings, as governments recalibrate sub- sidies amid climate transitions, a dynamic pertinent to Latvia’s green energy ambitions. These trends amplify the need for strategic engage- ment for smaller economies like Latvia. With limited caseloads, Latvia benefits from global efficiencies, such as ICSID’s 2024 caseload statistics, which pro- vide empirical benchmarks for risk assessment, while advocating for equitable reforms to prevent dispro- portionate burdens on developing or transition states. Strategic decoupling: shadow of Russia’s war Despite Latvian businesses’ historical footprint in Rus- sia and Belarus, along with exports totalling USD1.12 billion to Russia and USD154.11 million to Belarus in 2024, Latvian investors contemplating or pursuing ISDS claims against Russia or Belarus face procedural hurdles in arbitration, along with enforcement barri- ers erected by geopolitical sanctions and regulatory countermeasures.
The geopolitical earthquake triggered by Russia’s full- scale invasion of Ukraine in February 2022 has had profound implications for Latvia’s investment treaty framework. Like its Baltic neighbours, Latvia has undertaken a strategic decoupling from Russia and Belarus across multiple dimensions: energy, transport, trade and, crucially, investment protection. Latvia has moved to terminate its BIT with Belarus, reflecting legal necessity and political imperatives. The absence of a Latvia–Russia BIT means that Latvian investors in Russia have historically relied primarily on the ECT rather than a BIT for protection. The termination carries significant legal implications. Like similar BITs, the Latvia–Belarus treaty contains a “sunset clause” extending treaty protection for exist- ing investments for 20 years after termination. The EU’s 18th sanctions package, adopted on 18 July 2025, prohibits the recognition or enforcement of ISDS awards rendered in favour of sanctioned Russian or Belarusian entities within EU member states. Under Council Regulation (EU) 2025/1494, EU courts and authorities are compelled to reject such awards, over- riding treaty commitments to arbitration outcomes and effectively nullifying the New York Convention’s uniformity in intra-EU contexts. The regulations directly address concerns that Russian or Belarusian state-controlled entities might weapon- ise investment arbitration, using BIT protections and arbitral proceedings as economic and political pres- sure tools. By categorically prohibiting such claims and preventing enforcement, the EU has prioritised policy coherence and member state protection over traditional principles of investment protection and arbitration neutrality. However, these measures risk undermining the predictability and rule-of-law founda- tions that make investment arbitration attractive. Nevertheless, the enforcement realities mean that claims against Russia and Belarus will remain expen- sive and practically unenforceable for a long time. The Energy Charter Treaty: evolving protection in the energy sector The ECT has historically provided critical protection for cross-border energy investments, particularly rel-
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