ESTONIA Law and Practice Contributed by: Maria Pihlak, Carri Ginter, Raul Kartsep and Katariina Kuum, Sorainen
Sorainen Rotermanni 6, 10111 Тallinn Estonia Tel: +372 6 400 900 Email: estonia@sorainen.com Web: www.sorainen.com
1. Overview 1.1 National Position
Additionally, as Estonia is part of the EU, an addi- tional layer of treaty obligations (eg, EU investment and arbitration rules) and constraints apply, especially in relation to intra‑EU investment disputes. 1.3 Prevalence of Investor–State Arbitration The number of ISDS cases involving Estonia is rela- tively low. There have been five known ISDS cases against Estonia under various BITs (namely, the Esto- nia–USA BIT, Estonia–Finland BIT, Estonia–Germany BIT and Estonia–Netherlands BIT). Thus, ISDS is not particularly prevalent. In many instances, contractual or domestic remedies are used first, including exhausting all means of litigation in domestic courts before pursuing arbitration, while most cases are resolved via negotiations or settle- ment. 1.4 Key Industries As a small and diversified economy, Estonia has not seen a concentration of investor–state arbitration claims in any one particular industry. Instead, dis- putes have arisen across various sectors. This might be attributed to the fact that Estonia’s economy is not heavily reliant on extractive industries, large-scale infrastructure projects, or other sectors that commonly dominate ISDS caseloads in larger jurisdictions. Addi- tionally, many investments are in light industries, ICT and services, which often rely less on state contracts or concessions and more on open-market dynamics, reducing the frequency of treaty-based disputes. While no single industry stands out as disproportion- ately involved in investor–state arbitrations in Estonia, disputes have tended to cluster in sectors where the
Estonia participates in investor–state arbitration through its ratification of various bilateral investment treaties (BITs) and multilateral treaties. Historically, Estonia has been a country that has hon- oured its commitment to arbitrating investors’ claims in arbitration. Estonia has expressed no reluctance to join treaties with investor–state arbitration clauses, nor has it expressed a wish to terminate any BITs on its own initiative. While the intra-EU BITs have been terminated or have ceased to be in force, this is solely because of the EU’s internal policies and laws, and is aligned with EU integration dynamics rather than being a specific pol- icy against investor–state dispute settlement (ISDS). More recently, Estonia has adopted an FDI screen- ing regime (Foreign Investment Reliability Assessment Act, FIRAA), effective since 1 September 2023, which focuses on national security and public order con- cerns. While the adoption of FIRAA suggests a more careful regulatory stance, this does not directly appear to affect Estonia’s ISDS treaty obligations. Estonia continues to negotiate new BITs with third countries where its nationals and companies have commercial interests. 1.2 Arbitration Conventions Estonia is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards as well as the ICSID Convention.
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