ESTONIA Trends and Developments Contributed by: Maria Pihlak, Carri Ginter, Raul Kartsep and Katariina Kuum, Sorainen
Estonia’s treaty and arbitration framework Estonia is a party to the ICSID Convention and main- tains a number of BITs, primarily with non-EU states. However, following the Court of Justice of the Euro- pean Union’s Achmea and Komstroy rulings, Estonia has terminated or suspended the operation of intra- EU BITs. The country remains bound by the Energy Charter Treaty (ECT), although the future of the ECT itself is uncertain as the EU moves towards withdrawal and reform. So far, Estonia has faced relatively few investor–state arbitration cases. The most notable recent example is ELA USA Ltd v Estonia , which involved claims of alleged discrimination in a major waterfront redevel- opment at Tallinn’s Seaplane Harbour. In 2025, the tribunal dismissed the claim, finding that Estonia had acted lawfully. While this outcome reinforced Estonia’s reputation as a reliable, rule-of-law jurisdiction, it also underscores that even in environments with few dis- putes, significant claims can arise quickly when regu- latory expectations are unclear or contested. Emerging trends in investor–state arbitration From Sorainen’s International Arbitration subgroup’s point of view, the following trends are likely to define Estonia’s ISDS landscape over the next decade. Heightened arbitration risk in defence and dual-use sectors As Estonia channels state and venture capital into defence and dual-use innovation, foreign investors will seek robust protection for their capital. Investors may see regulatory changes, such as reclassifying technologies, tightening export controls or introducing national security reviews, as unfair or expropriatory. Dual-use technologies combine civilian and military applications, and rules often lag behind innovations in AI, cyber and robotics. Ambiguous licensing, unclear classifications or inconsistent enforcement can lead to disputes over what investors could reasonably expect. Possible disputes may concern: • Revoked export licences or security clearances • Reclassified technologies
• Local-content or offset requirements in defence procurement • State participation or control affecting ownership To reduce risk, Estonia can ensure regulations are clear, predictable and transparently applied, and engage stakeholders when changes are made. Tribu- nals generally look at whether investors could have anticipated the rules and whether measures are pro- portionate to public-interest goals. Frozen assets and sanctions as catalysts for disputes Estonia’s legislation allowing frozen Russian assets to be used for reparations creates new potential trig- gers for investment claims. Owners or beneficiaries – including foreign entities – could argue that their rights under investment treaties have been violated, citing expropriation or unfair treatment. Estonia, in turn, could rely on public-policy or security excep- tions, pointing to sovereign necessity or compliance with EU sanctions. Enforcing arbitral awards in this context is also chal- lenging. Payments to or from sanctioned entities may be blocked by EU rules, creating tension between Estonia’s treaty obligations, such as those under the ICSID Convention, and its duties under EU law. Intensified foreign investment screening Estonia’s Foreign Investment Reliability Assessment Act (FIRAA) requires foreign acquisitions in nation- al-security-sensitive sectors to undergo mandatory screening. As defence and dual-use industries grow, more deals will fall under this process. Decisions seen as arbitrary or lacking due process could trigger BIT claims for unfair treatment. To reduce risk, Estonia should keep screening transparent, consistent and open to review, clearly communicating criteria and reasoning for decisions. The EU law dimension and the decline of intra-EU BITs Following the Achmea and Komstroy rulings, intra- EU investor–state arbitration is largely off the table. Estonia’s terminated BITs with EU countries no longer offer ISDS protection, shifting focus to treaties with non-EU partners. Claims may still arise under mul-
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