ESTONIA Trends and Developments Contributed by: Maria Pihlak, Carri Ginter, Raul Kartsep and Katariina Kuum, Sorainen
tilateral treaties like the ECT or under contracts with arbitration clauses. EU law also affects award enforcement. Estonian courts may refuse recognition if awards conflict with EU sanctions or public-policy rules, shaping both the likelihood and outcome of ISDS cases involving Esto- nia. Rising costs, reputational stakes and institutional preparedness High-value disputes in sensitive sectors can car- ry major financial and reputational risks. Estonia’s government will need specialised legal capacity to prevent and manage disputes, assess regulatory impacts and co-ordinate across ministries. Investors may respond by including detailed dispute resolution clauses, securing political risk insurance and selecting arbitration venues outside the EU. Anticipated legal and institutional responses To navigate these pressures, Estonia is likely to pur- sue a range of legal and institutional measures. In the defence and dual-use sector, the government may further clarify the scope of regulated activities, align definitions with EU and NATO standards, and issue detailed licensing guidelines. Clear, predictable rules help reduce the risk of ‘regulatory surprise’ claims. Estonia should also consider strengthening transpar- ency in foreign-investment screening. Formal appeals or review procedures under the FIRAA, combined with anonymised summaries of decisions, would improve due-process safeguards and reassure investors that restrictions are proportionate. Treaty drafting and renegotiation will play an impor- tant role. Future BITs or investment chapters in trade agreements are likely to include explicit carve-outs for national security and public policy, while clarifying rules on indirect expropriation, necessity and emer- gency measures. At the EU level, Estonia may par- ticipate in reform efforts, including the development of a permanent Multilateral Investment Court, helping shape rules that are consistent with both constitu- tional and EU law obligations.
Sanctions and frozen-asset legislation will also need clear procedures. Providing notice, the right to be heard, transparent valuation and proportionality analy- sis can help protect against claims of arbitrary expro- priation, even where compensation is limited. As disputes increasingly reach Estonian courts, judi- cial expertise in international arbitration will be criti- cal. Continuous training, reasoned judgments and consistent application of public-policy exceptions will strengthen Estonia’s reputation as an arbitration- friendly jurisdiction. Investors are expected to respond proactively, con- ducting political risk assessments, negotiating arbi- tration clauses with neutral seats, choosing govern- ing law that aligns with treaty protections, and using political-risk insurance from entities such as MIGA or national export credit agencies. These contractual and institutional strategies will shape the practical con- tours of future disputes. Implications for stakeholders For investors Investors entering Estonia’s defence, cybersecurity and technology markets should carefully consider: • Which investment treaties remain in force and whether their home state is part of ICSID • Exposure to FDI screening, export controls and national security measures • Compliance with EU and domestic sanctions, and how restrictions could affect investment and operations • Arbitration rules, choice of seat, and enforcement under EU law Regulatory changes in Estonia can have direct treaty- law consequences, so investors need to plan for a more legally complex environment. For the Estonian state For Estonia, maintaining an attractive investment envi- ronment while protecting national security and com- plying with EU obligations requires: • Stable and predictable legal frameworks
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