The Investment Landscape Has Changed
For much of the past two decades, Asian investors operating in resource-rich markets worked with a reasonable degree of predictability. Bilateral investment treaties provided legal assurances, host states competed for foreign capital, and regulatory frameworks were generally stable enough to price risk into long-term investment models.
That predictability has eroded significantly.
In 2025, newly registered investor-state dispute settlement (ISDS) cases at ICSID exceeded the entire 2024 total before the year had concluded, driven in large part by resource sector conflicts. Mining accounted for nearly 30% of newly registered ISDS claims, a figure that has held or grown for a decade. And crucially, the jurisdictions generating disputes have shifted. The governments now invoking national security, resource sovereignty, and strategic industrial policy include states that were, until recently, considered stable investment destinations.
For Asian investors across mining, energy, infrastructure, and technology sectors, understanding what is driving this surge and how to respond is no longer an optional exercise in risk management. It is a core strategic requirement.
What Resource Nationalism Actually Looks Like in 2026
Resource nationalism is not new, but its current form is qualitatively different from earlier cycles. The immediate post-colonial expropriation waves of the 1960s and 1970s were blunt instruments: direct nationalisations, cancellation of licences, outright seizure of assets. What is emerging now is more sophisticated, and in many ways more difficult to challenge.
Governments are increasingly using layered regulatory intervention rather than outright expropriation. This involves a sequence of policy measures: export restrictions on unprocessed raw materials, mandatory domestic processing requirements, revisions to mining frameworks to expand state participation, forced renegotiation of concession terms, and environmental or social licensing requirements that are selectively enforced. The cumulative effect on an investor’s rights and economic expectations can be as damaging as expropriation, but the legal challenge is considerably more complex because no single measure constitutes an obvious treaty breach.
Indonesia’s nickel sector illustrates this clearly. Jakarta reinstated its ban on raw nickel ore exports and required foreign firms to invest in domestic processing capacity as a condition of continued access. The policy was framed as a development measure, but the practical consequences for investors who had structured their projects around an export model were severe. As of 2025, Chinese firms control approximately 75% of Indonesia’s nickel refining capacity, having moved most quickly to comply. Investors who were slower to adapt found themselves in a commercially untenable position, with treaty claims becoming the only viable path to recovery.
This pattern is repeating across the region. Governments are invoking national security to screen and unwind foreign investments in critical mineral sectors. Eight G20 members adopted new or revised foreign investment screening legislation in 2025, with national security grounds now routinely applied to mining and energy investments that would have cleared regulatory approval a decade ago. The Energy Charter Treaty’s amended ISDS provisions, which took provisional effect in September 2025, narrow the definition of protected investments and limit substantive protections, signalling that the regulatory environment for energy-sector investors is tightening at the multilateral treaty level as well.
The legal issue is indirect expropriation, and the question of whether state conduct crosses the threshold from legitimate regulation into compensable taking is precisely where most of these disputes will be fought.
Indirect Expropriation and Fair and Equitable Treatment
Two treaty standards dominate this litigation cycle: the prohibition on indirect expropriation and the fair and equitable treatment (FET) obligation. Understanding how tribunals are handling them is essential for investors considering whether to bring claims and how to structure those claims.
Indirect expropriation requires an investor to demonstrate that state measures have substantially deprived it of the value of its investment, even where legal title has not been transferred. The difficulty lies in the threshold. Tribunals have consistently held that non-discriminatory regulatory measures adopted in the public interest do not constitute indirect expropriation, even where they cause significant financial harm to an investor. Governments defending ISA claims are now routinely invoking this regulatory carve-out, and the July 2025 advisory opinion of the International Court of Justice on states’ climate change obligations has given them further ammunition. The ICJ opinion endorsed the view that states may have affirmative obligations to take regulatory action on climate grounds, and at least one judge went further to say that investment treaty protections must be interpreted in light of those obligations. Host states defending claims arising from restrictions on high-emitting projects will almost certainly cite this opinion.
The FET standard has historically been a more accessible basis for claims, encompassing failures to meet investors’ legitimate expectations, lack of transparency, arbitrary or discriminatory conduct, and denial of justice. But tribunals have become more cautious about expansive readings. Where a government can demonstrate that it disclosed the possibility of regulatory change, or that changes in the legal framework were announced and applied consistently, FET claims become harder to sustain.
For Asian investors, the implication is straightforward: the strength of a treaty claim depends heavily on what was promised at the time of investment and whether those promises were honoured. Pre-investment documentation, including concession agreements, regulatory approvals, and correspondence with government ministries, is often the most important evidence in the proceedings, and its preservation and proper interpretation requires both legal and financial analysis from the outset.
The Damages Question: Where Financial Expertise Becomes Critical
Even where liability is established, investor-state arbitration disputes are frequently won or lost at the quantum stage. Resource sector claims almost always involve large, contested damages figures, competing expert testimony on valuation methodology, and significant disputes about the appropriate discount rates, commodity price forecasts, and production assumptions embedded in damages models.
The dominant valuation methodology in resource sector claims is discounted cash flow (DCF) analysis, which quantifies the present value of future cash flows an investor would have earned but for the state’s wrongful conduct. In practice, it is a framework within which experts routinely arrive at dramatically divergent figures based on differing assumptions about mine life, commodity prices, capital expenditure, country risk premiums, and regulatory scenarios.
Tribunals are increasingly sceptical of DCF in early-stage or speculative projects, where future cash flows are inherently uncertain, and have shown greater willingness to apply alternatives including net asset value, market comparables, and sunk cost approaches. The choice of methodology and the quality of expert evidence can shift a damages award by hundreds of millions of dollars.
For investors contemplating or managing ISA claims, the practical implication is clear: financial and legal expertise cannot be siloed. A quantum strategy built without deep engagement with the underlying financial model, or a damages expert who has not properly understood the theory of liability, will produce inconsistent and vulnerable expert positions.
What Asian Investors Should Be Doing Now
The most valuable work happens before the dispute arises, not after a government measure has already been implemented.
Audit your treaty coverage. The bilateral investment treaties and multilateral agreements available to any investor depend on its corporate structure, the nationality of the investing entity, and the jurisdiction of the investment. Many Asian investors have not mapped their treaty coverage systematically and are unaware of protections available to them, or the gaps. For investors with group structures spanning multiple jurisdictions, treaty coverage through legitimate corporate structuring may expand available protection, but this must be done before any dispute is on the horizon.
Structure investments with ISDS in mind from day one. The vehicle through which an investment is made, the financing structure, and the documentation supporting the investor’s legitimate expectations at the time of entry all affect the strength of any future treaty claim. Investment agreements, concession documentation, and correspondence with government counterparties should be reviewed with one eye on what they would look like as evidence in arbitration.
Document regulatory commitments contemporaneously. Where governments make representations about regulatory stability, tax treatment, or operating conditions, those representations must be documented. Informal assurances and ministerial meetings carry limited evidentiary weight if unrecorded. A properly maintained contemporaneous record of regulatory engagement is often more valuable than any formal agreement.
Assess your damages exposure early. When a government measure begins to affect an investment, the instinct is often to engage politically before considering legal action. That is not wrong, but it must not delay the financial analysis. Damages accrue from the date of the wrongful act, and treaty claim windows under most BITs run between three and five years. A preliminary quantum assessment, conducted confidentially, gives management a clear view of what is at stake and what a settlement would need to look like to be commercially rational.
A Structural Observation on Asia’s Position
Asia occupies a distinctive position in this shifting landscape. Asian states, particularly in Southeast Asia, are simultaneously host states subject to ISDS claims by Western investors and increasingly significant claimants bringing claims against states where their own outbound investments have been affected.
As at March 2025, 257 ISDS cases were pending resolution globally, of which 25 involved at least one Asia-Pacific party. China and Singapore are among the most prominent nationalities of claimants. India, China, and Vietnam have each featured as respondent states. India’s Union Budget 2025-26 announced a revision to the country’s Model BIT to make it more investor-friendly, reflecting an acknowledgment that the restrictive 2015 framework had deterred inbound FDI. That reform, while welcome, does not provide immediate protection for investors whose assets are already deployed and whose rights are already being affected.
The picture is one of structural transition. The legal frameworks governing cross-border investment in Asia are in flux, geopolitical considerations are openly influencing regulatory decisions, and the volume of disputes will continue to rise as the critical mineral supply chain becomes more contested.
Closing Thoughts
Investor-state arbitration is an expensive, slow, and uncertain process. The best outcome is almost always to prevent the dispute from crystallising through careful pre-investment structuring, proactive regulatory engagement, and rigorous contemporaneous documentation. Where a claim becomes unavoidable, the quality of preparation across legal, financial, and evidentiary dimensions is what separates commercially successful recoveries from procedurally sound losses.
Asian investors operating in the resource and energy sectors are navigating an environment where the line between permissible regulation and compensable state conduct is increasingly blurred, and where governments are invoking national security, climate obligations, and strategic industrial policy to justify measures that would, in an earlier era, have been straightforwardly characterised as expropriation. Understanding where those legal lines fall, and building the evidence to enforce them, requires a level of integration between legal analysis, financial modelling, and treaty expertise that demands early and sustained engagement.
The 2025-26 surge in ISA claims is not an aberration. It is the predictable consequence of a decade of policy shifts converging with record demand for critical minerals and intensifying geopolitical competition. Investors who treat it as such, and plan accordingly, will be considerably better positioned than those who do not.
