THE AUTHORS:<\/strong> On 25 March 2026, Foley Hoag hosted a panel entitled \u201cPower and International Law: What Role for International Arbitration?” Moderated by Ms\u00a0Diana Paraguacuto-Mah\u00e9o<\/strong><\/a>\u00a0(Partner and Global Co-Chair of International Arbitration at\u00a0Foley Hoag<\/a>), the discussion featured Ms\u00a0Christina Hioureas<\/strong><\/a>\u00a0(Partner and Global Co-Chair of International Arbitration at\u00a0Foley Hoag<\/a>), Ms\u00a0Tafadzwa Pasipanodya<\/strong><\/a>\u00a0(Partner in International Arbitration and Head of the Africa Practice at\u00a0Foley Hoag<\/a>), and Mr\u00a0Kenneth Figueroa<\/a>\u00a0(Partner at\u00a0Foley Hoag<\/a>, Washington, D.C.), alongside guest speaker Mr\u00a0Kishore Jaichandani<\/strong>\u00a0(Founder and Managing Director of\u00a0Caveat Capital<\/strong>).<\/p>\n\n\n\n Ms Paraguacuto-Mah\u00e9o opened by situating international law between two poles: the enduring sovereignty of States and their capacity to assert power, and the attempt of international law to constrain and discipline State behaviour. She noted that international arbitration “came of age in a post-war international order characterised by global cooperation and accepted rules,” and that “the end, or at least weakening, of that order will be a significant driver of disputes.” She referred to recent trends evidencing stress on the international legal order, including armed conflicts, tariffs, disputes over natural resources, and the rise of resource nationalism. States are increasingly withdrawing from or bypassing multilateral dispute mechanisms, reflected inter alia by the \u201cparalysis\u201d of international dispute settlement, most notably the WTO Appellate Body.<\/p>\n\n\n\n Against this background, she suggested that certain mechanisms continue to function effectively, with international arbitration remaining relatively successful in constraining power. She pointed to the development of substantial jurisprudence holding States accountable, including powerful State actors, and noted that the International Centre for Settlement of Investment Disputes<\/a> (\u201cICSID<\/strong>\u201d) registered 67 new cases in 2025, the second-highest in its history, while participation by investors from the Asia-Pacific region is growing. She also referred to the unanimous and landmark advisory opinion delivered by the International Court of Justice <\/a>(\u201cICJ<\/strong>\u201d) in July 2025 on climate change obligations, which affirmed that States have binding duties under multiple bodies of international law to prevent climate harm, and that failure to do so can trigger international legal responsibility. That opinion has already begun to reshape the terrain for investment arbitration, as States invoke environmental obligations to justify regulatory measures affecting foreign investors, and investors in turn question whether host States have done enough to support the energy transition.<\/p>\n\n\n\n Framing the intersection between State power and IA, Ms Paraguacuto-Mah\u00e9o noted that International Arbitration modulates and is itself modulated by State power. Against this background, Ms Paraguacuto-Mah\u00e9o invited the panellists to consider whether international law is effectively constraining State power or is instead increasingly shaped by it.<\/p>\n\n\n\n Ms Pasipanodya responded that both dynamics are at play. She referred to Philippines v China<\/em> <\/a>(PCA, 2016), where the Philippines, as a less economically powerful State, obtained an award recognising China\u2019s wrongful conduct in the South China Sea despite China\u2019s non-participation in the proceedings. Although China has refused to comply, the recognition of the illegality of the “nine-dash line” has served as a lasting diplomatic lever for less powerful States. Ms Pasipanodya emphasised that Investor-State Dispute Settlement (\u201cISDS<\/strong>\u201d) demonstrates that States willingly submit themselves to dispute resolution mechanisms and accept constraints on their power. At the same time, such mechanisms provide a framework within which States must justify their conduct. Investment arbitration thus reflects a balance: it constrains but also structures the exercise of State power.<\/p>\n\n\n\n Referring to Martti Koskenniemi and his work From Apology to Utopia, Ms Pasipanodya recalled that international law oscillates between apology and utopia, it either collapses into an apology for State behaviour, merely describing what the powerful do, or ascends into a utopia too detached from State practice to be taken seriously. International law functions precisely because it allows States a certain degree of latitude while embedding them within a normative framework that compels them to justify their actions against shared legal standards.<\/p>\n\n\n\n Ms Hioureas agreed, emphasising that for vulnerable States lacking military power, international law is often the only tool of defence available. An adverse award or judgment may act as a deterrent, for instance by rendering investment projects too risky. She further noted that advisory opinion proceedings, although non-binding, carry significant legal and political weight. Ms Hioureas referred to the Chagos Advisory Opinion (Legal Consequences of the Separation of the Chagos Archipelago from Mauritius in 1965, ICJ Reports 2019, p. 95), in which the Court found that the decolonisation of Mauritius had not been conducted in accordance with international law and that the United Kingdom was required to end its administration of the Chagos Archipelago. Mauritius subsequently deployed a multidimensional strategy, recourse to the Universal Postal Union, correction of the designation on Google Maps, and diplomatic campaigns against British candidacies for United Nations positions. This sustained pressure led, after fifty-five years of occupation, to the signing in May 2025 of a treaty of restitution, demonstrating the capacity of international law to transform a legal victory into political reality.<\/p>\n\n\n\n Mr Figueroa built on this by emphasising the role of enforcement and political pressure. He highlighted the importance of the New York Convention and the Washington Convention, and of the awarding of damages as mechanisms that legitimately limit State power. He referred to Philip Morris v Uruguay<\/a><\/em> (ICSID, 2016) and Philip Morris Asia v Australia<\/a><\/em> (PCA, 2015), which confirmed that States retain regulatory space while still being subject to scrutiny. At the same time, Mr Figueroa cautioned that investors may use arbitration strategically to gain leverage in negotiations. In response, States are increasingly driving reform through UNCITRAL Working Group III, including proposals for a multilateral investment court. He added that State power is not inherently problematic but must be exercised within legal limits.<\/p>\n\n\n\n Ms Paraguacuto-Mah\u00e9o then turned to the doctrinal \u201ctoolbox\u201d available to constrain State power, including advisory opinions, the doctrine of necessity, security exceptions, and countermeasures.<\/p>\n\n\n\n Ms Hioureas began by referring to environmental obligations and recent developments before international tribunals. She cited the International Tribunal for the Law of the Sea <\/a>(\u201cITLOS<\/strong>\u201d) advisory opinion on climate change (2024), which addressed obligations relating to marine pollution and climate change. Before ITLOS, States such as Sierra Leone and Mozambique argued that climate obligations should not be sacrificed in favour of investment treaties. These developments highlight tensions between investment protection and environmental regulation, particularly regarding fossil fuels.<\/p>\n\n\n\n She noted that States retain a margin of appreciation to regulate in the public interest, and that such powers have been recognised by tribunals. She also referred to obligations arising under investment treaties, customary international law, and instruments such as the Paris Agreement and the Kyoto Protocol, raising the question of whether such norms operate as lex specialis or as part of customary law. Ms Hioureas noted that the ICJ has rejected the idea that climate agreements constitute lex specialis, affirming instead that they must be interpreted consistently with customary international law, human rights law, and investment law. She suggested that the ICJ increasingly recognises certain environmental obligations as customary. She further emphasised the increasing relevance of due diligence and human rights obligations in regulating private actors, requiring treaties to be interpreted in light of these evolving standards.<\/p>\n\n\n\n Moreover, environmental concerns are increasingly intersecting with armed conflict. According to Ms Hioureas, Palestine’s position before the ICJ extends environmental due diligence obligations to situations of armed conflict. Under this reasoning, the principle of proportionality in international humanitarian law prohibits targeting the environment as a military objective, opening the door to new forms of State responsibility for ecological damage caused during military operations.<\/p>\n\n\n\n Ms Pasipanodya addressed the doctrine of necessity, noting that, as reflected in Gab\u010d\u00edkovo\u2013Nagymaros Project (Hungary\/Slovakia), Judgment, ICJ Reports 1997, it is subject to a particularly high threshold and is rarely successful. She also referred to the Advisory Opinion on Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, ICJ Reports 2004, which confirms the strict conditions governing its application. She highlighted that Article 25 of the ILC Articles on State Responsibility requires necessity to be the only means of safeguarding an essential interest. Turning to the Argentine crisis cases, including LG & E v Argentina<\/a><\/em>, she explained that Argentina generally failed to meet the customary international law standard. However, treaty-based necessity clauses may operate differently, and under certain formulations Argentina succeeded. This illustrates the coexistence of distinct legal standards leading to different outcomes, and raises the question of whether specific treaty language, in particular self-judging versus objective necessity clauses, makes a determinative difference for States seeking to invoke Article 25.<\/p>\n\n\n\n Turning to procedural measures, Ms Paraguacuto-Mah\u00e9o asked how effective such tools are in practice. Mr Figueroa noted that interim measures are often requested by investors and serve to preserve the status quo. While effective if properly implemented, they may also be abused, requiring a careful balance of interests. He referred to tax-related disputes where repeated requests for interim measures led to significant delays and increased costs for the State, even though ultimately refused. He also mentioned a toll road concession case involving allegations of corruption, where interim measures were granted despite ongoing criminal proceedings, raising questions about the definition of the status quo. Mr Figueroa observed that corruption is difficult to address in arbitration unless clearly established, and may be better dealt with by criminal courts. He further emphasised the importance of handling security-sensitive evidence carefully, ensuring compliance with domestic law, requiring clear guidelines and transparency protocols.<\/p>\n\n\n\n He then referred to sanctions regimes, particularly involving Russia (Lugovoy Act), where domestic measures have interfered with arbitral proceedings and enforcement. This creates tensions between procedural fairness and compliance, with arbitrators playing a key role in safeguarding due process.<\/p>\n\n\n\n Sovereign immunity and licensing regimes may render even a favourable award unenforceable. The Crystallex v Venezuela<\/em> <\/a>case illustrates how enforcement remains subject to political choices and administrative authorisations. In this regard, the Singapore International Commercial Court dismissed Russia’s sovereign immunity defence in the Yukos enforcement proceedings in 2025, relying on transnational issue estoppel, a significant development. Meanwhile, courts in the European Union are being told by Brussels that certain investment awards, such as the Spanish renewables cases, constitute unlawful State aid and must not be enforced. These developments raise the question of whether the effectiveness of international arbitration now depends less on what happens in the hearing room and more on the geopolitical alignment of the enforcement jurisdiction.<\/p>\n\n\n\n From the funder’s perspective, Mr Jaichandani addressed enforceability and access to justice. He referred to funding and \u201cfinancial paralysis\u201d, questioning whether parties operate on an equal footing. Third-party funding enables access to justice but also affects power dynamics, particularly where funding arrangements are not disclosed. He noted that the effectiveness of international law in general depends on geopolitical context, jurisdiction, and political alignment. This discussion also raised the question of whether tribunals should allow recovery of funding costs, including success fees, to restore procedural symmetry, or whether that would cross an unacceptable line.<\/p>\n\n\n\n Ms Hioureas picked up on this, saying that States are not always in a position of power, questioning whether the invocation of Article 64 ICJ Statute, which obliges parties to bear their own costs, is fair.<\/p>\n\n\n\n In conclusion, the panel turned to avenues for reform. Ms Pasipanodya advocated for the systematic admissibility of State counterclaims, to correct a system perceived as one-sided, while opposing the requirement that States bear the costs associated with third-party funding, as notably raised in the case of Nachingwea and others v. United Republic of Tanzania. Ms Hioureas expressed optimism regarding a progressive normative convergence and the possible establishment of a multilateral investment court. Mr Figueroa emphasised the importance of greater transparency in funding. The panellists further addressed the structural critique that, for many States in the Global South, the system itself is a vehicle of power, and questioned whether the UNCITRAL Working Group III reforms, including proposals for an advisory centre for developing States, are ambitious enough to address this deeper asymmetry.<\/p>\n\n\n\n Overall, the discussion confirmed that international arbitration neither fully constrains nor merely reflects State power. Rather, it modulates power through doctrinal tools, procedural mechanisms, and enforcement frameworks. Its effectiveness depends on context, implementation, and political conditions, but it remains a central component of the contemporary international legal order.<\/p>\n\n\n\n This article was originally published in PBA Bulletin on 17 April 2026, as part of a special edition curated by Paris Baby Arbitration (PBA)<\/a>, in collaboration with Jus Mundi <\/a>and Jus Connect<\/a>.<\/p>\n\n\n\n
Anthonia Fanokoa<\/strong>,\u00a0Master\u2019s Candidate in Common Law and Transnational Law at the University of Sherbrooke
Josepha Nehring,\u00a0<\/strong>Master’s International and Comparative Law Candidate at the University of Zurich<\/strong> <\/p>\n\n\n\n
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As part of Paris Arbitration Week 2026, Paris Baby Arbitration (PBA)<\/a><\/strong>, in collaboration with Daily Jus<\/a><\/strong> and Jus Mundi<\/a><\/strong>, brings together contributions in a special edition of PBA Bulletin<\/a>,<\/strong> sharing reflections and perspectives from across this year\u2019s events.<\/em><\/h4>\n<\/blockquote>\n\n\n\n
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