THE AUTHORS:
Mirbek Sydygaliev, Consultant at Albertson Solicitors
Daniel Greineder, Senior Counsel and Head of International Arbitration at Albertson Solicitors
At a time of escalating geopolitical tensions and conflicts, the spectre of potential State succession looms over the international landscape. This blog post highlights the increasingly critical implications of State succession for international arbitration practitioners engaged in both commercial and investment disputes, particularly given the growing number of arbitral awards addressing the issue of State succession. Given the vulnerabilities of States and the increasing possibility of succession in various parts of the world, this analysis emphasizes the imperative for practitioners to proactively consider State succession as a significant factor in their global risk assessments. The post introduces the State Succession Index as a valuable tool for providing timely analysis and predictive insights into State succession.
The recent righteous outcry at the suggestion from the White House that Canada, a prosperous, democratic Western nation with strong ties to the rest of the world, might lose its independence, throws into relief the fragility and transience of States. They come and go. Since 1945 more than 100 new States have been established, many as a result of decolonization and the collapse of the USSR (Malcolm N. Shaw, International Law (8th ed.), Cambridge University Press, 2017, P. 725). There is good reason to expect the trend to continue with the future of countries, including Scotland and Catalonia, less than certain.
Obviously, some States are rather more stable than others, but arbitration prides itself on its global reach and its success in resolving disputes in the most troubled parts of the world. Practitioners, whether specializing in commercial or investment arbitration, may wish to include the likelihood of State succession in their regional risk assessments.
Certainly, the problem is not new. There are at least 50 publicly available decisions in Investor-State arbitrations considering the impact of State succession and changes in government, mainly in the context of secession and State succession. Nor have they always reached consistent conclusions. For example, in WWM v. Kazakhstan (II), Decision on Jurisdiction, 19 October 2015, the tribunal determined that Kazakhstan, as the legal successor of the USSR, was bound by the Canada–USSR BIT (1989) and thus found jurisdiction. However, in Gold Pool v. Kazakhstan, Award, 30 July 2020, the tribunal reached the opposite conclusion, declining jurisdiction because the Canada–USSR BIT (1989) did not apply to Kazakhstan. The reasoning behind both awards remains unknown, as they are still confidential.
Moreover, questions of State succession will have impinged on many commercial arbitration cases, which are not usually published. Major political and legal change has a ripple effect, affecting non-state parties in a purely commercial relationship. For example, a change in government may trigger a change in economic policy, in turn making a joint venture between two commercial entities less profitable. This may exacerbate their disagreements and drive them to bring contractual claims against each other.
The State Succession Index (“SSI”) was set up as a free web resource in 2023 by Mirbek Sydygaliev, a Kyrgyz public international lawyer, to complement existing resources, such as Fragile State Index, Global Peace Index, Rule of Law Index, Global Conflict Risk Index, and ACLED Conflict Index. The SSI takes its lead from Tai Heng-Cheng in offering practical and empirically founded, interdisciplinary analysis as opposed to mere legal theory:
“Rather than try to direct international decision makers with technical legal rules that do not exist, lawyers could provide guidance by identifying when the problem of State succession and commercial obligations is likely to present itself based on past trends and conditioning factors determining how actors are likely to behave, and by proposing processes and arrangements that would restore international order and protect the interests of actors and the world community”(Tai-Heng Cheng, Why New States Accept Old Obligations, University of Illinois Law Review, Vol. 2011, P.5).
The SSI adopts a broader definition of State succession than the Vienna Convention on Succession of States in Respect of Treaties (1978), which, in Article 1(b), defines it as “the replacement of one State by another in the responsibility for the international relations of territory.” The SSI additionally includes essential modifications to a State’s structures of power and authority, such as may occur after a coup d’état.
This is also in line with Cheng’s broader definition of State succession in the context of State succession and commercial obligations. That extends to State and government succession with “fundamental changes in the power and authority structures of a State” (Tai-Heng Cheng, State Succession and Commercial Obligations, Transnational Publisher, Inc. 2006. P.3). In addition, the SSI emphasizes the importance of assessing ongoing legal, political and diplomatic developments through a structured systemic framework. This approach helps better to understand the dynamics that lead to succession, not only in relation to commercial obligations but also to the broader concept of State succession.
The Enduring Relevance of State Succession in Arbitration
State succession, especially when understood broadly, may affect many arbitrable disputes. Indeed, it may become the subject of arbitration itself. Following the dissolution of the USSR, the European Community and its Member States established a common position on the recognition of newly independent States. In their Declaration on the Guidelines on the Recognition of New States in Eastern Europe and the Soviet Union of 16 December 1991, the EC foreign ministers emphasized inter alia the commitment to settle all questions concerning State succession and regional disputes by agreement, including where appropriate by recourse to arbitration.
Arbitration and State succession may intersect in further areas:
- Succession to Bilateral and Multilateral Treaties: Questions arise whether a successor State remains bound by or benefits from Bilateral Investment Treaties (“BITs”), arbitration clauses in commercial contracts, and multilateral agreements.
- Continuity of Contracts and State-Owned Enterprises (“SOEs”): Contracts involving State guarantees, concessions, or SOEs may be disputed, with successor authorities challenging prior obligations or seeking renegotiation.
- Investor-State Disputes: Investors operating in territories undergoing succession invoke investment treaties in arbitration claims, raising questions about treaty continuity, host State obligations, and jurisdictional legitimacy.
- State Debt and Financial Obligations: Disputes over apportionment of public debt and financial guarantees following succession may end up in arbitration.
- Human Rights and Property Claims: Succession scenarios may trigger arbitration claims for expropriation or human rights violations, though typically these are complex and politically sensitive cases.
Despite the significance of these issues, arbitration practitioners have long lacked the means to anticipate where succession processes might arise and how they could affect disputes. The SSI meets this need.
The State Succession Index: A Strategic Resource for Arbitration
The SSI assesses the dynamics of State succession processes worldwide, aiming to indicate their likely legal and commercial implications. Updated annually, the SSI highlights territories at risk of or already undergoing succession and presents indicators measuring political, and legal factors driving these developments. It collates information from news agencies, leading newspapers and publications of governments, NGOs and international organizations.
For arbitration practitioners, the SSI provides several valuable functions:
Early Warning for Dispute Risks. The SSI’s annual reports, including the 2024 State Succession Index and 2025 Watchlist, identify geopolitical flashpoints likely to generate succession-related disputes. Arbitration counsel advising clients with investments in these regions can proactively assess risks, review treaty coverage, and consider jurisdictional challenges. This capacity has been further enhanced by the recent addition of Situation Reports: dynamic, real-time updates on legal, political, and diplomatic developments potentially triggering or accelerating State succession. These reports track independence referenda, recognition and derecognition debates, constitutional amendments, military interventions and annexation of territories, and other events relevant to arbitration practitioners managing cross-border risks.
Treaty Succession Analysis. One of the most challenging succession issues involves whether BITs and arbitration agreements remain binding on successor States (As of 16 April 2025, 2845 BITs and 485 treaties with investment provisions have been concluded). The SSI’s contextual analysis — supported by Situation Reports covering new government declarations, treaty termination (denunciations), or provisional agreements — provide information about whether automatic succession, clean slate, or negotiated continuity apply in a given case. This is invaluable for arbitrators and counsel addressing preliminary objections on jurisdiction or treaty continuity.
Guidance on Applicable Law and Legitimate Authority. Arbitration cases involving succession often raise questions of the applicable law and identity of the legitimate State authority. The SSI’s country and territory profiles — enriched by Situation Reports documenting changes in governance, recognition, and diplomatic status — offer a reliable, continually updated source for determining applicable law and representation rights.
Predictive Insights for Case Management and Enforcement. State succession processes frequently result in delays, jurisdictional objections, or enforcement challenges in arbitration. The SSI’s predictive indicators about political stability, international recognition, and diplomatic alignment allow arbitrators to adjust procedural strategies, anticipate enforcement risks, and manage post-award issues. Situation Reports add further value by flagging critical legal or political developments, enabling practitioners to adjust case timelines, settlement strategies, or enforcement planning in response to rapidly changing circumstances.
The Broader Role of Arbitration in Managing State Succession
Finally, arbitration practitioners should not take a purely reactive stance to political upheaval. International arbitration can play a crucial role in managing the legal and financial fallout of State succession. At its best, it offers a neutral forum at one remove from politics and boasts tried and tested procedural practices for the taking of evidence and evaluation of legal argument. It could help to resolve contested treaty obligations, State debts, and investor protections, areas sometimes too sensitive or deadlocked for political or diplomatic settlement.
The arbitration community has the opportunity to develop jurisprudence on treaty succession and investor protections, to craft procedural innovations for cases involving contested authorities or State identity, and to contribute to legal predictability and commercial stability through reasoned awards and procedural guidelines.
ABOUT THE AUTHORS
Mirbek Sydygaliev is the founder and director of the State Succession Index project and serves as an international law consultant at Albertson Solicitors. He has lectured in international law and has worked in the International Legal Department of the Ministry of Foreign Affairs of the Kyrgyz Republic. Mirbek has actively promoted dialogue on international law issues in Kyrgyzstan. Notably, he initiated and managed an international law discussion platform, established by the Kyrgyz Ministry of Foreign Affairs. He holds a law degree from Kyrgyz National University, studied law as a Fulbright Scholar at the University of Washington, and later pursued diplomatic studies at the University of Oxford.
Daniel Greineder is a Senior Counsel and Head of International Arbitration at Albertson Solicitors. An English-qualified barrister with over 15 years of experience, he has acted in over 40 arbitrations, where the amount in dispute has on occasion exceeded USD 1 billion. He has practised at leading international firms and chambers in London, Geneva and Doha and is fully fluent in English and German. He trained as an English barrister and has particular experience of disputes arising in the energy and construction sector as well as of joint venture and corporate disputes. He was educated at Oxford University and City University, London, and has a special interest in law and language.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
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