Climate-Related Investment Arbitration: Tribunal's Approaches to Rollback of Renewable Energy Incentives

Kun Fan, UNSW Law and Justice

Abstract

(Addendum 18/11/2025) This article analyzes how arbitral tribunals have interpreted fair and equitable treatment (FET) standard to disputes arising from the rollback of renewable-energy incentives. Based on a comprehensive case analysis, it maps three approaches the tribunals have taken on whether general legislation can ground legitimate expectations of regulatory stability: a restrained line that considers general legislation does not create specific commitments capable of generating legitimate expectations; a middle-ground that allows changes within an "acceptable margin"; and a more expansive view that reads investment-inducing frameworks plus consistent assurances as commitment-forming. The article also traces two approaches to investor due diligence within the reasonableness inquiry: a stricter view that treats diligence as a prerequisite to any expectations claim, and a broader view that treats diligence as a relevant consideration but not dispositive. Across these strands, tribunals increasingly take a more balanced approach, weighing foreseeability, proportionality, and the investor's conduct, though with varying intensity. The analysis concludes with practical implications for investors and states based on recent jurisprudence.

Climate-Related Investment Arbitration: Tribunal's Approaches to Rollback of Renewable Energy Incentives is part of the TDM 3 (2025) - International Investment Arbitration - Environmental Protection and Climate Change Issues (Volume 4) and is available here www.transnational-dispute-management.com/article.asp?key=3127 (sign in to download).