Introduction

Energy and mining projects are unusually exposed to political and regulatory risk.

A foreign investor developing a gold mine, copper project, solar power plant, oil field, natural gas infrastructure or electricity-generation facility may invest hundreds of millions of dollars years before the project generates meaningful revenue. Once the capital has been committed, however, the investment often becomes geographically and economically tied to the host State.

A mine cannot simply be moved to another jurisdiction because tax rates have increased. A hydroelectric plant cannot be relocated because an operating licence has been cancelled. An offshore petroleum concession cannot be transferred to another country when the host government changes the fiscal regime.

This characteristic creates what is often described as the “obsolescing bargain” problem: before investment, the State may compete aggressively for foreign capital; after billions have been committed to immovable assets, the balance of bargaining power may change.

Political risk therefore occupies a central position in energy and mining investment strategy.

Such risk may arise through outright nationalisation, but modern investment disputes are often considerably more subtle. Foreign investors may encounter licence non-renewal, discriminatory taxation, cancellation of concessions, changes to renewable-energy incentives, new royalty regimes, export restrictions, compulsory domestic processing requirements, environmental restrictions, foreign-exchange controls or administrative decisions that substantially reduce the economic value of an investment.

International investment law does not guarantee investors that legislation will never change.

Nor does it generally insure investors against ordinary commercial failure.

Instead, bilateral investment treaties (“BITs”), multilateral investment treaties and investment chapters in free trade agreements may establish international-law standards governing how States must treat qualifying foreign investors and investments.

Where those standards are breached, certain treaties permit the investor to bring claims directly against the host State through international arbitration.

For energy and mining investors, understanding these protections before the investment is structured can therefore be as important as negotiating the concession, licence or project contract itself.

1. What Is Political Risk in an Energy or Mining Investment?

Political risk is broader than political instability.

A project does not need to be located in a country experiencing revolution, war or civil disorder before political risk becomes legally relevant.

From an investment-law perspective, political risk may include governmental conduct affecting the legal or economic framework of an investment.

Examples include cancellation or non-renewal of mining licences, revocation of electricity-generation permits, compulsory restructuring of concessions, discriminatory taxes, unexpected royalty increases, restrictions on repatriating profits, State interference with contractual rights, politically motivated enforcement actions, seizure of assets, compulsory transfer of ownership or fundamental changes to an incentive regime.

The key distinction is between commercial risk and State risk.

If the price of copper collapses because of global market conditions, that will ordinarily be a commercial risk.

If the government prohibits the investor from exporting copper while allowing comparable domestic producers to continue exporting, the issue may potentially engage investment treaty protections.

Similarly, a solar investor cannot normally claim treaty protection merely because electricity prices fall. But where a government fundamentally restructures a State-created regulatory framework after investment has been made, questions concerning fair and equitable treatment, discrimination or other treaty obligations may arise depending on the wording of the applicable treaty and the circumstances of the investment.

2. Why Energy and Mining Projects Are Particularly Vulnerable

Energy and mining investments combine several characteristics that make political risk unusually important.

First, they require enormous sunk costs.

Second, the underlying assets are generally immovable.

Third, their profitability frequently depends on public-law rights such as licences, concessions and operating permits.

Fourth, projects may operate for twenty, thirty or even fifty years.

Finally, natural resources and energy infrastructure frequently have strategic political significance.

A mining project may involve national debates concerning ownership of natural resources, environmental protection, Indigenous rights, water usage and distribution of mineral wealth.

Energy investments may involve energy security, electricity prices, subsidies, decarbonisation policies and strategic infrastructure.

Consequently, foreign investors are exposed not only to ordinary regulatory administration but also to changing political priorities.

3. Bilateral Investment Treaties

A bilateral investment treaty is an international agreement between two States concerning the treatment and protection of investments made by investors of one State in the territory of the other.

UNCTAD currently records thousands of BITs and hundreds of other treaties containing investment provisions worldwide, although the precise protections differ significantly between instruments.

A traditional BIT commonly contains protections relating to:

fair and equitable treatment, protection against expropriation, full protection and security, national treatment, most-favoured-nation treatment, free transfer of investment-related funds and access to investor-State dispute settlement.

However, there is no universal BIT.

The precise treaty must always be examined.

A protection contained in one country’s treaty with Germany may differ significantly from the protection available under its treaty with the United Kingdom, Netherlands, Canada or another State.

Accordingly, an investor’s nationality can have substantial legal consequences.

4. The Investor and Investment Must Be Protected by the Treaty

Before considering whether a government has breached a treaty, two jurisdictional questions usually arise:

Is the claimant a protected investor?

and

Is the relevant asset a protected investment?

Treaties commonly define investors by reference to nationality or incorporation.

For companies, the applicable test may depend on:

• place of incorporation;
• registered office;
• substantial business activities;
• ownership;
• control;
• or combinations of these factors.

Investment definitions are frequently broad and may encompass shares, concessions, contractual rights, licences, claims to money, intellectual property, land and other assets.

For energy and mining projects, a protected investment may therefore include interests in:

• a local mining company;
• mining licences;
• petroleum concessions;
• electricity-generation rights;
• power plants;
• pipelines;
• project contracts;
• shareholder loans;
• equipment;
• or project revenues.

Nevertheless, modern treaties increasingly impose additional requirements intended to prevent artificial treaty claims.

5. Fair and Equitable Treatment

The Fair and Equitable Treatment (“FET”) standard is one of the most important and frequently litigated protections in investment arbitration.

Depending on the treaty wording and applicable jurisprudence, FET may potentially address matters such as arbitrary conduct, serious procedural unfairness, discriminatory treatment, lack of transparency, denial of due process and frustration of legally relevant legitimate expectations.

For energy and mining investors, legitimate expectations are particularly important.

A project may be financed on the basis of specific governmental representations concerning:

• licence duration;
• tariffs;
• tax treatment;
• concession rights;
• environmental approvals;
• investment incentives;
• or regulatory treatment.

If the State later fundamentally contradicts specific assurances on which the investor reasonably relied, an FET claim may potentially arise.

However, this principle must be approached carefully.

Investment treaties do not normally freeze legislation

Foreign investors cannot generally assume that the regulatory framework will remain unchanged for decades.

Governments retain the power to legislate in areas including:

• taxation;
• environmental protection;
• labour;
• public health;
• climate policy;
• energy security;
• competition;
• and natural-resource management.

The stronger legitimate-expectations cases therefore commonly involve specific commitments, representations or regulatory circumstances going beyond a general expectation that the law will never change.

This balance has become increasingly prominent in modern treaty drafting. UNCTAD reports that new-generation investment treaties increasingly refine investor-protection standards while expressly preserving the State’s regulatory space and right to regulate in the public interest.

6. Regulatory Change and the Difference Between Loss and Treaty Breach

One of the most important concepts in international investment law is that:

a financially harmful regulatory change is not automatically an international-law violation.

Suppose a government increases environmental standards applicable to coal-fired power plants.

The resulting compliance expenditure may be considerable.

Nevertheless, a bona fide, non-discriminatory environmental regulation adopted through proper procedures may fall within the legitimate regulatory authority of the State.

The legal analysis may differ where a measure:

• targets a particular foreign investor;
• is manifestly arbitrary;
• contradicts specific commitments;
• is discriminatory;
• destroys the investment without legitimate justification;
• or is implemented through serious procedural irregularity.

Modern investment arbitration therefore requires balancing two legitimate interests:

the protection of foreign investment and the sovereign right of States to regulate.

7. Expropriation

Protection against unlawful expropriation is another fundamental feature of investment treaties.

The clearest case is direct expropriation.

For example, the State may nationalise an oil field or formally transfer ownership of a mine from the foreign investor to a State-owned company.

However, modern investment disputes frequently involve indirect expropriation.

In such cases, legal ownership may technically remain with the investor, but governmental measures may deprive the investment of its practical or economic value.

Potential examples could involve permanent cancellation of a core concession, measures preventing all economically meaningful use of an asset, or a combination of governmental acts effectively neutralising an investment.

Treaties generally distinguish between unlawful expropriation and lawful expropriation.

A lawful expropriation commonly requires elements such as:

• public purpose;
• non-discrimination;
• due process;
• and compensation.

The precise formulation depends on the treaty.

8. Mining Licences and Expropriation Risk

Mining provides a particularly clear illustration.

The investor may spend years conducting geological exploration, feasibility studies, environmental assessments and project construction.

If the State subsequently cancels the mining concession, the investor may lose access to the mineral deposit that justified the entire investment.

Several major investment disputes have therefore arisen from government action concerning mineral concessions.

In Bear Creek Mining v. Peru, the dispute concerned governmental revocation of rights relating to the Santa Ana silver mining project. The tribunal ultimately found indirect expropriation and awarded compensation, although substantially less than the amount claimed by the investor.

In Copper Mesa v. Ecuador, claims concerned the termination of mining concessions. The tribunal found treaty breaches including expropriation and fair and equitable treatment violations and awarded compensation to the investor.

These cases demonstrate why mining licences should be treated not merely as regulatory permissions but as potentially critical investment assets.

9. National Treatment

National treatment provisions generally require the host State to treat qualifying foreign investors no less favourably than comparable domestic investors in like circumstances.

For example, legal concerns may arise if:

• foreign-owned mines face significantly higher royalties;
• foreign power producers are excluded from advantages available to domestic companies;
• only foreign investors are subjected to specific restrictions;
• or administrative authorities systematically apply licensing standards more favourably to domestic competitors.

The comparison is highly fact-sensitive.

Different treatment is not automatically discriminatory because investors must normally be sufficiently comparable in the relevant legal and economic circumstances.

10. Most-Favoured-Nation Treatment

Most-Favoured-Nation (“MFN”) treatment is intended to prevent the host State from treating investors of one treaty partner less favourably than investors from certain third States.

Historically, investors have sometimes attempted to use MFN clauses to import more favourable substantive protections—or in certain cases procedural advantages—from other treaties concluded by the host State.

Tribunal approaches to this issue have varied considerably.

Modern treaties increasingly address the scope of MFN clauses more expressly.

Accordingly, investors should not assume that an MFN provision automatically permits borrowing protections from any other BIT.

Treaty wording remains decisive.

11. Full Protection and Security

Full Protection and Security (“FPS”) clauses traditionally concerned the physical protection of investments.

This may become relevant where the host State fails to exercise appropriate diligence to protect a mine, pipeline, power plant or project personnel from violence or serious interference.

Depending on treaty language and jurisprudence, some tribunals have considered whether FPS extends beyond physical security.

Energy and mining investments can be particularly exposed because remote project locations may face:

• civil unrest;
• sabotage;
• demonstrations;
• illegal occupation;
• armed groups;
• or attacks against infrastructure.

However, FPS is generally not equivalent to strict State liability for every private act causing damage.

The analysis commonly concerns the level of protection and diligence reasonably expected from the State in the circumstances.

12. Arbitrary and Discriminatory Measures

Many investment treaties separately prohibit arbitrary, unreasonable or discriminatory measures affecting the management, maintenance, use, enjoyment or disposal of investments.

This may be important where governmental conduct does not amount to expropriation but materially interferes with a project.

Examples could include selective licensing enforcement, unexplained regulatory obstruction, politically motivated cancellation of administrative approvals or unequal application of regulatory requirements.

Again, international investment law does not convert every administrative disagreement into a treaty claim.

The seriousness and nature of governmental conduct remain essential.

13. Free Transfer of Funds

The ability to repatriate capital is a major consideration for international investors.

BITs frequently protect the transfer abroad of items such as:

• profits;
• dividends;
• sale proceeds;
• interest;
• loan repayments;
• compensation;
• and liquidation proceeds.

This protection can become crucial where a State experiences foreign-exchange shortages or imposes capital controls.

An energy project may generate substantial revenue yet remain commercially impaired if the foreign investor cannot transfer dividends or service foreign-currency debt.

Treaties sometimes contain exceptions relating to bankruptcy, criminal enforcement, financial stability or other public-interest measures.

The treaty wording must therefore again be examined carefully.

14. Umbrella Clauses

Certain older BITs contain so-called umbrella clauses under which the State undertakes to observe obligations it has entered into concerning investments.

These provisions can become important where the host State is also a contractual counterparty.

For example, an energy investor may have:

• a concession agreement;
• power purchase agreement;
• production-sharing agreement;
• host-government agreement;
• or investment agreement.

A breach of contract does not automatically constitute a treaty breach.

Where an applicable treaty contains an umbrella clause, however, the relationship between contractual obligations and international treaty obligations may become more significant.

Tribunal interpretations of umbrella clauses have differed, making detailed treaty analysis essential.

15. Stabilisation Clauses and Investment Treaties Are Not the Same

International project contracts frequently contain stabilisation provisions.

These may provide mechanisms addressing subsequent legislative change, particularly in sectors such as petroleum, natural gas, power generation and mining.

Such provisions should be distinguished from treaty protection.

A stabilisation clause arises contractually.

A BIT obligation arises under international law between States.

An investor may therefore potentially possess several layers of protection simultaneously:

a concession or project contract, domestic investment legislation, a BIT, the Energy Charter Treaty where applicable, political-risk insurance and potentially guarantees or support agreements.

Sophisticated project structuring should evaluate how these protections interact.

16. Investor-State Dispute Settlement

One of the defining characteristics of many investment treaties is the possibility of Investor-State Dispute Settlement (“ISDS”).

Traditional international law generally required an injured foreign investor to depend upon its home State to pursue diplomatic protection.

Investment treaties changed this structure.

Under many BITs, qualifying investors may directly commence international arbitration against the host State.

Common mechanisms include:

ICSID arbitration, ICSID Additional Facility proceedings and arbitration under the UNCITRAL Arbitration Rules, depending on the treaty.

The International Centre for Settlement of Investment Disputes operates under the ICSID Convention.

Article 25 of the Convention provides jurisdiction over qualifying legal disputes arising directly out of an investment between a Contracting State and a national of another Contracting State where the parties have consented in writing to ICSID jurisdiction. Once valid consent has been given, it cannot be withdrawn unilaterally.

Consent may arise through a treaty, investment law or direct agreement.

17. Energy and Mining Dominate Investment Arbitration

Energy and extractive industries are disproportionately represented in international investment disputes.

ICSID reported that in calendar year 2025, 45% of newly registered cases arose from oil, gas and mining, with mining alone accounting for 24% of all new cases. Electric power and other energy accounted for an additional 6%.

These figures illustrate the practical importance of investment arbitration for natural-resource projects.

The connection is unsurprising.

Long project duration, large sunk capital, government licences, regulatory exposure and strategic political importance create ideal conditions for disputes concerning State conduct.

18. Treaty Arbitration Is Different from Commercial Arbitration

A crucial distinction exists between commercial arbitration and investment treaty arbitration.

Suppose a foreign mining investor signs a concession agreement containing an ICC arbitration clause.

A dispute concerning unpaid contractual amounts may be governed by that contractual arbitration clause.

But if government conduct potentially violates an applicable BIT—for example through unlawful expropriation—the investor may have a separate treaty claim.

The respondent is also different conceptually.

The contractual dispute arises from contractual obligations.

The treaty dispute arises from obligations that the host State owes under international law.

The two may overlap factually but are legally distinct.

19. Jurisdictional Requirements Can Decide the Entire Case

An investor may have suffered serious governmental interference yet still lose an arbitration because the tribunal lacks jurisdiction.

Before commencing proceedings, counsel must carefully examine issues such as:

• investor nationality;
• ownership and control;
• definition of investment;
• applicable dates;
• treaty entry into force;
• legality requirements;
• limitation periods;
• cooling-off periods;
• mandatory negotiations;
• fork-in-the-road clauses;
• waiver provisions;
• local-litigation requirements;
• denial-of-benefits clauses;
• and the precise arbitration consent.

Investment arbitration therefore begins long before merits arguments concerning expropriation or FET.

20. Treaty Structuring

For major energy and mining projects, investment treaty protection should ideally be considered before the investment is made.

Suppose an international mining group can legitimately structure an investment through several jurisdictions.

The corporate structure may affect:

• applicable BIT protection;
• access to ICSID;
• tax treatment;
• financing;
• foreign ownership requirements;
• and enforcement.

This process is commonly described as treaty structuring or investment structuring.

Treaty planning is not automatically improper.

Multinational businesses routinely organise investments through holding companies.

However, restructuring after a dispute has already arisen—or when a specific dispute is reasonably foreseeable—may generate serious jurisdictional objections and allegations of abuse of process.

The safest approach is therefore to incorporate investment protection analysis at the beginning of the project.

21. Political-Risk Insurance

Treaty protection should not be considered the only method of managing political risk.

Investors and lenders may also obtain political-risk insurance covering matters such as:

• expropriation;
• currency inconvertibility;
• transfer restrictions;
• political violence;
• breach of contract;
• or governmental non-payment.

Coverage may be provided by public or multilateral institutions as well as private insurers.

Political-risk insurance and treaty arbitration can complement each other, although subrogation and recovery provisions should be carefully coordinated.

22. The Energy Charter Treaty

Energy investments have historically benefited from an additional multilateral instrument: the Energy Charter Treaty (“ECT”).

The treaty covers investment protection and other matters concerning international cooperation in the energy sector and has generated numerous investor-State disputes.

The ECT framework is currently undergoing major transformation.

The Energy Charter Conference adopted amendments modernising the treaty on 3 December 2024, and provisional application of certain amendments commenced on 3 September 2025 for Contracting Parties that did not opt out or otherwise indicate that provisional application was incompatible with their domestic law.

At the same time, numerous European States have withdrawn or announced withdrawal from the ECT.

The European Union’s withdrawal became effective in June 2025, while several individual States—including Spain, Germany, France, the Netherlands and the United Kingdom—have also withdrawn. Lithuania’s withdrawal became effective on 8 August 2026, while Iceland and Romania have notified withdrawals taking effect in 2027.

Importantly, withdrawal does not always eliminate treaty protection immediately for existing investments. Article 47 of the original ECT contains a so-called sunset clause, under which certain existing investments may continue to benefit from protection for twenty years after withdrawal. The precise implications are legally complex and may also interact with agreements concerning intra-EU application.

Accordingly, ECT protection must now be analysed on a State-by-State, investment-by-investment basis rather than assumed generally.

23. Renewable Energy and Regulatory Change

Renewable-energy disputes illustrate particularly well the tension between investment protection and sovereign regulation.

Governments may establish incentive schemes to attract large-scale investment into solar and wind projects.

Investors may then finance projects based upon feed-in tariffs, premiums or other regulatory incentives.

Economic conditions may subsequently change and governments may reduce or restructure those schemes.

Numerous investment arbitrations have examined whether such changes crossed the line between legitimate regulation and treaty violation.

The jurisprudence demonstrates an important principle:

Investors may obtain protection against certain forms of arbitrary or fundamentally unfair governmental conduct, but they generally do not receive an unconditional guarantee that every element of an energy policy will remain frozen throughout the life of a project.

24. Mining, Environmental Protection and the State’s Right to Regulate

Mining disputes present an equally difficult balance.

Governments have legitimate responsibilities concerning:

• environmental protection;
• forests;
• water resources;
• biodiversity;
• public health;
• cultural heritage;
• local communities;
• and mine rehabilitation.

A foreign investor cannot ordinarily invoke a BIT simply to exempt itself from legitimate environmental law.

At the same time, environmental regulation cannot necessarily be used as a pretext for discriminatory or confiscatory treatment.

Tribunals may therefore examine:

• the purpose of the measure;
• proportionality where relevant;
• procedural fairness;
• discrimination;
• prior governmental assurances;
• investor conduct;
• environmental compliance;
• and the economic effect of the measure.

This is one reason ESG compliance has become increasingly relevant to investment treaty strategy.

An investor seeking international-law protection is in a substantially stronger position where it can demonstrate serious compliance with host-State law and applicable environmental obligations.

25. Investor Conduct Matters

Investment treaties should not be viewed as one-sided insurance policies.

Modern international investment law increasingly places greater emphasis on responsible investment.

An investor may encounter jurisdictional or merits problems if the investment was obtained through:

• corruption;
• fraud;
• deliberate misrepresentation;
• serious illegality;
• or other unlawful conduct.

Investor conduct may also affect damages.

For example, where the investor contributed materially to the circumstances causing its loss, tribunals may reduce compensation in appropriate cases.

The protection of an investment therefore begins with lawful project development and robust corporate compliance.

26. Damages in Investment Arbitration

Even after establishing treaty liability, the investor must prove loss.

Energy and mining damages can be extremely complex.

Valuation may involve:

• discounted cash flow analysis;
• market multiples;
• sunk costs;
• comparable transactions;
• future commodity prices;
• reserve estimates;
• production forecasts;
• operating costs;
• tax assumptions;
• discount rates;
• regulatory probabilities;
• and project maturity.

Early-stage exploration assets can be particularly difficult to value because future production remains uncertain.

The difference between the value claimed by an investor and the amount ultimately awarded may therefore be enormous.

The Bear Creek dispute illustrates this phenomenon: the investor reportedly sought more than USD 500 million while the tribunal awarded approximately USD 18.2 million.

Treaty liability and quantum must therefore be treated as separate legal and economic exercises.

27. Enforcement of Investment Arbitration Awards

Obtaining an award does not always end the dispute.

ICSID awards benefit from a specialised enforcement regime under the ICSID Convention.

By contrast, non-ICSID investor-State awards may generally depend upon other enforcement frameworks, including the New York Convention where applicable.

However, enforcement against States raises additional complications concerning sovereign immunity and identification of attachable commercial assets.

The distinction between immunity from jurisdiction and immunity from execution can become crucial.

Accordingly, investors contemplating arbitration should evaluate not only:

“Can we win?”

but also:

“Where are the State’s enforceable assets if it does not voluntarily comply?”

28. Türkiye’s Bilateral Investment Treaty Network

Türkiye has developed an extensive investment treaty network.

UNCTAD’s Investment Policy Hub currently lists 141 bilateral investment treaties involving Türkiye and 26 treaties with investment provisions, although not all are necessarily in force. Türkiye also signed a new BIT with Kazakhstan on 14 May 2026.

The Turkish Ministry of Trade identifies the principal protections commonly found in Türkiye’s BIT practice as including national and MFN treatment, fair and equitable treatment, full protection and security, protection against expropriation, free transfer of returns and international mechanisms for resolving investment disputes.

However, Türkiye’s treaties were negotiated over different periods and their language varies.

An investor should therefore never assume that all Turkish BITs provide identical rights.

29. Türkiye’s Foreign Direct Investment Law

Domestic Turkish law provides an additional framework for foreign investment.

Article 3 of Foreign Direct Investment Law No. 4875 provides, among other things, for freedom of foreign investment and national treatment subject to applicable international agreements and special laws.

It also provides that foreign direct investments shall not be expropriated or nationalised except for public interest and upon compensation in accordance with due process, and recognises the ability of foreign investors to transfer specified investment-related proceeds abroad through banks or special financial institutions.

The legislation also recognises access, under applicable conditions, to national or international arbitration for certain investment and concession-related disputes where the relevant requirements and party agreement exist.

Domestic law and treaty protection must nevertheless be distinguished.

A right arising under Law No. 4875 is not automatically identical to a right arising under a BIT.

30. Türkiye and the Energy Charter Treaty

Türkiye remains a Contracting Party to the Energy Charter Treaty.

Türkiye signed the ECT in 1994, ratified it in 2001 and the Treaty entered into force for Türkiye on 4 July 2001.

Accordingly, the ECT remains potentially relevant to qualifying energy investments involving Türkiye, subject to the treaty’s modernisation, party status, temporal scope and other jurisdictional requirements.

The position must be examined particularly carefully where an investor originates from a jurisdiction that has withdrawn from the Treaty.

31. Energy and Mining Arbitration Involving Türkiye

Türkiye’s experience demonstrates that investment treaty disputes are not theoretical.

UNCTAD records treaty-based disputes involving Türkiye in sectors including electricity and mining.

One particularly relevant current example is Alamos Gold v. Turkey, ICSID Case No. ARB/21/33.

The claim concerns investments in the Kirazlı gold mining project in Çanakkale and allegations concerning non-renewal of mining licences and related permits. According to currently available UNCTAD data, the case remains pending and the investors have alleged violations including fair and equitable treatment and indirect expropriation.

Because the proceeding remains pending, these are allegations rather than established treaty violations.

The case nevertheless provides an important illustration of how mining-licence decisions may develop into international investment treaty disputes.

Another example is Enel v. Türkiye, concerning a renewable-energy investment and alleged cancellation of a solar-power pre-licence. UNCTAD records the proceeding as having been decided in favour of Türkiye.

Türkiye has also faced ECT-related claims concerning electricity concessions, including Alapli v. Turkey and Uzan v. Turkey.

These cases illustrate the diversity of jurisdictional and merits issues that can arise in the energy sector.

32. Turkish Investors Investing Abroad

Investment treaties are equally important for Turkish companies investing outside Türkiye.

Turkish construction, energy, mining and infrastructure companies operate extensively in Central Asia, the Middle East, Africa, Eastern Europe and other emerging markets.

Where Türkiye has a qualifying BIT with the host State, a Turkish investor may potentially rely on that treaty.

One historical example is Federal Elektrik Yatırım and others v. Uzbekistan, where Turkish investors relied on the Türkiye–Uzbekistan BIT and the Energy Charter Treaty concerning investments connected with a gas-distribution project.

BIT analysis should therefore form part of outbound Turkish investment planning as well as inbound foreign investment into Türkiye.

33. The International Investment Regime Is Changing

The investment treaty system is currently undergoing substantial reform.

UNCTAD reports that newer-generation agreements increasingly:

preserve regulatory space, refine traditional investor-protection provisions, integrate sustainable-development concerns, include responsible-investment concepts and in some cases reduce reliance on traditional investor-State arbitration.

At the procedural level, UNCITRAL Working Group III continues work on major ISDS reforms.

During its 2026 sessions, the Working Group has been examining matters including draft statutes for a permanent international investment tribunal and appellate tribunal, procedural reforms, damages guidelines and a multilateral mechanism for implementing ISDS reform.

Investors should therefore recognise that the system of investment protection in 2035 may look significantly different from the system under which older BITs were drafted.

34. Political-Risk Due Diligence Before Investment

For a major energy or mining investment, legal due diligence should not stop at confirming whether the project company possesses the required licence.

International investment protection should form part of the transaction architecture.

Before committing capital, investors should examine the host State’s BIT network, the nationality of the investment vehicle, treaty definitions, substantive protections, dispute-resolution provisions, applicable cooling-off periods, ECT status where relevant, domestic investment legislation, concession protections, stabilisation clauses, political-risk insurance, foreign-exchange rules, State immunity considerations and potential enforcement jurisdictions.

These questions are substantially easier to address before investment than after a dispute has arisen.

Conclusion

Political risk is inseparable from international energy and mining investment.

The enormous capital expenditure, long development periods, dependence upon government licences and immovable nature of natural-resource assets make investors particularly vulnerable to governmental and regulatory change.

International investment treaties seek to mitigate some of this risk.

Depending upon their wording, BITs and other investment agreements may protect investors against:

unlawful expropriation, unfair or inequitable treatment, discriminatory measures, inadequate protection and restrictions on investment-related transfers.

Some treaties additionally give qualifying investors the extraordinary right to commence international arbitration directly against the host State.

However, these protections have limits.

International investment law does not guarantee regulatory immobility.

States remain entitled to regulate environmental protection, taxation, climate policy, natural resources, public health and other legitimate public interests.

The decisive legal question is therefore not simply whether regulation has changed.

It is whether the manner in which the State treated the investor violates a specific international obligation contained in the applicable investment treaty.

For investors, this distinction has practical consequences.

BIT analysis should begin before capital is invested, not after the government takes an adverse measure.

The jurisdiction through which an investment is structured, the treaty in force on the relevant dates, the definition of investor and investment, the availability of ICSID or UNCITRAL arbitration and the wording of substantive protections can ultimately determine whether an investor possesses an effective international remedy.

This is especially important in energy and mining, where licences, concessions and regulatory approvals may represent the legal foundation of investments worth hundreds of millions or billions of dollars.

Türkiye illustrates both sides of this system.

It has an extensive network of investment treaties, remains connected to the Energy Charter Treaty framework and provides domestic protections for foreign investment under Law No. 4875. At the same time, disputes involving Turkish energy and mining investments demonstrate that licence cancellation, regulatory measures and concession disputes can develop into complex international arbitration proceedings.

For international investors entering Türkiye—and Turkish investors expanding abroad—the correct question is therefore not merely:

“Is this project commercially profitable?”

A sophisticated political-risk analysis should also ask:

“If the regulatory environment changes after the investment becomes irreversible, what international legal protections will remain available?”

The answer may determine not only the investor’s litigation strategy after a dispute, but the bankability, valuation and corporate structure of the investment from the outset.

Disclaimer: This article is provided for general information and legal research purposes only and does not constitute legal or investment advice. Investment treaty protection depends on the precise treaty, nationality and corporate structure of the investor, timing and nature of the investment, conduct of the investor and host State, and the facts of the individual dispute. Professional advice should therefore be obtained before structuring an international investment or commencing investor-State arbitration.