International arbitration in 2026: Big picture thinking - Insights into the key trends shaping arbitration

ARBITRATION TRENDS IN 2026Big picturethinkingInsights into the key trendsshaping arbitrationWelcome to our annual arbitration trends reportThe world of international arbitration isundergoing rapid evolution as businesses confrontgeopolitical uncertainty, the acceleration oftechnological change and an increasingly complexregulatory environment.Drawing on the insights of our global international arbitrationteam, this report identifies eleven trends that we believe will becritical in shaping the arbitration landscape over the next year.Each trend is underpinned by our team’s practical experienceadvising clients across markets and sectors. From sovereignrisk and digital transformation to ESG compliance and newprocedural advancements, our experts share forward-lookinganalysis and actionable guidance to help you stay ahead in anevolving business environment and legal order.Why read this report?The trends we highlight are not just legal developments.They enable business leaders to anticipate and respond tochanging risk, regulatory and enforcement environments,which are key considerations in sustaining growth andprotecting value. Businesses are using arbitration proactivelyto strengthen contracts, optimize investment structures andprepare for and resolve disputes, wherever they may arise.“2026 will be a defining year for internationalarbitration, with disputes expanding incomplexity, reach and strategic importancefor clients globally. The interplay of technologicalchange, geopolitical developments andregulatory innovation is transforming not justwhat is arbitrated, but how and where disputesare resolved. At Freshfields, we are privilegedto support clients at the center of this changeby helping them protect value, navigateuncertainty and shape the outcomes that matterfor their business.Noiana Marigo and Boris KasolowskyGlobal Co-Heads, International ArbitrationWe invite you to explore the report and connect with your usualFreshfields contact or any of the authors to discuss how thesetrends may affect your business.2Contents3International arbitration 20261.Risks for businessesoperating in armedconflict zones:an evolvingbattlegroundRisks for businesses operating in armedconflict zones: an evolving battlegroundTim HarknessPartner,PartnerJoshua KellyPartner,LondonAlexandra van derMeulenPartner,ParisGabriel FuseaSenior Associate,ParisAnika HavaldarSenior Associate,DubaiMaria SlobodchikovaSenior Associate,New YorkIn briefThe global landscape of armed conflict is the mostcomplex and crowded since the Second World War.This includes international armed conflicts (e.g. the warin Ukraine), non-international armed conflicts (e.g. civilwars in Myanmar and Sudan) and situations that maynot be straightforward to categorize (such as “drugwars” and terrorist insurgencies). Across the globe,geopolitical fragmentation and hybrid threats - combiningcyberattacks with kinetic warfare - are redefining theoperating environment for multinational businesses.Companies now face increased exposure to sanctions,operational disruptions and other legal and reputationalrisks. As a result, we expect a surge in conflict-relatedcommercial and investor-state arbitration, litigationand public international law disputes.To manage these risks, businesses should integrateconflict analysis into due diligence, strengthencontractual and investment protections, establish robustdocumentation systems, monitor legal developmentsand anticipate disputes across multiple fora.“The scope of risk for corporates operating inconflict zones is expanding, with companiesfacing increased litigation exposure acrossmultiple jurisdictions, while also contendingwith accountability at the international law level,demanding robust due diligence and governanceto mitigate legal and reputational risks.Alexandra van der MeulenPartner, ParisThe expanding risk landscapeMany businesses today are deeply embedded in conflict-affectedeconomies. Energy and extractives, logistics, tech, constructionand industrial firms often provide goods and services thatsustain local markets. In addition, tech and defense companiesfrequently supply equipment to state actors, creating risks thatsuch equipment may ultimately be used in ways that breachinternational law.At the same time, companies looking to enter post-conflictenvironments, such as Syria or, eventually, Ukraine, faceheightened compliance and security risks arising from changingsanctions frameworks, governance uncertainty and residualinstability that may amplify operational and legal exposure.5Risks for businesses operating in armedconflict zones: an evolving battleground“In a world where conflict is, unfortunately, a newconstant, businesses need to hard wire conflictanalysis into their decision-making - preparationwill ensure resilience.Joshua KellyPartner, LondonThe impact on arbitrationCommercial arbitrationConflict amplifies contractual risk. In the current geopoliticalcontext, we anticipate increased use of commercial arbitrationas parties seek remedies for payment defaults, sanctions-relateddisruptions and halted operations. Tribunals are increasinglyasked to interpret force majeure and frustration clauses, assesswhether wartime conditions justify non-performance andnavigate the legal grey zones created by sanctions and coercion.Disputes now commonly involve contractors unable to resumework in unstable regions, suppliers invoking force majeure dueto security breakdowns, or financial institutions withholdingpayments to avoid breaching sanctions.Investor-State arbitrationInvestor-state arbitration is seeing a steep rise in conflict-relatedclaims. Foreign investors have typically brought claims for lossessuffered due to forcible actions - such as property damage,project halts, asset seizures, or expropriations. These actionsmay be taken by the host State’s organs (e.g. military, police)or non-state actors (e.g. rioters or insurgents). Recent examplesinclude claims against Azerbaijan, Iraq, Libya, Russia and Syriaunder bilateral and multilateral investment treaties.Investors routinely invoke “full protection and security”(requiring the safeguarding of investments against harm) and“war damages” (providing compensation for losses causedby war or civil disturbance) clauses. These claims may raisecomplex issues of State responsibility, including attributionand the applicability of defenses. For instance, to limit liability,conflict-affected states may invoke “essential security interests”treaty exceptions and raise “necessity” or “force-majeure”defenses under customary international law.As countries adopt ever-complex responses to conflict, includingsanctions, export controls and asset freezes, the number andvariety of conflict-related claims will likely increase. This includesclaims against states not directly involved in the conflict.For example, in 2025, Russian investors threatened or startedarbitrations against European countries for freezing assetsfollowing Russia’s invasion of Ukraine, alleging breaches of“free transfer,” “expropriation” and “fair and equitable treatment”clauses. Moreover, investments by non-Russian investors instates not directly involved in the conflict have, at times, becomecollateral damage of the sanctions regime, leading theseinvestors to explore potential claims.Litigation exposureOperating in conflict zones exposes businesses to significantand unpredictable litigation risks in the courts of the countriesinvolved in the armed conflict and elsewhere. Companies mayface lawsuits for not only direct involvement in conflict-relatedactivities but also indirect activities, such as maintainingcommercial operations perceived as supporting parties to theconflict (e.g. supplying equipment).Jurisdictions such as the United States, United Kingdom,France and Germany are increasingly asserting jurisdictionover corporate conduct occurring outside of their territories,scrutinizing actions for potential violations of human rights,terrorism-related statutes, and international law.6Risks for businesses operating in armedconflict zones: an evolving battlegroundIn the United States, statutes like the Anti-Terrorism Act allowfor civil claims against companies and individuals for aiding orabetting abuses. France’s Duty of Vigilance Act and Germany’sSupply Chain Act further require companies to proactivelyidentify, prevent and address human rights and environmentalrisks throughout their global operations, with non-complianceleading to regulatory penalties or civil claims, as well asreputational harm. As a result, legal risk now travelswith business.Public international law and human rightsConflict-related disputes are also playing out in an array of publicinternational law fora. Human rights courts, such as the EuropeanCourt of Human Rights, may provide an alternative to investorstate arbitration for companies. International compensationmechanisms, such as the newly established International ClaimsCommission for Ukraine, also provide compensation avenues forbusinesses affected by particular conflicts.Corporate accountability is also in sharp focus. Several UnitedNations human rights bodies are increasingly scrutinizing the roleof companies in conflicts. For example, UN Special Rapporteurs(independent experts) have published reports identifyingcompanies alleged to be involved in furthering or supportingunlawful conduct in armed conflicts, and in some cases have sentallegation letters to such companies.Further, businesses have faced complaints before theUN Working Group on Business and Human Rights or theOECD National Contact Points Grievance Mechanism.While non-binding, their decisions add significant reputationalpressure and are increasingly being used by NGOs andprosecutors to bolster domestic prosecutions for aidingand abetting international crimes.Practical takeawaysOperating in armed conflict zones is no longer a nicheconcern; it is a mainstream business risk. To managethis risk, companies will increasingly need to considerwhether the following actions are advisable given theconditions they are facing:• Adopt comprehensive due diligence strategies:Integrate conflict analysis into due diligence andimplement rigorous assessment and cross-borderrisk mapping systems.• Secure optimal protection under contracts andtreaties: Strengthen contractual protections,assess investment protection frameworks andconsider restructuring to avail protections.• Keep abreast of developments and maintain records:Establish systems for continuous documentationto strengthen their position to seek reparation ordefend claims and actively monitor legal developmentsin key jurisdictions.• Prepare for cross-border disputes and consider themost relevant dispute resolution fora: Anticipatemulti-fora disputes spanning litigation in the countriesinvolved in armed conflicts and other jurisdictions,commercial arbitration, investor-state arbitration andpublic international law litigation.Our international arbitration and public internationallaw specialists are ideally placed to assist clientsproactively manage these multidimensional disputes.Please contact us to learn more.7International arbitration 20262.Borders and beyond:sovereignty andboundary disputesdriving arbitrationBorders and beyond: sovereignty andboundary disputes driving arbitrationSamantha TanPartner,SingaporeWill Thomas KCPartner,LondonValerio LetiziaAssociate,ParisCamille StrosserSenior Associate,LondonIn briefIn 2026, sovereignty and boundary disputes will continueto be a driver of arbitration - not just between statesbut also for businesses, particularly those operating orinvested in the energy, extractives and infrastructuresectors.As states seek greater control over increasinglycontested spaces, businesses face increased legal andgeopolitical uncertainty, especially in environmentsaffected by technological advancement, energy demandand trade tensions.“Offering neutrality, a right to sue host Statesdirectly, and awards that are legally bindingand enforceable in most countries, arbitrationis an especially useful tool for businesses toproactively manage risk in projects affected byterritorial disputes or in new frontiers.Samantha TanPartner, SingaporeDisputes related to sovereignty and boundaries can give riseto several forms of arbitration, including:• State-to-state arbitrations: Mechanisms for resolvingsovereignty and boundary disputes under internationallaw (as an alternative to litigation before the InternationalCourt of Justice).• Investor-state arbitrations: Redress under investmenttreaties for foreign investors when state measures (such asexpropriation, license revocation, unfair or discriminatorytreatment, or a failure to provide adequate protection andsecurity) arise from sovereignty and boundary disputes.• Contractual arbitrations: Disputes between private parties(and/or involving state-owned entities) arising from projectdelays, force majeure claims or other contractual breachesdue to sovereignty and boundary-related disruptions.While these forms of arbitration will continue to arise fromtraditional inter-state disputes in 2026, we also expect themto expand into new areas previously considered beyond anystate’s individual jurisdiction.9Borders and beyond: sovereignty andboundary disputes driving arbitrationTraditional sovereignty and boundary disputesStates have contested sovereignty and boundaries forcenturies, often to secure access to valuable natural resources.Even where a boundary is settled, uncertainty can persist orunexpectedly arise, especially in areas of overlapping resources,creating long term risks for businesses and the potential for awide range of disputes.This is illustrated by the following examples.Guyana v. Venezuela (Essequibo Region)The territorial dispute over the oil-rich territory and itsoffshore waters has directly affected oil companies operatingconcessions in the area, exposing them to:• Physical risks to infrastructure and equipment, such as the2018 incident involving a drilling ship.• Delays or withdrawal of oil concessions: Guyana’s moratoriumon further exploration in the area directly impacted existingand future oil concessions. Even absent such a moratorium,investing in disputed areas generally carries significant risk,as a change in state “ownership” may lead to the cancellationof concessions.South China SeaSovereignty and boundary disagreements have, for decades,disrupted offshore resource development (see the South ChinaSea Arbitration between the Philippines and China, whichconcluded in 2016). More recently, such inter-state disputeshave begun to extend beyond hydrocarbons, impacting subseacables that are essential to global data transmission, withknock-on effects for private businesses. We have seen:• Interference and sabotage by foreign ships: Growing reportsof Chinese vessels scraping the seabed along subsea‑cableroutes pose national‑security concerns and expose privatecable owners to significant risks. With private technologycompanies now responsible for over 70 percent of globalsubsea‑cable usage, such interference can lead to substantiallosses and insurance claims, but also legal exposure fromservice interruptions.• Licensing delays: Contested sovereignty in the South ChinaSea has also caused licensing delays that affect privateoperators of subsea-cables. The Southeast Asia-Japan 2(SJC2) cable project was reportedly held up due to China’spermitting requirements and concerns over potentialespionage by the contractor.Expanding frontiers: beyond national jurisdictionTechnological advances and rising demand for strategic mineralsare transforming areas historically beyond any state’s individualjurisdiction into commercially significant (and highly sought after)regions, including:• Extended continental shelves in the Arctic: Melting seaice and accelerating energy and minerals exploration areintensifying overlapping claims by states for an “extendedcontinental shelf” - particularly among the Arctic States:Canada, Russia and Denmark/Greenland. In recent years, thesestates have begun authorizing exploration activities in disputedareas by private contractors, who will inevitably be operatingwith consequent risk and uncertainty. The map following showsthe extent of states’ overlapping claims.• Deep seabed mining (the Area): Rapid technologicaladvances, together with rising demand for critical minerals, areintensifying state interest in deep seabed mining. Explorationand exploitation activities in offshore areas beyond nationaljurisdiction (in the zone known as “the Area”) are governedby the regime set out in the United Nations Convention onthe Law of the Sea (UNCLOS), which requires an InternationalSeabed Authority (ISA) contract and a sponsoring state license.Exploration licenses now exist, but exploitation licenses awaitagreement on the long delayed ISA Mining Code - intended toregulate exploitation in the Area. Meanwhile, the United States,acting outside UNCLOS, has established its own framework,issuing an April 2025 executive order to fast track deep seabedmining permits within and beyond national jurisdiction. Thisuncertain and conflicting legal environment seems ripe fordisputes, including with and among private mining companies.10Borders and beyond: sovereignty andboundary disputes driving arbitration11Borders and beyond: sovereignty andboundary disputes driving arbitration• Outer space: Commercial resource exploration in spaceby states and private actors is also rapidly emerging as thenext frontier for resource exploration. In 2024, US company,AstroForge, received the first license for a commercial deepspace mining mission. As we noted in our 2025 Trends Report,the expansion of private sector activity in outer space isexposing critical gaps in the legal framework governing spaceresources, once again providing fertile ground for disputes.“Inter-state sovereignty and boundary conflictshave long been a source of uncertainty - and,in turn, a driver of associated commercialdisputes - in resource-rich areas. That historicaltrend seems set to continue, as does thegrowing trend for exploration of areas beyondnational jurisdiction, which will likely lead to new(and novel) disputes.Will Thomas, KCPartner, LondonThese new frontiers offer major opportunities for privateactors but also introduce novel risks as a result of competinglegal frameworks and regulatory uncertainty, including:• Adverse state action, such as withdrawal or non renewalof authorizations, sudden regulatory changes and failureto protect operations from security or geopolitical risks incontested zones; and• Contractual disputes, arising from delays or failures causedby overlapping claims to the same area, breakdowns in jointventures and disputes following damages to infrastructureand equipment.Practical takeawaysAs sovereignty and boundary disputes increasingly affectenergy, extractives and infrastructure projects, businessesshould consider taking proactive steps to protect theirinvestments and operations, such as:• Conduct thorough due diligence: Before investing orcontracting, assess the risk that disputed sovereigntyand boundary claims could affect the project’s viabilityor operations.• Draft for uncertainty: Contractual agreements shouldanticipate sovereignty and boundary‑related disruptions.Consider, for example, including appropriate warranties,as well as force majeure and stabilization clauses.• Diversify protection mechanisms: Strategic investmenttreaty planning can help secure access to investor‑statearbitration where disputes lead to expropriation or unfairtreatment. Additional safeguards, such as politicalrisk insurance, may also be put in place, tailored to theproject’s profile and locationWith a thorough understanding of these complexissues, our international arbitration team helps clientsanticipate and resolve disputes in this important sector.Please contact us to learn more.12International arbitration 20263.Navigating achanging defenselandscapeNavigating a changingdefense landscapeKate GoughPartner,LondonChristophe SeragliniPartner,ParisAlexander MonroCounsel,FrankfurtMathilde AllardAssociate,ParisVeronika TimofeevaSenior Associate,ParisIn briefThe defense sector is undergoing significanttransformation, driven by escalating geopolitical tensions,technological innovation and supply chain pressures.As defense spending climbs and the industry becomesmore complex, disputes grow more sophisticated andincreasingly sensitive. International arbitration offersdefense stakeholders the flexibility, confidentiality andneutrality needed to safeguard both commercial interestsand national security.The evolving defense ecosystemThe shift towards decentralized supply chainsGlobal instability has led nations to prioritize defense.Defense spending in the European Union (EU) reached €343bnin 2024 and was projected to hit €381bn in 2025, up 63 percentsince 2020. In the United Kingdom, annual defense spendingincreased by 30.2 percent over the past decade, reaching£60.2bn in 2024/2025. Meanwhile, military expenditure inthe United States approached US$1tn in 2024.In parallel, resource nationalism has escalated around critical rawmaterials essential for technologies like advanced batteries anddrones. Export restrictions have surged as a result, intensifyingcompetition for materials like copper, nickel and lithium.Against this backdrop, supply chain resilience (both security ofinformation and of supply) is critical, supported by initiativeslike NATO’s Defence-Critical Supply Chain Security Roadmapand the EU’s Defence Industry Transformation Roadmap.Drawing on Ukraine’s experience, the EU advocates shifting fromcentralized procurement authorities to decentralized supplychains involving a broader range of stakeholders for greaterresponsiveness and agility. Any related disputes are likely tospan multiple jurisdictions and involve several parties, requiringproactive risk management.14Navigating a changingdefense landscapeThe emergence of “New Defense” companiesand new technologiesAdvanced digital and cyber tools, such as AI-backed softwareand quantum technologies, are becoming central to nationalsecurity, creating opportunities for startups and small-tomedium enterprises, often at the forefront of technologicaladvancements. The emergence of these “New Defense”companies and the growing reliance on cutting-edgetechnologies increases the likelihood of disputes over intellectualproperty, data security breaches and liability for system failures.Space: the new frontier for defense disputesSpace has become vital for defense, with satellites and otherspace-based assets underpinning surveillance, communicationand strategic operations. Government investment in space isrising, with EU investment reaching a record €122bn in 2024.At the same time, private investment and mega-constellationprojects are booming, led by companies such as SpaceX, Amazon,Eutelsat and new entrants like Canada’s Telesat and China’sSatNet. The race for orbital slots and frequency rights createsnew flashpoints for disputes.“The defense industry is undergoing profoundchange as new technologies, geopolitical shifts,and a wider range of market participants reshapetraditional dynamics. Defense stakeholders mustbe prepared to navigate increasingly complexsupply chains, emerging regulatory frameworksand the novel disputes these changes bring.Kate GoughPartner, LondonArbitration’s enduring value in defense disputesArbitration remains the preferred method of resolving disputesunder commercial defense contracts, including those involvingstate entities, and its relevance is only increasing.Safeguarding sensitive informationDefense disputes often involve classified information andproprietary technology. Arbitration offers a robust framework tosafeguard this sensitive data. Most major arbitration rules includeconfidentiality provisions, and parties can agree on bespokeconfidentiality protocols or “Attorneys and Experts’ Eyes Only”regimes, to put in place further situation-specific safeguards.Classified documents are protected under Article 9.2(f) ofthe 2020 IBA Rules on the Taking of Evidence, which allowstribunals the discretion to exclude them from evidence wherecompelling grounds exist. Parties and tribunals can, however,obtain security clearance or seek declassification under theapplicable regulations to use classified documents in arbitration(as occurred in the ICSID case of Gabriel v. Romania).Adapting to multi-contract and multi-party transactionsModern defense projects link contractors, governments andsuppliers globally. Arbitration’s flexibility helps manage multiparty and multi-contract disputes. Arbitration rules generallyallow the joinder of additional parties and the consolidation ofrelated proceedings where cases share the same or compatiblearbitration agreements, or common legal or factual issues.These mechanisms help to reduce fragmentation, save costsand ensure consistency of outcomes.Ensuring neutralityNeutrality is essential for defense stakeholders. Arbitrationallows parties to select arbitrators with the relevant expertisewhile ensuring they have no home advantage. Many institutionalrules provide that, absent party agreement, arbitrators shouldbe selected from outside the parties’ jurisdictions.Recent geopolitical tensions have increased arbitrator scrutiny.Challenges based on perceived bias related to nationalityor public stance on geopolitical issues have become morecommon. Careful arbitrator selection is thus essential foraward enforcement.15Navigating a changingdefense landscapePractical takeawaysAs complexity in the defense sector grows, stakeholdersshould proactively consider adapting their disputeresolution strategies, such as:• Review contractual frameworks: Ensure arbitrationclauses in existing and new contracts are fit forpurpose and compatible across the supply chainto allow joinder/consolidation.• Protect confidentiality: Identify sensitive informationand applicable secrecy/classification restrictions andincorporate robust confidentiality provisions into thearbitration clauses and early procedural orders.• Assess treaty protection: Foreign investors shouldassess whether investment treaties could provideadditional protection against adverse state measures,including revocation of licenses, export restrictions ortermination of long-term supply agreements.• Evaluate enforcement risks: Carefully evaluateasset location and whether relevant jurisdictions maychallenge arbitrator neutrality on political grounds.Consider applicable immunity rules when contractingwith states or state-owned companies, as well assupranational entities.“Even as defense disputes become morecomplex and sensitive, arbitration continues tooffer what the industry needs most: a neutralforum, procedural flexibility and confidentialityto protect commercial interests and nationalsecurity. It remains the go-to solution whenstakes are high and trust is paramount.Christophe SeragliniPartner, ParisOur team understands these dynamics intimately and assistsclients in proactively resolving disputes across this critical sector.Please contact us to learn more.16International arbitration 20264.State power andthe reshapingof investor-statearbitrationState power and the reshapingof investor-state arbitrationNathalie ColinPartner,BrusselsNoiana MarigoGlobal Co-Headof InternationalArbitration, New YorkNoah Rubins KCPartner,ParisMaria Julia MilesiCounsel,Washington, DCFlorence FruehlingAssociate,BrusselsGregorio PettazziPrincipal Associate,MilanIn briefInvestor-state arbitration faces a rapidly changinglandscape as governments take a firmer hand in sectorsviewed as critical to national interests and the energytransition. States are tightening controls over strategicinvestments, invoking national security and adoptingpolicies to secure domestic access to vital resources.The mining sector, in particular, is under the spotlight,with growing demand for minerals like lithium andcobalt matched by new restrictions on foreign investmentand increased state intervention. In parallel, disputesare moving beyond arbitration to national courts, fromanti-arbitration injunctions to enforcement battles andEU sanctions.In this context, investors must adopt flexible, coordinatedstrategies to navigate a playing field that is more dynamicand complex than ever.National security and investment claimsWith intensified geopolitical tensions, governments havestepped up measures to monitor and, where needed, restrictor unwind foreign investments on security grounds. In 2025,eight G20 members adopted legislation designed to addresspotential security threats linked to foreign investments.“In the next few years, we expect the nationalsecurity lens to keep widening. Investors shouldincreasingly anticipate state interventionearly in a deal, and arbitrators will face greaterpressure to weigh national policy concernsalongside treaty protections.Noah Rubins KCPartner, Paris18State power and the reshapingof investor-state arbitrationSecurity-relatedmeasures1 CanadaSensitive Technology ListUpdated Guidelines on the National Security Reviewof Investments2 United StatesFinal Rule, Provisions Pertaining to US Investments inCertain National Security Technologies and Products inCountries of ConcernFinal Rule, Preventing Access to US Sensitive Personal Databy Countries of Concern or Covered Persons3 United KingdomProcurement Act 2023Procurement Regulations 20244 Saudi ArabiaInvestment LawImplementing regulations to the Investment Law5 Russian FederationAmendments to the Air Code of the Russian FederationCertain legislative acts6 JapanCabinet Order on inward direct investment7 Republic of KoreaAmendment to the Act on the Prevention of Divulgenceand Protection of Industrial TechnologyAmendment to the Decree on the Prevention of Divulgenceand Protection of Industrial Technology, No. 2005-4638 AustraliaForeign Investment Policy3721564 819State power and the reshapingof investor-state arbitrationThese measures often result in restricting, prohibiting,or compelling the divestment of foreign investments.Recent examples include Sweden’s measures preventingHuawei from participating in the roll-out of 5G networksand requiring the removal of existing Huawei equipment.Investor-state arbitration becomes key in this context.More than ever before, arbitral tribunals are likely to be calledupon to assess the compliance of national security measureswith investment protection treaties. New investment treatiesincreasingly incorporate “self judging” essential security interestexceptions to protection, which attempt to limit arbitral tribunals’scrutiny over state measures affecting foreign investments. Evenin the absence of such exceptions, the debate continues overwhether national security restrictions are compensable orlegitimate and non-actionable under the “police powers” doctrine.Mining disputes and the drive for critical mineralsMining remained the largest source of investor-state disputesettlement (ISDS) claims for the tenth consecutive year in 2025,with nearly 30 percent of newly registered cases arising out ofmining disputes.Source: UNCTADThis trend is expected to continue, driven by surging demand forkey critical minerals to support the energy transition. By 2040,demand for these materials is projected to be about six timeshigher for lithium, four times higher for graphite and twice ashigh for cobalt compared to today.As these minerals grow more vital to national interests,resource-rich nations are increasingly implementing nationalistpolicies, such as prioritizing local supply chains, imposing exportrestrictions, or asserting greater state control over miningoperations. For example, Indonesia has banned the export ofunprocessed nickel, requiring foreign investors to refine mineralslocally. Mexico has nationalized its lithium sector, grantingexclusive control to a state enterprise, while Zimbabwe hasbanned raw lithium exports to build up domestic processing.These measures, along with China’s export controls on gallium,germanium and graphite, aim to safeguard national interests andincreasingly tie access to minerals to geopolitical considerations.This intense competition for resources is driving a new waveof government intervention, through policy shifts, investmentrestrictions and export controls, that brings additional complexityand risk for foreign investors.Such developments are likely to fuel more disputes.The accelerating demand for critical minerals is unfolding inparallel with the broadening scope of ESG regulation, creatingincreasing points of regulatory friction. Governmental measuresare evolving beyond a focus on environmental concerns toplace a greater emphasis on social issues, such as inadequatecommunity consultation, infringements of indigenous rights anddeficiencies in social impact assessments. Allegations of thiskind featured prominently in Bear Creek v. Peru, South AmericanSilver v. Bolivia, Cortec Mining v. Kenya, and, most recently,Gabriel Resources v. Romania. Disputes are also arising withgrowing frequency from measures adopted by the judiciary.20State power and the reshapingof investor-state arbitrationMining investors are therefore well advised to strengthen theirdue diligence practices - at the outset and throughout theentire life of their investments - to ensure full compliance withapplicable social standards. Investors should also monitordomestic legal proceedings related to these issues fromthe outset and approach them not only from a domestic lawperspective but also with future ISDS strategies in mind. This willimprove their legal positions, should an investment dispute arise.National courts as the new battleground:Investor protection beyond arbitrationISDS has traditionally served as an alternative disputeresolution mechanism to local law remedies, with the objectiveof providing a level playing field independent of domestic lawand state courts. Recent state practice has however begun todisrupt this notion.“National courts are set to play an even greaterrole in ISDS as states push back on arbitrationboth before and after awards. Investors needintegrated strategies that line up defenses inevery relevant legal forum.Nathalie ColinPartner, BrusselsOne striking example is the anti-arbitration injunctionissued by the Moscow commercial court aimed at blockingarbitration proceedings initiated by German energy company,Wintershall, against Russia under a bilateral investment treaty.The judgment includes a penalty of no less than €7.5bn (thevalue of the arbitration claim) not only against Wintershall, butalso against each of the arbitrators and the claimant’s lawyers.Such high value injunctions aimed at counsel and arbitratorsraise new concerns for foreign investors engaged in arbitrationsinvolving Russia.European governments are also making use of anti-arbitrationinjunctions (or similar tools) against ISDS. So far, the Netherlands,Germany and Spain have all resorted to German courts in a bidto halt investor-state arbitration that they consider to be contraryto European Union law. Meanwhile, the Netherlands also lodged atort claim in the Belgian courts to block an investment arbitrationover gas extraction activities.After the arbitral award has been rendered, domestic courtsin investors’ home states have increasingly become a tool inrespondent states’ strategies to resist enforcement. Spain hasappeared in the German courts against RWE and in the Dutchcourts against AES, trying to do just that.Sanctions policy adds another layer of restrictions on ISDS.Following a wave of ISDS claims initiated by sanctionedinvestors against Western states, including those broughtby Russian oligarch, Mikhail Fridman, against Luxembourg,Cyprus and the United Kingdom, the EU enacted its 18thsanctions package in July 2025, whereby it prohibited suchclaims. In response, Russian investors have initiated proceedingsbefore the Court of Justice of the EU to challenge thisunprecedented measure. National courts have turned into anew battleground in ISDS disputes.21State power and the reshapingof investor-state arbitrationPractical takeawaysTo succeed in this shifting environment, investors should:• Create a comprehensive dispute strategy: Coordinateinternational and national actions from the outset toavoid inconsistent arguments and strengthen youroverall position.• Assess the impact of national court decisions: Whilethese actions often do not have immediate impact onthe investor-state arbitration itself, they can createadditional risks, such as director liability, enforcementchallenges, clawback actions, etc.• Leverage procedural tools: Consider requesting interimmeasures from arbitral tribunals to block domesticproceedings and keep arbitrations on track.• Elevate your due diligence and compliance: Ensuresocial and environmental risks are managed effectivelythroughout the investment lifecycle.Our global international arbitration team has beenrepresenting clients in disputes raising these legal issues.Please contact us if you would like to learn more.“We’re seeing mining disputes shift from justenvironmental battles to real scrutiny on howcompanies work with local communities.The smartest investors will be the ones whogenuinely engage with these social issues, notjust tick the usual compliance boxes.Noiana MarigoPartner - Global Co-Head of International Arbitration,New York22International arbitration 20265.Cross-border taxand tariff disputesmove to center stageCross-border tax and tariffdisputes move to center stageCarsten WendlerPartner,FrankfurtAnnie PanCounsel,LondonYuri MantillaSenior Associate,ParisGonzalo SalazarAssociate,FrankfurtPaige von MehrenSenior Associate,New YorkIn briefTax measures are rapidly becoming a central catalystfor high-stakes, cross-border disputes. With governmentsadopting more assertive - and sometimes retroactive -fiscal policies, companies can expect heightened scrutinyand intervention across multiple jurisdictions. Localaudits now often lead to complex, multifaceted disputesinvolving litigation, arbitration and even diplomaticchannels. Businesses that prioritize fiscal risk managementfrom the outset will be best positioned to navigate thisevolving landscape.Tax and fiscal disputes are here to stayTax and fiscal disputes have continued to evolve, with anoticeable increase in both frequency and complexity sinceour 2023 report. The continued prevalence of these disputes isdriven by dynamic fiscal and political pressures: post-pandemicbudget gaps, expanding defense expenditures and ongoinggeopolitical shifts have prompted governments to pursuerevenue more aggressively.We expect future tax and fiscal disputes to arise from large-scaleassessments stemming from reinterpretations of existing law,retroactive adjustments, the introduction or increase of royaltiesand special levies in extractive industries and the creation ofnew sector-specific taxes. Tax-related issues are increasinglyat the forefront of both investor-state and contractual disputes,underscoring the importance of effective tax risk managementas a strategic imperative, especially given the significant effectthat fiscal regimes have on project economics.Across different regions, this trend is taking shape in unique ways:• Latin America: Many countries in Latin America are in the midstof fiscal reforms. Tax authorities in Mexico and Argentina,for example, are implementing higher levies on extractiveand consumer-facing industries, expanding both the scopeand enforcement of indirect taxes (e.g. VAT). In Brazil, thereintroduction of a 10 percent withholding tax on dividendspaid to non-residents - ending a 30-year exemption - hastriggered immediate friction regarding the computation ofeffective tax rate caps for refunds and the application oftransitional “grandfathering” rules.241234589612101113147Key regions where tax investor-state disputes have arisenCases related to tax issues 2021-20251 Mexico 52 Peru 43 Bangladesh 14 Denmark 1European Union 15 Germany 16 Guinea 17 Mali 18 Mauritania 19 Azerbaijan 110 Rwanda 111 Senegal 112 Tunisia 113 Ukraine 114 Venezuela 1Cross-border tax and tariffdisputes move to center stage25Cross-border tax and tariffdisputes move to center stage• Africa: Resource-rich countries across the continent arerevising royalty rates, introducing new levies and adoptingnew interpretations of traditional tax rules. The evolvingenvironment is leading to more frequent and complexinvestor-state and contractual disputes, especially wherethe retroactive enforcement of new rules or interpretationsis in play.• Europe and Asia: Several European jurisdictions are signalinginterest in sector-specific taxes for digital and high-valueindustries, while some Asian countries are also contemplatingupdates to their royalty and tax frameworks.Navigating multiple dispute resolution pathwaysEffective management of tax and fiscal disputes requiresproactive planning and a strategic understanding of all availabledispute resolution avenues - including domestic litigation,arbitration, Mutual Agreement Procedures (MAPs) undertax treaties and negotiated settlements. Rather than seeingcomplexity as a challenge, businesses should see it as anopportunity to optimize their approach and leverage the fullspectrum of options.Key practical steps businesses should consider include:• Mapping out the options: Identify all relevant disputemechanisms and understand how they interact. Evaluate howtax and investment treaties may overlap with or complementeach other to choose the optimal path and maximize availableprotections. Proper coordination can streamline your strategyand drive more efficient resolutions.“As tax controversies surge globally, a holisticforward-thinking strategy is key. Understandinghow to leverage various paths - localproceedings, arbitration and negotiationsthrough government channels - maximizesthe chances of a favorable result.Carsten WendlerPartner, Frankfurt• Monitoring critical deadlines: Strategic management ofrelevant deadlines (including mandatory negotiation periods,exhaustion of local remedies and statutes of limitation, amongothers) is crucial, especially where steps taken, or not taken, inone forum might affect your rights in another. Forward planningis essential to ensure a coherent overall strategy and strictadherence to procedural requirements where necessary.• Coordinating closely: Where claims are pursued throughmultiple channels, close coordination is required to maintainconsistency in legal arguments and to develop a robustevidentiary foundation. This approach strengthens credibilityand helps secure more favorable outcomes.Partnering with counsel experienced in tax disputes ensures youremain well-positioned to navigate, monitor and coordinate theseissues to achieve the most efficient and robust outcomes.Tariffs: high stakes, low caseload - for nowWhile tariff-related headlines have surged over the past year,relatively few formal disputes have arisen focused exclusivelyon tariffs. This is likely due to political sensitivities and the factthat any such disputes might more readily be resolved throughhigh-level political negotiations, if at all.However, for 2026 and beyond, it will be important for businessesto treat tariffs as part of their broader fiscal risk managementstrategy, on par with tax. To prepare for this, companies shouldreview and fortify key contractual provisions (including pricingand hardship clauses) and ensure their supply chains andinvestment planning take potential tariffs into account.26Cross-border tax and tariffdisputes move to center stagePractical takeawaysTo effectively manage tax and fiscal disputes in an evolvingregulatory landscape, businesses should consider takingthe following actions:• Map your exposure: Create a global heat map to pinpointwhere your organization is most vulnerable, focusing onjurisdictions, sectors and counterparties that are facingor anticipating significant fiscal reforms.• Stress-test contracts and dispute clauses:Systematically review contracts, especially those withgovernments and state-owned entities. Ensure thatchange-in-law, stabilization, tax and dispute resolutionclauses are sufficiently robust to handle evolving risks.• Plan for multi-track disputes: Develop clear internalguidelines on when to pursue domestic legal remedies,arbitration or MAPs under tax treaties to ensure a swiftand coordinated response.• Integrate tax planning with dispute strategy:Design tax structures and investment holdings withpotential disputes in mind, ensuring that your planningfacilitates both compliance and effective recourse inthe event of a challenge.• Invest in early international law risk assessment:Engage experienced international counsel to assessthe legal risks from a legal perspective in addition to taxlegal advisers. Early identification helps prevent issuesfrom escalating across jurisdictions and ensures yourposition is well protected in any eventual arbitration orlegal proceeding.If you would like to discuss any of these topics in more detail,your Freshfields contact would be glad to assist.27International arbitration 20266.Venezuela’s turningpoint: opportunityamid recoveryVenezuela’s turning point:opportunity amid recoveryNigel Blackaby KCPartner,Washington, DCSylvia NouryPartner,LondonCarsten WendlerPartner,FrankfurtNatalia ZibibboCounsel,MadridGonzalo SalazarAssociate,FrankfurtIn briefAfter close to two decades as a pariah State, Venezuelanow stands at a crossroads. Under close oversight from theUnited States government, the country is moving towarda structured recovery. Notably, a US Executive Order inJanuary 2026 placed Venezuelan oil revenues under UScontrol, aiming to support both oil sector reconstructionand reform of Venezuela’s Petroleum Law. These changesare likely to fundamentally reshape foreign investmentmodels, but significant uncertainty remains. Venezuela stilllacks strong and independent institutions, and the politicaltransition creates legal grey areas, with many countries notrecognizing the current administration. For award creditorsand investors, this presents an opportunity to revisitstrategies for extracting value from awards and dormantclaims, though caution remains essential.Turning awards into strategic assetsVenezuela has long been a key target of investment arbitration inthe Americas, with over 50 claims and an estimated US$20-30bnin outstanding award liabilities.The last decade saw attempts at direct enforcement of someof those awards against assets of Petróleos de Venezuela SA(PDVSA), such as the shares of PDV Holding (which in turn holdsmajor US-based refiner and distributor, Citgo) in proceedingsbefore the US District Court for the District of Delaware.In light of recent events, negotiation may offer an alternativepath to realizing value. With the possibility of a sovereign debtrestructuring, award creditors could consider using their unpaidawards as negotiation leverage.“With Venezuela on the brink of major change,creditors now have an opportunity to dust offtheir playbooks, reevaluate exposures and thinkcreatively about recovery strategies beyondsimple enforcement.Nigel Blackaby KCPartner, Washington, DC29Venezuela’s turning point:opportunity amid recovery Source: Can Venezuela settle its debts?Securing a new deal: Credits and reinvestmentThe Venezuelan legislature has passed a new Petroleum Lawendorsed by the United States. This law removes the requirementthat state-owned PDVSA retains majority control, clarifies legaluncertainties under the old regime, greatly reduces fiscal burdensand allows access to arbitration in the event of disputes.US involvement and the reform of the Petroleum Law hasrenewed global interest in Venezuela’s energy sector andrelated industries. Those who can use their legacy awards ortrade receivables towards new commercial ventures are wellpositioned. Concrete advantages may include:• Priority status in upcoming joint venture opportunities;• Enhanced contractual protections and license extensions; and• More favorable fiscal terms tailored to the new economic reality.However, with legal reforms still underway and broadrecognition of the government unsettled, investors shouldproceed with caution and careful due diligence. Contracts signedwith the current administration may face challenge in courtsabroad, or in Venezuela itself if prospects of a political transitionmaterialize. Recent years have also seen Venezuela withdraw fromthe ICSID Convention and some investment treaties, affectinginternational protection.“For those who previously absorbed losses or heldback from pursuing formal claims, 2026 opensthe door for creative recovery strategies - andnew opportunities in a revitalizing market.Carsten WendlerPartner, Frankfurt30Venezuela’s turning point:opportunity amid recoveryPractical steps for successFor investors and creditors with Venezuelan arbitration(claim or award) exposure, agility is the key to securing thebest results.• Monitor US policy developments: In addition tomonitoring US policy developments at the Office ofForeign Assets Control, also watch for key moves bythe State Department’s Foreign Terrorist Organizationdesignations and shifts in how oil revenues are managed,as these can affect both timing and leverage.• Stay informed of local developments: As we haveseen with the Petroleum Law, local initiatives underthe guidance of the US are quickly changing the localregulatory landscape and need to be taken into account.Look out for any new legislation to protect foreigninvestment or steps to rejoin multilateral institutionssuch as ICSID.• Consider the secondary market: For those seeking aquicker exit, renewed activity on the secondary market(e.g. sale of awards or sale of claims to investment funds)could unlock new liquidity options, though be awarethat pricing remains highly sensitive to restructuringdevelopments.• Develop reinvestment scenarios: Consider debt-forequity swaps or “credit-to-contract” conversions butdo so with as many protections in place as possible.In this uncertain environment, contracts approved orguaranteed by the US may offer additional comfort.Successfully navigating Venezuela requires technical skill,sound judgment and deep market insight. Drawing on decadesof experience managing Venezuelan investments and claims,including securing over US$10bn in arbitral awards, our ourinternational arbitration and corporate teams are ready to helpyou assess the environment, mitigate risk and capitalize on newopportunities as the market evolves.31International arbitration 20267.AI’s industrialrevolution:a new frontierfor disputesAI’s industrial revolution:a new frontier for disputesPatrick SchroederPartner,HamburgNatalia ZibibboCounsel,MadridGuy MacInnes-ManbySenior Associate,LondonClemens TreichlPrincipal Associate,ViennaIn briefArtificial intelligence is no longer just a technology; it isan economic force requiring deeply interconnected globalsupply chains that span semiconductors, data centersand energy. This “industrial revolution” has created anew paradigm fundamentally altering risk profiles forbusinesses across all sectors. The immense capitalinvestment, coupled with intense geopolitical competition,is creating fertile ground for a new wave of complex, highstakes disputes. In 2026, we anticipate a rise in arbitrationsat the intersection of technology, trade and geopolitics,compelling businesses to rethink how they allocate risk andstructure their commercial relationships.A new global industrial ecosystemThe rapid expansion of AI has forged a new, high-stakes industrialecosystem. At its heart are semiconductors, where soaringdemand and massive R&D investment in specialized AI chipshave ignited fierce geopolitical competition. Governments inthe United States, the European Union and Asia are interveningwith subsidies and export controls to secure strategic controlover chip design and fabrication.Fueling this hardware boom are two other critical sectors:data and energy. The race to build data centers (further detailscan be found in Trend 9 below) for model training is acceleratingglobally - from North America and Europe to Africa and theMiddle East - often supported by significant governmentalincentives. This, in turn, creates immense energy demands,with projections showing data center power needs doublingby 2030. This is spurring significant investment in energyinfrastructure, especially renewables and novel strategies likeco-locating data centers with nuclear power plants. This capitalintensive build-out creates long-term dependencies in a highlyvolatile environment.33AI’s industrial revolution:a new frontier for disputesAI’s ripple effect across industriesBeyond this ecosystem, AI is a general purpose technology beingrapidly integrated across sectors from life sciences and miningto professional services. In life sciences, AI is accelerating drugdiscovery through novel collaborations. In the mining industry,it is optimizing exploration and operational efficiency throughproprietary geological models. Professional services firmsnow license proprietary AI tools for consulting and audit work,changing how professional advice is prepared, the content ofthat advice and its associated risks. This proliferation of AI-drivenpartnerships creates new opportunities but also new vectorsfor disputes.AI as a catalyst for disputesThis economic shift is inevitably creating friction points thatmay well lead to disputes.The geopolitical-regulatory nexusCertain governments are increasingly using regulation to favordomestic champions and protect national security interests,creating significant risk for foreign investors. Sudden policyshifts, new export controls, data localization rules and stringentAI safety regulations could crystallize into investment treatyclaims for unfair treatment or expropriation, particularly aftersignificant capital has been deployed.A new breed of commercial riskThe uncertain AI landscape creates new and complexcommercial risks. Disputes will focus on the allocation of scarceresources like chip capacity, ownership of IP in proprietarymodels and liability for data breaches, particularly over datasharing and royalty structures.Separately, M&A deals face greater transactional risk as closingconditions may be frustrated by rigorous investment screeningof critical digital infrastructure. More fundamentally, obligationslike “best efforts” or “fitness for purpose” may be interpretedunder a new lens, with disputes arising from both the decisionto use - and not to use - AI. This will also trigger a new wave ofinsurance coverage disputes as traditional cyber, tech E&O andD&O policies are tested against these novel risks.“We are seeing AI turn familiar risk categories -regulatory change, sanctions, data and IP - into amore tightly connected system. For cross-borderbusinesses in 2026, that means the same AIdriven investment can trigger disputes in multiplefora, from commercial arbitration to investmenttreaty claims.Natalia ZibibboCounsel, Madrid34AI’s industrial revolution:a new frontier for disputesPractical takeawaysAs AI continues its rapid integration into the global economy,businesses must adapt their strategies to navigate thistrend. To prepare for the challenges ahead, consider thefollowing practical steps:• Assess AI supply chain vulnerabilities: Stress-testsupply chain dependencies by mapping reliance on AIcomponents - semiconductors, cloud infrastructure,energy - and assessing geopolitical and regulatory risksin key regions.• Modernize and future-proof contracts: Future-proofcommercial agreements by clearly defining terms aroundIP, data usage and resource allocation in AI partnerships.Update clauses like “best efforts,” force majeure andliability caps for AI-specific risks.• Enhance dispute resolution mechanisms: Strengthendispute resolution frameworks by ensuring your contractscontain robust arbitration clauses to resolve complextechnical issues and stay informed about AI’s impact onproceedings (see Trend 8 below).• Structure AI investments for protection: For capitalintensive AI infrastructure, such as data centers orfabrication plants, structure investments to benefit frombilateral investment treaties and other internationalprotections against adverse regulatory changes.• Build organizational resilience: Build resilience byinvesting in compliance programs, cyber risk managementand insurance coverage tailored to the unique AI risks.As the AI economy evolves quickly, now is the time to review yourcontracts, risk management strategies and dispute resolutionmechanisms. Our global international arbitration team is ready tohelp you navigate these opportunities and challenges.“Many businesses don’t think of themselves aspart of the ‘AI industry,’ yet their operations areincreasingly dependent on a geopolitical supplychain for chips, cloud and energy. The strategicquestion in 2026 is how consciously thatrisk is being managed across contracts andinvestments.Patrick SchroederPartner, Hamburg35International arbitration 20268.AI-generatedprocedural challengesin internationalarbitrationAI-generated procedural challengesin international arbitrationRohit BhatPartner,SingaporeSam PrevattCounsel,New YorkSamantha Lord HillCounsel,LondonBecky SokolowNew York,AssociateIn briefThe integration of AI in international arbitration hasmoved from novelty to necessity. While its promise ofincreased efficiency and cost-effectiveness is clear, theexpanded use of AI tools for document analysis, drafting,research and more is creating a new species of proceduralchallenges. Safeguarding the integrity of the arbitralprocess now requires further attention to transparency,data security and the “human in the loop” requirement fordecision-making. With no unified regulatory framework yetin place, arbitrators, counsel and parties are left to navigatea growing patchwork of institutional guidelines.The disclosure dilemmasDisclosure obligations generally ensure the integrity of thearbitral process. While there is a trend towards disclosureof AI use, the scope of disclosure remains a point of debate.For example, institutions differ in their approach:• The broad view (2025 AAA-ICDR Guidance on Arbitrators’Use of AI Tools): The AAA Guidance encourages disclosurewhere AI tools materially impact the arbitration process orthe arbitrators’ reasoning. However, the guidance leavesopen the precise content of the disclosure obligation.• The targeted view (2024 Silicon Valley Arbitration & MediationCenter Guidelines on the Use of Artificial Intelligence inArbitration): The SVAMC guidelines suggest that general AI usedoes not require disclosure. Where appropriate, however,they suggest that the following details may help reproduceor evaluate the output of an AI tool: (1) the name, versionand relevant settings of the tool used; (2) a short descriptionof how the tool was used; and (3) the complete prompt andassociated output.37AI-generated procedural challengesin international arbitrationIn practice, parties and counsel will likely resist disclosing the“internal” use of AI (e.g., specialized legal AI), arguing it is nodifferent from using a search engine, provided that the tooloperates within a secure environment and does not itself createa risk of confidentiality or data breaches. The challenge for 2026is standardizing the “materiality threshold”, i.e., the point at whichAI’s role moves from efficiency aid to substantive contributor.“The central challenge of integrating AI inarbitration is balancing its promise of efficiencyagainst the need to safeguard proceduralfairness, transparency and the legitimacy ofthe arbitral process.Rohit BhatPartner, SingaporeEvidentiary integrity and AI “hallucinations”A critical procedural risk is the submission of AI-generated“hallucinations” - fictional case law or fabricated evidence. Tosome extent, the occurrence of hallucinations can be minimizedthrough more precise prompting by users as they become moreadept at using AI tools. At the same time, providers of AI toolsare taking steps to further mitigate the risk of hallucinations.Even so, with an increasing number of documented casesglobally of AI-generated fake citations, tribunals may considerimposing a duty of human verification, i.e., requiring parties tocertify that a human has reviewed all submissions for factual andlegal accuracy. Such measures would align AI assisted draftingwith existing duties of candor and could be reflected in earlyprocedural orders or soft law instruments.The use of AI by arbitratorsAI has the potential to improve both the efficiency and qualityof arbitrators’ work. However, the arbitration community is stillgrappling with when and how it is appropriate for arbitrators todelegate tasks to AI and how to ensure that such use does notencroach on the arbitrators’ mandate to exercise independentjudgement. This creates a practical dilemma.On the one hand, there is growing pressure to harness AI tomanage increasingly complex and document heavy cases. On theother, there is a need to preserve the integrity, transparency andperceived legitimacy of the arbitral process and to avoid overreliance on tools that may be opaque or prone to error.Guidance issued by the Chartered Institute of Arbitrators(CIArb), Silicon Valley Arbitration and Mediation Centre (SVAMC),American Arbitration Association-International Center forDispute Resolution (AAA-ICDR) and the Stockholm Chamberof Commerce permits arbitrators to use AI as a support tool.It nevertheless emphasizes that arbitrators must retain fullcontrol over decision making and that AI must not replace theirindependent analysis. In practice, this forces tribunals to drawa line between permissible back office support (for example,drafting assistance or initial issue spotting) and impermissibledelegation of evaluative or decision-making functions to AI.Institutional evolutionArbitral institutions are likely to continue developing andformalizing institution-wide frameworks to govern the use ofAI. Pending the adoption of comprehensive rules (which tendsto be a prolonged process), institutions are taking interim stepsto regulate AI use, for example by offering model AI clauses anddraft procedural orders that address AI-related issues.CIArb, for instance, has produced a model agreement and a draftprocedural order on the use of AI, which arbitrators and partiescan choose to incorporate into their proceedings. Over time,repeated use and adaptation of such model language is likely tocrystallize into de facto standards, even in the absence of formalinstitutional rule amendments.38AI-generated procedural challengesin international arbitrationPractical takeawaysAI is already reshaping the conduct of internationalarbitration, and its procedural implications cannot beignored. To stay ahead, tribunals, parties and counselshould consider these practical steps:• Address AI upfront: Proactively address disclosure and,verification early in the proceedings and equality of armsissues, ideally from Procedural Order No. 1 onwards.• Certify accuracy: Ensure any AI-generated materials arereviewed and certified by a qualified human, minimizingthe risk of errors or hallucinations.• Monitor evolving guidance and best practice: Emerginginstitutional guidance offers useful building blocks, butpractice will develop case by case.• Educate your team: Ensure your arbitration and legalteams are trained on both the capabilities and risks of AIin proceedings.The challenge for 2026 and beyond is to ensure that AI enhancesefficiency without compromising fairness, transparency or thelegitimacy of the arbitral process. These principles are embeddedin the way we work. Please contact us to discuss how we cansupport you.39International arbitration 20269.Building tomorrow’sdigital backbone:risks in data centerconstructionBuilding tomorrow’s digital backbone:risks in data center constructionAmani KhalifaPartner,RiyadhMatei PuriceCounsel - Headof Global ProjectsDisputes ContinentalEurope, ParisYosr BouassidaSenior Associate,ParisRobert ColvinSenior Associate,LondonShannon O’NeillSenior Associate,LondonIn briefData centers underpin our digital economy, poweringeverything from AI to e-commerce. With global demandfor data center capacity predicted to triple by 2030, thesector’s exponential growth brings complex environmental,construction and regulatory risks. These risks are likely tofuel a rise in high-value disputes, with arbitration emergingas the preferred forum for resolution.Around 70 percent of the increase in global demand for datacenters is attributable to surging AI usage, which alone requiresaround US$1.6tn investment in infrastructure. Marketsworldwide are experiencing unprecedented growth in bothconstruction and investment: in 2024, the United States had6.4 GW of capacity under construction (representing US$74bnin investment) and EMEA’s pipeline surged 43 percent to 14GW (around €170bn), while China expects to spend aroundUS$40bn by 2030 to double its capacity. This puts constructionof data centers at the heart of digital transformation.Data center construction has its own specificities. First, datacenters have high energy demands (with uninterrupted powerrequired) and produce commensurate GHG emissions iftraditional energy sources are used. Second, significant coolingsystems are required to prevent servers from overheating,typically requiring large volumes of water (or other innovativecooling solutions). Third, physical and cyber security are crucialdue to the sensitive nature of stored data. Fourth, centersneed flexibility to accommodate technological advancementsand demand increases.These challenges give rise to certain risks, which have thepotential to spill over into disputes.41Building tomorrow’s digital backbone:risks in data center constructionData centers: what makes themso complex to build?Energy supply for uninterrupted serviceCooling systems to protect serversSecurity to protect dataFlexibility and adaptability to meetdemand and accommodate innovationEnvironmental and community challengesData centers must be close to end-users, but they also have largeenvironmental footprints. Site selection is a significant risk, withmarkets such as the Singapore, Spain and the United Kingdombeing slow to bring new energy supply online, upgrade gridinfrastructure and secure timely grid access, leading to potentialdisagreements and claims with governments and regulators.To avoid these constraints and make projects more sustainable,some companies are building data centers in locations with goodaccess to renewable energy and water and a favorable climate.Others are turning to nuclear energy. However, these solutionscan bring their own complexities and face their own ESG,construction and regulatory disputes risks.In some cases, scrutiny from shareholders, investors, regulators,local communities and NGOs could precipitate disputes forfailure to adhere to ESG obligations. These may result in litigationbefore local courts or commercial arbitration (where there is anarbitration agreement), or, in certain circumstances, be raised asdefenses or counterclaims by states in investor-state arbitration.Disputes surrounding construction ofdata centersAs with any infrastructure project, disputes may arise betweenemployers, contractors, subcontractors, suppliers and/orinvestors relating to delays, cost overruns or failure to meettechnical specifications. While the disputes risk may be lowerwhere modular construction is used for the main constructionworks, the intricate interfaces between the various systemsforming part of a data center, which are typically delivered byseparate contractors, increases complexity and can result in multiparty disputes. This risk can be exacerbated by poorly draftedor misaligned contracts creating “gap risk,” leading to disputesabout scope, allocation of liability and/or performance failures.Global supply chain instability, especially for critical components,can also lead to claims for additional time, increased costs and/orliquidated damages. Further, rapid technological advancementsor surges in demand may outpace initial designs, leading todisputes over cost responsibility or project valuation if changesor even termination become necessary mid-construction.Regulatory and permitting risksChanging regulations, including zoning, environmental permitsand resource governance, add further layers of complexity.Governments and local authorities may reevaluate incentives(such as tax breaks, power supply contracts or permits) forconstruction of data centers or supporting energy projects,particularly in the face of community opposition or growingenvironmental or climate concerns.When incentives change mid-project, as notably seen in Italy andSpain in the context of solar projects, the economics can shiftdramatically. This can lead to contractual claims between therelevant parties and, in some cases, investment treaty claims byforeign investors against host governments.42Building tomorrow’s digital backbone:risks in data center constructionPractical takeawaysGiven these complexities, we expect data centerconstruction disputes to become more frequentand higher in value. In this context, project stakeholdersshould consider the following:• Pressure-test contracts and dispute resolutionprovisions: Ensure clear risk allocation and interfaceresponsibilities across all project documents.• Build evidence management capacity: Robust projectdocumentation and monitoring are essential for riskprevention and supporting arbitration.• Proactively manage supply chains and resources:Early procurement and contingency planning for criticalequipment and labor can reduce exposure to delay andcost escalation claims.• Monitor regulatory and community developments:Anticipate changes in energy, environmental andzoning laws, and design agile compliance strategies foreach market.• Secure arbitration-friendly investment structuresand treaty protections: Arbitration remains the mostcommon form of dispute resolution for such projectsdue to the need for confidentiality, flexibility and accessto expert arbitrators with engineering or operationalexperience. To mitigate risks arising from regulatory orpolicy changes, when investing in this sector, foreigninvestors should consider structuring their investmentto benefit from protection under international treaties.“Given the pace of technological changeand demand growth in data center projects,parties should expect heightened risk ofmid-construction changes, with correspondingexposure to cost and valuation disputesMatei PuriceHead of Global Projects Disputes Continental EuropeOur team supports stakeholders from project inception throughto dispute resolution, helping clients to identify and managerisks, optimize contracts and deliver commercially focused,efficient solutions to protect investments and secure successfuloutcomes. Please contact us if you would like to learn more.43International arbitration 202610.Technology disputesin arbitration:an expanding frontierTechnology disputes in arbitration:an expanding frontierJohn ChoongPartner,Hong KongElliot FriedmanPartner,New YorkSami TannousPartner,DubaiChristian VandergeestSenior Associate,New YorkIn briefAs technology companies continue to drive economicgrowth, we are seeing a corresponding increase in complexdisputes. Recent developments include an uptick in postM&A disputes, a new wave of mass arbitrations targetingmajor tech companies, and a rise in disputes concerningdigital assets. With innovation outpacing regulationand geopolitical pressures on the rise, we expect thesetech-related disputes to continue into 2026.Post-acquisition disputesWe anticipate a rise in post-M&A arbitration in the tech sector inresponse to record investments in cutting-edge, untested techprojects, many of which will also see increased volatility causedby economic uncertainty, geopolitical shifts, tariffs, sanctions,supply chain disruptions and large-scale regulatory changes.In particular, the race to invest in all aspects of the AI economyhas led to high valuations and a surge in acquisitions ofcompanies without a proven track record of revenue generation.Some of those investments are already leading to claims, forexample in relation to price adjustments, earnouts and breachesof representations and warranties.Tech companies are also increasingly relying on arbitrationto preserve the confidentiality of their deals and disputes,and to ensure that arbitrators with the right experience andexpertise are involved in the process. We expect that this trendwill continue to drive post-M&A disputes in the tech space.“In a global tech landscape disrupted byunpredictable tariffs, sanctions, geopoliticalshifts and rapid regulatory changes, arbitrationoffers a degree of commerciality and objectivitythat national courts - particularly in politicallysensitive jurisdictions - cannot.Elliot FriedmanPartner, New York45Technology disputes in arbitration:an expanding frontierMass arbitration: a new realityMass arbitration is the filing of hundreds or thousands ofcoordinated arbitrations at once, usually against a singlerespondent. Among the potential targets are the world’s largesttech companies, which often use arbitration agreements in theirconsumer, employment and commercial contracts. Recent datafrom the American Arbitration Association reported 180,000filings against tech companies in 2024 - and this number is likelyto grow. Paradoxically, mass arbitrations against tech companieshave been enabled by the rapid growth of social media andadvertising tools, which allow plaintiff firms to advertise potentialclaims to massive audiences at low cost.Many arbitral institutions have responded with new rules andfee structures for mass arbitrations, some of which have beenchallenged in court. We anticipate that these challenges willpersist and that arbitral institutions will continue to adapt theirrules to meet new procedural realities. As consumer-facing AIplatforms continue to expand, mass arbitration will likely play anincreasing role in resolving claims against AI companies.Digital asset disputesThe exponential growth of digital assets has fueled a parallelsurge in associated disputes, with arbitration often emergingas the preferred venue due to the cross-border and technicalnature of these conflicts. Arbitration offers unique benefitsbecause digital asset disputes may not be specific to a particularcountry or even region, and because parties to those disputestypically want them to remain confidential. Many digital asset,cryptocurrency and fintech businesses are therefore increasinglyusing arbitration clauses in their agreements.We expect to see jurisdictions and arbitral institutions activelycompeting to position themselves as the premier venuesfor these disputes. Hong Kong, for example, is positioning itselfas an arbitral seat of choice through a favorable regulatoryenvironment for both digital assets and arbitration. US andEuropean arbitral institutions are also following suit, supported bythe current wave of crypto and stablecoin regulation that shouldfurther establish cryptocurrencies as traditional financial assets.The Middle East is also actively situating itself as a regionalseat for digital asset disputes through introducing dedicatedlegislation (DIFC Digital Assets Law 2024) and establishinga specialized Digital Economy Court in the DIFC with securethird-party custody and blockchain analytics to supportpreservation, tracing and evidence. These tools are crucial infraud, breach of trust and enforcement scenarios.Investor-state disputes in the tech sectorAn increase in tech regulation also provides fertile ground forinvestor-state claims based on value-eroding governmentmeasures. The telecommunications sector, for example, saw ajump in investor-state arbitration filings in the past year. ICSIDreports that claims in the information/communication sectorrose to 8 percent of its caseload in FY2025, a significant increasefrom just 2 percent in the previous year. These claims aremaking the news. In October 2025, it was reported that Huaweithreatened Poland with a claim under the Energy Charter Treatyover a Polish law that invokes national security grounds to restrict“high risk” telecommunication suppliers.2026 may also see the first investor-state dispute squarelyfocused on digital assets. Some states have introduced plansto regulate crypto mining and digital assets, including throughnew licensing regimes or the implementation of robust antimoney laundering measures. This area continues to see massiveinvestment and the uncertain regulatory environment may leadto disappointed investors and legal claims against host States.46Technology disputes in arbitration:an expanding frontierPractical takeawaysWe expect an increase in post-M&A disputes and digitalasset disputes, as both tech M&A and digital currenciescontinue to be on the rise. Businesses should consider:• Detailed review of contractual terms: Players in thissector should ensure that their contracts providefor efficient and confidential resolution of disputes,with careful consideration of the legal frameworksapplicable to the transaction, in particular in crossborder operations.• Early assessment of multi-faceted case strategiesin case of mass claims: In the United States, wealso recommend that tech companies ensure thattheir arbitration clauses take advantage of the latestinnovations in response to mass arbitration, which canchange the playing field significantly when faced witha mass claim.• Ongoing monitoring of legal developments in keyjurisdictions: In the context of fast-evolving political andeconomic landscapes, tech regulations are changingrapidly. Industry investors should remain well-informedof these developments and consistently evaluate theassociated risks with their activities.Drawing on our extensive experience in commercial arbitration,tech sector disputes and investor-state arbitration, our globalinternational arbitration team is fully equipped to advise youacross all of these areas.47International arbitration 202611.Patent disputes:the growing roleof arbitrationPatent disputes:the growing role of arbitrationBoris KasolowskyPartner,FrankfurtThomas WalshPartner,New YorkYong Wei ChanCounsel,SingaporeClara FlorinSenior Associate,LondonAlexander GrimmPrincipal Associate,FrankfurtIn briefParties are increasingly looking to resolve patent disputesthrough arbitration, reflecting the growing value andcomplexity of patents, especially in the tech and lifesciences sectors. Arbitration offers parties efficiency,confidentiality and global enforceability (via the New YorkConvention), avoiding costly multi-jurisdictional litigationand the risk of conflicting decisions. New arbitrationinstitutions and patent-specific arbitration rules, like theArbitration Rules of the Patent Mediation and ArbitrationCentre (PMAC) of the Unified Patent Court (UPC), launchingin 2026, will further support and accelerate this trend.Patent arbitration is on the rise. This trend reflects thegrowing importance of patents as strategic assets, especiallyfor businesses in technology and life sciences. As the valueof these intellectual property assets increases, parties needto find ways to protect and enforce their patents swiftly andeffectively across multiple jurisdictions. Arbitration is increasinglyseen as an attractive alternative to litigation, which is oftenlimited to a specific jurisdiction, expensive, slow and played out inthe public domain.A recent high-profile example illustrates the benefits ofarbitration over traditional litigation in multi-jurisdictionalpatent disputes. The global patent dispute between AutoStoreand Ocado involved multiple proceedings before nationalcourts in the United States, United Kingdom, Germany and theEuropean Patent Office, centering on infringement claims andvalidity challenges over automated warehouse technologies.Ultimately, a worldwide settlement in 2023 saw the partieswithdraw all litigation and cross-license key patents. Hadinternational arbitration been pursued, the parties may haveachieved a centralized, efficient and potentially faster resolution,avoiding the complications and risks of navigating litigations innumerous jurisdictions.Pursuing concurrent claims in multiple jurisdictions - potentiallyincluding the United States, China, the European Union andJapan - can be prohibitively complex and costly and can resultin inconsistent findings. By contrast, arbitration can providea single forum for the streamlined resolution of disputes overpatent rights in multiple jurisdictions. While arbitration may beless suitable when it comes to validity challenges to individualportfolio patents, it is a beneficial forum for licensing disputes.49Patent disputes:the growing role of arbitrationThe expanding scope of patent andSEP arbitrationOne area where arbitration can be particularly helpful is disputesinvolving standard-essential patents (SEPs) and related fair,reasonable and non-discriminatory (FRAND) licensing terms.Because technical standards are usually global, SEP licensesare in many cases global, as well. As technological standardscontinue to proliferate across interconnected industries andgeographies, the number and complexity of SEP-related disputeswill grow. Arbitration provides a specialized toolset for resolvingthese matters, offering technical expertise (through theavailability of specialist arbitrators) and procedural flexibility inone central forum.Enforceability, expertise and institutionalinnovationA further hallmark advantage of arbitration is enforcement:the 1958 New York Convention makes arbitral awards easier toenforce globally than court judgments. National court systemsgenerally only offer effective enforcement regimes within theirown borders or, at best, on a regional basis, such as the UPC inEurope. In contrast, arbitral awards are enforceable under theNew York Convention in a predictable manner and with limitedjudicial review in nearly all jurisdictions. Arbitration thereforeenables parties to secure outcomes with broader enforceability,which is particularly critical in cross-jurisdictional disputes.Arbitration also offers procedural flexibility, allowing partiesto tailor the process to their preferences on matters such asdocument disclosure, timing, and evidence. Confidentiality isanother key benefit - an important consideration where tradesecrets or commercially sensitive information are at stake.In addition, parties have the opportunity to select arbitratorswho possess technical and subject-matter expertise or have aproven track record with complex cases, a capability not alwaysassured in national court litigation.Many arbitral institutions have panels of arbitrators specializingin patent disputes, including the World Intellectual PropertyOrganization (WIPO), the Singapore International ArbitrationCentre, the Hong Kong International Arbitration Centre and theNew York-based International Centre for Dispute Resolution andAmerican Arbitration Association.Another reason for the expected growth in patent arbitrationis the increasing interest of institutions to offer arbitrationrules that are specifically shaped for patent disputes. Notably,WIPO has offered arbitration rules for IP disputes since1994. To address rising SEP litigations, the Munich IP DisputeResolution Forum in 2018 developed specific FRAND ADR CaseManagement Guidelines.More recently, a new arbitral institution with a focus on patentdisputes is set to launch: the Patent Mediation and ArbitrationCentre of the UPC is expected to open in June 2026. PMAC’sarbitration rules are specifically designed for patent disputes.An early draft form of these rules is already available, with thefinal rules expected to be released in early 2026.PMAC’s aspirations reach beyond the jurisdictional scope of theUPC which is limited to European patents, European patentswith unitary effect and Supplementary Protection Certificates.Both the Draft Arbitration Rules and the Draft PMAC Rules ofOperation indicate that PMAC will also be able to administer“related disputes” - and it is expected that PMAC will broaden itsscope further to include non-EU patents, so long as at least oneEU patent is also involved in the dispute. In its initial phase, PMACanticipates that most of its arbitration (and mediation) cases willbe referrals from the busy UPC, but PMAC’s long-term goal is toattract direct filings, positioning itself as a comprehensive venuefor complex, multi-jurisdictional patent conflicts.We expect that users will embrace PMAC’s offering, just asholders of global patent portfolios will increasingly seek tohave their disputes resolved by way of arbitration.50Patent disputes:the growing role of arbitration“This accelerating trend towards arbitrationfor patent disputes is expected to continue asmore parties seek efficient, confidential andglobally enforceable resolutions. Institutions areresponding with purpose-built rules and forumsthat accommodate the increasing sophisticationand international scope of patent disputes. Asarbitration becomes even more accessible andtailored for intellectual property issues, weexpect parties with global patent portfolios to beincreasingly adopting it as a primary method forresolving their disputes.Boris KasolowskyPartner - Global Co-Head of International Arbitration,FrankfurtPractical takeaways• Consider arbitration clauses early: When negotiatingpatent-related agreements, consider proactivelyincluding arbitration clauses tailored for multijurisdictional patent disputes. Consider the inclusionof arbitration clauses in SEP license agreements wherefollow‑on licenses are likely to be required.• Assess global enforcement needs: Arbitration canbe especially helpful if country-by-country litigation isburdensome and a swift solution in one forum is crucialfor your business objectives.• Protect sensitive information: Arbitration’sconfidentiality helps shield trade secrets andcommercially sensitive data from public exposure.• Choose the right arbitrators: Leverage the ability toappoint subject-matter experts with relevant technicaland legal expertise as arbitrators.• Monitor institutional developments: Stay informedabout new venues like PMAC and evolving patent-specificrules to optimize dispute resolution strategies.• Reduce risk and cost: Arbitration can help streamlineproceedings, avoid conflicting judgments and minimizecosts and disruptions associated with parallel litigation.Please get in touch if you would like to discuss your disputeresolution strategy for patent disputes.51This material is provided by Freshfields, an international legal practice. We operateacross the globe through multiple firms. For more information about our organisation,please see https://www.freshfields.com/en-gb/footer/legal-notice/.Freshfields LLP is a limited liability partnership registered in England and Wales(registered number OC334789). It is authorised and regulated by the SolicitorsRegulation Authority (SRA no. 484861).This material is for general information only. It is not intended to provide legal adviceon which you may rely. If you require specific legal advice, you should consult a suitablyqualified lawyer.© 2026 Freshfields LLP, all rights reserved.February 2026, 568132freshfields.com