June
2025
Trade Law
International investment agreements (IIAs), while intended to prop cross-border investment, have faced persistent criticism for potentially undermining the regulatory sovereignty of developing countries. Various mechanisms have been proposed as alternatives to traditional bilateral investment treaty (BIT) models, often with the goal of curbing investor-state dispute settlement (ISDS) filings. While existing research has uncovered the impact of nonlegal factors, such as macroeconomic crises, little has been done to systematically examine how legal provisions in either major model BITs or ISDS reform toolboxes influence ISDS filing patterns. To address this gap, this Article analyzes the interplay between (i) legal texts of 2,148 BITs and treaties with investment provisions (TIPs) and (ii) the occurrence of 1,060 ISDS cases. It builds on the United Nations Conference on Trade and Development (UNCTAD)’s IIA Mapping Project to assess the impact of key legal deterrents recommended by ISDS reform proponents, while leveraging large language models to identify the key legal drivers of ISDS filings. The outcome of Poisson regression appears to reveal that: (i) procedural provisions resembling those in the 2012 U.S. Model BIT are the strongest positive predictors of ISDS filings, outweighing the impact of economic crises, whereas substantive provisions such as investor treatment and expropriation clauses are not; (ii) the effectiveness of deterrent provisions remains inconclusive, suggesting that their ability to curb ISDS filings requires further scrutiny; and (iii) the assumption that IIAs between developed host countries and developing states are more prone to ISDS filings is unsubstantiated. These findings could contribute to ongoing discussions on BIT reform by highlighting the legal determinants of ISDS frequencies, with implications for policymakers seeking to balance investment protection with regulatory autonomy.