An ICSID Tribunal sheds light on the tension between the fair and equitable treatment (FET) and the importance of investor due diligence
Discovery Global, a US investor, held licences for oil and gas exploration in Slovakia. It claimed that state measures, including lease non-renewals and new environmental requirements, violated Slovakia’s obligations under the US–Slovakia BIT.
The tribunal dismissed the claims. It reaffirmed that legitimate expectations arise only from clear and specific assurances by the State, and that an investor’s own conduct is relevant when assessing alleged breaches. The tribunal emphasised that Discovery Global had failed to carry out meaningful due diligence before committing capital. For instance, its assumption that it held rights to use a private access road proved mistaken. As the tribunal observed, “this misunderstanding could have been avoided had the claimant conducted a meaningful due diligence exercise.”
In addition, the tribunal held that Slovakia’s implementation of stricter environmental rules, consistent with EU law, did not amount to a breach of FET. Absent any stabilisation commitment, regulatory change was a normal risk of investment. Temporary setbacks and administrative hurdles were likewise insufficient to constitute treaty violations.
Having dismissed the FET claim and associated allegations of expropriation, the tribunal ordered Discovery Global to bear the full costs of arbitration and most of Slovakia’s legal fees.
The award reinforces the principle that investor protection does not shield claimants from ordinary regulatory risk or from their own failure to verify the legal and factual conditions of investment.
Discovery Global LLC v Slovak Republic, ICSID Case No. ARB/21/35. Award issued 17 January 2025 issued under the US-Slovakia BIT.
