Jakarta, April 26, 2026 – More than 340 civil society organizations worldwide are calling on governments not to adopt the Investor-State Dispute Settlement (ISDS) mechanism in international agreements to ensure that the energy transition away from fossil fuels can be conducted justly.
This call is in response to the First Conference on the Transition from Fossil Fuels, to be held in Santa Marta, Colombia, from April 24-29, 2026. The Santa Marta Conference was initiated by an alliance of 18 UNFCCC member countries to push for the establishment of a Fossil Fuel Treaty as a framework for a just transition from fossil energy to renewable energy. The Fossil Fuel Treaty is expected to complement and help achieve the Paris Agreement’s emission targets and the dialogues resulting from the COP30 Belém Roadmap, as well as provide the missing legal obligations.
ISDS (Investor-State Dispute Settlement) is a dispute resolution mechanism where foreign investors can sue states for billions of dollars in taxpayer money through international arbitration,
such as ICSID. This creates a chilling effect in which governments may delay, weaken, or abandon public-interest regulations to avoid costly legal claims from foreign investors. ISDS is embedded in numerous international investment agreements and free trade agreements. In many cases, it attacks laws aimed at protecting the climate, the environment, or local communities. There is currently an increase in global ISDS cases. By the end of 2023, there were at least 235 fossil fuel-related cases, comprising almost 20 percent of total ISDS cases (spanning sectors such
as crude oil and natural gas extraction, and coal, oil, and gas power generation). In 2024 alone, investors initiated 58 arbitrations. More than half were related to energy extraction and supply activities, and the other half to the critical minerals needed for the energy transition.
Rachmi Hertanti, a Researcher at the Transnational Institute, explained that the ISDS mechanism in trade agreements has become a systemic issue that hinders government action on climate change in developing countries, as explicitly noted in the November 2025 UN Framework Convention on Climate Change (UNFCCC) Report on the Baku to Belém Roadmap.
“This is the first time in a multilateral climate forum that the Santa Marta Conference will address the need to overcome the obstacles posed by ISDS to the phase-out of fossil fuels, including the
threat ISDS poses to developing countries’ efforts to gain added value from mineral extraction for the renewable energy transition. Therefore, it is crucial for us to ensure that Governments, especially in developing countries, are aware of the risks and impacts of ISDS rules on the just energy transition agenda, particularly amidst the energy crisis caused by the war,” emphasized Rachmi.
Aryanto Nugroho, National Coordinator of Publish What You Pay (PWYP) Indonesia, assessed that the global energy crisis driven by geopolitical tensions, such as the Iran-US conflict, should serve as an opportunity for Indonesia to accelerate a just energy transition.
“As one of the world’s largest coal producers, as well as an oil importer and the largest consumer of fossil fuels in Southeast Asia, Indonesia’s dependence on global supply chains is severely jeopardizing its energy security.”
“Unfortunately, the Indonesian Government is absent from the Santa Marta Conference—a crucial forum discussing the phase-out of fossil fuels and the removal of ISDS barriers. Indonesia’s absence in Santa Marta risks leaving our voices unheard in the formation of a just Fossil Fuel Treaty roadmap.”
“This absence is a missed opportunity, especially considering that the government’s current push for the downstreaming of critical minerals (nickel, bauxite, etc.) makes it increasingly vulnerable
to ISDS lawsuits from foreign investors. ISDS has the potential to hold state sovereignty hostage in the management of natural resources for the national and public interest. PWYP Indonesia urges the Government to immediately reform its investment regime by rejecting ISDS in all new agreements, and to join the coalition of countries supporting a Fossil Fuel Treaty free from the ISDS trap. The energy transition is not just about emission targets, but also energy sovereignty and the protection of the rights of communities affected by fossil and mineral extraction.”
The energy transition, which also requires critical minerals for battery and solar panel production, exposes developing countries further to ISDS lawsuits. This trend has increased ISDS claims arising from state nationalization measures, whether through divestment, revocation of mining permits, bans on the export of raw minerals, or domestic processing obligations for raw minerals. Indonesia is one of the countries implementing such policies.
Salsabila, a feminist activist from Kolektif Puanifesto, asserted that almost all ISDS lawsuits filed by investors contradict the rights of communities affected by environmental damage and health problems caused by investment projects in the extractive sector, particularly mining.
“The implementation of the ISDS mechanism, which is rooted in a colonial system, will only prolong the impunity of extractive corporations, perpetuate asymmetrical relations between
Corporations in the Global North and Global South exacerbate the climate crisis. The state’s obligation to protect the people’s rights is held hostage by the threat of investor lawsuits, ultimately
undermining communities’ struggles against the negative impacts of corporate business activities on their lives, whether related to human rights violations, economic losses, or broader environmental damage,” Salsabila stressed.
Hadi Rahmat Purnama, from the Legal Center for Corporate, International Trade, and Investment at Universitas Indonesia (LCITI-UI) noted that the ISDS mechanism has once again become a point of contention among countries, with many governments already rejecting it.
India, South Africa, and Ecuador have canceled investment treaties containing ISDS. Brazil has never approved ISDS. Australia and New Zealand have policies opposing ISDS. Capital-exporting countries like the European Union and the UK are now also rejecting ISDS.
“Therefore, we look forward to the Fossil Fuel Treaty produced in Santa Marta affirming the pledges and commitments of countries not to use the ISDS mechanism in any of their trade and investment agreements,” concluded Hadi.
To that end, global civil society organizations are urging that the only effective way for developing countries to pursue a just energy transition from fossil fuels to green energy is to protect themselves from the threat of ISDS lawsuits. The Santa Marta Conference in Colombia must build a coalition of governments committed to including provisions for the cancellation of ISDS in the future Fossil Fuel Treaty and to initiating negotiations for a multilateral agreement to realize a world free from ISDS.
For Further Information, please contact:
• Aryanto Nugroho, PWYP Indonesia: aryanto@pwypindonesia.org
• Rachmi Hertanti, Transnational Institute: r.hertanti@tni.org
• Salsabila Putri, Puanifesto: salsabilaaziziah@proton.me
• Hadi Rahmat Purnama, LCITI-UI: hadi.rahmat@ui.ac.id