The home state as the true complainant: political risk insurance claims and investor–state arbitration

Abstract Investor-State Dispute Settlement (ISDS) is often celebrated for enabling foreign investors to bring claims directly against host states without the political involvement of their home state. Yet this depoliticized image obscures the decisive role of political risk insurance (PRI), much of which is issued by state-sponsored providers. Under PRI, once indemnification is paid, the home state—not the investor—frequently becomes the real party in interest, either through subrogation or by directing the investor to act as its agent. This article shows how PRI politicizes disputes by reshaping the investor–state dyad into a triangular relationship in which the home state often emerges as the ‘true complainant’. Drawing on the comparatively transparent practice of Germany and the USA, it demonstrates how home states can recover PRI payouts through diplomatic pressure, ISDS proceedings, and, at times, interstate arbitration. PRI thus reintroduces home states into disputes, challenging the orthodox claim that ISDS depoliticizes investment relations.