The number of investor-state arbitration disputes has been on the rise since the mid 1990s. Their determinants are still not fully understood. This study empirically examines the effects of economic crises on investor-state arbitration claims, based on international investment agreements (IIAs). We use a unique dataset containing 961 investor-state arbitration claims covering 132 host (defendant) and 75 home (claimant) countries over the 1986-2017 period. We find that episodes of economic crises are positively and significantly associated with the number of investor-state arbitration cases and we uncover evidence that the type of economic crisis matters. In addition, the positive impact of economic crises on arbitration cases is inversely related to the rule of law in a host country. These results are consistent with the view that governments are prioritizing policy actions aiming at mitigating the negative impact of economic crises over compliance with their obligations in IIAs. From a policy perspective, our results suggest that besides strengthening the rule of law domestically, the IIA system should be reformed with a focus on avoiding a vicious circle, thus shortening the recovery period after economic crises. / Series: Department of Economics Working Paper Series