This chapter considers the various functions of States in international commercial and investment arbitration, which are essentially twofold.First, States are legislators and the creators of the system, and they also assist its development through their conduct which informs the interpretation of relevant treaties, such as BITs.Secondly, States are also parties to such proceedings, usually as the respondent to a claim, but also possibly also as the claimant, as a counter-claimant, and as a non-party intervener.This chapter then considers issues faced by States when acting as the respondent, and discusses how States might best prepare for and handle such disputes, and it also identifies various procedural issues which are likely to arise in such arbitral proceedings.It concludes that States have a complex combination of roles in international arbitration, and that the challenges in responding to claims can be managed if States are willing to learn from the decades of experience which States now have of participating in international arbitration proceedings.