Partly the design of the core, partly the open source nature. Speaking from experience, it's really hard to push the envelope with ARM chips as they refuse to license them for FPGA deployments so there's not a lot of work being done there.

What stops anyone from implementing ARM ISA on FPGA? If you think of an ISA like an API - that's something that is not copyrightable, so in theory anyone could do ARM on FPGA. So I am guessing that nobody wants to bear the cost of such development and also risking potential lawsuit?

Yeah, that's pretty much it. There's no real upside and you risk a lawsuit. There are plenty of other ISAs that will work and are licensable for FPGA development