Energy – Investment Treaty News

How the Energy Charter Treaty risks undermining the outcomes of COP 26

This article provides an initial assessment of the ECT-based arbitration risk flowing from the COP 26 pledges due to their impact on fossil fuel investments in ECT contracting parties. It further estimates how these impacts could translate into investor–state arbitration claims based on past and ongoing cases in the energy sector.

Spain held liable in another renewable energy case and ordered to pay EUR 22 million in compensation for damages

BayWa r.e. Renewable Energy GmbH and BayWa r.e. Asset Holding GmbH v. Spain, ICSID Case No. ARB/15/16

ECT modernization negotiations continue while agreement attracts criticism for impact on climate

Since our last report, two more negotiation rounds have taken place on ECT modernization. The seventh round took place from October 28–November 1, 2021, while the eighth round was held from November 9–11, 2021.

European Energy Disputes Update

As we reported, German-owned energy company Uniper put the Netherlands on notice of an investment dispute last year, following the announcement of the country’s plan to phase out coal-burning power plants by 2030. Alongside RWE, another German energy company, Uniper made good on that threat earlier this year; both companies initiated ICSID claims lodged under the ECT this spring.

Tribunal rules in favour of claimants in another Spanish solar dispute; Dissenting arbitrator argues that tribunal nonetheless over-emphasized Spain’s “right to regulate”

In another renewables case against Spain, an ICSID tribunal awarded over EUR 28 million to two subsidiaries of the German company RWE (jointly, RWE).

Valuing Fossil Fuel Assets in an Era of Climate Disruption

There have been more than 150 known ISDS cases brought by claimants whose business involves extracting, transporting, refining, selling, or burning fossil fuels for electricity. The authors, Kyla Tienhaara, Lise Johnson, and Michael Burger explore the question of how valuation and damages in fossil-fuel related investment claims should be approached in light of climate change considerations and the contested value of fossil fuel resources.

The Treaty on Sustainable Investment for Climate Change Mitigation and Adaptation: A model to steer international law toward renewable energy investments and the low-carbon transition

In this piece, the author analyzes the Treaty on Sustainable Investment for Climate Change Mitigation and Adaptation (“TSI”), winner of the Stockholm Treaty Lab prize. First, she presents the TSI as a model that states could adopt to foster international investment in the transition from carbon-intensive to low-carbon energy systems. Second, she comments on some challenges in implementing the TSI model and propose possible improvements in this regard. Third, she analyzes how the TSI could be used to improve current and future bilateral investment treaties (BITs).

Modernizing the Energy Charter Treaty: What about termination?

Negotiations for modernizing the Energy Charter Treaty, a 1994 agreement covering trade, investment and other aspects of the energy sector among its contracting parties, are expected to begin before 2019 draws to a close. Yet given the need identified in myriad other forums to reform ISDS and to ensure trade and investment agreements can support ambitious climate action, why aren’t more officials and commentators discussing the possibility of terminating the ECT entirely, or of reconsidering its survival clause for those parties which choose to withdraw? Tania Voon explores the issue and outlines options going forward.

Energy Charter Treaty: EU Council endorses negotiating directives for Brussels

The European Council has approved negotiating directives for the EU’s participation in talks to modernize the ECT, confirming its decision during a meeting on July 2, 2019.

Spain’s Renewable Energy Saga: Lessons for international investment law and sustainable development

Spain has faced approximately 40 arbitrations since it made the decision in 2010 to rescind or revise various regulatory measures aimed at drawing in greater investments into renewable energy projects. This article examines the awards issued in four of those cases, looking in particular at how the tribunals interpreted and applied the FET standard. The author looks at the potential problems that can emerge when states are unsure of how any given tribunal may interpret FET or other key standards and presents some potential solutions.

EU Commission proposes negotiating directives for ECT modernization

The EC released on May 14 a set of draft negotiating directives setting out its proposed approach in “modernizing” the Energy Charter Treaty (ECT).

ICSID tribunal finds Spain breached ECT obligations by failing to provide a reasonable rate of return

RREEF INFRASTRUCTURE (G.P.) LIMITED AND RREEF PAN-EUROPEAN INFRASTRUCTURE TWO LUX S.A R.L. V. KINGDOM OF SPAIN, ICSID CASE NO. ARB/13/30

Investors’ legitimate expectation claims against Italy dismissed due to the absence of specific commitments

BLUSUN S.A., JEAN-PIERRE LECORCIER AND MICHAEL STEIN V. ITALIAN REPUBLIC, ICSID CASE NO. ARB/14/3

Italy found liable for change in renewable energy policy in intra-EU arbitration

GREENTECH ENERGY SYSTEMS A/S & ORS. V. THE ITALIAN REPUBLIC, SCC ARBITRATION V (2015/095)

Achmea judgment analyzed and FET claim granted in ECT case against Spain

FORESIGHT LUXEMBOURG SOLAR 1 S.À.R.L., FORESIGHT LUXEMBOURG SOLAR 2 S.À.R.L., GREENTECH ENERGY SYSTEMS A/S, GWM RENEWABLE ENERGY I S.P.A. AND GWM RENEWABLE ENERGY II S.P.A. V. THE KINGDOM OF SPAIN, SCC ARBITRATION V (2015/150)

Egypt found liable for the shut-down of an electricity plant during the 2011 uprising

UNIÓN FENOSA GAS, S.A. V. ARAB REPUBLIC OF EGYPT, ICSID CASE NO. ARB/14/4

Spain found to have breached the Energy Charter Treaty in award by ICSID tribunal

ANTIN INFRASTRUCTURE SERVICES LUXEMBOURG S.À.R.L. AND ANTIN ENERGIA TERMOSOLAR B.V. V. THE KINGDOM OF SPAIN, ICSID CASE NO. ARB/13/31

ICSID tribunal finds Spain in breach of the FET standard under the Energy Charter Treaty

MASDAR SOLAR & WIND COOPERATIEF U.A. V. THE KINGDOM OF SPAIN, ICSID CASE NO. ARB/14/1

Luxembourg fund awarded EUR 53.3 million for FET breach arising out of Spain’s curtailment of renewable energy incentive schemes

NOVENERGIA II – ENERGY & ENVIRONMENT (SCA) (GRAND DUCHY OF LUXEMBOURG), SICAR V. THE KINGDOM OF SPAIN, SCC CASE NO. 063/2015

Solar energy claims brought by German investors against Czechia are dismissed

Jürgen Wirtgen, Stefan Wirtgen, Gisela Wirtgen and JSW Solar (zwei) GmbH & Co. KG v. Czech Republic, PCA Case No. 2014-03

All claims by Isolux Infrastructure Netherlands against Spain are dismissed

Isolux Infrastructure Netherlands B.V. v. the Kingdom of Spain, SCC Case No. V2013/153

Investors triumph over Spain in a claim concerning Spain’s regulatory overhaul for clean energy

Eiser Infrastructure Limited and Energía Solar Luxembourg S.à r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/36

Expansion of the Energy Charter to Africa and Asia: Undoing Reform in International Investment Law?

The Energy Charter Secretariat is in expansion mode, wanting to gain access to energy resources in Africa and Asia for its members—and extending a far-reaching and outdated investment protection system to investments in resource-rich countries.

Awards and Decisions

ICSID tribunal dismisses claims brought against Indonesia based on forged mining licences Churchill Mining PLC and Planet Mining Pty Ltd v. Republic of Indonesia, ICSID Case No. ARB/12/14 and ICSID […]

NAFTA tribunal orders Canada to pay U.S. wind power developer more than CAD28 million

Windstream Energy LLC v. Government of Canada, PCA Case No. 2013-22 An arbitral tribunal under Chapter 11 of the North American Free Trade Agreement (NAFTA) has reached the award stage. […]

Awards and Decisions

The long-expected final award has been rendered in the high-profile case initiated by tobacco giant Philip Morris in early 2010 against Uruguay over its tobacco control measures.

ICSID tribunal upholds Panama’s abuse of process objection; Transglobal to pay arbitration costs and most of Panama’s legal expenses

In the proceeding brought by Transglobal Green Energy, LLC (a U.S.-based company) and Transglobal Green Panama S.A. (a Panama-based company) against Panama under the United States–Panama bilateral investment treaty (BIT), an ICSID tribunal accepted Panama’s abuse of process objection.

NAFTA tribunal dismisses claims against Canada on green energy Feed-In Tariff program

An arbitration tribunal constituted under the North American Free Trade Agreement (NAFTA) has issued its award subject to a dissenting opinion.

US$50 billion awards against Russia in Yukos cases are set aside by Dutch court

In a judgment dated April 20, 2016, the District Court of The Hague, in the Netherlands, set aside awards that had ordered Russia to pay US$50 billion to the shareholders of Yukos, a bankrupt oil company.

Slovenia is condemned to pay €20 million in damages and US$10 million in costs to Croatian national electric company

An award rendered on December 17, 2015 by an arbitral tribunal constituted under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) added a new—and apparently final—chapter to a nearly 20-year-old conflict between the governments of Croatia and Slovenia over the supply of electricity generated by the Krško Nuclear Power Plant (Krško NPP), located in Slovenia.

State Strategies for the Defence of Domestic Interests in Investor–State Arbitration

Argentina and Ecuador are now well experienced in ISDS and have had some success in defending domestic interests from investor claims. Lessons from these prior experiences could benefit other countries, particularly in the developing world, as they devise their legal defence strategies.

ICSID tribunal dismisses final claim for compensation in relation to Hungary’s 2008 termination of power purchase agreement

Electrabel S.A. v. Republic of Hungary, ICSID Case No. ARB/07/1