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Eurus Energy Holdings Co. With the Vattenfall II

matter soon to conclude, which concerned legislation

phasing out nuclear power plants, Germany is now

faced with further investment treaty claims arising

from amendments to its energy market legislation.

Italy, the Czech Republic, Poland, Croatia, Bulgaria

and Hungary are also facing similar claims involving

the renewable energy sector.

Some of these claims have now attracted the

attention of the EU. In a decision issued in December

2017, EU Commissioner for Competition, Margrethe

Vestager, observed that any compensation that an

arbitral tribunal might grant to an investor on the

basis of Spain's modifications to its incentives regime

in the renewables sector would constitute state aid.

The EU Commission's position, therefore, is that any

payment by Spain of arbitral awards would require

its approval. We are likely to see further

developments in this area in the coming year.

Human rights and the environment

Parties have increasingly argued for the application

of human rights to investment treaty arbitration

(although this is controversial and remains

unsettled). For example, in Urbaser v Argentina, it was

argued that a supranational corporation should be

bound by human rights standards, a view also held

by Philippe Sands QC in a dissenting opinion in Bear

Creek Mining v Peru. In certain BITs, states are seeking

to recognise human rights obligations over the

promotion of foreign investment: for example, in the

Morocco-Nigeria BIT (not yet in force).

As governments increasingly seek to fight climate

change, this is giving rise to a new area of disputes,

with instruments such as the Geneva Convention on

Long-Range Transboundary Air Pollution, the Paris

Agreement and the United Nations Framework

Convention on Climate Change including dispute

resolution clauses that permit or provide for

arbitration. Climate change-related issues are also

likely to arise in investment treaty arbitration.

Huge sums of money will be required to fund the

transition to the green economy and much of it

will have to be provided by private enterprise.

Investment treaties have an important role to play

in encouraging this investment and investment

treaty arbitration will be essential in assisting to

resolve resulting disputes.

Looking forward

We see this 'rebalancing' continuing in 2018.

Recent examples include a claim at the International

Centre for Settlement of Investment Disputes (ICSID)

by a Jordanian hotelier against Hungary (Al Ramahi v

Hungary); a UAE ports operator against Belgium

(DP World v Belgium); an Egyptian telecoms group

against Canada (Global Telecom Holding S.A.E. v Canada);

and an Iranian investor against South Korea (Dayyani

v South Korea) (in which we represent South Korea).

Investors continue to bring claims against

traditional capital-exporting states (eg in Europe),

as well as states traditionally viewed as 'off limits'

due to the perceived repercussions of bringing such

claims. One of the clearest recent examples of the

latter is two recent claims against Saudi Arabia

(Makae Europe SARL v Saudi Arabia; Samsung

Engineering v Saudi Arabia).

' We are seeing an increasing

number of climate changerelated

disputes. Given that

these disputes are of a complex,

international nature and key

treaties provide arbitration

options, we expect to see the

importance of climate changerelated

arbitration grow in the

years to come.'

Moritz Keller, Counsel, Arbitration

Bilateral investment treaties: rebalancing

between 'the West' and 'the rest'

3

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